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


 
                              AGRICULTURAL PROGRAM AUDIT 

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

                                HEARINGS

                               BEFORE THE

                           SUBCOMMITTEES ON:
                        GENERAL FARM COMMODITIES
                          AND RISK MANAGEMENT;

                  CONSERVATION, ENERGY, AND FORESTRY;

                      NUTRITION AND HORTICULTURE;

  RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

             DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;

                                  AND

                     LIVESTOCK, DAIRY, AND POULTRY

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               ----------                              

                                JUNE 24;
                    JULY 7, 13, 14, 20, 21, 27, 28;
                         SEPTEMBER 8, 13, 2011

                               ----------                              

                           Serial No. 112-20


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov











                       AGRICULTURAL PROGRAM AUDIT














                       AGRICULTURAL PROGRAM AUDIT

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

                                HEARINGS

                               BEFORE THE

                           SUBCOMMITTEES ON:
                        GENERAL FARM COMMODITIES
                          AND RISK MANAGEMENT;

                  CONSERVATION, ENERGY, AND FORESTRY;

                      NUTRITION AND HORTICULTURE;

  RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;

             DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;

                                  AND

                     LIVESTOCK, DAIRY, AND POULTRY

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                                JUNE 24;
                    JULY 7, 13, 14, 20, 21, 27, 28;
                         SEPTEMBER 8, 13, 2011

                               __________

                           Serial No. 112-20


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov

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

68-336 PDF                       WASHINGTON : 2012 

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                        COMMITTEE ON AGRICULTURE

                   FRANK D. LUCAS, Oklahoma, Chairman

BOB GOODLATTE, Virginia,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
TIMOTHY V. JOHNSON, Illinois         TIM HOLDEN, Pennsylvania
STEVE KING, Iowa                     MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas              LEONARD L. BOSWELL, Iowa
K. MICHAEL CONAWAY, Texas            JOE BACA, California
JEFF FORTENBERRY, Nebraska           DENNIS A. CARDOZA, California
JEAN SCHMIDT, Ohio                   DAVID SCOTT, Georgia
GLENN THOMPSON, Pennsylvania         HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida            JIM COSTA, California
MARLIN A. STUTZMAN, Indiana          TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio                      KURT SCHRADER, Oregon
AUSTIN SCOTT, Georgia                LARRY KISSELL, North Carolina
SCOTT R. TIPTON, Colorado            WILLIAM L. OWENS, New York
STEVE SOUTHERLAND II, Florida        CHELLIE PINGREE, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  JOE COURTNEY, Connecticut
MARTHA ROBY, Alabama                 PETER WELCH, Vermont
TIM HUELSKAMP, Kansas                MARCIA L. FUDGE, Ohio
SCOTT DesJARLAIS, Tennessee          GREGORIO KILILI CAMACHO SABLAN, 
RENEE L. ELLMERS, North Carolina     Northern Mariana Islands
CHRISTOPHER P. GIBSON, New York      TERRI A. SEWELL, Alabama
RANDY HULTGREN, Illinois             JAMES P. McGOVERN, Massachusetts
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois
REID J. RIBBLE, Wisconsin
KRISTI L. NOEM, South Dakota

                                 ______

                           Professional Staff

                      Nicole Scott, Staff Director

                     Kevin J. Kramp, Chief Counsel

                 Tamara Hinton, Communications Director

                Robert L. Larew, Minority Staff Director

                                  (ii)


      Subcommittee on General Farm Commodities and Risk Management

                  K. MICHAEL CONAWAY, Texas, Chairman

STEVE KING, Iowa                     LEONARD L. BOSWELL, Iowa, Ranking 
RANDY NEUGEBAUER, Texas              Minority Member
JEAN SCHMIDT, Ohio                   MIKE McINTYRE, North Carolina
BOB GIBBS, Ohio                      TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia                LARRY KISSELL, North Carolina
ERIC A. ``RICK'' CRAWFORD, Arkansas  JAMES P. McGOVERN, Massachusetts
MARTHA ROBY, Alabama                 DENNIS A. CARDOZA, California
TIM HUELSKAMP, Kansas                DAVID SCOTT, Georgia
RENEE L. ELLMERS, North Carolina     JOE COURTNEY, Connecticut
CHRISTOPHER P. GIBSON, New York      PETER WELCH, Vermont
RANDY HULTGREN, Illinois             TERRI A. SEWELL, Alabama
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois

               Matt Schertz, Subcommittee Staff Director

                                 ______

           Subcommittee on Conservation, Energy, and Forestry

                 GLENN THOMPSON, Pennsylvania, Chairman

BOB GOODLATTE, Virginia              TIM HOLDEN, Pennsylvania, Ranking 
MARLIN A. STUTZMAN, Indiana          Minority Member
BOB GIBBS, Ohio                      KURT SCHRADER, Oregon
SCOTT R. TIPTON, Colorado            WILLIAM L. OWENS, New York
STEVE SOUTHERLAND II, Florida        MIKE McINTYRE, North Carolina
MARTHA ROBY, Alabama                 JIM COSTA, California
TIM HUELSKAMP, Kansas                TIMOTHY J. WALZ, Minnesota
RANDY HULTGREN, Illinois             CHELLIE PINGREE, Maine
REID J. RIBBLE, Wisconsin            MARCIA L. FUDGE, Ohio
KRISTI L. NOEM, South Dakota         GREGORIO KILILI CAMACHO SABLAN, 
                                     Northern Mariana Islands

               Brent Blevins, Subcommittee Staff Director

                                 ______

               Subcommittee on Nutrition and Horticulture

                     JEAN SCHMIDT, Ohio, Chairwoman

STEVE KING, Iowa                     JOE BACA, California, Ranking 
THOMAS J. ROONEY, Florida            Minority Member
STEVE SOUTHERLAND II, Florida        CHELLIE PINGREE, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GREGORIO KILILI CAMACHO SABLAN, 
                                     Northern Mariana Islands

                Matt Perin, Subcommittee Staff Director

                                 (iii)
?

Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
                              Agriculture

                 TIMOTHY V. JOHNSON, Illinois, Chairman

GLENN THOMPSON, Pennsylvania         JIM COSTA, California, Ranking 
MARLIN A. STUTZMAN, Indiana          Minority Member
AUSTIN SCOTT, Georgia                HENRY CUELLAR, Texas
RANDY HULTGREN, Illinois             PETER WELCH, Vermont
VICKY HARTZLER, Missouri             TERRI A. SEWELL, Alabama
ROBERT T. SCHILLING, Illinois        LARRY KISSELL, North Carolina

                Mike Dunlap, Subcommittee Staff Director

                                 ______

      Subcommittee on Department Operations, Oversight, and Credit

                  JEFF FORTENBERRY, Nebraska, Chairman

TIMOTHY V. JOHNSON, Illinois         MARCIA L. FUDGE, Ohio, Ranking 
STEVE KING, Iowa                     Minority Member
ERIC A. ``RICK'' CRAWFORD, Arkansas  JAMES P. McGOVERN, Massachusetts
KRISTI L. NOEM, South Dakota         JOE BACA, California

               Brandon Lipps, Subcommittee Staff Director

                                 ______

             Subcommittee on Livestock, Dairy, and Poultry

                  THOMAS J. ROONEY, Florida, Chairman

BOB GOODLATTE, Virginia              DENNIS A. CARDOZA, California,  
STEVE KING, Iowa                     Ranking Minority Member
RANDY NEUGEBAUER, Texas              DAVID SCOTT, Georgia
K. MICHAEL CONAWAY, Texas            JOE COURTNEY, Connecticut
TIM HUELSKAMP, Kansas                TIM HOLDEN, Pennsylvania
SCOTT DesJARLAIS, Tennessee          LEONARD L. BOSWELL, Iowa
CHRISTOPHER P. GIBSON, New York      JOE BACA, California
REID J. RIBBLE, Wisconsin            KURT SCHRADER, Oregon
KRISTI L. NOEM, South Dakota         WILLIAM L. OWENS, New York

              Michelle Weber, Subcommittee Staff Director

                                  (iv)



                             C O N T E N T S

                              ----------                              
                                                                   Page

 Subcommittee on General Farm Commodities and Risk Management, Friday, 
                             June 24, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa, 
  opening statement..............................................     4
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     3
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................     5
    Prepared statement...........................................     6

                                Witness

Murphy, William J., Administrator, Risk Management Agency, U.S. 
  Department of Agriculture, Washington, D.C.....................     7
    Prepared statement...........................................     9
    Supplementary information....................................    35
    Questionnaire................................................    37

Subcommittee on Conservation, Energy, and Forestry, Thursday, July 07, 
                                  2011

Holden, Hon. Tim, a Representative in Congress from Pennsylvania, 
  opening statement..............................................    47
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................    48
    Prepared statement...........................................    49
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................    45
    Prepared statement...........................................    46

                               Witnesses

Nelson, Bruce, Administrator, Farm Service Agency, U.S. 
  Department of Agriculture, Washington, D.C.....................    50
    Prepared statement...........................................    51
    Submitted questions..........................................    99
White, Dave, Chief, Natural Resources Conservation Services, U.S. 
  Department of Agriculture, Washington, D.C.....................    55
    Prepared statement...........................................    60
    Submitted questions..........................................   103

                           Submitted Material

Huntley, Mark G., President, Irrigation Association, submitted 
  letter.........................................................    97
U.S. Department of Agriculture, questionnaire....................   112

  Subcommittee on Nutrition and Horticulture, Thursday, July 07, 2011

Baca, Hon. Joe, a Representative in Congress from California, 
  opening statement..............................................   198
    Prepared statement...........................................   199
Schmidt, Hon. Jean, a Representative in Congress from Ohio, 
  opening statement..............................................   195
    Prepared statement...........................................   197
Southerland II, Hon. Steve, a Representative in Congress from 
  Florida, prepared statement....................................   200

                               Witnesses

Pegg, Rayne, Administrator, Agricultural Marketing Service, U.S. 
  Department of Agriculture, Washington, D.C.....................   201
    Joint prepared statement.....................................   204
Bech, Rebecca, Deputy Administrator for Plant Protection and 
  Quarantine, Animal and Plant Health Inspection Service, U.S. 
  Department of Agriculture, Washington, D.C.....................   203
    Joint prepared statement.....................................   204
    Supplementary material.......................................   225

                           Submitted Material

U.S. Department of Agriculture, questionnaire....................   234

Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
                  Agriculture, Thursday, July 13, 2011

Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................   265
Johnson, Hon. Timothy V., a Representative in Congress from 
  Illinois, opening statement....................................   263
    Prepared statement...........................................   264

                               Witnesses

Heinen, Suzanne, Acting Administrator, Foreign Agricultural 
  Service, U.S. Department of Agriculture, Washington, D.C.......   267
    Prepared statement...........................................   268
    Supplementary material.......................................   297
    Submitted questions..........................................   298
    Questionnaire................................................   304
Lindborg, Nancy, Assistant Administrator, Bureau for Democracy, 
  Conflict and Humanitarian Assistance, U.S. Agency for 
  International Development, Washington, D.C.....................   275
    Prepared statement...........................................   277
    Supplementary material.......................................   297
    Submitted questions..........................................   298
    Questionnaire................................................   345

Subcommittee on Department Operations, Oversight, and Credit, Thursday, 
                             July 14, 2011

Fortenberry, Hon. Jeff, a Representative in Congress from 
  Nebraska, opening statement....................................   441
    Prepared statement...........................................   442
Fudge, Hon. Marcia L., a Representative in Congress from Ohio, 
  opening statement..............................................   443

                                Witness

Nelson, Bruce, Administrator, Farm Service Agency, U.S. 
  Department of Agriculture, Washington, D.C.; accompanied by Jim 
  Radintz, Assistant Deputy Administrator, FSA, USDA.............   444
    Prepared statement...........................................   445
    Supplementary material.......................................   459
    Submitted questions..........................................   464
    Questionnaire................................................   464

Subcommittee on Conservation, Energy, and Forestry, Wednesday, July 20, 
                                  2011

Fudge, Hon. Marcia L., a Representative in Congress from Ohio, 
  prepared statement.............................................   488
Holden, Hon. Tim, a Representative in Congress from Pennsylvania, 
  opening statement..............................................   487
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................   485
    Prepared statement...........................................   486
    Submitted article............................................   529

                               Witnesses

Tidwell, Thomas, Chief, U.S. Forest Service, U.S. Department of 
  Agriculture, Washington, D.C...................................   489
    Prepared statement...........................................   492
Canales, Judy, Administrator, Rural Business-Cooperative Service, 
  U.S. Department of Agriculture, Washington, D.C................   497
    Joint prepared statement.....................................   501
Garcia, Juan, Deputy Administrator, Farm Service Agency, U.S. 
  Department of Agriculture, Washington, D.C.....................   499
    Joint prepared statement.....................................   501

                           Submitted Material

U.S. Department of Agriculture, response to submitted questions..   530
U.S. Department of Agriculture:
    Forestry Questionnaire.......................................   556
    Energy Questionnaire.........................................   584

  Subcommittee on Nutrition and Horticulture, Thursday, July 21, 2011

Baca, Hon. Joe, a Representative in Congress from California, 
  opening statement..............................................   620
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................   621
Schmidt, Hon. Jean, a Representative in Congress from Ohio, 
  opening statement..............................................   617
    Prepared statement...........................................   619

                                Witness

Rowe, Audrey, Administrator, Food and Nutrition Service, U.S. 
  Department of Agriculture, Washington, D.C.....................   622
    Prepared statement...........................................   625
    Submitted questions..........................................   661
    Questionnaire................................................   663

                           Submitted Material

Davis, Lisa, Vice President of Public Policy, Feeding America, 
  submitted statement............................................   655
Stone, Sam, Vice President, Government Relations, Dairy Farmers 
  of America, Inc., submitted letter and statement...............   659

     Subcommittee on General Farm Commodities and Risk Management, 
                        Wednesday, July 27, 2011

Boswell, Hon. Leonard L., a Representative in Congress from Iowa, 
  opening statement..............................................   693
    Prepared statement...........................................   695
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................   689
    Prepared statement...........................................   689
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................   690
    Prepared statement...........................................   692
McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts, prepared statement..............................   697
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, prepared statement..................................   696

                                Witness

Nelson, Bruce, Administrator, Farm Service Agency, U.S. 
  Department of Agriculture, Washington, D.C.; accompanied by 
  Juan M. Garcia, Acting Deputy Administrator for Farm Programs, 
  FSA, USDA......................................................   698
    Prepared statement...........................................   699
    Submitted questions..........................................   727
    Questionnaire................................................   727

Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
                  Agriculture, Thursday, July 28, 2011

Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................   791
Johnson, Hon. Timothy V., a Representative in Congress from 
  Illinois, opening statement....................................   789
    Prepared statement...........................................   790

                               Witnesses

Knipling, Dr. Edward B., Administrator, Agricultural Research 
  Service, U.S. Department of Agriculture, Washington, D.C.......   793
    Prepared statement...........................................   795
    Questionnaire................................................   832
Jacobs-Young, Ph.D., Chavonda, Acting Director, National 
  Institute of Food and Agriculture, U.S. Department of 
  Agriculture, Washington, D.C...................................   800
    Prepared statement...........................................   801
    Questionnaire................................................   879
Clark, Dr. Cynthia, Administrator, National Agricultural 
  Statistics Service, U.S. Department of Agriculture, Washington, 
  D.C............................................................   804
    Prepared statement...........................................   806
    Questionnaire................................................   929
Unnevehr, Ph.D., Laurian J., Acting Administrator, Economic 
  Research Service, U.S. Department of Agriculture, Washington, 
  D.C............................................................   809
    Prepared statement...........................................   810
    Questionnaire................................................   935

                           Submitted Material

Biotechnology Industry Organization, submitted statement.........   826
Van Arsdall, R. Thomas, Executive Director, National Coalition 
  for Food and Agricultural Research, submitted statement........   823
U.S. Department of Agriculture, response to submitted questions..   828

Subcommittee on Livestock, Dairy, and Poultry, and Foreign Agriculture, 
                      Thursday, September 08, 2011

Baca, Hon. Joe, a Representative in Congress from California, 
  prepared statement.............................................   944
Cardoza, Hon. Dennis A., a Representative in Congress from 
  California, opening statement..................................   942
    Prepared statement...........................................   943
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, prepared statement..................................   943
Rooney, Hon. Thomas J., a Representative in Congress from 
  Florida, opening statement.....................................   941
    Prepared statement...........................................   942

                               Witnesses

Garcia, Juan M., Acting Deputy Administrator for Farm Programs, 
  Farm Service Agency, U.S. Department of Agriculture, 
  Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior 
  Economist, Office of the Chief Economist, USDA.................   944
    Prepared statement...........................................   946
    Submitted questions..........................................   973
    Questionnaire................................................   997
Coale, Dana, Deputy Administrator for Dairy Programs, 
  Agricultural Marketing Service, U.S. Department of Agriculture, 
  Washington, D.C.; accompanied by Larry Salathe, Ph.D., Senior 
  Economist, Office of the Chief Economist, USDA.................   949
    Prepared statement...........................................   950
    Submitted questions..........................................   973
    Questionnaire................................................  1011

                           Submitted Material

National Milk Producers Federation, submitted report.............   974
Supplementary material submitted by the USDA.....................   971

Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
                Agriculture, Tuesday, September 13, 2011

Costa, Hon. Jim, a Representative in Congress from California, 
  opening statement..............................................  1021
Johnson, Hon. Timothy V., a Representative in Congress from 
  Illinois, opening statement....................................  1019
    Prepared statement...........................................  1020

                               Witnesses

Adelstein, Hon. Jonathan S., Administrator, Rural Utilities 
  Service, U.S. Department of Agriculture, Washington, D.C.......  1023
    Prepared statement...........................................  1025
    Questionnaire................................................  1073
Canales, Judith A., Administrator, Rural Business-Cooperative 
  Service, U.S. Department of Agriculture, Washington, D.C.......  1026
    Prepared statement...........................................  1028
    Supplementary material.......................................  1055
    Submitted report.............................................  1056
    Questionnaire................................................  1101
Trevino, Tammye H., Administrator, Rural Housing Service, U.S. 
  Department of Agriculture, Washington, D.C.....................  1032
    Prepared statement...........................................  1034
    Questionnaire................................................  1117

                          Submitted Questions

U.S. Department of Agriculture, response to submitted questions..  1065


                       AGRICULTURAL PROGRAM AUDIT

          (EXAMINATION OF THE FEDERAL CROP INSURANCE PROGRAM)

                              ----------                              


                         FRIDAY, JUNE 24, 2011

  Subcommittee on General Farm Commodities 
                       and Risk Management,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:02 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. K. 
Michael Conaway [Chairman of the Subcommittee] presiding.
    Members present: Representatives Conaway, Neugebauer, 
Schmidt, Austin Scott of Georgia, Crawford, Roby, Huelskamp, 
Gibson, Hultgren, Hartzler, Schilling, Stutzman, Lucas (ex 
officio), Boswell, McIntyre, Walz, Kissell, David Scott of 
Georgia, Courtney, and Peterson (ex officio).
    Staff present: Tamara Hinton, Kevin Kramp, Matt Schertz, 
Pelham Straughn, Suzanne Watson, Bart Fischer, Liz Friedlander, 
Clark Ogilvie, Anne Simmons, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. We will call the hearing to order. This 
hearing of the Subcommittee on General Farm Commodities and 
Risk Management entitled, Agricultural Program Audit: 
Examination of Federal Crop Insurance Programs, will come to 
order. We are pleased to have before us today the Administrator 
of the Risk Management Agency Bill Murphy. It is appropriate 
that our first farm bill audit hearing focuses on the Federal 
Crop Insurance program, because crop insurance has evolved over 
73 years to become a cornerstone of U.S. farm policy. It is as 
important now as ever. Farmers across the country are dealing 
with wild fires, droughts, and I am told, extra water in 
Minnesota, floods. It is also important to observe why the 
Federal Government is involved in crop insurance. That is 
because without Federal involvement, America's farmers quite 
simply would not have crop insurance. Without crop insurance, 
lenders would not likely make loans to producers. After all, 
producers are borrowing more money in a single year than many 
Americans borrow in a lifetime. So if there is ever a role for 
Federal involvement in what would ordinarily be a private 
market activity, this is a prime example.
    Still, as essential that Federal crop insurance is to most 
producers, it has been a long road to get to where we are, and 
we have not yet reached our final destination. Three events 
helped farm crop insurance become what it is today. First, 100 
percent private sector delivery through a strong agent 
workforce; second, the 2000 reform bill that increased producer 
access to high levels of coverage at more affordable prices; 
and third, the approval of revenue products that help producers 
cope with production losses and better market their crops, 
while dealing with price volatility. This last improvement was 
also a private sector innovation.
    With these innovations, participation has more than doubled 
over the past 20 years, and total liabilities protected has 
increased over 600 percent, reaching an expected total of over 
$100 billion in 2011. We have witnessed an increase in risk 
management tools available to producers, most notably the 
revenue products now on the market.
    Despite these successes, there are areas where Federal crop 
insurance must move forward to meet the risk management needs 
of U.S. producers, and this is especially true in the current 
budget climate. Federal crop insurance must be built upon, or 
it will wither and die because it will fall behind producer 
needs. For example, it is great that we have producers covered 
at the 70 to 85 percent coverage levels, meeting deductibles 
ranging from 30 down to 15 percent. These high deductibles grow 
even larger when coupled with artificially low actual 
production histories, or APHs, that further shrink insurable 
yields. But for many producers, only low levels of coverage are 
cost effective. This is true, despite the introduction of 
enterprise units in the farm bill that help producers buy up 
higher levels of coverage.
    Unfortunately, a lot of time has already been lost. Over 
the last 4 years, the Risk Management Agency has taken its 
focus off the task at hand in order to implement cuts to the 
Federal Crop Insurance program, first made in the 2008 Farm 
Bill, roughly a $6 billion reduction. And then in the 
renegotiation of the Standard Reinsurance Agreement, which 
reduced CBO baseline for ag spending by another $6 billion, all 
of which went to deficit reduction. While I was comfortable 
with the farm bill, I was not sold on the wisdom behind the 
SRA. In any case, we do not yet know the full impact of the 
farm bill and SRA will have on crop insurance. This has created 
great uncertainty and has preoccupied the time of RMA, and thus 
agents and companies, with issues that are not the primary goal 
of Federal crop insurance, which is to serve producer risk 
management needs. RMA and the industry must pick up where they 
left off and focus on meeting the needs of farmers and 
ranchers.
    In short, this public-private partnership is necessary. The 
farmer must pay to play. Risk management tools under Federal 
crop insurance are tailored to producer price and production 
risks. Lenders require and the Federal crop insurance has 
contributed to deficit reduction, and fully complies with the 
WTO. This is a good deal for the farmer, the agents, the 
companies creating private sector jobs, and economic activity, 
and good for the taxpayer.
    I look forward to hearing from Administrator Murphy on how 
we can make things better.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    We are pleased to have before us the Administrator of the Risk 
Management Agency, Mr. Bill Murphy.
    It is appropriate that our first farm bill audit hearing focuses on 
Federal Crop Insurance because crop insurance has evolved over 73 years 
to become a cornerstone of U.S. farm policy. It's as important now as 
ever. Farmers across the country are dealing with wildfires, droughts, 
and floods.
    It is also important to observe why the Federal Government is 
involved in crop insurance: it's because without Federal involvement 
America's farmers quite simply would not have crop insurance. And 
without crop insurance, lenders would likely not make loans to 
producers. After all, producers are borrowing more money in a single 
year than most Americans will borrow in a lifetime.
    So, if there was ever a role for Federal involvement in what would 
ordinarily be a private market activity, this is a prime example.
    Still, as essential as Federal Crop Insurance is to most producers, 
it has been a long road to get to where we are--and we have not yet 
reached our final destination.
    Three events helped Federal Crop Insurance become what it is today: 
First, 100% private sector delivery through a strong agent workforce; 
second, the 2000 reform bill that increased producer access to higher 
levels of coverage at more affordable prices; and third, the approval 
of revenue products that help producers cope with production losses and 
better market their crops while dealing with price volatility. This 
last improvement was also a private sector innovation.
    With these innovations, participation has more than doubled over 
the past 20 years and total liabilities protected has increased by over 
600%, reaching an expected total of over $100 billion in 2011, and we 
have witnessed an increase in the risk management tools available to 
producers, most notably ``revenue'' products.
    Despite these successes, there are areas where Federal Crop 
Insurance must move forward to meet the risk management needs of U.S. 
producers, and this is especially true in the current budget climate. 
Federal Crop Insurance must be built upon or it will wither and die 
because it will fall behind producer needs. For example, it is great 
that we have producers covered at the 70% to 85% coverage levels, 
meaning deductibles ranging from 30% down to 15%. These high 
deductibles grow even larger when coupled with artificially low actual 
production histories, or APHs, that further shrink insurable yields. 
But for many producers, only low levels of coverage are cost effective. 
This is true despite the introduction of ``enterprise units'' in the 
farm bill that helped producer's buy-up higher levels of coverage.
    Unfortunately, a lot of time has already been lost. Over the last 4 
years, the Risk Management Agency has taken its focus off of the task 
at hand in order to implement cuts to Federal Crop Insurance, first 
made in the 2008 Farm Bill--roughly a $6 billion reduction--and then in 
the renegotiation of the Standard Reinsurance Agreement, which reduced 
the CBO baseline for agriculture by another $6 billion, all of which 
went to deficit reduction.
    While I was comfortable with the farm bill, I was not sold on the 
wisdom behind the SRA. In any case, we do not yet know the full impact 
the farm bill and the SRA will have on Crop Insurance. This has created 
great uncertainty and has preoccupied the time of RMA, and thus agents 
and companies, with issues that are not the primary goal of Federal 
Crop Insurance, which is to serve producer risk management needs. RMA 
and the industry must pick up where they left off and focus on meeting 
the needs of our farmers and ranchers.
    In short, this private-public partnership is necessary. The farmer 
must pay to play. Risk management tools under Federal Crop Insurance 
are tailored to producer price and production risks. Lenders require 
it. And, Federal Crop Insurance has contributed to deficit reduction 
and fully complies with the WTO. This is a good deal for the farmer, 
the agents and the companies creating private sector jobs and economic 
activity, and for the taxpayer. I look forward to hearing from 
Administrator Murphy on how we can make a good thing even better.
    But first I would yield to the Ranking Member of the Subcommittee, 
Mr. Boswell, for any opening remarks he may have.

    The Chairman. I would like to yield to the Ranking Member 
of the Subcommittee, Mr. Boswell, for any comments he may make.

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A REPRESENTATIVE 
                     IN CONGRESS FROM IOWA

    Mr. Boswell. Well, thank you, Mr. Chairman, and I 
appreciate you having this hearing. I certainly concur with 
much of what you have just said. Pay to play, that is a pretty 
good little term, and I think it rings very true. We will 
probably talk about some of that.
    I also would like to thank everybody for joining us here 
today, as I look around the gallery and see who is here and the 
interest level seems to remain high. Mr. Murphy, welcome back, 
too. We have had a few conversations. It has been a little 
while, so maybe this is a chance for us to catch up.
    But anyway, I come from a state where we have, as you know, 
92,000 farms and more than 30 million acres in production. It 
sounds like we are having an interruption, doesn't it? I 
understand challenges of farmers and those in agricultural 
business face today. It is high risk, as you well know.
    When I retired from the Army and returned home to farm, I 
quickly realized that farming had greatly changed over the 20 
years that I was away. Back then, I had always said that in 
order to farm, a producer needs to have access to a bank and a 
place to buy and sell product, and the inputs. Of course, we 
have gotten much more sophisticated over the last years. I got 
caught right in the farm crisis of the late 1970s, early 1980s. 
After surviving it, which I did, and I also was chairing my 
local place to buy and sell, the cooperative, I realized how 
important a good crop insurance agent was to help me manage my 
risk. I worked with my agent, sure that I was never put in the 
position that I was during the 1980s farm crisis, because I had 
an opportunity to do it.
    I share that story because I understand the importance of 
the crop insurance industry, not only in the State of Iowa, but 
across the country. In 2010, 255 million acres were enrolled in 
crop insurance. Sign up and buy up levels for crop insurance 
have proven that farmers appreciate having additional options 
to help them manage risks; however, certain regions and certain 
crops are underrepresented, we have found. Looking ahead, we 
need to see how we can make the program work for more 
producers.
    Additionally, I have to say that I am opposed to cutting 
funding to the program. Budgets are tight, but tight budgets do 
not mean we must jeopardize the risk management tools that we 
have today, or put in question when improvements can be made in 
the future.
    On that note, this Committee has gone a long ways in 
previous years to address sound fiscal management, and the USDA 
has decreased costs through the renegotiation of the Standard 
Reinsurance Agreement, SRA. I have been concerned with these 
cuts and the effects this negotiation may have on the 
relationship between farmers and their agents. We must 
acknowledge that the crop insurance industry is a business, and 
both the companies and the agents need to make a reasonable 
profit in order to stay in the market.
    Just yesterday, I had an unexpected conversation with a 
senior agent in a small town surrounded by agriculture. I won't 
name the place, but I could if we have a conversation about it. 
He is concerned. It is time to start thinking about passing the 
business on, and with all the questions, whether it is to 
family or somebody, to keep, it is a vital part. It is as 
important as having the bank and the place to buy and sell. 
That agency is important in that community, is my point.
    So with that in mind, at this hearing I will be submitting 
a question when we get into question time to you, Mr. Murphy, 
with the request for a written response on this issue. The 
renegotiation of the SRA has left insurance agents in my state 
and many others perplexed, worried sick, I guess, by a direct 
cap in the SRA on commissions private companies are allowed to 
provide. To me, this is arbitrary and neglects the principle of 
a free market and the expertise and hard work of insurance 
agents our farmers rely on. So I look forward to the response 
and working with you to further enhance the crop insurance 
industry so it provides maximum benefits to producers and 
consumers alike.
    One of the many farm programs we support are highly valued 
crop insurance and must be structured to ensure a free 
marketplace for insurers and agents across the nation. We are 
making great strides to help the American farmer, and I look 
forward to hearing more about the crop insurance program today. 
I thank you again for your testimony, which will be an 
essential means for us to continue to move forward on the next 
farm bill.
    So thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you, sir. I recognize the Chairman of 
the full Committee for any comments he might have.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Thank you, and I would like to thank the 
Chairman and the Ranking Member for holding this first in a 
series of audit hearings to examine programs authorized in the 
farm bill.
    My goal with these hearings is two-fold. First, I want the 
Department to present a spending snapshot of farm programs. Our 
Subcommittees will examine spending trends, confirm whether the 
purposes and goals of the programs we authorize are being met 
successfully. We will look for duplication within issue areas 
to determine program overlap. We will also examine program 
eligibility and whether those eligibility criteria meet the 
needs of our constituents. We will scrutinize waste, fraud, and 
abuse, and look for ways to build on the success the Department 
has already achieved in this area of program integrity. In 
essence, this is what I mean by an audit of farm programs.
    The second purpose of these audits is educational in 
nature. I think it is important that our Committee learn just 
how many programs we authorize in the farm bill, and the amount 
of money we dedicate in each area. I want the Members of our 
Committee to have a holistic view of farm policy before we move 
forward. Too often in the past, Congress has considered a 
piecemeal approach to farm programs, adding layer upon layer 
while not looking at the overall picture to see how these 
programs interact. We are starting with comprehensive audits so 
we can examine each program within the broader context of farm 
policy. These audits ensure that we are operating from the same 
base of knowledge. We represent states ranging from Alabama to 
Oregon, and the diverse constituencies that come with that, so 
we all have unique priorities for farm policy. But while our 
priorities may differ, our facts cannot. So these audits give 
all of us the same data to use in decision making.
    Having the best available data will help us better 
understand farm programs so we can navigate the tough, and I 
mean tough, road ahead. I hope that today we can start a 
dialogue on how to root out inefficiencies so we can continue 
supporting our farmers and ranchers while spending, yes, fewer 
taxpayer dollars.
    It is also important for all of us to understand our 
priorities from the last two farm bills. Before we move forward 
with new policies, we should understand how we got to where we 
are today. Some of the circumstances that shaped past farm 
bills are still relevant today. Others have changed. We all 
know that this farm bill will be developed under a very 
different fiscal climate than the 2008 Farm Bill. The simple 
truth is, we must make some difficult decisions. There are no 
sacred cows, so to speak, and during these tough fiscal times, 
every program, every title will be on the table. This farm bill 
gives the Committee an excellent opportunity to prioritize the 
programs that are working, fix the programs that are broken, 
eliminate the programs that are duplicative. We will make these 
determinations with the help of these audits, along with the 
input from our constituents. We will start this process today 
by taking a serious look at crop insurance to ensure that our 
funds are utilized economically, and the program delivery is 
efficient for farmers and ranchers.
    As we begin the process of developing the 2012 Farm Bill, I 
know the challenge of doing more with less will be foremost in 
our minds. I believe that we can meet this challenge and 
develop thoughtful policies to keep American agriculture 
productive and competitive in the 21st century.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Good morning.
    I'd like to thank Chairman Conaway for holding the first in a 
series of audit hearings to examine programs authorized in the farm 
bill.
    My goal with these hearings is two-fold. First, I want the 
Department to present a spending snapshot of farm programs.
    Our Subcommittees will examine spending trends and confirm whether 
the purpose and goals of the programs we authorize are being met 
successfully.
    We will look for duplication within issue areas to determine 
program overlap. We will also examine program eligibility and whether 
those eligibility criteria meet the needs of our constituents.
    And we will scrutinize waste, fraud and abuse, and look for ways to 
build on the success the Department has already achieved in this area 
of program integrity. In essence, this is what I mean by an ``audit'' 
of farm programs.
    The second purpose of these audits is educational in nature. I 
think it is important for our Committee to learn just how many programs 
we authorize in the farm bill and the amount of money we dedicate to 
each area.
    I want the Members of our Committee to have a holistic view of farm 
policy before we move forward. Too often in the past, Congress has 
taken a piecemeal approach to farm programs, adding layer upon layer 
while not looking at the overall picture to see how these programs 
interact.
    We are starting with comprehensive audits so that we can examine 
each program within the broader context of farm policy.
    These audits ensure that we are operating from the same base of 
knowledge. We represent states ranging from Alabama to Oregon--and the 
diverse constituencies that come with that--so we all have unique 
priorities for farm policy. But while our priorities may differ, our 
facts cannot. So these audits give all of us the same data to use in 
decision making.
    Having the best available data will help us better understand farm 
programs so that we can navigate the tough road ahead.
    I hope that today, we can start a dialogue on how to root out 
inefficiencies so we can continue supporting our farmers and ranchers 
while spending fewer taxpayer dollars.
    It is also important for all of us to understand our priorities for 
the last two farm bills. Before we move forward with new policies, we 
must understand how we got where we are today.
    Some of the circumstances that shaped past farm bills are still 
relevant today. Others have changed. We all know that this farm bill 
will be developed under a very different fiscal climate than the 2008 
Farm Bill.
    The simple truth is that we must make some difficult decisions. 
There are no ``sacred cows,'' so to speak, and during these tough 
fiscal times, every program, in every title, will be on the table.
    This farm bill gives the Committee an excellent opportunity to 
prioritize programs that are working, fix programs that are broken, and 
eliminate programs that are duplicative. We will make those 
determinations with the help of these audits, along with input from our 
constituents.
    We will start that process today by taking a serious look at crop 
insurance to ensure that our funds are utilized economically and 
program delivery is efficient for our farmers and ranchers.
    As we begin the process of developing the 2012 Farm Bill, I know 
that the challenge of doing more with less will be foremost in our 
minds.
    I believe that we can meet this challenge and develop thoughtful 
policies to keep American agriculture productive and competitive in the 
21st century.

    The Chairman. Thank you, Mr. Chairman. We have one vote, 
and I thought we would just try to do a rolling vote, but it 
came quicker than I thought it was going to. After--do you have 
any comments, Ranking Member? Okay.
    Why don't we take a quick break, run across the street, 
vote, and come back? Then all of us will have access to hear 
you talk, and it won't be as disruptive that way. So we will 
take--the meeting will recess, subject to call of the chair.
    [Recess.]
    The Chairman. I have one piece of administrative duty, the 
gentleman from Indiana, Mr. Stutzman, is not a Member of the 
Subcommittee, but has joined us today or will join us in a 
moment. I have consulted with the Ranking Member, and am 
pleased to welcome him in joining in questioning of the 
witness.
    So at this point in time, Mr. Murphy, you have the floor 
for your opening comments. Thank you for being here.

STATEMENT OF WILLIAM J. MURPHY, ADMINISTRATOR, RISK MANAGEMENT 
                   AGENCY, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.

    Mr. Murphy. Chairman Conaway, Ranking Member Boswell, 
Members of the Subcommittee, as Administrator of the Risk 
Management Agency, I am pleased to meet with you today to 
discuss the latest developments in RMA, and the progress and 
challenges of the Federal Crop Insurance Program. Along with 
Secretary Vilsack's leadership, I have the goal to administer 
the Federal Crop Insurance Program in a manner that provides 
effective risk management services to all farmers and ranchers, 
regardless of their location or the size of their operation.
    The Secretary and I are aware that in today's economy, it 
is important that the program be cost effective and give a fair 
value for taxpayers' dollars. I am proud that I can confidently 
say that we are doing just that.
    Crop insurance has become an integral part of the business 
life of the large majority of American farmers and ranchers. 
They would find it difficult, if not impossible, to continue 
without the protection provided by this part of the farm safety 
net. Many lenders now require crop insurance coverage in order 
to make operating loans to crop and livestock producers. Many 
producers use crop insurance as collateral for loans, as well 
as provide support for forward pricing their crop.
    Today, over 250 million acres of farms and ranches are 
covered by Federal crop insurance, for an overall participation 
rate exceeding 80 percent for the major crops. The value of 
insured crops is at a record high. In 1994, program liability 
was less than $14 billion. This year, it will exceed $100 
billion. More producers buy higher levels of insurance now, and 
more specialty crop producers participate in the program than 
ever before.
    Our unique and successful relationship with our private 
partners, 15 insurance companies, and the agents who deal 
directly with farmers and ranchers is the foundation of this 
program. Producers purchase crop and livestock insurance from 
an insurance agency operating and living in their communities. 
This relationship levers the respective strengths of the public 
and private sectors. The 2011 crop year, with widespread 
flooding in some areas and record drought in others, has been a 
true test to the crop insurance program. My staff and I are 
closely watching all developments to ensure that producers get 
all the protection provided by their policies.
    The preventive planning coverage available in most policies 
has been of extreme importance this year in areas where 
standing water and water-logged soils have prevented producers 
from getting into their fields. In drought-stricken areas, the 
compensation provided for reduced yields will be extremely 
important in helping producers to survive until next year. In 
years like this one, the value of this critical safety net is 
made clear.
    The $6 billion in savings credit created through the 
renegotiated Standard Reinsurance Agreement in 2010 went 
towards reducing the Federal deficit and supporting high 
priority risk management and conservation programs. By 
containing program costs, these changes also ensure the 
sustainability of the crop insurance program for American 
farmers and ranchers for years to come.
    RMA's Comprehensive Information Management System, CIMS, is 
of clear importance to producers. Working with the Farm Service 
Agency, RMA began in 2007 to provide access to over 12,000 
users of RMA, FSA, and crop insurance companies as the single 
source of RMA and FSA program information for producers, crop 
acreage, and production. The next stage of this information 
sharing is now underway, and the Department's efforts with 
cross functional representation from RMA, FSA, NRCS, and NASS 
one-stop reporting for farmers, and standardizing programs 
across the Department is our goal.
    As those of you acquainted with the dairy farmers may be 
aware, the Livestock Gross Margin dairy plan of insurance ran 
out of funding this year. Congress makes $20 million available 
a year for all livestock programs, and the popularity of a 
newly-designed dairy program exhausted these funds in March, 
halfway through the fiscal year. We look forward to again 
funding LGM dairy in the new fiscal year.
    RMA continues to make significant progress in preempting 
fraud, waste, and abuse through the expanded use of data 
mining. RMA, FSA, and the crop insurance companies have 
preempted tens of millions of dollars of improper payments 
through quality control, data mining, and other measures. RMA 
is constantly identifying ways to balance competing needs to 
make our product less susceptible to fraud, while seeking to 
provide responsive, useful risk protection tools for farmers.
    Again, thank you for the opportunity to participate in this 
important hearing. I look forward to discussing the Crop 
Insurance Program with you, and to responding to any questions 
you may have.
    [The prepared statement of Mr. Murphy follows:]

Prepared Statement of William J. Murphy, Administrator, Risk Management 
        Agency, U.S. Department of Agriculture, Washington, D.C.
    Chairman Conaway, Ranking Member Boswell, and Committee Members, I 
am pleased to meet with you today to discuss the latest developments in 
the Risk Management Agency (RMA), the progress and challenges of the 
Federal crop insurance program, and the status of the Standard 
Reinsurance Agreement (SRA) and its benefits to the agricultural 
community and the American taxpayer. My staff and I work daily to 
validate the utility of current insurance products--making certain we 
offer the best risk management protection possible for all of America's 
farmers and ranchers. The agency, along with our fifteen approved crop 
insurance companies, provide risk management tools that are compatible 
with international trade commitments, create products and services that 
are actuarially sound and market driven, harness the strengths of both 
the public and private sectors, and reflect the diversity of the 
agricultural sector.
    Crop insurance is a vital part of the farm safety net and has 
become an integral part of business life for a large majority of 
American farmers and ranchers. They would find it difficult to continue 
providing the United States and the world with an abundant supply of 
food, fiber and fuel without the protection provided by this part of 
the farm safety net. Many lenders now require crop insurance coverage 
in order to make operating loans to crop and livestock producers, and 
many producers use crop insurance as collateral for the loans.
    There is a unique and successful relationship between RMA and our 
private partners, the 15 approved insurance companies, and the agents 
who deal directly with farmers and ranchers. Producers purchase Federal 
crop or livestock insurance from insurance agents operating in their 
communities, who sell the insurance on behalf of the 15 insurance 
companies. This relationship leverages the respective strengths of the 
public and private sectors. The insurance companies provide Federal 
crop insurance under reinsurance agreements with the Federal Crop 
Insurance Corporation (FCIC), administered by RMA.
    The 2011 crop year, with widespread flooding in some areas 
accompanied by severe drought in other areas, has been a test of the 
crop insurance program. My staff and I are closely watching all 
developments to insure that producers get the protection provided by 
their policies. The Prevented Planting coverage available in most 
policies has been of extreme importance this year in areas where 
standing water or waterlogged soil prevented producers from getting 
into their fields until past the time for planting. In drought stricken 
areas, the compensation provided for reduced yields will be extremely 
important in helping producers to survive. In years like this one, the 
value of this critical safety net is made clear.
Brief History
    Participation in the crop insurance program increased significantly 
following changes enacted in 1994 by Congress. For example, fewer than 
100 million acres of farmland were insured under the program in 1994. 
Today, over 250 million acres of farm and ranch lands are covered by 
Federal crop insurance, for an overall participation rate exceeding 80 
percent for the major crops.
    As the amount of insured acreage has increased, so too has the 
liability, or value of the insurance in force. In 1994, program 
liability was less than $14 billion. Industry estimates suggest 2011 
program liability could exceed $100 billion. The crop insurance program 
has seen sustained growth as demonstrated by the increasing proportion 
of acres insured at buy up levels over the last decade. Today, over 90 
percent of all policyholders purchase buy-up levels of coverage. Of 
note is the significant level of participation by specialty crop 
producers. The overall participation rate for specialty crop producers 
is about 75 percent, which is fairly comparable to the 83 percent 
participation rate for the major program crops. Important fruit, nut 
and vegetable states California (71%), Florida (91%), and Washington 
(68%) each score well in Federal crop insurance program participation.
    This growth has been accomplished in an actuarially sound manner as 
required by Congress and the program is working well. Over the last 2 
decades, premiums (producer premiums added to premium subsidies) have 
been sufficient to cover the indemnities paid to producers plus a 
reasonable reserve, as directed by the Federal Crop Insurance Act.
    In 2000, Congress enacted the Agricultural Risk Protection Act 
(ARPA) that expanded the role of the private sector allowing entities 
to participate in conducting research and development of new insurance 
products and features. With the expansion of contracting authority, RMA 
can enter into contracts for research and development of new and 
innovative insurance products. Private entities may also submit 
unsolicited proposals for insurance products to the FCIC Board of 
Directors (Board) for approval. If approved by the Board, these 
unsolicited insurance products are eligible to receive reimbursement 
for research, development and maintenance costs, in addition to any 
approved premium subsidies and reinsurance.
    ARPA also removed restrictions on the development of insurance 
products for livestock. Authority was added to allow the Board to 
create an expert review panel to provide assistance to the Board and 
RMA in evaluating proposed insurance products for feasibility and 
actuarial soundness. Premium subsidies to farmers were increased to 
encourage producers to purchase higher insurance coverage levels and to 
make the insurance program more attractive to prospective producers. 
Throughout all of this, RMA has implemented many innovations to keep up 
with industry advances as well as customer demands.
Standard Reinsurance Agreement
    On June 10, 2010, USDA released the new reinsurance agreement and 
announced that $6 billion in savings were created through this action. 
Two-thirds of this savings went toward paying down the Federal deficit, 
and the remaining \1/3\ was used to support high priority risk 
management and conservation programs. By containing program costs, 
these changes also ensure the sustainability of the crop insurance 
program for America's farmers and ranchers for years to come.
CIMS & ACRSI
    The 2002 Farm Bill required the Secretary of Agriculture to develop 
a Comprehensive Information Management System (CIMS) to be used by the 
Farm Service Agency (FSA) and RMA in the farm programs they administer. 
CIMS was made available for use in September 2007. It provides access 
for over 12,000 users from RMA, FSA and the crop insurance companies as 
a single source of RMA and FSA program information for producers, crop 
acreage and production. The next stage of information sharing is now 
underway with the Acreage/Crop Reporting Streamlining Initiative 
(ACRSI). This is a Departmental effort with cross functional 
representation from RMA, FSA, Natural Resources Conservation Service, 
andNational Agricultural Statistics Service.
    The objective of ACRSI is to establish a common USDA framework for 
producer commodity reporting in support of USDA programs and to 
establish common data standards of information used for producer 
commodity reporting. ACRSI and CIMS will facilitate `one-stop' 
reporting of producer information and greater data sharing of data 
among government agencies. This will provide for greatly improved 
integrity and accuracy of the data collected and reported to USDA. RMA 
and FSA will be able to efficiently identify discrepancies, cases of 
misreporting, and potential fraud, waste, and abuse, thus reducing the 
potential for improper payments. Furthermore, these efforts will save 
time and money for the government, producers and companies by reducing 
reporting and data management burdens.
Livestock Products
    ARPA authorized RMA to offer insurance products for livestock 
producers and provided $20 million in funding to cover administrative 
and operating (A&O) and premium subsidy costs for pilot livestock 
insurance plans each fiscal year. RMA currently reinsures eight 
livestock products, all of which were developed and submitted by 
private parties through the authorities contained in Section 508(h) of 
the Federal Crop Insurance Act. There are two basic insurance models 
used to offer livestock insurance: Livestock Risk Protection (LRP) and 
Livestock Gross Margin (LGM). LRP provides protection against 
unexpected declines in the price of certain livestock--feeder cattle, 
fed cattle, lamb, and swine. LGM provides protection to livestock 
producers against unexpected increases in feed costs or unexpected 
declines in prices for the insured livestock product. Gross margin is 
the market value of the insured livestock product minus feed costs. As 
we have noted previously, the $20 million in annual funding for all 
livestock programs was exhausted in March because of the increased 
popularity of LGM-Dairy. Thus, none of the livestock programs are 
currently available. They will be offered again in Fiscal Year 2012 
when an additional $20 million in funding becomes available.
Program Integrity and Data Mining
    In conjunction with the improved quality control requirements in 
the new SRA, RMA Compliance has revised its work plans to reflect a 
more balanced approach between quality assurance and investigating 
program abuses. In a time of declining resources and increased 
responsibilities, effective internal controls provide a significant 
cost-benefit compared to identifying and prosecuting program abuse 
alone. RMA is reviewing company operations and internal controls to 
determine the success of their efforts to address crop insurance 
program vulnerability concerns.
    RMA continues to make significant progress in preempting fraud, 
waste and abuse through the expanded use of data mining. ARPA directed 
RMA to employ data mining technologies to program compliance and 
integrity efforts, and provided the funding necessary to support these 
activities. ARPA also provided a role for FSA to assist RMA in further 
program compliance and integrity. RMA subsequently entered into a 
contract with the Center for Agribusiness Excellence (CAE) at Tarleton 
State University to develop and maintain appropriate data warehousing 
and data mining capabilities. Annually, CAE produces a spot-check list 
of producers engaging in questionable behaviors which is provided to 
FSA for further investigation. With the assistance of FSA offices, RMA 
and the insurance companies conduct growing season spot checks to 
ensure that claims for losses are legitimate.
    These efforts have been highly successful as the cumulative cost 
avoidance from data mining and related activities from 2001 through 
2010 is estimated to be almost $840 million, based on our analysis of 
the changes in loss experience for those people placed on the spot-
check list. In light of the success of the spot-check program, the new 
SRA broadens the use of data mining to help direct company efforts at 
detecting and investigating suspect behaviors. We believe the targeted 
company reviews enabled by data mining will be more effective and 
efficient than the random review process of previous years.
    While RMA, FSA and the crop insurance companies have preempted tens 
of millions of dollars of improper payments through quality controls, 
data mining, and other measures, RMA is constantly identifying ways to 
balance competing needs to make our products less susceptible to fraud 
while seeking to provide responsive, useful risk protection to farmers. 
We still have work to do and improvements to make, but we are making 
good progress in our fight against waste, fraud and abuse in the 
Federal crop insurance program.
Premium Rates
    One of the most important considerations for the Federal crop 
insurance program is the premium cost for producers. If premium rates 
are too high, producers will not participate in the crop insurance 
program. If premium rates are too low, actuarial performance will 
deteriorate. RMA continually seeks to improve its premium rating 
methodology and maintain actuarial balance. RMA recently commissioned a 
comprehensive review of its rating methodology by a panel of outside 
experts. A preliminary draft of the review was posted for public 
comment. The final draft, as well as the response to public comments, 
is available on RMA's website. The review supported RMA's overall 
approach to generating premium rates based on historical loss 
experience, and provided a number of recommendations for potential 
improvements that RMA is pursuing. The most critical of these 
recommendations is for RMA to determine if all historical losses should 
be given the same weight in determining current premium rates. Work on 
the reweighting of historical loss experience is currently ongoing.
Concept Proposals
    The 2008 Farm Bill provided an alternative for producers and 
private entities to submit to the FCIC Board, proposals for insurance 
coverage for agricultural commodities not traditionally served, and to 
improve current insurance coverage. Private entities are authorized to 
submit Concept Proposals for plans of insurance to the Board for 
approval of an advance payment of up to half of their estimated 
research and development costs to assist them in developing a completed 
508(h) insurance product. Completed 508(h) products receive 
reimbursement of the balance of their research and development costs 
and up to 4 years of maintenance expenses if approved by the Board. To 
date, the Board has received 23 Concept Proposals and approved 11 for 
advance payments totaling approximately $1.7 million.
Combination Policies (COMBO)
    On March 30, 2010, RMA published the final rule for the Common Crop 
Insurance Policy, commonly known as the COMBO policy, to be effective 
for the 2011 crop year. The COMBO policy combines five plans of 
insurance into a single plan of insurance. This new policy makes risk 
management decisions simpler for the producer and enhances program 
efficiency by reducing inconsistencies, duplication, and paperwork. 
Furthermore, by combining the previous five plans of insurance into a 
single plan RMA eliminated a primary source of confusion and error in 
the administration of the Federal crop insurance program. Another 
benefit of the COMBO policy is the use of a single rating and pricing 
component so all coverage is consistent in terms of protection and 
cost. Similar efforts are underway to combine RMA's area-based programs 
(Group Risk Plan--GRP, and Group Risk Income Protection--GRIP) into a 
single plan of insurance.
Information Technology Modernization
    The Information Technology Modernization (ITM) project, RMA's 
technology reengineering initiative, began in earnest in FY 2008, based 
on funding received in the farm bill. Phase I was completed in FY 2010, 
and included significant achievements to deploy the majority of the 
actuarial tools required to generate 2011 insurance offers and provide 
for validation of detailed policy data received from crop insurance 
companies that is used as the basis for calculation of expense 
reimbursement and risk sharing between RMA and the companies in 
accordance with the SRA. Accepted data is also used for future rating 
and publicly generated reports. Rollover of the 2011 crop year 
actuarial data was accomplished and the first filing for the 2012 crop 
year took place on April 30, 2011.
    Phase II development continues and focuses on corporate reporting 
providing data reporting and analysis capabilities. On-demand analysis 
and standardize reporting will be available on multiple years of 
actuarial, policy, and financial data. The analytical environment has 
been set up and development has begun on standardized reports. ITM 
Phase II also includes Regional Office Exceptions (ROE) written 
agreement processing. ITM Phase II is progressing towards scheduled 
operations in July 2011. Enhancements to the ITM production system have 
been implemented for actuarial processes, policy processing, premium 
calculations, and other Phase I capabilities.
    RMA supports many information technology functions using private 
contractors. The contract for IT services is generally for 5 years and 
is due to expire in 2011. In January 2011, RMA competitively awarded a 
new contract for IT services until 2015. Accounting and other corporate 
reporting capabilities will be implemented in the new system as part of 
this contract, and is scheduled to be complete at the end of the 
calendar year.
Organic Crops
    RMA continues to move forward in improving crop insurance coverage 
for organic producers so they will have viable and effective risk 
management options like many of the conventional crop programs. 
Consistent with the 2008 Farm Bill, RMA contracted for research into 
whether or not sufficient data exists upon which RMA could determine a 
price election for organic crops, and if such data exists, to develop a 
pricing methodology using that data. Also included in the contract was 
research into the underwriting, risk and loss experience of organic 
crops as compared with the same crops produced in the same counties 
during the same crop years using nonorganic methods. Three reports have 
been completed from this study.
    The first report outlined research into data that exists today that 
could support price elections for various organic crops. The second 
report outlined a proposed methodology for development of a price 
election for organic cotton, corn and soybeans. The third report 
presented the results of the contractor's comparative analysis of loss 
experience for organic crops and conventional crops that were produced 
in the same counties during the same crop years.
    RMA intends to establish dedicated price elections for organic 
crops where supported by data and sound economic pricing principles. 
The first of these organic price elections became available for the 
2011 crop year. In addition, RMA will continue to capitalize on 
improved data collection and sharing of organic production and price 
data occurring throughout USDA, an initiative to better leverage the 
resources of all of our agencies to address this important segment of 
agriculture.
    RMA will continue to evaluate the loss experience of both organic 
and conventional practices to ensure that premium rating is 
commensurate with the level of risk for each. This includes revising 
surcharges for those areas or situations that merit such consideration.
Quality Adjustment
    Another area of continued challenge to the program involves 
providing coverage for reduced quality in a harvested crop. RMA 
provides quality adjustment for many crops, based primarily on 
standards contained in the Official United States Standards for Grain, 
such as test weight, kernel damage, etc. Wheat, for example, is 
eligible for quality adjustment when poor quality results in a grade 
worse than U.S. No. 4. While producers and the crop insurance companies 
have been generally supportive of RMA's quality adjustment provisions, 
in some instances producers would like to see quality adjustment begin 
when their grain quality loss is not as severe as current rules 
require. Additionally, producers contend that quality adjustments in 
the program do not always reflect what they are actually discounted in 
the market place. This is most often heard earlier in the harvest 
season when the extent of poor quality is not fully known and grain 
buyers tend to have more severe discounts.
    One of the challenges for RMA's organic program is to assure that 
the availability of Federal crop insurance does not inappropriately 
affect market dynamics, such as buyers imposing larger quality 
discounts and relying on Federal crop insurance to make producers 
whole. Similarly, crop insurance is not meant to provide coverage for 
the marketing errors of producers or for a general deterioration in 
market conditions--unless, of course, such deterioration is a covered 
cause of loss. RMA continually strives to provide standard quality 
discounts that apply to all producers nationwide so everyone is treated 
equitably and the crop insurance program does not promote or become 
subject to abusive market practices. RMA has continued to work with 
grower associations and others to continually improve the effectiveness 
of its quality adjustment provisions.
          * * * * *
    Mr. Chairman, this concludes my statement. Thank you for the 
opportunity to meet with you today. We look forward to working with you 
and Committee Members and will be pleased to provide whatever 
assistance you may request. I would be pleased to answer any questions 
you and other Members of the Committee may have.

    The Chairman. Well thank you, Mr. Murphy, being under the 
wire at the 5 minute mark. I appreciate that.
    The chair reminds Members they will be recognized for 
questioning in order of seniority of Members who were here at 
the time of the start of the hearing. After that, Members will 
be recognized in order of arrival. I appreciate Members 
understanding.
    I will now recognize myself for 5 minutes. In my opening 
statement, and Mr. Boswell, in yours as well, you talked about 
the importance of the private-public partnership for delivery 
of crop insurance. From time to time, we hear rumors of--that 
partnership may need to go just totally public, and with the 
public delivery of the system. Are you and your staff committed 
to this public-private partnership, because it sure looks like 
it works to us.
    Mr. Murphy. Yes, indeed. In fact, the Secretary reiterated 
that when meeting with one of the trade groups a couple weeks 
ago in his office. There is no doubt in my mind that we are 
enjoying this participation level today, due to that unique 
relationship with private agents and their companies.
    The Chairman. All right. You mentioned the importance of 
your information technology improvements. Will you be able to 
finish all of that under the existing budget authorities?
    Mr. Murphy. We will do the best we can, sir. It is moving 
along. We are having some very good success. I am glad to see 
we had it up and running. We were able to bring the COMBO 
product up this year. So it is functioning. I am concerned for 
the out-years. Next year, we don't have the funding anymore 
that was provided in the farm bill. I am sure I will be up here 
asking for additional funding for that project, but that is of 
great concern to us.
    The Chairman. Well, I think it is going to be important, 
Mr. Murphy, that you lay that out for us specifically because 
we have choices to make, and those need to be informed choices. 
That information has an impact on that, and the Committee needs 
to understand that.
    Mr. Murphy. I would like to add that also the more complex 
our programs become, we really need that IT capacity in order 
to deliver these programs to farmers.
    The Chairman. Well, also the impact on this budget on FSA 
and their ability to deliver their side of the house is in the 
same way impacted by that.
    At one point in time, speaking of data mining, there were 
some barriers between RMA and FSA data so that the folks at 
Tarleton could not fully exploit everything available. Have 
those barriers been taken down? Is there anything left that we 
need to do?
    Mr. Murphy. No, actually we are making a lot of progress. 
There are--continues to be problems between the data between 
RMA's data and FSA's. We are actually working through the SURE 
Program. We are fixing a lot of that data. I think as CIMS 
comes up and running, it will be extremely helpful in 
identifying where we have differences between the two 
programs----
    The Chairman. But in terms of legal barriers?
    Mr. Murphy. Oh, no, we are working through that. In fact, 
FSA is just about prepared to publish their new rule, which 
will provide us the flexibility we need.
    The Chairman. Okay. So there is something in that regard to 
fully exploit that, it benefits all of us.
    Mr. Murphy. Right.
    The Chairman. Can you walk us through a little bit about 
how the 508(h) program is working, and maybe some examples 
currently in the pipeline?
    Mr. Murphy. Okay. Actually, we have three different ways 
that we can develop programs. One of them is that we can go out 
and contract ourselves for the development. The other way is 
where the private sector actually comes into the board of 
directors and presents a program. They can go the 508(h) route, 
which is that they bring a fully developed program to the board 
of directors for approval. Another route with the last farm 
bill was the concept proposals where folks can actually come 
into the board of directors, explain what they would like to 
develop, and then we can get partial funding for that 
development, and then it follows the 508(h) procedure after 
that.
    It seems we are getting new programs out in the street. 
That seems to be working well to that effect. There are some 
issues or some concerns being raised about some other programs 
that are higher priority that should be done first, but that is 
just the way the system is established. But we are working 
along at it.
    The Chairman. All right. The Members know that there is a 
questionnaire that asks about each of the major components. You 
sent yours in. I would like to go to the question on page 5, 
number 10. It says Utilization (Participation) Data. If you 
could walk us through that, the number of policies stayed 
exactly the same for 10 years. Can you just walk across that--
those columns and help us understand what each one of them 
means?
    Mr. Murphy. Okay. I think--actually, I think the next chart 
is much better for looking at the changes over years.
    The Chairman. Well just tell us what that means. What is 
the--we talked about $100 billion in coverage out there, but 
that bottom line for--just says $71 billion.
    Mr. Murphy. Okay, yes. Well that's actually in 2010 it was 
in the $70 billion range, $78 billion I think is what it is at 
right now. But with the increase in commodity prices between 
2010 and 2011 is where we expect to see the increase to over 
$100 billion.
    The Chairman. Well, we have talked about participation, but 
the number of policies has stayed dramatically the same for 
that----
    Mr. Murphy. No, it is actually--well, there hasn't been a 
lot of variation since 2001.
    The Chairman. Okay. And then the loss ratio and the loss 
cost columns, can you explain them to us real quick?
    Mr. Murphy. Okay. Loss ratio is just the experience of the 
program. That is the ratio of premiums to indemnities paid. The 
good story here is that you can see the 10 year average, we are 
at .837. That means for every dollar in premium, we pay out 
83 cents, so that the program is actually performing very 
soundly at this time. In fact, if you go back 20 years, you are 
still under a dollar loss ratio. So we are very proud of the 
changes in that.
    Loss cost ratio is just a measure of how much of the 
indemnity--how much of the liability is being used by the 
indemnity. We actually use both of these ratios in order to 
come up with the rates for the program.
    The Chairman. All right, thank you, and I will yield back. 
Mr. Boswell, 5 minutes.
    Mr. Boswell. Thank you.
    Again, going to our continuing or running conversation, Mr. 
Murphy. We found, in our hearings across the country a month 
ago, what we need out there, available to our producers, is 
affordable, and viable crop insurance. I think you are trying 
very hard to do that. I am not--this is extremely important. 
You think of the high cost inputs, and out in cotton country, 
wheat country, and so on, but you know, they like to talk about 
the price per bushel of corn when it is doing well. You never 
hear any conversation about the cost of input, and I think it 
has become important for all of us on this Committee that we 
ought to be making an issue of that. The public out there 
doesn't really get the idea of what it costs to put that crop 
in. It is capital intensive and this crop insurance is terribly 
important.
    So anyway, I want to ask you this question that we referred 
to, and then I will leave it with you. The Risk Management 
Agency has redefined the definition of agent compensation 
relative to the release of the 2011 Standard Reinsurance 
Agreement. The restrictions outline the acquisition section of 
the manager's bulletin on agent compensation are very troubling 
because they restrict an agent's ability to sell his agency or 
her agency at the full market value. In many instances, the 
sales of these family-owned crop insurance agencies are relied 
upon for retirement income and for future financial planning. 
In addition, such restrictions will also hinder a company's 
ability to grow. The only option for company expansion will be 
through the acquisition process, which favors large companies 
over small companies, and will lead to less choice for 
consumers.
    So how does the agency acquisition provision in the 2011 
SRA improve the Federal Crop Insurance Program and strengthen 
the safety net for farmers and is the RMA willing to revisit 
this provision to address these concerns? I will give you this 
in writing as well after this is over with, but I would like 
for you to comment on it.
    Mr. Murphy. Actually, that provision is not in the SRA 
itself. That provision is actually in follow-up procedures that 
we provided after the----
    Mr. Boswell. Well, let us address the point then.
    Mr. Murphy. Right. There is nothing in there that restricts 
the sale of an agency. What they are talking about there, and 
where this becomes an issue is if a company buys an agency and 
then employs the principle of that agency and continues to pay 
the agents--all we are saying there is that that sale, if the 
principle stays involved in that agency as it becomes part of 
the company, is that that counts toward compensation. There is 
a great concern that that particular scheme was being utilized 
to evade the caps on each commission.
    So you know, I want to make clear that there is nothing 
that restricts it.
    Mr. Boswell. Well, at least----
    Mr. Murphy. Okay, that----
    Mr. Boswell. It limits----
    Mr. Murphy. It limits potential sales. You could say that.
    Mr. Boswell. Okay.
    Mr. Murphy. You could say that. Now this is in a procedure 
that we actually got--we just finished getting comments from 
the agents. We sent it out to the agents to get their comments 
as well. We are incorporating all of that now. We have not 
issued it yet as a final procedure, but----
    Mr. Boswell. I hope we can have some conversation on that. 
I would look forward to that. Seriously, when I share with you 
the person that I talked to, I didn't call him. He called me. I 
talked to him for--at any other time during this whole process 
we have not had conversations.
    Mr. Murphy. I am sure it is because of----
    Mr. Boswell. But anyway, he comes in with this concern, and 
coming from this individual, as I am sure many others, it is a 
genuine concern and we need to talk to him about. So I would 
trust you to do that, and if you might give us a few points on 
how--what you might have to say about the pilot program, 
concerning livestock.
    Mr. Murphy. The livestock programs?
    Mr. Boswell. Yes.
    Mr. Murphy. Actually, the big news has been the dairy gross 
margin coverage. Historically, we get $20 million a year for 
the livestock program since ARPA, since 2000. We have actually 
only been spending about--of that $20 million, about $3 or $4 
million a year. What changed this year is that the dairy 
industry requested through the developer of that program to 
make two changes. One of them, to provide a subsidy, which was 
not in there before and is not really in any livestock 
programs. We do have a small one in some of the others, but 
that is just to offset some additional costs. So there is no 
true subsidy like we see in the crop programs. They requested a 
subsidy and they also requested that the premium payment be 
changed from the beginning of the insurance period to the end, 
like the rest of the Crop Insurance Program. The developers 
agreed to that and we sent it--we put it out just 4 months ago. 
Growers were extremely interested in the program. Like I said, 
they have used up all of the funding that we had available for 
dairy, which was about 75 percent of that $20 million.
    Mr. Boswell. Thank you. I will do a follow-up later.
    I yield back.
    The Chairman. Thank you, Mr. Boswell.
    Mr. Neugebauer, 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Administrator Murphy, this will come of no surprise to you. 
I want to talk about something that has been a big concern of 
mine for a number of years, and that is shallow losses. For 
some of my colleagues that are new to the Committee, basically 
a lot of producers can purchase an APH policy and get 65, 70 
percent coverage, but in many cases if they want to buy up that 
coverage, when you get above that level, the premium becomes 
extremely expensive. In fact, it is almost a 1:1, a dollar of 
premium for a dollar of benefit. Obviously that makes the 
economics--so what in many cases can happen for our producers, 
they can have anywhere from a 25 to 30, 35 percent loss, and 
not receive any coverage from their policy. You know, obviously 
there are very few businesses I know that can sustain a 30, 35 
percent loss in their margin and be profitable.
    So there are a lot of potential solutions to that out 
there, and some have said to offer additional premium support 
for APH to make it more cost effective to buy up. Others have, 
as you know, I have a plan that would provide a supplemental 
opportunity, based on area yield or county yield.
    So what are your thoughts? Do we stick with the APH, or do 
we look at some of these supplemental opportunities?
    Mr. Murphy. Well, I know the SURE Program that was 
instituted with the last farm bill was actually supposed to 
address that, and basically utilizing the crop insurance 
indemnity for an additional payment under--as a disaster 
payment. I have not gotten too involved in SURE. Anecdotally I 
understand there are concerns in different parts of the 
country, whether it is achieving what it was intended to do. 
You know, how it is actually working day-to-day, I really am 
not the best person to talk to, but I would be very happy to 
work with you towards the farm bill and look for some----
    Mr. Neugebauer. Yes, I think part of the SURE Program is it 
is triggered on a state-wide basis, and you know, Texas is a 
pretty big state, and so you can have one condition in one area 
of our state and others. Well, I think that is going to be an 
important part of that, because I think as we begin to look at 
the basket of safety net for producers, price, it doesn't do 
you any good to have any price safety net if you don't produce 
a crop.
    Mr. Murphy. I think also it requires a disaster declaration 
in the county and the adjacent counties. So if only a small 
percentage of farmers gets hit with a problem, it potentially 
is not going to trigger the county.
    Mr. Neugebauer. Absolutely, and I want to go on to another 
area. I know that Plains Cotton Growers initiated an effort on 
cotton seed, pilot program, and I guess this was the first year 
of that program. Can you kind of give us a little thumbnail of 
how that program has worked and the results of that?
    Mr. Murphy. We haven't gotten the acreage information in 
yet. That is probably going to be another couple months away, 
but I can tell you anecdotally from our offices down there and 
the companies there, it is extremely popular. This is something 
that those growers are very interested in. That seed is 
becoming--especially when the prices drop, that seed becomes a 
bigger part of their revenue for the year. So it is critical to 
not only have the lint, but the seed as well, get the offset 
for the seed.
    So from what I understand, the growers are very happy with 
it. We worked with the developers and we actually made it 
extremely simple to administer the program, so I think the 
agents are happy with it. So overall, I think it has been a 
success.
    Mr. Neugebauer. You know, recently when they renegotiated 
the SRA, I think RMA kind of divided the country into three 
groupings. Group one was Illinois, Indiana, then group two was 
Alabama, soon to be some of the other states, and group three 
was kind of the hodge podge, all the way from Alaska to Nevada 
to Vermont.
    Can you kind of give me some perspective of how those were 
grouped?
    Mr. Murphy. Okay. The reason we had done that--and that was 
something new we introduced for the first time with this array. 
In the past, the underwriting--the ability to make underwriting 
gains or loss were equal across the country. What we tried to 
do this time, as an effort to try to get that same high level 
of service we see in the Midwest and other parts of the 
country, we reduced the company's ability to make underwriting 
gains in the five--what normally are referred to as the I 
States in the Midwest. Actually, we increased the opportunity 
to make underwriting gains in other parts of the country, and 
what--so we just--for the first year in 2011 we are going 
through it. I think, from the modeling we have so far, it seems 
to be working. We have talked to agents who were saying that 
actually in some of the parts that historically had low 
commissions--that this is actually making it--more companies 
are becoming interested in getting into these other parts of 
the country, and that is what we wanted to do. So we wanted to 
spread that competition as well.
    Mr. Neugebauer. Were the premiums different in the 
groupings?
    Mr. Murphy. Pardon?
    Mr. Neugebauer. Were the premiums different in those----
    Mr. Murphy. Only by nature of whatever the experience was 
for those crops, yes.
    Mr. Neugebauer. Nothing to do with groups?
    Mr. Murphy. No, not from the grower's standpoint. No, no 
difference at all.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. Mr. Courtney, from 
Connecticut.
    Mr. Courtney. Thank you, Mr. Chairman. Thank you for 
holding this hearing.
    Mr. Murphy, I wanted to go back to the dairy pilot program 
that you were talking about earlier. Obviously, the high demand 
is an interesting signal that the interest is there. You know, 
one of the farms in my district that was one of the subscribers 
to the insurance was sharing with me his experience with it, 
which you know, he has a moderate-sized herd farm. He signed up 
for it kind of as a test run, because looking out on the 
horizon, it is pretty clear that risk insurance is going to be 
part of the world of that industry.
    His concern obviously was cost, a little bit, which I think 
a lot of the smaller farms are nervous about, but the other 
issue was the complexity of the product. I mean, he was 
describing to me the system for calculating the monthly 
premiums, and you know, we are pretty comfortable in 
Connecticut with insurance products----
    Mr. Murphy. Right.
    Mr. Courtney.--as you can imagine, but this one was pretty 
sophisticated. The message was that they got to run a farm. I'm 
trying to sort of calculate what their payments are. It took 
some fairly difficult and time consuming efforts.
    I wonder if you could walk through about whether that is a 
complaint that you are hearing, and whether there are ways to 
address it. You know, simplicity is always a good thing.
    Mr. Murphy. Yes, indeed. You know, I haven't heard too many 
complaints about that, but it does not surprise me, because it 
is a great Gilmore complex and our normal Crop Insurance 
Program for corn or soybeans or something like that. Because 
what you are actually doing, you are looking forward into the 
next 11 months and you are comparing the prices of the feed 
versus the price of the milk itself using the futures contract, 
and that is what makes the margin. So you are insuring that 
margin month to month in the out-years.
    So instead of looking at--if I was a corn grower, I am 
looking at one insurance period. When you are actually a dairy 
farmer, you are looking at potentially 11. They have to go out 
there, so it has a great deal of complexity.
    The program has not been evaluated yet. That will probably 
occur within the next couple years. What I encourage is they 
can either send comments in to us and we can share them with 
the developer, or we can get the address of the developer and 
the grower can go directly to them. But like I said, these--
they instituted a major change just this year, so I believe 
they will be open to looking at comments that growers might 
have, but I think the very nature of that type of a program is 
going to be more complex than something like the corn the guy 
probably insures already.
    Mr. Courtney. I mean, is it too soon to say whether people 
have been actually filing claims?
    Mr. Murphy. Yes, it is.
    Mr. Courtney. Okay.
    Mr. Murphy. Yes, it is too soon now, definitely. But I 
think it certainly shows their concern with the volatility that 
they have been seeing in pricing for the product. And I 
understand that the industry has put forward something very 
similar, something that they would like to see potentially in 
the farm bill. I have not seen what they are suggesting, but I 
know they have been working on a product.
    Mr. Courtney. Right. Thank you, Mr. Chairman. I yield back.
    The Chairman. I thank the gentleman. Before we move to our 
side, the Ranking Member of the full Committee has slipped in. 
Do you have any comments?
    Mr. Peterson. Yes, thank you, Mr. Chairman.
    I guess what I would like to know, we made these 
significant changes in the farm bill and the SRA. When are you 
going to have solid information about how this actually sorted 
out? You probably don't have that yet, I assume.
    Mr. Murphy. No, no. We are already seeing some of the 
effects, Congressman, especially in the area of agent 
compensation. This has been a bit tricky for the companies who 
try to get through. We are doing it new for the first time at 
cap and how it is implemented. We are exceeding the cap, as no 
surprise for 2011, with the way the commodity prices are going. 
We are seeing areas like California, where commissions had 
dropped a good deal more than we thought they would. The 
industry, the companies themselves have expressed some concern 
here, so we are going to take a look at that to try to even out 
the pain of reducing the A&O overall in the program. Some of 
the companies are interested in having that discussion.
    On the underwriting gains side, all I have seen is some 
studies that have been done on the new underwriting gain 
potential, underwriting loss potential, and they have not been 
bad at all, especially with the prices we are seeing this year. 
Now we are getting off to a bad start, and so I guess--I 
imagine that has the companies nervous. But it is probably 
going to be, I would say, November or December before we have a 
good handle on what the impacts would be on underwriting, gains 
or losses.
    Mr. Peterson. Okay. And then how about on the agent 
situation, the same timeframe?
    Mr. Murphy. Yes, we are already hearing the concerns from 
the agents on it, and we are already talking to some agents. 
They are coming up with some ideas. We are getting questions, 
can anything be done since this is sort of locked in place? 
Basically, as long as we don't increase the costs, we do have 
some flexibility, all right, but it would require all the 
companies to agree to make the change. And those discussions 
will probably just get started within the next couple months.
    Mr. Peterson. So you know, depending on when we actually 
write the farm bill, but say it is next year, we will probably 
have pretty good information?
    Mr. Murphy. Certainly on the A&O side, yes, the 
administrative and operating expense side that would provide 
the companies, and we will have some preliminary information on 
the underwriting gain potential, underwriting loss potential as 
well.
    Mr. Peterson. Okay. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Peterson.
    Mr. Austin Scott, of Georgia, for 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and 
Administrator Murphy, thank you for joining us today.
    Thinking back to when I was a child, I can remember quite 
vividly my grandfather, who was a producer, telling me that he 
thought the insurance program was the most important thing that 
the Federal Government did for the farmer, and was, quite 
honestly, maybe the only thing that we would have to do for the 
farmer if we had it right. I also majored in risk management 
and insurance at the University of Georgia, which is the best 
school on the face of the Earth, I might add.
    But my question gets back to this. One is I would say, and 
you can check these numbers, while the average loss ratio is 
83.7 percent, the total loss ratio over 10 years is even a 
little better and closer to 77 percent, is that----
    Mr. Murphy. Yes.
    Mr. Austin Scott of Georgia. So our total loss ratio is 
even a little better than our average loss ratio, because of 
the years where we got hit so hard. I also remember my 
grandfather talking about people who had learned to game the 
insurance system, if you will, and so as we work forward with 
this insurance program, I want to make sure that we have the 
best program possible for the good farmer. It gets back to 
something you have talked about a little bit before and I would 
like you to expand on. Is somebody whose claims ratio--and I 
know you have talked about it more from the standpoint of a 
discount for consistently good producer----
    Mr. Murphy. Right.
    Mr. Austin Scott of Georgia.--but virtually every insurance 
product out there in America is risk-adjusted, based on the 
conduct of the individual. And so, as we go forward with that, 
would you talk with us about your ideas for having somebody who 
makes multiple claims versus somebody who is not making those 
claims, someone whose loss ratios are out of line, if you will, 
consistently. How do you intend to handle them paying more into 
the system, the risk adjustment there?
    Mr. Murphy. Okay. Overall, first I will just say that from 
a standpoint of integrity, it is actually imbedded in every 
function for the program. It is critical that we continue to 
try to do the best we can to combat fraud, waste, and abuse. We 
have some very advanced tools, data mining, which has been very 
successful, which has helped us identify schemes going on. We 
have some very large cases occurring right now with tobacco in 
North Carolina as a result of the findings of data mining. That 
is an important tool, so that will help us, but you are 
absolutely right. When you get down to the county level of this 
program, if somebody is abusing that program, that county is 
paying for it. The neighbors are paying for it. We rate on a 
crop county basis in this program, and so as a result, next to 
data mining, probably the most important tool that we have in 
identifying and fighting fraud are neighbors who do not want to 
see their premiums go up because of something somebody is 
doing.
    We keep working more and more. We work very closely with 
FSA on a spot-check list that we use to identify anomalies 
through data mining. FSA spot-checks those through the year. 
That has been extremely effective. And so I think as long as we 
try to keep up with the new schemes, because as you tighten 
things up, a certain group of people will always look for ways 
to get money for doing little. We will keep addressing that, 
going forward.
    Mr. Austin Scott of Georgia. I think you are right, I mean, 
with what you said. I think my FSA agents could probably 
predict for you who was going to file the claim.
    Mr. Murphy. Who you need to watch.
    Mr. Austin Scott of Georgia. And so could the majority of 
the farmers in the community. And so I guess I hope that we 
will work towards an adjustment in that, and make sure that we 
are creating the program that works for the good producer. And 
I understand that a good producer is going to have some losses. 
That is just the facts of life, but I just hope that you will 
keep moving down that path and keep us informed. And I do, 
again, want to point out the importance, I believe, in the 
private-public partnership here where we are the insurer, but 
we have private agents out there actually handling the 
insurance product.
    Thank you, I yield back the rest of my time.
    The Chairman. Thanks, Mr. Scott.
    Mrs. Roby for 5 minutes.
    Mrs. Roby. Thank you, Mr. Chairman, and thank you, Mr. 
Murphy, for being with us today.
    Just to build upon what Mr. Scott was talking about, in 
preparation for this hearing we heard from our folks back home 
who shared similar concerns, that we should be rewarding 
farmers for good performance history with crop insurance, 
either through lower premiums or increased coverage levels. 
More consideration needs to be given to the individual 
experiences that would not disadvantage good producers in a bad 
county experience situation.
    I want to ask you a specific question about the group risk 
insurance program. It was very, very popular throughout the 
South and was used pretty heavily in Alabama. And the RMA stops 
the program in many counties, due to insufficient data. So I 
want to know is RMA currently exploring any avenues that would 
allow reintroduction of this program, or a similar program in 
areas that previously lost access to those products?
    Mr. Murphy. Right. I think there is a two-part answer. One 
of them is I think NASS is working harder with farm groups, 
realizing the importance of getting this data into NASS. So I 
think there is an emphasis on growers of making sure that 
everybody in the county reports to NASS the correct numbers.
    The second thing we are doing is we are looking at our 
group risk plan, as well as a few other changes to the actual 
production history basis of the program. One of the things we 
will be looking at is perhaps having area group plan 
participants provide their yields every year, that way we would 
be able to use our own data instead of having to rely on NASS's 
program alone. So we are looking at that as a way to address 
that.
    Another thing we could do is look at combining districts. 
That gets a little tricky if you have a lot of changes in the 
geography of the area, but that is another thing we can take a 
look at. But we are very aware of that and we are looking at 
ways that we can bring the program back into those counties, as 
well as expand into other counties.
    Mrs. Roby. Good. Thank you for that.
    I just want to make this as a comment. You can respond if 
you want, but right now under the current rules, in some 
situations a farmer is required to carry a failed crop to 
harvest, and you know, this comes from our groups back home, so 
they spend more money to actually harvest the crop than the 
crop is going to bring. I just want to point that out, that 
that needs to be addressed. It is detrimental in some 
situations.
    But I want to go back and--let me see, I have a little bit 
more time. You mentioned in your testimony that lenders now 
require crop insurance coverage in order to make operating 
loans, and many producers use collateral for loans. Can you 
tell us why crop insurance has become so important to the 
producers in securing financing?
    Mr. Murphy. I think it is because the grower knows up front 
what his protection is going to be, and the banker knows up 
front that the production is there. It is not only their 
knowledge of the crop insurance, but bankers have become 
extremely knowledgeable of the actual mechanics of the 
programs, and so they will suggest certain types of products 
that they want the grower to purchase.
    Another thing that they can do is that they can have the 
indemnity sent to the bank, or make the indemnity payable to 
both the bank and the grower. Now the grower does not always 
like that, but if it helps secure a loan, I think it is a good 
thing. So it has just become something the bank can depend on. 
Now with the advance of revenue coverage as well as yield 
coverage, I mean, for a grower to be able to go into a banker 
and say I am guaranteed to make this much money per acre, that 
is pretty powerful source of collateral for that bank. So I 
believe that is why it has become--we don't need Congress to 
take any action during the year. We don't need the Secretary to 
take action. The program just works, and if a grower has a 
loss, he gets paid.
    Mrs. Roby. Thank you so much, Mr. Chairman. I yield back.
    The Chairman. I thank the gentlelady.
    Mr. Schilling for 5 minutes.
    Mr. Schilling. Thank you, Mr. Chairman.
    What I wanted to just address--thank you for coming out--
duplication and overlapping of services, basically. One of the 
concerns about the duplication of the acreage reporting, 
including the cost of administering and the frustration that it 
causes our producers. Given that many of the producers have 
multiple farms with differing acres and crop rotations on each 
farm, it seem the process drastically increases the margin of 
error and creates twice as many opportunities for the mistakes. 
Why can't we just avoid--I think you know where I am going with 
that.
    Mr. Murphy. Yes, I understand your point exactly, sir, and 
I am very pleased to tell you we are making progress in this 
area. Through the Comprehensive Information Management System, 
the CIMS Program, we are pulling together the acreage reporting 
dates for both FSA and RMA. I think next year, spring crops 
2012, will see the first dates of that, and they will be in the 
northern tier of the country. That has always been a source of 
angst to growers out there.
    We are working toward, through that same project, a single 
port reporting. If the farmer wants to go to his FSA county 
office and report, why can't the agent download that 
information and use it himself, and vice versa? If it is a 
rainy Thursday afternoon, why can't the grower sit and certify 
at home and have it sent to both programs? That is the end goal 
of the CIMS project. Under Secretary Scuse is the primary 
proponent of it in the Department, and I am happy to say that 
we are moving very quickly toward that.
    Mr. Schilling. Very good. And then just my last--have there 
been any issues in reconciling a crop insurance reduction? We 
talked a little bit about that, so I am going to pass on that. 
One of the things I am a big proponent, like Mr. Scott had 
indicated, is the public-private partnerships. I think those 
are huge. One of the things in the Illinois 17th District where 
I am from, that is the one thing I continue to hear from the 
farmer is leave our insurance alone. But with that, I 
appreciate your time, sir.
    Mr. Murphy. Thank you.
    The Chairman. I thank the gentleman.
    Mr. Crawford, from Arkansas, for 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman, and thank you, Mr. 
Murphy, for being here.
    Can you provide any insight into differences in 
participation rates between crops and/or regions? For example, 
in 2010, according to RMA data about 68 percent of rice, 
particularly in Arkansas, acres were insured. By contrast, 
nearly all of Texas cotton acres were insured. Are there unique 
concerns with certain crops or regions?
    Mr. Murphy. Actually, there is indeed. I am happy to report 
that we are seeing increases. One of the concerns we often get 
is between major program crops and specialty crops. We are at 
83 percent participation on the major program crops. We have 
come up to 75 percent for specialty crops, so we are seeing 
progress there.
    I think the introduction of the additional subsidy for 
enterprise units has also been extremely helpful, especially in 
your area, for both rice and cotton down there. It reduces the 
premium tremendously. Growers have flocked to those programs 
and we are seeing increases there. That alone is not going to 
solve it. We are seeing probably Arkansas, Mississippi, 
Alabama, that area is where we are seeing lower participation 
than other parts of the country. We are actively working with 
commodity groups down there to try to improve the programs. We 
are looking at the dates in the program to make sure that they 
are the correct dates we should or should not be using, such as 
planting dates, reporting dates, end of insurance dates. We are 
taking a look at that. We are even getting into the policies 
themselves. We have been having great meetings with the rice 
growers and working at some additional coverage the growers 
would like to see for downed rice, which results when 
hurricanes come through the area and they have to deal with the 
additional costs of harvest. Hopefully that is going to see 
some progress in the next couple years. It has been very 
successful work between us and the group down there.
    So we are using multiple ways to do it. I think it is 
slowly coming along, I just think we have to keep working with 
it. Program integrity is another big issue. There have been 
issues with program integrity in the past. Farmers have to be 
convinced that their premium dollars that they are paying out 
is going only to the legitimate losses. Our compliance office 
is putting extra effort into that area to show that.
    So we are doing a number of things, going forward, and as 
we get into the farm bill, I would be more than happy to work 
with you and your staff in additional ways we could look at 
increasing participation.
    Mr. Crawford. Excellent. I have just got half of my time 
left here, so let me ask you this. Is that flooding that has 
resulted from the Army Corps of Engineers breaching levies 
along the Mississippi and Missouri Rivers an insurable cause of 
loss under the Federal Crop Insurance Program?
    Mr. Murphy. Yes, it was, and there was some consternation 
at the beginning when the Corps first had decided to 
intentionally breach some of those levies. We worked with the 
Corps. They provided us with some information of what would 
happen if they did not breach the levies where they did. 
Additional damage would occur to crops downstream, uncontrolled 
damage where they couldn't tell us what additional damage would 
occur, especially in the northern part, the Missouri levy. The 
water was actually topping the plugs at the point that they 
blew them. If a levy is topped, the integrity of that structure 
is compromised severely and will probably fail anyway. As we 
moved further down along the Mississippi, the Corps was able to 
show that actually if they did not breach those levies where 
they did, the potential for the levies alongside with more 
intensive cropping, higher value cropping would be compromised. 
We were able to make the determination up and down the 
Mississippi River that they were insurable events. The 
companies have been informed. They tell me that they are moving 
loss adjusters in now to start working with the growers there.
    Yes, we were able to address all those concerns.
    Mr. Crawford. Excellent. Okay. Real quick, back to rice. 
You covered that pretty well, but I just want to ask, what is 
the current participation rate of rice and buy-up coverage and 
levels of protection, and how does this participation rate 
compare to other major crops like corn, soybeans, wheat, and 
cotton?
    Mr. Murphy. I don't have that information right with me. I 
can tell you it is lower than you see in the major crops. I 
will get that to you, though.
    [The information referred to is located on p. 35.]
    Mr. Crawford. Any ideas what we can do to increase that?
    Mr. Murphy. Again, I think it is working with the growers 
and seeing how we can improve that program. I mean, it was the 
development of revenue coverage that brought in the corn and 
soybean growers to the levels we have seen, so program 
improvements will bring in growers, once they believe their 
risks are being addressed by our programs. So I think it is a 
matter of just continuing to work until we get it right.
    Mr. Crawford. Excellent. Thank you, Mr. Murphy. I 
appreciate it, and I yield back.
    The Chairman. I thank the gentleman.
    Mr. Huelskamp, for 5 minutes.
    Mr. Huelskamp. Thank you, Mr. Chairman. I appreciate your 
appearance here today, Mr. Murphy, and I come from a fairly 
large district, and doing town halls across the district, you 
learn not to complain about certain things. You complain about 
water, in my area it is a drought, and in the other end of the 
district it is flooding. We had both of those. But here 
consistently is the important piece, crop insurance and the 
product you produce and we will be watching that very closely.
    As one proponent noted, that given the situation, this is 
really going to test the program and we are really going to 
have to perform like we never have before.
    With that in mind, particularly with the--not only the 
currently higher but much more volatile commodity prices, how 
does that impact, in your mind, and how do you adjust for that 
and maintain the solvency of a program with the type of changes 
we have seen and are likely to see in the next 6 months.
    Mr. Murphy. Right. Actually, there is a lot of data 
available for us to go back and stress test our rates against 
historic results of the futures market, which we do. In 2008, I 
think we saw the biggest drop ever for the major commodities on 
the futures market from the beginning of the year to the end of 
the year. We actually ended up with a positive loss ratio 
nationwide, even though the companies probably did a claim on 
just about every corn or soybean policy out there that had 
revenue. And so we ended up with a positive price.
    We continue to work with--have others review our actuarial 
rating methods, so we have outsiders look at what we are doing 
and validate or suggest changes, which is done and we 
incorporate the changes. It is a constant work in progress, and 
I am very happy that it has been successful to date. With the 
commodity prices we are seeing today, if a farmer goes ahead 
and forward contracts his price, he has a massive risk and crop 
insurance is just necessary to protect that grower in the event 
that the price is to drop or go considerably higher.
    Mr. Huelskamp. I appreciate that. How much room for margin 
of error do you have? I mean, there are suggestions out there 
with the current economic environment with items--whether it is 
in this building or the Federal Reserve, that impact 
volatility. How much margin of error--I mean, 2008 was a year, 
2011 might be one for the books as well.
    Mr. Murphy. Yes, indeed. We take volatility into account 
when doing the rating of the program. That is what--in 2008, 
that is what led to such large premium bills for farmers. It 
wasn't the yield portion of the risk, it was the volatility 
factor associated with the revenue portion of the risk that 
they saw. So I think we have well-addressed the margin of 
error. Only experience will let us know, but like I said, we 
have a lot of data we can go back and take a look at, and 
again, stress test the program, which we do.
    Mr. Huelskamp. I appreciate that, and 2008 is a good year--
an appropriate year to talk about. I think 2011 might be one we 
talk about for many years as well.
    The second question would be--and I had looked through the 
materials closely and didn't see this--but as far as taxpayer 
costs and other programs, how does that vary across the crops, 
and is that in the information you provided us?
    Mr. Murphy. We can provide more information on that. The 
taxpayer costs of the program changes dramatically on the 
experience that we have for that year. For the last 10 to 20 
years, except for a little blip in 2002, we have had positive 
loss ratios, so I think the program is well worth the money. 
The subsidy--the premiums are subsidized and average between 60 
or 70 percent--60 and 65 percent. So if we have $10 billion in 
premium this year, well the subsidy is going to be up about $6 
billion in the program. So the cost goes along with the 
commodity prices as well. There are a lot of variables in the 
program, the loss ratio, the losses that the companies pick up 
versus the government, so----
    Mr. Huelskamp. And the high cost over the last decade would 
have been how much in what year?
    Mr. Murphy. As far as the total cost of the program? I 
would have to pull that together for you. I can do that, the 
last 10 years.
    [The information referred to is located on p. 35.]
    Mr. Huelskamp. Okay, I appreciate that.
    Thank you, Mr. Chairman. I yield back my time.
    The Chairman. Thanks, Mr. Huelskamp.
    Mr. Gibson, 5 minutes.
    Mr. Gibson. Thanks, Mr. Chairman, and I appreciate, Mr. 
Murphy, you being here today.
    I represent a district in upstate New York, and your agency 
enjoys a good reputation up there for how quickly you process 
claims and--so given the current climate, the natural disasters 
that have hit across the country, including in my district, we 
have had flooding along the Hudson River. It mentioned in your 
assessment whether or not you will be able to keep up with the 
timeliness of the pay-outs and is there something about that 
program that I should carry back? I am about ready to meet with 
all my farmers; I have a quarterly panel. So if you want to 
give me some assessment as to how you think that is going to 
go, and if there are any best practices that you think I should 
carry back, I would welcome them.
    Mr. Murphy. Okay. Because of the nature of the losses we 
are seeing this year, just about every part of the country is 
dealing with something this year. I don't think I have ever 
seen anything like it, and I have been with the program for 30 
years. A lot depends on how the rest of the year goes, the 
total amount of claims that will have to occur. I have talked 
to the companies. They feel very confident that they have an 
adequately trained workforce. They are moving people around the 
country, which they routinely do to be able to address 
situations like this. I do believe we will be able to make the 
30 day turnaround required, once the insured signs the claim to 
the payment of the claim. The companies have told me that they 
feel good about it, so I am confident going through we will be 
able--the companies will be able to provide that same level of 
service that growers have become accustomed to.
    Mr. Gibson. That is encouraging. Is there anything that in 
this period that would be helpful for me to convey to the 
farmers in terms of best practices?
    Mr. Murphy. If they have a loss, notify their company 
immediately. That is probably the most important thing you 
could bring back. You don't want to get into a situation where 
the company is notified late in the year and they don't have 
the ability to look at that crop. That becomes extremely 
problematic, so I would say stay in touch with your company, 
stay in touch with your agent.
    Mr. Gibson. Thanks very much.
    The second area I would like to cover is, like every place 
else around the country, our dairy farmers and beef farmers, 
the beef industry in the 20th, we are having issues with input 
costs. I am curious to get your assessment as the ongoing 
activities in the Senate with regard to ethanol. Your 
assessment, how significantly that would impact input costs?
    Mr. Murphy. Okay. Again, that is a little bit out of my 
area of expertise. I usually look toward economists for their 
advice on it, and I will continue to do so. I am happy to 
report that we do have programs for livestock that are gross 
margin. Basically you are insuring that margin between the 
price of the finished product and the price of the input cost. 
It has been a slower uptake in cattle than we have seen in 
dairy, but it is an excellent program for times like these, so 
I would encourage growers to take a look at that, if they are 
concerned about both input and future price for their 
commodity.
    Mr. Gibson. Thanks very much, Mr. Murphy, and I appreciate 
your being here.
    I yield back.
    The Chairman. I thank the gentleman.
    Mrs. Hartzler, for 5 minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr. 
Murphy, and I would like to echo the comments that have already 
been said here by my farmers. Your part of the farm bill is 
probably the most popular part, and everyone, all of us--I am a 
farmer, too--appreciate what you do.
    I wanted to ask regarding the cost--of course, we are 
looking at budget issues now. In Fiscal Year 2010, it says the 
crop insurance costs were $4.7 billion. I just wondered, can 
you give me kind of a rough breakdown of how much of that went 
to claims and how much went to the administrative costs and 
operating costs?
    Mr. Murphy. Actually, we are a very small agency. We have 
less than--we have about 500 employees overall, so when you are 
talking discretionary costs of the program, we are only talking 
$78 million to $80 million being the overall cost of the 
program of discretionary.
    The major costs that we see in the program are the 
producer's subsidy that they get paid, the potential 
underwriting gains that the companies can make on a good year, 
and then the administrative and operating expense that we 
provide to the companies in order to deliver the program. Crop 
insurance, unlike private property and casualty insurance, you 
don't--the farmers don't pay that in their premium bill. We 
provide a separate payment to the companies to deliver the 
program for it. In the negotiation of the Standard Reinsurance 
Agreement, we actually reduced both the potential underwriting 
gains for the companies, as well as the administrative and 
operating costs provided to the companies, so we are certainly 
going to see a reduction. Probably the wildcard in the whole 
thing is the premium subsidy, going forward. Like I said, as we 
have seen these record commodity prices, that brings up the 
producer premium subsidy payment.
    Mrs. Hartzler. But in Fiscal Year 2010, how much money for 
those various things, or maybe you could get that to me later?
    Mr. Murphy. I can provide that to you on a year basis. I 
will break it out for 2010 and get that up to your office.
    The information referred to is located on p. 36.]
    Mrs. Hartzler. Yes, that would be fine.
    Another question, we have about an 80 percent crop 
insurance participation, right, on your major crops, and Fiscal 
Year 2009, about $79 billion worth of crops were insured, but 
yet, the overall value of crops in the U.S. that year was $169 
billion. So in other words, about 53 percent of the value of 
crop production was actually insured. So how does that 
reconcile that 80 percent participation rate, and given the 
price volatility and extreme weather, does that concern you?
    Mr. Murphy. Yes, it always concerns me. There are quite a 
few crops we haven't reached yet. That is a priority with the 
Agency, to figure out how we can expand coverage to the 
remaining crops out there. Another thing to keep in mind is 
that our yield guarantees are based on a 10 year average, all 
right, so that basically makes the APH guarantee lower than 
expectations. If you have seen some of the modeling on how 
yields have been increasing, especially over the last 10 years, 
so you are going to see a lag with the guarantee compared to 
what expectations of the crops are today. I think that adds a 
lot to it.
    Mrs. Hartzler. Definitely, that is true. Your testimony 
states there is only $20 million available annually to cover 
administrative and operating costs and premium subsidy costs 
for the pilot livestock insurance plans, so can you tell me a 
little bit about that? Are there pilot livestock insurance 
plans generally available, are they limited geographically now? 
How are they--given the finite resources, are they based on a 
first come, first served principle to sign up? How much would 
livestock insurance plans cost the government if it was widely 
available, given its popularity? Three questions there.
    Mr. Murphy. Well, I think there are a couple issues 
available here. I wouldn't look at livestock programs that we 
have, such as the revenue programs and the dairy program being 
the only--we have a pasture range land forage program out there 
now, that is widely available. We are expanding it as we have 
the funding to do so. That is something I think livestock folks 
generally participate in. A lot of livestock farmers also grow 
corn, alfalfa, soybeans. They can insure those.
    We only got the authority to actually start insuring 
livestock in the ARPA Act in 2000, so it has been a slow ramp-
up. I think Congress wanted to limit how much we wrote until 
they could see the experience of the programs. I think that 
impacts--that is why they limited it to $20 million. That is 
something I think I would be very interested in discussing with 
the Committee as we get into the farm bill, taking a look at 
that and seeing if that is realistic anymore.
    I think cattle guys have been slow to come into the program 
overall. Cattle folks are very independent, as I am sure you 
are aware, if you work with cattle guys out there. It is a 
different breed. I think that is maybe a barrier as well.
    Mrs. Hartzler. Okay. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thanks, Mrs. Hartzler.
    Mrs. Schmidt, 5 minutes.
    Mrs. Schmidt. Thank you, Mr. Chairman, and thank you, Mr. 
Murphy, for coming today.
    In the last few years of higher commodity prices, and given 
the flooding and drought across the country this year, 
including the flooding in my own district, how do you ensure 
that farmers claims are adjusted, processed, and reviewed in a 
timely manner, and are there ways to speed up that process?
    Mr. Murphy. Well, the companies themselves who reentered 
into the reinsurance agreement, they are responsible for that 
part of the program. They keep a core of well-trained 
individuals in claims adjusting on board. When we have a year 
like this, they bring others in the community who have worked 
in the past on loss adjustment, have been farmers themselves or 
farm managers. They bring them on to help to bring their 
numbers up, and they get it done. Rarely do I hear, even in 
2008, do I hear concerns that it has taken too long to get a 
claim paid.
    There are some concerns that the audits that have to go on 
in some of these claims, that has been voiced in the past. What 
I do to address that is I do what I can to inform farmers that 
this whole program is predicated on you having records to 
support your yields. Please make sure you have those together, 
and that way the audit will go quicker in the event that the 
grower is chosen.
    So I think overall the industry is well geared up to 
address these challenges across the nation. I think things will 
go smoothly, as they have in the past.
    Mrs. Schmidt. Thank you. Along the same lines, I understand 
that risk sharing between the USDA and the private insurance 
companies is spelled out in the Standard Reinsurance Agreement. 
However, can you please give a general explanation of the risks 
borne by the government and those borne by the insurance 
companies, and do you think the current arrangement is an 
appropriate balance of risk sharing?
    Mr. Murphy. Yes, I can do my best. We take a look at, of 
course, the lower the loss ratio of the year, the lower the 
claims, the more the companies assume the risks; the higher it 
gets, the more the government assumes the risks. That is why 
the government is involved in this program. If there wasn't a 
need, we would not be here. The industry would be able to 
handle the problem. They are concerned that such a systemic 
loss would occur in the Midwest and the high plains that they 
would not be able to address it, that is why we are here. So 
that is where we put the majority of our protection on the 
higher levels, once you get above $1.20 loss ratio where we are 
paying $1.20 for every dollar we get in.
    What we have seen over the last 10 years, the companies 
have been picking up most of those losses because it has been 
very good loss ratios nationwide. It is a very complex formula 
in the program, but I think generally as the higher the loss 
ratio is, the more the government assumes, the more risk the 
government assumes.
    I think it is also important that the private reinsurance 
market worldwide participates in this program by taking some of 
that residual risk after it passes through the SRA, so we 
actually have some of that being sent off into the worldwide 
international market.
    Mrs. Schmidt. Thank you. For several crops, while a large 
percentage of planted acres are insured, they are insured at a 
minimum CAT or buy-up coverage levels. Cotton and rice are good 
examples of this. What can be done to increase coverage for 
these crops?
    Mr. Murphy. Yes. I think, especially if you look at 
geographical areas, that is where you see the lower amount of 
coverage. Rice growers, especially in the central South, they 
have wells to get their water so they are always going to be 
able to get water. It is a perception of risk. Their big 
concern is hurricane or disease that comes through, and how 
often that occurs? It is all in perception of risk. I think it 
is just continuing working with the growers, that is what we 
can do? We have not always had high participation in corn, 
soybeans and wheat. It is only by making changes to the 
program, ensuring that the program addresses their risks that 
they have to deal with that we have seen the participation 
increase. I think it is the same with these other crops. It is 
just constantly working with them.
    Mrs. Schmidt. Thank you, and one final--and this is more a 
personal view. Some of the critics back home that are fiscal 
hawks think that all of this is nonsense and it is not needed. 
How would you address that?
    Mr. Murphy. I think this year is an excellent example of 
how important the farm safety net is to farmers out there. Food 
security is a priority with this country. I would say all these 
programs are extremely important.
    Now, I agree the cost of government has gotten high. I 
think everybody does. We are looking for ways to become 
efficient and ways to reduce the costs to taxpayers, but the 
farm safety net is critical. I would hate to be put in a 
position where we do not have these programs available, and 
there would be widespread losses across the country.
    Mrs. Schmidt. Excellent answer, thank you.
    The Chairman. I thank the gentlelady.
    Mr. Murphy, on the statutory loss ratio is one, I guess, 
which would mean we lose a dollar for every dollar of a premium 
we put in. Right now, it comes to average 83 cents on every 
dollar. If we push that 83 cents up to a dollar, do you think 
that would increase--would that have an impact on 
participation, getting other people into the program by 
lowering the costs?
    Mr. Murphy. You mean if you get----
    The Chairman. Lower the premium down to that 83 cents----
    Mr. Murphy. Yes, I think once you get under--our target 
loss ratio now over time is $1. Once you start getting below 
that as your target, it starts getting very complex.
    The Chairman. How do you push it up? How do you get to that 
dollar?
    Mr. Murphy. You--there are a number of different ways, 
participation, working with the rate itself. Now, we also have 
a reserve in there, okay, because the law requires we keep a 
reserve. So even though the 83 cents is there, that means we 
have a 20 cents reserve for future years.
    The Chairman. Well, let me ask if the--I get that, because 
you are going to have a year like 2 years ago when it was 
$1.40. If your loss ratio was closer to the dollar, would you 
have greater participation in the program because the premiums 
would be lower?
    Mr. Murphy. Yes, I think generally you can say that.
    The Chairman. Okay.
    Mr. Murphy. But again, you have to look at the length of 
time you are looking at to do that analysis. When we do rate 
making, we actually use about 30 to 35 years of data.
    The Chairman. Okay. The reserve is pegged at what?
    Mr. Murphy. The reserve is just required by statute that we 
have so much money----
    The Chairman. How much? Is that per----
    Mr. Murphy. It doesn't actually say in the law. We try to 
stay around 10 to 20 percent.
    The Chairman. Of premium?
    Mr. Murphy. Of premium reserve in there, yes. That means 
you want to be around 90 cents loss ratio. Once you start 
getting up above 90 cents, then we would be concerned that we 
had the correct----
    The Chairman. All right. You never ever hardly hear about 
actual production histories, I bet. What are you doing to try 
to--given how long it takes those to move and the impact it 
has, and continued droughts in our part of the world, pushing 
those down. What is on the table?
    Mr. Murphy. Okay. We are doing a number of different 
things. We are taking a look at the rating itself, and how we 
weight the years. Like I said, we use 30 years of data to rate 
the program. There has been a big issue we have had, especially 
with soybean and corn growers, is how you rate those individual 
years. I think we all now are on the same page, and that is 
probably the most recent years need to be weighted more than 
the earlier years. We are working in that direction. We are 
trying to adjust the yield drag on individual yields. If I am a 
corn grower in Illinois, 10 years ago my yield and my APH, is 
that really relative to what the expectations are this year? We 
have movement going on in that, and hopefully growers will see 
some of that progress in 2012.
    So we are doing things like that to try to address it. We 
are also working with growers, manufacturers, how we can 
incorporate some of this GPS technology to improve some of the 
efficiencies in the program. For instance, as a farmer is 
planting, why can't that information not be sent directly to 
the agent and start populating the acreage database? As I am 
harvesting and I have a loss, why can't that data start 
populating a claims form for me? So it is looking at 
efficiencies like that in the program to make it more--a better 
product for farmers out there.
    The Chairman. This may sound a little self-serving. Earlier 
Mr. Scott made some unfounded specious comments about some 
small university in Georgia. Tarleton State has the data mining 
program. Do you know off the top of your head what that value 
gets pushed back to the taxpayers as a result of that work?
    Mr. Murphy. Sure. We are looking at cost avoidance, since 
the inception, to now of about $840 million.
    The Chairman. Versus the cost of----
    Mr. Murphy. Probably--we are $4 million a year, probably 
$40 million at the most.
    The Chairman. Okay. I guess the point being that as we move 
into these austerity programs, I am hopeful that programs that 
actually--I don't want to say make money--you say cost 
avoidance.
    Mr. Murphy. Exactly.
    The Chairman. Exactly. Most of the folks out there want to 
do it right, and there are a few that don't. And so as you--as 
we trim your budget, so to speak, I am hopeful that the data 
mining issue is one that we see value in. It won't score that 
way necessarily, because of the way our complex rules work, but 
that data mining program, wherever it is, is fully exploited, 
not only in this part of the farm bill, but I suspect there is 
some applications in food stamps or SNAP and other programs in 
which that data mining concept could be used and exploited.
    Mr. Murphy. Yes, indeed.
    The Chairman. Mr. Boswell, do you have any further 
questions?
    Mr. Boswell. No further questions.
    The Chairman. Mr. Murphy, thank you. This is one of those 
rare circumstances where we actually got the entire hearing 
done in a reasonable time, in spite of a vote. I have some 
official words to read here somewhere.
    All right. Before we go on, I want to ask the Ranking 
Member if he wanted to say anything. Under the rules of the 
Committee, the record of today's hearing will remain open for 
10 calendar days to receive additional materials, supplementary 
written responses, a couple of questions that were asked, from 
the witness to the questions posed by a Member.
    This hearing on the Subcommittee on General Farm 
Commodities and Risk Management is adjourned.
    [Whereupon, at 11:38 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
 Supplementary Material Submitted by William J. Murphy, Administrator, 
         Risk Management Agency, U.S. Department of Agriculture
    During the June 24, 2011 hearing entitled, Agricultural Program 
Audit: Examination of Crop Insurance Programs, requests for information 
were made to William J. Murphy. The following are the information 
submissions for the record.
Insert 1
          Mr. Crawford. Excellent. Okay. Real quick, back to rice. You 
        covered that pretty well, but I just want to ask, what is the 
        current participation rate of rice and buy-up coverage and 
        levels of protection, and how does this participation rate 
        compare to other major crops like corn, soybeans, wheat, and 
        cotton?
          Mr. Murphy. I don't have that information right with me. I 
        can tell you it is lower than you see in the major crops. I 
        will get that to you, though.

    For information on program participation by crop, see spreadsheet 
entitled, Largest Crops Insured by Federal Crop Insurance, Reinsurance 
Year 2010, follows.

                     Largest Crops Insured by Federal Crop Insurance, Reinsurance Year 2010
----------------------------------------------------------------------------------------------------------------
                                        Share of                        Share of                      Share of
       Crop           Liablilty        Liability         Premium         Premium        Subsidy        Subsidy
----------------------------------------------------------------------------------------------------------------
         Corn      $31,673,245,782         41%       $2,854,569,648         38%     $1,748,845,970        37%
     Soybeans      $17,968,268,248         23%       $1,746,840,208         23%     $1,068,744,370        23%
        Wheat      $6,426,634,955           8%       $1,123,672,475         15%     $685,193,684          15%
       Cotton      $2,986,974,144           4%       $488,627,636            6%     $319,399,594           7%
      Nursery      $2,310,476,269           3%        $49,806,802            1%      $40,080,416           1%
       Citrus      $2,053,384,518           3%        $64,728,939            1%      $44,317,648           1%
         Rice      $1,226,342,119           2%        $69,298,862            1%      $50,108,540           1%
       Grapes      $1,049,323,716           1%        $46,628,400            1%      $33,311,279           1%
     Potatoes      $962,357,453             1%        $81,774,552            1%      $54,825,864           1%
        Other      $10,949,219,926         14%       $1,066,169,977         14%     $663,500,752          14%
                  ----------------------------------------------------------------------------------------------
  Total All Crops  $77,606,227,130                   $7,592,117,499                 $4,708,328,117
----------------------------------------------------------------------------------------------------------------

Insert 2
          Mr. Huelskamp. I appreciate that, and 2008 is a good year--an 
        appropriate year to talk about. I think 2011 might be one we 
        talk about for many years as well.
          The second question would be--and I had looked through the 
        materials closely and didn't see this--but as far as taxpayer 
        costs and other programs, how does that vary across the crops, 
        and is that in the information you provided us?
          Mr. Murphy. We can provide more information on that. The 
        taxpayer costs of the program changes dramatically on the 
        experience that we have for that year. For the last 10 to 20 
        years, except for a little blip in 2002, we have had positive 
        loss ratios, so I think the program is well worth the money. 
        The subsidy--the premiums are subsidized and average between 60 
        or 70 percent--60 and 65 percent. So if we have $10 billion in 
        premium this year, well the subsidy is going to be up about $6 
        billion in the program. So the cost goes along with the 
        commodity prices as well. There are a lot of variables in the 
        program, the loss ratio, the losses that the companies pick up 
        versus the government, so----
          Mr. Huelskamp. And the high cost over the last decade would 
        have been how much in what year?
          Mr. Murphy. As far as the total cost of the program? I would 
        have to pull that together for you. I can do that, the last 10 
        years.

    See worksheet ``Program Expenditures Table'' that follows. As 
regards program costs by crop, in general those would be roughly 
proportionate to their share of program liability/premium/subsidy, as 
provided in the worksheet ``Largest Crops Table.'' It is otherwise 
difficult number to obtain as only premium subsidy is calculated and 
directly available on a by-crop basis. We do not directly calculate A&O 
by crop. Underwriting gains/losses are based solely on a state's 
underwriting performance, not on that of any individual crop.

          Other Program Expenditures, Fiscal Years 2001 to 2010
------------------------------------------------------------------------
                                      ARPA & FCIA       Interest & Other
  Fiscal Year        RMA A&O          Initiatives              *
------------------------------------------------------------------------
                            (Million Dollars)
------------------------------------------------------------------------
      2001           $65.60             $43.78               $0.00
      2002           $73.73             $40.68               $0.95
      2003           $70.22             $48.61               $0.00
      2004           $70.99             $46.22              $35.59
      2005           $70.48             $45.23               $0.00
      2006           $75.94             $37.51               $0.00
      2007           $75.44             $39.61               $0.00
      2008           $75.17             $47.79               $0.00
      2009           $76.83             $53.37               $0.00
      2010           $79.99             $53.05               $0.00
   2011 **           $78.84             $68.50               $0.00
------------------------------------------------------------------------
* Related to the dissolution of American Growers Insurance Company.
** Estimated.

Insert 3
          Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr. 
        Murphy, and I would like to echo the comments that have already 
        been said here by my farmers. Your part of the farm bill is 
        probably the most popular part, and everyone, all of us--I am a 
        farmer, too--appreciate what you do.
          I wanted to ask regarding the cost--of course, we are looking 
        at budget issues now. In Fiscal Year 2010, it says the crop 
        insurance costs were $4.7 billion. I just wondered, can you 
        give me kind of a rough breakdown of how much of that went to 
        claims and how much went to the administrative costs and 
        operating costs?
          Mr. Murphy. Actually, we are a very small agency. We have 
        less than--we have about 500 employees overall, so when you are 
        talking discretionary costs of the program, we are only talking 
        $78 million to $80 million being the overall cost of the 
        program of discretionary.
          The major costs that we see in the program are the producer's 
        subsidy that they get paid, the potential underwriting gains 
        that the companies can make on a good year, and then the 
        administrative and operating expense that we provide to the 
        companies in order to deliver the program. Crop insurance, 
        unlike private property and casualty insurance, you don't--the 
        farmers don't pay that in their premium bill. We provide a 
        separate payment to the companies to deliver the program for 
        it. In the negotiation of the Standard Reinsurance Agreement, 
        we actually reduced both the potential underwriting gains for 
        the companies, as well as the administrative and operating 
        costs provided to the companies, so we are certainly going to 
        see a reduction. Probably the wildcard in the whole thing is 
        the premium subsidy, going forward. Like I said, as we have 
        seen these record commodity prices, that brings up the producer 
        premium subsidy payment.
          Mrs. Hartzler. But in Fiscal Year 2010, how much money for 
        those various things, or maybe you could get that to me later?
          Mr. Murphy. I can provide that to you on a year basis. I will 
        break it out for 2010 and get that up to your office.

    See worksheet Program Expenditure table.

                   Federal Crop Insurance Program Expenditures, Reinsurance Years 2001 to 2010
----------------------------------------------------------------------------------------------------------------
                                                                                        Company
             A&O+LAE Paid     Premium     Cost Share     Premium         Program        Share of    Cost of Crop
Reins. Year     to AlPs       Subsidy      Subsidy      Discount      Underwriting      Gains &      Insurance
                                                                     Gain or Loss *      Losses       Program
----------------------------------------------------------------------------------------------------------------
                                                (Million Dollars)
----------------------------------------------------------------------------------------------------------------
    2001       $635.87     $1,781.22        $0.42         $2.81         ^$10.99        $346.00     $2,755.33
    2002       $625.89     $1,737.94        $0.38         $0.00       $1,150.42        ^$47.31     $3,467.33
    2003       $733.66     $2,044.94        $0.37         $0.00        ^$174.68        $377.85     $2,982.15
    2004       $889.42     $2,472.26        $4.22         $0.00        ^$893.62        $689.43     $3,161.71
    2005       $829.25     $2,334.66        $4.11         $0.00      ^$1,604.41        $914.97     $2,478.58
    2006       $958.58     $2,779.01        $0.00         $0.00      ^$1,167.48        $818.85     $3,388.95
    2007     $1,332.53     $3,812.23        $0.00         $0.00      ^$3,082.33       $1,572.47    $3,634.89
    2008     $2,009.25     $5,678.56        $0.00         $0.00      ^$1,112.57       $1,095.14    $7,670.38
    2009     $1,618.51     $5,424.16        $0.00         $0.00      ^$3,732.14       $2,297.77    $5,608.30
  2010 *     $1,367.74     $4,708.61        $0.00         $0.00      ^$3,409.89       $1,930.38    $4,596.84
----------------------------------------------------------------------------------------------------------------
Reinsurance Year = July 1 to June 30 of following year.
* Negative number = program underwriting gain, positive number = program underwriting loss.

                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    The Federal crop insurance program is managed by the Risk 
Management Agency (RMA) which is under the Farm and Foreign 
Agricultural Services mission area of the United States Department of 
Agriculture.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    FCIC was created in 1938, under the Federal Crop Insurance Act 
(Act), to carry out the crop insurance program to help agriculture 
recover from the combined effects of the Great Depression and the Dust 
Bowl. The program was started as an experiment and was delivered by the 
FCIC until 1980. During the formative years of the program, 
participation was low and crop insurance activities were limited to 
major crops in the main producing areas.
    The crop insurance program continued to evolve and the Federal Crop 
Insurance Act of 1980 expanded the program and introduced the public-
private partnership whereby private insurance companies would sell and 
service Federal crop insurance policies reinsured by FCIC. To encourage 
participation in the expanded crop insurance program, the Act 
authorized a premium subsidy be paid on behalf of insured producers. In 
1994 the Federal Crop Insurance Reform Act of 1994 was enacted, which 
introduced the catastrophic risk protection (CAT) level coverage. 
Producers did not pay a premium for CAT coverage and instead paid a 
small per crop, per county administrative fee. The Federal Crop 
Insurance Reform Act of 1994 introduced the concept of linkage within 
the program. Linkage required a producer to purchase crop insurance at 
least the CAT level of coverage in order to qualify for the benefits of 
another farm safety net program in an effort to increase participation 
and eliminate the need for competing ad hoc disaster programs. The 
linkage requirement was eliminated after 2 years, though there have 
since been numerous ``linkage'' requirements for disaster assistance or 
other farm safety net programs. The Federal Crop Insurance Reform Act 
of 1994 also introduced higher subsidy rates for ``buy-up'' coverage 
(insurance coverage above the CAT level for which producers pay some 
portion of the premium), as well as providing authority for revenue 
insurance products. Further, the Federal Crop Insurance Reform Act of 
1994 expanded the role of the private sector, allowing entities to 
participate in research and development of new insurance products and 
features. A process was also created to allow private entities to 
submit unsolicited proposals for insurance products to the FCIC Board 
of Directors (Board) for approval. This allowed the introduction of the 
first revenue products.
    In 1996, the Risk Management Agency (RMA) was created to administer 
FCIC programs and other non-insurance-related risk management and 
education programs that help support U.S. Agriculture. In 2000, 
Congress enacted legislation that allowed private entities to be 
eligible for reimbursement of research, development and operating costs 
for their private submitted products approved by the Board. This 
legislation also removed restrictions on the development of insurance 
products for livestock; provided authority for the FCIC Board to create 
an expert review panel to assist the Board in evaluating new insurance 
products for feasibility and actuarial soundness; and significantly 
increased premium subsidies, by more than 50 percent, to encourage 
producers to purchase higher insurance coverage levels, and to make the 
insurance program more attractive to prospective producers.
4. Purpose/Goals
    Federal crop insurance serves America's agricultural producers 
through effective, market-based risk management tools and solutions to 
strengthen the economic stability of agricultural producers and rural 
communities and provides world class agricultural risk management 
products, tools, education, and outreach.
5. Success in Meeting Programmatic Purpose/Goals
    In the 2010 crop year, Federal crop insurance was available for 
approximately 350 commodities, in over 3,141 counties, covering all 50 
states and Puerto Rico. Insured acreage in the program exceeded 256 
million acres. As the amount of insured acreage has increased, so too 
has the liability, or value of the insurance in force. In 1994 program 
liability was less than $14 billion. Industry estimates suggest that 
for 2011 program liability could exceed $100 billion. Of special 
significance is the level of participation in specialty crops programs. 
Seventy-five percent of producers are participating, which compares 
well to the 83 percent participation levels for the major program 
crops. Important fruit, nut and vegetable states like California (71%), 
Florida (91%), and Washington (68%) each score well in Federal crop 
insurance program participation.
    Many banks now require or at least encourage crop insurance 
coverage in order to make operating loans to producers. Federal crop 
insurance has become a fact of life for many farmers--without which 
American farmers would find it difficult to continue providing America 
and the world with an abundant supply of food, fiber and fuel. The crop 
insurance program has seen sustained growth as demonstrated by the 
increasing proportion of acres insured at buy up coverage levels over 
the last decade to a record-high of 90 percent.
    The type of coverage being purchased is also shifting to the more 
comprehensive revenue coverage. In 2010, revenue coverage accounted for 
65 percent of the insured acres, compared to just 33 percent in 2000. 
In addition, the average coverage level (percent of the total crop 
covered) for buy up insurance has increased to approximately 73 percent 
for 2010, compared to 68 percent in 2000. Improvements to the program 
have been accomplished in an actuarially sound manner. Over the last 2 
decades, premiums (producer premiums added to premium subsidies) have 
been sufficient to cover the indemnities paid to producers plus a 
reasonable reserve. For example, the program's loss ratio from 1994 
through 2010 has averaged about 0.82.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                                 (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
          FY               2002          2003         2004         2005         2006         2007         2008         2009         2010         2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 A&O        $74,232      $70,248      $71,001      $71,468      $76,278      $76,658      $76,121      $77,177      $80,325      $78,842
           FCIC Fund     $2,820,926   $2,910,966   $3,366,433   $2,242,167   $3,295,458   $4,379,256   $4,145,091   $6,765,663   $6,898,215   $6,992,896
                      ----------------------------------------------------------------------------------------------------------------------------------
  Total Authority....    $2,895,158   $2,981,214   $3,437,434   $2,313,635   $3,371,736   $4,455,914   $4,221,212   $6,842,840   $6,978,540   $7,071,738
--------------------------------------------------------------------------------------------------------------------------------------------------------
The FCIC fund includes Budget Authority only. It does not include carryover balances or offsetting collections.


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                                 (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
          FY               2002          2003         2004         2005         2006         2007         2008         2009         2010         2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 A&O        $83,801      $75,849      $71,482      $66,739      $73,824      $79,091      $76,254      $72,799      $78,002      $82,000
           FCIC Fund     $2,946,551   $3,254,184   $3,197,568   $2,883,272   $3,371,615   $3,471,225   $4,074,814   $7,888,892   $4,706,125   $6,989,000
                      ----------------------------------------------------------------------------------------------------------------------------------
  Total Outlays......    $3,030,352   $3,030,033   $3,269,050   $2,950,011   $3,445,439   $3,550,316   $4,151,068   $7,961,691   $4,784,127   $7,071,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlay amounts differ from Budget Authority due to timing. The general rule of thumb for FCIC outlay spend rates (current year/past year) is 90/10 for
  ARPA, Delivery Expenses, and Underwriting Gains/Losses and 35/65 for Indemnities. For the A&O Account, RMA currently estimates a 90/10 split.

8. Annual Delivery Cost (FY 2002-FY 2011)
    See [following tables] from Explanatory Notes provided to the 
Congress in recent years as part of the President's annual budget 
proposal. The pages provided display information on program costs 
including costs associated with program delivery. Note that in each 
case, the earliest fiscal year shown is an actual amount and the other 
2 years are estimates.


Explanatory Notes, President's Budget Proposal for RMA (FY 2009), p. 22-
                                   25
                         Risk Management Agency
                    Full Cost By Strategic Objective
 
 Strategic Objective 2.3: Provide Risk Management and Financial Tools to
 Farmers and Ranchers
                                    FY 2007       FY 2008      FY 2009
                                     ($000)       ($000)        ($000)Program
             Program ItemsFederal Crop Insurance
 Corporation Fund      Research and Development        $40,000       $40,000      $40,000
       Program
      Pilot Programs                  $21,000       $21,000      $21,000
      Policy Consideration and         $3,500        $3,500       $3,500
       Implementation
      Premium Program              $2,727,720    $3,846,559   $4,100,446
      A&O Expenses/Delivery        $1,110,750    $1,479,566   $1,471,876
       Expenses
      Risk Management Assistance       $5,000        $5,000       $5,000
       Program
      Excess Crop Losses             $466,286  ($1,250,534)     $936,123
                                 ---------------------------------------
          Total                    $4,374,256    $4,145,091   $6,577,945Administrative and Operating
 Expenses        Administrative Costs          $58,369       $62,332      $63,461
         (direct)
        Information Technology         17,075        13,716       13,716
                                 ---------------------------------------
          Total                       $75,444       $76,048      $77,177        Performance measure:
       Increase the normalized
       value of FCIC risk
       protection coverage
       provided through FCIC
       sponsored insurance (in
       billions)        Performance target:             $50.7         $53.7        $54.8
        Unit Cost:                        N/A           N/A          N/A
                                 =======================================
            Total Program          $4,449,700    $4,221,139   $6,655,122
            Total FTEs                    488           553          553


Explanatory Notes, President's Budget Proposal for RMA (FY 2010), p. 19-
                                   22
                         Risk Management Agency
                    Full Cost By Strategic Objective Strategic Objective 2.3: Provide Risk Management and Financial Tools to
 Farmers and Ranchers
                                    FY 2008      FY 2009       FY 2010
                                     ($000)       ($000)       ($000)Program
             Program ItemsFederal Crop Insurance
 Corporation Fund      Agricultural Risk               $42,791      $68,500       $68,500
       Protection Act
       Initiatives
      Premium Program              $4,377,350   $6,892,983    $8,837,530
      A&O Expenses/Delivery        $1,994,615   $1,621,679    $1,545,767
       Expenses
      Risk Management Assistance       $5,000       $6,000        $6,000
       Program
      Excess Crop Losses           $1,577,759     $967,415      $914,732
                                 ---------------------------------------
          Total                    $7,997,515   $9,556,577   $11,372,529Administrative and Operating
 Expenses        Administrative Costs          $61,863      $63,606       $66,754
         (direct)
        Information Technology        $13,303      $13,571       $13,571
                                 ---------------------------------------
          Total                       $75,166      $77,177       $80,325        Performance measure:
       Increase the normalized
       value of FCIC risk
       protection coverage
       provided through FCIC
       sponsored insurance (in
       billions)        Performance target:             $53.7        $54.8         $50.7
        Unit Cost:                        N/A          N/A           N/A
                                 =======================================
            Total Program          $8,072,681   $9,633,754   $11,452,854
            Total FTEs                    480          553           568


Explanatory Notes, President's Budget Proposal for RMA (FY 2011), p. 23-
                                   24
                         Risk Management Agency
                    Full Cost By Strategic Objective Department Strategic Goal: USDA will assist rural communities to create
 prosperity so they are self sustaining and economically thriving.
                                   FY 2009       FY 2010       FY 2011
                                   Amount        Amount        Amount
                                   ($000)        ($000)        ($000)Program
            Program ItemsFederal Crop Insurance
 Corporation Fund      Agricultural Risk              $47,371       $68,500       $68,500
       Protection Act
       Initiatives
      Premium Program             $8,416,173    $7,669,250    $9,040,243
      A&O Expenses/Delivery       $1,601,807    $1,567,145    $1,683,633
       Expenses
      Risk Management                 $6,000        $6,000        $6,000
       Assistance Program
      Excess Crop Losses          $1,962,597    $1,167,759    $1,204,771
      Projected Savings from              --            --     ^$782,000
       Negotiations of SRA
                               -----------------------------------------
          Total Costs            $12,033,948   $10,478,654   $11,221,147Administrative and Operating
 Expenses        Administrative Costs         $63,606       $66,754       $67,493
         (direct)
        Information Technology       $13,571       $13,571       $15,571
                               -----------------------------------------
          Total Costs                $77,177       $80,325       $83,064
          FTEs                           481           568           568        Performance measure:
       Increase the normalized
       value of FCIC risk
       protection coverage
       provided through FCIC
       sponsored insurance (in
       billions)        BY Performance                 $53.7         $54.8         $50.7
        Cost per measure (unit           N/A           N/A           N/A
         cost)
------------------------------------------------------------------------
                  Total for Department Strategic Goal 1
------------------------------------------------------------------------
      Total Costs for            $12,111,125   $10,558,979   $11,304,211
       Department Strategic
       Goal
      FTEs                               481           568           568


Explanatory Notes, President's Budget Proposal for RMA (FY 2012), p. 23-
                                   24
                         Risk Management Agency
                 Full Cost By Department Strategic Goal Department Strategic Goal: Assist Rural Communities to Create Prosperity
 so They Are Self-Sustaining, Repopulating, and Economically Thriving.
                                   FY 2010       FY 2011       FY 2012Program
            Program ItemsFederal Crop Insurance
 Corporation Fund (FCIC)      Premium Subsidy             $4,089,811    $4,600,900    $3,082,875
      Delivery Expenses           $1,567,145    $1,325,000            --
      Underwriting Gains          $1,167,759      $999,496            --
      Federal Crop Insurance         $74,500       $68,500       $59,500
       Act Initiatives
      Other Authority           ($2,352,096)            --            --
       Withdrawn
                               -----------------------------------------
          Total Costs             $4,547,119    $6,993,896    $3,142,375Administrative and Operating
 Expenses        Administrative Costs         $66,045       $66,045       $66,045
         (direct)
        Information Technology       $14,280       $14,280       $16,280
                               -----------------------------------------
          Total Costs                $80,325       $80,325       $82,325
          FTEs                           501           568           568        Performance Measure:
       The normalized value
       of:          BY Performance             Dollars       Dollars       Dollars
          Cost per measure             $51.9         $52.4         $52.9
           (unit cost)
------------------------------------------------------------------------
                        Total for Strategic Goal
------------------------------------------------------------------------
  Total Costs for Priority        $4,627,444    $7,074,221    $3,224,700
   (program, direct, indirect)
  FTEs                                   501           568           568
9. Eligibility Criteria
    In general, anyone producing a crop or livestock for which premium 
rates have been published in the counties actuarial documents is 
eligible to purchase crop insurance. Basic requirements such as legal 
competency and being of legal majority apply. The person purchasing 
crop insurance must also have an insurable interest in the crop and 
must provide the required identification number and other required data 
to the agent from whom the policy was purchased.
    Any farmer or rancher can become ineligible to participate in the 
program. Circumstances that may cause a person to become ineligible 
include having a delinquent debt, such as unpaid premium or failure to 
timely repay an indemnity that was overpaid. That person again becomes 
eligible when the debt is resolved. Persons who are disqualified, 
suspended, or debarred under the Act and applicable regulation, are 
ineligible for crop insurance for the period of disqualification, 
suspension or debarment. Any person who is convicted of violating the 
controlled substance provisions of the Food Security Act of 1985, as 
amended, is ineligible for crop insurance from the beginning of the 
crop year of conviction and the 4 subsequent consecutive crop years.
    There are no carve-outs in the Federal crop insurance program.

                                                          10. Utilization (Participation) Data
                                                                Additional Coverage Only
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Number of
  Reinsurance Year         Policies        Insured Acres    Liability (Value)       Premium        Claims Payments       Loss Ratio         Loss Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
              2001         1.1 million      170.5 million      $30.1 billion       $2.7 billion       $2.9 billion              1.069             0.097
              2002         1.1 million      176.6 million      $30.5 billion       $2.7 billion         $4 billion              1.485             0.131
              2003         1.1 million      183.8 million        $34 billion       $3.2 billion       $3.2 billion              1.003             0.095
              2004         1.1 million        189 million      $39.5 billion         $4 billion       $3.2 billion              0.811             0.081
              2005         1.1 million      217.7 million      $37.2 billion       $3.7 billion       $2.3 billion              0.609             0.061
              2006           1 million      213.7 million      $45.4 billion       $4.4 billion       $3.5 billion              0.782             0.077
              2007           1 million      243.3 million      $59.8 billion       $6.3 billion       $3.4 billion              0.544             0.057
              2008           1 million      242.2 million      $81.1 billion       $9.5 billion       $8.6 billion              0.909             0.107
              2009         1.1 million      242.5 million      $71.6 billion       $8.6 billion       $5.2 billion              0.597             0.072
              2010         1.1 million      236.2 million        $71 billion       $7.3 billion       $4.1 billion              0.565             0.058
           Maximum         1.1 million      243.3 million      $81.1 billion       $9.5 billion       $8.6 billion              1.485             0.131
           Minimum           1 million      170.5 million      $30.1 billion       $2.7 billion       $2.3 billion              0.544             0.057
  Ten-year average         1.1 million      211.6 million        $50 billion       $5.2 billion         $4 billion              0.837             0.084
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                               Catastrophic Coverage Only
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Number of
  Reinsurance Year         Policies        Insured Acres    Liability (Value)       Premium        Claims Payments       Loss Ratio         Loss Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
              2001             236,669         41 million       $6.9 billion     $247.7 million      $48.9 million              0.197             0.007
              2002             208,563       38.2 million       $6.8 billion     $229.5 million      $78.7 million              0.343             0.012
              2003             175,393       33.7 million                          $227 million      $44.1 million              0.194             0.007
              2004             156,004       31.7 million                        $241.3 million        $95 million              0.394             0.013
              2005             138,464       28.1 million                        $236.4 million      $81.3 million              0.344             0.012
              2006             125,786       28.3 million                        $261.2 million      $64.5 million              0.247             0.007
              2007             120,100       28.3 million                        $268.4 million      $50.6 million              0.188             0.007
              2008             120,405         30 million                        $332.7 million      $80.4 million              0.242             0.010
              2009              93,099       22.3 million                          $305 million      $59.3 million              0.194             0.008
              2010              79,687       20.3 million                        $262.2 million      $39.6 million              0.151             0.006
           Maximum             236,669         41 million                        $332.7 million        $95 million              0.394             0.013
           Minimum              79,687       20.3 million                          $227 million      $39.6 million              0.151             0.006
  Ten-year average             145,417       30.2 million                        $261.1 million      $64.2 million              0.249             0.009
--------------------------------------------------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    The public-private partnership between RMA and private crop 
insurance companies for the delivery of subsidized crop insurance is 
unique. The Federal crop insurance program is different from disaster 
funding because farmers are contributing to the costs of the program 
through the payment of premium for an actuarially sound program.
12. Waste, Fraud and Abuse
    Waste--The crop insurance program is currently reporting a 4.7 
percent average error rate in accordance with the Improper Payments 
Information Act. This rate is consistent with the program's 
historically reported error rates of between four to six percent. While 
the goal is to continue to reduce crop insurance program errors, the 
closely related private Property and Casualty lines of insurance 
typically report error rates of all types, intentional and 
unintentional, between 15 and 20 percent. RMA recently renegotiated the 
Standard Reinsurance Agreement (SRA) to include targeted quality 
control reviews to assist in identifying and correcting individual and 
program errors. RMA also is completing an Information Technology 
Modernization project that has new built in internal controls and 
checks of data to identify and correct data errors before indemnities 
are paid. Advances in technology will continue to provide opportunities 
to improve the way we assign insurance guarantees and assess loss 
events that will continue to improve RMA's ability to limit program 
errors.
    Fraud and Abuse--RMA is in its eleventh year of conducting annual 
spot checks of producers identified through Congressionally authorized 
data mining as being anomalous when compared to their neighbors. Once 
identified, these producers are notified that they will be checked 
during the year by the Farm Service Agency (FSA). RMA has documented 
that this effort reverses the observed anomalous behavior resulting in 
a reduction of expected indemnity payments of almost $840 million to 
date. The 2011 SRA includes an expansion of this effort to include 
checks of an additional tier of producers by their insurance company.
    RMA also dedicates significant resources to assisting USDA's Office 
of Inspector General (OIG) in investigating and prosecuting criminal 
program violations and imposing administrative sanctions when 
indicated. Although RMA continues to believe the percentage of 
producers engaged in criminal behavior is relatively small, these 
producers create a negative impression of the program with the public 
and as such RMA believes the aggressive identification and prosecution 
of those who abuse the program is essential to maintaining program 
integrity. Currently, RMA is assisting OIG and the Department of 
Justice with identifying violations in the tobacco insurance program 
that includes criminal activity by a significant number of producers, 
agents, and loss adjusters across several states. The termination of 
the tobacco quota program created vulnerabilities in the tobacco 
marketing system that left the insurance program exposed to abuse. RMA 
is working to correct these vulnerabilities, while identifying those 
who have taken advantage of them in the interim and prosecuting and 
sanctioning those persons to the fullest extent of the law.
13. Effect of Administrative PAYGO
    In 2005, the Office of Management and Budget released Memorandum M-
05-13 (``Budget Discipline for Agency Administrative Actions'') 
requiring that for ``any proposed discretionary agency administrative 
action that would increase mandatory spending, the agency must include 
one or more proposals for other administrative actions to be taken by 
the agency that would comparably reduce mandatory spending''. This is 
commonly referred to as ``PAYGO.''
    There have been a number of Administrative PAYGO actions in the 
crop insurance program. For example, last year's renegotiation of the 
Standard Reinsurance Agreement generated a significant amount of 
budgetary savings, $2 billion of which was applied to Administrative 
PAYGO (the remainder was applied to debt reduction). Conversely, a 
number of crop insurance products have been added or expanded, like the 
Pasture, Rangeland, and Forage product--a critical product for 
livestock producers--using Administrative PAYGO offsets.


                       AGRICULTURAL PROGRAM AUDIT

                 (EXAMINATION OF CONSERVATION PROGRAMS)

                              ----------                              


                         THURSDAY, JULY 7, 2011

 Subcommittee on Conservation, Energy, and 
                                  Forestry,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:04 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Glenn 
Thompson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, Goodlatte, 
Gibbs, Southerland, Roby, Huelskamp, Hultgren, Ribble, Noem, 
Lucas (ex officio), Holden, Schrader, Owens, McIntyre, Walz, 
Pingree, Fudge, and Peterson (ex officio).
    Staff present: Brent Blevins, Tamara Hinton, Josh Maxwell, 
Debbie Smith, Lauren Sturgeon, Suzanne Watson, Nona S. Darrell, 
Liz Friedlander, Anne Simmons, John Konya, and Jamie Mitchell.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. Well, good morning, everyone. This hearing of 
the Subcommittee on Conservation, Energy, and Forestry 
entitled, Agricultural Program Audit: Examination of 
Conservation Programs, will come to order. I will start out 
with my opening statement.
     I want to welcome everyone to this Subcommittee hearing to 
examine the farm bill conservation programs. This is one of a 
series of hearings the six Subcommittees of the House 
Agriculture Committee will be holding to audit farm bill 
programs in advance of writing the next farm bill. Though the 
current farm bill doesn't expire until September of 2012, it is 
important that we begin the review process now. I believe it is 
imperative that we have a sound knowledge base from which to 
make responsible decisions as we address these programs.
    Now, I don't think I need to remind anyone in this room 
that we face many challenges in drafting the next farm bill. In 
the current fiscal environment, we will be faced with some 
difficult decisions regarding the fate of programs in all parts 
of the farm bill, including Title II. Moreover, Title II 
programs, including the Wetlands Reserve Program and the 
Grasslands Reserve Programs do not have a budget baseline 
beyond the expiration of the current farm bill. Given the 
challenging decisions ahead of us and a number of new faces on 
the Subcommittee, I think this is an excellent opportunity for 
everyone to ask questions about specific programs, as well as 
general program delivery and familiarize themselves with 
programs under the Subcommittee's jurisdiction.
    Congress offered the first conservation programs for 
farmers and ranchers in the 1930s and we have seen a tremendous 
growth in programs since then. The conservation title was first 
introduced in the farm bill in 2002 and the Title was further 
revised and expanded in the 2008 Farm Bill.
    Today, USDA offers more than 20 separate active land and 
land retirement programs that account for billions in spending 
annually. This hearing gives us the chance to hear directly 
from those at USDA who are responsible for the implementation 
of conservation programs, and we have a chance to learn about 
these programs and to ask questions about how they are 
implemented and in what manner we could improve the delivery in 
the future. When the time comes to make decisions about 
conservation programs, we will all be better placed to do so if 
we have a thorough understanding of how each program operates.
    Our witnesses today will provide information about these 
various programs that we need to move forward in a legislative 
process. We will learn about basic information about the amount 
of money that is being spent on each program, program 
participation, as well as examples of duplication with other 
programs, and examples of waste, fraud, and abuse.
    I want to welcome Chief Dave White of the NRCS and Mr. 
Bruce Nelson, the Administrator of FSA. It is good to see you 
both. I am certainly eager to hear your testimony on these 
programs. And I look forward to working with you both in the 
months ahead to draft aa conservation title that fulfils its 
core goals while utilizing taxpayer dollars in a responsible 
manner.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning. I want to welcome everyone to the Conservation, 
Energy, and Forestry Subcommittee hearing to examine farm bill 
conservation programs.
    This is one of a series of hearings the six Subcommittees of the 
House Agriculture Committee will be holding to audit farm bill programs 
in advance of writing the next farm bill.
    Though the current farm bill does not expire until September of 
2012, it is important we begin the review process now.
    I believe it is imperative we all have a sound knowledge base from 
which to make responsible decisions in how we address these programs.
    I don't think I need to remind anyone in this room that we face 
many challenges in drafting the next farm bill.
    In the current fiscal environment, we will be faced with some 
difficult decisions regarding the fate of programs in all parts of the 
farm bill, including Title II.
    Multiple Title II programs, including the Wetlands Reserve Program 
and the Grasslands Reserve program, do not have a budget baseline 
beyond the expiration of the current farm bill.
    Given the challenging decisions ahead of us and the number of new 
faces on this Subcommittee, I think this is an excellent opportunity 
for everyone to ask questions about specific programs as well general 
program delivery and familiarize themselves with programs under the 
Subcommittee's jurisdiction.
    Congress offered the first conservation programs for farmers and 
ranchers in the 1930s and we have seen a tremendous growth in programs 
since then.
    The conservation title was first introduced to the farm bill in 
2002. The title was further revised and expanded in the 2008 Farm Bill.
    Today, USDA offers more than 20 separate active land and land 
retirement programs that account for billions in spending annually.
    This hearing gives us the chance to hear directly from those at 
USDA who are responsible for the implementation of conservation 
programs.
    We will have a chance to learn about these programs and to ask 
questions about how they are implemented and in what manner we could 
improve their delivery in the future.
    When the time comes to make decisions about conservation programs, 
we will all be better placed to do so if we have a thorough 
understanding of how each program operates.
    Our witnesses today will provide information about these various 
programs that we need to move forward in the legislative process.
    We will learn basic information about the amount of money that is 
being spent on each program, program participation, as well as examples 
of duplication with other programs and examples of waste, fraud and 
abuse.
    I want to welcome Chief Dave White of NRCS and Mr. Bruce Nelson, 
Acting Administrator of FSA. It is good to see you both and I am eager 
to hear your testimony on these programs.
    I look forward to working with you both in the months ahead to 
draft a conservation title that fulfills its core goals while utilizing 
taxpayer dollars in a responsible manner.
    I now yield to my friend, the Ranking Member from Pennsylvania, Mr. 
Holden, for his opening statement.

    The Chairman. And I will yield to my friend, the Ranking 
Member from Pennsylvania, Mr. Holden, for his opening 
statement.

   OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    Mr. Holden. Thank you, Mr. Chairman. I would like to thank 
our witnesses and guests for being here this morning.
    This hearing presents an important and timely opportunity 
for Members of this Subcommittee to review the state of USDA 
conservation programs. The Natural Resources Conservation 
Service and the Farm Service Agency, through the authority of 
this Committee and the farm bill, currently administer over 20 
programs to assist producers and landowners who wish to 
practice conservation on agricultural lands.
    These conservation practices have expanded over the years 
from early efforts to reduce high levels of soil erosion and 
address water quality and quantity issues to address other 
natural resources concerns such as wildlife habitat, air 
quality, wetlands restoration and protection, and energy 
efficiency. As the economic and regulatory pressures have 
increased in recent years, agriculture producers and private 
forest landowners have come to rely on these farm bill 
conservation programs to help them stay in business.
    I am concerned that recent reductions in conservation 
program funding is resulting in USDA having to deny producers 
the tools they need to combat these burdens effectively due to 
insufficient funding. Lack of assistance to meet regulatory 
requirements imposes an unfunded mandate on producers and harms 
our landowners' ability to run their businesses and efficiently 
implement conservation practices on their land.
    Bottom line, access to funds is vital and so is the 
delivery of these funds. Whether it is through FSA, NRCS, or a 
technical service provider, a consistent message we are hearing 
across the country is that more people are needed in the field 
to assist producers in making land-management decisions and 
implementing conservation practices.
    As we focus on deficit reduction and the streamlining of 
Federal programs, it is important that we ensure USDA remains 
able to deliver effective conservation programs with fewer 
resources and respond to the demand for those landowners who 
depend on them. Farmers and ranchers have always been the 
original stewards of the land and continue to be the best 
advocates for research conservation.
    I look forward to today's expert testimony and the 
opportunity to listen and learn and ask questions of those 
responsible for ensuring that that remains true in the future.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. We are also joined in 
the hearing by the Chairman of the Agriculture Committee. I now 
recognize Chairman Lucas for an opening statement.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Thank you, Chairman Thompson and Ranking Member 
Holden for holding today's hearing to examine conservation 
programs.
    During the past two farm bills, I served as Chairman and 
Ranking Member respectively of the Subcommittee with 
jurisdiction over the Conservation Title. My, aren't free 
elections a wondrous thing? Both in 2008 and in the 2002 Farm 
Bill saw exponential growth in conservation programs. In 2002, 
we increased conservation spending in the 2002 Farm Bill by $17 
billion over 10 years, an 80 percent expansion that created one 
of the greenest farm bills in history. This legislation 
increased our commitment to important programs like CRP, EQIP, 
and helped multiply participation in conservation practices.
    In the 2008 Farm Bill, we built upon the historic 
Conservation Title by adding $4 billion over 10 years. That 
Conservation Title included new regional and cooperative 
partnership programs, as well as reauthorization and increased 
funding for existing programs. These programs have created many 
new ways for producers and conservation organizations to 
achieve shared goals. Farmers and ranchers, with the assistance 
of these programs, have worked voluntarily to help reduce soil 
erosion, increase wetlands, improve water quality, and preserve 
farmland and wildlife habitat.
    However, as we work towards the next farm bill, this 
Committee will be faced with a very different budget situation. 
Not only will the Agriculture Committee have to do our part 
within the overall deficit situation, but as all of us know, we 
literally have dozens of programs, as has been alluded to by 
the Chairman and the Ranking Member, with no baselines, many 
under the umbrella of conservation. Conservation is an 
important element of farm policy. Farmers and ranchers make 
their living off the land and they are committed to preserving 
and protecting it for future generations.
    As lawmakers, we have a responsibility to ensure that 
conservation policy is effective without being duplicative or 
too costly. This is especially important in the current fiscal 
environment. Today's audit will help us evaluate our current 
policy so that we can determine what is working, what needs to 
be adjusted, and what can be eliminated. This is a critical 
step in the process of developing the next farm bill.
    I thank all of you for being here and participating today, 
and I can only say that I have the greatest of confidence in 
the gentlemen from Pennsylvania when we make those tough 
decisions in the coming days, months, and year.
    I yield back the balance of my time, Mr. Chairman.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Good morning.
    I'd like to thank Chairman Thompson for holding today's hearing to 
examine conservation programs.
    During the past two farm bills I served as the Chairman and Ranking 
Member, respectively, for the Subcommittee of jurisdiction for the 
conservation title. Both the 2008 and 2002 Farm Bills saw exponential 
growth in conservation programs.
    In 2002, we increased conservation spending in the 2002 Farm Bill 
by $17 billion over 10 years--an 80 percent expansion that created the 
greenest farm bill in history. This legislation increased our 
commitment to important programs like CRP and EQIP and helped multiply 
participation in conservation practices.
    In the 2008 Farm Bill, we built upon the historic conservation 
title by $4 billion over 10 years. That conservation title included new 
regional and cooperative partnership programs as well as the 
reauthorization and increased funding of existing programs.
    These programs have created new ways for producers and conservation 
organizations to achieve shared goals. Farmers and ranchers, with the 
assistance of these programs, have voluntarily worked to help reduce 
soil erosion, increase wetlands, improve water quality, and preserve 
farmland and wildlife habitat.
    However, as we work towards the next bill, this Committee will be 
faced with a very different budget situation. Not only will the 
Agriculture Committee have to do our part within the overall deficit 
situation, but as all of us know, we literally have dozens of programs 
with no baselines, many under the umbrella of conservation.
    Conservation is an important element of farm policy. Farmers and 
ranchers make their living off the land, and they are committed to 
preserving and protecting it for future generations. As lawmakers, we 
have a responsibility to ensure that conservation policy is effective 
without being duplicative or too costly. That is especially important 
in the current fiscal environment.
    Today's audit will help us evaluate our current policy so that we 
can determine what is working, what needs to be adjusted, and what can 
be eliminated.
    This is a critical step in the process of developing the next farm 
bill, and I thank you all for being here today to participate in that 
process.

    The Chairman. Thank you, Mr. Chairman.
    We are also joined by the Ranking Member for the full 
Agriculture Committee. Mr. Peterson, any opening remarks, sir? 
Okay. Very good.
    The chair requests that the other Members submit their 
opening statements for the record so that the witnesses may 
begin their testimony and ensure that there is ample time for 
questions.
    And I am very pleased to welcome our panel of witnesses to 
the table today. And we have Mr. Dave White, Chief of the 
Natural Resource Conservation Services, Department of 
Agriculture; and Administrator Bruce Nelson, Administrator of 
Farm Service Agency with the Department of Agriculture. 
Gentleman, you are the only two witnesses for this panel, so I 
encourage you to take the time that you need. We are not going 
to be using any lights today for your testimony, so I encourage 
you to take the time that you need to cover the information so 
that we will all benefit.
    And Mr. Nelson, please begin when you are ready.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, 
        U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Mr. Nelson. Mr. Chairman, thank you very much. I am new to 
this so I have to learn how to punch the buttons.
    Mr. Chairman, Ranking Members, Members of the Subcommittee, 
thank you for the opportunity to discuss the conservation 
programs administered by the Farm Service Agency here today. My 
testimony will focus on FSA's conservation programs and our 
collaboration with our conservation partners in ensuring high-
quality, cost-effective program delivery. And I am especially 
glad to be here on my first occasion with Dave White, who did 
an outstanding job as State Conservationist in my home State of 
Montana before becoming Chief of NRCS.
    Let me begin by talking about FSA's largest conservation 
program, the Conservation Reserve Program, or CRP. CRP is a 
voluntary program that provides a cost-effective means to 
address conservation concerns on environmentally sensitive 
lands. Currently, CRP contains more than 31 million acres and 
FSA issues about $1.7 billion annually in rental payments to 
CRP participants.
    USDA recently announced the results of general Signup 41, 
which was held this past spring. Of the 3.8 million acres 
offered, 2.8 million acres were accepted. With 4.4 million 
acres of contracts expiring on September 30 this year, 
enrollment is anticipated to total 29.9 million acres on 
October 1.
    The Conservation Reserve Enhancement Program, or CREP, is a 
component of the CRP continuous signup and is a partnership 
among USDA, the tribes, states, and in some cases, private 
groups. CREP agreements address high-priority conservation 
issues, and in total, FSA has 45 CREP agreements in 33 states.
    Another newer component of CRP is a Transition Incentives 
Program. TIP provided $25 million through 2012 to provide 
additional CRP payments for retiring owners or operators who 
transition land to beginning farmers or socially disadvantaged 
producers. In turn, the new operator must return some or all of 
the land to production using sustainable farming techniques. As 
of June 30, there were 506 approved TIP contracts accounting 
for nearly 73,000 acres. I would note for the Committee that 
those numbers are an update from my testimony submitted for the 
record because 20 additional contracts were established in the 
last 3 weeks of June.
    FSA works closely with NRCS to administer the Emergency 
Conservation Program, which provides emergency cost-share 
funding and technical assistance to farmers and ranchers to 
rehabilitate damaged farmland. Approximately $90 million has 
been allocated nationwide under ECP for this fiscal year, about 
$2 million remains available to fulfill an anticipated $134 
million in requests, leaving a projected shortfall of $132 
million. This estimate is also a minor update from my testimony 
submitted for the record.
    FSA also administers several other new conservation 
programs that were created in the 2008 Farm Bill. The Voluntary 
Public Access and Habitat Incentive Program provides grants to 
states and tribal governments to encourage private landowners 
to make their land available for recreation. Earlier this 
month, USDA announced additional grants under this program, 
bringing in the total number of states and tribes participating 
to 26.
    FSA and NRCS also jointly administer a Grassland Reserve 
Program, or GRP. GRP participants limit cropping while 
retaining the right to conduct grazing practices and 
operations. Applications may be filed with either NRCS or FSA. 
Generally, FSA implements rental contracts and NRCS administers 
the easement program. Currently, 1.1 million acres are enrolled 
in GRP at an annual cost of approximately $10 million.
    FSA and NRCS are working hard together to make sure farmers 
know their options and have the right technical assistance. I 
am proud to report that the average government cost per 
enrolled acre in inflation-adjusted terms is significantly 
lower now than in the late 1980s, while at the same time, more 
environmental and conservation benefits are being generated. We 
have streamlined tasks and reduced signup costs by about 30 
percent per contract for general signup and 18 percent per 
contract for continuous signup.
    In closing, we are committed to ensuring that our 
conservation program benefits the agricultural sector as 
intended by Congress. And we look forward to working closely 
with you to ensure sustainable conservation for agriculture in 
rural areas. Mr. Chairman, this concludes my statement, and I 
would be happy to answer any questions you or Members of the 
Subcommittee might have. Thank you very much.
    [The prepared statement of Mr. Nelson follows:]
Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency, 
            U.S. Department of Agriculture, Washington, D.C.
    Mr. Chairman, Ranking Member, and Members of the Subcommittee, 
thank you for the opportunity to discuss the conservation programs 
administered by the Farm Service Agency (FSA).
    FSA's largest conservation program, the Conservation Reserve 
Program (CRP), which was first authorized by the 1985 Farm Bill, has a 
long record of accomplishment. CRP is a voluntary program that provides 
a cost-effective means to address many conservation concerns on 
environmentally-sensitive lands (such as clean air, clean water, and 
wildlife habitat). Currently, CRP contains more than 31 million acres 
of grass, trees, riparian buffers, filter strips, restored wetlands, 
and high-value wildlife habitat. The experience of the 1930's and 
economic and societal impacts of the ``Dust Bowl'' demonstrates the 
importance of protecting our nation's most environmentally sensitive 
lands.
    The Transition Incentives Program (TIP) provides up to two 
additional CRP annual rental payments to a retired or retiring owner or 
operator of land under an expiring CRP contract if the land is sold or 
leased to a beginning or socially disadvantaged farmer or rancher for 
the purpose of returning some or all of the land to production using 
sustainable methods.
    FSA also implements several programs that provide emergency 
conservation assistance to producers. For example, the Emergency 
Conservation Program (ECP)--which has been in existence for several 
decades--provides emergency funding to farmers and ranchers to 
rehabilitate farmland damaged by natural disasters and for carrying out 
water conservation measures in periods of severe drought.
    FSA administers several new programs created by the 2008 Farm Bill. 
For example, the Voluntary Public Access and Habitat Incentive Program 
(VPA-HIP) provides grants to states and tribal governments to encourage 
owners and operators of privately held farm, ranch, and forestland to 
voluntarily make their land available for public access for hunting, 
fishing, and other wildlife-dependent recreation. These grants provide 
funds to programs administered by state and tribal governments
    FSA and the Natural Resources Conservation Service (NRCS) jointly 
administer the Grassland Reserve Program (GRP), which is a voluntary 
conservation program that emphasizes support for grazing operations, 
enhancement of plant and animal biodiversity, and protection of 
grassland under threat of conversion to other uses.
    FSA also implements non-Conservation Title programs that have 
conservation effects such as the Biomass Crop Assistance Program (BCAP) 
and the Emergency Forest Restoration Program (EFRP) both of which 
require that participants have a conservation plan.
    For FSA's conservation programs, the agency relies on technical 
assistance from NRCS, the Forest Service, the Fish and Wildlife 
Service, state fish and wildlife agencies, state Forestry agencies, 
state agricultural and environmental departments, conservation 
districts, non-governmental organizations, and the private sector. 
These partners help us with numerous activities, including technical 
determinations, conservation plan development, engineering design, 
outreach to farmers and ranchers, and monitoring the impacts of 
conservation programs.
    Today, I will not only discuss these conservation programs in more 
detail, but will also discuss how we work with our many conservation 
partners, and indicate how we are moving forward to ensure high-
quality, cost-effective program delivery.
Conservation Reserve Program
    CRP was authorized by the 1985 Farm Bill with a strong commodity 
supply control connection. CRP has evolved into a conservation program 
that increasingly targets environmental need by ranking offers in a 
general signup according to their environmental benefit and through a 
continuous signup that focuses on relatively small acreages that 
protect much larger areas such as buffer strips, riparian buffers and 
grass waterways.
    CRP also created the Conservation Reserve Enhancement Program 
(CREP) which leverages scarce Federal dollars with state and non-
government organization funds to better meet local environmental needs. 
Under CREP, CRP helps to protect the Chesapeake Bay, salmon in the 
Pacific Northwest, Mammoth Cave in Kentucky and Hawaiian coral reefs. 
More recently, CRP has targeted enrollment of lands to achieve the 
goals of initiatives focused on the conservation of priority fish and 
wildlife resources such as wetlands, quail, ducks, and longleaf pine.
    CRP provides cost-share assistance and annual rental payments to 
farmers and ranchers to establish long-term (10 to 15 years) 
conservation cover (such as grass or trees) on eligible farmland. 
Numerous conservation practices are available including filter strips, 
riparian buffers, wetland restoration and high-value wildlife habitat. 
Annual rental payments are based on the agricultural rental value of 
the land, and cost-share assistance is provided for up to 50 percent of 
the participant's costs in establishing approved conservation 
practices. FSA issues about $1.7 billion annually in rental payments to 
CRP participants.
    USDA recently announced the results of Signup 41, which was held 
this past spring. Of the 3.8 million acres offered, 2.8 million acres 
were accepted. Signup 41 acceptances have no impact on this year's 
crop; accepted land currently in crops can be harvested normally. For 
next year, the price impacts of Signup 41 enrollment on the price of 
corn, soybeans, and wheat are estimated to be very modest. With 4.4 
million acres expiring on September 30, 2011, enrollment is anticipated 
to total 29.9 million acres on October 1, 2011 (contracts for the 
recently-accepted 2.8 million acres begin on that date).
    A Fiscal Year (FY) 2012 general signup is assumed in the 
President's Budget; however, no signup dates have been announced. The 
Secretary is committed to a strong CRP program and feels the best way 
to keep it strong is to accept acres with the highest environmental 
benefit.
    A conservation plan is required for each CRP contract. FSA partners 
with NRCS which makes certain technical eligibility determinations and 
develops conservation plans. FSA is responsible for all program 
activities, makes compliance determinations, and consults with other 
Federal agencies such as the U.S. Fish and Wildlife Service. FSA also 
partners with the Forest Service to provide conservation planning for 
participants installing tree practices under CRP and also the Emergency 
Forestry Conservation Reserve Program (EFCRP).
    The environmental benefits of CRP are substantial. Since the 
beginning of the program, USDA estimates CRP has reduced soil erosion 
by more than 8 billion tons, including an estimated 325 million tons in 
2010. On fields enrolled in CRP, nitrogen and phosphorus losses were 
estimated to be reduced by 607 million pounds and 122 million pounds, 
respectively, in 2010. In addition, CRP acreage reduces the impacts of 
downstream flood events and recharges groundwater aquifers.
    There are two primary ways for farmers and ranchers to participate 
in CRP: the general signup provisions, such as Signup 41, and 
continuous signup provisions. Under the general signup, producers 
compete nationally for enrollment during specified periods. Under 
continuous signup, landowners and operators with eligible lands may 
enroll certain high priority conservation practices, such as restored 
wetlands, filter strips, and riparian buffers, at any time during the 
year without competition. In addition to annual soil rental payment and 
cost-share assistance, many continuous practices are eligible for 
additional annual and one-time up-front financial incentives.
Continuous Signup
    The Conservation Reserve Enhancement Program (CREP) is a component 
of CRP continuous signup and is a partnership among USDA, tribes, 
states and, in some cases, private groups. Partners (generally states) 
generally provide 20 percent of estimated total project costs. CREP 
agreements address high-priority conservation issues of both local and 
national significance, such as impacts to water supplies, loss of 
critical habitat for threatened and endangered wildlife species, soil 
erosion and reduced habitat for fish populations such as salmon. 
Enrollment in a state is limited to specific geographic areas and 
practices. In total, FSA has 45 CREP agreements with its partner states 
and organizations spanning areas in 33 states.
    Most CREP agreements are designed to target assistance toward a 
critical need or issue. Iowa's CREP agreement, for example, focuses on 
constructed wetlands in the Mississippi River basin. These constructed 
wetlands reduce nitrogen loadings in watersheds dominated by tile-
drained cropland. They consist of a treatment pool and grass buffer, 
and range in size from 16-70 acres. Monitoring data from the Iowa 
project indicate that these wetlands remove 40-90 percent of the 
nitrate flowing into the wetlands. The cost to reduce nitrogen load by 
a pound in such situations is projected to be less than $1.38 per year 
for 50 years.
    As another example, we have CREP agreements with all the states 
that drain into the Chesapeake Bay watershed. Pennsylvania's CREP 
agreement, which has the most acreage enrolled, provides financial and 
technical assistance to voluntarily restore wetlands, riparian areas, 
and grasslands; reduce erosion; and prevent sediment, nitrogen, and 
phosphorus from reaching the Chesapeake Bay. The Conservation Effects 
Assessment Program (CEAP) of the Chesapeake Bay estimates that nitrogen 
loss is reduced by 79 pounds per acre per year from acreage enrolled in 
CRP.\1\
---------------------------------------------------------------------------
    \1\ United States Department of Agriculture, Natural Resources 
Conservation Service. 2011. Assessment of the Effects of Conservation 
Practices on Cultivated Cropland in the Chesapeake Bay Region. Final 
Draft. http://www.nrcs.usda.gov/technical/nri/ceap/chesapeake_bay/
index.html.
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Farmable Wetlands Program
    The Farmable Wetlands Program (FWP) is another component of CRP 
that is designed to restore up to one million acres of farmable 
wetlands and associated buffers by improving the land's hydrology and 
vegetation. Eligible producers in all states restore wetland benefits 
by planting long-term, resource-conserving covers to improve the 
quality of water, control soil erosion, and enhance wildlife habitat. 
Participants must agree to restore the hydrology of the wetlands and to 
establish vegetative cover, which may include planting bottomland 
hardwoods, cypress and other appropriate tree or wetland species. FWP 
practices receive the same benefits as other continuous practices such 
as filter strips and riparian buffers.
CRP Initiatives
    CRP further targets limited Federal funds by focusing on specific 
goals such as wetlands, longleaf pine, or wildlife. CRP initiatives 
include:

   Wetlands Initiative. This initiative was created to restore 
        wetlands located within the 100 year floodplain, restore playa 
        lakes and wetland complexes located outside the 100 year 
        floodplain, and restore floodplains by establishing bottomland 
        hardwood trees. The initiative provides vital habitat for many 
        wildlife species, filters runoff, improves water quality, and 
        reduces downstream flooding.

   Quail Initiative. This initiative was created because 
        Northern bobwhite quail populations have declined due to 
        habitat loss. The 350,000 acre initiative creates early 
        successional grass buffers along agricultural field borders in 
        the 35 states that encompass the historic ranges of the 
        bobwhite quail. The buffers also benefit many other species, 
        such as, grasshopper sparrow, dickcissel, and Henslow's 
        sparrow.

   Longleaf Pine Initiative. The 250,000 acre longleaf pine 
        initiative was developed to address the decline of longleaf 
        pine in the Southeast. Its goal is to re-establish longleaf 
        pine stands to benefit wildlife species and protect water 
        quality.

   Duck Nesting Habitat Initiative. This 150,000 acre 
        initiative was designed to restore wetlands and wetland 
        complexes that are located outside the 100 year floodplain in 
        the Prairie Pothole Region. It will provide critical habitat 
        and nesting cover for ducks, sandhill cranes and other wildlife 
        species, while filtering runoff, and reducing downstream 
        flooding.

   State Acres for Wildlife Enhancement. This 850,000 acre 
        initiative is designed to target high priority wildlife 
        objectives on a state and/or regional level. The projects were 
        targeted to create habitat for threatened and endangered 
        species, species of special concern, and species of economic 
        interest such as sage-grouse, lesser prairie-chicken, and ring-
        necked pheasant.
Transition Incentives Program
    Another component of CRP is TIP which was created in the 2008 Farm 
Bill and provides $25 million through 2012 to promote the transition of 
expiring CRP land from a retired or retiring owner or operator to a 
beginning or socially disadvantaged farmer or rancher to return some or 
all of the land to production using sustainable farming techniques. 
Under TIP, the retired party is eligible to receive annual rental 
payments for up to 2 additional years beyond the contract expiration 
provided that the land is not transitioned to a family member. Certain 
conservation and land improvement work may begin on the transitioned 
land during the last year of the CRP contract.
    A retired or retiring CRP participant may apply for TIP beginning 
one year before the date of the expiration of the CRP contract through 
the end of the contract. TIP sign-up began on May 17, 2010, and as of 
June 9, 2011, there were 486 approved TIP contracts accounting for 
nearly 73,000 acres for expected outlays of $6.5 million.
Emergency Conservation Program
    The Emergency Conservation Program (ECP) provides emergency cost-
share funding (generally, up to 75 percent) and technical assistance to 
farmers and ranchers to rehabilitate farmland damaged by natural 
disasters and for carrying out emergency water conservation measures in 
periods of severe drought. For land to be eligible the natural disaster 
must create new conservation problems that, if untreated, would impair 
or endanger the land or materially affect the land's productive 
capacity and for rehabilitation matters must be unusual damage for 
which Federal assistance is required to return the land to productive 
agricultural use. County FSA committees determine land eligibility 
based on on-site inspections of damage. Funding for this program is 
appropriated by Congress.
    Timing of ECP assistance is critical to producers facing disasters 
and FSA and NRCS employees work closely at the state and county level 
to provide efficient and timely service. For instance, FSA and NRCS 
employees in Alabama are working to provide assistance to farmers 
affected by recent tornados. Approximately $67 million has been 
allocated under ECP in FY 2011. FSA currently has approximately $9 
million available with more than $167 million in pending or soon to be 
submitted requests.
    FSA provides technical assistance regarding debris removal, fence 
restoration, and grading and shaping of damaged land and FSA has an 
agreement with NRCS for it to provide technical assistance for 
practices requiring greater conservation expertise, including 
restoration of conservation structures and installations as well as 
drought emergency measures. FSA also has an agreement with the Forest 
Service to provide technical assistance for hurricane disasters that 
affect tree stands.
Voluntary Public Access_Habitat Incentive Program
    VPA-HIP provides grants to states and tribal governments to 
encourage owners and operators to voluntarily make land available for 
public access for wildlife-dependent recreation. Funding may be used to 
expand existing, or create new, public access programs, or provide 
incentives to improve wildlife habitat on enrolled lands. USDA 
announced additional participating states earlier this month, bringing 
the total number of states participating in the program to 25 (plus the 
Yakima Nation). With the expanded participation in FY 2011, the program 
is expected to have a total cost of $50 million.
Grassland Reserve Program
    FSA and NRCS jointly administer GRP. GRP participants voluntarily 
limit future development and cropping uses of the land while retaining 
the right to conduct grazing practices and operations related to the 
production of forage and seeding, subject to certain restrictions 
during nesting seasons. Applications may be filed for a rental contract 
or an easement with NRCS or FSA. Generally, FSA implements rental 
contracts and NRCS administers easements. NRCS provides all on-the-
ground technical assistance for easements and rental contracts. 
Currently, 1.1 million acres are enrolled in GRP, at an annual cost of 
approximately $10 million.
Moving Forward
    As you can see, FSA's programs cover a wide variety of conservation 
and other related needs that have evolved over time. For example, CRP 
has been very effective at enhancing habitat for lesser prairie-chicken 
and sage-grouse both of which are candidate species for listing under 
the Endangered Species Act. CRP also helps producers comply with 
regulatory actions such as the Chesapeake Bay's total maximum daily 
load requirements. CRP participation not only promotes the protection 
of environmentally-sensitive land, but can also help reduce the need 
for additional regulatory burdens on agricultural producers.
    We are committed to ensuring that conservation programs benefit the 
agricultural sector as intended and protect land, improve water and air 
quality, and promote wildlife habitat. We are also committed to 
ensuring that we efficiently and effectively manage stewardship over 
our natural resources. In addition, we work with our partners including 
NRCS and the Forest Service, to ensure compliance with the law by 
thoroughly reviewing producer and land eligibility and needs.
    We are working hard to innovate and improve program efficiency. The 
average government cost per enrolled acre, in inflation-adjusted terms, 
is significantly lower now than in the late 1980's while, at the same 
time, more environmental benefits are being generated. Further, FSA and 
NRCS have significantly reduced technical assistance costs over the 
past 10 years. We have made changes that allow the automation of 
eligibility determinations and further streamlined the tasks necessary 
to implement technical assistance for CRP. Because of these changes, 
the costs of signup activities have been reduced by about 30 percent 
per contract for general signup and 18 percent per contract for 
continuous signup.
    We are also committed to evaluating CRP outcomes to ensure that we 
best target assistance as we move forward. We undertake monitoring and 
evaluation work with Federal, state, university, and other partners, 
which provides the sound science to effectively administer CRP and 
other conservation programs. These analytical results have been used to 
develop new conservation initiatives and resulted in the Iowa CREP 
findings noted earlier. These results are also used to develop 
environmental goals for the FSA strategic plan and to guide other USDA 
decision-making.
Final Thoughts
    In an era of reduced resources, we look forward to working closely 
with Congress to identify and meet critical conservation needs. We also 
look forward to working more closely with not only our inter-agency 
partners within USDA, but also with the private sector and other 
government agencies. By doing so, we aim to better leverage resources, 
share ideas, and deliver programs that ensure sustainable conservation 
activities and programs for agriculture and rural areas.

    The Chairman. Thank you, Mr. Nelson.
    Chief White, begin when you are ready.

STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES CONSERVATION 
                  SERVICES, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.

    Mr. White. Thank you, Mr. Chairman, Mr. Ranking Member, Mr. 
Lucas, Mr. Peterson, Mr. Goodlatte, distinguished Members of 
this Subcommittee. I am starting to feel a little bit 
intimidated. I wasn't expecting quite this many Members here.
    Anyway, you have asked me to talk about 15 programs, and I 
have to tell you, I have been studying like a first-semester 
freshman right before the exam time. Fifteen of them, I am 
going to break them down into three categories for you. One, we 
are going to have the mandatory-funded cost-share programs; 
then, we will have a group of four, the mandatory easement 
programs; and then we will have three discretionary.
    So the eight mandatory cost-share programs, we will just 
call this the big eight. The first one is EQIP, Environmental 
Quality Incentives Program. This is the workhorse. This is the 
big kid on the block. This is the most lushly funded. This is 
the main bricks-and-mortar conservation cost-share program we 
have in the United States of America. Since 2005, about \1/4\ 
million contracts have been written with farmers, ranchers, and 
forest landowners in the United States of America--\1/4\ 
million since 2005. It has several components to it, some of 
them I am going to address separately. So EQIP is really the 
biggest program we have.
    The Conservation Stewardship Program is the up-and-coming 
kid. The Conservation Stewardship Program can enroll 12.7 
million acres a year. We have had two enrollments. We are in 
the tail end of the third enrollment. As of yesterday, the CSP 
now has about 35 million acres. We are probably going to get 
another 3 million acres in there. So it is going to be 38 
million acres here in a month or so. So it is now 
geographically the largest program. It is a completely 
different program from the one it replaced, the Conservation 
Security Program; Stewardship has a nationwide signup. It has a 
focus on additionality.
    Third cost-share program in the big eight, Wildlife Habitat 
Incentive Program, $85 million a year baseline, frankly, it is 
very, very similar to EQIP in how we operate it. It does have a 
couple of distinct differences. One, it allows you to have a 
higher cost-share rate for long-term enduring contracts. And 
the second thing that is somewhat unique about it is that it 
has a specific directive in there where we are to prioritize 
the funding for state and national strategic objectives and 
which we have done. And I will probably go into that later on.
    Fourth program in the big eight, the Agricultural 
Management Assistance, this was actually in part of the credit 
title. It is only in 16 states. Sixteen states that have 
historically low participation in crop insurance is where AMA 
is offered. Again, it is very similar to EQIP. It does have a 
couple of differences that I would bring forward to your 
attention. This is a program that is really targeted towards 
smaller specialty crop organic farmers. It has a baseline. It 
is not in the Conservation Title, but it has its own baseline. 
The funding is statutorily split between three agencies. Ten 
percent of the funding goes to the Agricultural Marketing 
Service, and they use that to help pay to transition to organic 
farming. Forty percent of the funding goes to the Risk 
Management Agency. They use that funding to help specialty 
crops small farmers pay for crop insurance. Fifty percent comes 
to NRCS and we help develop on-farm conservation systems. Two 
things it does that really are fairly unique: one, you can use 
the funding to install new irrigation systems, which is rather 
unique; and second, you can use the funding to build irrigation 
reservoirs, which, if you are in a drought, it is a pretty big 
thing.
    Fifth team in the big eight conference is the Agricultural 
Water Enhancement Program, fondly called AWEP. AWEP is a 
component of EQIP. It has its own distinct, separate baseline, 
which at the end of the farm bill will be $60 million. AWEP is 
focused on water conservation, water quality. There are some 
specific instructions in the manager's report that gives us 
targeted areas like the Ogallala Aquifer, Red River, Upper 
Mississippi, Eastern Snake Plain Aquifer in Idaho, Bay Delta, 
California, Puget Sound. And we have put funding in all of 
those areas. A unique thing at AWEP is if you are in like an 
exceptional drought area--I think that is a D3/D4--you can use 
AWEP funds to build irrigation reservoirs. And some of you may 
remember Mr. Everett from Alabama, that was a provision that he 
really wanted to see in this 2008 Farm Bill.
    Number six in the big eight, Conservation Innovation 
Grants, this is a subcomponent of EQIP that does not have a 
separate funding stream. All funding for this comes out of the 
overall EQIP allocation. There are two components to 
Conservation Innovation Grants. CIG A, which is really a grant 
program, a 50 percent matching grant program, and it is 
designed to take a research finding that is found in the lab 
that shows promise and how do you get that to on-the-ground 
application in a practical manner for farmers and ranchers. 
This divide between discovery and application is called Death 
Valley. So the Conservation Innovation Grants, Section A, is 
designed to help you bridge that Death Valley and take 
promising research results and put them on on-the-ground, 
reasonable, technical applications that farmers can use around 
the country.
    The second part of CIG, Section B is air quality: $37.5 
million is designated for this subsection and it is to be used 
around the country in areas in air quality attainment areas. 
There are several of them. I was detailed to Senator Harkin in 
the 2008 Farm Bill process. This was brought forward on the 
Senate side by Senators Boxer and Feinstein. Members of this 
Committee, some of you may remember, Mr. Costa, Mr. Cardoza 
brought it forward. This is designed to help producers 
upgrade--part of it was to upgrade their engines. And when I 
first heard about it, I scoffed at it. I mocked it. I laughed 
at it. I thought this was the goofiest thing I have ever heard 
of. And then I saw how it was working and I was wrong. I was 
dead, flat, slap wrong.
    I have been to California where the bulk of this funding 
has gone. Central Valley, California, there is not one area in 
the United States of America where farmers are more regulated 
than they are in the Central Valley. And if you like peaches, 
plums, grapes, raisins, broccoli, carrots, onions, lettuce, it 
is very important for us to keep those producers in business. 
The Central Valley is like a big bowl. Everything that comes in 
there stays in there. Their air quality concerns are huge. And 
these guys are going out of business. I was on a producer's 
farm. His name was Don Cameron, and he had 30 irrigation pumps 
lined up right behind his barn, 30 of them. Every single one of 
them had a hole cut in the block. I was looking at a million 
dollars of irrigation pumps that could maybe be sold for scrap 
metal because they were too polluting for the California Air 
Resources Board. And with this particular section of EQIP, we 
are able to cost-share on a 50-50 basis. They are going from 
Tier 0 to Tier 3 engines in the last 2 years. This is 
astounding.
    And farmers, they are putting in this money, too, where we 
have done about 40 in EQIP; they have done about 40. It has 
reduced emissions with the net effect of removing over 400,000 
cars from the road in California every single year. We may be 
at the point if we carry this on for a couple more years, we 
will obviate the need for any further regulation of these guys 
in the Central Valley.
    Number seven in the big eight, Chesapeake Bay Watershed 
Program, $50 million baseline, I had been up here before 
talking about it. Many of you are extremely familiar with that. 
Chesapeake Bay is ground zero for agriculture and regulation. 
This is often viewed as the canary in the coal mine. I am much 
more bullish on our chances than other people, and the 
Chesapeake Bay Watershed Program is really equipping us with 
some of the resources we need in this critical area.
    Rounding out the big eight is not really a program per se, 
but it is a mechanism. It is the Cooperative Conservation 
Partnership Initiative. It is an authority which allows us to 
use three different programs--EQIP, the Wildlife Habitat 
Incentive Program, and the Conservation Stewardship Program--
for outside entities like universities and agricultural groups 
and other partners to designate areas where they identify a 
problem and we focus EQIP, WHIP, and CSP resources to solve 
that identified problem. Right now, we have about 164 projects 
around the country. There is a statutory limitation of no more 
than six percent of EQIP, WHIP, and CSP that can be used in 
CCPI. We are right now at 5.9 percent. So there probably won't 
be a whole lot more. So that rounds out the big eight.
    Now, the big 12, these are all four easement programs. The 
big kid on the block is the Wetlands Reserve Program. In my 
opinion, it is the single biggest reason this country has 
achieved no net loss of wetlands. If you remember George 
Herbert Walker Bush, Bush I, he announced it was going to be 
the policy of the United States, no net loss of wetlands. This 
program is one of the main reasons why that has occurred. There 
are over 2 million acres right now. It is mostly marginal crop 
land that guys have a hard time making money on anyway. And 
that is one, Mr. Chairman, that you mentioned does not have a 
baseline, going forward.
    Second one is the Farm and Ranch Lands Protection Program. 
I know that that is critical to Mr. Holden and other Members of 
this Committee. This is a working lands easement program. 
Essentially, you are purchasing development rights. So this 
farm, this ranch is going to stay in agriculture forever. It is 
not going to be an airport; it is not going to be subdivided; 
it is not going to be little ranchettes. It is going to be in 
agriculture. A lot of changes made in 2008 that have made this 
program better, it will have a baseline of about $200 million, 
going forward.
    Third program, Grassland Reserve Program, this is kind of a 
hybrid. It blends a little bit of WRP and a little bit of FRPP, 
but again, it is a working lands program. Mr. Nelson very ably 
described that, so I won't go into it. And it is jointly 
administered between our two agencies.
    Number 12 of the big 12 is the Healthy Forests Reserve 
Program. This is actually located in the Forestry Title. It is 
a permanent easement program--30 year contract for tribes--to 
aid in the recovery of threatened and endangered species. What 
is different about this is no-year money. We have to work with 
Fish and Wildlife Service to get people who enrolled into Safe 
Harbor Agreements. This is really focused on recovery of 
endangered species. Very small, $10 million a year for the last 
3 years and will not have a baseline, going forward.
    All right. That leaves us with three more programs you 
wanted me to talk about. That would take us to 15. I couldn't 
think of a sports analogy for that so I am going to give you a 
bonus program to take us to the Sweet 16 shifting from football 
to basketball.
    Number 13 is Resource Conservation and Development created 
in the early 1960s. RC&D really created 501(c)(3) nonprofit 
organizations whose mission was rural development broadly--
natural resource-based rural development. I worked with them 
all of my career. I have a lot of respect for them. They have 
done some tremendous work around the country. In the last Bush 
Administration, OMB made an analysis and said it was 
duplicative, and the last few years of the Bush Administration, 
the Administration recommended it be zeroed out. That was 
carried forward in the Obama Administration and Congress 
adopted it this year. There is zero funding for this program. 
We are in the process of doing an orderly closeout of that. It 
is a very good program, but I recognize the necessity of the 
hard choices that are being made.
    Number 14 is the Small Watershed Program, which actually is 
two other programs--P.L. 78-534 and P.L. 83-566. These date 
from the 1940s and 1960s. Over that period of time, essentially 
these were flood-control structures. There is also water 
supply. These are the dams that are really flood control. There 
have been about 1,800 projects over that amount of time, over 
11,000 structures have been built. Now, when you go back to the 
1940s and 1950s, fast-forward to today, we are in a bit of a 
fix. These dams, structures if you will, most of them were 
built with a 50 year life-span. That is not to say that at 51 
years they fall down. They are perfectly good but they had a 
design life of around 50 years. These structures are reaching 
the end of their design life. In fact, every day for the next 
20 years somewhere in the United States of America a watershed 
dam will reach the end of its design life. That is not to say 
that they are bad at that point in time; it just to say their 
design life is over.
    Which leads me into number 15, which is the Watershed 
Rehabilitation Program. And I will give a nod to Chairman 
Lucas, who has recognized this and acted very forcefully to 
establish this particular program. What do you do with these 
structures? These structures are providing about $2 billion in 
prevented damages every year across America. What do you do 
when they reach the end of their design life? What do you do 
when they need rehabilitation? What do you do when there is a 
safety issue? And this is a mechanism where we can go in and 
fix these older structures. And they don't have to be at the 
end of their design life either. In this country, urban 
development has occurred where we have put a little dam out in 
a farm field. It might be in a city now. A good example of that 
is Atlanta. We have several watershed projects and Atlanta, as 
of 2011, is not the Atlanta of 1950.
    So when something like that occurs, we go in and we upgrade 
those structures to high-hazard classifications so adding in 
those extra safety features. There is not one earmark in this 
program. This program is a cost-share 65-35. And NRCS has a 
little criteria where we decide where to work. Number one on 
the list is human health and safety. This had $100 million in 
the farm bill and I think it has $18 million, going forward, in 
this particular ag budget.
    Bonus program number 16 is another easement program. This 
is a discretionary easement program. This falls under the 
Emergency Watershed Protection Program. It is for flood plain 
easements. It allows us after a flood to go in and purchase 
easements on these flood plains where guys are getting washed 
out all the time. Actually, if you look at it, it really saves 
us a lot of money because you are not paying disaster 
assistance on that land or crop insurance year after year. And 
if there is flooding in the future, the water can spread out, 
be filtered, ground water recharged, good for wildlife. There 
is a lot going for that program.
    I have talked enough. One thing I would ask you, this is 
your watch. This is going to happen under your control. Forty 
years from now, nine billion new people will be in this world. 
I have seen all kinds of projections for what it is going to 
take. I have seen 50 percent increase of production, 70 
percent, double production. Any way you slice it, we are going 
to have to increase production. And conservation is one of the 
key ways that we can ensure the future that those little 
Americans who come after us will have the same bounty that we 
enjoy today.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. White follows:]
Prepared Statement of Dave White, Chief, Natural Resources Conservation 
       Services, U.S. Department of Agriculture, Washington, D.C.
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear before you today to discuss conservation programs 
administered by the Natural Resources Conservation Service (NRCS).
    The NRCS conservation portfolio contains a broad mix of authorities 
providing programs for conservation technical assistance, environmental 
improvement, stewardship, easements, and water resources. These 
conservation investments, designed by Congress and implemented by USDA, 
have a proven track record. They are good for farmers, ranchers and 
private forest landowners and they work for all Americans--helping to 
secure a high quality environment in concert with food security for our 
nation and the world.
    Last year we celebrated 75 years of service to the nation's 
farmers, ranchers, and other land owners and managers, we looked back 
at the landmark achievements, and continued to make some history of our 
own. Before providing the Subcommittee with details about our 
conservation programs, I would like to share a few of the benefits that 
these programs delivered through our long, strong partnership with 
America's farmers, ranchers, and private forest landowners.
    Last year (Fiscal Year 2010) was a record year in conservation 
program delivery. Of special note is the Wetlands Reserve Program 
(WRP). A nationwide emphasis on wetlands conservation resulted in a 
record-setting WRP enrollment of nearly 273,000 acres, exceeding the 
next-highest yearly total by more than 58,000 acres and nearly doubling 
our average annual enrollment. And while much work remains to be done 
in completing restoration work associated with these record 
enrollments, more than 129,000 acres of wetlands were created, restored 
or enhanced in FY 2010. While acreage numbers are impressive, the more 
important outcome is that these wetlands are now providing essential 
habitat for at-risk species, such as the threatened Louisiana Black 
Bear and the endangered Whooping Crane. The better job we do in 
assisting in keeping candidate and other at-risk species off the List 
of Endangered and Threatened Wildlife, the greater flexibility our 
producers have in providing food, feed, and fiber for the nation and 
the world.
    Voluntary conservation on private lands works! USDA established the 
Conservation Effects Assessment Project (CEAP) in 2003 to develop a 
scientific understanding and methodology for estimating the 
environmental effects of conservation practices on agricultural 
landscapes at national, regional, and watershed scales. CEAP is built 
on partnerships and working collaborations involving Federal agencies 
inside and outside of USDA, land-grant universities, state agencies, 
and nonprofit organizations.
    The first CEAP assessments of the effects of conservation practices 
on cultivated cropland were released in FY 2010. Two of the planned 14 
regional reports, the Upper Mississippi River Basin (UMRB) and the 
Chesapeake Bay Region CEAP Cropland Reports, quantify the great 
progress farmers have made in reducing sediment and nutrient losses 
from cropland, while emphasizing a continuing need for conservation 
efforts to focus on nutrient management. A few key highlights from the 
UMRB assessment include:

   Voluntary, incentive-based conservation works. Reduced 
        tillage is used on 95 percent of the cropland--sediment losses 
        are reduced by an estimated 69 percent as compared to a 
        scenario where full conventional tillage is used.

   Nutrient management is the greatest need. Much can be done 
        through expanded adoption of existing practices. About 60 
        percent of the cropland needs improved nutrient management; 
        Timing, rate and method of application are important factors in 
        managing nutrient application.

   Targeting can greatly enhance program effectiveness. 
        Treating the most critical acres can have three to five times 
        the effect on sediment and nutrient reduction as compared with 
        treating acres with less serious problems.

   Comprehensive conservation planning is essential. Suites of 
        practices that address multiple resource concerns are more 
        effective than single practices.

    In FY 2010, NRCS used landscape-scale initiatives to address 
priority resource concerns in working landscapes and watersheds 
nationwide. Two of these initiatives began prior to FY 2010--the 
Chesapeake Bay Watershed Initiative, supported by the statutory 
Chesapeake Bay Watershed Program in the farm bill and the Great Lakes 
Restoration Initiative, supported by financial assistance transferred 
from the U.S. Environmental Protection Agency and the Great Lakes 
Restoration Action Plan. The other initiatives are the Sage-Grouse, the 
Longleaf Pine, California Bay-Delta, Lesser Prairie-Chicken, 
Mississippi River Basin Healthy Watersheds, New England Forestry, and 
the Migratory Bird Habitat. These initiatives reflect a common 
objective of using targeted conservation assistance in addressing 
priority natural resource concerns that are broader than a single state 
and that will help to keep working lands working.
    The Sage-Grouse Initiative (SGI) is a great example of how 
landscape-scale conservation delivers broad benefits for agriculture. 
SGI focused conservation delivery within habitat core areas to help 
maintain large and intact grazing lands--important for the sage-grouse 
and for the rancher. NRCS identified practices that can be implemented 
through the Environmental Quality Incentives Program, the Wildlife 
Habitat Incentive Program, the Grassland Reserve Program and the Farm 
and Ranch Lands Protection Program to increase and protect grouse 
habitat and populations on 640,000 acres in 11 western states. In FY 
2010, NRCS contracted with 223 ranching operations for a total $18.5 
million in financial assistance to remove sage-grouse threats and help 
sustain working ranches. As a result, over 180 miles of high-risk 
fencing near breeding sites were marked or removed, which prevented an 
estimated 800 to 1,000 mortalities through fence collisions in just the 
first year.
    The SGI also resulted in a landmark agreement that provides 
regulatory certainty to ranchers who take actions to improve sage-
grouse habitat on their land. In early 2010, the U.S. Fish and Wildlife 
Service (FWS) determined sage-grouse to be a ``candidate'' species 
under the Endangered Species Act (ESA), which means listing is 
warranted but precluded by higher listing priorities and positive 
management actions that address threats to the species need to be taken 
to prevent listing. NRCS and FWS negotiated a first-of-its kind 
regional agreement that lets landowners know the investments they make 
today to benefit this declining species and the sustainability of their 
ranching operation by implementing NRCS conservation practices 
according to the SGI Conference Report can continue should sage-grouse 
be listed at a future date.
    This new conservation approach prioritizes assistance to ensure 
that the best conservation practices are implemented in the right 
landscapes for a positive sage-grouse population-level response. The 
SGI is a perfect example of how conservation programs can respond to 
critical natural resource issues by merging science and program 
delivery, and targeting practices and geography to make a real 
difference on the landscape for natural resources and for America's 
farmers and ranchers.
NRCS Conservation Programs
    This testimony provides an overview and status for 15 of NRCS' 
conservation programs and authorities:
Environmental Quality Incentives Program
    The Environmental Quality Incentives Program (EQIP) provides 
financial and technical assistance on working lands to help producers 
address environmental challenges. To meet these challenges, EQIP 
provides incentives for the application of farming and other land use 
practices that maintain or improve the condition of soil, water, air, 
and other natural resources. The program assists agricultural and 
forestland users in identifying natural resource issues and 
opportunities to improve their agricultural operations and provides 
technical and financial assistance to address them in an 
environmentally beneficial and cost-effective manner. EQIP-promoted 
practices meet a variety of environmental and natural resource 
challenges.
    In FY 2010, EQIP financial assistance obligations by states reached 
almost $840 million in 36,500 contracts covering an estimated 13 
million acres. In addition to regular EQIP projects, these funds also 
supported projects in resource based initiatives such as air quality, 
on-farm energy audits, migratory bird habitat, and the Mississippi 
River Basin Initiative, and projects that emphasize environmental 
protection and agricultural production as compatible goals such as 
organic production and seasonal high tunnels.
    In FY 2010, NRCS provided $37.5 million in financial and technical 
assistance to 12 states through the national Air Quality Initiative to 
help producers meet requirements of the Clean Air Act. Through this 
initiative, NRCS provides assistance to farmers and ranchers to reduce 
air pollution generated from agricultural operations in areas 
designated by the U.S. Environmental Protection Agency as non-
attainment areas for ozone and particulate matter. During FY 2010, over 
950 contracts supported some 3,800 practices on more than 220,000 
acres. In the Central Valley of California alone, we estimate that 
these air quality projects over the past 2 years have had the 
equivalent impact of removing the NOX emissions from 400,000 
vehicles from the area's roads each year.
    In FY 2010, NRCS worked to provide financial assistance to more 
than 240 producers for on-farm energy audits by offering the 
Agricultural Energy Management Plan through EQIP. In partnership with 
the private sector and other organizations, NRCS is developing 
technical tools and training to evaluate and reduce agricultural energy 
consumption through implementation of on-farm energy audit 
recommendations and to help producers adapt plans and practices for 
better energy efficiency and on-farm energy production.
    The Organic Initiative is a nationwide special initiative within 
EQIP to provide assistance to organic producers as well as producers in 
the process of transitioning to organic production. In FY 2010, NRCS 
obligated nearly $24 million in financial assistance to treat 148,000 
acres in organic production or in transition to organic production. The 
most often recommended practices include nutrient management, cover 
crop, pest management, conservation crop rotation, and prescribed 
grazing.
    The FY 2012 President's budget includes $1.408 billion in mandatory 
funding for financial and technical assistance for the Environmental 
Quality Incentives Program.
Agricultural Water Enhancement Program
    The Agricultural Water Enhancement Program (AWEP) is a component of 
EQIP. The purpose of AWEP is to promote improved ground and surface 
water conservation and water quality by leveraging the Federal 
Government's investment in natural resources conservation with services 
and resources of other eligible partners. The AWEP program was 
specifically created to address serious surface and ground water 
shortages as well as water quality concerns in many agricultural areas. 
The security of the nation's food supply is dependent upon the 
continued delivery of clean, reliable irrigation water to farms and 
ranches.
    This is the second year in which AWEP has been implemented and 
interest from the agricultural sector has remained steady. In FY 2010, 
NRCS obligated $60.8 million in 1,489 new contracts to implement 
conservation practices on nearly 271,000 acres of agricultural land. 
The ability to leverage funding through partnership agreements has also 
remained strong. Partners provided approximately $50.5 million in 
technical and financial assistance in FY 2010, nearly matching NRCS' 
AWEP investment. Through AWEP, the agency approved 28 new partner 
project areas during FY 2010, and continued to provide support for 63 
existing project areas approved during FY 2009. Over \1/2\ of the 
projects approved in FY 2010 are located in the high-priority water 
quantity concern areas, where conservation practices will be applied to 
conserve scarce water resources.
    The FY 2012 President's budget includes $60 million in mandatory 
funding for financial and technical assistance for the Agricultural 
Water Enhancement Program.
Conservation Innovation Grants
    Conservation Innovation Grants (CIG) is a component of the 
Environmental Quality Incentives Program (EQIP) that is intended to 
stimulate the development and adoption of innovative conservation 
approaches and technologies while leveraging Federal investment in 
environmental enhancement and protection, in conjunction with 
agricultural production. CIG provides grants of up to 50 percent of the 
total project cost on a competitive basis to non-Federal governmental 
or non-governmental organizations, federally-recognized Indian tribes, 
or individuals. Applicants must provide non-Federal funding for at 
least 50 percent of the project cost, of which up to \1/2\ (25 percent 
of the total project cost) may come from in-kind contributions.
    CIG has two major components: National and State:

    (1) The National Component emphasizes projects that have a goal of 
        providing benefits over a large geographic area. These projects 
        may be watershed based, regional, multi-state, or nationwide in 
        scope.

    (2) The State Component provides flexibility to NRCS State 
        Conservationists to target CIG funds to individual producers 
        and smaller organizations that may possess promising 
        innovations, but may not compete well on the larger scale of 
        the national grants competition.

    Funding for CIG is announced each year through a funding notice. 
CIG funds single- or multi-year projects, up to 3 years in length.
    CIG projects have resulted in new technologies and opportunities 
for producers. A 2005 grant helped to demonstrate that precision 
feeding of dairy cows could facilitate reductions in the protein 
(nitrogen) and phosphorus being fed to dairy animals while maintaining 
or even improving milk production and possibly improving animal health. 
Based on the findings from these feeding trials, the Pennsylvania State 
University Cooperative Extension developed the ``Dairy Tool'' to help 
farmers identify the greatest opportunities to improve profitability on 
their farms.
    In FY 2010, NRCS received 388 applications requesting more than 
$221.8 million. NRCS obligated about $18 million through 61 agreements 
representing 43 states and U.S. territories of the Pacific. Grant 
recipients provide matching funds to CIG bringing the total value of 
the approved projects to more than $35 million.
Wildlife Habitat Incentive Program
    The Wildlife Habitat Incentive Program (WHIP) provides assistance 
to improve upland and wetland habitats to benefit priority wildlife 
species, including threatened, endangered and other at-risk species. 
Focused efforts on habitat for fish and wildlife also contribute to 
more sustainable use of resources. By prioritizing specific geographic 
areas through various efforts at the state level, WHIP is able to 
target financial and technical assistance funds to benefit habitats for 
specific declining wildlife species such as the sage grouse. For 
example, WHIP funds helped to support a project in Somerset County, 
Maine, to rebuild a wildlife and nature preserve. Following a dam 
breach in 2000, the landowner committed to reclaiming the land. The 
project is improving the forest stand, planting cover crops, installing 
nesting boxes, among other practices to create open space and nesting, 
brooding, and rearing habitat for the American woodcock, a species of 
concern, as well as 50 other important wildlife species.
    In FY 2010, NRCS obligated almost $63 million in financial 
assistance in more than 4,700 agreements to enroll over one million 
acres in WHIP. Sixty-eight of these contracts valued at over $3.7 
million are with American Indian and Alaskan Natives participants to 
benefit habitat for culturally important species. Since the program 
began in 1998, national enrollment has included almost 37,000 
agreements on over 6.5 million acres.
    The FY 2012 President's budget includes $73 million in mandatory 
funding for financial and technical assistance for the Wildlife Habitat 
Incentive Program.
Agricultural Management Assistance
    NRCS administers the conservation provisions of the Agricultural 
Management Assistance (AMA) program, which provides financial 
assistance to agricultural producers to address water management, water 
quality, and erosion control issues by incorporating conservation into 
their farming operations. AMA is available in 16 states where 
participation in the Federal Crop Insurance Program is historically 
low: Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, 
Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Rhode 
Island, Utah, Vermont, West Virginia, and Wyoming.
    With AMA funds, producers may construct or improve water management 
structures or irrigation structures; plant trees for windbreaks or to 
improve water quality; and mitigate risk through production 
diversification or resource conservation practices, including soil 
erosion control, integrated pest management, or transition to organic 
farming. AMA may provide producers a first-time opportunity to address 
natural resource concerns on their lands. For instance, producers that 
cannot meet Environmental Quality Incentives Program (EQIP) irrigated-
land criterion may receive AMA assistance to install irrigation.
    In FY 2010, $6 million was obligated into 429 contracts covering 
11,102 acres.
    The FY 2012 President's budget includes $2.5 million in mandatory 
funding for the Agricultural Management Assistance program.
Chesapeake Bay Watershed Program
    The Chesapeake Bay Watershed Program (CBWP) helps agricultural 
producers improve water quality and quantity, and restore, enhance, and 
preserve soil, air, and related resources in the Chesapeake Bay 
Watershed through the implementation of conservation practices. These 
conservation practices reduce soil erosion and nutrient levels in 
ground and surface water; improve, restore, and enhance wildlife 
habitat; and help address air quality and related natural resource 
concerns. CBWP encompasses all tributaries, backwaters, and side 
channels, including their watersheds, draining into the Chesapeake Bay. 
This area includes portions of the states of Delaware, Maryland, New 
York, Pennsylvania, Virginia, and West Virginia.
    NRCS implements CBWP through the various natural resources 
conservation programs authorized by subtitle D, Title XII of the Food 
Security Act of 1985. In FY 2010, NRCS implemented CBWP through the 
Environmental Quality Incentives Program (EQIP) and the Wildlife 
Habitat Incentives Program (WHIP).
    In FY 2010, nearly 2,900 agricultural producers submitted 
applications to NRCS to participate in CBWP. NRCS approved more than 
950 contracts for more than $33.5 million of financial assistance to 
treat an estimated 156,700 acres of high priority agricultural land. 
The balance of CBWP funds authorized in FY 2010 supported technical 
assistance for the program.
    The FY 2012 President's budget includes $50 million in mandatory 
funding for financial and technical assistance for the Chesapeake Bay 
Watershed Program.
Cooperative Conservation Partnership Initiative
    The Cooperative Conservation Partnership Initiative (CCPI) enables 
the use of certain conservation programs along with resources of 
eligible partners to provide financial and technical assistance to 
owners and operators of agricultural and nonindustrial private 
forestlands. CCPI is designed to encourage investment in natural 
resource conservation by non-Federal sources, foster coordination with 
other partners, and achieve high-priority natural resource objectives.
    Under CCPI, NRCS enters into multi-year agreements with eligible 
partner organizations. Partners eligible to enter into a CCPI agreement 
with NRCS include federally recognized Indian Tribes, state and local 
units of government, farmer cooperatives, producer associations, 
institutions of higher education, and other non-governmental 
organizations with a history of working cooperatively with producers to 
address conservation priorities related to agriculture and 
nonindustrial private forestland.
    In order to receive CCPI financial assistance, owners and operators 
of agricultural and nonindustrial private forestlands must participate 
within a project area defined in an approved CCPI agreement and enroll 
in the Environmental Quality Incentives Program (EQIP); Wildlife 
Habitat Incentive Program (WHIP), or the Conservation Stewardship 
Program (CSP).
    In FY 2010, about $42.3 million was obligated in 279 contracts with 
producers to implement conservation practices on nearly 1.2 million 
acres of agricultural lands. Through CCPI, NRCS approved 51 new partner 
project areas in FY 2010, and continued to support 110 projects 
approved during FY 2009.
    CCPI does not receive specific funding. By statute, funding is 
limited to no more than six percent of available program funds (EQIP, 
WHIP) or acres (CSP). NRCS manages resources and allocations between 
all three programs to assure obligations through CCPI will not exceed 
funding authority.
Conservation Security Program
    The Conservation Security Program was a voluntary program that 
provided financial and technical assistance for the conservation, 
protection, and improvement of natural resources on tribal and private 
working lands. It provided payments for producers who practice good 
stewardship on their agricultural lands and provided incentives for 
those who wanted to do more. Under the 2008 Farm Bill, NRCS is not 
authorized to enter into new Conservation Security Program contracts 
but continues to make payments to producers with 5 to 10 year contracts 
from prior years.
    The FY 2012 President's budget includes $197 million in mandatory 
funding for the Conservation Security Program.
Conservation Stewardship Program
    The Conservation Stewardship Program (CSP) encourages agricultural 
and forestry producers to adopt new conservation measures and maintain 
existing conservation activities on their operations. CSP provides 
opportunities to recognize excellent stewards and deliver valuable new 
conservation. The program helps producers identify natural resource 
problems in their operation and provides technical and financial 
assistance to go beyond existing conservation and deliver new 
environmental benefits in an environmentally beneficial and cost-
effective manner. CSP has helped participants take additional steps in 
conservation, adopting new efficient technologies and generating 
additional environmental benefits. A Pennsylvania dairy farm was able 
to enhance their existing soil improvement efforts based on cover 
crops, diversions, waterways, and strip cropping to incorporate a 
simple yet effective cover crop mix enhancement to further their 
benchmark level of conservation. Their next step was to upgrade to a 
high residue vertical tillage implement that will increase surface 
residue and further reduce soil erosion. All of these improvements--
increased plant diversity and improved erosion control were made 
possible through participation in CSP.
    CSP is a voluntary program available through a continuous sign-up 
process, with announced cut-off dates for ranking and funding 
applications. Applications are evaluated relative to other applications 
addressing similar priority resource concerns to facilitate a 
competitive ranking process.
    In FY 2010, CSP supported conservation by obligating more than $320 
million in financial assistance funding. These funds will be used to 
treat 25,164,328 acres leading to more productive working lands, 
improved water quality and energy efficiency. These are among the many 
benefits of addressing the natural resource concerns of agricultural 
and forestry producers.
    The FY 2012 President's budget includes $788 million in mandatory 
funding for financial and technical assistance for the Conservation 
Stewardship Program to enroll 12 million acres.
Wetlands Reserve Program
    The Wetlands Reserve Program (WRP) provides technical and financial 
assistance to enable eligible landowners to restore, protect and 
enhance valuable wetland ecosystems, including associated habitats such 
as uplands, riparian areas, and forestlands. The goal of WRP is to 
achieve the greatest wetlands functions and values, along with optimum 
wildlife habitat, on every acre enrolled in the program. WRP addresses 
wetland, wildlife habitat, soil, water and related natural resource 
concerns on private lands in an environmentally beneficial and cost-
effective manner. The program achieves solutions to local community 
issues related to farms, ranches, rural lands, and other areas by 
establishing easements and long-term agreements on eligible farmlands 
and by establishing 30 year contracts on Tribal lands. This unique 
program offers landowners an opportunity to establish, at minimal cost, 
long-term conservation and wildlife habitat enhancement practices and 
protection.
    During FY 2010, NRCS enrolled a total of 272,762 acres in WRP in 
1,414 projects. Of these, the majority were in easements (206,094 acres 
in 951 permanent easements and 61,935 acres in 30 year easements). Also 
during FY 2010, NRCS restored and enhanced 129,082 acres of wetlands 
that are part of WRP easements and contracts in prior years.
    The FY 2012 President's budget includes $785 million in mandatory 
funding for financial and technical assistance for the Wetlands Reserve 
Program and NRCS expects to enroll 271,158 acres.
Farm and Ranch Lands Protection Program
    The Farm and Ranch Lands Protection Program (FRPP) protects the 
nation's highly productive agricultural lands by providing matching 
funds to keep productive farm and ranch lands in agricultural uses. 
Farm and ranch lands enrolled in FRPP are protected from threats of 
conversion to non-agricultural uses, and remain productive and 
sustainable sources of food, fiber, and feed for the nation. Keeping 
land in agricultural use reduces the amount of urban pollution 
(nitrogen, phosphorus and sedimentation) from land that would otherwise 
be converted to lawns and impervious surfaces.
    FRPP is helping to achieve landscape scale conservation objectives. 
In FY 2010, nearly 19,000 acres of historic agricultural land, critical 
wildlife habitat and iconic views in Sublette County, WY were protected 
through an FRPP agreement. The Sommers-Grindstone Conservation Project 
includes four separate conservation easements and public fishing access 
on nearly 5 miles of the Green River. The agreement is a partnership 
among landowners, the Wyoming Game and Fish Commission, the Wyoming 
Stock Growers Agricultural Land Trust, and an extensive list of public 
and private funders, including NRCS. The easement will allow the land 
to remain undeveloped--benefitting cattle and wildlife--and will ensure 
that the ranch passes to another generation of ranchers. The cattle 
ranches are comprised of hay meadows, riparian areas, a diversity of 
trees, sage-brush, high-grass prairie, and wetlands. The conservation 
easements are held by the Wyoming Stock Growers Agricultural Land 
Trust, and the ranches remain under the ownership and management of the 
landowners. Additionally, FRPP supports the President's America's Great 
Outdoors initiative by preserving the natural landscape features of 
non-urbanized areas and encouraging the continued agricultural uses of 
the lands.
    In FY 2010, over 170,000 acres were enrolled in FRPP in 35 states. 
The average size easement enrolled in FY 2010 was 423 acres.
    The FY 2012 President's budget includes $200 million in mandatory 
funding for financial and technical assistance for the Farm and Ranch 
Lands Protection Program.
Grasslands Reserve Program
    The Grasslands Reserve Program (GRP) helps landowners and operators 
restore and protect rangeland, pastureland, and other grassland while 
maintaining the land's suitability for grazing. Participants 
voluntarily limit future development and cropping uses of the land 
while retaining the right to conduct common grazing practices and 
operations related to the production of forage and seeding.
    Limiting development and providing habitat needed by threatened, 
endangered, and other at-risk species, preserves agricultural heritage 
and green space, provides for recreational activities and ensures the 
nation's ability to produce its own food. For example, five GRP 
projects in Phillips County, MT have protected nearly 30,000 acres 
since 2009. These projects are preserving rural ranching operations 
while protecting critical wildlife habitat for sage-grouse and other 
grassland birds. More than 80 percent of the acres in the five ranches 
are prime habitat for sage-grouse.
    During FY 2010, the program obligated and committed $90.3 million 
of the financial assistance funding allocated to the states and 
enrolled 335,332 acres in the program. Of the funding provided, 
approximately 60 percent enrolled GRP easements and 40 percent enrolled 
rental contracts.
    The FY 2012 President's budget includes $67 million in mandatory 
funding for financial and technical assistance for the Grasslands 
Reserve Program to enroll an estimated 203,515 acres.
Healthy Forest Reserve Program
    Healthy Forest Reserve Program (HFRP) assists landowners in 
restoring, enhancing, and protecting forest ecosystems to: (1) promote 
the recovery of threatened and endangered species; (2) improve 
biodiversity; and (3) enhance carbon sequestration.
    HFRP provides financial assistance for specific conservation 
actions completed by the landowner. As funds are made available, NRCS 
solicits project proposals State Conservationists have developed in 
cooperation with partnering organizations. States selected for funding 
provide public notice of the availability of funding within the 
selected area.
    During FY 2010, NRCS received 164 applications in the 13 states 
with approved projects. Fourteen landowners were enrolled, encompassing 
5,583 acres, with financial assistance obligations valued over $6 
million.
    The FY 2012 President's budget includes $9.75 million in mandatory 
funding for the Healthy Forest Reserve Program.
Watershed Rehabilitation Program
    The purpose of the Watershed Rehabilitation Program is to extend 
the service life of dams and bring them into compliance with applicable 
safety and performance standards or to decommission the dams so that 
they do not pose a threat to life and property. NRCS may provide 
technical and financial assistance for the planning, design, and 
implementation of rehabilitation projects that may include upgrading or 
removing the dams.
    Eleven dam rehabilitations were completed in FY 2010, and there are 
23 dam rehabilitation projects currently under construction. There is 
one dam that is being decommissioned. Additionally, there were 650 
ongoing assessments of high hazard dams that provided communities with 
technical information about the condition of their dams and 
alternatives for rehabilitation for dams that do not meet Federal dam 
safety standards.
    The FY 2011 Final Continuing Resolution provided for $18 million in 
Watershed Rehabilitation funding. The FY 2012 President's budget does 
not include funding for the Watershed Rehabilitation Program, 
reflecting the many difficult choices that were made in the budget 
prioritizing process this year.
Watershed and Flood Prevention Operations Program
    The Watershed and Flood Prevention Operations program authorizes 
the Secretary of Agriculture to provide technical and financial 
assistance to entities of state and local governments and Tribes 
(project sponsors) for planning and installing watershed projects. The 
Watershed Protection and Flood Prevention Program is available 
nationwide to protect and improve watersheds up to 250,000 acres in 
size. Currently there are approximately 300 active small watershed 
projects throughout the country. The Flood Control Act of 1944 is 
available only in areas authorized by Congress; and these areas cover 
about 38 million acres in 11 states.
    The FY 2011 Final Continuing Resolution did not include funding to 
carry out the Watershed and Flood Prevention Operations program for the 
remainder of the fiscal year. Further, the FY 2012 President's budget 
does not include funding for the Watershed and Flood Prevention 
Operations Program, including the Watershed Operations (P.L. 78-534) 
and Small Watersheds (P.L. 83-566). NRCS is in the process of 
conducting an orderly close-out of these programs, ensuring to the 
maximum extent possible that the highest priority projects are 
completed with the limited remaining funds.
Resource Conservation and Development
    The Resource Conservation and Development (RC&D) Program objective 
is to encourage and improve the capability of state and local units of 
government and nonprofit organizations in rural areas to plan, develop, 
and implement programs for resource conservation and development. NRCS 
provided program administration and assistance to RC&D areas and their 
volunteer nonprofit RC&D Councils.
    The FY 2011 Final Continuing Resolution did not include funding to 
carry out the Resource Conservation and Development program for the 
remainder of the fiscal year. Further, the FY2012 President's budget 
does not include funding for the Resource Conservation and Development 
program. NRCS is in the process of conducting an orderly close-out of 
its RC&D program operations. The elimination of funding, however, does 
not eliminate RC&D Councils, which may continue to operate and compete 
for assistance from state, local, and other Federal agencies, private 
organizations, and foundations to carry out specific projects.
Conclusion
    In conclusion, conservation programs play an essential role in the 
nation's food security. Conservation helps to make farms and ranches 
more resilient to risks--whether from pests, disease, floods, or 
drought--and helps producers adapt to the challenges. Our farmers and 
ranchers know better than anyone the value of clean water, clear air 
and healthy soil for agricultural production. They know that land 
stewardship secures the future, and they have made incredible strides 
to protect the land they rely on. Through programs such as the 
Environmental Quality Incentives Program and the Conservation 
Stewardship Program, NRCS builds partnerships with farmers, ranchers, 
and forestland owners to make their operations more sustainable. These 
conservation efforts improve soil fertility and reduce soil erosion, 
improve fertilizer use and water use efficiency, reduce energy use, and 
enhance overall productivity.
    These investments in private lands conservation are good for 
farmers, ranchers, and forestland owners-reduced input costs directly 
help the bottom line, while improved soil and water quality help 
maintain and even enhance long-term productivity while minimizing 
regulatory pressures. These same investments in conservation work for 
all Americans, by contributing to healthy landscapes, healthy 
communities, and to the food security of our nation and the world.
    Thank you for the opportunity to be here today to discuss the work 
of NRCS. I am happy to answer any questions from the Subcommittee 
Members.
                                                                NRCS Cost-Share Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Agricultural                                              Cooperative                          Environmental
                        Management         Agricultural       Conservation       Conservation      Chesapeake Bay        Quality        Wildlife Habitat
Program/Initiative  Assistance Program  Water Enhancement     Stewardship        Partnership     Watershed Program      Incentives     Incentive Program
                           (AMA)          Program (AWEP)     Program (CSP)    Initiative (CCPI)        (CBWP)         Program (EQIP)         (WHIP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Purpose or Goal     Provides cost-      Provides           Encourages         CCPI is a          Provides           Provides           Provides
                     share assistance    financial and      producers to       conservation       financial and      financial and      financial and
                     to agricultural     technical          address resource   initiative that    technical          technical          technical
                     producers to        assistance to      concerns in a      enables the use    assistance to      assistance to      assistance to
                     address issues      agriculture        comprehensive      of certain         agricultural       agricultural       develop fish and
                     such as water       producers in       manner by          conservation       producers to       producers to       wildlife habitat
                     management, water   approved project   improving,         programs along     help plan and      help plan and      on private
                     quality, and        areas to           maintaining, and   with resources     implement          implement          agricultural
                     erosion control     implement water    managing           of eligible        conservation       conservation       land,
                     by incorporating    enhancement        existing           partners to        practices that     practices that     nonindustrial
                     conservation into   activities on ag   conservation       provide            improve water      address natural    private
                     their farming       land for the       activities; and    financial and      quality and        resource           forestland, and
                     operations.         purpose of         undertaking        technical          quantity and       concerns and for   Tribal lands.
                                         conserving         additional         assistance to      restores,          opportunities to   All private or
                                         surface and        conservation       owners and         enhances, and      improve soil,      Tribal
                                         ground water and   activities.        operators of       preserves soil,    water, plant,      agricultural
                                         improving water                       agricultural and   air and related    animal, air, and   land is
                                         quality.                              nonindustrial      resources.         related            eligible, unless
                                                                               private                               resources on       it is currently
                                                                               forestlands.                          Tribal land,       enrolled in CRP,
                                                                                                                     agricultural       WRP, HFRP, WBP,
                                                                                                                     land, and          EWPP, GRP or a
                                                                                                                     nonindustrial      similar program.
                                                                                                                     private
                                                                                                                     forestland. The
                                                                                                                     program does not
                                                                                                                     include land
                                                                                                                     enrolled in CRP,
                                                                                                                     WRP, or GRP.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Length of           1-10 years          1-10 years         5 years            Partners enter     1-10 years         1-10 years         1-10 years, or a
 agreement/                                                                    into multi-year                                          minimum of 15
 contract                                                                      agreements.                                              years for
                                                                              Project start and                                         agreements for
                                                                               end dates (not                                           essential plant
                                                                               to exceed a                                              and animals.
                                                                               period of 5
                                                                               years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acreage enrollment  11,102              270,667            25,164,327         1,193,967          156,704            13,034,363         1,054,095
 level in FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost of the         FY 2011 $7.5 m      FY 2011 $74m       FY 2011 $600.8 m   Funded from EQIP,  FY 2011 $72 m      FY 2011 $1.24 b    FY 2011 $85 m
 program            FY 2012 $2.5 m per  FY 2012 $60 m      FY 2012 $787.6 m    WHIP, CBWP, and   FY 2012 $50 m      FY 2012 $1.41 b *  FY 2012 $73 m **
                     President's                            per President's    CSP
                     budget                                 budget
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2010 Backlog of  767                 1,724              6,322              Included in        1,355              39,028             3,788
 applications                                                                  individual
                                                                               program totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eligible land       AMA is available    All private or     All private or                        All private or     Private and        All private or
                     in 16 states        Tribal land in     Tribal                                Tribal land in     Tribal             Tribal
                     where               agricultural       agricultural                          agricultural       agricultural       agricultural
                     participation in    production is      land and                              production is      land, including    land is
                     the Federal Crop    eligible.          nonindustrial                         eligible.          cropland,          eligible, unless
                     Insurance Program   Includes           private                               Includes           grassland, and     it is currently
                     is historically     cropland,          forestland is                         cropland,          nonindustrial      enrolled in CRP,
                     low.                grassland, and     eligible unless                       grassland, and     private            WRP, HFRP, WBP,
                                         nonindustrial      it is enrolled                        nonindustrial      forestland but     EWPP, or GRP.
                                         private            in CRP, WRP, or                       private            does not include   Participants
                                         forestland.        GRP.                                  forestland, but    land enrolled in   must have
                                                                                                  does not include   CRP, WRP, or GRP   control of land
                                                                                                  land enrolled in                      for the duration
                                                                                                  CRP, WRP, or                          of the contract.
                                                                                                  GRP.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Does funding        Yes                 Yes                Yes                Yes                No-year            Yes                Yes
 expire October 1,
 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payments            Up to 75% or up to  Up to 75% or up    Annual payment                        Financial          Financial          Up to 75% for
                     90% for             to 90% for         based on level                        assistance to      assistance to      contracts with a
                     historically        historically       of conservation                       participants for   participants for   duration of 10
                     underserved         underserved        stewardship;                          the estimated      the estimated      years or less;
                     participants        participants       supplemental                          costs incurred     costs incurred     up to 90% for
                                                            payment for                           for performing     for performing     historically
                                                            participants                          or implementing    or implementing    underserved
                                                            that adopt a                          conservation       conservation       participants;
                                                            resource                              practices. Up to   practices. Up to   and up to 90%
                                                            conserving crop                       75% and up to      75% and up to      for contracts
                                                            rotation.                             90% for            90% for            having a
                                                            National average                      historically       historically       duration of at
                                                            cost not to                           underserved        underserved        least 15 years.
                                                            exceed $18/ac.                        participants.      participants.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Producer            Develop and follow  Develop and        Implement a        In order for a     Develop and        Develop and        Develop and
 Responsibilities    a plan that         follow a plan      conservation       producer to be     follow a plan      follow a plan      follow a plan
                     describes the       that describes     stewardship plan   considered for     that describes     that describes     for high quality
                     conservation and    the conservation   that encourages    financial          the conservation   the conservation   fish or wildlife
                     environmental       and                producers to       assistance         and                and                habitat.
                     objectives to be    environmental      address resource   through a CCPI     environmental      environmental      Contribute to
                     achieved.           objectives to be   concerns in a      partner            objectives to be   objectives to be   the installation
                     Contribute to       achieved.          comprehensive      agreement, the     achieved.          achieved.          costs and
                     installation        Contribute to      manner by          land associated    Contribute to      Contribute to      perform
                     costs.              installation       installing and     with a program     installation       installation       operation and
                                         costs.             adopting           application must   costs and          costs and          maintenance
                                                            additional         be located         perform            perform            during the
                                                            conservation       within an          operation and      operation and      lifetime of the
                                                            activities and     approved CCPI      maintenance        maintenance        installed
                                                            improving,         project area.      during the         during the         practices.
                                                            maintaining, and   Only producers     lifetime of the    lifetime of the
                                                            managing           who are eligible   installed          installed
                                                            existing           for EQIP, WHIP,    practices.         practices.
                                                            activities.        CBWP, or CSP may
                                                                               receive
                                                                               financial
                                                                               assistance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appeals Process     Non-Title XII       Title XII          Title XII          Title XII          Title XII          Title XII          Title XII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Participants are    Adjusted Gross      Adjusted Gross     Adjusted Gross     Adjusted Gross     Adjusted Gross     Adjusted Gross     Adjusted Gross
 subject to:         Income              Income             Income             Income             Income             Income             Income
                     limitations.        limitations.       limitations.       limitations.       limitations.       limitations.       limitations.
                    Reporting           Reporting          Reporting          Reporting          Reporting          Reporting          Reporting
                     requirements of     requirements of    requirements of    requirements of    requirements of    requirements of    requirements of
                     the Federal         the Federal        the Federal        the Federal        the Federal        the Federal        the Federal
                     Funding             Funding            Funding            Funding            Funding            Funding            Funding
                     Accountability      Accountability     Accountability     Accountability     Accountability     Accountability     Accountability
                     and Transparency    and Transparency   and Transparency   and Transparency   and Transparency   and Transparency   and Transparency
                     Act of 2006         Act of 2006        Act of 2006        Act of 2006        Act of 2006        Act of 2006        Act of 2006
                                        Highly erodible    Highly erodible    Highly erodible    Highly erodible    Highly erodible    Highly erodible
                                         land and wetland   land and wetland   land and wetland   land and wetland   land and wetland   land and wetland
                                         compliance.        compliance.        compliance.        compliance.        compliance.        compliance.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* EQIP funding authorized in the farm bill is $1.59 b for FY 2011 and $1.75 b for FY 2012.
** WHIP funding authorized in the farm bill for FY 2012 is $85 m.


                                                                 NRCS Easement Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Emergency Watershed
 Program Characteristic   Wetlands Reserve Program    Program--Flood Plain        Grassland Reserve       Farm and Ranch Lands    Healthy Forest Reserve
                                                            Easement                   Program             Protection Program         Program (HFRP)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Purpose or Goal           Restore, protect, or      Restore, protect,         Restore and protect       Assists with the         Restore, protect and
                           enhance wetlands on       maintain and enhance      rangeland, pastureland    purchase of              enhance forest
                           eligible lands. The       the functions of the      and other grassland       conservation easements   ecosystems to promote
                           goal is to achieve the    floodplain; conserve      while maintaining the     to protect               the recovery of T&E
                           greatest wetlands         natural values            land's suitability for    agricultural             species; improve
                           functions and values,     including fish and        grazing. Program          productivity and         biodiversity; and
                           along with optimum        wildlife habitat, water   emphasis is on            related conservation     enhance carbon
                           wildlife habitat on       quality, flood water      supporting grazing        values of the land.      sequestration.
                           every acre enrolled in    retention, ground water   operations, plant and
                           the program. The          recharge and open         animal biodiversity,
                           program accepts           space; reduce long-term   and grassland and land
                           eligible wetlands and     Federal disaster          containing shrubs or
                           associated habitats       assistance; and           forbs under the
                           such as uplands,          safeguard lives and       greatest threat of
                           riparian areas, and       property from floods,     conversion.
                           forestlands.              drought, and the
                                                     products of erosion.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Length of easement/       Easements: Permanent and  Permanent easements.      Easements: Permanent and  Permanent, unless state  Easements: Permanent,
 contract                  30 years and maximum                                maximum duration under    law prohibits a          30 year, and maximum
                           allowed under state                                 state Law.                permanent easement.      allowed under state
                           Law.                                               Contracts: 10 year, 15                              law; 30 year contracts
                          Restoration cost-share                               year, and 20 year                                  with Tribes; 10 year
                           agreements: generally                               rental contracts.                                  cost-share agreements.
                           10 years; 30 year
                           contracts with Tribes.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acreage enrollment level  2,347,128                 187,876                   1,206,953                 809,098                  691,860
 Numbers through FY10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost of the program FY09  $1,065,850                EWP-FPE: $62,567          $147,766                  $268,662                 $10,143
 and FY10 obligations     FY11 projection:          Recovery: $156,480
 (in thousands FA and      $611,312
 TA)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Backlog of applications   2,715 applications        2,194 applications        401 applications          184 applications         150 applications
 as of June 10, 2011      251,915 acres             215,920 acres *           209,058 acres             92,365 acres             24,565 acres
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land valuation            Lowest of Geographic      Geographic Area Rate      Lowest of Geographic      Appraisals--Fair market  Appraisals--Before and
                           Area Rate Cap,            Cap, appraisals or        Area Rate Cap,            value less               After appraisal
                           appraisals (seldom        market analysis.          appraisals conducted by   agricultural value.      method.
                           used) conducted by                                  certified, general real
                           certified, general real                             property appraisers or
                           property appraisers, or                             landowner offer. Value
                           landowner offer.                                    based on fair market
                                                                               value less grazing
                                                                               value.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Landowner eligibility     Must be a landowner to    Must be a landowner to    Must be a landowner for   Program is implemented   Must be the landowner
                           participate in the        participate in the        easement participation    through eligible         of eligible land for
                           program. Landowners       program.                  or be a landowner or      entities. Eligible       which enrollment is
                           must comply with Highly  Landowner does not need    have control of           entity requirements      sought.
                           Erodible Land and         to comply with Highly     eligible land for         found in 7 CFR part     Landowner does not need
                           Wetland Conservation      Erodible Land and         rental contract           1491.                    to comply with Highly
                           provisions of FSA of      Wetland Conservation      participation.           Must be a landowner to    Erodible Land and
                           1985.                     provisions of FSA of     Must comply with Highly    sell an easement to an   Wetland Conservation
                          Adjusted gross income      1985.                     Erodible Land and         eligible entity.         provisions of FSA of
                           provisions apply.        Registration and           Wetland Conservation      Participating            1985.
                          Registration and           reporting requirements    provisions of FSA of      landowners must comply  Registration and
                           reporting requirements    of the Federal Funding    1985.                     with Highly Erodible     reporting requirements
                           of the Federal Funding    Accountability and       Adjusted gross income      Land and Wetland         of the Federal Funding
                           Accountability and        Transparency Act of       provisions apply.         Conservation             Accountability and
                           Transparency Act of       2006.                    Registration and           provisions of FSA of     Transparency Act of
                           2006.                                               reporting requirements    1985                     2006.
                          7 year ownership                                     of the Federal Funding   Adjusted gross income
                           requirement.                                        Accountability and        provisions apply.
                                                                               Transparency Act of      Registration and
                                                                               2006.                     reporting requirements
                                                                              GRP has an option where    of the Federal Funding
                                                                               easements can be          Accountability and
                                                                               acquired through          Transparency Act of
                                                                               eligible entities         2006.
                                                                               similar to FRPP.
                                                                               Criteria for
                                                                               determining whether an
                                                                               entity is ``eligible''
                                                                               can be found in 7 CFR
                                                                               part 1415.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Land Eligibility          Marginal, frequently      Any floodplain lands      Grassland, land that      Must be privately owned  Eligible land includes
                           flooded agriculture       damaged by flooding at    contains forbs or         land on a farm or        private land that
                           lands and associated      least once within the     shrubland where grazing   ranch and contain at     contributes to the
                           uplands.                  previous calendar year,   is the predominant use;   least 50 percent         restoration and
                          Note, the term             or that have a history    or land located in an     prime, unique,           enhancement of habitat
                           agriculture lands do      of repeated flooding      area that has been        statewide, or locally    or otherwise increase
                           include wooded lands.     (i.e., flooded at least   historically grassland,   important farmland,      the likelihood of
                                                     twice within the          forbs, or shrubland,      unless otherwise         recovery for a
                                                     previous 10 years).       and the land could        determined by NRCS;      selected species under
                                                     While NRCS normally       provide habitat for       contain historical or    section 4 of ESA,
                                                     purchases floodplain      animal or plant           archaeological           candidate species,
                                                     easements on              populations of            resources; furthers a    state listed species
                                                     agricultural lands, on    significant ecological;   state or local policy    or one identified by
                                                     a case-by-case basis      contains historical or    consistent with the      the Chief for special
                                                     NRCS may purchase         archeological             purposes of the          consideration.
                                                     floodplain easement in    resources, or would       program; and is
                                                     rural residential areas   address issues raised     subject to a pending
                                                     in lieu of traditional    by state, regional, and   offer by an eligible
                                                     EWP recovery work if a    national conservation     entity;
                                                     sponsor is acquiring      priorities.              (2) Must be cropland,
                                                     the underlying land                                 rangeland, grassland,
                                                     rights and the cost of                              pastureland, or
                                                     the recovery work would                             forestland that
                                                     exceed the easement                                 contributes to the
                                                     acquisition costs. In                               economic viability of
                                                     such situations, any                                an agricultural
                                                     structures are then                                 operation or serves as
                                                     demolished or removed                               a buffer to protect an
                                                     from the easement area.                             agricultural operation
                                                                                                         from development; Must
                                                                                                         not include forestland
                                                                                                         on greater than \2/3\
                                                                                                         of the easement area.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payments                  For easement: provides    Provides acquisition      For easement: provides    Provides cost-share      For easement: provides
                           acquisition costs;        costs; administrative     acquisition costs;        assistance to eligible   acquisition costs;
                           administrative costs      costs associated with     administrative costs      entities to acquire an   administrative costs
                           associated with           acquiring an easement,    associated with           easement.                associated with
                           acquiring an easement,    and restoration costs.    acquiring an easement,   Single payment or up to   acquiring an easement,
                           and restoration costs.   Easement payments are      and restoration costs.    five installment         and restoration costs.
                          For 30 year contracts:     made as a single         Easement payments are      payments; first         For 30 year contracts:
                           provides contract         payment                   generally a single        payment at closing       provides contract
                           payment.                                            payment however;          followed by four         payment.
                          Easement payments are                                landowners may request    annual payments.        Easement and contract
                           generally a single                                  payment for up to 10                               payments may be made
                           payment but may be made                             years in equal or                                  in a single payment or
                           in annual payments for                              unequal amounts.                                   for no more than ten
                           no more than 30 years.                             For rental contracts:                               annual payments of
                          For restoration cost-                                provides annual rental                             equal or unequal size.
                           share agreement:                                    payment. If restoration                           For restoration cost-
                           provides restoration                                efforts are necessary,                             share agreement:
                           cost-share assistance.                              participant can receive                            provides restoration
                                                                               cost-share assistance                              cost-share assistance.
                                                                               through a restoration
                                                                               agreement.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Special provisions for    30 year contract          None                      None                      None                     30 year contracts
 Indian Tribes             enrollment option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Does funding expire       Expires--annual funds     No-year funds except for  Expires--annual funds     Expires--annual funds    No-year funds
 October 1, 2012                                     ARRA funds which are 2
                                                     year funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appeals process           Title XII                 Non-Title XII             Title XII                 Title XII                Non-Title XII
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Data is still undergoing quality assurance review.

                              Attachment 2

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    The Chairman. I thank the gentleman. Thank you both for 
your testimony.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival. And I appreciate 
Members understanding. I am going to reserve my time for 
questioning.
    I now recognize the Chairman of the Agriculture Committee, 
Mr. Lucas, for 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman.
    And I do appreciate the presentation you gentlemen have 
given. The challenge this Committee faces as we sit here in 
preparation for a farm bill next year or perhaps if the grand 
discussions between the President and the leadership of both 
the House and the Senate come about, a rather quicker process 
where the budget realities are going to come to bite very 
challengingly. And clearly, it is not just going to be the 
Commodity Title. It will be Conservation. It will be all the 
programs. So I ask my questions in light of the Committee's 
preparation to make some tough, tough decisions.
    Administrator, how much are we going to spend on CRP this 
year, round numbers?
    Mr. Nelson. Congressman, it is $1.7 billion annual rental 
payments.
    Mr. Lucas. Chief, how much are we going to spend on CSP 
this year?
    Mr. White. Around $600 million.
    Mr. Lucas. Six hundred million dollars. How much on WRP?
    Mr. White. About $611 million.
    Mr. Lucas. Six hundred eleven million dollars dollars?
    Mr. White. Yes.
    Mr. Lucas. Okay. And I would take note the Chief is exactly 
right. The Dam Rehabilitation Program is one of those designed 
to be administered strictly on a priority basis established by 
the Department after review of all the structures, no earmarks, 
no silly games from Congress, a very straightforward way to do 
things. And it has been implemented in that way.
    Chief, could you explain to the Committee for just a moment 
about EQIP and the difference between the approach in EQIP and 
CSP?
    Mr. White. Mr. Lucas, I kind of think of them in two 
different ways. EQIP I think is your bricks and mortar. That is 
your pipeline. That is your animal facility. That is your 
fence. That is your filter strip. That is your terrace. It is 
things you put on the ground. The Conservation Stewardship 
Program is more of management-related. It is going to be taking 
nutrient management and going to precision nutrient management. 
It is going to be taking prescribed grazing and advancing that. 
So it is more of the management. That is the way I kind of look 
at them, sir.
    Mr. Lucas. So from the perspective of the countryside on 
CRP, if you want to participate in the program, you have to 
participate within the guidelines. If you are accepted, you are 
signed up for 10 years. In CSP it is not so much just putting 
your property into the program. You have to adjust your 
practices to fit the goals of CSP?
    Mr. White. Well, there are priority resource concerns that 
vary around the country. Each state kind of, with their state 
technical committee and local workgroups, will design those. 
CSP is a 5 year contract. It is renewable for another 5 years. 
And to get in you have to be meeting a resource concern like 
soil erosion, water quality, and you have to agree to do 
another one. There is a lot of additionality. In fact, in the 
20,000 contracts we had at the end of last year, Mr. Lucas, we 
had about 78,000 to 79,000 new practices in there that the 
producers self-select. So there are things they want to do.
    Mr. Lucas. And I would note to my friends on the 
Subcommittee that as we work through the next farm bill, we 
also have obligations under WTO, CRP being green-box compliant. 
CSP, because it requires certain practices, it falls in a 
different category. Just for a moment back to the cost of the 
various programs, at a $1.7 for CRP, $600 million approximately 
for CSP, and you said $550 million for the Wetlands Reserve 
Program?
    Mr. White. Yes, let me double-check that.
    Mr. Lucas. Please. And the simple reason I bring that, in 
times of tighter budgets, that looks like a pretty interesting 
dollar figure per acre on WRP compared to the other two.
    Mr. White. It has been averaging about $2,000 an acre.
    Mr. Lucas. Averaging $2,000 an acre?
    Mr. White. But that is long-term protection as well.
    Mr. Lucas. And we signed up for how many years on the WRP? 
The length of contract on the WRP?
    Mr. White. WRP is permanent easements, which is the bulk of 
them. It could be 30 year. There is also a provision that was 
put in in 2008 for 30 year tribal contract. And then there is 
one that is not used very much for restoration only, 10 year 
contracts.
    Mr. Lucas. Six hundred thirty million dollars on 10 million 
acres.
    Mr. White. Sorry.
    Mr. Lucas. I will send you some more questions later about 
that.
    Mr. White. Thank you, sir.
    Mr. Lucas. And I see my time is about to expire. I would 
just note to the Committee that the challenges we face--the 
conservation programs are the most popular. They do the most 
good. They are the legacy programs, as our friends here have 
stated. But the budget situation and the grand negotiations 
going on are going to be so tough. We are going to have to make 
some extremely tough decisions in all areas of the farm bill in 
a lot of things we have done historically such as helping our 
California friends meet their emissions standards brings 
questions to light: Is it appropriate? How much should the 
Federal Government spend to meet state standards in comparison 
to what it does in the rest of the country?
    With that I yield back the time I don't have. Thank you, 
Mr. Chairman.
    The Chairman. I thank the Chairman. I now recognize the 
Ranking Member of the full Agriculture Committee, Congressman 
Peterson, for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    First of all, Mr. White, I was having a discussion back 
home this last week about CSP, and according to them, the way 
this is rolled out that there is not flexibility for the states 
to set their own priorities, that according to them, they are 
having to follow national priorities, which do not work in 
northwest Minnesota. And I heard you say that the state 
technical committees were making these decisions and so forth, 
but these are from local folks that are on the ground saying 
that the way this has been put together does not work for them. 
There are 25 practices that you can choose from to get 
qualified and only three of the 25 actually work in that part 
of the country. And so they were asking for more flexibility 
for the states. So, if you would check into it, I don't know 
what is going on exactly. Maybe the state made this decision 
and they didn't recognize what was going on. I don't know.
    Mr. White. There are about 80 or 90 enhancements, there are 
some national priorities, but we do try to fit it so I will 
have to get back to you.
    Mr. Peterson. Well, for whatever reason, they claim there 
is only like three things on that list that actually work in 
that part of the world. So whatever.
    And Chairman Lucas, you have to, when you go to sign up, 
you have this list of all of these practices that you can pick 
and some of them are worth more than others, but, supposedly, 
there is flexibility there to make it work on your farm.
    And I would also say on the CRP, I hope that everybody 
recognizes what is going on. There has been talk out there 
about CRP. But as we go through these signups, we are sorting 
this out. We had 4.1 million acres come out this year, 4.4, 
million acres something like that. Pardon?
    Mr. Nelson. Congressman, that is 4.4 million acres of 
contracts expiring this year.
    Mr. Peterson. Right. And they only signed back up 2.9 
million acres.
    Mr. Nelson. Well, 2.8 million acres, yes.
    Mr. Peterson. Oh, 2.8 million acres. And I think the number 
was like you had to have 279 EBI or something to get qualified, 
so this is significantly higher than what it has been, and so 
there is a lot of this land out there that is coming back into 
production just as we go through this process. Next year, there 
are going to be 6 million acres coming out. We will probably 
see a similar kind of situation where only \1/2\ of that is 
going to get back in.
    I think we have a process set up here that is sorting out 
the land that should be farmed, the land that shouldn't be 
farmed, and I hope we don't go off on some tangent where we are 
doing some meat-ax thing where we end up putting a bunch of 
land back in production that is going to cost us crop insurance 
and disasters and other things. So that is just an editorial 
comment.
    The other thing I am concerned about is with these budget 
deals that were made in the CR and so forth, there has been 
talk out there that I read in news articles that you are not 
going to be able to honor contracts. I just want to make sure 
that you have enough money to--any contract that has been 
signed that there is sufficient money to actually pay that 
contract. Is that the case?
    Mr. White. Mr. Peterson, that is the case. We will have 
enough money to fund all of the contracts.
    Mr. Peterson. But you probably have had to cut back on how 
many additional contracts you couldn't offer because of this?
    Mr. White. Not at this point.
    Mr. Peterson. Well, I thought they cut back on your 
appropriation. Didn't they?
    Mr. White. The biggest cutback we had was in the 
discretionary amounts like RC&D, the Watershed Program, there 
were reductions in mandatory but they were just kind of the 
normal CHIMPs. They were from the authorized levels. No program 
actually got less. There was maybe some cut in WRP but a cut 
from the authorized level, we still saw an increase in the 
actual, at least for EQIP.
    Mr. Peterson. So you weren't spending your authorized 
level? I mean just because it has been CHIMPed every year.
    Mr. White. For programs like EQIP, it has generally been 
CHIMPed.
    Mr. Peterson. So because they have been CHIMPing it every 
year, you guys just don't spend what was authorized?
    Mr. White. No, sir. We can only spend what is appropriated. 
And this year it will be about $1.4 billion. And I think your 
authorized level this year is $1.588.
    Mr. Peterson. Well, I thought they CHIMPed some other 
programs, too?
    Mr. White. Yes, but I don't think that anything that is 
going to result in a reduction in contracts to people.
    Mr. Peterson. So that didn't change anything out there in 
terms of----
    Mr. White. No. The biggest cuts we are dealing with are for 
discretionary with the RC&D Program, the Watershed, trying to 
close those two. They affect about 400 people, 500 people. We 
are offering a buyout, early-out offers. No one has lost their 
job, and for this year at least I think we are okay. I guess 
the biggest thing is WRP was capped at 202,000 acres. Last year 
we enrolled like 270,000 acres, but that was an unbelievable 
year. That was the biggest enrollment year in the history of 
the program.
    Mr. Peterson. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. I recognize myself for 
5 minutes for questions.
    Both of you mentioned the positive impacts conservation 
programs are having on restoration efforts in the Chesapeake 
Bay. Does NRCS have specific data on how much nitrogen, 
phosphorus, and sediment has been reduced in recent years, and 
are there projections for future reductions?
    Mr. White. Yes, sir. Yes, sir, we do. We embarked on this 
project called the Conservation Effects Assessment Project, 
CEAP. We have done one in the Chesapeake Bay and it looked at 
2003, 2004, 2005. So that is kind of the baseline. And I can 
tell you that voluntary incentive-based conservation is having 
huge reductions in nitrogen, phosphorus and sediment going into 
the Bay. If you look at that 2005-06 baseline and you look at 
just the conservation we put on since that time, we have had 
like a 15 percent further reduction in phosphorus, like a 17 
percent reduction in nitrogen, and I cannot remember the figure 
for sediment, but we can get that to you. That has just 
occurred since 2006. So farmers and ranchers really are making 
huge strides in the Chesapeake Bay.
    The Chairman. Very good. I hear a lot from aspiring young 
farmers. Some of these folks, frankly, didn't grow up in a farm 
family, which is very impressive, somebody that wants to go 
into farming. And one of the concerns that I often hear--and I 
have heard this in different parts of the district is that 
there are often times USDA, the programs we are talking about 
today offers a higher reimbursement or rental rates per acre to 
put something into a conservation program than what those same 
acres would fetch in an open market. And frankly, I had one 
farmer that actually had to rent fields a long distance from 
his home when there was adjoining property that his business 
plan he put together, he couldn't compete with the government 
was the bottom line. Is this something that you have heard 
before? Is this something that we look at, that we monitor the 
impact of?
    Mr. Nelson. Mr. Chairman, I will learn how to use that talk 
button yet, sir.
    Mr. Chairman, with respect to the CRP program, the 2008 
Farm Bill, as you know, now requires that the National 
Agricultural Statistics Service do a survey of cash rental 
rates in counties around the country, and that is used as a 
basis for setting the CRP rental rates. And so we now have a 
more solid statistical basis for defending those rates than we 
might have had in the past.
    And just to give you some anecdotal evidence putting CRP 
rental rates in perspective, I come from Chouteau County, 
Montana, dry land wheat farmer out there, hometown is Fort 
Benton. And I was on the farm back in the 1980s when the CRP 
program got started. And the rental rates at that time were 
about $45 an acre. That is the biggest wheat-producing county 
in the state and we still enrolled about 240,000 acres in CRP. 
So $45 back in 1986. In the latest Signup 41 in Chouteau 
County, the average rental rate in county was about $39. And if 
you take into account the consumer price index that a dollar is 
worth about half now what it was back in 1986, that means that 
the real cash rental rates for my friends and neighbors there 
in Chouteau County who participate in CRP, the real CRP rental 
rate is about half now what it was. And I think part of that, 
again, is that because we have a statistic service doing that 
survey out there that we are pegging the CRP rental rates 
closer to the market than perhaps they were in the past.
    The Chairman. Very good. Thank you. My time has expired. I 
am thinking we will probably get an opportunity for a second 
round.
    So I now recognize the gentleman from Pennsylvania, Mr. 
Holden, for 5 minutes.
    Mr. Holden. Thank you, Mr. Chairman.
    Chief White, you mentioned in your opening statement the 
Chesapeake Bay Program, and you know Mr. Goodlatte and I worked 
hard on the last farm bill with the other Members of this 
Subcommittee and the full Committee to get that program into 
the farm bill. Has the 2011 CR, which cut mandatory spending by 
$673 million hindered the ability to implement that program as 
we envisioned it, due to the regulatory burdens that they were 
facing. We thought it was so important to give them a little 
extra investment to deal with what was coming down from EPA. 
Have you been able to do what we asked you to do despite the 
cuts in 2011?
    Mr. White. Yes, sir. As part of that, the Chesapeake Bay 
was fully funded. It was not CHIMPed or reduced.
    Mr. Holden. We have no idea where the 2012 Appropriation 
Bill is going to end up but we know what the House did. If it 
ends up being around $1 billion in reductions in conservation, 
do you think that will affect the Bay program?
    Mr. White. Yes. Basically, what you will have, Mr. Holden, 
is fewer contracts, less conservation on the land, probably 
fewer people to do that.
    Mr. Holden. And finally, Chief White, you mentioned 
farmland preservation, and how important it is to the 
Commonwealth of Pennsylvania. In the 2008 Farm Bill, as you 
mentioned, we had to make some changes because we though there 
were some administrative problems in Pennsylvania specifically. 
And I was hearing everything was going fine, but I have one 
county in my district, Lebanon County, who was complaining 
about the ability to enter into contracts, that there seems to 
still be some red tape. So this really isn't a question. If you 
could have you or your staff look into it, is there still a 
problem with getting someone in your agency to approve 
contracts or what the exact problem is?
    Mr. White. It is a problem, Mr. Holden. I take full 
responsibility for it. We have not been as fast as we should 
have been in getting that certified entity process out there. 
We have advanced how we are looking at with Pennsylvania in 
particular so we hopefully have taken care of that problem. But 
the root cause lies with me and hopefully in the next 30 days 
we will get those rules out there for certified entities, which 
will greatly streamline the process across the country.
    Mr. Holden. And you don't need anything further from us?
    Mr. White. No, sir.
    Mr. Holden. All right. Thank you.
    Mr. White. I have to assume blame for that one.
    Mr. Holden. Thanks, Mr. Chairman.
    The Chairman. I thank the gentleman. I recognize the 
gentleman from Florida, Mr. Southerland, for 5 minutes.
    Mr. Southerland. Thank you, Mr. Chairman.
    Mr. White, I find your testimony refreshing, very honest. 
You are passionate about what you do and thank you. And you as 
well, Mr. Nelson. I know that regarding the issues that I am 
concerned with, it just seems that, Mr. White, you seem to be 
speaking about quite a bit of the things that interest me.
    But I wanted to ask you regarding Longleaf Pine 
Restoration. I am from North Florida----
    Mr. White. Yes.
    Mr. Southerland.--and obviously Longleaf Pine restoration 
is something that is a great concern to a lot of our landowners 
there, as well as our National Forest there. I understand that 
the Florida NRCS and the Wildlife Habitat Incentive Program has 
been used to assist landowners, increasing planting of Longleaf 
Pine. Can you just elaborate to me? I am still learning about 
the program. Please elaborate a little bit on USDA efforts and 
the services you are providing for these private landowners.
    Mr. White. Thank you, sir. That is a great one. I love the 
longleaf pine. When this nation was settled, we had 90 million 
acres of longleaf pine. It is a gorgeous plant. It is more like 
a savannah grass underneath, a tree that grew up under frequent 
fire regimes. And now we are down to like 3 million acres. And 
your area from Mr. Goodlatte's area to yours and swinging 
across the Texas is where the longleaf were.
    We are trying to work with the Forest Service, other 
agencies outside of USDA, private landowners to try to restore 
that particular forest. And we are using mostly the Wildlife 
Habitat Incentive Program. And when I talked a little bit about 
WHIP, I said the unique thing, one of the really cool things 
about it is we have a directive there to use the funding for 
state and national initiatives. This longleaf pine really came 
from the bottom up. It wasn't from me down. It came from those 
various states saying we need to do something about this. And 
we are very pleased to cost-share with producers to plant 
trees.
    Another big thing is getting rid of the invasives like an 
Alabama cogongrass and there is just a gob of invasive species 
out there. Well, you know that being from Florida. You are like 
ground zero for that. So it is helping with invasives and 
helping to reestablish this tree. This tree built Williamsburg. 
It kept the wooden ships afloat, built Savannah, straight, 
long-grain, rot-resistant, a fabulous--it provides habitat for 
I don't know how many hundreds of different creatures. It is 
amazing.
    Mr. Southerland. Well, thank you. I am going to move on to 
Everglades restoration, a little bit farther down from my neck 
of the woods, but still the Everglades is an important part of 
our state. And I know that WRP is a popular program in Florida, 
but tell me just a little bit because it is farther down, so 
you understand more about that than I do even thought I still 
have constituents in my neck of the woods who still reach out 
to my office.
    Share with me, though, and the Committee how the WRP 
Wetland Restoration Program, it works down with the--and I know 
that there are private landowners in and around the Everglades 
working with you. Can you shed a little light on that? And, 
again, I am asking because I don't know as much about the 
program as I perhaps need to.
    Mr. White. Right. I have to be careful what I say here. The 
Everglades is a very, very ecologically important area and a 
lot of different entities have done a lot of talk about how 
important it is to restore it and we are doing something about. 
And this is just private lands, working with ranchers, last 
year, Mr. Southerland, we enrolled the largest contiguous block 
of land ever enrolled at the WRP and it was in the northern 
Everglades in a place called Fisheating Creek. It is going to 
have a huge, huge positive impact on Lake Okeechobee and the 
Everglades water system. The ranchers are going to work to 
restore the natural hydrology. We are going to work with them 
to control the invasive species. We are going to work with them 
under compatible use to make sure there is still some 
production. We need that land grazed periodically. There were I 
can't remember how many landowners in this 26,000. It was just 
very few. They were large landholders----
    Mr. Southerland. Right.
    Mr. White.--but a few years ago, this land probably would 
have been in subdivisions. And now it is going to be restored. 
The landowners keep the land. They control access to it. I 
think it is going to be a big, big win for the Everglades. And 
stay tuned for Part two.
    Mr. Southerland. Thank you very much.
    Mr. White. Yes, sir.
    Mr. Southerland. Mr. Chairman, I yield back.
    The Chairman. I thank the gentleman. I now recognize Ms. 
Pingree for 5 minutes.
    Ms. Pingree. Thank you, Mr. Chairman.
    Well, thank you very much for your interesting testimony 
this morning. As one of the new Members of the Committee, I 
feel like much of this is a tutorial for me. And I look forward 
to continuing to learn more about these programs.
    Perhaps my only editorial comment really is sort of meant 
for us generally. I understand the chair of the Committee when 
he talks about the need to make cuts. The deficit issues that 
we are facing in this country and the importance of tightening 
our budget everywhere that we can. But considering that my 
other committee happens to be the House Armed Services 
Committee where we rarely think about making cuts and spend far 
more money on what is an essential services, of course, 
defense, but we also have to think about the security around 
our food systems in this country. And as you mentioned earlier 
this morning, our population is only increasing. The needs that 
we are going to have for food produced in this country I think 
are only going to grow. And much of what you do in the programs 
that you administer are very critical to that.
    So I thank you for your work, and I certainly will be doing 
all I can as a brand new, highly junior Member of this 
Committee to support many of these programs. And I do hear 
about them in my home state. One question I want to bring 
forward to you is really how one of the programs is 
administered. And I apologize. I am reading off my phone so my 
lettering is a little strong.
    But in the 2008 Farm Bill, Congress recognized the 
importance of making conservation programs accessible to all 
farmers, including organic producers and conventional producers 
interested in transitioning to organic. I represent the State 
of Maine. Organic farming has been growing there for a long 
time but increasingly is of great interest on the part of the 
producers and consumers and is one of the areas where farmers 
have been able to increase their profits, which is a wonderful 
thing for all of us. We have managed to increase the amount of 
farmland in our state, and the average age of the farmer is 
going down. So that also is bucking a national trend and I 
think showing that we can do more to produce our food locally.
    But I want to talk about the EQIP program. It has a 
specific provision to ensure that the program can be accessed 
by organic and transitioning farmers in recognition of both the 
conservation opportunities here, and I think also because of 
the historic lack of participation of organic producers in the 
conservation programs. So I am very supportive of the 
implementation of this provision through the Organic 
Initiative. As I said, it has been popular in Maine with over 
$700,000 provided in the fiscal assistance to Maine producers 
in Fiscal Year 2010, which in our small state is actually 
great.
    But while it has been popular, there have been some 
barriers to implementation. And I hear about this not just in 
Maine but with other producers I talk to about it to around the 
country. One of these barriers includes the unfamiliarity with 
NRCS with organic systems. Can you talk to me a little bit 
about the training and educational efforts to overcome this and 
other barriers? And to be a little more specific, I have heard 
that sometimes when a transitioning farmer visits a field 
office, they will find that the person that they are dealing 
with isn't well trained in making that transition, doesn't 
necessarily know how to help them make that, that the field 
guide recommends some pesticides that wouldn't be qualified 
under organic certification. And again, where I see both the 
environmental but also great economic benefits to farmers who 
have been able to make this transition, get a higher price for 
their products, and also do good conservation work alongside, 
it seems like an important initiative. So can you fill me in on 
that?
    Mr. White. Ms. Pingree, you are absolutely right. I 
encountered this when I was in Montana. We are a traditional ag 
agency and this has moved us outside of our comfort zone, and 
it is going to take us a while to become more familiar with the 
organic. I mean, we are heck on wheels when it comes to corn, 
cotton, wheat, soybeans, cows, sheep, stuff like that, but then 
all of a sudden you are talking organic, you go, ``Oh my 
gosh.'' So we are doing training for our people. We are making 
some changes at headquarters that is going to streamline it and 
make it more accessible to organic producers.
    What Ms. Pingree is talking about is a section of EQIP that 
has organic the Secretary shall provide us. It is not a 
``may,'' it is not a ``maybe,'' it is ``shall,'' and we are 
trying to have the training and to equip ourselves to do a 
better job.
    I had mentioned the Conservation Innovation Grants. We did 
one a couple years ago to a group of sustainable ag organic 
producers who are to look at all our standards and to make sure 
that we have adequately incorporated them. We have put our 
standards out there to try and take care of those kinds of 
issues. So we are trying to make some steps to that.
    As far as funding goes, I set a $50 million limit for that. 
For $50 million, we are using about half of it. The rest is 
rolled back into other stuff. But you also need to think you 
are an AMA state, ag marketing, which has some organic in it 
and also the Conservation Stewardship Program has some organic 
sections in it. In fact, if you look at that 35 million acres--
twice the size of the State of Maine--enrolled in a 
conservation program. Pretty cool.
    Ms. Pingree. That is great. Well, thank you for your 
comments.
    I will yield back the time I don't have.
    The Chairman. I thank the gentlelady.
    And I now recognize the gentleman from Wisconsin, Mr. 
Ribble, for 5 minutes.
    Mr. Ribble. Good morning. I appreciate your testimony this 
morning. And I have a question, actually, for each of you, but 
I will start with Mr. White.
    I represent Wisconsin's 8th Congressional District, which 
is one of the largest dairy-producing districts in the United 
States. And Wisconsin dairy farmers rely pretty heavily on EQIP 
and use it pretty regularly. I am wondering if you can just 
talk about the current funding allocation for livestock. Do you 
feel that funding is appropriate and necessary? And then as a 
follow up, are there structural changes that need to be made to 
the program to ensure that a wide range of producers can 
benefit from the program?
    Mr. White. Mr. Ribble, Wisconsin?
    Mr. Ribble. Yes.
    Mr. White. I got to tell you, when you go to Wisconsin, it 
does your heart good if you are a conservationist, all of those 
beautiful strip crop fields, those small little dairy farms. It 
is just a fabulous part of the world. We do a lot of work with 
dairy. EQIP has a statutory requirement in it that 60 percent 
of the funds have to go to livestock operations. And we have 
never had a problem meeting that. And frankly, most of that 
money is beef production and dairy, followed by poultry, then 
swine. I think that it is widely available in your state. I 
know we do a lot of work with animal feeding operations, water 
quality aspects. I have been there. I have seen some of the 
stuff. I don't know of any access problems that we have.
    Ms. Pingree mentioned the age of farmers are dropping in 
her state. This Committee actually put into EQIP where five 
percent of the funds have to go to beginning farmers and 
ranchers and five percent has to go to socially disadvantaged 
producers. So from that standpoint, we are trying to make it as 
broadly applicable as possible, sir.
    Mr. Ribble. Are there formulas between larger and smaller 
producing dairies?
    Mr. White. No, sir.
    Mr. Ribble. No, okay. So the size of the dairy doesn't 
matter?
    Mr. White. Size-neutral.
    Mr. Ribble. Okay. Very good. Thank you.
    Mr. Nelson, as you know, farmers nationwide are facing an 
ever-increasing regulatory burden, particularly from EPA, and I 
hear quite a bit from them regarding EPA. Could you maybe give 
some insight into what USDA programs in your view provide the 
best assistance for producers as they strive to meet those 
demands?
    Mr. Nelson. Congressman, I appreciate that question because 
our programs aren't necessarily always thought of in that 
context. I think they should be because, look, I am a farmer 
myself, and I think it is always good when we have the 
opportunity as ag producers to have a variety of conservation 
programs out there that we can tailor to our individual needs 
on our farms and ranches. And if we can achieve compliance with 
other regulations at the national or state level in that 
manner, that is great. And so I think the approach of a 
partnership between Federal Government, in some cases state 
government, and individual farmers and ranchers out there on a 
voluntary basis to achieve goals like preventing nitrates into 
the Mississippi river or the Chesapeake Bay, that is a great 
approach and is the kind of public-private partnerships that 
are good for all of us.
    Mr. Ribble. Are those partnerships available? Are you 
working in a collaborative effort with producers around the 
country?
    Mr. Nelson. Yes. Virtually all of the programs that both 
Chief White and I have talked about here today are 
collaborative efforts. In some cases, Chief White's agency 
works with organizations and larger entities. Farm Service 
Agency, we work with individual agricultural producers on their 
individual farms. And, for example, the Conservation Reserve 
Enhancement Program, the first area we talked about Chesapeake 
Bay a little bit before and what NRCS is doing there. FSA has a 
Conservation Reserve Enhancement Program area that goes right 
along, works hand-in-hand with NRCS that gives individual 
producers the opportunity to enroll on a continuous basis on 
CRP in that area. And that prevents the leaching of nitrates 
into the Bay that is so problematic.
    As a matter of fact, as Mr. White talked about earlier, the 
assessment that they did earlier that we in FSA worked together 
with them on shows that that effort alone has resulted in 
reducing the levels of nitrogen off every acre down about 79 
pounds an acre. And I tell you, 79 pounds of nitrogen an acre 
would grow one heck of a lot of winter wheat out in Montana. So 
it is significant.
    Mr. Ribble. All right. Thank you very much.
    The Chairman. I thank the gentleman.
    I recognize Ms. Fudge from Ohio.
    Ms. Fudge. Thank you very much, Mr. Chairman. And thank you 
both, gentlemen, for your testimony today.
    Chief White, I do want to follow up on a question that was 
just asked by my colleague. Under EQIP, the 2008 Farm Bill 
authorized increased payments for socially disadvantaged 
farmers, ranchers, and beginning producers. There were also 
incentives for organic operations. At that time there was a lot 
of discussion, obviously, about these incentives which some may 
have even called preferences at the time as best I can glean 
from that. I wasn't on the Committee. I am a new Member.
    A couple of questions. Was there some projection at the 
time as to how many producers would take advantage of these 
incentives and do you know to date how many socially 
disadvantaged and beginning producers have, in fact, taken 
advantage of the incentives?
    Mr. White. Thanks, Ms. Fudge. I can get you those numbers 
on how many are doing it. I can tell you we blow away that five 
percent every year, far beyond, both beginners and socially 
disadvantaged. And what it essentially means is if you are a 
beginning farmer/rancher, socially disadvantaged, you can get 
up to 90 percent cost-share or 15 percent above whatever the 
prevailing rate is because rates vary, but a maximum of 90 
percent. I can tell you it is very popular. You may know 
Secretary Vilsack has embarked on his ``strike force'' where we 
are trying to do specific, more targeted outreach to make sure 
we reach our underserved communities. We are participating in 
that. My personal feeling is it has been extraordinarily 
successful, ma'am.
    Ms. Fudge. So then, in fact, you do believe that there has 
been a very positive impact with these programs?
    Mr. White. Oh, yes, ma'am.
    Ms. Fudge. And is there something that you think we should 
consider changing that would make it--that there would be more 
participation--which at this point I am not sure that you 
really need--or include other groups? Do you think there needs 
to be some change in it?
    Mr. White. No, because we view that five percent as a 
floor, not a ceiling.
    Ms. Fudge. Okay. Thank you.
    Mr. Nelson, Section 2101 of the 2002 Farm Bill provided for 
use of Conservation Reserve Program, CRP, land to be used to 
grow biomass or place wind turbines on that acreage. Businesses 
in my district are working to place wind turbines and to 
develop other renewable energy solutions. As you know, 
renewable energy is important for job creation and to sustain 
our environment. Have businesses and other organizations 
approached NRCS about using this land to grow biomass or to 
place wind turbines? Do you know?
    Mr. Nelson. I am sorry, ma'am. I wasn't quite sure your 
question, but we have implemented the provision of the farm 
bill with respect to the placement of wind turbines on 
Conservation Reserve Program acreage, and what we do in that 
case is essentially the footprint of the wind turbine would be 
penalty-free take-out of the CRP program. So we have 
implemented that.
    Ms. Fudge. All right. So have people taken advantage of it?
    Mr. Nelson. Yes. Yes. And we will provide you with some 
specific figures on that.
    Ms. Fudge. Okay.
    Mr. Nelson. Be more than happy to.
    Ms. Fudge. Thank you. I look forward to it. Thank you.
    Mr. Nelson. Thank you.
    Ms. Fudge. Mr. Chairman, I yield back.
    The Chairman. I thank the gentlelady and I recognize Mr. 
Hultgren from Illinois for 5 minutes.
    Mr. Hultgren. Thank you, Mr. Chairman.
    Thank you. I apologize. It is a busy day with a lot of 
committees going on, but I appreciate you being here, 
appreciate the work that you're doing.
    Question for you: I wonder if I could get a response from 
both of you. Farmers and ranchers continue to face 
environmental regulations that increase costs and can drive 
producers out of business. We all know that. What program 
provides the most benefit to producers to assist with these 
mounting regulations?
    Mr. Nelson. Well, with respect to Farm Service Agency, it 
is a Conservation Reserve Program which is our largest program. 
And that gives individual producers the opportunity to 
participate in things like the continuous signup practices of 
buffer strips and other practices where you enroll very highly 
environmentally sensitive land that is actually protecting 
larger acreages. And that helps with the individual producer's 
compliance with other regulations. And I believe that any time 
an individual farmer or rancher has the opportunity to enter 
into a partnership with the Federal Government or state or 
local agencies through, again, a voluntary program and achieve 
not only the benefits of that program but compliance with other 
environmental regulations, that is a good thing for all of us.
    Mr. White. Mr. Hultgren, from my perspective, four letters: 
EQIP, Environmental Quality Incentive Program. We have a 
statutory provision in there that says one purpose of the 
program is to help producers meet or avoid the need for 
regulation. And with that statement, you have stood NRCS as the 
shield arm between the regulatory agencies and our producers. 
And you have arrayed the strategic forces of 11,000 or 12,000 
highly trained technical people with billions of dollars at 
their disposal to help producers meet or avoid regulation. And 
I don't mean this in a pejorative sense, but we take that very 
seriously. And I could die a happy person if I could turn the 
regulatory community into the Maytag Repairman.
    Mr. Hultgren. One of the things that we know is there is a 
lot of overlap and some duplication in programs. I just wonder, 
with overlap and duplication in conservation programs, does it 
produce any challenges for producers who may participate in 
multiple programs?
    Mr. White. In a word, yes. But go ahead.
    Mr. Nelson. Well, I think there is some duplication but 
there are also complementary programs. And we will look forward 
to working with you as you get into the farm bill and our 
technical folks will provide you with all of the information 
that we can and assistance that we can with respect to the 
administration of programs and our experience working with 
producers.
    But one of the things that I would like to emphasize--and 
again, this is coming from a producer point of view--is that it 
is a good thing to have a lot of different alternatives out 
there, alternatives that will work as well in Montana as they 
will in Florida or in Illinois because some programs that work 
in some parts of the country don't work in other parts of the 
country. And the more alternatives that individual producers 
have to voluntarily participate in these programs, the more you 
can tailor and shape them to your individual farming operation. 
And that gives us a better chance of getting more conservation 
on the land, which is what the whole thing is about.
    So again, we look forward to working with you and providing 
you with any information that we can that will help you in 
those deliberations, but we also want to make sure that we 
continue to give the full range of options to producers in 
every part of the country to increase the amount of 
conservation on the land.
    Mr. White. I will just briefly add to that. I agree with 
what Administrator Nelson has said. It is good to have a full 
toolbox. But that said, in each of your packets, we have 
provided you with a matrix, and in that matrix it shows side-
by-side all the easement programs and it shows side-by-side all 
the cost-share programs. If you are a field person, you have to 
know the rules for all of them. You have to know which you need 
AGI for, which are HEL-compliant, which don't need it, which 
are no-year funds, which are one year--you can see the 
differences across this matrix and it makes it very complex for 
our people. It makes it complex for our producers. The matrix 
will speak for itself, sir. And I think that while we need that 
toolbox where you have enough implements in there, I don't know 
that we need as many as we have.
    Mr. Hultgren. Well, thank you both. My time is up but I do 
appreciate you being here. I appreciate your answers to 
questions. I look forward to continuing this discussion as we 
go forward in the farm bill. I do think it is important for us 
to be looking at. I think it has been kind of a piecemeal 
approach in the past on this, but there are ways we can find 
more of an understandable and easier-to-navigate process that 
works. I am hoping we can get there with that.
    I yield back. Thank you.
    The Chairman. I thank the gentleman and I recognize Mr. 
Schrader, from Oregon, for 5 minutes.
    Mr. Schrader. Thank you, Mr. Chairman. Well, I really 
appreciate Mr. White's final comments there because to the 
uninitiated or relatively uninitiated, even though I am a 
farmer, this is a pretty complex arena with multiple programs. 
And I have never seen an agency yet or a program yet that 
didn't think it was pure and important in and of itself and 
does something terribly distinct and different than the other 
program that is very similar and almost duplicative to it. So I 
appreciate the emphasis on that.
    I guess my challenge to both of you, both FSA and NRCS 
would be to look at the outcomes. I mean instead of we as 
legislators tend to come up with brilliant new programs that 
are going to fit in a variety of areas, usually ours, and get 
us great results, but I think to get past that sort of 
multiplicity of management schemes and the duplication that is 
evident there, maybe we should focus on outcomes. Which of 
these different programs give us the biggest bang for the buck? 
What is the cost per acre of each of these different programs? 
What relative level of nitrates or phosphates are prevented 
from going in the rivers and streams given the different types 
of programs? What sediment doesn't occur or does occur as a 
result? That would give us a much more informed input as to 
which programs are the biggest bang for the buck in these tough 
times and doing great work.
    There are probably some other intangible concerns we also 
want to know, but I guess I would really hope this Committee 
would focus on helping the agency develop outcomes that we can 
measure so that all the variety of programs--I don't care what 
program you use if you get good results. You can go to Tahiti 
for 2 weeks, I don't care, as long as the air quality and the 
water quality gets a little better as a result of what you are 
doing. So I just would challenge you in that regard.
    A series of comments that I don't need answers to right now 
but would like at some point a response. The TIP subprogram as 
part of the CRP program, what is the management overlay or 
duplication or whatever in that regard? It would seem that the 
ECP program could be duplicative of other disaster relief 
programs. I just need information as to how it is not, why we 
need this particular one for farm and forestland. The VPA-HIP 
program, while a nice program and I am a big fan of hunting and 
fishing, too--I am not sure, given our budget limitations, that 
is one I would put a whole heck of a lot of money in, but I 
stand to be corrected on that. And the idea of having both NRCS 
and FSA manage the Grassland Reserve Program seems a little 
cumbersome to me, so I would be curious as to why we have 
gotten into that area.
    On the positive side, it is nice to see that some of the 
programs that were enacted in the 1930s, 1940s, 1950s, and 
1960s are transitioning away, not that they are not important 
but perhaps less important than some of the programs that we 
have identified for the 21st century. I think that is important 
but hope that both agencies would continue to look at that.
    I guess the big question I have is--I come from Oregon and 
half my state is forestland. And 40 percent of that is private 
forestland. And I think we are missing the mark on our 
forestland programs. The information I have, only six percent 
of EQIP funding goes to forestland, despite increases recently. 
I recognize the increases. Only six percent with the emphasis 
on carbon sequestration, air quality, wildfires, invasive 
species ruining one of our greatest natural resources that 
built this country, that has me greatly concerned. And the 
Beginning Farmer and Rancher Development Program, only three 
percent is dedicated towards forest stewardship and new 
forestry.
    So I am just very, very concerned that forestry is getting 
a real short end of the stick in these conservation programs in 
the Agriculture Department and Natural Resources Conservation 
Service. I would hope that we would look at that a little more 
closely and beef those programs up as we get rid of some of the 
duplication in other areas.
    So with that, I yield back, Mr. Chairman.
    The Chairman. I thank the gentleman.
    And I wanted to take the opportunity for a second round for 
anyone that has questions. I exercise that liberty first for 5 
minutes.
    Chief White, you have expressed an interest in having more 
employees on the farm rather than behind a desk at NRCS 
offices. Can you give us an update on where you are in this 
process?
    Mr. White. Two items I will cover with you briefly, Mr. 
Chairman, that I can think of off the top of my head is the 
Conservation Delivery Streamlining Initiative. We are looking 
at our whole business processes. The outcome goal, we want to 
eliminate 80 percent of the administrative clerical tasks from 
our field office and free up 75 percent of their time for 
direct working with farmers. If we can pull this off, Mr. 
Chairman, it is the equivalent of adding more than a thousand 
people to our workforce. It is going to free up that much time.
    The second thing I would add is that I have recently 
challenged our State Conservationists. Hugh Hammond Bennett 
created this agency back in the 1930s. When he retired in 1952, 
90 percent of the Soil Conservation Service employees were in 
direct field positions. And by golly, if Hugh Hammond Bennett 
could do it, why can't we? So I asked the State 
Conservationists, what are you going to have to do in Florida, 
in Pennsylvania, or wherever you may be if we want 90 percent 
of our technical staff be in direct service to producers? And 
they came back with all kinds of cool ideas. We are going to 
start implementing them, and my hope is that despite any budget 
cuts we can actually end up with more people on those front 
lines providing direct service to producers.
    The Chairman. Well, I congratulate you for your efforts. I 
think there is many of us that when you are successful, we may 
want to replicate that process across all parts of the Federal 
Government.
    Mr. White. I am not running for President yet.
    The Chairman. Okay. And this is just my observation and I 
may be incorrect, but it seems like the last farm bill, in 
terms of the balance between direct technical assistance at 
what I would call boots on the ground in programs, there was an 
emphasis more primarily on programs. And I am concerned that 
perhaps we skewed too far and I just see a lot of value of 
those boots on the ground, those folks that provide the 
technical assistance to help the farmers make the right 
decisions, to be that present resource.
    And just to both panelists, I just want to get your 
perspectives on that as we approach the next farm bill. Do you 
see the 2008 Farm Bill kind of skewed in that direction, more 
programs, less technical assistance, and should that be 
something that we should move back if not a 50-50 at least more 
technical assistance?
    Mr. White. Well, I agree with you. And I think the 2008 
Farm Bill made some clarifications in technical assistance we 
are finding very valuable now. And technical assistance, I mean 
we talk about it, but what does it really mean? There are some 
books here that I brought just in case somebody would ask about 
TA. Those two books at the end are for one animal confined 
feeding operation, the technical documents it took for the 
design specifications. This right here is a 29 head dairy 
lining a pond, and a separator. This is the construction of a 
5.3 mile pipeline for a rancher. This is converting a flood 
irrigation system to a sprinkler.
    And if you look at the technical drawings that are 
throughout this, it is absolutely vital that we keep those 
highly trained men and women out there on the land. I have been 
in this business for a long time. I have yet to see a Keebler 
elf come out and help us with this. This is done by highly 
trained men and women. We need to keep them there. We need more 
boots on the ground. But I will also say this, Mr. Chairman. I 
don't care whose foot is in that boot. And if we can make 
arrangements with state agencies, conservation districts, 
nonprofit groups, ag organizations to get the feet in those 
boots, that is what we will do. This past year we took $20 
million--you may have heard of this Strategic Watershed Action 
Teams--we leveraged it, that $20 million, turned into $30 
million and it gave us, oh gosh, 450 boots on the ground. They 
are non-Federal, but they are going to be working alongside of 
us.
    The Chairman. Very good. Mr. Nelson, any thoughts on this 
issue?
    Mr. Nelson. Well, yes, I think one of the interesting 
things about this discussion is that is points out there are 
some differences between Farm Service Agency and NRCS. NRCS is 
a technical agency. And as Chief White said and I think 
everybody would like to have, their folks do best when they are 
out in the field. They arrange conservationists and engineers 
who are out in the field and not in the offices doing 
paperwork. And so we have already had discussions about how we 
at FSA, which tends to be an administrative agency that is more 
paperwork-oriented, can actually support and help that effort, 
because in these times when we are tightening our belts, we are 
all going to have to be more efficient in the way we do things.
    The challenge for us in FSA is to how we can 
technologically get to the point where we need to be. As you 
know, we are going through a terrible transition from 1970s and 
1980s computer technology to 21st century computer technology, 
and that has been very difficult not only on our employees, but 
it is actually difficult on the producers as well.
    I was privileged a couple of weeks ago to come up here and 
be part of a demonstration for folks of a project, a long-
overdue project in the Agency to update our computer systems 
and our software so that we are actually into the 21st century 
with this MIDAS project. And I appreciated everybody's 
participation in that because it is going to make us a lot more 
efficient. And it is going to make us not only better able to 
serve producers but produce information in response to requests 
from you folks because I can tell you right now that in putting 
together the answer to these audit questionnaires because of 
all of the different computer systems we are working with in 
FSA, we had to put word out literally to our county offices 
across the country in some cases to put this information 
together. That doesn't make any sense.
    And so this move, like I say, is not only going to be a big 
help to the Agency, it is going to be a big help to you and to 
our producers as well. So we have to operate more efficiently 
and we have to get to a point where we do more online with our 
producers so that they can sit at home and do their work with 
not only Farm Service Agency but NRCS and other USDA agencies 
as well, because our producers are in the 21st century but we 
are not. And so we have to catch up with them in this case. And 
we are working hard on that. And again, we really appreciated 
the opportunity to come up here and visit with you about it and 
look forward to the future opportunities to do that. And all of 
that will help both of our agencies.
    Mr. White. Can I respond one more time? I would like to put 
to rest an old canard about the animosity or the conflict or 
the turf battles that occur between NRCS and FSA. We really 
don't have time for that. Mr. Nelson and I have talked on how 
we can work better together, and our commitment to you is that 
we will do that. And not only are we going to work better 
together but we are going to work better together for the 
benefit of the American producer and for the American taxpayer.
    The Chairman. And I know we all appreciate that.
    I now recognize the gentlelady from Alabama for 5 minutes 
of questioning.
    Mrs. Roby. Thank you so much, Mr. Chairman. Thank you both 
for being here.
    Just last Thursday, we held a 2 hour listening session with 
farmers in Alabama, and I did it in conjunction with our 
Agriculture Commissioner John McMillan, and the number one 
issue that kept coming up over and over again was CRP. And this 
isn't the first time I have heard it. And for Alabama, this 
program was definitely useful in the beginning, taking marginal 
lands out of production, but as time has gone on and more and 
more viable land is being shifted out of production into 
longleaf pine. And one of the issues that has been discussed is 
Alabama, it would be much more valuable to have to option of 
grass, which would make it easier to move that land back into 
production if needed.
    Another issue is that farmers are competing against the 
Federal Government in finding land to rent and oftentimes, the 
presence of the government causes the prices of land to 
increase drastically. And interestingly enough, one of the 
farmers who participated in our listening session last week 
that brought up and had concerns about the CRP was a timber 
owner, and he said that the conversion of cropland to longleaf 
pine has hurt him because it impacts, of course, the price of 
the timber produced. And so my question to both of you is 
whether Alabama is unique in seeing the usefulness of CRP 
diminishing? Or has CRP served its purpose and is no longer 
needed? And what changes might we make to CRP to ensure that 
much-needed land stays in productive agriculture?
    Mr. Nelson. Well, I appreciate the question because we 
just, as you know, finished with CRP general Signup 41, and I 
think it is important to note that even in this time of high 
commodity prices that producers voluntarily around the country 
offered 3.8 million acres into that program. And so in response 
to your question, I think the producers have shown that there 
is still great interest in participation in CRP, at least 
around the country.
    Mrs. Roby. But the people operating the land are not 
necessarily producers because there is so much land that our 
farmers rent or lease to produce, and it is up to the landowner 
to shift that into the CRP program and thus takes that 
property, then, out of production for those farmers who just 
want to farm.
    Mr. Nelson. Congresswoman, we would be more than happy to 
visit with you further about this and to provide you with the 
information about the CRP participation in Alabama. And I think 
it is important to note one other thing, too, that could be 
affecting this, and that is that there was established down in 
the Gulf Coast and Atlantic Coast region and including Florida 
a national conservation priority area for longleaf pine. It 
does, in fact, give producers additional environmental benefits 
index points when they go to enroll land in the Conservation 
Reserve Program. And certainly, before we will go forward with 
another general signup, the question of whether these 
conservation priority areas are one that I am sure you will 
look at in Congress and we will certainly look at within the 
Farm Service Agency. So I would look forward to talking further 
with you about that.
    Mrs. Roby. Well, as the Ranking Member pointed out, he said 
there is what, 4.1 million acres coming out, but the problem is 
is that it is very, very costly to then convert that property 
back into productive farm use. And so that is a tremendous 
concern in my State of Alabama because of this program.
    Mr. White, do you have anything to add?
    Mr. White. Earlier, when you were out, we had a discussion 
about how wonderful longleaf pines were. NRCS is certainly 
working with producers on cost-share programs, working lands 
programs on a voluntary basis for producers who want to do 
that. Certainly, Alabama is in the belt where those trees were 
from.
    I guess I hear this from time to time but the beautiful 
thing about voluntary conservation programs, if you don't want 
to do it, you don't have to. And I would not want to take the 
right of someone else away to enter into a voluntary 
conservation program of which the CRP certainly is one.
    Mrs. Roby. And my time is expired but I just would add to 
that that it is for our farmers, the concern is because of the 
existence of the program, maybe its usefulness has run out 
because we do need to provide for all of those, as you 
referenced, millions----
    Mr. White. Yes, ma'am.
    Mrs. Roby.--of mouths that are going to need to be fed. So 
that is the point of my question. And I appreciate both of you 
being here. And Mr. Chairman, I yield back.
    The Chairman. I thank the gentlelady.
    I recognize the gentleman from Florida for any additional 
questions.
    Mr. Southerland. Just to kind of follow up on that 
statement, I think one of the challenges of the longleaf pine, 
as you know, the woodpecker issue down there in our area--so 
when you have one agency that is trying to encourage you to 
come in and help restore--and I agree with everything you said, 
Chief, about the longleaf pine and how beautiful it is, and I 
think we are doing some incredible things down in North 
Florida, especially with the Tall Timbers organization down 
there. When you assist in helping us plant longleaf pine only 
to have the redheaded woodpecker come in, then you will never 
be able to harvest your timber because of regulations. So if 
they are identified on your property, please believe me, there 
are many that say as a result of them coming here and making 
them your home, you can't cut. But that is just a follow-up 
comment to Mrs. Roby.
    I want to ask a couple questions. I know regarding CRP, you 
know--and again I am learning these programs--but what 
penalties does a landowner face if he opts out of CRP contract 
and what flexibility is currently available, if any, to allow 
landowners out of a CRP contract?
    Mr. Nelson. Well, I appreciate that question because CRP, 
again, we just went through a general signup, and so the issue 
has been in front of the Department and the country. And the 
Secretary does have the authority to do penalty-free early-
outs----
    Mr. Southerland. Okay.
    Mr. Nelson.--under CRP. The policy at the present time is 
that if a producer wants to voluntarily opt out of the program 
that they would have to pay back the rental payments that they 
had received and there would be liquidated damages of 25 
percent on the rental payments they had received and 25 percent 
liquidated damages on any cost-share assistance they had 
received and possibly interest as well. So that is the current 
policy.
    Mr. Southerland. That sounds like that was designed by the 
IRS.
    Mr. White. Mr. Southerland, can I address that?
    Mr. Southerland. Sure.
    Mr. White. I am going to take you back a little bit. The 
guys we are cost-sharing with for longleaf pine, they are going 
to cut that thing or projected in, what, 20, 30 years?
    Mr. Southerland. No, it is longleaf pine you are looking at 
closer to 50 years.
    Mr. White. Okay. Well----
    Mr. Southerland. And that is another issue. You know, there 
are some other crops, certainly, that one could say obviously 
we need to address longleaf pine but maybe some other species 
that we can also plant in order to return an investment for the 
landowner.
    Mr. White. But I am going to check on that, whether you can 
cut them or not, because I think you can.
    Mr. Southerland. Well, I know this. I know that we have a 
National Forest down there and the National Forest because of 
the woodpecker has been turned into basically a national park. 
And in the rural county where having logging operations in 
these rural counties has been shut down because of the 
woodpecker, and they basically have taken a National Forest and 
made it a national park, it is creating economic damage to 
these communities. And so it something very near and dear to my 
heart. And so I think some flexibility there would be good 
because I do believe that the longleaf pine is worth pursuing. 
I mean it is a great thing. But, yes, anything you can check on 
that, that would be good.
    Mr. White. I will get back to you, sir.
    Mr. Southerland. Thank you.
    And my follow-up question, what programs have wildlife 
components--hold on. My question here is messed up. Let me 
shift here. What percentage of funding under EQIP makes it to 
the producer?
    Mr. White. About 75 percent. About 20--the numbers vary 
from year to year, sir, but it is normally--the technical 
assistant generally runs from 20 to 25 percent.
    Mr. Southerland. Okay.
    Mr. White. And that is what buys these books that I just 
showed.
    Mr. Southerland. I got you. And last, on just a statement 
on the budget cuts, I appreciate your can-do attitude because 
the American people are given a dollar amount that they have to 
live within and they have a can-do attitude that they are going 
to make it work. And I have heard you display that this morning 
and it is refreshing. And so I just want to tell you how much I 
appreciate the way both of you have testified before us this 
morning. Thank you very much.
    Mr. White. Listen, I am an American. I am not going to 
crawl up in a fetal position and cry myself to sleep.
    Mr. Southerland. Well, that is not how this country was 
founded and----
    Mr. White. I am going to try to do what I can do.
    Mr. Southerland.--and I don't believe you would. So thank 
you very much. I yield back.
    The Chairman. The gentleman yields back. And I recognize 
the gentleman from Illinois for any additional questions.
    Mr. Hultgren. Thank you, Mr. Chairman, just a couple.
    I wondered if you could explain the Conservation Innovation 
Grants. Tell me a little bit more what they are, and also let 
me know, if you would, the success rate for these innovation 
projects eventually becoming adopted conservation practices?
    Mr. White. Yes, sir. I am assuming you are referring to the 
one that is supposed to bridge Death Valley, to take promising 
research and try and figure out how it can be broadly applied 
to the land. We have had some spectacular successes and we have 
had some spectacular failures. I can get you more of a rundown 
on which is which on that, but I think in the area of feed 
management, we have seen some extraordinary results from the 
University of Washington. Odor control, I think that was 
Wisconsin Department of Agriculture did some wonderful work on 
how to do better odor control, precision agriculture, water 
quality. We have had some really good stuff, but we have also 
had some things that just did not work out. And I am trying, 
frankly, to get my arms wrapped around it better and I will 
have to get back to you on some of this, sir.
    Mr. Hultgren. Is your sense that most of them are working, 
most of them not working, just to kind of gauge a success rate? 
Is it possible to do that? And again, it is for the 
Conservation Innovation Grants.
    Mr. White. Maybe 75-25.
    Mr. Hultgren. Working to not working?
    Mr. White. Yes, and that is kind of an estimate. So can I 
revise and extend my remarks?
    Mr. Hultgren. Yes.
    Mr. White. Okay.
    Mr. Hultgren. That would be good. Yes, and if you can let 
us know if there is more feel to that. For me my concern is 
money that is being spent, is it being useful?
    Mr. White. Exactly.
    Mr. Hultgren. So it is not numbers of success but dollars 
being spent leading to real innovation that is actually being 
used out in the field.
    Mr. White. Got you.
    Mr. Hultgren. Switching over to the Conservation 
Stewardship Program, what percentage of funds for the 
Conservation Stewardship Program are used to pay for things 
farmers already have done and how much is used to encourage new 
practices?
    Mr. White. Okay. The law says you will pay to maintain 
existing and to create additional. We have put an emphasis on 
the additional. Right now, that annual payment is roughly split 
60-40, 60 percent for new stuff, 40 for the maintenance of 
existing.
    Mr. Hultgren. Okay. Kind of wrapping up and getting back to 
the first round of questions. I guess I would like to just get 
some thoughts from you. We talked a little bit about going into 
the farm bill and really looking for ways--certainly, we want 
options out there, but at the same time we don't want to be 
tripping over options and having it with limited resources 
where we are not being as effective as we possibly can be. So I 
wondered, do you think is there a more comprehensive way to 
provide environmental benefits to our farmers and ranchers 
instead of the piecemeal approach that Congress has provided 
over the last 25 years? If you think there is, give me some 
sense of what that would be.
    Mr. White. You go first.
    Mr. Nelson. Well, I think again, as I said earlier, the 
challenge here is to look at all of these programs and figure 
out ways which we absolutely need to do to both operate them 
more efficiently and make them more effective to farmers. But 
as I also talked about earlier, to do that in a way that we 
don't take alternatives away from farmers and ranchers around 
the country so that, again, a farmer in my State of Montana, 
your State of Illinois, they are not going to need exactly the 
same thing.
    So it isn't an easy thing to do, but we need to figure out 
a way to do it because like it or not, we are facing budget 
challenges here. We have had to tighten our belts. You know, I 
had to do that back on the farm. I had to do that when I was in 
the Governor's office back in Helena. And we are going to have 
to do it. So, again, the challenge is to figure out a way to 
become more efficient in the administration of programs, make 
them more effective for the individual producers, and not take 
alternatives away so that we can continue to make sure our 
producers in every area in the country have the full range of 
options. And I think all of the programs need to be on the 
table that both agencies are involved with, and we are 
certainly looking forward to working with you on that and 
providing you our technical assistance and our experience in 
administration of the programs and working with producers on 
the best ways to do that.
    Mr. White. I think Mr. Nelson said that very well. One of 
the things that we all have to recognize is every program is 
there for a reason. And they have all done some great work and 
they all have a constituent base and we need to respect that as 
we move forward. But your challenge is, in this budget climate, 
how do you increase the efficiency? How do we do a better job 
and still provide the producers with what they need in the area 
of conservation.
    Mr. Hultgren. Yes, just in closing, I do think that is our 
challenge. I think recognition that we want to see results for 
money that is being spent, especially with limited dollars. 
Programs that made sense 10 years ago may not make sense any 
longer. And I get concerned when the focus is more on agenda 
rather than on real results. And so, anyhow, I look forward to 
working with you. I know this is just a first step of a long 
process that is coming forward. Thank you both.
    I yield back.
    The Chairman. I thank the gentleman. I thank all Committee 
Members. And Administrator Nelson, Chief White, thank you so 
much for your service and your testimony here today. Your 
preparation coming in, very well prepared. I think this hearing 
was very informative. Frankly, we have a lot of work to do as 
we continue down the road of preparing for this next farm bill. 
And as has been mentioned many times, these are challenging 
times with the debt and the fiscal situation we are in, but we 
never should forget that as Americans we enjoy, frankly, the 
most affordable, highest-quality, and safest food supply of 
anywhere in the world. And the biggest threat to our national 
security by far would be at whatever point we would rely on a 
foreign country to provide that for us. So we are blessed not 
to be in that position.
    I certainly appreciate the work of FSA and NRCS and the 
fact that you work together, collaboratively. And certainly we 
look forward to working with you as we continue forward in this 
process. So thank you all so much.
    Under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member. This hearing 
of the Subcommittee on Conservation, Energy, and Forestry is 
adjourned.
    [Whereupon, at 11:56 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
 Submitted Letter by Mark G. Huntley, President, Irrigation Association
July 18, 2011

Hon. Glenn Thompson,
Chairman,
Subcommittee on Conservation, Energy, and Forestry
House Committee on Agriculture,
Washington, D.C.;

Hon. Tim Holden,
Ranking Minority Member,
Subcommittee on Conservation, Energy, and Forestry
House Committee on Agriculture,
Washington, D.C.

    Chairman Thompson and Ranking Member Holden:

    On behalf of the members of the Irrigation Association, thank you 
for the opportunity to offer our perspective on USDA's conservation 
programs. Our industry appreciates your focus and leadership on this 
issue, as we believe that the conservation title of the farm bill is 
important to the long-term viability of U.S. agriculture and meeting 
the demands of our current and future generations, as well as a sound 
and sustainable environment.
    The Irrigation Association is a trade association representing 
approximately 2,000 member companies in the irrigation industry. Our 
members include irrigation product manufacturers, dealers, 
distributors, contractors and end users in the agricultural and 
landscape industries. The mission of the Irrigation Association is to 
promote efficient irrigation technologies, products and services, and 
our expertise lies in ensuring every drop of water applied to a crop is 
done so in an efficient manner, thus leading to more agricultural 
output per unit of input.
    I would like to begin by discussing the USDA's Environmental 
Quality Incentives Program. As you know, EQIP is a voluntary 
conservation program, which provides financial and technical assistance 
to farmers and ranchers who face threats to soil, water, air, and 
related natural resources on their land. Through EQIP, the NRCS 
develops contracts with agricultural producers to implement 
conservation practices, which address on-farm environmental natural 
resource opportunities and challenges. Even though this program is an 
incentive program for agricultural producers, this is first and 
foremost an environmental quality program. For example, if an 
agricultural producer were to invest in more efficient irrigation 
technologies and products; not only would that producer see a decrease 
in the amount of water used to produce the same amount of yield, the 
producer will also see a decrease in run-off (leading to an increase in 
water quality) and an increase in energy efficiency (using the energy 
embedded in the water used for irrigation in an efficient manner), 
among other recognized environmental benefits. It is our belief that 
the further investment in this environmental quality program is much 
more effective than increased regulations placed on U.S. agricultural 
producers.
    From 1997 to 2010, EQIP has been a strong supporter of promoting 
efficient irrigation technology and products. During this time, three 
of the top ten projects funded by EQIP have been focused on irrigation:
Top 10 EQIP Funded Projects (1997-2010)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: NRCS.

    Specific to irrigation projects, EQIP works with the producer, 
through the technical service provider program, to determine the best 
technology, design and practices to ensure that every drop of water is 
being used in the most efficient way possible, while ensuring that the 
investment makes financial sense for the producer. In fact, the 
Irrigation Association works collaboratively with the NRCS through a 
Memorandum of Understanding that qualifies our certified irrigation 
designers to participate in the TSP program.
    Through these investments in efficient irrigation technologies and 
products, the effects on the environment have been very positive, as 
we've seen documented through the USDA's Conservation Effects 
Assessment Program.
    Next, I would like to spend a moment discussing some of the 
challenges currently facing American agriculture.
    According to the Global Harvest Initiative, the global population 
is expected grow to more than nine billion people by 2040, an increase 
of nearly 50 percent from today's level. In this same time period, 
global agriculture will be required to double its productivity in the 
face of limited water resources.
    Feeding more than nine billion people will require substantial 
increases in agricultural output and productivity. Irrigation is one of 
the most powerful levers of agricultural productivity, so it is no 
surprise that irrigation comprises a significant proportion of the 
country's overall water use (37 percent of total water withdrawals 
according to the U.S. Geological Survey 2005 Water Use Report). As more 
farmers seek to leverage the productivity benefits of irrigation, 
irrigated acreage in the United States will continue to grow. Irrigated 
acreage in the United States has more than doubled from 25 million 
acres in 1950 to over 60 million acres in 2005. At the same time 
farmers are irrigating more acres, they are using less water for 
irrigation. Water use for irrigation has dropped back to 1970 levels 
(Source: NRCS Farm and Ranch Irrigation Survey 2008). The Irrigation 
Association joins the USGS and the Department of the Interior in 
attributing these decreases in irrigation water use to significant 
increases in on-farm irrigation efficiency.
    As the population continues to increase, regulations and aging 
infrastructure are affecting the amount of water available for 
irrigation. American farmers are among the most productive and 
innovative in the world. Yet, if United States agriculture is to meet 
this challenge, we must sustain, improve and expand efficiently 
irrigated agriculture. The Irrigation Association recognizes that 
United States agriculture will need to continue increasing productivity 
to meet the future needs of the growing global population, while 
optimizing the efficient use of natural resources.
    As I mentioned earlier, fostering the adoption of efficient 
irrigation technologies and practices is an effective way to improve 
agricultural productivity, overall water-use efficiency and water 
quality, thus sustaining water resources for future generations.
    In conclusion, the irrigation industry highly values the variety of 
benefits achieved with efficient on-farm water use. We've enjoyed our 
historic partnership with the NRCS and look forward to working with the 
Congress and the NRCS for years to come in promoting efficiencies in 
agricultural production.
    As the House Committee on Agriculture continues the audit of the 
USDA, we encourage you to review EQIP, note the positive attributes of 
the program and continue the promotion of the efficient use of water in 
agricultural production.
    If you have any questions regarding EQIP or any other irrigation-
related issue, please contact IA's Federal Affairs Director John Farner 
at [Redacted] or [Redacted]. Thank you again for the opportunity to 
submit comments.

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Mark G. Huntley,
John Deere Water,
President, Irrigation Association.
                                 ______
                                 
                          Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. 
        Department of Agriculture
Questions Submitted By Hon. Frank D. Lucas, a Representative in 
        Congress from Oklahoma
    Question 1. How many different conservation programs does FSA 
administer?
    Answer. FSA administers five primary conservation programs 
including the:

   Conservation Reserve Program (including Conservation Reserve 
        Enhancement Program, Farmable Wetlands Program and Transition 
        Incentives Program);

   Emergency Conservation Program (ECP);

   Grassland Reserve Program (GRP);

   Grass Roots Source Water Protection Program; and

   Voluntary Public Access and Habitat Incentive Program (VPA-
        HIP).

    FSA also administers programs under other Titles that support 
conservation goals and purposes including:

   Emergency Forest Restoration Program (EFRP) under the 
        Forestry Title;

   Biomass Crop Assistance Program (BCAP) under the Energy 
        Title;

   Conservation Loan Program under the Credit Title; and

   Debt for Nature under the Credit Title.

    Question 2. Do the current criteria to determine the Environmental 
Benefit Index (EBI) for CRP eligibility ensure that the most productive 
land stays in production and the environmentally sensitive land, or 
highly erodible land, is enrolled?
    Answer. The EBI is used to rank and select offers for enrollment in 
the general signup component of CRP which includes about 26 million 
acres of the CRP's 32 million acre enrollment authority. The general 
signup accepts land based on eligibility criteria defined in the CRP 
statute and the EBI ranking. Before any cropland may be considered for 
general signup enrollment, it must have a recent cropping history and 
meet other eligibility requirements which can be any of the following:

   Highly erodible cropland (i.e., have an erodibility index of 
        8 or greater);

   Located in a conservation priority area; or

   Under an expiring CRP contract.

    Each general signup offer is ranked with the EBI which uses data 
collected for five environmental factors (wildlife benefits, water 
quality benefits, soil conservation benefits, air quality benefits, and 
enduring benefits) and a cost factor. There is no prohibition on 
enrolling productive land in the CRP and certainly some lands in the 
program are productive, but must have significant environmental 
benefits to qualify. The productivity of the lands in the CRP is 
reflected in the soil rental rates of the lands enrolled. For CRP 
general signup, the higher the rental rate requested, the lower the EBI 
points for the cost factor, as illustrated in the chart below.
Relationship Between Rental Rate and Cost Factor EBI Score

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    For general signup, the cost factor serves to discourage enrollment 
of more productive lands, but if the environmental benefits are 
sufficiently high, they may be accepted. For example, an offer with a 
rental rate of $150 per acre would get 40 points for cost, while an 
offer with a rental rate of $30 per acre would get 108 points. Thus, 
the points for the five environmental factors of offers of the more 
productive land ($150 per acre land) would have to be at least 68 
points higher than the scores of land with lower productivity ($30 per 
acre land) to be ranked higher.
    Regarding keeping environmentally sensitive or highly erodible land 
enrolled, the CRP is implemented using two basic approaches: the 
competitive general signup discussed above and the continuous signup. 
An assessment of the environmental sensitivity of the lands enrolled 
under general signup begins with the erodibility index (EI).
    Of the general signup acres currently enrolled, 19.9 million acres 
are categorized as HEL (EI%8) based on the weighted average of the EI 
of the soils on the contracted fields. The remaining 6.3 million acres 
are non-HEL. However, ``environmental sensitivity'' is not based solely 
on EI. Many non-HEL general signup CRP lands may be adjacent to 
wetlands or streams, overlay at-risk groundwater, or are providing 
significant wildlife benefits, and would be considered environmentally 
sensitive.
    Continuous signup specifically targets the most environmentally 
sensitive lands and, includes the Conservation Reserve Enhancement 
Program (CREP),\1\ wetland, conservation buffer, and wildlife 
initiatives. There are about 5.1 million continuous signup acres 
currently enrolled.
---------------------------------------------------------------------------
    \1\ CREP agreements leverage Federal funding with funding provided 
by state and local partners whose primary purpose is to target acres 
for enrollment that will address environmental concerns specific to the 
state. The outcome is that environmental sensitive lands of special 
significance are enrolled in a CREP project area.

    Question 3. What percentage of acres enrolled in CRP currently have 
an EBI that is low enough that the land could be farmed productively 
without significant environmental impact?
    Answer. It is likely that much of the land enrolled in CRP can be 
farmed productively because most were used for crop production prior to 
enrollment; however, whether that land can be farmed without 
significant environmental impact in not clear. HEL lands brought back 
into production will need a conservation plan (to maintain eligibility 
for commodity program payments). Even with a plan, however, many 
environmental benefits would be lost including air and water quality, 
sediment, carbon sequestration, and wildlife habitat. In addition, as 
noted in the response to Question 2, many non-HEL lands are providing 
significant environmental benefits, many of which would be lost if 
returned to cropping.
    In addition to HEL lands enrolled, non-HEL and continuous signup 
enrollment currently includes:

   2.0 million acres of conservation (streamside) buffers

   2.2 million acre of wetland restoration practices

   4.2 million acres of Prairie Pothole grass plantings

   2.6 million acres in state conservation priority areas

   165,000 acres of Longleaf Pine plantings

   252,000 acres of volcanic or organic soils highly 
        susceptible to blowing

   934,000 acres of grass plantings in 1930's Dust Bowl 
        counties

    Since 1990, USDA has ranked the quality of general signup offers 
using an EBI. Doing so helps USDA achieve environmental benefits in a 
cost-effective manner. The EBI is a numeric score resulting from the 
summation of five environmental indices \2\ and a cost factor which is 
a function of the rental rate requested by the producer. As discussed 
in Question 2, the lower the rental rate requested, the higher the cost 
factor score. At the time general signup offers were selected, a 
determination was made that the land was of sufficient environmental 
sensitivity to be enrolled in CRP.
---------------------------------------------------------------------------
    \2\ The environmental factors are wildlife, water quality, soil 
erosion, air quality benefits, and the likelihood of benefits enduring 
after the contract ends.
---------------------------------------------------------------------------
    The EBI is used to rank CRP offers and provides a numeric score 
that serves as a qualitative measure of environmental benefits relative 
to cost. It provides information about whether one offer is likely to 
provide more environmental benefits than another. The score provides an 
indication of environmental sensitivity; however, it does not address 
whether lands could be farmed productively without significant 
environmental impact.
    CRP is designed as a reserve program to safeguard the nation's 
natural resources and is a major contributor to increased wildlife 
populations in many parts of the country because enrolled acreage is 
planted to resource-conserving vegetative covers. CRP also protects 
groundwater and helps improve the condition of lakes, rivers, ponds, 
and streams by reducing water runoff and sedimentation. Another benefit 
is the protection of millions of acres of topsoil from erosion. In 
addition, CRP sequesters more carbon on private lands than any other 
federally-administered program.
    Secondary objectives include protecting the nations' long-run 
capability to produce food and fiber, curbing production of surplus 
commodities, and providing income support for farmers. If it is in the 
public interest, such as times of emergency, the Secretary may 
authorize CRP acreage to be used for the production of agricultural 
commodities.

    Question 4. Do you think the goals of the Farmable Wetlands Program 
(FWP) are consistent with the overall goals of the CRP program? Are the 
eligibility criteria for FWP the same as the overall program? Where do 
we see the most land being enrolled for FWP?
    Answer. FWP is a voluntary program to restore up to one million 
acres of farmable wetlands and associated buffers by improving the 
land's hydrology and vegetation. Eligible producers in all states may 
enroll eligible land in the FWP through the Conservation Reserve 
Program (CRP). The majority of the land enrolled in the FWP is located 
in Iowa, Minnesota, Mississippi, North Dakota, and South Dakota, 
although enrollment is throughout the nation.
    FWP is consistent with the overall goals of the CRP to improve the 
quality of water, control soil erosion, and enhance wildlife habitat. 
CRP wetland restoration practices utilize multiple buffer-to-wetland 
ratios and size requirements due to the differing underlying purposes 
of the wetland restoration. Buffer-to-wetland ratios and wetland or 
tract size requirements differ not only within FWP practices but also 
with other CRP wetland restoration practices.
    For example, under the CRP Duck Nesting Habitat wetland restoration 
practice the buffer-to-wetland ratio is 6:1 with no wetland or tract 
size limitations; however, under the FWP Flooded Prairie wetland 
restoration practice the buffer-to-wetland ratio is 4:1, and there is a 
statutory limitation of 20 acres for the size of the wetland and 40 
acres for the size of the tract.
    Land eligibility and cropping history requirements are also 
different under FWP. Land enrolled under CRP wetland restoration 
practices must be cropland with a cropping history of 4 out of the 
previous 6 years. For FWP, cropland enrolled has different cropping 
history requirements and for certain practices the land may be marginal 
pastureland.

    Question 5. How much flexibility is allowed for haying and grazing 
activities? Could CRP take on some of the same goals as the Grasslands 
Reserve Program (GRP)?
    Answer. The CRP authorizing legislation generally prohibits any use 
of the forage including haying and grazing except for managed 
harvesting, haying or grazing or other commercial use in response to a 
drought or other emergency, routine grazing, or prescribed grazing for 
the control of invasive species. The annual rental payment is reduced 
by an amount commensurate with the economic value of the activity which 
is generally 25 percent. Any haying or grazing must be conducted with 
an appropriate cover management plan. By contrast, the GRP authorizing 
legislation generally requires that a rental contract or an easement 
permit common grazing practices and haying, mowing or harvesting for 
seed production.
    For CRP to take on some of the same goals as GRP, certain 
provisions of the CRP authorizing legislation would need to be reviewed 
including:

   Land eligibility,

   Permissible activities for haying and grazing of the land 
        subject to a GRP management plan,

   Enrollment terms with longer contracts and/or easements, and

   Landlord tenant provisions.

    Question 6. How successful has the Transition Incentive Program 
(TIP) been under CRP? Is this program being utilized and do you believe 
this is a successful approach to getting workable land back into 
production?
    Answer. The regulation for the Transition Incentives Program (TIP) 
was published May 14, 2010. The farm bill authorized $25 million for 
TIP through fiscal year 2012.
    FSA has implemented this program including a TIP Net website which 
provides a web-based tool to connect interested retired or retiring 
land owners or operators with interested beginning or socially 
disadvantaged farmers or ranchers.
    As of July 31, 2011, there are 575 approved TIP contracts with 
85,956.6 acres enrolled. Currently, $7,580,705 in CRP annual rental 
payments will be issued over the next 2 years for TIP to retired/
retiring farmers or ranchers.

    Question 7. How much is being spent on cost-share assistance for 
tree thinning activities?
    Answer. As of July 7, 2011, FSA had 64 contracts with total 
payments of $11,366 for the CRP tree thinning practice.

    Question 8. How does the split administration of GRP work, do you 
think this is the best way to administer this program?
    Answer. National leadership for GRP is provided by the Chief, NRCS, 
and the Administrator, FSA, and their designees. Specific agency 
responsibilities are detailed in a Memorandum of Understanding.
    NRCS and FSA at the national level jointly develop and evaluate 
program policy and direction, monitor program implementation, ensure 
that GRP information is made available to the public, formulate 
budgets, and coordinate national GRP funding allocations to achieve 
national program objectives. Obligations are tracked at the national 
level to ensure 60 percent of the funding supports easements and 40 
percent of the funding supports rental contracts over the life of the 
farm bill.
    FSA has lead responsibility for rental contract administration and 
financial activities. FSA also provides all of the producer eligibility 
determinations and implements the rental contract enrollment options. 
NRCS has lead responsibility on conservation planning, technical 
assistance to owners and operators, and easement administration. 
National ranking criteria guide the development of state ranking 
criteria to ensure GRP funds are focused on projects that support 
grazing operations, protect grassland from conversion to other uses, 
enhance plant and animal biodiversity, leverage non-Federal funds and 
address that state's program priorities. Priority is given to expiring 
Conservation Reserve Program (CRP) grasslands.
    While shared administration responsibilities for GRP does create 
some challenges, the agencies have worked together to implement this 
program as efficiently as possible. The Department is always interested 
in exploring more efficient and effective ways to implement our 
programs and would welcome the opportunity to work with you and others 
to achieve that end.

    Question 9. What steps do your respective agencies take to ensure 
that conservation practices are truly effective? Can you describe the 
process you use, for example, to ensure that measures to prevent 
streambank erosion are working?
    Answer. We take a number of steps to ensure that conservation 
practices are working--from our science-based technical standards and 
conservation planning process to oversight for practice installation 
and follow-up to validate performance.

   The planning process used by USDA is site specific and our 
        technically trained staff works with the customer to identify 
        the resource problems and plan the right suite of science-based 
        practices to fix the problem (in this case it would likely be 
        our shoreline and streambank protection practice).

   Conservation practices are developed by technical experts 
        and undergo thorough peer and public review before being 
        finalized and published through a Federal Register notice.

   Practices are designed and installed to specifications by 
        technically qualified professionals (could be NRCS, State 
        Forester, a third party, or the landowner); where engineering 
        is involved there are additional review and approval 
        requirements and authorities.

   Once installed, USDA follows up to ensure that the practice 
        was installed correctly and completely and that it is 
        performing as expected for the intended purpose and lifespan.

    USDA implements a number of conservation practices that reduce 
streambank erosion and modify the vegetation and hydrology to enhance 
streambank stability. There are numerous examples and case studies that 
demonstrate that conservation practices and systems can improve 
streambank stability and improve water quality. A recent example is 
Peacheater Creek-Northeast Oklahoma. The area is characterized by 
poultry and cattle production and the downstream Illinois River and 
Lake Tenkiller had been placed on the 303(d) list for elevated 
phosphorus levels. Riparian area protection along with in-field 
conservation practices and farmstead improvements were applied. 
Measured decreases in streambank erosion were among the results, which 
also included reductions in phosphorus and nutrient loading and 
improved fish communities.
    In addition to the technical requirements to ensure conservation 
practice integrity, USDA collects natural resource trend data and 
conducts short- and long-term analyses of the conservation benefits of 
USDA conservation practices. The National Resources Inventory (NRI), 
for example, provides statistically sound data on natural resource 
status and trends on non-Federal lands, including trends in soil 
erosion, land use change, and wetlands, among others.
    USDA's Conservation Effects Assessment Project (CEAP) is a multi-
agency effort to quantify the environmental effects of conservation 
practices and programs and develop the science base for managing the 
agricultural landscape for environmental quality. CEAP literature 
reviews and assessments document the effects of conservation practices 
and related environmental benefits.
    Monitoring and evaluation of conservation practice effectiveness in 
all 43 CREP Projects also document the effectiveness of conservation 
practices applied and the public the societal benefits. Another data 
set developed in partnership with the U.S. Geological Survey has 
quantified the benefits of conservation plantings and habitat 
development to many grassland and waterfowl species in over 12 Great 
Plain States.
Response from Dave White, Chief, Natural Resources Conservation 
        Services, U.S. Department of Agriculture
Questions Submitted By Hon. Frank D. Lucas, a Representative in 
        Congress from Oklahoma
    Question 1. We have three different easement programs, two without 
a baseline going into the new farm bill. Can you help me understand the 
differences between the three and is it possible to look at ways of 
combining any of them? Can consolidation be beneficial for program 
delivery?
    Answer. NRCS administers three easement programs under Title XII of 
the Food Security Act of 1985, as amended, which include the Farm and 
Ranch Lands Protection Program (FRPP), the Wetlands Reserve Program 
(WRP), and the Grasslands Reserve Program (GRP). NRCS categorizes GRP 
and FRPP as ``working lands'' programs and the WRP as an 
``environmental restoration and protection'' program.

   FRPP is used to assist eligible entities to purchase 
        conservation easements that prevent conversion of agricultural 
        land to non-agricultural uses. Easements are held by the entity 
        and USDA has a ``right of enforcement'' should the entity be 
        unable to fulfill its responsibilities associated with 
        enforcing the terms of the easement.

   GRP is used to assist to landowners and operators to protect 
        grazing uses and conservation values by conserving and 
        restoring grassland resources on eligible private lands through 
        rental contracts, easements, and restoration cost-share 
        agreements. GRP prohibits non-agriculture uses of the enrolled 
        land and the conversion of grazing lands or grassland to 
        cropland. The U.S. Government holds the GRP easements but GRP 
        also offers an option where an eligible entity can either 
        assume title to the GRP easement or receive financial 
        assistance toward the purchase an easement under an arrangement 
        similar to FRPP.

   WRP is used to restore, protect, and enhance wetlands and 
        associated habitats on eligible farmlands through easements 
        (permanent and 30 year), 30 year contracts with Tribes, and 
        restoration cost-share agreements. Compatible uses, such as 
        haying and grazing, may be permitted if they further the 
        purposes of the easement. For example, grazing may be 
        authorized if it was a natural part of the ecosystem or is 
        necessary to control invasive species. The United States 
        Government holds the WRP easements.

    NRCS welcomes the opportunity to work with you in exploring 
opportunities to consolidate programs to achieve efficiencies, while 
preserving the natural resource conservation objectives that these 
programs were designed to achieve.

    Question 2. Could you tell us to your best of your ability what 
percentage of time and funds are used simply on program administration 
and do you think Congress could help the Department out on the 
administrative side of things by combining like programs?
    Answer. While the administrative tasks associated with the farm 
bill conservation programs represent a marginal workload for our field 
and state offices, these tasks are inextricably linked with the 
successful delivery of these programs. Examples of the program 
administration tasks include establishing a case file, developing 
participant notifications and issuing correspondence, managing 
contracts and agreements, and performing effective oversight of 
contracts with producers. For customer service and program delivery to 
be most successful, the technical aspects of program delivery must be 
interconnected and coordinated with the administrative activities.
    Recognizing the need to reduce the amount of staff time expended in 
performing administrative tasks and the need to strengthen program 
coordination, NRCS is implementing a Conservation Delivery Streamlining 
Initiative to more cost-effectively deliver our programs and increase 
the time our field staff has to work with farmers and ranchers. The 
agency is also identifying opportunities to realign workload and 
structure to increase the proportion of our staff that is in direct 
field service delivery.

    Question 3. What unique purpose does the Agricultural Management 
Assistance Program (AMA) program serve and does it share any goals/
purposes with other programs? What assistance does the AMA provide to 
producers that other conservation programs do not?
    Answer. AMA provides assistance to agricultural producers to manage 
risk and voluntarily address issues such as water management, water 
quality, and erosion control by incorporating conservation practices 
into their farming operation. Many of these practices are also 
available through the Environmental Quality Incentives Program (EQIP). 
Even so, AMA provides assistance to producers who have small-acreage or 
specialty-crop farming operations that do not meet the land eligibility 
guidelines for participation in other programs. For example, AMA 
provides cost-share assistance for irrigation-related practices that 
may be implemented on land that does not have an irrigation history, 
whereas EQIP will only provide assistance for irrigation-related 
practices on land that has an irrigation history. By helping to 
mitigate the risks associated with these kinds of agricultural 
enterprises, AMA helps agriculture remain a valuable segment of local 
economies.

    Question 4. What programs have wildlife components and what makes 
the WHIP program different than these other programs? Are there ways to 
incorporate those differences into the other programs currently 
authorized to build on wildlife habitat success?
    Answer. While many programs have wildlife components, the Wildlife 
Habitat Incentive Program (WHIP) is the only conservation program that 
focuses solely on wildlife habitat on private agricultural, 
nonindustrial private forest, and tribal lands. WHIP is also the only 
conservation program that addresses a wide range of aquatic wildlife 
habitat resource concerns. WHIP is directed by statute to prioritize 
projects that would address issues raised by state, regional, and 
national conservation initiatives, such as State Wildlife Action Plans 
or similar wildlife-oriented initiatives. While less direct than WHIP's 
authority, the following conservation programs also have wildlife 
components or contribute to wildlife-related resource concerns:

   The Environmental Quality Incentives Program (EQIP). EQIP 
        participants may adopt practices for the benefit of fish and 
        wildlife-related resource concerns on working agricultural 
        lands. While EQIP eligibility requires lands to be in 
        agricultural use, WHIP focuses on habitat development. Although 
        projects on publicly owned land are not eligible for WHIP, 
        under certain conditions, such projects may be eligible for 
        EQIP. WHIP has a $50,000 annual payment limitation while EQIP 
        has a $300,000 contract and payment limitation.

   The Conservation Stewardship Program (CSP). CSP offers 31 
        enhancements that benefit wildlife to provide improvements to 
        cover, food, habitat connectivity and access to water for 
        terrestrial and aquatic wildlife including rare and declining 
        habitats. In comparison, WHIP provides basic self-sustaining 
        prioritized habitats by the implementation of various 
        conservation practices. After the implementation of a complete 
        WHIP conservation plan the land is then eligible to participate 
        in CSP to further enhance the land for wildlife. CSP would have 
        to add the component of first developing the land for fish and 
        wildlife habitat and then enhance the lands.

   The Wetlands Reserve Program (WRP). WRP provides for long-
        term restoration and protection of valuable wetland and 
        associated upland habitat through permanent and 30 year 
        easements, 30 year contracts, and restoration cost-share 
        agreements. However, WHIP land eligibility is much broader than 
        WRP providing for habitat development benefiting species beyond 
        those associated with wetland habitats. While WHIP allows for 
        contract periods of up to 15 years for certain projects, it 
        does not provide an easement option and only provides cost-
        share assistance.

   The Healthy Forest Reserve Program (HFRP). HFRP provides for 
        long-term protection and restoration of forestland habitat 
        resources through permanent and 30 year easements, 30 year 
        contracts, and restoration agreements in order to benefit 
        species with special status such as those listed as threatened 
        or endangered under the Endangered Species Act (ESA), proposed 
        or candidate species for ESA listing, or species of special 
        concern within the state. HFRP is primarily confined to the 
        restoration and protection of forest land resources while WHIP 
        eligibility is much broader, providing for habitat development 
        benefiting species beyond those associated with forestland 
        habitats. Unlike the various HFRP enrollment options, WHIP can 
        only provide long term cost-share contracts.

   The Grassland Reserve Program (GRP). GRP provides for long-
        term protection of grazing uses and related conservation values 
        through conservation easements, rental contracts, and 
        restoration agreements. GRP emphasizes support for working 
        grazing operations, enhancement of plant and animal 
        biodiversity, and protection of grassland under threat of 
        conversion to other uses. WHIP eligibility is much broader and 
        provides for habitat development benefiting species beyond 
        those associated with grassland habitats. While WHIP provides 
        for long-term contracts (15 years), it does not contain rental 
        agreement or easement enrollment options.

   The Conservation Reserve Program (CRP). Under CRP, FSA 
        enters into contracts with agricultural producers to retire 
        highly erodible and other environmentally sensitive land. 
        During the 10 to 15 year contract period, eligible land is 
        converted to grass, trees, wildlife cover, or other 
        conservation uses to improve soil, air, and water quality and 
        improve wildlife habitat. Participants receive annual rental 
        payments and half the cost of establishing conservation covers 
        CRP enrolls land to create wildlife habitat. All of the lands 
        eligible for CRP could be enrolled in WHIP if they fall within 
        the WHIP priority areas but not all lands eligible for WHIP 
        could be enrolled in CRP. While WHIP allows for contract 
        periods of up to 15 years for certain projects, it does not 
        provide a rental contract option and only provides cost-share 
        assistance.

    USDA welcomes the opportunity to work with the Committee in 
evaluating opportunities to incorporate the unique elements of WHIP 
into other programs that have wildlife components, while preserving the 
natural resource conservation objectives that those programs are 
designed to achieve. Features of WHIP that are lacking in other 
programs include: broader land use eligibility; emphasis on wildlife 
habitat development; ability to undertake aquatic-related habitat 
measures; and priority for projects that support state, regional, and 
national initiatives.

    Question 5. EQIP funding has grown exponentially over the last 10 
years, can you talk about the backlog and do you think the Department 
is able to effectively manage the program as the funding has increased?
    Answer. The farm bill increased funding for EQIP by 337 percent 
from its authorized level of $400 million in 2002 to $1.75 billion 
authorized for 2012. With this increased level of funding, program 
participation also increased dramatically. In FY 2002, producers 
enrolled 19,682 EQIP contracts at an average contract value of $15,700. 
In FY 2010, we added 36,499 new EQIP contracts at an average contract 
value of $23,000, resulting in about 150,000 active EQIP contracts. 
Despite the increase in participation, demand for program assistance 
remains high. The number of unfunded applications for EQIP at the end 
of FY 2010 was 7,777.
    While farm bill program participation has increased significantly, 
the number of staff years available to support these programs has not 
followed suit. Since FY 2002, the amount of financial assistance 
administered by NRCS has increased by 390 percent across all programs 
while the staff years available to deliver this assistance increased by 
10 percent (see following chart).
    The increase in program delivery workload for the field office has 
created challenges. We recognize that in order to deliver conservation 
services NRCS needs to have adequate ``boots on the ground'' and we are 
taking aggressive steps to address the increased program workload. 
These steps include:

   Making improvements to the farm bill technical service 
        provider (TSP) provision that will increase the number of 
        technical experts available to assist producers with their 
        conservation planning and implementation.

   Implementing a Conservation Delivery Streamlining Initiative 
        (CDSI) that will reduce the number of administrative tasks 
        performed by field staff and allow them to be working in the 
        field up to 75 percent of the time, and

   Initiating a process to increase the proportion of agency 
        technical staff in direct field service delivery positions.
Change in Program Funding and Staff Years Since 2002

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    Question 6. What percentage of EQIP funding is carved-out by set 
asides or subprograms?
    Answer. The 2008 Farm Bill requires the following funding set 
asides for the Environmental Quality Incentives Program for each of 
fiscal years 2009 through 2012:

   Socially Disadvantaged Farmers and Ranchers--5 percent

   Beginning Farmer and Ranchers--5 percent

   Cooperative Conservation Partnership Initiative--6 percent

   Air Quality--$37.5 million

   Organic--Payments are authorized to assist organic or 
        transition to organic production, but there is no specified 
        minimum. The NRCS Chief has set aside $50,000,000 annually.

   Conservation Innovation Grants--Competitive grants are 
        authorized to stimulate innovative approaches to leveraging the 
        Federal investment in environmental enhancement in concert with 
        agriculture, but there is no specified amount. Since 2008, NRCS 
        has set aside between $20 and $30 million annually for national 
        CIG awards.

   Livestock--60 percent of EQIP must be obligated to practices 
        related to livestock production.

    Question 7. I am concerned that while EQIP receives fewer funds 
than authorized every year, these subprograms do not receive the same 
cuts. Can you explain if these cuts to mandatory spending have any 
further impact on subprograms?
    Answer. Where the subprograms are provided a percentage of the 
available funds, they receive proportionally the same reductions as the 
overall program. For subprograms where the statute requires a specific 
amount of funding, such as the $37.5 million set aside for air quality 
(1240H(b)), an overall reduction in EQIP funding is absorbed by the 
general program and may potentially impact other EQIP priorities. For 
subprograms that are authorized, but no specific funding is set aside, 
such as for the organic initiative, NRCS has discretionary authority to 
adjust the amount of funding as appropriate, so as to avoid adverse 
impacts to other EQIP program priorities.

    Question 8. The 2008 Farm Bill included ``bidding down'' language 
like that in the EQIP program which states: ``If the Secretary 
determines that the environmental values of two or more applications 
for payments are comparable, the Secretary shall NOT assign a higher 
priority to the application only because it would present the least 
cost to the program.'' Does this seem like language that makes sense in 
this fiscal environment?
    Answer. The ``bidding down'' language was incorporated in the 2002 
Farm Bill to address concerns from agricultural stakeholders that 
wealthier landowners whose main income was from non-agricultural 
sources were out-competing farmers and ranchers for conservation 
program contracts because they could afford to take less Federal cost-
share for the installation of practices. As a result, farmers and 
ranchers had a harder time successfully getting in to EQIP.
    NRCS implements this provision in a manner that ensures 
applications are evaluated and prioritized on the least-cost 
alternative to achieve the highest environmental benefits and thus NRCS 
is able to make cost-effective project selections. The ``bidding down'' 
requirement allows EQIP to select projects that achieve the highest 
environmental benefit and treat all applicants in a fair and equitable 
manner regardless of their financial status.

    Question 9. How much money has come out of EQIP to fund the CCPI 
program?
    Answer. As directed by the 2008 Farm Bill, no more than six percent 
of the funds made available for the Environmental Quality Incentives 
Program (EQIP) are used for the Cooperative Conservation Partnership 
Initiative (CCPI). EQIP funds made available through CCPI go to 
producers participating in the project, delivered in accordance with 
the EQIP authorities. The following amounts were obligated in contracts 
with producers participating in CCPI projects in:

   FY 2010: $70,800,000

   FY 2011: $74,280,000 (estimated)

    Question 10. How has the Department used the EQIP program in 
regards to organics and do you think the money used for that purpose is 
an effective use of conservation dollars. What are the comparative 
environmental benefits?
    Answer. The 2008 Farm Bill included a provision within EQIP 
intended to assist organic producers as well as producers in the 
process of transitioning to organic production. In FY 2010, NRCS 
obligated $24 million in contracts with producers to treat 148,000 
acres in organic production or in transition to organic production.
    The most commonly used practices included:

   Nutrient Management

   Cover Crop

   Pest Management

   Conservation Crop Rotation

   Prescribed Grazing

   Seasonal High Tunnel (interim conservation practice)

    Assisting organic producers and those in the transition to organic 
farming with conservation practices furthers EQIP purposes with this 
new and growing segment of the agricultural sector. While many 
observers interpret organic production alone to be the most sustainable 
form of farming, NRCS has found that there are many conservation needs 
in the organic sector. Helping these operators to integrate 
conservation approaches in their production system ensures that 
critical environmental benefits are realized by helping organic growers 
remain economically viable so that they may sustain the natural 
physical, biological, and chemical properties of the soil and other 
natural resources, which is vital to organic production.

    Question 11. Congress created the Conservation Security Program 
(CSP) in the 2002 Farm Bill. This program was then replaced with the 
Conservation Stewardship Program in the 2008 Farm Bill. Can you discuss 
the changes that were made to the new CSP?
    Answer. The Conservation Stewardship Program reflects many changes 
from its predecessor, the Conservation Security Program. Overall the 
changes made the program more accessible and accountable and include:

   Providing continuous nationwide enrollment.

   Establishing an enrollment cap of 12.769 million acres each 
        fiscal year at an average cost of $18/acre/year.

   Making nonindustrial private forestland (NIPF) eligible for 
        enrollment while establishing a limit of 10 percent of total 
        acres per year.

   Ensuring that a minimum of 5 percent of acres are dedicated 
        to assist Beginning Farmers or Ranchers and a minimum 5 percent 
        of acres are dedicated to assist Socially Disadvantaged Farmers 
        or Ranchers.

   Requiring contract offers to include all eligible land under 
        the effective control of the producer.

   Limiting the contract length to 5 years with an opportunity 
        for one renewal for a 5 year term.

   Allowing producers to initiate organic certification during 
        the contract period.

   Allowing for annual and supplemental payments.

   Limiting each person or legal entity to $40,000 per year. 
        Contract limitations for formal joint operations are $400,000 
        for the contract period and from $40,000 to $80,000 per year.

    Question 12. A major issue with CSP was paying farmers for the 
status quo? How much more environmental benefit have we seen from the 
implementation of the new CSP program? What does the new CSP program 
offer that other working lands programs cannot provide?
    Answer. The Conservation Stewardship Program (CSP) is resulting in 
agricultural producers applying thousands of additional conservation 
activities on enrolled lands in conjunction with maintaining existing 
stewardship levels, generating sizable environmental benefits to the 
public. For example, under the 20,567 contracts enrolled during FY 
2010, participants will apply and maintain an additional 78,947 
conservation activities--an average of 3.8 additional activities per 
contract over all land uses in the contract. Additionally, CSP requires 
a participant to apply at least one additional activity for each land 
use, such as cropland and pasture, in order to be eligible to receive 
payment for the enrollment of that particular land use. An individual 
contract often has more than one land use, and thus an average of 2.8 
additional activities will be applied per land use across all land 
uses.
    The purpose of other programs is to meet conservation standards 
while CSP focuses on achieving an additional, higher level of 
management. This higher level of conservation management is achieved 
through a comprehensive approach to working lands conservation where 
all of a participant's eligible land must be enrolled. Of the enrolled 
land, CSP encourages the participant to implement additional 
conservation activities while maintaining existing conservation 
activities.

    Question 13. What is the Administration's position on the situation 
with WRP having no baseline and what priority does the Administration 
put on the continuation of the program. Where should Congress look to 
fund this program?
    Answer. Demand for WRP continues to be high and WRP has proven 
itself to be a valuable program for meeting the nation's objectives 
related to protecting and restoring wetlands on private lands. Over the 
last 20 years, more than 11,000 private landowners have voluntarily 
enrolled in WRP to restore, protect and enhance wetlands and wildlife 
habitat on over 2.3 million acres nationwide. Through WRP, NRCS, 
landowners, and many partners work together to achieve long-term 
benefits on a landscape scale that will ensure our wetland resources 
are available for future generations.
    NRCS welcomes the opportunity to work with the Committee in 
exploring opportunities to achieve efficiencies that would allow 
funding of WRP while preserving the full array of natural resource 
conservation objectives that the broader suite of conservation programs 
are intended to achieve.

    Question 14. In terms of environmental benefits, do you see working 
lands or easement programs providing the biggest bang for the buck?
    Answer. Both program approaches deliver their intended 
environmental benefits. With a variety of program approaches, it is 
possible for participants to find a conservation path that fits their 
personal economic situation and environmental objectives. Working land 
programs offer a valuable tool for assisting producers to address 
natural resource concerns that affect the viability and productivity of 
their operations. For example, working lands programs can provide 
technical and financial assistance needed to help producers meet or 
eliminate the need for regulatory requirements on their operations. 
These investments--voluntarily shared by the program participant--also 
provide a public benefit such as better water, air, or habitat quality. 
Some working lands programs, such as the Grasslands Reserve Program or 
Farm and Ranch Lands Protection Program, offer easements, but ensure 
that enrolled lands will remain in agricultural uses over the long 
term--retaining important agricultural lands is a critical component 
for ensuring food security for the nation.
    Other easement programs emphasize the retirement of sensitive or 
environmentally significant lands. These conservation easements 
recognize the rights reserved to private landowners, compensate these 
landowners for the rights they voluntarily forego, and create valuable 
enduring environmental benefits for society. For example, establishing 
easements that protect and improve essential habitat can help to 
prevent a candidate species, like the sage-grouse, from being listed. 
These protections need to be in place for the long-term which an 
easement program can provide.
    Program approaches also can be used in tandem. For example, land 
retirement easements and working lands programs are valuable tools for 
addressing hypoxia in the Gulf of Mexico. Working lands programs can 
help producers improve nutrient management and reduce potential losses 
of nutrients into the riverine system, while land retirement easement 
programs can restore and protect wetlands and floodplain areas in 
strategic areas that best trap the nutrients that have left the farm 
prior to reaching the Gulf. Using program approaches together can 
achieve the landscape-scale transformation needed to address larger 
conservation challenges such as hypoxia or candidate species 
protection.

    Question 15. Do you think the benefit outweighs the cost to the 
Federal Government when acquiring permanent easements on lands at huge 
costs during this fiscal environment?
    Answer. Conservation easements provide significant and enduring 
benefits. These benefits are increased by ensuring that project 
location and purpose are part of the selection process. NRCS ranks and 
selects projects based upon several resource concern factors that 
consider the resource potential of the site itself and its location in 
the watershed. These factors are key to identifying valuable 
opportunities as the quality of any easement project will depend on its 
location as well as its intrinsic attributes.
    While initial easement acquisition costs may appear high, they 
should be considered in the context of the enduring public benefits. 
For example, based on the Benefit Cost Analysis for WRP, the estimated 
value of benefits per acre of permanent wetland was $10,935 and the 
estimated cost was $3,000. This means that the program has a cost 
benefit ratio of 3.6. This indicates that the value of estimated 
benefits from wetlands is considerable.
    Easements may also provide benefits through avoided costs. For 
example, for frequently flooded lands where producers routinely lose 
crops, the producer typically receives crop insurance or disaster 
payments. Retiring these lands through floodplain easements eliminates 
the insurance and disaster payments, reduces overall damages downsteam 
from flooding; and improves water quality.

    Question 16. Do the carve-outs in the law for certain groups get 
fully used or do you often have to roll those funds back in?
    Answer. The set asides for socially disadvantaged and beginning 
farmers and ranchers, as authorized under the 2008 Farm Bill for the 
Environmental Quality Incentives Program (EQIP) and the Conservation 
Stewardship Program (CSP), are fully used. Each year we have exceeded 
the funding target goals. In 2010, the funding for these certain groups 
was:

   EQIP--$57,736,481 or 6.9 percent of total funds obligated in 
        2,109 contracts for socially disadvantaged farmers and ranchers

   EQIP--$ 134,944,240 or 16 percent of total funds obligated 
        in 5,450 contracts for beginning farmers and ranchers

   CSP--1,695,890 acres or 6.7 percent of acres in 378 
        contracts for socially disadvantaged farmers and ranchers.

   CSP--1,038,269 acres or 4.1 percent of acres in 1,496 
        contracts for beginning farmers and ranchers

    Question 17. How does regional equity affect the way you run the 
conservation programs and are they a hindrance to getting money to the 
places that need it the most?
    Answer. Regional equity ensures that each state receives an the 
opportunity for a minimum level of $15 million in aggregate funding 
under subtitle D programs, excluding the Conservation Reserve Program, 
Wetlands Reserve Program, and Conservation Security Program. The intent 
is to ensure that states are able to meet producers' needs and address 
priority natural resource concerns. The provision allows that funds not 
obligated in contracts by April 1st of each year may be recalled by the 
Chief to meet demand in other states. While ensuring that a minimum 
level of funding is provided to all states is an important 
consideration, the establishment of a fixed level may create disharmony 
should overall program funding be reduced. Establishing a proportion of 
funding rather than a fixed number could create a more balanced 
approach to ensuring that all states receive the mandatory resources 
needed to achieve conservation objectives.

    Question 18. What is the Administration's opinion on priority areas 
and do you think they match with the priorities of the Administration? 
Do you feel that funds go to these priority areas solely because of 
their inclusion in the law?
    Answer. Focusing scarce resources on priority issues is an 
effective method for accelerating progress. NRCS' Conservation Effects 
Assessment Project (CEAP) reports have documented that risks to natural 
resource quality may be concentrated in specific areas and treating 
those can generate disproportionate benefits. The 2008 Farm Bill 
identified a number of priorities:

   geographically based (e.g., Agriculture Water Enhancement 
        Program's (AWEP) Eastern Snake Plain Aquifer, Puget Sound, 
        Ogallala Aquifer, Sacramento River watershed, Upper Mississippi 
        River Basin, Red River of the North Basin, and the Everglades; 
        Chesapeake Bay Watershed Program; and Conservation Reserve 
        Program priority areas);

   production-oriented (EQIP and CSP organic initiatives);

   producer-focused (Conservation Access for beginning and 
        socially disadvantaged producers); and

   resource-specific (EQIP air quality initiative, AWEP's water 
        quality and quantity focus).

    These farm bill priorities align well with Administration 
priorities for conservation and strengthening rural America. For 
example:

   The emphasis on serving historically underserved communities 
        mirrors USDA's Strike Force initiative;

   the Administration's Chesapeake Bay Executive Order further 
        emphasizes the priorities outlined in the Chesapeake Bay 
        Watershed Program;

   USDA's focus on strengthening rural economies is supported 
        by priorities for assisting beginning farmers and ranchers in 
        their conservation needs.

    While funds go to these farm bill priorities because of statutory 
direction, they are nonetheless areas of considerable conservation need 
and deserving of conservation funding irrespective of their 
establishment as priority areas within the statute.

    Question 19. How does the split administration of GRP work, do you 
think this is the best way to administer this program?
    Answer. National leadership for GRP is provided by the Chief, NRCS, 
and the Administrator, FSA, and their designees. Specific agency 
responsibilities are detailed in a Memorandum of Understanding.
    NRCS and FSA at the national level jointly develop and evaluate 
program policy and direction, monitor program implementation, ensure 
that GRP information is made available to the public, formulate 
budgets, and coordinate national GRP funding allocations to achieve 
national program objectives. Obligations are tracked at the national 
level to ensure 60 percent of the funding supports easements and 40 
percent of the funding supports rental contracts over the life of the 
farm bill.
    FSA has lead responsibility for rental contract administration and 
financial activities. FSA also provides all of the producer eligibility 
determinations and implements the rental contract enrollment options. 
NRCS has lead responsibility on conservation planning, technical 
assistance to owners and operators, and easement administration. 
National ranking criteria guide the development of state ranking 
criteria to ensure GRP funds are focused on projects that support 
grazing operations, protect grassland from conversion to other uses, 
enhance plant and animal biodiversity, leverage non-Federal funds and 
address that state's program priorities. Priority is given to expiring 
Conservation Reserve Program (CRP) grasslands.
    While shared administration responsibilities for GRP does create 
some challenges, the agencies have worked together to implement this 
program as efficiently as possible. The Department is always interested 
in exploring more efficient and effective ways to implement our 
programs and would welcome the opportunity to work with you and others 
to achieve that end.

    Question 20. What steps do your respective agencies take to ensure 
that conservation practices are truly effective? Can you describe the 
process you use, for example, to ensure that measures to prevent 
streambank erosion are working?
    Answer. We take a number of steps to ensure that conservation 
practices are working--from our science-based technical standards and 
conservation planning process to oversight for practice installation 
and follow-up to validate performance.

   The planning process used by USDA is site specific and our 
        technically trained staff works with the customer to identify 
        the resource problems and plan the right suite of science-based 
        practices to fix the problem (in this case it would likely be 
        our shoreline and streambank protection practice.

   Conservation practices are developed by technical experts 
        and undergo thorough peer and public review before being 
        finalized and published through a Federal Register notice.

   Practices are designed and installed to specifications by 
        technically qualified professionals (could be NRCS, State 
        Forester, a third party, or the landowner); where engineering 
        is involved there are additional review and approval 
        requirements and authorities.

   Once installed, USDA follows up to ensure that the practice 
        was installed correctly and completely and that it is 
        performing as expected for the intended purpose and lifespan.

    USDA implements a number of conservation practices that reduce 
streambank erosion and modify the vegetation and hydrology to enhance 
streambank stability. There are numerous examples and case studies that 
demonstrate that conservation practices and systems can improve 
streambank stability and improve water quality. A recent example is 
Peacheater Creek-Northeast Oklahoma. The area is characterized by 
poultry and cattle production and the downstream Illinois River and 
Lake Tenkiller had been placed on the 303(d) list for elevated 
phosphorus levels. Riparian area protection along with in-field 
conservation practices and farmstead improvements were applied. 
Measured decreases in streambank erosion were among the results, which 
also included reductions in phosphorus and nutrient loading and 
improved fish communities.
    In addition to the technical requirements to ensure conservation 
practice integrity, USDA collects natural resource trend data and 
conducts short- and long-term analyses of the conservation benefits of 
USDA conservation practices. The National Resources Inventory (NRI), 
for example, provides statistically sound data on natural resource 
status and trends on non-Federal lands, including trends in soil 
erosion, land use change, and wetlands, among others.
    USDA's Conservation Effects Assessment Project (CEAP) is a multi-
agency effort to quantify the environmental effects of conservation 
practices and programs and develop the science base for managing the 
agricultural landscape for environmental quality. CEAP literature 
reviews and assessments document the effects of conservation practices 
and related environmental benefits.
    Monitoring and evaluation of conservation practice effectiveness in 
all 43 Conservation Reserve Enhancement Program (CREP) Projects also 
document the effectiveness of conservation practices applied and the 
public the societal benefits. Another data set developed in partnership 
with the U.S. Geological Survey has quantified the benefits of 
conservation plantings and habitat development to many grassland and 
waterfowl species in over 12 Great Plain States.
Questions Submitted By Hon. Martha Roby, a Representative in Congress 
        from Alabama
    Question 1. Representative Terry Everett, who held my seat from 
1993-2009 and during his tenure on this Committee, was very active in 
regards to irrigation. During the last farm bill, Representative 
Everett worked tirelessly in the creation of the Agricultural Water 
Enhancement Program under EQIP. This program has provided technical and 
financial assistance for agricultural water enhancement activities on 
farms. In particular, on-site off-stream reservoir was an initiative 
that many of our farmers were excited about participating in when it 
was passed into law.
    Unfortunately, the implementation of the program has been difficult 
to access in Alabama due to the requirement that the pond should be on 
high ground which much of our farm land is flat.
    Additionally, Alabama has had difficulty in accessing USDA's 
irrigation programs due to the traditional lack of historical 
irrigation. Many of our farmers do not own the land that they are 
farming and therefore it is not cost-effective to build irrigation 
system. In a recent survey conducted by a team of Alabama Agricultural 
Experiment Station researchers at Auburn University, six out of ten 
farmers without irrigation in the state said they would be more likely 
to install or improve irrigation systems if a cost-share or subsidized 
loan program were available.
    What can we do to improve EQIP to ensure that farmers are able to 
find assistance in irrigation?
    Answer. The agency has authority through EQIP and AWEP to provide 
financial and technical assistance to producers for improvements to 
existing irrigation systems that address water conservation or water 
quality resource issues. Such assistance may include development of 
irrigation storage reservoirs, ponds, and in-ground dugouts for new 
sources of water. Although water storage facilities on high ground are 
more ideal as these practices allow for use of less expensive efficient 
gravity flow irrigation, this is not the only alternative that may be 
available. For locations with relatively flat topography, EQIP and AWEP 
can be used to install water storage facilities along with pumping 
systems to transport the water to area for application of irrigation 
water. Under AWEP, the 2008 Farm Bill encourages development of 
irrigation storage facilities for areas experiencing drought in 
accordance with applicable EQIP program rules and on eligible on-farm 
agricultural land. This includes assistance to establish on-farm 
irrigation storage practices, which may be off-stream, but still on 
eligible land that is either owned or under the control of the 
producer.
    According to the statute, financial assistance through EQIP and 
AWEP many only be provided to achieve a measurable water conservation 
or water quality environmental benefit. Correspondingly, there is a 
requirement that EQIP and AWEP program applicants demonstrate 
irrigation history on cropland as a condition for approval of 
irrigation system improvements. This standard is in place to help meet 
the statutory requirement to validate a resulting environmental 
benefit. Demonstration of irrigation history, however, is not limited 
to evidence of in-field irrigation equipment. Producers that may be 
using other, transportable means to irrigate may document those methods 
as evidence of irrigation history.

    Question 2. As a report that the American Forest Foundation 
recently produced highlights, Alabama is spending quite a bit of its 
EQIP funds, roughly 17% and about 33% of WHIP funds on family forest--
this is great, given how heavily forested my state is and given many of 
the forest health and fire challenges we are dealing with. What do you 
think is the reason for my state's focus on forests, as compared with 
other states, that average about 4% spending on forests?
    Answer. The focus of program assistance on forest related issues in 
your state is reflective of the locally-led process where conservation 
partners and producers provide recommendations to the agency for the 
kind and scope of assistance needed. Through local work groups and 
State Technical Committee's, the State Conservationist is provided 
latitude to focus program assistance to identified priority natural 
resource concerns. This flexibility allows each State Conservationist 
to prioritize funding on those geographic locations which have 
significant need for assistance to address resource concerns.
                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    Conservation Reserve Program (CRP).
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    FSA enters into contracts with agricultural producers to retire 
highly erodible and other environmentally sensitive land. During the 10 
to 15 year contract period, eligible land is converted to grass, trees, 
wildlife cover, or other conservation uses to improve soil, air, and 
water quality and improve wildlife habitat. The program was initially 
authorized by the 1985 Farm Bill and amended by every subsequent farm 
bill.
    FSA is responsible for overall implementation and has entered into 
agreements for technical assistance with the Natural Resources 
Conservation Service (NRCS), the Forest Service acting on behalf of 
State Foresters, and other technical service providers. Participants 
receive annual rental payments and half the cost of establishing 
conservation covers.
    Since the 1985 Farm Bill, CRP has evolved from a program with a 
commodity supply control component to a conservation program that has 
increasingly focused or targeted limited program resources.

    General Signup

    Producers may offer land for CRP general sign-up enrollment during 
designated signup periods and all offers compete and are ranked against 
all other offers nationwide using an Environmental Benefit Index (EBI) 
which is used to rank offers based on a number of environmental factors 
and cost.

    Continuous Signup

    Continuous signup targets environmentally-desirable land which 
could be devoted to conservation practices such as filter strips, grass 
waterways, and other practices that protect larger acreages. Offers may 
be made at any time.

    Conservation Reserve Enhancement Program (CREP)

    CREP is a state and Federal partnership to address environmental 
issues of importance to the state and nation. CREP combines state and 
Federal dollars with funding from nongovernment sources and provides a 
framework for USDA to work closely with state, tribal, and local 
governments to address specific environmental issues and goals.

    Farmable Wetlands Program (FWP)

    FWP is designed to restore up to one million acres of farmable 
wetlands and associated buffers by improving the land's hydrology and 
vegetation. This includes constructed wetlands developed to receive 
flow for row-crop agriculture drainage systems for the purpose of 
providing nitrogen removal; land that was devoted to commercial pond-
raised aquaculture; and cropland that was subject to the natural 
overflow of a prairie wetland.

    Transition Incentive Program (TIP)

    TIP is designed to facilitate the transition of expiring CRP land 
from a retired or retiring owner or operator to a beginning or socially 
disadvantaged farmer or rancher to return the land to production for 
sustainable grazing or crop production. TIP provides annual rental 
payments for up to 2 additional years after the expiration of the CRP 
contract to facilitate this transition.

    Emergency Forestry Conservation Reserve Program (EFCRP)

    EFCRP was designed to help restore and enhance forest resources 
that were damaged by the 2005 hurricanes. By planting trees, such as 
longleaf pine and bottomland hardwoods, landowners and operators could 
enhance wildlife habitat and improve the ability of at-risk land to 
withstand future storms. Enrollment for EFCRP ended in January 2009.

    Wetland Restoration Floodplain Initiative

    This initiative was designed to restore the functions and values of 
wetland ecosystems that have been devoted to agricultural use. This 
500,000 acre initiative enrolls wetlands and buffers within a 100 year 
floodplain. These wetlands prevent degradation of the wetland area, 
increase sediment trapping efficiencies, improve water quality, prevent 
erosion and provide vital habitat for waterfowl and other wildlife.

    Wetland Restoration Non-Floodplain Initiative

    This initiative restores wetlands and playa lakes, which are 
shallow, depressional wetlands that are located outside a 100 year 
floodplain. This 250,000 acre initiative provides vital habitat for 
many wildlife species, filters runoff, recharges groundwater supplies 
and sequesters carbon.

    Bottomland Hardwood Initiative

    This initiative is designed to restore flood plains through the 
restoration of primarily bottomland hardwoods. This 250,000 acre 
initiative improves air and water quality and provides carbon 
sequestration benefits through reduction of greenhouse gases as well as 
increasing wildlife habitat.

    Quail Initiative

    This 350,000 acre initiative is designed to create habitat for the 
northern bobwhite quail and other grassland dependent birds. Bobwhite 
populations have declined with their habitat disappearing due to 
urbanization, increased grassland cultivation, and succession. This 
initiative provides successional grass buffers along agricultural field 
borders.

    Longleaf Pine Initiative

    This 250,000 acre initiative is designed to restore and re-
establish longleaf pine stands that benefit wildlife species and 
protect water quality.

    Duck Nesting Habitat Initiative

    This 150,000 acre initiative is designed to restore wetlands 
located outside the 100 year floodplain in Iowa, Minnesota, Montana, 
North Dakota, and South Dakota. Restoring these wetlands will provide 
nesting ducks with critical habitat, nesting cover, security from 
predators, and food.

    State Acres for Wildlife Enhancement Initiative (SAFE)

    SAFE is an 850,000 acre initiative designed to target high priority 
state and regional wildlife objectives. SAFE provides the flexibility 
to meet the specific needs of high-value wildlife species in a 
participating state or region by targeting the restoration of vital 
habitat.
3. Brief History
    Title XII of the Food Security Act of 1985, as amended (1985 Farm 
Bill), authorized CRP to enroll 40 to 45 million acres by 1990 with a 
primary goal of reducing soil erosion on highly erodible cropland. 
Secondary objectives included protecting the nation's long-run 
capability to produce food and fiber, reducing sedimentation, improving 
water quality, fostering wildlife habitat, curbing production of 
surplus commodities, and providing income support for farmers.
    The Food, Agriculture, Conservation, and Trade Act of 1990 (1990 
Farm Bill) extended CRP through 1995 and expanded the types of land 
eligible for enrollment to include lands that could reduce on-site or 
off-site threats to water quality if removed from production. Following 
1990 Farm Bill enactment, FSA adopted new rental rates based on soil-
specific productivity and developed an EBI to rank offers.
    The Federal Agriculture Improvement and Reform Act of 1996 (1996 
Farm Bill) re-authorized CRP enrollment through 2002 and set a maximum 
enrollment of 36.4 million acres. After 1996 Farm Bill enactment, FSA 
modified the EBI to include a wildlife benefits component. To better 
target the program, FSA began enrollment of selected practices such as 
filter strips and riparian buffers on a continuous basis without 
competition which included an incentive payment to encourage 
enrollment. In 1997, FSA created CREP which furthered targeting through 
state-Federal conservation partnerships that address specific state and 
nationally significant water quality, soil erosion, and wildlife 
habitat concerns related to agriculture. Additional incentives are 
generally provided. An up-front signing payment and a practice 
incentive payment were established in 2000 to further enhance 
continuous enrollment, including CREP.
    The 2001 agriculture appropriations act authorized FWP which 
provided for non-competitive enrollment under continuous sign-up 
provisions and incentives for up to 500,000 acres of small non-flood 
plain wetlands and adjacent uplands in six states (Nebraska, Iowa, 
Minnesota, North Dakota, South Dakota, and Montana). Enrollment was 
limited to 100,000 acres per state.
    The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 
extended CRP enrollment authority through 2007 and increased the 
enrollment cap by 2.8 million acres to 39.2 million acres. An 
administrative requirement that cropland must have been recently 
cropped was added by the 2002 Farm Bill to require that cropland must 
have been cropped or considered cropped in at least 4 of the 6 years 
preceding enactment. The 2002 Farm Bill also generally authorized 
managed harvesting of forage, expanded FWP from the original six states 
to all states, and raised the enrollment cap to 1 million acres while 
keeping the 100,000 acre state maximum.
    During 2006, FSA offered CRP participants the opportunity to re-
enroll or extend contracts set to expire between 2007 and to 2010 on 
about 28 million acres. FSA ranked the acreage based on the EBI score 
when the land was enrolled. The highest ranked were offered new 10 or 
15 year contracts. Lower ranking contracts were offered extensions of 
2-5 years depending upon the relative ranking. This preserved farmers' 
ability to protect America's most sensitive agricultural lands. Holders 
of about 82 percent of expiring contract acres were approved for re-
enrollment or extension.
    The 2006 supplemental emergency appropriations act authorized the 
EFCRP to provide assistance to timberland damaged by the 2005 
hurricanes. Acreage enrolled does not count against the CRP enrollment 
cap.
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
extended CRP enrollment authority through September 30, 2012, and 
required that enrollment be no more than 32 million acres beginning 
October 1, 2009. Other changes included:

   Expansion of practices under FWP;

   50 percent cost-share for tree thinning activities;

   New payment limitation applicability and adjusted gross 
        income eligibility criteria;

   Updated cropping history to 4 of 6 years between 2002 and 
        2007;

   Added new routine grazing authority;

   Added TIP; and

   Added authority to exclude continuous and CREP acreage from 
        the 25 percent county cropland enrollment limit.
4. Purpose/Goals
    CRP's purpose is ``to assist owners and operators of land to 
conserve and improve the soil, water, and wildlife resources of such 
land and to address issues raised by state, regional, and national 
conservation initiatives.''
5. Success in Meeting Programmatic Purpose/Goals
    CRP environmental benefits include:

                           Total Land Enrolled and Land Enrolled in Certain Categories
----------------------------------------------------------------------------------------------------------------
                                                                         Fiscal Year (FY)
         Measure                   Unit         ----------------------------------------------------------------
                                                     2006         2007         2008         2009         2010
----------------------------------------------------------------------------------------------------------------
Total Land Enrolled       million acres                 36.0         36.8         34.6         33.8         31.3
In Buffers                million acres                 1.84         1.90         2.00         2.01         2.02
Wetlands                  million acres                 2.01         2.06         1.98         1.98         2.05
HEL 1                     million acres                 25.2         25.5         23.6         22.8         20.5
----------------------------------------------------------------------------------------------------------------
                            Reductions (not leaving field or intercepted by buffers)
----------------------------------------------------------------------------------------------------------------
Sediment                  million tons                   210          216          219          220          220
Nitrogen                  million lbs                    607          623          616          611          607
Phosphorus                million lbs                    121          124          123          123          122
----------------------------------------------------------------------------------------------------------------
                         Greenhouse Gas Reduction (Carbon Dioxide (CO2) equivalent/Year)
----------------------------------------------------------------------------------------------------------------
CO2 sequestered           million metric tons             51           50           48           47           44
Energy and Fertilizer     million metric tons              9            9            9            8            8
                                                ----------------------------------------------------------------
  Total                   million metric tons             60           60           57           55           52
----------------------------------------------------------------------------------------------------------------
1 HEL means highly erodible land.


    CRP improves water quality.

   CRP reduces the nitrogen and phosphorus leaving a field by 
        runoff and percolation. Using models developed by the Food and 
        Agricultural Policy Research Institute (FAPRI), in FY 2010, 607 
        million pounds less nitrogen and 122 million pounds less 
        phosphorus left fields due to CRP, which accounted for 95 and 
        86 percent reductions, respectively, as compared to cropped 
        land conditions in 2005/2006.

   Grass filters and riparian buffers (partial field 
        enrollments) intercept sediment, nutrients, and other 
        contaminants before they enter waterways. FAPRI's model 
        estimates that in 2010, 356 million pounds of nitrogen and 72 
        million pounds of phosphorus were intercepted by 2.0 million 
        acres of CRP buffers, nationally.

   In 2010, grass and tree plantings reduced nitrate loss by 
        109 million pounds. Nitrate is a form of nitrogen that is 
        biologically available to algae. Excess nitrate contributes to 
        the formation of hypoxic zones in the Gulf of Mexico, 
        Chesapeake Bay, and other waters.

   Wetlands restored and constructed by CRP improve water 
        quality by converting nitrate/nitrogen into benign atmospheric 
        nitrogen. In 2010, Iowa's 65 CREP constructed wetland projects 
        on 1,808 acres reduced nitrate runoff by nearly 650,000 pounds.

    CRP enhances wildlife habitat. The 31.3 million acres of grass, 
trees, and wetlands established by CRP benefit numerous wildlife 
species. Several independent studies have identified benefits to 
multiple bird populations including:

   Prairie Pothole Ducks--Researchers from the U.S. Fish and 
        Wildlife Service (USFWS) estimated that the CRP contributed to 
        a net increase of about two million additional ducks per year 
        (30 percent increase in duck production) since 1992 in North 
        Dakota, South Dakota, and Northeastern Montana. Populations 
        fluctuate on a year-to-year basis due to differences in 
        precipitation patterns.

   Ringed-Neck Pheasants--Western EcoSystems Technology, Inc., 
        found that, in prime pheasant habitat, a four percent increase 
        in CRP herbaceous vegetation was associated with a 22 percent 
        increase in pheasant counts.

   Sage Grouse--The Washington Department of Natural Resources 
        found that CRP enrollment was associated with halting a decline 
        (25 percent between 1970-1988) in sage grouse populations. The 
        study found that a region without substantial CRP enrollment 
        had continued sage grouse population decline.

   Northern Bobwhite Quail--Mississippi State University found 
        that quail observations were positively related to CRP 
        enrollment. The quail population response varies by cover and 
        region.

   Grassland Birds--The CRP was identified as a ``Reason for 
        Hope'' for grassland birds in the 2009 ``State of the Birds'' 
        report, which documented serious declines in grassland birds. 
        Researchers from the United States Fish and Wildlife Service, 
        U.S. Geological Survey, and the University of Montana found 
        that CRP had a large impact on grassland bird populations, 
        including two birds designated as species of continental 
        importance by Partners in Flight.

    CRP sequesters carbon. CRP sequesters more carbon on private lands 
than any other federally administered program. In 2010, CRP resulted in 
the equivalent of a 52 million metric ton net reduction in carbon 
dioxide (CO2) from CO2 sequestration, reduced 
fuel use, and nitrous oxide emissions avoided from not applying 
fertilizer. Carbon sequestration helps offset the release of greenhouse 
gases (GHG) into the atmosphere. GHG have been associated with 
anthropogenic climate change.
    CRP protects and enhances soil productivity. CRP conservation 
covers reduce erosion and protect soil productivity. By targeting 
fragile cropland and placing these lands into protective conservation 
covers, the CRP greatly reduces sheet, rill, and wind soil erosion. 
Each year since 2002, CRP reduced soil erosion by 325 million tons or 
more from pre-CRP levels. Since 1986, CRP has reduced more than 8 
billion tons of soil erosion. (Note: Erosion rates and total sediment 
provided at the beginning of this section are not comparable 
measurements because erosion includes the rate of soil loss through 
wind and water erosion.)
    CRP reduces downstream flood damage. CRP lands reduce downstream 
flood damage by helping to reduce peak flows after storm events by 
holding and slowly releasing the storm water.
    FSA is using CRP enrollment data, the USDA soils and natural 
resource inventories, and cooperative agreements with Federal, state, 
and other partners to refine these performance measures and to estimate 
the benefits from CRP. For more information see: http://
www.fsa.usda.gov/FSA/webapp?area=home&subject=
ecpa&topic=nra.
    Other sources of information related to the topics discussed above 
include the following:

http://www.fsa.usda.gov/Internet/FSA_File/factsheet_crp_bennies.pdf
http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecpa&topic=nra
http://www.fsa.usda.gov/Internet/FSA_File/duck_report.pdf
http://www.fsa.usda.gov/Internet/FSA_File/pheasant_study.pdf
http://www.fsa.usda.gov/Internet/FSA_File/sage_grouse.pdf
http://www.fsa.usda.gov/Internet/FSA_File/quail_study.pdf
http://www.fsa.usda.gov/Internet/FSA_File/grassland_birds_fws.pdf
http://www.stateofthebirds.org/2009/habitats/game-birds
http://www.fsa.usda.gov/Internet/FSA_File/fyannual2009.pdf
http://www.fsa.usda.gov/Internet/FSA_File/606586_hr.pdf

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conservation Reserve Program     $1,784,665  $1,788,852  $1,798,522  $1,863,004  $1,930,723  $1,948,248  $1,990,178  $1,933,660  $1,910,630   $1,997,496
Emergency Forestry Conservation           0           0           0           0       5,500       6,060       9,944       9,881       8,297        9,291
 Reserve Program
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                                           7. Annual Outlays (FY 2002-FY 2011) 
---------------------------------------------------------------------------------------------------------------------------------------------------------
    CRP is funded by Commodity Credit Corporation (CCC). Budget authority for CCC programs is based on obligations. Funds that are obligated in one
 fiscal year may not be disbursed until a succeeding fiscal year or fiscal years.


                                                             FY 2002 Through FY 2011 Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conservation Reserve Program     $1,785,059  $1,789,258  $1,800,675  $1,828,470  $1,895,872  $1,963,161  $1,990,867  $1,916,468  $1,910,630   $1,997,496
Emergency Forestry Conservation           0           0           0           0       5,500       6,060       9,524       9,846       8,297        9,291
 Reserve Program
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
 and made more resilient to climate change, while enhancing our resources. 

 Program
             Program ItemsConservation      Conservation Reserve               974,124       1,990,178       1,872,881       1,910,630       1,997,496
       Program
      Grassroots Source Water              1,856           3,687           5,000           5,000           5,000
       Protection Program
      State Mediation Grants 1               526           1,092           1,092           1,092           1,092
      Direct Conservation Loans                0               0               0             114           1,065
       1
      Guaranteed Conservation                  0               0               0               1             278
       Loans 1
      Other Conservation                   4,600           3,247              46              ^4          33,334
       Payments 2
                                 -------------------------------------------------------------------------------
        Administrative Costs             107,118         240,070         256,932         278,940         278,825
         (direct)
        Indirect costs                     9,773          82,642          63,352          68,779          72,804
                                 -------------------------------------------------------------------------------
          Total Costs                  1,097,997       2,320,916       2,199,303       2,264,552       2,389,894
          FTEs                             1,228           3,023           2,015           2,928           2,885

                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
 repopulating, and economically thriving. 

 Program
             Program ItemsIncome Support and Disaster
 Assistance      Emergency Conservation          149,727.00      128,456.00            0.00       92,459.00       39,719.00
       Program 3
      Administrative costs            776,465.00      683,795.00      694,980.00      744,303.00      753,934.00
       (direct)
      Indirect costs                   47,548.00      234,633.00      226,905.00      242,967.00      246,299.00
                                 -------------------------------------------------------------------------------
        Total Costs                   973,740.00    1,046,884.00      921,885.00    1,079,729.00    1,039,952.00
        FTEs                            8,905.00        8,620.00        9,528.75        8,355.00        8,140.00Conservation      Emergency Conservation                   0               0      153,044.00               0               0
       Program 3
      Administrative costs                     0               0        8,344.00               0               0
       (direct)
      Indirect costs                           0               0               0            0.00               0
                                 -------------------------------------------------------------------------------
        Total Costs                         0.00            0.00      161,388.00            0.00            0.00
        FTEs                                0.00            0.00            0.25            0.00            0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
  related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
  Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
  Income Support and Disaster Assistance Goal.

9. Eligibility Criteria
    Eligible Producers

    An eligible producer must have owned or operated eligible land for 
at least 12 months prior to enrollment. In cases where the land was not 
acquired to enroll in the CRP, a waiver may be authorized.

    Eligible Land

    Land that may be offered includes cropland that is planted or 
considered planted to an agricultural commodity 4 of the 6 crop years 
from 2002 through 2007, and is physically and legally capable of being 
planted in a normal manner to an agricultural commodity.
    For continuous signup, land may be certain marginal pasture land.

    Additional Cropland Requirements

    In addition to cropping history, for general signup, cropland must 
meet one of the following:

   Have a weighted average erosion index of 8 or greater;

   Be expiring CRP acreage; or

   Be located in a national or state CRP conservation priority 
        area.
10. Utilization (Participation) Data

   Total enrollment of 31.31 million acres in 750,000 contracts 
        on 416,000 farms.

   Consists of 26.2 million acres in 338,000 contracts on 
        222,000 farms in general signup enrollment and 5.0 million 
        acres in 412,000 contracts on 239,000 farms.

                                    CRP Enrollment by State as of April 2011
----------------------------------------------------------------------------------------------------------------
                                                                                    Annual Rental  Payments
         State               Number of      Number of Farms        Acres      ----------------------------------
                             Contracts                                             ($1,000)          ($/Acre)
----------------------------------------------------------------------------------------------------------------
                U.S.            749,913           415,953        31,213,510         1,720,354            55.12
             Alabama              9,108             6,488           398,166            18,286            45.93
              Alaska                 45                28            19,037               671            35.25
            Arkansas              5,956             3,289           250,780            14,971            59.70
          California                506               390           124,510             4,712            37.84
            Colorado             12,744             6,125         2,251,395            74,324            33.01
         Connecticut                 16                13               163                13            78.44
            Delaware                666               349             6,850               754           110.13
             Florida              1,318             1,067            56,382             2,262            40.12
             Georgia              9,069             6,440           318,782            14,973            46.97
              Hawaii                  9                 9               167                10            57.64
               Idaho              5,200             2,960           668,317            29,619            44.32
            Illinois             82,044            44,833         1,035,931           118,474           114.36
             Indiana             38,168            21,360           286,447            31,196           108.91
                Iowa            106,489            53,422         1,673,364           214,169           127.99
              Kansas             47,139            26,794         2,738,960           109,973            40.15
            Kentucky             17,649             9,459           360,295            40,039           111.13
                    Louisiana     5,036             3,210           327,661            20,172            61.56
               Maine                679               472            17,972               931            51.83
            Maryland              6,427             3,518            79,041            10,891           137.78
       Massachusetts                  4                 4                15                 3           172.53
            Michigan             15,185             8,695           229,140            20,198            88.15
           Minnesota             63,002            33,112         1,640,921           110,574            67.39
         Mississippi             19,808            12,458           850,134            40,870            48.07
            Missouri             36,459            21,063         1,364,524           101,211            74.17
             Montana             15,257             5,982         2,863,105            92,025            32.14
            Nebraska             28,306            15,872         1,081,185            65,850            60.91
       New Hampshire                  5                 5                58                 3            55.46
          New Jersey                275               194             2,449               170            69.29
          New Mexico              1,978             1,283           453,819            15,221            33.54
            New York              2,866             2,032            53,136             3,713            69.87
      North Carolina              8,076             5,263           117,457             8,049            68.53
        North Dakota             34,254            16,766         2,650,455            95,825            36.15
                Ohio             38,008            21,227           343,596            40,952           119.19
            Oklahoma              7,500             5,074           861,360            28,902            33.55
              Oregon              4,279             2,253           551,279            28,710            52.08
        Pennsylvania             12,115             7,625           220,750            22,729           102.96
         Puerto Rico                 19                19             2,032               130            63.93
      South Carolina              7,649             4,323           159,731             6,129            38.37
        South Dakota             31,613            14,790         1,165,373            65,084            55.85
           Tennessee              7,321             4,883           205,282            13,775            67.10
               Texas             22,107            16,234         3,465,165           124,839            36.03
                Utah                875               543           167,952             5,206            31.00
             Vermont                384               271             2,875               288           100.18
            Virginia              5,839             4,464            63,416             3,760            59.29
          Washington             12,406             5,168         1,453,510            81,116            55.81
       West Virginia                447               363             5,840               431            73.73
           Wisconsin             24,642            15,107           400,679            32,064            80.02
             Wyoming                965               653           224,020             6,087            27.17
        Not Reported                  1                 1                28                 2            82.00
----------------------------------------------------------------------------------------------------------------
Note: ``Not Reported'' includes a contract with a data anomaly.

11. Duplication or Overlap with Other Programs
    CRP is not a duplicate of other USDA conservation programs. Certain 
programs may share some common eligibility, but each program provides 
producers a unique set of options for the short and long-term 
management of the farm or ranch. Generally, the same parcel of land 
cannot be enrolled in more than one program at the same time. These 
programs are complementary because they provide choices for producers 
in how they voluntarily protect their land and provide conservation 
benefits to their community and beyond.
    CRP enrolls land to create wildlife habitat. All of the lands 
eligible for CRP could be enrolled in Wildlife Habitat Incentive 
Program (WHIP) if they fall within the WHIP priority areas but not all 
lands eligible for WHIP could be enrolled in CRP.
    CRP and WRP address the restoration and long term conservation of 
wetland resources. However, CRP is directed primarily to cropland and 
marginal pastureland, and many CRP participants with wetland resources 
are unwilling to have an easement placed on the land.
    In the case of Grasslands Reserve Program (GRP), most of the land 
is either native sod or pasture but some cropland may be enrolled into 
easements or long-term contracts. There is some potential overlap of 
eligible acres in riparian areas near streams or rivers, but this gives 
producers the flexibility to enroll in the program that best suits 
their needs.
    CREP targets specific resource concerns in a state CREP project 
area while providing additional incentives for enrollment above and 
beyond what is available under continuous CRP and Initiatives. These 
additional incentives are made possible through USDA and state 
government partnerships.
    Initiatives and continuous CRP are available nationwide or in 
certain selected geographic areas.
    Both Environmental Quality Incentives Program (EQIP) and CRP 
address natural resource concerns, the land uses on which the practices 
are applied generally are distinct. There could be minimal overlap 
where CRP enrolls windbreaks, shelterbelts and shallow water 
impoundments for wildlife.
    There are many examples of FSA and NRCS programs working together 
to achieve conservation goals. For example, in the Chesapeake Bay, 
combinations of land retirement and conservation practices/systems are 
used to achieve nutrient, sediment and other resource objectives.
12. Waste, Fraud and Abuse
    There has been no extensive Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of the program during the past 5 
years. Although occasional cases of producer misconduct may have been 
identified and addressed through investigations in the past, we do not 
have a current audit that indicates on-going systemic waste, fraud or 
abuse. FSA conducts its own internal investigation through its county 
office review process and through its internal review audit process. In 
2008, 2009 and 2010 the amount of improper payments for CRP was .77 
percent, 1.2 percent, and 1.77 percent, respectively.
13. Effect of Administrative PAYGO
    Exhibit 1 shows the costs and savings related to USDA's 
Administrative PAYGO Scorecard.
                                 ______
                                 
1. Program Name
    Emergency Conservation Program (ECP).
    Prepared by USDA's FSA.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    ECP was authorized by the Agricultural Credit Act of 1978, as 
amended, to provide financial assistance to agricultural producers to 
rehabilitate farmlands damaged by natural disaster when new 
conservation problems have been created that: (1) if not treated, will 
impair or endanger the land; (2) materially affect the productive 
capacity of the land; (3) represent damage that is unusual in character 
and is not the type that would recur frequently in the same area; and 
(4) will be so costly to rehabilitate that Federal assistance is or 
will be required to return the land to productive agricultural use. 
Funding is appropriated by Congress. ECP generally is funded through 
periodic supplemental appropriations that remains available until 
expended.
4. Purpose/Goals
    ECP provides emergency funding and technical assistance for farmers 
and ranchers to rehabilitate farmland damaged by natural disasters and 
for carrying out emergency water conservation measures in periods of 
severe drought.
5. Success in Meeting Programmatic Purpose/Goals
    ECP successfully provides financial assistance to agricultural 
producers to rehabilitate farmlands damaged by natural disasters. In FY 
2010, nearly $54 million was allocated to help producers throughout the 
country address damage from drought, floods, hurricanes, wildfire, 
tornados and other disasters. As of June 20, 2011, in FY 2011, nearly 
$65 million (see 2011 allocations table below) has been allocated to 
assist with similar disasters, including the devastating tornados that 
have hit states such as Alabama, Arkansas, Alabama, Georgia, North 
Carolina, Pennsylvania, Virginia and others, and floods in Arkansas, 
California, Colorado, Iowa, Kentucky, Oregon, Minnesota, New York, 
North Carolina, Tennessee, Virginia, Wisconsin and other states. If 
funds allocated to a state are not used within a reasonable period of 
time, the funds are withdrawn and reallocated to meet ECP needs 
elsewhere.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Conservation Program            0           0     $11,929    $150,000    $161,800     $18,000    $204,413           0           0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                                           7. Annual Outlays (FY 2002-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    The Emergency Conservation Program (ECP) receives no-year discretionary appropriations. Actual ECP cost-share outlays are made when practices are
 completed.


                                                             FY 2002 Through FY 2011 Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Conservation Program      $32,365     $46,980     $23,100     $57,123     $88,311     $72,166     $27,730     $71,084     $76,879      $71,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
 and made more resilient to climate change, while enhancing our resources. 

 Program
             Program ItemsConservation      Conservation Reserve               974,124       1,990,178       1,872,881       1,910,630       1,997,496
       Program
      Grassroots Source Water              1,856           3,687           5,000           5,000           5,000
       Protection Program
      State Mediation Grants 1               526           1,092           1,092           1,092           1,092
      Direct Conservation Loans                0               0               0             114           1,065
       1
      Guaranteed Conservation                  0               0               0               1             278
       Loans 1
      Other Conservation                   4,600           3,247              46              ^4          33,334
       Payments 2
                                 -------------------------------------------------------------------------------
        Administrative Costs             107,118         240,070         256,932         278,940         278,825
         (direct)
        Indirect costs                     9,773          82,642          63,352          68,779          72,804
                                 -------------------------------------------------------------------------------
          Total Costs                  1,097,997       2,320,916       2,199,303       2,264,552       2,389,894
          FTEs                             1,228           3,023           2,015           2,928           2,885

                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
 repopulating, and economically thriving. 

 Program
             Program ItemsIncome Support and Disaster
 Assistance      Emergency Conservation          149,727.00      128,456.00            0.00       92,459.00       39,719.00
       Program 3
      Administrative costs            776,465.00      683,795.00      694,980.00      744,303.00      753,934.00
       (direct)
      Indirect costs                   47,548.00      234,633.00      226,905.00      242,967.00      246,299.00
                                 -------------------------------------------------------------------------------
        Total Costs                   973,740.00    1,046,884.00      921,885.00    1,079,729.00    1,039,952.00
        FTEs                            8,905.00        8,620.00        9,528.75        8,355.00        8,140.00Conservation      Emergency Conservation                   0               0      153,044.00               0               0
       Program 3
      Administrative costs                     0               0        8,344.00               0               0
       (direct)
      Indirect costs                           0               0               0            0.00               0
                                 -------------------------------------------------------------------------------
        Total Costs                         0.00            0.00      161,388.00            0.00            0.00
        FTEs                                0.00            0.00            0.25            0.00            0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
  related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
  Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
  Income Support and Disaster Assistance Goal.

9. Eligibility Criteria
    County FSA committees determine land eligibility based on on-site 
inspections of damage, taking into account the type and extent of 
damage. For land to be eligible, the natural disaster must create new 
conservation problems that, if untreated, would:

   impair or endanger the land;

   materially affect the land's productive capacity;

   represent unusual damage which, except for wind erosion, is 
        not the type likely to recur frequently in the same area; and

   be so costly to repair that Federal assistance is or will be 
        required to return the land to productive agricultural use.

    Conservation problems existing prior to the applicable disaster are 
ineligible for ECP assistance.
    ECP program participants receive cost-share assistance of up to 75 
percent of the cost to implement approved emergency conservation 
practices, as determined by county FSA committees. Socially-
disadvantaged producers may be eligible for up to 90 percent cost-share 
assistance.
    Individual or cumulative requests for cost-sharing of $50,000 or 
less per person, per disaster are approved at the county committee 
level. Cost-sharing from $50,001 to $100,000 is approved at the state 
committee level. Cost-sharing over $100,000 must be approved by FSA's 
national office. Further, there is a payment limitation of $200,000 per 
person or legal entity per disaster.
10. Utilization (Participation) Data
    Since 1978, ECP has provided assistance to help producers on 
between 2,000 to nearly 38,000 farms a year. The wide range of 
assistance stems from the fact that ECP is an appropriated program that 
is only utilized when needed by farmers and ranchers after disasters 
strike.
    As of June 20, 2011, about $167 million is estimated in unmet ECP 
needs primarily related to recent natural disasters including flooding, 
tornadoes, drought, and wildfires.
11. Duplication or Overlap with Other Programs
    Although the Emergency Watershed Protection Program (EWP) and ECP 
have similar goals, generally, ECP is farm level, and EWP is watershed 
level. Through ECP, USDA works directly with farmers to cost-share on 
practices to restore land and return it to production after a natural 
disaster. Under EWP, USDA works with states, counties, or other local 
sponsors to provide financial assistance to address problems caused by 
natural disasters that affect area wide issues. Sponsors must provide a 
share of the resources to support the project.
    ECP also works in concert with the Emergency Forest Restoration 
Program (EFRP), authorized by the 2008 Farm Bill, Forestry Title, to 
address all eligible private agricultural land after a natural 
disaster. EFRP addresses the critical need to restore nonindustrial 
private forestland after a natural disaster such a hurricane or 
tornado.
12. Waste, Fraud and Abuse
    Although occasional cases of producer misconduct may have been 
identified and addressed through investigations in the past, no current 
systemic waste, fraud or abuse has been identified related to this 
program. Due to the nature of ECP funding, ECP has been audited often. 
Most recently, following appropriations under the 2008 supplemental 
appropriations act and the 2008 disaster relief and recovery 
supplemental appropriations act as well as transfer authority provided 
in the 2009 supplemental appropriations act, OIG conducted the 
following audits:

    a. Review of Emergency Disaster Assistance for 2008 Disasters: 
        Emergency Conservation Program, (Audit 03702-1-TE). This audit, 
        which focused on ECP assistance to address damages from 
        Hurricanes Ike and Gustav, did not find many significant 
        issues.

    b. Review of Emergency Disaster Assistance for the 2008 Natural 
        Disasters: Emergency Conservation Program (Audit 03702-1-TE). 
        This audit, which focused on ECP assistance to address damage 
        from the 2008 Midwest Floods, had a number of findings, which 
        could only be addressed with additional funding and staff 
        salary.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Voluntary Public Access and Habitat Incentive Program (VPA-HIP).
    Prepared by USDA's Farm Service Agency.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    VPA-HIP is a competitive grant program authorized by the 2008 Farm 
Bill. Up to $50 million is available through FY 2012. Funding is 
limited to state and tribal governments establishing new public access 
programs, expanding existing public access programs, and/or enhancing 
wildlife habitat on lands enrolled in public access programs.
4. Purpose/Goals
    The primary objective of the VPA-HIP is to encourage owners and 
operators of privately-held farm, ranch, and forestland to voluntarily 
make that land available for access by the public for wildlife-
dependent recreation, including hunting or fishing, under programs 
implemented by state or tribal governments. VPA-HIP will provide 
environmental, economic and social benefits including, but not limited 
to, enhanced wildlife habitat, improved wildlife populations, increased 
revenue for rural communities, and expanded opportunities for re-
connecting Americans with the great outdoors.
5. Success in Meeting Programmatic Purpose/Goals
    Funding was first obligated under VPA-HIP in 2010. It is too soon 
to assess the success in meeting programmatic goals.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Voluntary Public Access and               0           0           0           0           0           0           0           0     $11,756      $21,578
 Habitat Incentives Program
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                             FY 2002 Through FY 2011 Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Voluntary Public Access and               0           0           0           0           0           0           0           0           0      $33,334
 Habitat Incentives Program
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
 and made more resilient to climate change, while enhancing our resources. 

 Program
             Program ItemsConservation      Conservation Reserve               974,124       1,990,178       1,872,881       1,910,630       1,997,496
       Program
      Grassroots Source Water              1,856           3,687           5,000           5,000           5,000
       Protection Program
      State Mediation Grants 1               526           1,092           1,092           1,092           1,092
      Direct Conservation Loans                0               0               0             114           1,065
       1
      Guaranteed Conservation                  0               0               0               1             278
       Loans 1
      Other Conservation                   4,600           3,247              46              ^4          33,334
       Payments 2
                                 -------------------------------------------------------------------------------
        Administrative Costs             107,118         240,070         256,932         278,940         278,825
         (direct)
        Indirect costs                     9,773          82,642          63,352          68,779          72,804
                                 -------------------------------------------------------------------------------
          Total Costs                  1,097,997       2,320,916       2,199,303       2,264,552       2,389,894
          FTEs                             1,228           3,023           2,015           2,928           2,885

                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
 repopulating, and economically thriving. 

 Program
             Program ItemsIncome Support and Disaster
 Assistance      Emergency Conservation          149,727.00      128,456.00            0.00       92,459.00       39,719.00
       Program 3
      Administrative costs            776,465.00      683,795.00      694,980.00      744,303.00      753,934.00
       (direct)
      Indirect costs                   47,548.00      234,633.00      226,905.00      242,967.00      246,299.00
                                 -------------------------------------------------------------------------------
        Total Costs                   973,740.00    1,046,884.00      921,885.00    1,079,729.00    1,039,952.00
        FTEs                            8,905.00        8,620.00        9,528.75        8,355.00        8,140.00Conservation      Emergency Conservation                   0               0      153,044.00               0               0
       Program 3
      Administrative costs                     0               0        8,344.00               0               0
       (direct)
      Indirect costs                           0               0               0            0.00               0
                                 -------------------------------------------------------------------------------
        Total Costs                         0.00            0.00      161,388.00            0.00            0.00
        FTEs                                0.00            0.00            0.25            0.00            0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
  related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
  Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
  Income Support and Disaster Assistance Goal.

9. Eligibility Criteria
    Only states and tribal governments are eligible for Federal VPA-HIP 
funding. States and tribal governments may propose to use VPA-HIP grant 
funding to expand existing public access programs, create new public 
access programs, and/or provide incentives to enhance wildlife habitat 
on lands enrolled in state or tribal government public access programs.
10. Utilization (Participation) Data
    States and tribal governments participating in VPA-HIP are Arizona, 
California, Colorado, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, 
Kentucky, Michigan, Minnesota, Montana, Nebraska, New Hampshire, North 
Dakota, Oregon, Pennsylvania, South Dakota, Texas, Utah, Virginia, 
Washington, Wisconsin, Wyoming and the Confederated Tribes and Bands of 
the Yakama Nation.
11. Duplication or Overlap with Other Programs
    VPA-HIP is unlike any other USDA program as it specifically targets 
public access. Incentives for enhancing wildlife habitat under VPA-HIP 
are limited to those private land owners and operators who make land 
available for public access. The Department of Interior Federal Aid in 
Wildlife Restoration Act makes funds available from an 11 percent 
excise tax on sporting arms and ammunition through the Secretary of 
Interior to states. Activities eligible under the Landowner Incentive 
Program (LIP) of the USFWS for such funding include acquisition and 
development of access and improvement of wildlife habitat. VPA-HIP has 
proven complementary to state public access program initiated as a 
result of LIP funding.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Grass Roots Source Water Program (Source Water).
    Prepared by USDA's Farm Service Agency.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Source Water is a grant program implemented for State Rural Water 
Associations and is designed to help prevent source water pollution in 
states through voluntary practices installed by producers and other 
landowners at the local level.
    Source Water uses onsite technical assistance capabilities of each 
state rural water association that operates a source water program in 
the state. State rural water associations deliver assistance in 
developing source water protection plans within watersheds for the 
common goal of preventing the contamination of drinking water supplies.
    Source water is surface and ground water that is consumed by rural 
residents. According to the National Rural Water Association, ground 
water is the primary source of drinking water for some 44,000 
communities in the United States. Through the program, state rural 
water associations hire, for every participating state, a full-time 
source water specialist who possesses knowledge and experience in rural 
issues. The technician works with FSA's state and county leadership, 
NRCS technicians, local leaders, and communities to create operating 
plans that identify priority areas where local pollution prevention 
efforts are needed most in their respective states.
    This collaboration is intended to result in the development of a 
source water protection plan that outlines voluntary measures for 
farmers, ranchers, and local communities that can be installed on their 
lands to prevent source water pollution. Voluntary measures may range 
from storing herbicides, pesticides, or other substances in more secure 
containers to relocating waste lagoons. By working at the grassroots 
level, local team members inform and educate participants about source 
water protection measures that benefit their neighbors and communities. 
Additionally, the plans also establish steering committees to evaluate 
voluntary practices that have been implemented. FSA monitors the 
overall performance of the program.
4. Purpose/Goals
    Source Water's goal is to implement source water protection plans 
in each state by assisting small and rural communities in protecting 
their drinking water resources. There are source water protection plans 
in 43 states. The ultimate goal of the project is to assist public 
water utilities and the agricultural community in coordinating efforts 
by taking a proactive approach to maintain and/or improve water quality 
within their source water protection planning areas.
5. Success in Meeting Programmatic Purpose/Goals
    Between October 1, 2009, and September 30, 2010, source water 
protection plans were completed in 119 communities which provide 
protection measures for 470 public drinking water sources (415 wells 
and 55 surface water intakes).

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grassroots Source Water                  $0          $0          $0          $0      $3,713      $3,713      $3,687      $5,000      $5,000       $3,577
 Protection Program
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                             FY 2002 Through FY 2011 Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                   Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grassroots Source Water                  $0          $0          $0          $0      $3,713      $3,713      $3,687      $5,000      $5,000       $4,242
 Protection Program
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
 and made more resilient to climate change, while enhancing our resources. 

 Program
             Program ItemsConservation      Conservation Reserve               974,124       1,990,178       1,872,881       1,910,630       1,997,496
       Program
      Grassroots Source Water              1,856           3,687           5,000           5,000           5,000
       Protection Program
      State Mediation Grants 1               526           1,092           1,092           1,092           1,092
      Direct Conservation Loans                0               0               0             114           1,065
       1
      Guaranteed Conservation                  0               0               0               1             278
       Loans 1
      Other Conservation                   4,600           3,247              46              ^4          33,334
       Payments 2
                                 -------------------------------------------------------------------------------
        Administrative Costs             107,118         240,070         256,932         278,940         278,825
         (direct)
        Indirect costs                     9,773          82,642          63,352          68,779          72,804
                                 -------------------------------------------------------------------------------
          Total Costs                  1,097,997       2,320,916       2,199,303       2,264,552       2,389,894
          FTEs                             1,228           3,023           2,015           2,928           2,885

                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
 repopulating, and economically thriving. 

 Program
             Program ItemsIncome Support and Disaster
 Assistance      Emergency Conservation          149,727.00      128,456.00            0.00       92,459.00       39,719.00
       Program 3
      Administrative costs            776,465.00      683,795.00      694,980.00      744,303.00      753,934.00
       (direct)
      Indirect costs                   47,548.00      234,633.00      226,905.00      242,967.00      246,299.00
                                 -------------------------------------------------------------------------------
        Total Costs                   973,740.00    1,046,884.00      921,885.00    1,079,729.00    1,039,952.00
        FTEs                            8,905.00        8,620.00        9,528.75        8,355.00        8,140.00Conservation      Emergency Conservation                   0               0      153,044.00               0               0
       Program 3
      Administrative costs                     0               0        8,344.00               0               0
       (direct)
      Indirect costs                           0               0               0            0.00               0
                                 -------------------------------------------------------------------------------
        Total Costs                         0.00            0.00      161,388.00            0.00            0.00
        FTEs                                0.00            0.00            0.25            0.00            0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
  related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
  Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
  Income Support and Disaster Assistance Goal.

9. Eligibility Criteria
    States are selected based on a formula that ranks states based on 
total maximum daily loads, impaired waters, total farm acres, and total 
toxic discharges.
10. Utilization (Participation) Data
    States participating in Source Water include: Alaska, Alabama, 
Arizona, Arkansas, California, Colorado, Connecticut, Delaware, 
Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, 
Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, 
Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, 
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South 
Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, 
Wisconsin, and Wyoming. The 43 participating states were chosen based 
on objective technical criteria relating to water quality and 
population.
11. Duplication or Overlap with Other Programs
    There is no overlap with Rural Development (RD) programs which 
provide support grants and loans for water and wastewater treatment, 
distribution, and collection systems.
    The FSA source water program is not a duplication but is 
complementary of the Environmental Protection Agency's (EPA) source 
water initiatives. The EPA source water program is targeted to 
compliance of community water supplies with Safe Drinking Water Act 
regulations. FSA authorized source water efforts focuses incorporating 
the agriculture community into prevention of contamination in source 
waters through FSA programs such as the CRP and education of the 
agriculture community and non-governmental entities.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Grassland Reserve Program (GRP).
    Prepared by USDA's NRCS and FSA.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    GRP was authorized in section 2401 of the 2002 Farm Bill and was 
reauthorized by section 2403 of the 2008 Farm Bill. NRCS and FSA 
jointly administer this program. Both agencies share policy 
development, NRCS administers the easements, and FSA implements the 
rental contracts. Funding for GRP comes from the Commodity Credit 
Corporation (CCC).
    Legislative Changes. The 2008 Farm Bill:

   Increased the acreage that may be enrolled in the program by 
        1.2 million acres during the years 2009 through 2012.

   Provided priority for enrollment of expiring acreage from 
        the Conservation Reserve Program (CRP), limited to ten percent 
        of the total acres enrolled in any year.

   Authorized eligible lands to be enrolled into either a 
        permanent easement (or maximum allowed under state law); or a 
        10, 15, or 20 year rental contract.

   Authorized restoration agreements on lands, enrolled under a 
        either a rental contract or an easement, to receive up to 50 
        percent cost-share.

   Expanded the definition of eligible to include land that 
        contains historical or archeological resources and land that 
        addresses state, regional, or national conservation priorities.

   Required a grazing management plan for GRP participants.

   Required that valuation of an easement be at the lower of 
        either an appraisal or market survey, a rate set by the 
        Secretary of Agriculture, or the landowner's offer.

   Defined ``eligible entities'' as units of state, local, or 
        tribal government or nongovernmental organizations that have a 
        charter describing a commitment to conserving ranchland, 
        agricultural land, or grassland for grazing and conservation 
        purposes.

   Allowed that easements may now be acquired by eligible 
        entities based on a 50 percent cost-share with the Federal 
        Government.

   Established an annual payment limitation of $50,000 for both 
        rental and restoration agreements.

   Waived a minimum acreage limitation for enrollment.

   Excluded land from the GRP if it is currently enrolled in 
        another conservation program or is already protected by an 
        existing easement, contract or deed restriction or is owned by 
        a conservation organization.

   Allowed interested landowners to submit applications under a 
        continuous sign-up.
4. Purpose/Goals
    The purpose of the Grassland Reserve Program (GRP) is to assist 
landowners and operators in protecting grazing uses and related 
conservation values by conserving and restoring grassland resources on 
eligible private lands through rental contracts, easements, and 
restoration agreements. The program emphasizes support for working 
grazing operations; enhancement of plant and animal biodiversity; and 
protection of grassland and land containing shrubs and forbs under 
threat of conversion.
5. Success in Meeting Programmatic Purpose/Goals
    Montana: GRP Enrollments Support Agency Commitment to Sage Grouse 
Habitat. In Phillips County, Montana, five GRP projects enrolled in the 
last 2 years protect 29,485 acres. These projects help preserve rural 
ranching operations while providing critical wildlife habitat for sage 
grouse and other grassland birds. The USFWS announced this species as a 
candidate for listing on the Endangered Species List. NRCS is taking 
proactive steps to protect and improve habitat in order to prevent 
listing of this bird in significant decline. More than 80 percent of 
the acres in these five ranches are prime habitat for of sage grouse. 
These ranchers have embraced management activities that continue to 
provide food, clean water, and habitat for mule deer, elk, pronghorn, 
and a multitude of neo-tropical grassland birds and one of the 
healthiest populations of sage grouse in the nation.
    Pennsylvania: GRP Helps Landowners Manage for Conservation. 
Conservation-minded landowners are interested in protecting and 
improving pastures for grazing management, while maintaining wildlife 
habitat for ground nesting birds. These landowners see the GRP program 
as a good fit for their management goals. These conservation easements 
protected nearly 400 acres of grasslands in areas subject to increasing 
development pressure.
    Wyoming: A 2,412 acre GRP easement was placed on land in central 
Wyoming, adjacent to the Medicine Bow National Forest. The upper 
meadows are used by an elk herd. Cows and calves graze during late 
spring and stay all summer. Good feed and water nourish both domestic 
animals and wildlife, with escape cover on the west end of the pasture. 
During fall and winter, elk cows and bulls spend days on the pasture. 
Pronghorn antelope and mule deer are often seen in the lower 
elevations. Approximately 25 to 35 sage grouse forage in the lower 
elevation habitat.
    Sage-Grouse Recovery: USDA provided $2.5 million in GRP financial 
assistance to five western states for Greater Sage-Grouse conservation 
and recovery on lands identified by state wildlife agencies as 
containing critical sage grouse habitat. The funds were used for 
enrollment of GRP easements on private lands in California, Colorado, 
Montana, Utah and Wyoming, with technical assistance and additional 
financial assistance provided through state and local partnerships.
    Conservation on the Ground--GRP in Kansas. Kansas has very 
productive native grasslands. During FY 2007, ranchers in Kansas signed 
47 GRP conservation easements that will protect 22,600 acres of the 
state's native grassland. GRP conservation easements are one way to 
prevent the destruction of the Kansas tall-grass prairie. And, Kansas 
ranchers have demonstrated a keen interest in the program by enrolling 
22,600 acres in GRP easements that will forever remain in tall-grass 
prairie.
    Washington State protecting historic grazing lands. The Colvin 
family has ranched on their 530 acres family homestead along Scatter 
Creek in Washington State since Ignatius Colvin arrived over the Oregon 
Trail in the 1850's. GRP easements allow the current generation of the 
Colvin family to keep the land as a working ranch in perpetuity. Urban 
development pressures in western Washington make maintaining large 
tracts of grazing lands very difficult. By granting GRP easements, the 
entire 530 acres grazing area soon will be protected. The contiguous 
easements were funded through Fiscal Year 2004, 2005, and 2009 
allocations. The Colvin family's grazing management plan, developed 
with NRCS, maintains and enhances native prairie habitat.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                  $85
                            2004                                 $115
                            2005                                 $128
                            2006                                  $54
                            2007                                  $16
                            2008                                   $3
                            2009                                  $48
                            2010                                 $101
                            2011                                  $79
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                  $34
                            2004                                  $55
                            2005                                  $71
                            2006                                  $27
                            2007                                  $29
                            2008                                   $3
                            2009                                  $46
                            2010                                  $93
                            2011                                  $80
------------------------------------------------------------------------

    NRCS GRP financial assistance (FA) funds support eligibility 
determinations, rental contracts, easement acquisition, and monitoring. 
FA for easement acquisition is obligated when the acres to be placed 
under easement are enrolled but are not expended until the easement has 
been perfected which is a process that may take over a year. Technical 
Assistance (TA) funds obligated in a given year are used for workload 
generated by the enrollment of new acres and acreage already enrolled. 
The majority of TA funding usually is expended in the year of 
obligation. FA funding represents the majority of program budget 
authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011)     Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:    Annual delivery cost for NRCS includes:
 Grassland Reserve Program      Conservation Planning and              453             155           2,021           2,047           5,880
       Technical Consultation
      Conservation                           330             203             835             846           2,430
       Implementation
      Financial Assistance--               1,079             445           3,240           3,281           9,425
       Program Administration
      Indirect Costs                       1,282             200             520             526           1,512
                                 -------------------------------------------------------------------------------
        Sub-total Technical                3,144           1,003           6,616           6,700          19,247
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost           9,843           1,810          41,042          93,408          98,126
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                       12,987           2,813          47,658         100,108         117,373
        FTEs                                  21               7              30              28              55Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.


                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Annual delivery cost for FSA includes:    Department Strategic Goal: Ensure our National Forests and private working lands are conserved, restored,
 and made more resilient to climate change, while enhancing our resources. 

 Program
             Program ItemsConservation      Conservation Reserve               974,124       1,990,178       1,872,881       1,910,630       1,997,496
       Program
      Grassroots Source Water              1,856           3,687           5,000           5,000           5,000
       Protection Program
      State Mediation Grants 1               526           1,092           1,092           1,092           1,092
      Direct Conservation Loans                0               0               0             114           1,065
       1
      Guaranteed Conservation                  0               0               0               1             278
       Loans 1
      Other Conservation                   4,600           3,247              46              ^4          33,334
       Payments 2
                                 -------------------------------------------------------------------------------
        Administrative Costs             107,118         240,070         256,932         278,940         278,825
         (direct)
        Indirect costs                     9,773          82,642          63,352          68,779          72,804
                                 -------------------------------------------------------------------------------
          Total Costs                  1,097,997       2,320,916       2,199,303       2,264,552       2,389,894
          FTEs                             1,228           3,023           2,015           2,928           2,885

                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining,
 repopulating, and economically thriving. 

 Program
             Program ItemsIncome Support and Disaster
 Assistance      Emergency Conservation          149,727.00      128,456.00            0.00       92,459.00       39,719.00
       Program 3
      Administrative costs            776,465.00      683,795.00      694,980.00      744,303.00      753,934.00
       (direct)
      Indirect costs                   47,548.00      234,633.00      226,905.00      242,967.00      246,299.00
                                 -------------------------------------------------------------------------------
        Total Costs                   973,740.00    1,046,884.00      921,885.00    1,079,729.00    1,039,952.00
        FTEs                            8,905.00        8,620.00        9,528.75        8,355.00        8,140.00Conservation      Emergency Conservation                   0               0      153,044.00               0               0
       Program 3
      Administrative costs                     0               0        8,344.00               0               0
       (direct)
      Indirect costs                           0               0               0            0.00               0
                                 -------------------------------------------------------------------------------
        Total Costs                         0.00            0.00      161,388.00            0.00            0.00
        FTEs                                0.00            0.00            0.25            0.00            0.001 FSA has programs related to supporting the conservation goal that are not part of the specific request.
2 Grassland Reserve Program (GRP) payments are reported by NRCS for budget purposes. FSA administrative costs
  related to GRP and Voluntary Public Access and Habitat Incentive Program are included.
3 The information related to the Emergency Conservation Program (ECP) is reported as an emergency program under
  Goal 1. We have broken out the program information but the administrative costs relate to all programs for the
  Income Support and Disaster Assistance Goal.



                                                                 9. Eligibility Criteria 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Land is eligible if it is privately owned or Tribal land and it is: (1) grassland that contains forbs or shrubs (including rangeland and
 pastureland) for which grazing is the predominant use; or (2) located in an area that has been historically dominated by grassland, forbs, or shrubs.
 The land must also have potential to provide habitat for animal or plant populations of significant ecological value if the land is retained in the
 current use or restored to a natural condition.


                                                          10. Utilization (Participation) Data
                                                                Contract Fiscal Year 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Rental Contracts                          Easements
                                                 ------------------------------------------------------------------------------
                                                                                                                   Obligations    Dollars
                                                                                                                     for Due     Allocated    Technical
                                                    Number 1     Acres 1    Obligations    Number 1     Acres 1     Diligence       for       Assistance
                                                                                                                    and Market   Easements
                                                                                                                     Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                                                     424      273,516  $29,288,185          144       95,907   $3,232,610  $52,318,210   $3,437,072
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Numbers currently reported in National Easement Staging Tool (NEST) are undergoing an intense quality assurance review. Numbers are subject to change
  during this process.

11. Duplication or Overlap with Other Programs
    GRP provides for the long-term conservation/preservation of 
critical grassland resources that are under pressure from conversion. 
Other long-term conservation programs such as CRP, WRP, and Farm and 
Ranch Land Protection Program share the common objective to enhance and 
improve the grassland resources through short-term (10+ year 
contracts--CRP) or through the purchase of easements under FRPP. 
Generally, the same parcel of land cannot be enrolled in more than one 
program at the same time. These programs are complementary because they 
provide choices for producers in how they voluntarily protect their 
land and provide conservation benefits to their community and beyond.
    These programs share a common goal of restoring and protecting the 
natural resources benefits of grassland ecosystems to provide wildlife, 
water quality erosion and other natural resource benefits. In some 
cases, the restoration of the grassland resources requires the 
development of grassland habitat or the development of the 
infrastructure (fences, springs etc.) that will enable the long-term 
management of these resources. In the cases where infrastructure or 
management changes are needed, there may be some overlap with EQIP, 
Stewardship, and/or WHIP.
    Some of the practices offered through Stewardship to meet the 
minimum threshold at the end of the contract are also offered through 
other programs such as EQIP. Utilizing Stewardship for this purpose 
increases the additionality intent and uniqueness of the program.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Chesapeake Bay Watershed Program (CBWP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The CBWP was authorized by section 2602 of the 2008 Farm Bill. The 
Chief of NRCS may implement CBWP in the watersheds of all tributaries, 
backwaters, and side channels draining into the Chesapeake Bay. These 
areas include lands in Delaware, Maryland, New York, Pennsylvania, 
Virginia, and West Virginia.
    As of 2010, CBWP participants have enrolled nearly 270,000 acres in 
about 1,800 agreements in the Chesapeake Bay watershed.
4. Purpose/Goals
    The purpose of CWBP is to assist producers in implementing 
conservation activities on agricultural lands in the Chesapeake Bay for 
the purposes of (1) improving water quality and quantity in the 
Chesapeake Bay watershed and (2) restoring, enhancing, and preserving 
soil, air, and related resources in the Chesapeake Bay watershed.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010:

   NRCS enrolled over 950 agreements on over 156,000 acres.

   The value of the contracts was over $33.5 million.

   The average agreement size is 164 acres.

   On average, NRCS agreed to reimburse participants 
        approximately $35,000 for each long-term agreement.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                                   --
                          2009 1                                  $23
                            2010                                  $43
                            2011                                  $72
------------------------------------------------------------------------
1 Chesapeake Bay Watershed Program funding began in FY 2009. Prior to
  this time, discretionary funds were received through Congressionally
  designated projects.


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                                   --
                          2009 1                                   $3
                            2010                                  $23
                            2011                                  $41
------------------------------------------------------------------------
1 Chesapeake Bay Watershed Program funding began in FY 2009. Prior to
  this time, discretionary funds were received through Congressionally-
  designated projects.

    CBWP FA funds are obligated the year a contract is entered into, 
and this initial obligation is applicable to the entire multi-year span 
of the contract. As the years pass, FA for contracted practices is not 
expended until the practices are installed and inspected for quality 
control by NRCS personnel. For this reason, FA funds tend to outlay for 
multiple years after obligation. TA funds obligated in a given year are 
used for workload generated by the enrollment of new contracts and 
workload generated by prior year contract implementation. The vast 
majority of TA funding tends to outlay in the year of obligation. FA 
funding represents the majority of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011)  
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Chesapeake Bay Watershed Program      Conservation Planning and               --              --             209             676           1,234
       Technical Consultation
      Conservation                            --              --           1,083           3,501           6,393
       Implementation
      Financial Assistance--                  --              --             727           2,350           4,292
       Program Administration
      Indirect Costs                          --              --           1,228           3,970           7,251
                                 -------------------------------------------------------------------------------
        Sub-total Technical                   --              --           3,247          10,497          19,170
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost              --              --          18,595          33,539          52,830
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                           --              --          21,842          44,036          72,000
        FTEs                                  --              --              25              85             172Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Congress provided the authority to deliver CBWP funds through 
applicable programs in the Chesapeake Bay. Since the purpose of CBWP is 
similar to the purpose of the Environmental Quality Incentives Program 
(EQIP), CBWP is administered using the same programmatic rules as EQIP.
    To participate in CBWP, both the land and the applicant must be 
eligible. Eligible land includes cropland, rangeland, pastureland, 
private nonindustrial forestland, and other farm or ranch lands in the 
Chesapeake Bay watershed. The land must have an identified natural 
resource concern that poses a serious threat to soil, water, air, or 
related resources by reason of land use practices, soil type, terrain, 
climatic conditions, topography, flooding, saline characteristics, or 
other natural resource factors or natural hazard. Publicly-owned land 
is eligible only if: (1) the land is under private control for the 
contract period; (2) is included within the participant's operating 
unit; and (3) must have written authorization from the government 
agency that owns the land to apply conservation practices. For 
irrigation-related practices, the land must have a history of actively 
irrigating the land unit for 2 out of the last 5 years.
    Applicants must be an agricultural producer, have control of the 
land for the life of the contract, be in compliance with farm bill 
provisions (highly erodible land, wetland conservation, protection of 
tenants and sharecroppers), be within appropriate program payment 
limitations and adjusted gross income requirements, and develop an EQIP 
plan of operations. Applications are accepted year round at local USDA 
Service Centers, but there are application cut-off dates that vary from 
state to state.
10. Utilization (Participation) Data
    CBWP Application/Contract Status data include:

------------------------------------------------------------------------
                    Number of Active      Financial
    Fiscal Year       and Completed      Assistance       Total Treated
                        Contracts         Obligated           Acres
------------------------------------------------------------------------
          2009                 826       $18,592,739           110,327
          2010                 953       $33,517,624           156,704
                   -----------------------------------------------------
  Total...........           1,779       $52,110,363           267,031
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    CBWP is a mechanism for focusing funding for maximum impact, is 
delivered through existing programs such as the EQIP, and is focused in 
the Chesapeake Bay watershed and on priorities related to controlling 
nutrient and sediment and habitat conservation.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Watershed Operations Program (Small Watershed).
    Prepared by USDA's NRCS.
2. Subprogram/Department Initiatives
    None.
3. Brief History
    The Watershed Operations programs operate under Public Law 83-566, 
the Watershed Protection and Flood Prevention Act of 1954, as amended 
(P.L. 83-566); and Public Law 78-534, the Flood Control Act of 1944 
(P.L. 78-534). Both of these laws authorize the Secretary of 
Agriculture to install watershed improvement measures to reduce 
flooding, sedimentation, and erosion damage; and improve the 
conservation, development, utilization, and disposal of water; and 
advance the conservation and proper utilization of land.
4. Purpose and Goals
    The program sets out to develop Watershed Project Plans, with 
specific actions and schedules that will meet local sponsor and 
resource concerns and that are physically, environmentally, socially, 
and economically defensible. The three general purposes set out in P.L. 
83-566 include: (a) Preventing damage from erosion, floodwater, and 
sediment; (b) Furthering the conservation, development, utilization, 
and disposal of waters; and (c) Furthering the conservation and proper 
utilization of land. The general purposes set out in P.L. 78-534 are 
(a) Run-off and water-flow retardation and (b) Soil-erosion prevention. 
NRCS provides technical and financial assistance to install watershed 
improvement measures through three means: technical assistance, land 
treatment measures, and easement and construction measures.
    These programs (P.L. 83-566 & P.L. 78-534) provide for cooperation 
between the Federal Government and the states and their political 
subdivisions for purposes of:

    Agricultural   Watershed        Water Quality
 Water                    Protection               Management
    Management   Fish and       Flood            Municipal &
 Wildlife                 Prevention--Flood        Industrial Water
                          Damage Reduction         Supply
   Public
 Recreation
5. Success in Meeting Programmatic Purpose/Goals
    Program Benefits. Estimates of flood prevention and other annual 
benefits to the environment and communities from P.L. 83-566 and P.L. 
78-534 that occurred in FY 2010 are shown below.
    Monetary Benefits. Benefits include:

   Agricultural Benefits (not related to flood control): $404 
        million. Benefits associated with erosion control, animal waste 
        management, water conservation, water quality improvement, 
        irrigation efficiency, change in land use, etc.

   Non-Agricultural Benefits (not related to flood control): 
        $899 million. Benefits associated with recreation, fish and 
        wildlife, rural water supply, water quality, municipal and 
        industrial water supply, and incidental recreation uses, etc.

   Agricultural Flood Protection Benefits: $320 million. This 
        value includes all crop and pasture damage reduction benefits 
        as well as all other agricultural damage reduction benefits.

   Non-Agricultural Flood Protection Benefits: $434 million. 
        Non-agricultural flood damage prevented to roads, bridges, 
        homes, and other structures that exist in the floodplain.

    Natural Resources Benefits include:

   Acres of nutrient management: 674,283

   Tons of animal waste properly disposed: 4,801,640

   Tons of soil saved from erosion: 90,038,700

   Miles of streams and corridors enhanced, or protected: 
        54,190

   Acres of lakes and reservoirs enhanced, or protected: 
        2,518,613

   Acre-feet of water conserved: 1,842,813

   Acres of wetlands created, enhanced, or restored: 279,326

   Acres of upland wildlife habitat created, enhanced, or 
        restored: 9,149,776

    Social and Community Benefits:

   Number of people: 48,316,354

   Number of farms and ranches: 181,248

   Number of bridges: 61,678

   Number of public facilities: 3,650

   Number of businesses: 46,583

   Number of homes: 610,983

   Number of domestic water supplies: 27,857

              6. Annual Budget Authority (FY 2002-FY 2011)
   (Watershed and Flood Prevention Operations, P.L. 78-534, and Small
                         Watershed, P.L. 83-566)
------------------------------------------------------------------------
                 FY                      Appropriation ($ in millions)
------------------------------------------------------------------------
                            2002                                 $106
                            2003                                 $109
                            2004                                  $86
                            2005                                  $75
                            2006                                  $74
                            2007                                   $9
                            2008                                  $30
                            2009                                  $24
                            2010                                  $30
                            2011                                   --
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
   (Watershed and Flood Prevention Operations, P.L. 78-534, and Small
                         Watershed, P.L. 83-566)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                  $85
                            2003                                  $80
                            2004                                  $73
                            2005                                  $86
                            2006                                  $81
                            2007                                  $78
                            2008                                  $44
                            2009                                  $42
                            2010                                  $19
                            2011                                  $15
------------------------------------------------------------------------

    Watershed Operations program TA funds generally outlay in the year 
the funds are obligated. The only exception to this is when TA funds 
are obligated through an architecture and engineering services contract 
to provide planning, design or quality assurance inspection during 
construction. FA funds are obligated after permitting and/or land 
rights are obtained. Outlays for these funds are generally expended 
over a fiscal year, but can extend over multi-years for a complex 
watershed operations project or for a project whose contract was 
awarded toward the end of the fiscal year. Given the nature of 
construction projects, it is possible for outlays to carryon for 
multiple years after the initial appropriation or obligation of the 
funds. Watershed Operations program funds are no-year funds.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Watershed and Flood Prevention
 Operations      Conservation Planning and              771           1,027           3,802             824             824
       Technical Consultation
      Conservation                         2,514           4,654          18,130           3,827           3,827
       Implementation
      Financial Assistance--                 271             337           1,326             280             280
       Program Administration
      Indirect Costs                       1,779           4,715          11,876           3,133           3,133
                                 -------------------------------------------------------------------------------
        Sub-total Technical                5,335          10,733          35,134           8,064           8,064
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost           3,540          19,057         134,155          21,936          21,936
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                        8,875          29,790         169,289          30,000          30,000
        FTEs                                 139              90              94              28             120Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
  the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.
Fiscal year 2009 includes $145 million in budget authority and associated FTE from the American Recovery and
  Reinvestment Act of 2009.

9. Eligibility Criteria
    Sponsor: All watershed projects must have at least one outside 
sponsor which must be a state or local organization/agency (i.e., 
state, city, town, conservancy district, tribal) that has legal 
authorities to acquire and hold land rights, condemn land if necessary, 
and perform continuing operations and maintenance. The sponsor(s) must 
also be able to raise, expend, and publicly account for funds as these 
projects have a local match or share required.
    Project/Structures: Watershed projects involving an estimated 
Federal contribution in excess of $5 million for construction, or 
construction of any single structure having a capacity in excess of 
2,500 acre-feet of water storage require authorization by Congressional 
Committee. Watershed projects are limited to 250,000 acres and cannot 
include any single structure which provides more than 12,500 acre-feet 
of floodwater detention capacity, or more than 25,000 acre-feet of 
total capacity. The Chief of NRCS authorizes the use of Watershed 
Operations funds for all other projects.
    Federal financial assistance may be applied to installation costs 
when land treatment measures are installed primarily to achieve 
environmental and public benefits such as surface and ground water 
quality improvement, water conservation, and flood mitigation. The 
Federal share may not exceed the rate of assistance for similar 
practices under other USDA conservation programs.
    Land treatment measures are installed through project agreements 
with local sponsoring organizations or through long-term contracts 
between the landowner and NRCS. In the first case, the local sponsors 
arrange for and accomplish the work by contract or force account and 
NRCS makes payments to the local sponsoring organizations as the land 
treatment measures are installed. In the second case, NRCS contracts 
directly with landowners.
10. Utilization (Participation Data)
    At the end of FY 2010, of the 1,757 projects authorized by the 
Watershed Protection and Flood Prevention Act, NRCS has assisted 
sponsors complete implementation on over 1,066 watersheds and are 
implementing works of improvement in 300 active watershed projects.
11. Duplication or Overlap with Other Programs:
    The program was not funded under the 2011 Full-Year Continuing 
Appropriations Act. The Agency is in the process of closing out 
operations.
    Watershed Operations program payments cannot be applied to payments 
on land for the same conservation purposes funded through other USDA 
conservation programs.
12. Waste, Fraud and Abuse:
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    The Watershed Rehabilitation Program.
    Prepared by USDA's NRCS.
2. Subprogram/Department Initiatives
    None.
3. Brief History
    The Watershed Rehabilitation Program (P.L. 106-472) is administered 
by NRCS to assist project sponsors with rehabilitation of aging project 
dams. Only dams installed under P.L. 83-566, the Pilot Watershed 
Program, P.L. 78-534, or Resource Conservation and Development (RC&D) 
Programs are eligible. This program provides technical and financial 
assistance to watershed project sponsors in rehabilitating aging dams 
in their communities.
4. Purpose/Goals
    The purpose of P.L. 106-472 is to extend the service life of dams 
and meet applicable safety and performance standards. Priority is given 
to those structures that pose the highest risk to life and property. 
Projects are eligible when hazard to life and property increases due to 
downstream development and when there is need for rehabilitation to 
extend the planned life of a structure. Watershed Rehabilitation 
Program work can consist of repairing or replacing deteriorated 
components, repairing damages from catastrophic events, upgrading the 
structure to meet state dam safety laws, or to decommission a 
structure.
5. Success in Meeting Programmatic Purpose/Goals
    The Natural Resources Conservation Service has authorized the 
rehabilitation of 162 of these high hazard dams in 22 states as of the 
end of FY 2010. Many of these structures were originally set in rural 
areas and designed and constructed as ``low hazard'' structures. As a 
result of land use change and downstream development, many of these 
dams now represent a ``high hazard'' to surrounding communities. These 
rehabilitated structures are constructed to high hazard standard which 
provide millions of dollars of flood protection. Through this program, 
NRCS is making sure that the rehabilitation of these dams will not only 
ensure that these watershed dams remain safe and protect the lives of 
people, property, and infrastructure, but continue to provide flood 
control, recreation and wildlife habitat to the citizenry and 
communities for an additional 50 to 100 years.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Appropriation ($ in millions)
------------------------------------------------------------------------
                            2002                                  $10
                            2003                                  $30
                            2004                                  $30
                            2005                                  $27
                            2006                                  $31
                            2007                                  $31
                            2008                                  $20
                            2009                                  $40
                            2010                                  $40
                            2011                                  $18
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   $6
                            2003                                  $10
                            2004                                  $19
                            2005                                  $21
                            2006                                  $21
                            2007                                  $22
                            2008                                  $31
                            2009                                  $24
                            2010                                  $32
                            2011                                  $17
------------------------------------------------------------------------

    The Watershed Rehabilitation Program TA funds are generally 
expended in the year the funds are obligated. The only exception to 
this is when TA funds are obligated through a services contract to 
provide planning, design or quality assurance inspection during 
construction. FA funds are obligated after permitting and/or land 
rights are obtained. These funds are generally expended over a fiscal 
year, but can extend over multi-years for a complex dam rehabilitation 
project or for a project whose contract was awarded toward the end of 
the fiscal year. Given the nature of constructions projects, it is 
possible for outlays to carryon for multiple years after the initial 
appropriation or obligation of the funds. Watershed Rehabilitation 
Program funds are no-year funds.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Watershed Rehabilitation Program      Conservation Planning and            2,573             845           4,739           1,994           1,368
       Technical Consultation
      Conservation                         2,799           2,972          16,667           7,008           4,805
       Implementation
      Financial Assistance--               1,193             342           1,918             806             553
       Program Administration
      Indirect Costs                      10,460           3,135          17,581           7,392           5,070
                                 -------------------------------------------------------------------------------
        Sub-total Technical               17,025           7,294          40,905          17,200          11,796
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost          14,284          12,566          49,095          22,961          28,365
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                       31,309          19,860          90,000          40,161          40,161
        FTEs                                 113              65              72              82              71Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
  the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.
Fiscal year 2009 includes $50 million in budget authority and associated FTE from the American Recovery and
  Reinvestment Act of 2009.

9. Eligibility Criteria
    A dam must be under proper and active maintenance, and only dams 
installed under P.L. 83-566, the Pilot Watershed Program, P.L. 78-534, 
or RC&D Programs are eligible.
    Each project requires a local cooperating sponsor that works 
closely with NRCS to complete the rehabilitation of each dam. Each 
sponsor must provide thirty-five (35) percent of the costs to 
rehabilitation a dam. Through several means, sponsors in these 
communities contribute their funds through the collection bonds, County 
budgets, state appropriations, state park division, Municipal taxing 
authority, Watershed taxing authority, and through In-kind technical 
services.
11. Duplication or overlap with other programs
    There is no duplication or overlap with other USDA conservation 
programs.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Healthy Forests Reserve Program (HFRP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Title V of the Healthy Forests Restoration Act of 2003 (Public Law 
108-148) authorized the establishment of the Healthy Forests Reserve 
Program (HFRP) which was reauthorized by the 2008 Farm Bill.
    HFRP provides financial assistance for specific conservation 
actions completed by the landowner. As funds are made available, the 
NRCS Chief solicits project proposals State Conservationists have 
developed in cooperation with partnering organizations. States selected 
for funding provide public notice of the availability of funding within 
the selected area. HFRP offers four enrollment options:

   10 year restoration agreement for which the landowner may 
        receive 50 percent of the average cost of the approved 
        conservation practices;

   30 year contract (equivalent to the value of a 30 year 
        easement) for which the landowner may receive 75 percent of the 
        easement value of the enrolled land plus 75 percent of the 
        average cost of the approved conservation restoration 
        practices. This option is available to Indian Tribes only;

   30 year easement for which the landowner may receive 75 
        percent of the easement value of the enrolled land plus 75 
        percent of the average cost of the approved conservation 
        practices; or

   Permanent easement for which landowners may receive 100 
        percent of the easement value of the enrolled land plus 100 
        percent of the average cost of the approved conservation 
        practices.
4. Purpose/Goals
    HFRP assists landowners in restoring, enhancing, and protecting 
forest ecosystems to: (1) promote the recovery of threatened and 
endangered species; (2) improve biodiversity; and (3) enhance carbon 
sequestration. HFRP supports the NRCS Mission Goal of Healthy Plant and 
Animal Communities.
5. Success in Meeting Programmatic Purpose/Goals
    The following provides examples of HFRP results:
    Oregon: Partnership Protects Working Forest and Enhances Habitat. 
In FY 2010, NRCS partnered with the USFWS and the Oregon Department of 
Forestry (ODF) to provide private landowners the opportunity to create 
a northern spotted owl (NSO) habitat while maintaining a working 
forest. NSO habitat in the Pacific Northwest is an important criterion 
for defining healthy forests, making HFRP an excellent vehicle for this 
effort. NRCS developed HFRP long term management requirements and 
sideboards as a supplement to the ODF Forest Stewardship Plan on 11 
properties being offered for permanent easements.
    The supplements specify the long term management requirements and 
sideboards of each individual property; some properties opted for even-
age stand management and others for the uneven-age stand management 
regime. The FSP-HFRP supplement recognizes the requirements of a State 
of Oregon Stewardship Agreement and will require that the landowner 
intends to meet or exceed all Oregon Forest Practices Act standards 
current at the time of approval including provisions for Riparian 
Management Areas. The information contained in the supplement provides 
guidance and requirements to reach landowner and program goals and 
objectives. The supplements include area regulation timelines and 
overall forest management practices for thinning, patch cuts, planting, 
canopy cover requirements and specific management regimes for each 
property.
    NRCS worked closely with USFWS and ODF to ensure consistency among 
agencies' requirements while developing the supplements. The 
supplements use forest management to enhance future NSO habitat and 
maintain existing habitat. NRCS, USFWS, and ODF entered into a 
programmatic Safe Harbor Agreement to provide assurances to the 
landowner if they manage the property according to the Forest 
Stewardship Plan supplement. NRCS develops conservation plans and 
landowner conservation program contracts to implement the conservation 
practices necessary for restoration, enhancement, and management for 
NSO as planned in the Forest Stewardship Plan supplement. NRCS has 
completed the supplement plans for 11 properties in western Oregon 
totaling 1,852 acres of valuable habitat for the endangered NSO on 
these potential permanent easements. The HFRP work has been an 
excellent demonstration of one-on-one conservation planning resulting 
in detailed landowner decisions while allowing management flexibility 
for plans that will stretch into perpetuity. This has been an excellent 
model for all nonindustrial forest planning.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                                       Appropriation/Apportionment ($ in
                 FY                                millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   $2
                            2007                                   $2
                            2008                                   $2
                            2009                                  $10
                            2010                                  $10
                            2011                                  $10
------------------------------------------------------------------------
Note: FY 2006 through 2008 is Discretionary appropriations. FY 2009
  through 2011 is the Mandatory apportionments.


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                                   $1
                            2009                                   $1
                            2010                                   $3
                            2011                                   $6
------------------------------------------------------------------------
Note: FY 2006 to 2008 is Discretionary funding and Mandatory funding
  from 2009 to 2011.

    HFRP FA funds support easement acquisition and restoration. Funds 
are expended when the easement is perfected or the practices necessary 
for restoration are installed and verified by NRCS personnel, both 
processes which may take over a year to complete. TA funds obligated in 
a given year are used for workload generated by the enrollment of new 
easements and workload generated by easements enrolled in prior years. 
The vast majority of TA funding tends to be expended in the year of 
obligation. FA funding represents the majority of program budget 
authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011)  
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Healthy Forests Reserve Program      Conservation Planning and               19              12             180             187             301
       Technical Consultation
      Conservation                            21              15             382             398             641
       Implementation
      Financial Assistance--                   9              58             459             478             770
       Program Administration
      Indirect Costs                          78              66             314             328             529
                                 -------------------------------------------------------------------------------
        Sub-total Technical                  127             151           1,335           1,391           2,241
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost           2,349           1,835           1,191           6,226           7,509
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                        2,476           1,986           2,526           7,617           9,750
        FTEs                                   1               2               5               6              23Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 and 2008 are the discretionary appropriations. The 2009 and 2010 are actual mandatory
  obligations; and Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Only privately held land, including acreage owned by an Indian 
Tribe, is eligible for enrollment in HFRP. In addition, to be eligible, 
the landowner must commit to restoring, enhancing, or measurably 
increasing the likelihood of recovery of a threatened or endangered 
species or candidates for the Federal or state threatened or endangered 
species list, and must improve biological diversity or increase carbon 
sequestration. Land enrolled in HFRP must have a restoration plan that 
includes practices necessary to restore and enhance habitat for species 
listed as threatened or endangered or species that are candidates for 
the threatened or endangered species list. NRCS provides technical 
assistance to help owners comply with the terms of their HFRP 
restoration plans.
    Landowners may receive safe harbor assurance for land enrolled in 
the HFRP who agree, for a specified period, to protect, restore, or 
enhance their land for threatened or endangered species habitat. In 
exchange, landowners avoid future regulatory restrictions on the use of 
that land under the Endangered Species Act.

                  10. Utilization (Participation) Data
                        Contract Fiscal Year 2010
------------------------------------------------------------------------
                                     10 Year
                                   Restoration    30 Year     Permanent
                                    Agreements   Easements    Easements
------------------------------------------------------------------------
Number 1                                     1            2            9
Acres 1                                  2,747        1,416        1,472
Dollars Obligated                     $599,988     $882,139   $4,994,249
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
  assurance review.

11. Duplication or Overlap with Other Programs
    To the extent that these programs each allow for 10 year 
restoration agreements to improve wildlife habitat, there is 
duplication and overlap with the WHIP program and the 10 year 
restoration agreement portion of HFRP.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Conservation Security Program (Security).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The 2002 Farm Bill authorized the Security. Except for existing 
program contracts, it was replaced by the Conservation Stewardship 
Program (Stewardship) by the 2008 Farm Bill.
    Security is a voluntary program that provides financial and 
technical assistance through 5 to 10 year contracts to promote the 
conservation and improvement of soil, water, air, energy, plant and 
animal life, and other conservation purposes on Tribal and private 
working lands.
    The Chief of NRCS was authorized to implement Security in all 50 
states, the Caribbean Area, and the Pacific Basin area. The program 
provides equitable access to benefits to all producers, regardless of 
size of operation, crops produced, or geographic location.
4. Purpose/Goals
    Security's goal is to identify and reward those farmers and 
ranchers who are meeting the highest standards of conservation and 
environmental management on their operations and to support ongoing 
stewardship of private agricultural lands by providing payments for 
maintaining and enhancing natural resources.
5. Success in Meeting Programmatic Purpose/Goals
    In Fiscal Year 2011, a total of $180,292,191 was expended to cover 
the obligations of 15,031 prior year contracts (2004-2008).

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   $4
                            2004                                  $41
                            2005                                 $202
                            2006                                 $259
                            2007                                 $297
                            2008                                 $379
                            2009                                 $283
                            2010                                 $234
                            2011                                 $204
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                  $38
                            2005                                 $186
                            2006                                 $263
                            2007                                 $294
                            2008                                 $309
                            2009                                 $276
                            2010                                 $220
                            2011                                 $205
------------------------------------------------------------------------

    Security's FA funds are obligated separately for each year of the 
contract with the producer. They are expended during the year of 
obligation. TA funds obligated for a given year are used for workload 
generated by prior year contract implementation. The vast majority of 
TA funding also are expended in the year of obligation. FA funding 
represents the majority of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Conservation Security Program      Conservation Planning and            2,033           2,228           1,264             941             990
       Technical Consultation
      Conservation                         2,348           2,920           1,657           1,233           1,297
       Implementation
      Financial Assistance--              17,204          11,714           6,647           4,947           5,205
       Program Administration
      Indirect Costs                       4,321          27,728          20,315          15,120          13,446
                                 -------------------------------------------------------------------------------
        Sub-total Technical               25,906          44,590          29,883          22,241          20,938
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost         268,451         272,461         246,121         199,928         182,468
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                      294,357         317,051         276,004         222,169         203,406
        FTEs                                 200             367             220             154             132Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
   Applicants must have submitted an application applied prior 
        to Oct. 1, 2008.

   Eligible applicants include an individual producer, 
        partnership, association, corporation, estate, trust, other 
        business or other legal entities controlling eligible lands. 
        The term producer means an owner, operator, landlord, tenant or 
        sharecropper that shares in the risk of producing any crop or 
        livestock; and must be entitled to share in the crop or 
        livestock available for marketing from an agricultural 
        operation.

   An applicant must be in compliance with highly erodible land 
        and wetland conservation provisions, and average adjusted gross 
        income requirements.

   Working lands include cropland, grassland, prairie land, 
        improved pasture, and range land, as well as forested land that 
        is an incidental part of an agriculture operation.
10. Utilization (Participation) Data
    Security Dollars Obligated on Active/Completed Contracts data 
include:

------------------------------------------------------------------------
                           Financial Assistance    Technical Assistance
                                 Obligated               Obligated
------------------------------------------------------------------------
            Total           $199,927,828.26          $16,985,614.49
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    Because Security is available only for contracts that were entered 
into prior to the enactment date of the 2008 Farm Bill, a producer who 
receives Security payments cannot also receive payments under the 
Stewardship.
12. Waste, Fraud and Abuse
    In July 2009, OIG issued an audit report on the Conservation 
Security Program. They noted potential improper payments made to 
participants that were ineligible and participants that received 
payments for more than one Security contract at a time. The audit 
involved review of 20,653 contracts. Of those contracts, 37 percent 
(7,666) contained errors, mostly minor or technical in nature. Three 
contracts (less than one percent of all the contracts) were found to be 
fraudulent. Corrective actions were taken on all errors and were 
completed by December 31, 2009.
    To recover the improper payments that were made, NRCS sent demand 
letters and bills to participants. For certain participants, liquidated 
damages have also been assessed. NRCS has recovered $4.618 million to 
date as result of these corrective actions. To remediate the situation, 
updated procedures were issued to require field verifications prior to 
funds being obligated. NRCS continues to work to recover all improper 
payments made.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Conservation Stewardship Program (Stewardship).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The 2008 Farm Bill authorized Stewardship with an enrollment of 
12,769,000 acres for each fiscal year (FY) for the period beginning 
October 1, 2008, and ending on September 30, 2017.
    The Chief of NRCS makes Stewardship available to all producers, 
regardless of operation size or crops produced, in all 50 states, the 
District of Columbia, and the Caribbean and Pacific Island areas.
    Since it was first funded in 2008, Stewardship has enrolled 20,567 
contracts on over 25.1 million acres.
4. Purpose/Goals
    The purpose of Stewardship, as a voluntary program, is to encourage 
agricultural and forestry producers to address resource concerns by: 
(1) undertaking additional conservation activities; and (2) improving 
and maintaining existing conservation systems. Stewardship provides 
financial and technical assistance to help land stewards conserve and 
enhance soil, water, air, and related natural resources on their land.
    Stewardship participants receive payments for conservation 
performance--the higher the performance, the higher the payment. It 
provides two possible types of payments. An annual payment is available 
for installing new conservation activities and maintaining existing 
practices. A supplemental payment is available to participants who also 
adopt a resource conserving crop rotation. Through 5 year contracts, 
NRCS makes payments as soon as practical after October 1 of each fiscal 
year for contract activities installed and maintained in the previous 
year.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010:

   NRCS enrolled 20,567 contracts on 25,164,327 acres.

   The value of the contracts is $320,399,890.

   The average contract size is 1,224 acres.

   On average, NRCS agreed to reimburse participants $15,578 
        for each contract.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                                   --
                            2009                                  $10
                            2010                                 $469
                            2011                                 $601
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                                   --
                            2009                                   $5
                            2010                                  $51
                            2011                                 $389
------------------------------------------------------------------------

    Stewardship's FA funds are obligated separately for each year of 
the 5 year contract for installing new or maintaining existing 
conservation activities. FA funds are expended one year after 
obligation, after NRCS personnel perform a field visit to site-verify 
that the conservation activities are installed and maintained to 
specifications. TA funds obligated in a given year are used for 
workload generated by the enrollment of new contracts and workload 
generated by prior year contract implementation. The vast majority of 
TA funding tends to be expended in the year of obligation. FA funding 
represents the majority of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Conservation Stewardship Program      Conservation Planning and               --              --             398           2,939           3,356
       Technical Consultation
      Conservation                            --              --             520           3,849           4,397
       Implementation
      Financial Assistance--                  --              --           2,086          15,440          17,645
       Program Administration
      Indirect Costs                          --              --           6,374          47,187          45,581
                                 -------------------------------------------------------------------------------
        Sub-total Technical                   --              --           9,378          69,415          70,979
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost              --              --              --         320,398         529,855
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                           --              --           9,378         389,813         600,834
        FTEs                                  --              --              75             496             540Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
   Eligible land includes cropland, grassland, prairie land, 
        improved pastureland, rangeland, nonindustrial private 
        forestland, and agricultural land under the jurisdiction of an 
        Indian tribe.

   Eligible applicants include individuals, legal entities, 
        joint operations, or Indian tribes. Applicants must be the 
        operator of record in the USDA farm records management system 
        for the eligible land being offered for enrollment and have 
        effective control of the land for the term of the proposed 
        contract.

   Applicants must be in compliance with the highly erodible 
        land and wetland conservation provisions requirements and 
        adjusted gross income provisions prior to receiving program 
        payments.

    Stewardship contract provisions provide:

   A person or legal entity may have more than one Stewardship 
        contract but, for all Stewardship contracts combined, may not 
        receive more than $40,000 in any year or more than $200,000 
        during any 5 year period.

   The contract limit is the same as the payment limit except 
        in the case of joint operations, for which the contract limit 
        is $80,000 per fiscal year and $400,000 over the term of the 
        contract period.
10. Utilization (Participation) Data
    2010 Stewardship Application/Contract Status data includes:

------------------------------------------------------------------------
                  Number of
                  Active and     Financial        Total       Technical
                  Completed      Assistance      Treated     Assistance
                  Contracts      Obligated        Acres       Obligated
------------------------------------------------------------------------
       Total          20,567   $320,397,871     25,164,327   $59,940,382
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    Some of the practices offered through Stewardship to meet the 
minimum threshold at the end of the contract are also offered through 
other programs such as EQIP. Utilizing Stewardship for this purpose 
increases the additionality intent and uniqueness of the program.
12. Waste, Fraud and Abuse
    In an effort to implement lessons learned from the 2009 
Conservation Security Program OIG audit, NRCS undertook an independent 
inquiry of FY 2010 Conservation Stewardship Program Contracts. The 
agency reviewed ten random contracts from 15 selected states after all 
states completed a ``Checklist to Address Conservation Stewardship 
Program O&E Review Findings.'' The results of the review showed 
inconsistencies in the calculation of additional activity points. To 
address these matters NRCS has undertaken an extensive follow-up regime 
with all states providing additional guidance, training, written 
directives and net conferences to alleviate the problem. Finally, each 
new contract entered into must now have a NRCS conservationist field 
review the operation's on-the-ground compliance prior to enrollment.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Wetlands Reserve Program (WRP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Congress first authorized WRP in the 1990 Farm Bill and has 
reauthorized it with little change in the three farm bills since. WRP 
is a voluntary program that provides technical and financial assistance 
to enable eligible landowners to address wetland, wildlife habitat, 
soil, water and related natural resource concerns on private lands in 
an environmentally beneficial and cost effective manner. The program 
achieves solutions to local community issues related to farms, ranches, 
rural lands and other areas by establishing easements and long-term 
agreements on eligible farmlands and establishing 30 year contracts on 
Tribal lands. Over the last 20 years, WRP's voluntary, private lands 
approach has made it the Federal Government's private lands wetland 
restoration and conservation program. Year after year, WRP has 
delivered benefits to both the individuals participating and the 
American public benefitting from the services the WRP wetlands provide.
4. Purpose/Goals
    The primary purpose of WRP is the restoration, protection and 
enhancement of wetlands and associated habitats for the benefit of 
wetland-dependent wildlife, with an emphasis on migratory birds and 
special status species. The WRP goal is to achieve the greatest wetland 
functions and values, along with optimum wildlife habitat, on every 
acre enrolled in the program. WRP is most suited for frequently flooded 
agricultural lands, where restoration will maximize habitat for 
migratory birds and other wildlife, and improve water quality. WRP 
focuses on:

   Enrolling marginal lands that have a history of crop 
        failures or low production yields;

   Restoring and protecting wetland values on degraded 
        wetlands;

   Maximizing wildlife benefits;

   Achieving cost-effective restoration with a priority on 
        benefits to migratory birds;

   Protecting and improving water quality; and

   Reducing the impact of flood events.
5. Success in Meeting Programmatic Purpose/Goals
    WRP has become the preeminent Federal private lands program for 
protecting and restoring wetlands. Over the last 20 years, WRP has 
helped more than 11,000 private landowners voluntarily restore, protect 
and enhance wetlands and wildlife habitat on over 2.3 million acres 
nationwide. Currently, about 30 percent of those acres are in the 
restoration process and will require continued conservation assistance 
in order to reach full restoration. WRP has proven to be a program 
under which NRCS, landowners and many various partners can work 
together to achieve truly cooperative conservation resulting in long-
term benefits on a landscape scale that will ensure our wetland 
resources are available for future generations.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                 $275
                            2003                                 $306
                            2004                                 $280
                            2005                                 $273
                            2006                                 $273
                            2007                                 $283
                            2008                                 $184
                            2009                                 $571
                            2010                                 $675
                            2011                                 $611
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                  $98
                            2004                                 $231
                            2005                                 $205
                            2006                                 $234
                            2007                                 $154
                            2008                                 $249
                            2009                                 $131
                            2010                                 $278
                            2011                                 $348
------------------------------------------------------------------------

    WRP TA funds support staff time needed to conduct eligibility 
determinations, finalize easement transactions, complete restoration 
designs, develop management and maintenance plans, and conduct 
monitoring of wetlands under easement. WRP FA funds support the 
easement costs paid to the landowner, restoration costs paid for 
implementation of restoration design, and implementation costs for 
maintenance and repairs on existing easements. FA for easement 
acquisition is obligated when the acres to be placed under easement are 
enrolled but is not expended until the easement is perfected, a process 
that may take years. FA for restoration is obligated when contracts are 
developed based on final restoration designs but is not expended until 
the installation of practices used to restore the wetlands is complete 
and verified by NRCS personnel, which also may occur over several 
years. TA funds obligated in a given year are used for workload 
generated by the enrollment of new acres and workload generated by 
acquisition, restoration, and monitoring of prior year enrollments 
which requires the majority of the TA funds obligated in a given year. 
FA funding represents the majority of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Wetlands Reserve Program      Conservation Planning and            4,346           2,363           2,191           2,558           3,807
       Technical Consultation
      Conservation                        21,771          12,719          11,791          13,764          20,482
       Implementation
      Financial Assistance--              17,382          11,186          10,370          12,106          18,015
       Program Administration
      Indirect Costs                      16,599           6,923           6,418           7,492          11,148
                                 -------------------------------------------------------------------------------
        Sub-total Technical               60,098          33,191          30,770          35,920          53,452
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost         187,757         149,758         404,941         594,219         672,647
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                      247,855         182,949         435,711         630,139         726,099
        FTEs                                 190             225             191             217             343Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.



                                                                 9. Eligibility Criteria 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Owners of private and tribal lands are eligible to participate in the WRP. WRP offers a perpetual easement, 30 year easement, or 10 year restoration
 cost-share agreement available to all private and tribal landowners and a 30 year contract option for tribal landowners only. Land is eligible if it
 contains wetlands that have been degraded primarily as a result of agricultural use and have a high likelihood of successful restoration that will
 maximize wildlife benefits and wetland functions and values taking cost into consideration. Associated habitats and lands functionally related to the
 eligible wetlands may also be enrolled if they will contribute significantly to the wetland functions and values or practical administration of the
 enrolled area.



                                                                              10. Utilization (Participation) Data  
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    During the 2008 Farm Bill, WRP has enrolled an average of approximately 215,000 acres on 1,200 projects each year. Since its inception in 1992, WRP has enrolled over 2.3 million acres on
 over 11,000 projects. The majority of enrollments, over 77 percent are perpetual easements, 16 percent are 30 year easements and 30 year contracts with tribes, and the remaining six percent
                                                               are restoration cost-share agreements.                                  2010 WRP Number of Agreements and Dollars Obligated data includes:


--------------------------------------------------------------------------------------------------------------------------------------------------------
                  30 Year Contracts     30 Year Easements   Permanent  Easements    Restoration Cost      Total Agreements
               --------------------------------------------                          Share Agreement   ----------------------   Financial     Technical
                                                           --------------------------------------------                        Assistance    Assistance
                  Acres      Number     Acres      Number     Acres      Number     Acres      Number     Acres      Number     Obligated     Obligated
--------------------------------------------------------------------------------------------------------------------------------------------------------
     Total         1,761          4     60,154        425    206,692        954      4,155         31    272,762      1,414   $592,562,106  $28,910,632
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers currently reported in NEST are undergoing an intense quality assurance review. Numbers are subject to change during this process.

11. Duplication or Overlap with Other Programs
    There is some potential overlap of the restoration cost-share 
agreement enrollment option of WRP with WHIP. Because the restoration 
cost-share agreement enrollment option does not have an associated 
easement, it provides technical and financial assistance in the form of 
a cost-share agreement for the implementation of wetland restoration. 
The wetland restoration practices implemented through the WRP 
restoration cost-share agreements would potentially be eligible for 
cost-share under WHIP. The primary benefit of the WRP restoration cost-
share agreement that sets it apart from WHIP is the length of the 
agreement. The WRP agreements require the restoration to be maintained 
for a longer period of time--a minimum of 10 years after the date the 
last practice is installed and, in contrast, WHIP agreements can be for 
one year to a maximum of 10 years. Thus, the WRP restoration cost-share 
agreements provide for a longer term protection of the public 
investment and realization of the public benefits resulting from the 
restored wetlands.
    CRP land eligibility criteria is more narrow than WRP. The nature 
of the agreements with landowners is also vastly different. Although 
there may be some overlap of eligible land with the CRP, WRP does not 
offer enrollment options similar to CRP.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Farm and Ranch Lands Protection Program (FRPP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    FRPP was last reauthorized in 2008 Farm Bill. This legislation 
expanded the purpose of the Farm and Ranch Lands Protection Program 
from ``protecting topsoil'' to ``protecting agricultural use and 
related conservation values of the land.'' The program now allows for 
long term agreements with cooperating entities. Such agreements may be 
5 years in duration for certified entities and 3 years for eligible 
entities that are not certified. The 2008 Farm Bill defines a 
``certified entity'' as an eligible entity with a proven record of 
acquiring and monitoring conservation easements. Entities may submit 
proposals to protect farm and ranch lands throughout the term of the 
agreement.
4. Purpose/Goals
    FRPP is a voluntary program that helps farmers and ranchers keep 
their land in agriculture. The program provides matching funds to 
state, Tribal, or local governments and non-governmental organizations 
with existing farm and ranch land protection programs to purchase 
conservation easements.
5. Success in Meeting Programmatic Purpose/Goals
    The following is an example of the benefits of FRPP:
    The 180 acre Carpenter Farm and the 142 acre Sparks Farm in Salem 
County were protected from development with funding from the State 
Agriculture Development Committee (SADC), Garden State Preservation 
Trust, and FRPP. The Carpenter Farm has been in agriculture for more 
than 300 years. Wheat and soybeans are the primary crops cultivated on 
the Sparks Farm. In addition to protecting rich, fertile farmland and 
investing in the agricultural economy of the region, preserving these 
lands also provides a significant environmental benefit. The resulting 
land and waterscape is one of the top areas in the state for waterfowl 
diversity and has been designated an Important Bird Area by New Jersey 
Audubon.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                  $50
                            2003                                 $100
                            2004                                 $112
                            2005                                 $112
                            2006                                  $74
                            2007                                  $74
                            2008                                  $97
                            2009                                 $121
                            2010                                 $150
                            2011                                 $175
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   --
                            2003                                  $15
                            2004                                  $54
                            2005                                  $63
                            2006                                  $59
                            2007                                  $91
                            2008                                  $73
                            2009                                  $74
                            2010                                 $102
                            2011                                  $97
------------------------------------------------------------------------

    FRPP FA funds are obligated the year parcels are enrolled in the 
program but not expended until easements are closed, which may take 
several years. TA funds obligated in a given year are used for workload 
generated by the enrollment of new parcels and workload generated by 
parcels enrolled in prior years. The vast majority of TA funding tends 
to be expended in the year of obligation. FA funding represents the 
majority of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Farm and Ranch Lands Protection
 Program      Conservation Planning and              N/A             325             336             336             460
       Technical Consultation
      Conservation                           N/A              17              18              18              25
       Implementation
      Financial Assistance--                 958           3,704           3,828           3,830           5,248
       Program Administration
      Indirect Costs                       2,185           1,615           1,669           1,670           2,289
                                 -------------------------------------------------------------------------------
        Sub-total Technical                3,143           5,661           5,851           5,854           8,022
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost          69,940          90,520         112,915         144,042         166,978
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                       73,083          96,181         118,766         149,896         175,000
        FTEs                                  24              29              34              29              44Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Individual landowners must apply to and be accepted by the eligible 
state, tribe, or local government or nongovernmental programs to 
participate in FRPP. As a Title XII program, these individual 
landowners must meet farm bill payment eligibility requirements for 
adjusted gross income, wetland conservation, and highly erodible land 
conservation. The land to be enrolled in FRPP must meet one of three 
criteria to qualify for consideration: (1) have at least 50 percent 
prime, unique, or important farmland soil; (2) have historic or 
archeological resources; or (3) support the policies of a state or 
local farm and ranch lands protection program.
    To qualify, farmland must: be part of a pending offer from a state, 
tribe, or local farmland protection program; be privately owned; have a 
conservation plan for highly erodible land; be large enough to sustain 
agricultural production; be accessible to markets for what the land 
produces; have adequate infrastructure and agricultural support 
services; and have surrounding parcels of land that can support long-
term agricultural production. Depending on funding availability, 
proposals must be submitted by the eligible entities to the appropriate 
NRCS State Office during the application window.
10. Utilization (Participation) Data
    2010 FRPP Number of Parcels and Dollars Obligated data includes:

------------------------------------------------------------------------
                                              Financial
                                              Assistance      Technical
                 Number of      Acres 1     Obligated for    Assistance
                 Parcels 1                     Easement       Obligated
                                             Acquisition
------------------------------------------------------------------------
       Total            403       170,412     $144,041,755    $4,425,878
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
  assurance review. Numbers are subject to change during this process.

11. Duplication or Overlap with Other Programs
    GRP also offers long-term and permanent easements to protect 
grazing lands from conversion to other uses. Lands eligible for GRP are 
generally eligible for FRPP; however, FRPP is more broadly applicable 
to include cropland or other lands that may not be eligible for GRP.
12. Waste, Fraud and Abuse
    NRCS has uncovered few instances of entity misuse of landowner 
contributions in acquiring easements through FRPP. However, a 2005 OIG 
audit found that the entity coerced landowners into returning some of 
the proceeds of the sale of the easement to the entity, who had claimed 
these as part of their non Federal match. As a result, the entity did 
not pay the required 25 percent of the purchase price for the FRPP 
easement. In response, NRCS terminated the agreement with the eligible 
entity and arranged for parcels to be included in a subsequent 
agreement with another eligible entity. Internal controls have been 
instituted that require landowners to sign a ``Confirmation of Matching 
Funds'' to ensure that cooperating entities do not use landowners' 
proceeds from the easement acquisition to cover the entities' 
contribution. In addition NRCS State Office staff interview landowners 
to be certain that they are not being forced to provide the entity cash 
match.
    In Wisconsin, the eligible entity misrepresented the source of its 
funds by certifying that it had not obtained the money from landowners 
when it had. This resulted in NRCS overpaying on these easements. The 
Office of General Counsel is currently reviewing legal options. As a 
result of this case, changes were made to FRPP policy requiring NRCS 
State office staff to visit every FRPP parcel and interview every 
landowner, inform them of FRPP regulations, and confirm the estimated 
easement value, Federal contribution, entity contribution, landowner 
donation, and recommended contribution to stewardship funds before a 
cooperative agreement is signed.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Resource Conservation and Development (RC&D).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    RC&D was initiated under the Soil Conservation and Domestic 
Allotment Act, (16 U.S.C. 590a-590f), the Bankhead-Jones Farm Tenant 
Act (16 U.S.C. 1010 and 1011), and the Food and Agriculture Act of 
1962, and is authorized under subtitle H, title XV of the Agriculture 
and Food Act of 1981, (16 U.S.C. 3451-3461), as amended. Through the 
program, RC&D areas establish or improve coordination systems in rural 
communities, and build rural community leadership skills to more 
effectively use Federal, state, and local programs for the communities' 
benefit. The 2002 Farm Bill permanently authorized the program. The 
2008 Act further strengthened the relationship between USDA and RC&D 
councils. The program began with ten pilot areas and grew to 375 areas 
designated by the Secretary of Agriculture.
    A RC&D area is a locally defined multi-county area, sponsored and 
directed by a RC&D Council that carries out the program encouraging 
natural resource conservation and utilization, accelerated economic 
development, and/or improvement of social conditions where needed to 
foster a sound local economy. The RC&D Council consists of sponsors 
from the public and private sector that represent a diverse cross-
section of community interests. Sponsors include county and city 
governments, soil and water conservation districts, sub-state 
districts, Tribal governments, and other interested private 
organizations in the area. The RC&D program is based on grassroots 
involvement and decision-making. From public meetings to identify 
community concerns, needs, and problems, the RC&D Council develops an 
area plan that details the goals, objectives, and action items needed 
to address the local communities' priorities and concerns. The RC&D 
Council then collects data about identified problems, develops 
alternatives, and recommends solutions. Implementation of an action 
item may include one step or a full range of steps, such as problem 
identification, development of alternatives, plan development, and 
funding.
4. Purpose/Goals
    The purpose of the RC&D program is to--

    (i) Develop and carry out area plans and projects in designated 
        areas in order to conserve, develop, and improve the use of 
        land.

    (ii) Develop natural resources.

    (iii) Improve and enhance the social, economic, and environmental 
        conditions in primarily rural areas of the United States.

    (iv) Encourage and improve the capability of state and local units 
        of government, Indian Tribes, nonprofit organizations, and 
        councils.

    The mission of the RC&D Program was to make the financial, 
administrative, educational, and technical resources of USDA and other 
public and private partners available to increase the ability of 
communities to meet their regionally identified resource conservation 
and economic development needs.
5. Success in Meeting Programmatic Purpose/Goals
    The program has been successful in meeting its purpose and goals. 
Each year RC&D Councils and their partners, with technical assistance 
from NRCS, help to create, retain, and expand businesses and the 
formation of cooperatives. RC&D Council projects create and retain 
jobs. Each RC&D Council brings in external grant funds for direct 
project implementation into their area.
    RC&D Councils assist farm or ranch operations with agri-tourism 
activities and direct marketing from the field to the consumer via 
Community Supported Agriculture groups (CSAs), restaurants, commercial 
stores, or public access farmers markets.
    Efforts to improve natural resources within RC&D areas result in 
the improvement of wildlife habitat, lakes and other water bodies, and 
streams. RC&D Councils assist animal agricultural operations with water 
quality projects; assist the construction or rehabilitation of flood 
control structures; and preserve or protect agricultural land. Over the 
last 5-8 years, RC&D Councils have begun implementing renewable energy 
projects.
    RC&D Councils hold workshops, tours and seminars nationwide on 
agriculture, aquaculture, forestry and wildlife; and training sessions 
on leadership development, grant writing, business development, 
nonprofit management and environmental education. These educational 
projects have helped people develop new skills.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Appropriation ($ in millions)
------------------------------------------------------------------------
                            2002                                  $48
                            2003                                  $51
                            2004                                  $52
                            2005                                  $51
                            2006                                  $51
                            2007                                  $51
                            2008                                  $51
                            2009                                  $51
                            2010                                  $51
                          2011 1                                   --
------------------------------------------------------------------------
1 The 2011 Appropriations Act provided no funding for this program.
  Based on authority provided through multiple short-term continuing
  resolutions, a total of $27 million was available for this program
  through April 15, 2011.


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                  $49
                            2003                                  $49
                            2004                                  $51
                            2005                                  $51
                            2006                                  $51
                            2007                                  $52
                            2008                                  $52
                            2009                                  $51
                            2010                                  $50
                            2011                                  $22
------------------------------------------------------------------------

    RC&D primarily funded the support of RC&D Coordinators. Given the 
nature of this expense, outlays generally occurred in the year of 
appropriation and obligation. Prior to FY 2009, RC&D funds were no-year 
funds.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Resource Conservation and
 Development      Conservation Planning and           27,693          21,364          21,364          21,364          21,364
       Technical Consultation
      Conservation                        21,495          19,355          19,355          19,355          19,355
       Implementation
      Financial Assistance--                 N/A             N/A             N/A             N/A             N/A
       Program Administration
      Financial Assistance--Cost             N/A             N/A             N/A             N/A             N/A
       Share & Monetary
       Incentive
      Indirect Costs                       1,900          10,011          10,011          10,011          10,011
                                 -------------------------------------------------------------------------------
        Total Costs                       51,088          50,730          50,730          50,730          50,730
        FTEs                                 453             440             412             403             423Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual appropriations; Fiscal Year 2011 is an estimate from
  the Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Eligible entities for the RC&D program are nonprofit entities that 
are established by volunteers or representatives of states, local units 
of government, Indian tribes, or local nonprofit organizations 
specifically to participate in the RC&D program. They apply to the 
Secretary of Agriculture to be designated as a USDA RC&D area. The size 
and configuration of an area must be based on an assessment of rural 
development needs, institutional arrangements, and the natural 
resources of the region. Boundaries of an RC&D area are established on 
a multi-jurisdictional basis to make the most efficient use of area 
plans relating to land conservation, land management, community 
development, and environmental enhancement. Commonality of existing 
needs and opportunities are important aspects relating to the 
geographic boundaries of the area. The Secretary selects designated 
areas for assistance on the basis of the elements of the RC&D Council's 
area plan.
10. Utilization (Participation) Data
    There are 375 RC&D areas serving 2,696 counties in every state, the 
Caribbean, and the Pacific Basin. Designated areas continue to serve 
over 85 percent of U.S. counties and more than 77 percent of the U.S. 
population. There are 39 applicant areas covering 236 additional 
counties that have applied for the designation by USDA.
11. Duplication or Overlap with Other Programs
    The Federal support for the program was not funded under the FY 
2011 Full-Year Continuing Appropriations and agency technical support 
for the program is being closed out. RC&D councils may continue to 
compete to participate in other programs.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Environmental Quality Incentives Program (EQIP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    Agricultural Water Enhancement Program.
    Conservation Innovation Grants (CIG).
    Organics.
    Air Quality Initiative.
3. Brief History
    EQIP was established in the 1996 Farm Bill and was reauthorized in 
the 2002 and 2008 Farm Bills. The Chief of NRCS may implement EQIP in 
any of the 50 states, the District of Columbia, the Commonwealth of 
Puerto Rico, Guam, the Virgin Islands of the United States, American 
Samoa, and the Commonwealth of the Northern Mariana Islands.
4. Purpose/Goals
    NRCS is charged with carrying out EQIP in a manner that optimizes 
environmental benefits and provides:

   Flexible technical and financial assistance to farmers and 
        ranchers that face the most serious threats to soil, water, 
        air, and related natural resources;

   Assistance to farmers and ranchers in complying with 
        Federal, state, and local environmental regulatory 
        requirements;

   Assistance to farmers and ranchers in making beneficial, 
        cost-effective changes to cropping systems, grazing management, 
        manure, nutrient, pest, or irrigation management, land uses, or 
        other measures needed to conserve and improve soil, water, air, 
        and related natural resources; and

   For the consolidation and simplification of conservation 
        planning and implementation to reduce the administration burden 
        on producers.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010:

   NRCS enrolled almost 36,500 agreements on over 13,000,000 
        acres.

   The value of the contracts was over $839 million.

   The average agreement size is 357 acres.

   On average, NRCS agreed to reimburse participants 
        approximately $23,000 for each agreement.
6. Annual Budget Authority (FY 2002-FY 2011)
    EQIP supports CCPI and CIG. These are not appropriated separately 
or tracked separately in the NRCS financial system.

------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                 $200
                            2003                                 $695
                            2004                                 $975
                            2005                               $1,000
                            2006                                 $995
                            2007                                 $996
                            2008                               $1,200
                            2009                               $1,067
                            2010                               $1,180
                            2011                               $1,238
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                 $185
                            2003                                 $626
                            2004                                 $859
                          2005 1                                ^$531
                            2006                                 $771
                            2007                                 $815
                            2008                                 $953
                            2009                                 $943
                            2010                               $1,059
                            2011                               $1,171
------------------------------------------------------------------------
1 Prior to FY 2005, NRCS advanced funding for the EQIP program to FSA.
  In FY 2005 all obligations from FY 2005 and prior and the remaining
  funding to pay those obligations came back to NRCS. The negative
  outlays meant there was additional cash available to pay for the EQIP
  obligations that came back to NRCS.

    EQIP FA funds are obligated the year of contract enrollment for the 
entire multi-year span of the contract. As the years pass, FA for 
contracted practices is not expended until the practices are installed 
and inspected for quality control by NRCS personnel. For this reason, 
FA funds tend to be expended over multiple years after obligation. TA 
funds obligated in a given year are used for workload generated by the 
enrollment of new contracts and workload generated by prior year 
contract implementation. The vast majority of TA funding tends to be 
expended in the year of obligation. FA funding represents the majority 
of program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Enironmental Quality Incentives
 Program      Conservation Planning and           27,928          17,315          19,132          20,429          22,277
       Technical Consultation
      Conservation                       119,171          89,704          99,117         105,837         115,411
       Implementation
      Financial Assistance--              80,152          60,221          66,540          71,051          77,479
       Program Administration
      Indirect Costs                      15,460         101,729         112,404         120,025         130,883
                                 -------------------------------------------------------------------------------
        Sub-total Technical              242,711         268,969         297,193         317,342         346,050
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost         750,140         924,221         757,389         856,697         833,950
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                      992,851       1,193,190       1,054,582       1,174,039       1,180,000
        FTEs                               2,171           2,313           2,395           2,407           2,872Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    To participate in EQIP, both the land and the applicant must be 
eligible. Eligible land includes cropland, rangeland, pastureland, 
private nonindustrial forestland, and other farm or ranch lands. The 
land must have an identified natural resource concern that poses a 
serious threat to soil, water, air, or related resources by reason of 
land use practices, soil type, terrain, climatic conditions, 
topography, flooding, saline characteristics, or other natural resource 
factors or natural hazard. Publicly owned land is eligible when the 
land is under private control for the contract period, and is included 
in the participant's operating unit, and must have written 
authorization from the government agency to apply conservation 
practices. For irrigation-related practices, the land must have a 
history of actively irrigating the land unit for 2 out of the last 5 
years.
    Applicants must be an agricultural producer, have control of the 
land for the life of the contract, be in compliance with farm bill 
provisions (highly erodible land, wetland conservation, protection of 
tenants and sharecroppers), be within appropriate program payment 
limitations and adjusted gross income requirements, and develop an EQIP 
plan of operations.
    Organics--The Organic Initiative is a nationwide special initiative 
within EQIP to provide assistance to organic producers as well as 
producers in the process of transitioning to organic production.
    Air Quality Initiative--The Air Quality Initiative is a nationwide 
special initiative within EQIP to provide assistance to farmers and 
ranchers to reduce air pollution generated from agricultural operations 
in areas designated by the EPA as non-attainment areas for ozone and 
particulate matter.
10. Utilization (Participation) Data
    EQIP Application/Contract Status data includes:

------------------------------------------------------------------------
                    Number of Active      Financial
        FY            or Completed       Assistance       Total Treated
                        Contracts         Obligated           Acres
------------------------------------------------------------------------
          2005              49,406      $792,091,721        18,080,499
          2006              41,190      $784,849,667        21,115,275
          2007              41,700      $781,954,270        17,104,234
          2008              48,116      $943,407,338        16,944,359
          2009              31,960      $731,099,112        12,003,583
          2010              36,499      $838,985,212        13,034,363
                   -----------------------------------------------------
  Total...........         248,871    $4,872,387,320        98,282,313
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    EQIP is one of the program structures through which CBWP is 
delivered. CBWP has more focused priorities by concentrating on water 
quality and quantity and only in the Chesapeake Bay watershed.
    Although similar to EQIP, WHIP has expanded priorities to support 
fish and wildlife.
    Although similar to EQIP in implementation, Agricultural Management 
Assistance (AMA) is limited to 16 statutorily-designated states that 
have low participation in Federal Crop Insurance Programs. There are 
some practices that can be installed through AMA but not EQIP
    Although similar to EQIP, Agricultural Water Enhancement Program 
(AWEP) focuses on ground and surface water conservation and water 
quality, and is a component of EQIP.
    Both EQIP and CRP address natural resource concerns, the land uses 
on which the practices are applied generally are distinct. There could 
be minimal overlap where CRP enrolls windbreaks, shelterbelts and 
shallow water impoundments for wildlife.
12. Waste, Fraud and Abuse
    An audit by the OIG revealed that participant contracts for the 
Migratory Bird Habitat Initiative in one Louisiana Parrish received an 
increased payment rate for the socially disadvantaged designation 
although those participants were not actually in a socially 
disadvantaged group. It was identified by OIG that staff inadvertently 
selected an incorrect payment schedule. It was recommended to adjust 
the agency's business tools so that the socially disadvantaged 
designation indicated by the participant would automatically provide 
the correct payment rate without staff having to manually select 
various payment schedules for each application. For the improper 
payments, the agency provided each participant with the option to 
either return the overpayment amount or to receive a reduction in 
future scheduled payments.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Conservation Innovation Grants (CIG).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    First authorized in the 2002 Farm Bill and reauthorized by each 
subsequent farm bill, CIG is a voluntary program intended to stimulate 
the development and adoption of innovative conservation approaches and 
technologies while leveraging Federal investment in environmental 
enhancement and protection, in conjunction with agricultural 
production. Under CIG, EQIP funds are used to award competitive grants 
to non-Federal governmental or non-governmental organizations, Tribes, 
or individuals.
    CIG enables NRCS to work with other public and private entities to 
accelerate technology transfer and adoption of promising technologies 
and approaches to address some of the nation's most pressing natural 
resource concerns. CIG will benefit agricultural producers by providing 
more options for environmental enhancement and compliance with Federal, 
state, and local regulations.
4. Purpose/Goals
    CIG provides grants on a competitive basis to stimulate the 
development and adoption of innovative conservation approaches and 
technologies while leveraging Federal investment in environmental 
enhancement and protection, in conjunction with agricultural 
production.
    NRCS expects to incorporate innovative technologies and approaches 
which result from CIG into NRCS technical manuals, guides, activities, 
and references, and to transfer these innovations to others in the 
public sector. CIG projects target innovative on-the-ground 
conservation, including pilot projects and field demonstrations.
5. Success in Meeting Programmatic Purpose/Goals
    The following provides examples of CIG project results:

    (a) In 2005, the Washington State University was awarded a CIG 
        grant to implement the project titled ``Development and 
        Integration of a National Feed Management Education Program and 
        Assessment Tools into a Comprehensive Nutrient Management Plan 
        (CNMP)'' in Washington. The intend of the project was to 
        develop a two-tier tool for assessing the impacts of feed 
        management practices on whole farm nutrient balance for animal 
        nutritionists and NRCS staff and TSP advisors; develop the 
        content of a Feed Management chapter for the NRCS Agricultural 
        Waste Management Field Handbook (AWMFH), and develop and 
        implement an education program targeting integration of feed 
        management into a CNMP.

    At the end of the project in 2008, the Washington State University 
        (WSU) developed educational materials that are applicable at 
        the national level and provided training for NRCS staff, 
        agricultural professionals, and technical service providers 
        (TSP's) in feed management concepts and practices that minimize 
        import of nutrients to the farm. WSU provided training in the 
        use of computer models and software for strategic ration 
        balancing, whole farm nutrient balance, and nutrient excretion 
        estimates based upon feed and animal performance inputs, and 
        developed a chapter for the NRCS Agricultural Waste Management 
        Field Handbook (AWMFH) on Feed Management. Education materials 
        were used to assist with the understanding of the conservation 
        practice standard (CPS) code 592 Feed Management, feed 
        management plan development and implementation tools, and a 
        decision aid tool were developed (Feed Nutrient Management 
        Economics software--FNMP$).

    Workshops have been conducted in the States of Washington, 
        California, Texas, Maryland, Nebraska, Pennsylvania, and 
        Wisconsin. Collaborating states with these trainings included: 
        Idaho, Oregon, Virginia, Indiana, Iowa, and Minnesota. In 
        addition, the national CNMP training program led by Iowa State 
        has incorporated our Feed Management project material into 
        their curriculum. Approximately 70 individuals have become 
        certified through the American Registry of Professional Animal 
        Scientists organization to be feed management planners.

    While the funding for this project has ended, the interest and 
        implementation activities are continuing. The project team is 
        available to work with individual states with adoption of CPS 
        592 Feed Management. In addition, the American Registry of 
        Professional Animal Scientists continues to provide the exam 
        process for certifying that a nutritionist is qualified to 
        develop a nutrient management plan.

    The Feed Management chapter for the AWMFH was completed by 
        September 2008. In addition, NRCS is converting a decision aid 
        tool called Feed Management Nutrient Planning Economics (FNMP$) 
        from Excel to an Access data base format. Efforts to provide 
        training for nutritionists and TSPs will continue.

    (b) The World Wildlife Fund, Inc. (WWF), received a CIG grant in 
        2005 for a project titled ``Market-Based Program for 
        Environmental Services on South Florida Ranch Lands.'' The main 
        goal of the project was to engage ranchers, public agencies, 
        and public interest groups to design, establish, and install a 
        market-based incentive program for phosphorous reduction in the 
        Lake Okeechobee (Northern Everglades) region; monitored and 
        evaluate the environmental benefits (Phosphorous load 
        reduction) achieved by the water management alternatives 
        installed by the livestock producer participants; and design a 
        scaled-up version of the pilot incentive program for use on a 
        broader scale and communicated results of the field tests 
        through field days, journal articles, workshops, and 
        conferences.

    When the project was completed in 2006, eight (8) ranching 
        operations located within the Northern Everglades--Lake 
        Okeechobee region in south Florida were contracted by WWF to 
        developed Water Management Alternatives (WMA's) on formerly 
        drained wetlands that had been converted to pasturelands in an 
        effort to retain surface waters and nutrients. Each rancher had 
        different circumstances for which to implement practices and to 
        demonstrate surface water retention/water quality benefits. 
        Sizes of the rancher WMA's ranged from very small in-pasture 
        systems of 49 acres to two large systems involving 3,748 and 
        2,500 acres respectively. The average size of the eight WMA 
        project areas was 1,092 acres.

    This CIG project has successfully established a foundation for a 
        Payment for Environmental Services (PES) program that is 
        locally accepted among livestock producers, and local, state 
        and Federal agencies. The eight pilot projects WMA's 
        demonstrated an average of 3 metric tons of phosphorous 
        retained on-site from 0.5-2.24 acre-feet of water retained 
        within their CIG project areas. As a result of this CIG 
        project, the first effective PES program was generated on a 
        large regional scale to benefit a globally recognized imperiled 
        ecosystem, the Everglades, and will do so by maintaining 
        agriculture as part of the solution. The CIG PES Program 
        offered a previously unrecognized environmental benefit from 
        the installation of conservation practices for farm bill 
        participants located within the Northern Everglades--Lake 
        Okeechobee region.

    The project titled ``Wisconsin's Dairy and Livestock Air Emission/
        Odor Project'' from Wisconsin Department of Agriculture, Trade, 
        and Consumer Protection (ATCP) was funded in 2005 to implement 
        best management practices to establish the connection between 
        agricultural ambient air concentrations and odor and evaluate 
        various best management practices installed on dairy and other 
        livestock operations to reduce odor, ambient air 
        concentrations, and overall environmental impacts; and to test 
        the odor standards developed as part of the administrative rule 
        to implement Wisconsin's Livestock Siting Law.

    Wisconsin Department of Agriculture developed and implemented a 
        plan to evaluate the odor standards in ATCP 51 LIVESTOCK 
        FACILITY SITING, Wisconsin Administrative Code through odor 
        measurements and the relationship with measured ambient air 
        concentrations on six to eight dairy/livestock farms. 
        Evaluation installation of a manure digester to produce methane 
        for production of electricity was completed. An evaluation of 
        post implementation impacts on ambient air concentrations, 
        odors, and water quality was conducted. And results were 
        communicated through the Wisconsin Agricultural Stewardship 
        Initiative (WASI).

    This project provided actual air sampling data associated with the 
        implementation of practices on dairies in the Midwest U.S. This 
        data verified that impermeable covers are extremely effective 
        at controlling odors and permeable covers are considerably 
        effective at controlling odors. This data also emphasized the 
        importance of proper design and operation (proper retention 
        time, operational reliability, and addition of substrate 
        material) for anaerobic digesters and that storage lagoons 
        receiving digested manure may require additional management for 
        odors and ammonia. Solids separation with aeration does appear 
        to reduce odors (about 25 percent) and hydrogen sulfide, but 
        may increase ammonia emissions. Overall, the project provided 
        some much-needed data regarding the effectiveness of certain 
        odor control practices. Although the data set is somewhat 
        limited, it does provide some trends and identification of 
        areas for further study.

    (c) In 2005, the Chesapeake Bay Foundation received a CIG grant for 
        a project titled ``Precision Dairy Feeding to Reduce Nutrient 
        Pollution in Pennsylvania's Waters and the Chesapeake Bay'' to 
        demonstrate to dairy producers that precision feeding of dairy 
        cows could facilitate reductions in the protein (nitrogen) and 
        phosphorus being fed to dairy animals while maintaining or even 
        improving milk production and possibly improving animal health.

    A total of 66 diverse farms were enrolled in the precision dairy 
        feeding program and received technical assistance from the 
        University of Pennsylvania. Forage, feed, and feces samples 
        were collected quarterly from these farms and analyzed to 
        adjust their rations to more precisely meet the nutrient needs 
        of the dairy herds. An additional 33 farms had their forage, 
        feed, and feces sampled and received technical assistance 
        through nutritionists and veterinarians who were trained to 
        precisely balance dairy rations by the University of 
        Pennsylvania. Dairy producers with their nutritionists 
        regularly adjusted rations to maintain and improve production 
        while minimizing manure nutrients.

    Based on the finding from these feeding trials, the Pennsylvania 
        State University Cooperative Extension developed the ``Dairy 
        Tool'' to help farmers identify the greatest opportunities to 
        improve profitability on their farms. Feed management is an 
        essential component of this assessment. In addition, several 
        publications related to feed management were prepared by the 
        project participants in August 2008. Further the findings from 
        the CIG project were presented at various conferences through 
        display of posters and booths. Also, the Chesapeake Bay 
        Foundation created and distributed a brochure entitled ``Feed 
        Efficiency: Improving Dairy Production while Cutting Feed 
        Costs'' to introduce precision to 13,000 dairy producers who 
        were not participants in the program. Further several workshops 
        and training sessions were conducted in Pennsylvania to present 
        the findings and benefits of precision dairy feeding to dairy 
        farmers throughout Pennsylvania.

    Widespread application of the ``precision dairy feeding'' 
        techniques that were demonstrated and analyzed in this project 
        could be most valuable to NRCS in achievement of lower 
        phosphorus and nitrogen loading rates to receiving streams and 
        water bodies. This could make an especially beneficial 
        contribution to improved water quality in many watersheds with 
        high concentrations of dairy animals. Further this feeding 
        technology could aid development acceptable alternatives in 
        development of CNMP's. In addition, improvements in animal 
        health through precision dairy feeding would contribute towards 
        addressing health issues related to the animal resource.

    The findings through this project relating to the evaluation and 
        promotion of ``precision dairy feeding'' could the s 
        significant value to NRCS in assisting dairy producers with the 
        development and implementation of resource management systems 
        and the achievement of water quality pollutant loading limits.
6. Annual Budget Authority (FY 2002-FY 2011)
    CIG is not appropriated as a separate program. CIG is an initiative 
within the Environmental Quality Incentives Program and is reported in 
the immediately preceding Questionnaire.
7. Annual Outlays (FY 2002-FY 2011)
    CIG is a sub-program of EQIP. Budget Authority and Outlays for CIG 
are reported as part of EQIP. Since 2004, $125.9 million has been 
awarded to CIG grant recipients.
8. Annual Delivery Cost (FY 2007-FY 2011)
    CIG is not appropriated separately. It is a subprogram of the EQIP. 
The program delivery costs for CIG are included in the total EQIP 
delivery cost and are reflected in the EQIP table.
9. Eligibility Criteria
    CIG is available to all eligible applicants in the 50 states, 
Caribbean Area (Puerto Rico and the Virgin Islands), and the Pacific 
Islands Area (Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands).

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
           FY             Number of Applications     Number of Grants
------------------------------------------------------------------------
             2004                      148                       40
             2005                      175                       54
             2006                      199                       63
             2007                      194                       50
             2008                      260                       56
             2009                      391                       52
             2010                      388                       58
             2011                      411                      TBD
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    There is no duplication or overlapping with USDA conservation 
programs. Because the purposes and functions of CIG are unique, CIG 
payments do not overlap with other USDA conservation payments.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Agricultural Water Enhancement Program (AWEP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    AWEP was authorized by the 2008 Farm Bill as a CCC-funded program 
within EQIP. The Chief of NRCS may enter into AWEP partnership 
agreements with eligible partners who compete through the Request for 
Proposals process in any of the 50 states, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, and the Commonwealth of the Northern Mariana 
Islands.
4. Purpose/Goals
    The purpose of the AWEP is to promote ground and surface water 
conservation and water quality by helping producers implement 
agricultural water enhancement activities. NRCS is charged with 
carrying out AWEP in a manner that optimizes environmental benefits and 
encourages the following activities with respect to agricultural land:

   Development of a water quality or water conservation plan, 
        including resource condition assessment and modeling;

   Water conservation restoration or enhancement projects, 
        including conversion of dryland farming or to producing 
        commodities that are less water intensive;

   Water quality or quantity restoration or enhancement 
        projects;

   Irrigation system improvement and irrigation efficiency 
        enhancement;

   Activities designed to mitigate the effects of drought; and

   Related activities that the Secretary of Agriculture 
        determines will help achieve water quality or water 
        conservation benefits on agricultural land.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010, NRCS obligated approximately $60.8 million in 1,489 new 
contracts to implement conservation practices on nearly 271 thousand 
acres of agricultural lands. Partners provided approximately $50.5 
million in technical and financial assistance. Through AWEP, the agency 
approved 28 new partner project areas during FY 2010, and continued to 
provide support for 63 projects approved during FY 2009.
    Approximately 54 percent of the projects approved in FY 2010 are 
located in the designated high-priority water quantity concern areas. 
Socially disadvantaged producers received 2.8 percent of all contracts 
under the program.
    For FY 2011 eight new projects in seven states were approved for a 
total of $4.7 million. Producer enrollment currently underway for FY 
2011 projects.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   $0
                            2003                                   $0
                            2004                                   $0
                            2005                                   $0
                            2006                                   $0
                            2007                                   $0
                            2008                                   $0
                            2009                                  $73
                            2010                                  $73
                            2011                                  $74
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   $0
                            2003                                   $0
                            2004                                   $0
                            2005                                   $0
                            2006                                   $0
                            2007                                   $0
                            2008                                   $0
                            2009                                   $7
                            2010                                  $48
                            2011                                  $70
------------------------------------------------------------------------

    AWEP FA funds are obligated the year of contract enrollment for the 
entire multi-year span of the contract. As the years pass, FA for 
contracted practices is not expended until the practices are installed 
and inspected for quality control by NRCS personnel. For this reason, 
FA funds tend to outlay for multiple years after obligation. TA funds 
obligated in a given year are used for workload generated by the 
enrollment of new contracts and workload generated by prior year 
contract implementation. The vast majority of TA funding tends to 
outlay in the year of obligation. FA funding represents the majority of 
program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Agricultural Water Enhancement
 Program      Conservation Planning and               --              --           1,264           1,257           3,757
       Technical Consultation
      Conservation                            --              --           4,390           4,367          13,052
       Implementation
      Financial Assistance--                  --              --           3,091           3,075           9,190
       Program Administration
      Indirect Costs                          --              --           2,661           2,648           7,914
                                 -------------------------------------------------------------------------------
        Sub-total Technical                   --              --          11,406          11,347          33,913
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost              --              --          60,397          60,813          40,087
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                           --              --          71,803          72,160          74,000
        FTEs                                  --              --              66              65             223Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2009 and 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Eligible partners include: Federally recognized Indian Tribes, 
states, units of local government, agricultural or silvicultural 
associations or other groups of such producers such as an irrigation 
association an agricultural land trust, or other nongovernmental 
organizations with experience working with agricultural producers.
    The Managers' Report to the 2008 Farm Bill provides direction for 
the Secretary to give priority to producers in six priority areas: The 
Eastern Snake Plain Aquifer region, Puget Sound, the Ogallala Aquifer, 
the Sacramento River watershed, Upper Mississippi River Basin, the Red 
River of the North Basin, and the Everglades.
10. Utilization (Participation) Data
    Approximately 46 percent of valid applications were funded during 
FY 2010. Funding the remaining 54 percent of valid applications would 
require an additional $70.4 million. For FY 2011, requirements for 
continued funding of previous-year projects will significantly impact 
the number of new projects awarded and increase the percentage of 
unfunded applications. This condition is expected to continue to impact 
the number of new applications funded in future years.
    AWEP Application/Contract Status data includes:

------------------------------------------------------------------------
                        Active or         Financial
        FY              Completed        Assistance        Total Acres
                        Contracts         Obligated
------------------------------------------------------------------------
          2009               1,704       $60,385,278           488,380
          2010               1,489       $60,813,288           270,667
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    The Agricultural Management Assistance (AMA) also focuses on ground 
and surface water conservation and water quality. Although similar to 
AMA in implementation, AWEP is available nationwide. There are some 
practices that can be installed through AMA but not AWEP.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Cooperative Conservation Partnership Initiative (CCPI).
    Prepared by USDA's Natural Resources Conservation Service.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 2707 of the 2008 Farm Bill authorized the CCPI as a CCC-
funded program. The Chief of NRCS may enter into CCPI partnership 
agreements with eligible partners who compete through the Request for 
Proposals process in any of the 50 states, the District of Columbia, 
the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, and the Commonwealth of the Northern Mariana 
Islands.
4. Purpose/Goals
    The purposes of the CCPI are to:

   Address conservation priorities involving agriculture and 
        nonindustrial private forestland on a local, state, multi-
        state, or regional level;

   Encourage producers to cooperate in meeting applicable 
        Federal, state, and local regulatory requirements related to 
        production involving agriculture and nonindustrial private 
        forestland;

   Encourage producers to cooperate in the installation and 
        maintenance of conservation practices that affect multiple 
        agricultural or nonindustrial private forest operations; or

   Promote the development and demonstration of innovative 
        conservation practices and delivery methods, including those 
        for specialty crop and organic production and precision 
        agriculture producers.

    NRCS may make EQIP, Wildlife Habitat Incentive Program (WHIP), and 
Stewardship program resources available to owners and operators of 
agricultural and nonindustrial private forestlands who are located in 
an approved CCPI project area.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010, NRCS obligated approximately $42.3 million in 279 new 
contracts to implement conservation practices on nearly 1.2 million 
acres of agricultural lands. Through CCPI, the agency approved 51 new 
partner project areas during FY 2010, and continued to provide support 
for 110 projects approved during FY 2009.
    For FY 2011 51 new projects were approved for a total of $20 
million. Producer enrollment currently underway for FY 2011 projects.
6. Annual Budget Authority (FY 2002-FY 2011)
    CCPI is not appropriated as a separate program. CCPI is a provision 
for delivering up to six percent of the resources within the WHIP, 
EQIP, and Stewardship.
7. Annual Outlays (FY 2002-FY 2011)
    CCPI is not appropriated as a separate program. CCPI is an 
initiative within WHIP, EQIP, and Stewardship resources.
8. Annual Delivery Cost (FY 2007-FY 2011)
    CCPI is not appropriated separately. It is a provision through 
which several existing programs may be delivered, including the 
Environmental Quality Incentives Program, Conservation Stewardship 
Program, and Wildlife Habitat Incentive Program. The program delivery 
costs for CCPI are included in the delivery costs for EQIP, 
Stewardship, and WHIP and are reflected in the tables for those 
programs.
9. Eligibility Criteria
    Eligible partners include: Federally recognized Indian Tribes, 
states, units of local government, agricultural or silvicultural 
associations or other groups of such producers such as an irrigation 
association an agricultural land trust, or other nongovernmental 
organization with experience working with agricultural producers.
10. Utilization (Participation) Data
    Approximately 42 percent of valid applications were funded during 
FY 2010. Prior year project were funded to approximately 90 percent of 
the original request.
    2010 CCPI--EQIP Application/Contract Status data includes:

------------------------------------------------------------------------
                    Number of Active      Financial
                      and Completed      Assistance       Total Treated
                        Contracts         Obligated           Acres
------------------------------------------------------------------------
         Total               1,188       $23,234,738         1,080,901
------------------------------------------------------------------------

    2010 CCPI-WHIP Application/Contract Status data includes:

------------------------------------------------------------------------
                    Number of Active      Financial
                      and Completed      Assistance       Total Treated
                        Contracts         Obligated           Acres
------------------------------------------------------------------------
         Total                 106          $654,375            12,549
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    CCPI is a provision that is delivered through existing programs, 
including EQIP, Conservation Stewardship Program, and WHIP. CCPI is a 
way for partners to identify target areas where program funds will be 
spent.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Wildlife Habitat Incentive Program (WHIP).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    WHIP was first authorized in the 1996 Farm Bill and was 
reauthorized in the 2002 and 2008 Farm Bills. The Chief of NRCS may 
implement WHIP in any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, and the Commonwealth of the Northern Mariana 
Islands.
4. Purpose/Goals
    The purpose of WHIP is to help participants develop fish and 
wildlife habitat on private agricultural land, nonindustrial private 
forestland, and Indian land.
    In order to provide direction to the state and local levels for 
implementing WHIP and achieving its objective, NRCS has established the 
following national priorities:

    (i) Promote the restoration of declining or important native fish 
        and wildlife habitats.

    (ii) Protect, restore, develop, or enhance fish and wildlife 
        habitat to benefit at-risk species.

    (iii) Reduce the impacts of invasive species on fish and wildlife 
        habitats.

    (iv) Protect, restore, develop, or enhance declining or important 
        aquatic wildlife species' habitats.

    (v) Protect, restore, develop, or enhance important migration and 
        other movement corridors for wildlife.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010

   NRCS enrolled over 4,700 agreements on over 1,000,000 acres.

   The value of the contracts was almost $63 million.

   The average agreement size is 223 acres.

   There were 68 contracts valued at over $3.7 million with 
        American Indian and Alaska Native Lands.

   On average, NRCS agreed to reimburse participants 
        approximately $13,000 for each long-term agreement.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                  $15
                            2003                                  $30
                            2004                                  $42
                            2005                                  $47
                            2006                                  $43
                            2007                                  $43
                            2008                                  $85
                            2009                                  $85
                            2010                                  $85
                            2011                                  $85
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   $2
                            2003                                   $9
                            2004                                  $14
                            2005                                  $21
                            2006                                  $27
                            2007                                  $31
                            2008                                  $44
                            2009                                  $53
                            2010                                  $58
                            2011                                  $63
------------------------------------------------------------------------

    Please explain changes between budget authority and outlays:
    WHIP FA funds are obligated the year of contract enrollment for the 
entire multi-year span of the contract. As the years pass, FA for 
contracted practices is not expended until the practices are installed 
and inspected for quality control by NRCS personnel. For this reason, 
FA funds tend to outlay for multiple years after obligation. TA funds 
obligated in a given year are used for workload generated by the 
enrollment of new contracts and workload generated by prior year 
contract implementation. The vast majority of TA funding tends to 
outlay in the year of obligation. FA funding represents the majority of 
program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Wildlife Habitat Incentives
 Program      Conservation Planning and            1,310           3,554           2,770           2,733           2,769
       Technical Consultation
      Conservation                         3,410           7,563           5,895           5,817           5,893
       Implementation
      Financial Assistance--               3,688           9,086           7,083           6,989           7,080
       Program Administration
      Indirect Costs                       1,919           6,220           4,849           4,785           4,846
                                 -------------------------------------------------------------------------------
        Sub-total Technical               10,327          26,423          20,597          20,324          20,588
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost          32,131          57,080          52,146          62,602          64,412
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                       42,458          83,503          72,743          82,926          85,000
        FTEs                                  77             150             128             126             150Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    To be eligible for WHIP, the land must be:

   Private agricultural land including cropland, grassland, 
        rangeland, pasture, and other land determined by NRCS to be 
        suitable for fish and wildlife habitat development.

   Nonindustrial private forestland including rural land that 
        has existing tree cover or is suitable for growing trees.

   Indian land.

     An exception may be made by the Chief in the case of 
            land allotted by the Bureau of Indian Affairs or Indian 
            land where there is sufficient assurance of control.

    Applicants are subject to adjusted gross income provisions and must 
provide NRCS with written evidence of ownership or legal control of the 
land.
    WHIP plays an important role in implementing a number of NRCS 
special initiatives.

   Longleaf Pine Initiative. In Alabama, Florida, Georgia, 
        Louisiana, Mississippi, North Carolina, South Carolina, Texas, 
        and Virginia, WHIP improved the health and extent of the 
        longleaf pine forest ecosystem in ways that benefited both the 
        health of the plant community and wildlife habitat. During FY 
        2010, NRCS enrolled over 33,000 acres of longleaf pine forest 
        in almost 400 contracts valued at nearly $4.65 million.

   Lesser Prairie Chicken Initiative. WHIP enrolled land in 
        Colorado, Kansas, New Mexico, Oklahoma, and Texas to keep this 
        candidate species from being listed as threatened and 
        endangered under the Endangered Species Act, while also 
        improving grazing and wildlife habitat. During FY 2010, NRCS 
        enrolled over 98,000 acres in these states in 138 WHIP 
        contracts valued at more than $3.8 million.

   New England-New York Forestry Initiative. WHIP expanded 
        stewardship opportunities for forestlands and wildlife in the 
        New England States of Connecticut, Maine, Massachusetts, New 
        Hampshire, New York, Rhode Island, and Vermont. During FY 2010, 
        NRCS enrolled over 48,500 acres in these states in more than 
        300 WHIP contracts valued at more than $4.6 million.

   Sage-Grouse Initiative. In 11 states (California, Colorado, 
        Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, 
        Utah, Washington, and Wyoming) WHIP implemented conservation 
        practices that will reduce threats to sage-grouse habitat; 
        these practices are designed both to keep this candidate 
        species from being listed as threatened and endangered and to 
        provide grazing land for ranches. During FY 2010, NRCS enrolled 
        almost 90,000 acres in these states in 37 WHIP contracts valued 
        at more than $3.8 million.
10. Utilization (Participation) Data
    Approximately 56 percent of valid applications were funded during 
Fiscal Year 2010. Funding the remaining 44 percent would require an 
additional $44 million.
    WHIP Application/Contract Status data includes:

------------------------------------------------------------------------
                    Number of Active      Financial
        FY            and Completed      Assistance       Treated Acres
                        Contracts         Obligated
------------------------------------------------------------------------
          2005               3,333       $33,246,702           454,091
          2006               2,717       $31,464,158           324,954
          2007               2,107       $31,494,465           357,699
          2008               3,495       $57,221,029           646,491
          2009               3,706       $51,998,722           812,497
          2010               4,731       $62,862,480         1,054,095
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    WHIP provides for developing, restoring, and enhancing wildlife 
habitats which can also be done under EQIP. EQIP has one national 
priority in regard to at-risk species habitat conservation as does 
WHIP. However, WHIP has four additional priorities for fish and 
wildlife.
    EQIP is agriculturally support based while WHIP is fish and 
wildlife habitat support based. EQIP requires lands to be in production 
agriculture to be eligible. Lands can be in agriculture or have the 
potential to be in agriculture to be eligible for WHIP. Public lands 
connected with eligible lands are eligible for EQIP but not for WHIP.
    CRP enrolls land to create wildlife habitat. All of the lands 
eligible for CRP could be enrolled in WHIP if they fall within the WHIP 
priority areas but not all lands eligible for WHIP could be enrolled in 
CRP.
12. Waste, Fraud and Abuse
    An audit by the Office of Inspector General (OIG) revealed that 
participant WHIP contracts for the Migratory Bird Habitat Initiative in 
one Louisiana Parrish received an increased payment rate for the 
socially disadvantaged designation although those participants were not 
actually in a socially disadvantaged group. It was identified by OIG 
that staff inadvertently selected an incorrect payment schedule. It was 
recommended to adjust the agency's business tools so that the socially 
disadvantaged designation indicated by the participant would 
automatically provide the correct payment rate without staff having to 
manually select various payment schedules for each application. For the 
improper payments, the agency provided each participant with the option 
to either return the overpayment amount or to receive a reduction in 
future scheduled payments.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Agricultural Management Assistance (AMA).
    Prepared by USDA's NRCS.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    AMA was originally authorized under the Agricultural Risk 
Protection Act of 2000, Title I, Section 133, Public Law 106-224, on 
June 22, 2000. This title was amended by the 2002 Farm Bill and the 
2008 Farm Bill.
    AMA is available in 16 states where participation in the Federal 
Crop Insurance Program is historically low: Connecticut, Delaware, 
Hawaii, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New 
Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont, West 
Virginia, and Wyoming.
4. Purpose/Goals
    AMA provides financial assistance payments to agricultural 
producers to voluntarily address issues such as water management, water 
quality, and erosion control by incorporating conservation practices 
into their farming operations. The Agricultural Marketing Service (AMS) 
is responsible for using AMA funding for organic certification 
assistance, and the Risk Management Agency (RMA) is responsible for 
using AMA funds for mitigation of financial risks through assisting 
producers to purchase risk insurance. Funding is authorized at $15 
million for FY 2008-2012 and of the funding made available each fiscal 
year, not less than 50 percent is to be provided to NRCS, 40 percent to 
RMA, and 10 percent to AMS.
5. Success in Meeting Programmatic Purpose/Goals
    AMA currently has over 660 contracts in implementation and a 
continuing backlog of applications that indicates strong support among 
producers for the program. At the end of FY 2010, AMA had a backlog of 
767 applications, with an estimated contract value of $5.1 million, 
covering over 9,500 acres.
    AMA provides many producers a first-time opportunity to address 
natural resource concerns on their lands. For instance, many producers 
have not been able to participate in EQIP because they do not meet the 
eligibility criterion that land must have been irrigated for 2 of the 
previous 5 years to receive EQIP funding. A number of these EQIP-
ineligible producers are small-acreage or specialty-crop farming 
operations that provide high dollar value products to the general 
public. By helping to mitigate the risks associated with these kinds of 
agricultural enterprises, AMA helps agriculture remain a valuable 
segment of local economies.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                      Apportionment ($ in millions)
------------------------------------------------------------------------
                            2002                                   $0
                            2003                                   $0
                            2004                                  $14
                            2005                                  $14
                            2006                                   $5
                            2007                                   $5
                            2008                                   $8
                            2009                                   $8
                            2010                                   $8
                            2011                                   $8
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                            2002                                   $0
                            2003                                   $0
                            2004                                   $2
                            2005                                   $7
                            2006                                   $6
                            2007                                   $7
                            2008                                   $5
                            2009                                   $5
                            2010                                   $6
                            2011                                   $6
------------------------------------------------------------------------

    AMA FA funds are obligated the year of contract enrollment for the 
entire multi-year span of the contract. As the years pass, FA for 
contracted practices is not expended until the practices are installed 
and inspected for quality control by NRCS personnel. For this reason, 
FA funds tend to outlay for multiple years after obligation. TA funds 
obligated in a given year are used for workload generated by the 
enrollment of new contracts and workload generated by prior year 
contract implementation. The vast majority of TA funding tends to 
outlay in the year of obligation. FA funding represents the majority of 
program budget authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:


                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011Agricultural Management
 Assistance      Conservation Planning and              458             147             150             147             212
       Technical Consultation
      Conservation                         2,386             457             465             457             659
       Implementation
      Financial Assistance--                 940             433             441             433             624
       Program Administration
      Indirect Costs                         775             457             141             165             238
                                 -------------------------------------------------------------------------------
        Sub-total Technical                4,559           1,494           1,197           1,202           1,733
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost              --           5,756           6,181           6,048           5,767
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                        4,559           7,250           7,378           7,250           7,500
        FTEs                                  27               9               9              12              33Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual obligations; Fiscal Year 2011 is an estimate from the
  Fiscal Year 2012 President's Budget submission.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Applicants must own or control the land within an identified AMA 
state and comply with adjusted gross income limitation provisions. 
Eligible land includes cropland, rangeland, grassland, pastureland, 
nonindustrial forestland, and other private land that produces crops or 
livestock where risk may be mitigated through operation diversification 
or change in resource conservation practices.
10. Utilization (Participation) Data
    Approximately 36 percent of valid applications were funded during 
FY 2010. Funding the additional remaining 64 percent of valid 
applications would require an additional $5.1 million. The FY 2010 
funded applications covered over 11,000 acres.
    AMA Application/Contract Status data includes:

------------------------------------------------------------------------
                    Number of Active      Financial
    Fiscal Year       and Completed      Assistance       Treated Acres
                        Contracts         Obligated
------------------------------------------------------------------------
          2005                 766        $9,578,046            74,255
          2006                 275        $3,718,549            13,328
          2007                   0                $0                 0
          2008                 276        $5,756,087            33,202
          2009                 214        $6,179,956            13,875
          2010                 426        $6,048,438            11,102
                   -----------------------------------------------------
  Total...........           1,957       $30,942,815           145,762
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    The priorities of AMA are the same as for EQIP. There are some 
practices that can be implemented under AMA that cannot be under EQIP.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.


                       AGRICULTURAL PROGRAM AUDIT

                (EXAMINATION OF SPECIALTY CROP PROGRAMS)

                              ----------                              


                         THURSDAY, JULY 7, 2011

Subcommittee on Nutrition and Horticulture,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:52 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Jean 
Schmidt [Chairwoman of the Subcommittee] presiding.
    Members present: Representatives Schmidt, Southerland, 
Crawford, Baca, Pingree, and Costa.
    Staff present: Patricia Barr, John Goldberg, Pam Miller, 
Mary Nowak, Matt Perin, Debbie Smith, Keith Jones, John Konya, 
and Jamie Mitchell.

  OPENING STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN 
                       CONGRESS FROM OHIO

    The Chairwoman. I would like to thank our witnesses. I am 
sorry for the delay, but at least we got the first set of votes 
out of the way.
    First off, I just want to say thank you to everybody for 
your patience, and especially to our witnesses for the USDA's 
Agricultural Marketing Service, and to the Animal and Plant 
Health Inspection Service, or APHIS, for joining us. I look 
forward to your insight and to your testimony. I also want to 
thank my good friend, Ranking Member Joe Baca, who got an 
exciting gift from a friend of his today. He actually bought 
the baseball, but--can I brag for you? Well, Hank Aaron signed 
his baseball. Is that like the coolest thing in the world? 
Sorry I had to steal your thunder, but I just am really 
impressed. So obviously, this is a big day for Mr. Baca. But, 
thank you for joining me in this hearing, it is well known that 
a certain degree of bipartisanship exists in this Committee. It 
is one of the best committees to actually be on because we 
fight about regional issues, not about Republican versus 
Democratic. I am really glad that he is my friend throughout 
this whole process.
    As we approach the next farm bill, I look forward to 
hearing from the farming community, the producers, the 
handlers, everyone from around the country. And as Chairman 
Lucas said and has continued to say, that there has to be a 
firm understanding of the programs within the framework of the 
farm bill, because as he has said, everything is on the table. 
So I look forward to hearing from APHIS and AMS with a general 
snapshot of the spending of each program that they administer.
    I just want to say to Ms. Pegg, I understand you are 
leaving, so I won't bother you with any leafy green issues 
today. But we will be looking at your testimony and asking 
questions. We will study the financial aspects of these 
programs and consider whether or not the program's goals are 
being met, and whether the programs are financially prudent. We 
will join the other Subcommittees in looking for instances of 
program overlap, as well as examples of waste, fraud, and 
abuse.
    An additional benefit to examining programs and their 
operation is the education that members will receive. Many of 
us do not have firsthand knowledge of how each program is 
administered on a daily basis. I appreciate the opportunity to 
learn what you all do, and I am excited to hear your testimony.
    It is our hope that this process of evaluation and 
education will give Members a clear picture of the farm bill as 
a whole and see how well programs are being administered before 
engaging in policy discussions before the next farm bill. 
Today's audit hearing is focused specifically on specialty crop 
programs found in Title X of the farm bill, as well as the 
administration of Section 32 of the Act of August 24, 1935. 
While many programs that affect the specialty crop industry are 
found throughout the farm bill, we will do our best to stay 
focused on Title X.
    USDA's Agricultural Marketing Service and APHIS are the 
agencies charged with administering most of the Title X 
programs. AMS also administers a series of grant programs, 
including the Specialty Crop Block Grant Program, which is 
designed to enhance the competitiveness of fruits and 
vegetables, tree nuts, dry fruits, horticulture, floriculture, 
and nursery crops. These grants are widely used throughout the 
states in a variety of ways. I know many in Ohio are 
beneficiaries of and like the flexibility that Specialty Crop 
Block Grant Program provide.
    Creating technical assistance programs throughout the Ohio 
Produce Marketing Agreement has been helpful and beneficial. 
Last July, a grower from a neighboring district appeared before 
our Subcommittee. In his testimony, he stated ``In states like 
Ohio, we do not have existing support programs and systems of 
technical assistance similar to what other states enjoy. The 
Specialty Crop Block Grant Program is one of the few tools we 
have to support our growers and better realize our specialty 
crop opportunities.'' Further, AMS administers research and 
promotion programs, as well as marketing orders and agreements 
to help stabilize markets for specific commodities. One 
marketing agreement that has received a considerable amount of 
attention is the National Leafy Green Marketing Agreement that 
AMS is considering, and that is currently open for public 
comment. I look forward to learning how AMS is administering 
Section 32 funds which have supported agricultural commodities 
like fruits, vegetables, and meats, which are not typically 
covered by mandatory price supports. AMS has the responsibility 
of administering a wide range of programs, including the 
National Organic Program, which oversees the labeling of 
products as organic.
    In addition to AMS testifying, APHIS will detail their 
responsibilities in administering the pest and disease 
programs, including the National Clean Plant Network, which 
propagates pest and disease-free nursery stocks for the 
industry. As we approach the next farm bill, it is imperative 
that we hear directly from the Department so we can fully 
understand from your firsthand experience what is working and 
what is not working. Some of the decisions on program 
authorizations and funding levels will be difficult, but with 
proper evaluation, I am confident that we can put together a 
farm bill that meets the goals of food safety and security, 
rural prosperity, and nutritional well-being.
    Again, I look forward to the panel, and to the witnesses 
from the Department and for Ms. Bech and Ms. Pegg for joining 
us today.
    [The prepared statement of Mrs. Schmidt follows:]

 Prepared Statement of Hon. Jean Schmidt, a Representative in Congress 
                               from Ohio
    Thank you all for coming to this hearing to review specialty crop 
programs to help us prepare for the next farm bill. I thank our 
witnesses from USDA's Agricultural Marketing Service and Animal and 
Plant Health Inspection Service for joining us today. I look forward to 
hearing your insightful testimony.
    I also want to thank my friend, Ranking Member Baca, for joining me 
in holding this hearing today. It is well known that a certain degree 
of comity or bipartisanship exists here on the Agriculture Committee 
and I look forward to working with my friend as we go through this farm 
bill process.
    As we approach the next farm bill, I look forward to hearing from 
producers and handlers from around the country. But before we begin 
that process, I agree with Chairman Lucas that Members need to have a 
firm understanding of the programs within the framework of the farm 
bill.
    I look forward to hearing from APHIS and AMS with a general 
snapshot of the spending of each program that they administer. We will 
study the financial aspects of these programs and consider whether or 
not the programs' goals are being met and whether the programs are 
financially prudent.
    We will join the other Subcommittees in looking for instances of 
program overlap as well as examples of waste, fraud, and abuse.
    An additional benefit to examining programs and their operation is 
the education that Members will receive. Many of us, do not have 
firsthand knowledge of how each program is administered on a daily 
basis. I appreciate the opportunity to learn as much about individual 
programs before the farm bill hearings begin.
    It is our hope that this process of evaluation and education will 
give Members a clear picture of the farm bill as a whole and see how 
well programs are being administered before engaging in policy 
discussions before the next farm bill.
    Today's audit hearing is focused specifically on specialty crop 
programs found in Title X of the farm bill as well as the 
administration of Section 32 of the Act of August 24,1935. While many 
programs that affect the specialty crop industry are found throughout 
the farm bill, we will do our best to stay focused on those in Title X.
    USDA's Agricultural Marketing Service (AMS) and Animal and Plant 
Health Inspection Service are the agencies charged with administering 
most of the Title X programs.
    AMS also administers a series of grant programs including the 
Specialty Crop Block Grant Program which is designed to enhance the 
competitiveness of fruits and vegetables, tree nuts, dried fruits, 
horticulture, floriculture and nursery crops. These grants are widely 
used throughout the states in a variety of ways.
    I know many of my Ohio constituents like the flexibility that the 
Specialty Crop Block Grant Program provides producers, creating 
technical assistance programs through the Ohio Produce Marketing 
Agreement. Last July, a grower from near my district appeared before 
our Subcommittee. In his testimony, he stated ``In states like Ohio, we 
do not have existing support programs and systems of technical 
assistance similar to what other states enjoy. The block grant program 
is one of the few tools we have to support our growers and better 
realize our specialty crop opportunities.''
    Further, AMS administers research and promotion programs as well as 
marketing orders and agreements to help stabilize markets for specific 
commodities. One marketing agreement that has received a considerable 
amount of attention is the National Leafy Green Marketing Agreement 
that AMS is considering and that is currently open for public comment.
    I also look forward to learning how AMS is administering Section 32 
funds, which have supported agricultural commodities like fruits, 
vegetables, and meats, which are not typically covered by mandatory 
price supports.
    AMS has the responsibility of administering a wide range of 
programs including the National Organic Program which oversees the 
labeling of products as organic.
    In addition to AMS testifying, APHIS will detail their 
responsibilities in administering the Pest and Disease programs 
including the National Clean Plant Network which propagates pest and 
disease-free nursery stock for the industry.
    As we approach the next farm bill, it is imperative that we hear 
directly from the Department so we can fully understand from your 
first-hand experience what is working and what is not working. Some of 
the decisions on program authorizations and funding levels will be 
difficult, but with proper evaluation, I am confident that we can put 
together a farm bill that meets the goals of food safety and security, 
rural prosperity, and nutritional well-being.
    Again, I would like to thank the witnesses from the Department, Ms. 
Bech and Ms. Pegg, for joining us today. I look forward to your 
testimony and today' s discussion.

    The Chairwoman. Now I will turn this over to the Ranking 
Member, my good friend, Joe Baca.

    OPENING STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Baca. Good afternoon, and thank you, Madam Chairwoman 
Schmidt for holding this important hearing to examine programs 
that are contained within Title X of the 2008 Farm Bill. I 
appreciate your bipartisanship in working with these issues. I 
appreciate the little bit of stealing the thunder of Hank Aaron 
signing this autographed ball. As you know, he broke Babe 
Ruth's record and still holds the record for most home runs 
right now. Some of us who play in the Congressional game, hope 
we can hit a home run.
    The Chairwoman. Can I just add that the Cincinnati Reds 
could use some help. Do you think you could come help?
    Mr. Baca. Some of us are willing to come out of retirement. 
Maybe even to play for the Reds. I do appreciate that. Thank 
you very much, Madam Chair.
    Let's get back to the original topic here. The 2008 Farm 
Bill was historic legislation that included the fundamental 
improvements to the USDA nutrition and farm conservation 
programs, but perhaps none more important that its recognition 
of specialty crops and organic agriculture.
    Specialty crops now represent nearly 50 percent of the farm 
gate value of the plants based in U.S. agriculture. Organic 
fruits and vegetables now account for over 11 percent of all 
fruits and vegetable sales in the United States. The 
availability of fruits, vegetables, and other specialty crops 
are critical to the health of the American consumer, especially 
as we look at obesity and other health-related problems that 
are impacting us. If we don't deal with that, the additional 
taxpayer costs will be roughly around $197 billion. As we look 
at alternative fruits and vegetables, we need to focus on 
American products. Let me state that again, we need American 
products grown by American farmers to better ensure the 
economic well-being of our citizens.
    The specialty crops and organic sector were recognized in 
the 2008 Farm Bill because they looked to the future in areas 
like research, conservation, pests and disease management, and 
expansion of market opportunities. Congress responded to this 
forward thinking with a nearly $3 billion in investment in the 
future of specialty crops and organic producers. This 
investment is vital to farms across the nation.
    My home State of California is blessed as the nation's top 
producer of many fruits, tree nuts, and other crops. California 
also leads the nation in the amount of certified organic 
cropland with over 430,000 acres. As we now know, the 2012 Farm 
Bill will be written during a time of unprecedented fiscal 
challenges. The question of how to wisely use American's hard-
earned tax dollars will never be far from us. We must not lose 
sight of the fact that any farm bill, at its core, is about 
good public policy. If we are smart, the 2012 Farm Bill can 
save money, improve health and nutrition, and strengthen our 
economy.
    I am convinced that we are on the right policy track with 
the programs that we will be reviewing today. I look forward to 
working with my colleagues to ensure that the down payment made 
on behalf of specialty crops and organic producers does not go 
to waste in 2012. Again, I want to thank the panelists for 
their patience in waiting for our votes to conclude. I want to, 
again, thank the Chairwoman for holding this hearing.
    With that, I yield back the balance of my time.
    [The prepared statement of Mr. Baca follows:]

Prepared Statement of Hon. Joe Baca, a Representative in Congress from 
                               California
    Good afternoon. Thank you Chairwoman Schmidt for holding this 
important hearing to examine programs that are contained within Title X 
of the 2008 Farm Bill.
    The 2008 Farm Bill was historic legislation that included 
fundamental improvements to USDA nutrition and farm conservation 
programs.
    But perhaps no policy change was more vital than the recognition of 
specialty crops and organic agriculture.
    Specialty crops now represent nearly 50 percent of the farm gate 
value of plant based U.S. agriculture.
    Organic fruits and vegetables now account for over 11 percent of 
all fruit and vegetable sales in the U.S.
    The availability of fruits, vegetables, and other specialty crops 
is critical to the health of America's consumers.
    And we need American products--grown by American farmers--to better 
ensure the economic well-being of our citizens.
    The specialty crop and organic sectors were recognized in the 2008 
Farm Bill--because they looked to the future in policy areas, like:

   Research and conservation;

   Pest and disease management; and

   Expansion of market opportunities.

    Congress responded to this forward thinking with a nearly $3 
billion investment in the future of specialty crop and organic 
producers.
    This investment is vital to farmers across the nation.
    My home State of California is blessed as the nation's top producer 
of many fruits, tree nuts, and other crops.
    California also leads the nation in the amount of certified organic 
crop-land--with over 430 thousand acres.
    As we all know--the 2012 Farm Bill will be written during a time of 
fiscal challenges.
    We must not lose sight of the fact that any farm bill--at its 
core--is about good public policy.
    If we are smart--the 2012 bill can save money, improve health and 
nutrition, and strengthen our economy.
    I am convinced that we are on the right policy track with the 
programs that we will be reviewing today.
    I look forward to working with my colleagues to ensure the down 
payment made on behalf of specialty crop and organic producers does not 
go to waste in 2012.
    Again--I want to thank the Chairwoman for holding this hearing--and 
thank our witnesses for taking the time to help us better understand 
these programs. I yield back.

    The Chairwoman. Thank you very much. The chair would 
request that other Members submit their opening statements for 
the record so the witnesses may begin their testimony in a 
timely manner, since we already are an hour delayed.
    [The prepared statement of Mr. Southerland follows:]

 Prepared Statement of Hon. Steve Southerland II, a Representative in 
                         Congress from Florida
    I welcome the opportunity to reauthorize Federal agricultural 
policies affecting American agricultural production in the development 
of the 2012 Farm Bill. As a significant contributor to U.S. farm 
receipts and balance of trade, it is extremely important that the 
issues affecting specialty crops play a meaningful role in the farm 
bill. Specialty crops, including fruits, vegetables, nuts, 
horticultural crops and others, represent over \1/3\ of gross 
agricultural cash receipts in the U.S., and hence have a significant 
stake in our nation's agricultural policy.
    Florida ranks among the top ten states in the nation in 
agricultural crop value and second in the specialty crop production 
with a wide variety of fruit, vegetable and nursery crops grown through 
the state. The farm bill 5 year farm policy measure should continue and 
strengthen its emphasis on key areas such as pest and disease, 
research, as well as giving states the flexibility needed to better 
address environmental challenges and ensuring critical resources are 
available to respond to the unique needs of specialty crops in most 
budget efficient manner possible.
    Historically, many Florida agricultural producers--and specialty 
crop growers throughout the country--have chosen to base their economic 
decisions on the marketplace and have not relied on Federal farm price 
support programs. However, these markets can be very volatile and the 
industry faces extreme and somewhat unique pressures including ever 
increasing environmental challenges, labor and production costs beyond 
that of our competitors, subsidized foreign market competition. In 
addition, unprecedented exposure to pests and disease and state-of-the-
art agricultural research needs tailored to the needs of fruit and 
vegetable production is also vital.
    Florida is listed by the USDA as the number two high risk state 
second only to California regarding exotic pest and disease 
introductions pressure. According to the Florida Department of 
Agriculture, costs to combat pests and diseases affecting Florida 
farmers, have easily exceeded $1 billion over the last decade.
    Specialty crop farm bill measures such as the such Pest and Disease 
Management Program ``Section 10201'', the Specialty Crop Block Grants, 
the Specialty Crop Research Initiative, and well as marketing, 
nutrition, and other programs provide valuable opportunities for 
Florida and U.S. specialty crop industry in American farm policy.
    Mindful of the fiscal constraints facing our Federal budget and 
increasing national debt, we must be vigilant within this Committee and 
working with the U.S. Department of Agriculture to focus valuable 
Federal resources in those areas with the most effective impact to 
sustain and strengthen specialty crop and agricultural production in 
our nation. I look forward to working with my colleagues toward that 
end as we consider reauthorization of the 2012 Farm Bill.

    The Chairwoman. I am going to begin with introducing our 
first panelist, Ms. Rayne Pegg, who is the Administrator, 
Agricultural Marketing Service, U.S. Department of Agriculture, 
Washington, D.C., and Ms. Rebecca Bech, Deputy Administrator 
for the Plant Protection and Quarantine, Animal and Plant 
Health Inspection Service, U.S. Department of Agriculture, 
Washington, D.C.
    Ms. Pegg, we will let you begin.

            STATEMENT OF RAYNE PEGG, ADMINISTRATOR,
AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Ms. Pegg. Thank you very much, Chairwoman Schmidt, Ranking 
Member Baca, and Members of the Subcommittee. Thank you for 
inviting me to appear before you today to provide a 
comprehensive picture of the activities authorized in the 
Organic Agriculture Title X of the farm bill, as well as the 
activities under Section 32. It is our hope that this 
examination of specialty crop, organic, pest and disease 
management and Section 32 provisions from the last farm bill 
will prove helpful as you begin the next farm bill discussions.
    USDA Agricultural Marketing Service and the Animal and 
Plant Health Inspection Service are the primary agencies with 
the responsibility for implementing Title X. Rebecca Bech from 
APHIS is here with me today to answer any APHIS-specific 
questions that you might have.
    As you mentioned earlier, AMS administers two grant 
programs that were reauthorized and amended in the 2008 Farm 
Bill. Specialty Crop Block Grant Program provides funding to 
states and U.S. territories to enhance the competitiveness of 
specialty crops. Specialty crops are defined as fruits and 
vegetables, tree nuts, dried fruits, horticulture, and nursery 
crops, including floriculture.
    The 2008 Farm Bill provided the following funding levels 
for the block grants program from CCC funding: $10 million in 
2008, $49 million in 2009, $55 million for 2010 through 2012. 
In Fiscal Year 2010, approximately $55 million was awarded for 
54 grants, which funded a total of 822 different projects. This 
year's application deadline is July 13.
    The Farmers Market Promotion Program is another AMS grant 
program covered under Title X. This works to help improve and 
expand domestic Farmers Markets, roadside stands, community-
supported agricultural programs--sorry, agriculture tourism 
activities, and other direct producer to consumer market 
opportunities. The 2008 Farm Bill extended the Farmers Market 
Promotion Program through 2012, and provided a total of $33 
million in CCC funding. In 2008, that funding was at $3 
million, 2009, $5 million, and in 2010, it was still $5 
million, and for 2011 and 2012, we are going up to $10 million 
in funding. In 2010, with the $5 million funding, we funded a 
total of 81 awards that went to 35 different states. In 2011, 
we have notified--we published notice of funding availability 
in June of 2011, and the deadline for applying for those funds 
was last Friday, July the 1st.
    AMS's Market News disseminates detailed information on 
marketing conditions for hundreds of agricultural commodities 
at major domestic and international wholesale markets, 
production areas, and ports of entry. Using direct contacts of 
salespersons, suppliers, brokers, buyers, Market News reporters 
collect, validate, analyze, and organize unbiased data on 
price, volume, quality, and condition, making it available 
within hours of collection. In the 2008 Farm Bill, there was 
specialty crop market news allocation which authorized $9 
million for each fiscal year, starting in 2008 through 2012. 
Although funding was not appropriated, AMS continues to carry 
out specialty crop Market News activities as the agency 
collects information on current supply, demand, and price for 
nearly 400 domestic and 700 international fruits, vegetables, 
nuts, ornamental and specialty crops.
    Title X also directed USDA to collect data on production, 
pricing, and marketing of organic agricultural products, 
provided $5 million in CCC funds, available until expended. Of 
the $5 million, $3.5 million was directed specifically to AMS. 
AMS is working to enhance Market News systems to expand 
reporting of organic market prices. By the end of 2009, AMS 
Market News had expanded the daily reporting of organic 
commodities to include a total of 234 items.
    Marketing orders and agreements serve as tools to help 
fruit and vegetable growers work together to solve marketing 
problems that they cannot solve independently. These programs 
are designed to help balance the availability of quality 
product with the need of adequate returns to producers and 
demand of consumers. There are currently 32 active specialty 
crop marketing orders and agreements that the agency oversees.
    Authorized by Federal legislation, research and promotion 
programs, often referred to as check-off programs, are designed 
to strengthen the position of the industry in the marketplace, 
and to maintain and expand domestic and foreign markets. The 
programs are fully funded by the industry. Board members are 
nominated by the industry and appointed by the Secretary. AMS 
oversees the activities of boards and approves their budgets in 
order to ensure compliance with the legislation.
    There were two research and promotion provisions in the 
2008 Farm Bill. The first made a number of amendments to the 
Honey Research Promotion and Consumer Information Act. As a 
result of those amendments, a Honey Packers and Importers 
Program became effective in 2008. A final research and 
promotion provision in the last farm bill allowed for the 
development of a program for good agricultural practices and 
good handling practices under the Mushroom Promotion Research 
and Consumer Information Order, as well as reapportioned the 
membership of the Mushroom Council to reflect the shifts in the 
industry.
    To support organic agriculture, the 2008 Farm Bill 
authorized funding for the National Organic Program at $5 
million for Fiscal Year 2008, $6.5 million for 2009, $8 million 
for 2010, $9.5 million for 2011, and $11 million for 2012. For 
the Fiscal Year 2010, Congress appropriated $6.9 million, and 
the 2011 budget for the program is $6.91 million. In addition 
the National Organic Certification Cost-share Program makes 
funds available to states and U.S. territories that are 
interested in providing cost-share assistance to organic 
producers and handlers certified under the National Organic 
Program. The 2008 Farm Bill provided $22 million in CCC funding 
for cost-share activities. It also increased the amount of 
reimbursement from $500 to $750. Of the $22 million for the 
program, $6.5 million remains for the Fiscal Year 2011 and 2012 
to be spent.
    To support domestic producers, Section 32 of the Act of 
August 24, 1935, authorizes the appropriation for each fiscal 
year of an amount equal to 30 percent of the gross receipts 
from duties collected under Customs laws of the United States 
during the preceding calendar year. These funds are 
specifically used to encourage domestic consumption of non-
price supported perishable commodities and reestablish farmers' 
purchasing power through a variety of activities. These 
activities include purchasing commodities, removal of surplus 
commodities from the marketplace for distribution to our 
Federal nutrition programs, including those programs that 
support the National School Lunch Program as well as food 
banks, diversion programs that bring production into line with 
demand to assist producers, and disaster assistance. AMS 
annually purchases approximately $1 billion worth of 
commodities for distribution through various nutrition 
assistance programs. The 2008 Farm Bill authorized a spending 
cap for AMS purchases that has since been modified through 
subsequent appropriations.
    In addition to the 2002 Farm Bill which established that 
there be a minimum of $200 million used for the purchases of 
fruits and vegetables, the 2008 Farm Bill established 
additional fruit and vegetable purchases for each subsequent 
year. The minimum purchase requirement for the 2011 year for 
fruits and vegetables is a total of $403 million. To make up 
this purchase, entitlement purchases, Department of Defense 
purchases, and bonus buys can make up the total requirement for 
meeting the minimum fruit and vegetable purchasing requirement 
under the farm bill.
    AMS and APHIS undertake numerous activities to facilitate 
the competitive and efficient marketing of the U.S. 
agricultural products, as well as to protect and promote U.S. 
agricultural health. I hope that this testimony and subsequent 
questions and answers will prove useful to the Subcommittee as 
you undertake your work on the next farm bill.
    I want to introduce Rebecca Bech, who will add some 
additional comments regarding APHIS's administration of Title X 
of the farm bill.

   STATEMENT OF REBECCA BECH, DEPUTY ADMINISTRATOR FOR PLANT 
 PROTECTION AND QUARANTINE, ANIMAL AND PLANT HEALTH INSPECTION 
   SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Ms. Bech. Well, thank you for inviting me to join 
Administrator Pegg today to talk to you about the specialty 
crop provisions from the 2008 Farm Bill that APHIS continues to 
implement.
    The Animal and Plant Health Inspection Service is charged 
with protecting American agriculture from foreign pest and 
disease introductions, and within APHIS, I head up the Plant 
Protection Quarantine Program, which focuses on both plant 
pests and diseases that can harm our specialty crops, but also 
our forests and natural resources, as well as traditional 
crops.
    To accomplish that mission, APHIS has developed a robust 
agricultural safeguarding system, which consists of a set of 
comprehensive interlocking programs that work together to 
protect our agricultural resources.
    The 2008 Farm Bill created two programs that take these 
measures further by targeting specific segments of agriculture 
and activities that particularly benefit the specialty crops, 
and I would like to thank the Committee for its continued 
support for these crucial programs. Both the programs, the 
Plant Pest and Disease Management and Disaster Prevention 
Program, and the National Clean Plant Network, have proven to 
be highly effective and widely supported by stakeholders and 
industry. Through the Plant Pest and Disease Management and 
Disaster Prevention provision, which we refer to as Section 
10201 of the farm bill, APHIS is partnered with numerous 
states, tribes, universities, and other community partners to 
strengthen and expand the scope of APHIS's pest and disease 
prevention activities. Under the program, which is funded 
through the Commodity Credit Corporation, APHIS is allocated 
$50 million in Fiscal Year 2011, and as of today, we have 
funded 317 projects this year with over 100 cooperators. The 
agency provided $45 million in Fiscal Year 2010, along with $12 
million in Fiscal Year 2009. This program has been hugely 
successful and well-supported as we continue to see the 
positive impact of the various 2009, 2010, and 2011 projects.
    Because of this influx of farm bill funding, we have been 
able to work with states and industry to eradicate the plum pox 
virus in Pennsylvania, enhance California's ability to detect 
dangerous pests entering through mail and freight. We have 
eradicated 13 separate Mediterranean fruit fly outbreaks 
without the use of emergency funding, and we work with states 
across the country to survey for pests so that we can respond 
to any pest issues swiftly.
    These are just a few of the success stories that we have 
seen through this effort, but the net effect of these efforts 
and the many partnerships is a demonstrated improvement in 
USDA's ability to detect and respond to a plant pest or disease 
outbreak. Detecting and responding to a plant pest or disease 
in the early stage of an introduction is a significant cost 
saving for taxpayers, and can help minimize the potentially 
devastating impact on agriculture.
    The second farm bill program that helps address plant pest 
and diseases is Section 10202, the National Clean Plant 
Network. The network is a partnership of APHIS, the 
Agricultural Research Service, and the National Institute of 
Food and Agriculture. The network works to develop and produce 
clean propagative material, so that should a plant pest or 
disease strike, clean plant material is available to states, 
private nurseries, and the producers. Essentially, it is like 
an insurance policy that guarantees that there will be fresh 
stock of disease-free plants. The network is currently 
comprised of clean plant networks for fruit trees, grapes, 
citrus, berries, and hops. It includes 18 supported clean plant 
centers and associated programs located in 14 states. We 
continue to see broad support within the specialty crop 
industry, and also interest from other commodity groups in 
becoming part of this program.
    I would like to thank you again for the opportunity to 
testify today, and we look forward to working with the 
Subcommittee as you develop the next farm bill.
    Thank you.
    [The prepared statement of Ms. Pegg and Ms. Bech follows:]

  Joint Prepared Statement of Rayne Pegg, Administrator, Agricultural
    Marketing Service; Rebecca Bech, Deputy Administrator for Plant
Protection and Quarantine, Animal and Plant Health Inspection Service, 
            U.S. Department of Agriculture, Washington, D.C.
    Chairwoman Schmidt, Ranking Member Baca, and Members of the 
Subcommittee, thank you for inviting me to appear before you today to 
provide a comprehensive picture of the activities authorized in the 
Horticulture and Organic Agriculture Title of the Food, Conservation, 
and Energy Act of 2008 (2008 Farm Bill), as well as the activities 
under Section 32 of the Act of August 24, 1935 (Section 32). It is our 
hope that this examination of the specialty crop, organic, pest and 
disease management, and Section 32 provisions from the last farm bill 
will prove helpful as you begin work on the next farm bill.
    The Horticulture and Organic Agriculture Title (Title X) of the 
2008 Farm Bill represents the first time that a farm bill title was 
devoted exclusively to these two sectors. The U.S. Department of 
Agriculture's (USDA) Agricultural Marketing Service (AMS) and the 
Animal and Plant Health Inspection Service (APHIS) are the primary 
agencies with responsibility for implementing Title X. APHIS Deputy 
Administrator Bech is here with me today to answer any APHIS-specific 
questions that you might have.
    The economic vitality of rural America and the U.S. economy at 
large depends on a competitive, efficient, and productive agricultural 
system. In order to increase prosperity and sustainability in our 
nation's agricultural system and rural communities, AMS conducts 
oversight activities designed to protect producers from unfair 
competition and business practices. AMS assists producers in management 
and marketing through the development and oversight of national 
standards for the production and handling of agricultural products. 
Under the National Organic Program (NOP), the agency also develops and 
oversees the standards of products labeled as organic. AMS also 
supports producers by providing market trend analysis and business and 
marketing tools to cover hundreds of commodities every day and 
producing information that impacts billions of dollars in agricultural 
products each year.
Grant Programs
    The Specialty Crops Competitiveness Act of 2004, as amended by the 
2008 Farm Bill, defines specialty crops to include fruits and 
vegetables, tree nuts, dried fruits, horticulture and nursery crops, 
including floriculture. Using this definition, specialty crops 
accounted for about 20 percent of the $283 billion in U.S. farm cash 
receipts in 2009. Yet, only about three percent of total crop acres in 
the U.S. are devoted to specialty crops.
    AMS administers two grant programs that were reauthorized and 
amended in the 2008 Farm Bill. The Specialty Crop Block Grant Program 
provides funding to states and U.S. territories to enhance the 
competiveness of specialty crops. The agency, commission, or department 
responsible for agriculture within each of the 50 states, the District 
of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the 
U.S. Virgin Islands, and the Commonwealth of the Northern Mariana 
Islands is eligible to apply for these grant funds from USDA. The 
minimum base grant each state or U.S. Territory is eligible to receive 
is equal to the higher of $100,000 or \1/3\ of 1 percent of the total 
amount of funding made available for that fiscal year (FY).
    The 2008 Farm Bill provided the following funding levels for the 
Specialty Crop Block Grant Program from the Commodity Credit 
Corporation (CCC): $10 million in FY 2008, $49 million in FY 2009, and 
$55 million for each Fiscal Year 2010 through 2012. In Fiscal Year (FY) 
2010, approximately $55 million was awarded for 54 grants that funded 
827 projects, an approximate ten percent increase in the number of 
projects funded the previous year. The application deadline for FY 2011 
awards is July 13, 2011.
    The last farm bill also amended the definition of specialty crop to 
include horticulture, and added Guam, American Samoa, the U.S. Virgin 
Islands and the Commonwealth of the Northern Mariana Islands to the 
list of ``states'' eligible to apply for grants. These changes required 
AMS to undertake rulemaking that was completed on March 27, 2009, with 
the publication of the final rule in the Federal Register.
    The other AMS grant program reauthorized and amended in Title X of 
the 2008 Farm Bill is the Farmers Market Promotion Program (FMPP). This 
program seeks to improve and expand domestic farmers markets, roadside 
stands, community-supported agriculture programs, agri-tourism 
activities, and other direct producer-to-consumer market opportunities. 
The 2008 Farm Bill extended the FMPP through 2012 and provided $33 
million in CCC funds: $3 million in FY 2008, $5 million in each Fiscal 
Years 2009 and 2010, and $10 million in each Fiscal Years 2011 and 
2012.
    The farm bill specified statutorily the categories of farmer-to-
consumer direct marketing activities eligible for funding under the 
program. It also required that not less than ten percent of the funds 
used to carry out the program in a fiscal year are to be used to 
support the use of Electronic Benefits Transfers (EBT) at farmers' 
markets. The 2010 awards were announced in October 2010, and totaled 
approximately $4.3 million (81 awards in 35 states). A proposed rule 
that established eligibility and application requirements, the review 
and approval process, and grant administration procedures, was 
published in the Federal Register on June 1, 2011. The 2011 Notice of 
Funding Availability (approximately $10 million) was published on June 
3, 2011, with a deadline of July 1, 2011 for submission of grant 
proposals.
Market News
    AMS' Market News disseminates detailed information on marketing 
conditions for hundreds of agricultural commodities at major domestic 
and international wholesale markets, production areas, and ports of 
entry. Using direct contacts with salespeople, suppliers, brokers, and 
buyers, Market News reporters collect, validate, analyze, and organize 
unbiased data on price, volume, quality and condition, making it 
available within hours of collection.
    In the 2008 Farm Bill, there was a Specialty Crops Market News 
allocation which authorized $9 million for each Fiscal Year 2008 
through 2012, to remain available until expended. Although recent 
appropriations have not specified specialty crops, AMS continues to 
carry out specialty crops Market News activities as the agency collects 
information on the current supply, demand and prices on nearly 400 
domestic and 70 international fruits, vegetables, nuts, ornamental and 
specialty crops.
    Title X also directed USDA to collect data on the production, 
pricing, and marketing of organic agricultural products and provided $5 
million in CCC funds, available until expended. Of the $5 million 
provided in FY 2008, $3.5 million was directed to AMS. In addition, the 
bill required a report to Congress within 180 days of enactment on the 
progress made implementing these activities and identifying additional 
production and marketing data needs. The report was delivered to 
Congress on December 29, 2008. AMS is working to enhance Market News 
systems to expand reporting of organic market prices. By the end of 
2009, AMS Market News had expanded the daily reporting of organic 
commodities to include 234 items. AMS Market News also added an 
additional section on the advertised specials on organic products to 
the weekly National Fruit and Vegetable Retail Report.
Marketing Orders and Agreements
    Marketing orders and agreements serve as tools to help fruit and 
vegetable growers work together to solve marketing problems that they 
cannot solve individually. These programs are designed to balance the 
supply of quality product with the need for adequate returns to 
producers and the demands of consumers. There are currently 32 active 
specialty crop marketing orders and agreements.
    Marketing orders are typically initiated by producers who have an 
active role in the development of program provisions. Before any 
program is implemented or amended, approval by a \2/3\ or larger 
majority by number or volume represented in a referendum is required. 
Local committees of farmers and handlers--appointed by the Secretary of 
Agriculture--administer the orders.
    Marketing orders are binding on all individuals and businesses 
classified as ``handlers'' in the geographic area covered by the order. 
As defined by most agreements and orders, a handler is anyone who 
receives the commodity from producers, grades and packs it, transports, 
or places the commodity in commercial channels. However, this 
definition is ultimately defined by an individual program. Marketing 
orders are distinguished from marketing agreements, in that the 
agreements are binding only on handlers who are signatories of the 
agreements. Handlers must comply with the grade, size, quality, volume, 
and other requirements established under the specific program.
    In the 2008 Farm Bill, Congress directed USDA to add clementines to 
the list of products in Section 8e of the Agricultural Marketing 
Agreement Act of 1937. Section 8e provides that whenever a specified 
domestically produced commodity is regulated under a Federal marketing 
order, imports of the commodity must meet the same or comparable 
product standards as the domestic commodity. However, this provision 
has not been implemented as the industry has not pursued establishing a 
Federal clementines marketing order.
    Also, Title X provided for an expedited marketing order for Hass 
avocados relating to grades and standards. The order would become 
effective within 15 months of the date that the Department began the 
procedures for determining if the order should proceed. To date, AMS 
has not received an industry proposal.
Research and Promotion
    Research and promotion programs, often referred to as ``check-
offs'', are designed to strengthen the position of the industry in the 
marketplace and to maintain and expand domestic and foreign markets. 
The programs are all fully funded by industry assessments and are 
authorized by Federal legislation. Board or council members are 
nominated by the industry and officially appointed by the Secretary of 
Agriculture. In order to ensure compliance with the legislation, AMS 
oversees the activities of the boards or councils and approves their 
budgets.
    There were two research and promotion provisions in the 2008 Farm 
Bill. The first made a number of amendments to the Honey Research, 
Promotion, and Consumer Information Act. It directed AMS to consider a 
national research and promotion program for honey packers and 
importers. AMS received a proposal for the packers and importers 
program, and conducted a referendum on that proposal from April 2-16, 
2008. In the referendum, 78 percent of those voting, representing 92 
percent of the volume of referendum voters, approved the program. The 
program became effective on May 22, 2008, one day after the final rule 
was published in the Federal Register. The first board meeting took 
place on September 4, 2008. With the approval of this new program, the 
collection of assessments under the Honey Research, Promotion and 
Consumer Information Order--authorized under the Honey Research, 
Promotion and Consumer Information Act--was suspended. A termination 
order for that program was published in the Federal Register on April 
17, 2009.
    Furthermore, USDA was directed to consider establishing a research 
and promotion program for domestic honey producers. On July 14, 2009, 
AMS published a proposed rule and solicited comments for a domestic 
honey producer program. The rule and referendum procedures were 
published on April 12, 2010. The referendum was held May 17-June 4, 
2010, and resulted in the producers rejecting the domestic research and 
promotion program.
    Another research and promotion provision in the last farm bill 
allowed for the development of a program for Good Agricultural 
Practices and Good Handling Practices under the Mushroom Promotion, 
Research and Consumer Information Order, as well as reapportioned the 
membership of the Mushroom Council to reflect shifts in domestic 
mushroom production. AMS published the final rule implementing these 
provisions in the Federal Register on October 2, 2009.
Organics
    The Organic Foods Production Act (OFPA) of 1990 required USDA to 
develop national standards for organically produced agricultural 
products and to assure consumers that agricultural products marketed as 
``organic'' meet consistent and uniform standards. The National Organic 
Program (NOP) is a marketing program administered by AMS.
    The 2008 Farm Bill authorized funding for the NOP at $5 million for 
FY 2008, $6.5 million for FY 2009, $8 million for FY 2010, $9.5 million 
for FY 2011, and $11 million for FY 2012. For FY 2010, Congress 
appropriated $6.96 million while the FY 2011 funding for NOP is $6.91 
million.
    The National Organic Certification Cost-Share Program makes funds 
available to states and U.S. territories that are interested in 
providing cost-share assistance to organic producers and handlers that 
are certified under the NOP. The 2008 Farm Bill provided $22 million in 
CCC funds, to remain available until expended, for organic cost-share 
activities, and increased the cost-share reimbursement from $500 to 
$750 annually. Also, USDA was directed to submit an annual report to 
Congress, by March 1 of each year, that describes requests by, 
disbursements to, and expenditures for each state during the current 
and previous fiscal years, including the number of producers and 
handlers served. The program made approximately $4.8 million available 
for FY 2010 and approximately $5.2 million is available for FY 2011.
Section 32
    Section 32 of the Act of August 24, 1935 authorizes the 
appropriation for each fiscal year of an amount equal to 30 percent of 
the gross receipts from duties collected under customs laws of the 
United States during the previous calendar year. These funds are used 
to encourage domestic consumption of non-price supported perishable 
commodities and to re-establish farmers' purchasing power through a 
variety of activities, including: purchases of commodities and removal 
of surplus commodities from the marketplace for distribution to Federal 
nutrition assistance programs such as the National School Lunch Program 
and diversion programs that bring production in line with demand to 
assist producers. AMS annually purchases approximately $1 billion in 
commodities for distribution to various nutrition assistance programs. 
Section 32 funds are also used to finance the administrative costs 
associated with the purchase of commodities and the development of 
specifications used for food procurement throughout the Federal 
Government.
    The 2008 Farm Bill directed USDA to make Section 32 specialty crop 
purchases of (in addition to the $200 million required in the 2002 Farm 
Bill): $190 million for FY 2008, $193 million for FY 2009, $199 million 
for FY 2010, and $203 million for FY 2011, and $206 million for FY 2012 
and each fiscal year thereafter. AMS purchased $390.3 million in 
specialty crops in FY 2008, $472.8 million in FY 2009, $511 million in 
FY 2010, and plans to purchase $403 million in FY 2011.
    The 2008 Farm Bill also required USDA to arrange for an independent 
study and evaluation of the purchasing processes principally devoted to 
perishable agricultural commodities provided in Section 32. The report 
was released on May 13, 2010.
Pest and Disease Management
    The mission of protecting American agriculture from foreign pests 
and disease introduction is among USDA's most critical. To accomplish 
that mission, APHIS has developed a robust agricultural safeguarding 
system. While APHIS' efforts benefit all of agriculture, its programs 
are of particular importance to specialty crops, as foreign pest and 
disease introductions could potentially devastate them.
    The agricultural safeguarding system that APHIS has developed is a 
set of comprehensive, interlocking programs that work together to 
protect agriculture. While the border inspection function--which was 
transferred to the Department of Homeland Security's Customs and Border 
Protection in 2003--is a critical component, it is but one part of the 
layered system in place, which has programs that begin well before 
products or people reach the border, and continues after their entry.
    The system relies on APHIS' strength as a science and risk based 
regulatory agency, and the many measures the Agency has developed, 
including:

   Sound regulatory policies based upon strong science and 
        thorough risk assessments;

   Pre-clearance inspections of commodities in overseas 
        countries before shipment to the United States;

   Extensive pest surveillance activities, both here and 
        abroad;

   Inspection of living plants imported through USDA-operated 
        plant inspection stations;

   Supervision of fumigation and other pest mitigation 
        treatments when protocols require; and

   Robust emergency response activities in the event of 
        significant pest or disease introductions.

    Together, these multi-faceted activities serve as a safety net that 
allows all agriculture to succeed.
    APHIS has two programs that take these measures further, by 
targeting specific segments of agriculture and activities that 
particularly benefit specialty crops. Both programs, which were created 
in the 2008 Farm Bill, have proven to be highly effective, and widely 
supported by stakeholders and industry.
    The first, section 10201 of the farm bill, Plant Pest and Disease 
Management and Disaster Prevention, is a new program that allows APHIS 
to partner with numerous states, Tribes, universities, and other 
community partners to strengthen and expand the scope of APHIS' pest 
and disease prevention activities.
    Under the program, which is funded through the CCC, APHIS allocated 
$50 million in FY 2011 to fund 270 projects with over 100 cooperators 
that prevent the introduction or spread of plant pests and diseases. 
This follows $45 million in FY 2010 and $12 million in FY 2009.
    Projects originate as suggestions from hundreds of cooperators 
throughout the country. These projects aim to improve the six key goals 
of the program:

    1. Enhancing plant pest analysis and survey

    2. Targeting domestic inspection activities at vulnerable points

    3. Enhancing threat identification tools and technology

    4. Developing programs to safeguard nursery production

    5. Enhancing outreach and education to increase public awareness 
        and support of plant pest and disease eradication and control 
        programs

    6. Enhancing mitigation capabilities

    Projects are evaluated based on how well they align with these 
goals, the expected impact of the project, and their technical 
approach.
    The program provides strong protection to America's agricultural 
and environmental resources, and helps nursery and specialty crop 
growers flourish. Over the last 2 years, Section 10201 projects have 
played a significant role in many USDA successes, such as including the 
eradication of plum pox in Pennsylvania, minimizing the effect of a 
Mediterranean fruit fly outbreak in Florida, survey work for European 
grapevine moth in California, national surveys for honeybee pests, and 
methods development work to combat citrus pests.
    The net effect of these efforts and the many partnerships is a 
demonstrated improvement in USDA's ability to detect and respond to a 
plant pest or disease. Detecting and responding to a plant pest or 
disease in the early stages of an introduction is a significant cost 
savings for taxpayers, and can help minimize the potentially 
devastating impact on agriculture.
    The second farm bill program that helps address plant pests and 
disease is Section 10202, the National Clean Plant Network (NCPN). The 
NCPN is a partnership of three USDA Agencies: APHIS, the Agricultural 
Research Service and the National Institute of Food and Agriculture. It 
aims to develop and produce clean propagative plant material. Should a 
plant pest or disease strike, the network could then provide clean 
plant material to states for certified clean plant programs and to 
private nurseries and producers. Essentially, it is an insurance policy 
that guarantees that there will be fresh stock of disease-free plants.
    NCPN is comprised of commodity-based networks. Commodities that 
have developed a clean plant network under the auspices of the program 
are fruit trees, grapes, citrus, berries and hops. These five networks 
include 18 supported clean plant centers and associated programs 
located in 14 states. There has been broad support within the specialty 
crop industry, and other commodities have expressed interest in the 
program as well. The NCPN national stakeholder database has about 500 
people enrolled who expressed specific interest in the program, which 
includes nursery and grower industries, scientists, state regulatory 
officials, and educators. The program has been funded with $5 million 
in CCC funding each fiscal year from 2009 to 2012, to remain available 
until expended.
Miscellaneous
    The 2008 Farm Bill provided country of origin labeling requirements 
for honey that bears any official certificate of quality, grade mark or 
statement, continuous inspection mark or statement, sampling mark or 
statement or any combination of the certificates, marks, or statements 
of USDA. An interim rule, which became effective October 6, 2009, 
established a new regulation addressing country of origin labeling for 
packed honey bearing any official USDA mark or statement and added a 
new cause for debarment from inspection and certification service for 
honey. The final rule was published on January 4, 2011, with an 
effective date of February 3, 2011.
    It should be noted that USDA did not implement the 2008 Farm Bill's 
Food Safety Education Initiatives provision or the Grant Program to 
Improve Movement of Specialty Crops as no funding was provided by 
Congress.
Conclusion
    AMS and APHIS undertake numerous activities to facilitate the 
competitive and efficient marketing of U.S. agricultural products, as 
well as to protect and promote U.S. agricultural viability. These 
efforts support the overall mission of USDA, which is to protect and 
promote food, agriculture, natural resources and related issues. I hope 
that this testimony and the subsequent questions and answers will prove 
useful to the Subcommittee as you undertake your work on the next farm 
bill.

    The Chairwoman. Thank you so much for your testimony, and I 
will remind the Members that just came in, that if you have any 
written statements, you have 5 calendar days to bring them to 
the Committee, and that we will begin questioning in order of 
who came and then by seniority, and so I will begin.
    I would like to start with Specialty Crop Block Grants, 
probably to Ms. Pegg.
    Ms. Pegg, in Fiscal Year 2010, approximately 13 percent of 
block grant funding was used for research. How do states or the 
USDA ensure that there are not duplicative research projects 
funded with both block grants and other research projects?
    Ms. Pegg. This is a good question, because not only 
regarding research projects but also with the Farmers Market 
Promotion Project, we need to keep this in mind when people 
make applications. There are two tracks that occur. If a 
project applies for a Farmers Market Promotion Grant or another 
research grant throughout the Department, when that project 
comes in it is shared with the other agencies and divisions to 
look at if they are receiving block grant funds, therefore it 
may be disqualified. Regarding block grant applications, they 
will come in and we will review them, and they will have to 
justify if they are receiving other grant funds, what is the 
benefit, why do they need this funding, and why do they 
specifically need it for this one component?
    So they have to create a justification or not receive the 
funding at all for that, and that is part of our review 
process.
    The Chairwoman. Thank you. Can you elaborate on what 
activities are considered allowable marketing and promotion 
activities, and allowable education activities under the block 
grant program?
    Ms. Pegg. There are a number of educational activities. It 
must be for the benefit of specialty crops defined under the 
farm bill, so if it is a marketing program, it must 
specifically demonstrate that it is going to promote specialty 
crops and not other commodities that are not defined. We want 
to ensure that is the case when handing out the dollars, 
awarding the dollars to each of the recipients. So it can vary 
from a specific commodity being promoted. Education can be, for 
instance, in Ohio they have done a number of projects regarding 
food safety training for their producers, creating food safety 
manuals and practices that are specific for their specialty 
crop industry as well as their region.
    So those are some examples there that they have focused on.
    The Chairwoman. Thank you. When the block grants are made 
to states, how much funding is being used by the states for 
administration or overhead costs to run the program, and are 
states required to disclose this information when they are 
applying for the funding?
    Ms. Pegg. Yes, there is already a ten percent cap that they 
can use for administration costs for each state. They must also 
provide--we go in and do site visits of the states as well as 
financial audits that they provide to the program, and so they 
will supply that to demonstrate that they are meeting that cap.
    The Chairwoman. Thank you. Can you talk about the process a 
project must undergo to be approved for a grant?
    Ms. Pegg. The process initially starts with a state--each 
state administers it according to what is best for their 
program, whether they have a pool of people that are reviewing 
the grants and then grading them and then making the 
determination, but the state makes the initial determination. 
They send those recommendations to USDA. We review those to 
make sure that they are in compliance with the statute, that 
they do support specialty crops specifically, and that there is 
no other conflicts that may occur regarding other funding that 
may be received before giving the final approval for the award 
funds to go out to the state.
    The Chairwoman. And is the program set up to favor one type 
of project over another?
    Ms. Pegg. No, not at all.
    The Chairwoman. Okay. In Section 32, the DOD Fresh Program 
uses Section 32 funds to purchase fresh fruits and vegetables 
for child and other nutrition programs. I understand there has 
been concern over DOD's administration of this program. Do you 
think it is cost effective and efficient for DOD to make these 
purchases as opposed to AMS that makes the other Section 32 
fruit and vegetable purchases?
    Ms. Pegg. This is a question that a number of people have 
been discussing. DOD is effective in certain parts of the 
United States, and we really look to our FNS, our Food and 
Nutrition Service counterpart as well as those Food Service 
directors that are dealing directly with DOD to see the 
effectiveness. However, we have been discussing with our 
counterparts regarding if it is not effective, are there some 
other alternatives in which AMS could either administer or the 
Food Service directors could administer directly.
    So we are looking at other alternatives. We would love to 
continue the conversation with the Committee at looking at 
other options for schools. We do think that the DOD model is 
effective for some schools, but we are also open to looking at 
some other alternatives where it may not be as effective.
    The Chairwoman. Thank you so much. I will allow Mr. Baca at 
this time to question the panel.
    Mr. Baca. Thank you, Madam Chair.
    Ms. Pegg, we appreciate your insight as we look to 
determine the best policies for specialty crops and organic 
agriculture in the next farm bill. Since first serving on the 
House Agriculture Committee, one of my greatest passions in 
Congress has been the work of the Committee to improve and 
expand the nutrition programs. Specifically, I am proud of the 
progress we have made with the SNAP Program in the 2008 Farm 
Bill. Not only did we increase the benefit level, but we also 
went a long way to remove the stigma associated with food 
stamps by changing the name of the program and switching to 
debit cards.
    That said, can you update the Subcommittee on AMS's efforts 
in working with Food and Nutrition Service to ensure the 
farmers markets accept SNAP benefits through debits as a form 
of payment? Another question, do you have any specific data on 
the number of farmers markets that currently can accept the 
SNAP benefits?
    Ms. Pegg. Regarding your question, this has been an 
important topic and one that both my agency as well as Food and 
Nutrition Service have been working on collaboratively to 
determine what are the hurdles that people are facing in terms 
of getting more SNAP benefits into farmers markets. There are a 
couple programs that are working to increase EBT at farmers 
markets, the accessibility of EBT at farmers markets. That is 
the Farmers Market Promotion Program, of course. That grant 
program provides for ten percent of the funds. However, in 
2010, we saw 30 percent of the dollars in the Farmers Market 
Promotion Program go to support EBT transactions in farmers 
markets.
    We are also working directly with Food and Nutrition 
Service to look at the hurdles. We have developed a handbook to 
help farmers markets, individual stalls in order to help them 
put in EBT machines, how to administer that effectively, how to 
make it cost effective, looking at some of those hurdles and 
providing a handbook that gives them some additional tools for 
making it simpler, so that these things are more accessible in 
more markets.
    We have increased the number of EBTs at farmers markets to 
1,600, and we really hope to improve that over the years as we 
look at some of these issues that they are facing and find new 
ways to address them, so that we are creating more access in 
more markets throughout the United States.
    Mr. Baca. Thank you.
    In the 2008 Farm Bill, we established a minimum of ten 
percent set aside with FMPP funds to cover electronic benefit 
transfer equipment. This allows folks participating in SNAP to 
use their benefits at farmers markets. I understand since 
adding this set-aside for the program demands for these debit 
funds has far exceeded the supply. Are you finding this to be 
the case? How many applications have you received that included 
EBTs, and how many have been funded?
    Ms. Pegg. Well, I don't have the 2011 numbers yet, but when 
we saw the $5 million in funding of the Farmers Market 
Promotion Program, we saw 30 percent of those funds going to 
support EBT in farmers markets. So that is a clear indication 
now we are dealing with $10 million in the 2011 year. So we are 
hopeful that once we review all of those applications that we 
received on July 1, we will actually see an increase in the 
number of applicants for those supporting EBT transactions at 
farmers markets, CSAs, food hubs, and so forth. And you are 
seeing a lot of various entities throughout the nation 
recognize the need for providing this to their constituency, 
whether it is Detroit's food hub, that they recognize that they 
are doing $30,000 a month in sales just for food stamp 
recipients every month, that they need to be providing this 
service at their food hub. It is one that people are 
recognizing the need for, and therefore they are utilizing 
Farmers Market Promotion dollars----
    Mr. Baca. Let me follow up with another question since you 
mentioned that. Beyond FMPP, what else could we in Congress do 
to ensure that fruit and vegetable farmers selling directing to 
SNAP and WIC customers, can afford to do so. That has been the 
problem. Can they afford to? Costs are going up, the debit card 
amounts have not. The costs of fruits and vegetables is a lot 
higher.
    Ms. Pegg. Well, this is one that a lot of nonprofits are 
also addressing, whether they are providing the benefit of 
double dollars specifically to go for fruit and vegetable 
purchases. A lot of nonprofits have been focused on those pilot 
programs. I think we have to be creative. It is not only those 
programs within AMS, but whether it is Rural Development or 
other programs throughout USDA in terms of how to address this 
very specific need in creating more access of foods for those 
that are underserved.
    Mr. Baca. Our schools are now doing a lot of the fresh 
fruits and vegetables. That costs a lot. With our school lunch 
facilities downsizing and a lack of funding for these efforts, 
a lot of needy children who need fresh fruits and vegetables, 
aren't receiving them.
    Ms. Pegg. Yes, it is a very critical issue that we need to 
think about how these different programs can be used to benefit 
a lot of these difficult times and difficult struggles that a 
lot of local entities are facing right now.
    Mr. Baca. Right. I know that my time has run out. Hopefully 
in the second round I can ask Ms. Bech some questions.
    The Chairwoman. Thank you, and now, Mr. Southerland, you 
have 5 minutes.
    Mr. Southerland. Thank you, Madam Chair. Ms. Bech, I wanted 
to ask--you may not be aware, but I am from Florida and so 
obviously in Florida, we have an enormous number of specialty 
crops. I just want to ask you some questions regarding the 
Specialty Crop Research Initiative, if I could read a brief 
statement here. ``Florida, as many other specialty crop regions 
of the country, are fighting an extremely dangerous threat due 
to citrus greening''--which I am sure you are familiar with--
``represents an immediate threat to the entire $12.2 billion 
citrus industry in Florida, California, Alabama, Louisiana, and 
Texas. The specialty crop disease has the ability to kill 
citrus trees and their fruit within a few short years, 
literally placing the future of citrus production in this 
nation at risk. Citrus ranks nearly first in the nation among 
crop value, among fruit and vegetable specialty crops, 
according to the USDA's National Agricultural Statistics 
Services. Timely research on citrus greening and its vector, 
the Asian citrus psyllid, is absolutely essential to ensuring 
the future of citrus production in this country.'' As you know, 
Congress authored the Specialty Crop Research Initiative under 
the farm bill in an effort to meet the critical needs of the 
specialty crop industry by developing and disseminating 
science-based tools to address needs of specialty crops, 
including pest and disease management, resistance to pest, and 
diseases and management strategies in an effort to identify and 
address threats from pests. This is the type of research need 
for which Congress intended to address through the SCRI, and it 
would be difficult to identify a specialty crop of such major 
national significance that faces more of a devastating risk to 
the future of its existence. Recognizing this dire challenge, 
domestic citrus growers have self-funded more than $39 million 
in research annually over the past 4 years. Please explain, if 
you would, why the USDA has declined to fund over the last 3 
years this devastating disease through Specialty Crop Research 
Initiative Program, as I have stated, designed by Congress and 
intended specifically for the purposes such as these.
    Ms. Bech. Well, we certainly share your concern. Citrus 
Greening is a very devastating disease. The Specialty Crop 
Research Program is administered underneath the National 
Institute of Food and Agriculture, which is not my program, and 
we can get you some information about the administering of that 
particular program.
    For APHIS, I would like to say that we have a Citrus Health 
Response Program in which part of that funding we set aside for 
research, and we have worked very closely with the growers and 
the industry down in Florida as well as the rest of the citrus 
industry to try to address the concerns about citrus greening.
    Mr. Southerland. I think--and that would be helpful. I will 
tell you, having been there and been on the ground there, no 
country that has ever faced this has ever solved it. It 
literally wipes out the citrus industry. This is an enormous 
problem, and having met the farmers that are there that are 
funding this, and perhaps not getting the assistance that I 
think some of the funds were set up to aid is bothersome. So I 
would appreciate that. Thank you very much.
    Ms. Pegg, I want to ask a quick question. The Specialty 
Crop Block Grants provide Florida flexibility to meet the 
unique farming challenges of our state, targeting specialty 
crops including fruits and vegetables and nursery to support 
projects and marketing research innovation, education, pest 
disease management, and other things. Florida, as I stated, is 
the second largest recipient based on specialty crop 
production, receiving $24.3 and $4.9 million annually.
    Please comment, just with the time I have remaining, on 
this block grant program which gives the states flexibility to 
address their unique agricultural needs.
    Ms. Pegg. Well, I think you have raised a lot of the points 
that are important to this program. It really is one of the 
programs that is very beneficial to each state and the growers 
in that state and what they are facing. What the projects that 
Florida may be focused on, whether it is food safety or finding 
new tomato varieties or looking at methyl bromide's 
alternatives are really specific to those needs of that 
industry versus what Ohio or even California will focus on, 
which I think is really the success of this program, is it is 
really meeting the unique needs of whatever those producers are 
facing. I think that is why it has been such a successful 
program and why people really do feel that they are seeing the 
benefits of those dollars.
    Mr. Southerland. Madam Chair, I see that I am out of time 
so I will yield back what time I don't have.
    The Chairwoman. Thank you. Why don't we go to Mr. Crawford, 
5 minutes, and then we will go to round two on questions.
    Mr. Crawford. All right, thank you, Madam Chair.
    Last fall, USDA announced that Section 32 funds would be 
used to fund $630 million in disaster assistance. Ms. Pegg, can 
you cite the authority that the Department used to establish 
such a disaster assistance program under Section 32 funds?
    Ms. Pegg. You know, it is really important under Section 32 
to look at all the clauses which give us the authority for the 
different activities that we do. So Clause 1 is encourage 
exportation of agricultural products. Clause 2 is encourage 
domestic consumption. Clause 3 is reestablish farmer's 
purchasing power by making payments in connection with normal 
production of agricultural commodities. In addition, the 
Secretary also has the authority to direct Section 32 funds to 
be used for special disaster assistance programs, and this is 
the authority that we used to provide that funding. We provided 
a total of $270 million in support for those that were 
experiencing the excessive moisture flash flooding disaster in 
the Midwest.
    It is important to note that this authority has not only 
been used in recent years, but you know, in 2007 it was used to 
help hog producers with the melamine poisoning. It was also 
used in 2006 to help citrus growers with citrus canker in 
Florida. So it has been a tool that many Secretaries have used 
over the years to help those producers that are struggling. 
There is a number of tools under Section 32, not only providing 
disaster assistance, but whether that be bonus buys and so 
forth.
    Mr. Crawford. Okay. I understand the Commodity Credit 
Corporation funds were to be used to make up for this shortfall 
in Section 32 funds. How much CCC funding has been used to make 
commodity purchases that would have normally been bought with 
Section 32 funds?
    Ms. Pegg. So just to back up a little bit, initially it was 
announced that $550 million would be used to provide support. 
We didn't use all of that $550 million; only $270 million was 
actually used in support. So there is roughly, $160 million 
still available to provide, whether it be bonus buy assistance 
or disaster assistance under the Section 32 account. So there 
are still funds available to meet the needs, should anything 
occur in the remainder of the fiscal year.
    Mr. Crawford. Okay. I understand CCC has a line of credit 
with the Treasury that has to be paid back. Will future Section 
32 funds have to be used to reimburse the CCC?
    Ms. Pegg. Well, there is the authority to use Section 32 
CCC funds if we need to, and there--we can consider if we need 
to, to reimburse CCC funds. That has not yet been determined if 
that is necessary at this time.
    Mr. Crawford. Okay. I yield back. Thank you. Thank you, Ms. 
Pegg.
    The Chairwoman. I would now like to look at pest and 
disease issues, and probably Ms. Bech would be better suited 
for this, but feel free to chime in.
    What is the main conclusion that can be drawn from the 2009 
Annual Pesticide Data Report you just released this spring? 
That would be you, Ms. Pegg.
    Ms. Pegg. Sorry about that, we were--yes. The Pesticide 
Data Report is I think the one you are referring to regarding 
the residues, and this is a really important report because it 
is really showing us the historical trends in terms of 
pesticide use throughout the United States. It looks at 
pesticide usage for all the different commodities primarily 
consumed in the marketplace.
    So what it is indicating is it is indicating that we are 
seeing that pesticide use over time is reducing. There is a 
changing in trends in terms of pesticide use. Producers are 
moving to softer chemicals, as well as overall, our annual 
report shows that pesticide residues found on foods tested at 
levels below tolerances established by EPA. So you know, as we 
are always encouraging people to eat more fruits and vegetables 
and to wash them before you do, and I think this age-old rule 
still applies.
    The Chairwoman. What do you believe the purpose of the 2009 
annual report is, and what value was derived from it, do you 
believe?
    Ms. Pegg. Pardon, what was the second question?
    The Chairwoman. What was the value of the program shown in 
the report?
    Ms. Pegg. Well, there are a lot of purposes for it. I mean, 
not only does it help inform EPA in terms of trends that we are 
seeing in terms of usage, there is also value in it in that it 
is also used in discussions with foreign countries when they 
ask about pesticide usage for various commodities to set 
maximum residue limits. What we are seeing the trends is that 
overall usage is changing, and we are using softer chemicals 
and transitioning from some of the older chemicals that were 
used in previous years. So you are seeing some developments in 
terms of that science and technology, and the products that are 
available in the marketplace.
    The Chairwoman. When consumers hear about residue, they 
might get concerned. I think you have answered the question you 
tell them to wash the fruit, but what advice is there for 
consumers who are still troubled by the newspaper stories 
warning of the consumption of produce based in this report?
    Ms. Pegg. Well, once again our annual report shows that 
overall pesticide residues found on foods tested are at levels 
below the tolerance established by EPA, and it also shows us to 
continue eating fruits and vegetables, and wash them before you 
do.
    The Chairwoman. All right, and then to go back to Section 
32 again. Does the Department have the ability to operate the 
DOD Fresh Program, or would legislative language be needed for 
you to operate it?
    Ms. Pegg. We do have the authority to operate that program, 
should it be necessary.
    The Chairwoman. Okay. In your testimony outlines, the 
required Section 32 specialty crop purchases for each fiscal 
year, and that AMS plans to purchase $403 million in Fiscal 
Year 2011. Can you tell me how much of this you have spent so 
far?
    Ms. Pegg. Yes. There is the total requirement for fruit and 
vegetable purchases of the $403 million that you mentioned, and 
so far we have purchased $232 million in fruit and vegetable 
purchases. So we will have to meet that minimum before the end 
of the fiscal year.
    The Chairwoman. Last fall, the USDA announced that Section 
32 funds would be used to fund $630 million in disaster 
assistance. What authority did the Department use to establish 
such a disaster assistance program using Section 32 funds?
    Ms. Pegg. The authority that we used is the Secretary also 
has the authority to direct Section 32 funds to be used for 
special disaster assistance programs is the authority that we 
used. And we used a total of $270 million to provide that 
assistance to sweet potato, rice, soybean, cotton farmers that 
were experiencing crop loss.
    The Chairwoman. Has the Department used this authority 
before?
    Ms. Pegg. Yes, we have used this authority a number of 
years. In 2006, we used it for Florida growers dealing with 
citrus canker. We have used it for the melamine incident with 
pork producers. So we have used it on a number of occasions.
    The Chairwoman. Okay. And now since I am about out of time, 
first off, Mr. Costa has joined the dais. Do we have unanimous 
consent that he can ask questions of the panel? Is there 
agreement? Fine. And I think the next 5 minutes goes to the 
Ranking Member, Mr. Baca, and then Mr. Southerland and then Mr. 
Costa.
    Mr. Baca. Thank you, Mrs. Schmidt. With a constant threat 
of invasive species like the Asian citrus psyllid, and the 
European grapevine moth, pest and disease management is 
critical to agriculture in my home State of California. Because 
of this, I am very interested in the implementation of Section 
10201 of the 2008 Farm Bill. While I am pleased to know that 
the pest prevention project in California has received 
approximately $12 million in funding for the Fiscal Year 2011, 
I am concerned regarding APHIS prohibition from funding the 
administration costs associated with these projects. Congress 
has now acted on three separate occasions, the Recovery Act, 
the Agriculture Appropriation Bill for 2011, and the 
Agriculture Appropriation Bill for 2012, to provide technical 
correction that allows APHIS to move forward with the 
administrative funding needed. Do you have any recommendations 
for how these issues can be permanently resolved so that 
constant funding for the program may continue?
    Ms. Bech. Yes, well we share the concern and first, we 
appreciate Congress passing the temporary fixes. We agree that 
there needs to be a permanent fix, and we believe that the 
permanent fix can be achieved either through the farm bill or 
another law. We would look forward to working with you with 
language.
    Mr. Baca. Okay. Can you please provide the Subcommittee in 
writing of the USDA's Office of General Counsel's opinion on 
the current prohibition and their recommendation as to how to 
best resolve it?
    Ms. Bech. Well, we would be happy to work with our Office 
of General Counsel to address your request about the opinion, 
and I am no lawyer, but I would be happy to talk a little bit 
about it.
    We know that according to USDA's General Counsel and the 
Department of Justice that the statute provided that the 
Secretary can use the funds, facilities, and authorities of CCC 
to carry out a particular program or activity. However, the 
funding cap on administrative expenses of the CCC Charter Act 
continues to apply, so we can work with our Office of General 
Counsel to address your requests.
    [The information referred to is located on p. 225.]
    Mr. Baca. Okay, thank you. In 2009, APHIS released a pest 
and disease risk assessment update for 50 states. This update 
mentioned specific challenges and identified risks and 
suggestions that included county level data that would be 
helpful in better identifying the risks moving forward. Has the 
Department released an updated risk assessment analysis since 
October of 2009? If not, can you tell me how APHIS plans to 
refine its interpretation of the pest finding and trends, and 
how would these changes impact partnership among the Federal, 
state, and industry cooperators?
    Ms. Bech. Well, we initially characterized the states' risk 
by applying certain criteria, and we looked at different things 
such as the susceptibility of the state to invasive species, 
the number of ports that they have, as well as things like the 
impact and the agricultural commodities that are grown in the 
state. And while we did that with consulting our National Plant 
Board, as well as working with the Specialty Crops Farm Bill 
Alliance, you can imagine when we came out with the assessment 
that there was some concern about how different states ranked. 
But we used that--it is not a formula-based method that we used 
to establish the funding of the project, so this is only one 
aspect that we used. But because there was some concern, what 
we have done is we have authorized the use of funds for some of 
the projects working with states to redefine what that 
assessment process would look like, and we funded two projects 
with that. We are hoping that they will be completed this year. 
By the end of the year, we hope to reassess the assessment for 
the risk ranking of the states, and we would be able to then 
look at how that would be implemented.
    So the actual impact on it right now I think it really 
shows that we have to work together and that we can employ all 
the different interests to come together to administer the 
funds. I think it would actually support a stronger team-
building effort.
    Mr. Baca. Thank you. I know that my time has run out, are 
there any duplicated services that can be consolidated in 
trying to implement this?
    Ms. Bech. The specific risk----
    Mr. Baca. Yes, are there duplicated services that we might 
want to consolidate to reduce our costs, and yet still provide 
these important services?
    Ms. Bech. Well, I think that the risk assessment as well as 
the other things that we look at, and the transparency in which 
we go about looking at the projects and the funding list have 
served us well, and it shows a coordinated effort, especially 
because a lot of the projects that we fund cross multiple 
states and we look at regional approaches as well. So it is 
really looking at it nationally as well as individually.
    Mr. Baca. Thank you. I know my time has run out, Madam 
Chair.
    The Chairwoman. Mr. Southerland?
    Mr. Southerland. Thank you, Madam Chair.
    Mrs. Bech, I apologize for asking you a question outside of 
your purview here, but obviously we will track that down, 
because citrus greening is terribly important to all of those, 
especially the Florida delegation.
    Moving over to APHIS, could you explain to me, as a new 
Member, just--and this will be very simple as my only 
question--just elaborate how the USDA assesses risk. Help me 
understand: I know 4\1/2\ minutes is not a long time, but give 
me kind of a kindergartner's understanding of how that--how it 
works. How do you go after it?
    Ms. Bech. Well, that is a good question, and we can provide 
you with some additional information after this hearing about 
it.
    Mr. Southerland. Okay.
    Ms. Bech. But one of the things we have done is we have 
really created a very collaborative approach with working with 
the states, as well as the industry groups to look at the risk, 
and as I mentioned earlier, we had a risk assessment that was 
done, looking at the different risks of the states and looking 
at the kinds of commodities, the impacts, the kinds of invasive 
species that are coming through, such as citrus greening and 
the Asian----
    Mr. Southerland. So they are the ones that--I apologize for 
interrupting, but you are basically put on notice from the 
states because they have obviously--something has been 
triggered and they see it, so they are doing basically R&D for 
you?
    Ms. Bech. Well, what the states are doing is we are working 
together to survey and to look at the pests that are coming in, 
and so we are working as a team to address the threats as they 
come in.
    Mr. Southerland. Okay.
    Ms. Bech. And we have been enhancing the surveys that the 
states do, as well as providing traps and lures, things like 
that. So it is really a real partnership.
    Mr. Southerland. Collaborative effort. Is that--and part of 
your assessment, obviously when you have aid that you can send 
to the states, I mean, is there--do you always take into 
account the economic impact if those diseases or insects would 
go unhampered? I mean, as far as being able to prioritize, 
okay, because obviously you have a finite resource and you have 
so many problems. I mean, do you prioritize based upon the 
impact economically, because that is a jobs issues to many 
states.
    Ms. Bech. Yes. Well, we do look at economics but there are 
other factors that weigh in as well, and we try to look at the 
impact--like you are a citrus-producing state. Certainly the 
problems that you are facing in Florida impact the other 
citrus-producing states as well, so we take many things into 
consideration and the impact on the commodity itself, yes.
    Mr. Southerland. Very good, thank you. And if you could 
give me information, maybe provide it to our office, I would 
welcome that. I would love to learn more about how you go about 
assessing. So thank you.
    I yield back.
    The Chairwoman. Thank you. Now, Mr. Costa from California.
    Mr. Costa. Thank you very much, Madam Chairperson, for 
allowing me to participate with the Subcommittee this 
afternoon. It is an important issue, and I look forward to 
questioning the witnesses.
    For my colleague from Florida, what we tend to do is look 
at this in terms of risk assessment versus risk management. 
Your ability to manage the risk is based upon your ability to 
assess the various aspects of risk. Then with state agencies 
and local ag commissioners in California, you make a 
determination on what resources should be placed on the 
management of the risk, based upon the risk assessment that has 
taken place.
    I would like to ask this question as it relates to APHIS. 
As you know, over the 16 year period from 1995 to 2010, as it 
relates to our ability to export our products abroad, we have 
had 312, World Trade Organization SPS trade concerns that have 
been raised. Of these, 212 trade concerns, I understand, remain 
unresolved. California, is at the tip of this spear. California 
uses over 500,000 phytosanitary export certificates to access 
those markets.
    My question to you is how APHIS works with all Federal 
agencies in trying to deal with this backlog? How does it 
assist the USTR on these SPS trade concerns? Ms. Bech, can you 
address that quickly, because I have some other questions.
    Ms. Bech. Okay. Well, I will try to address what APHIS has 
done, but of course, our USTR and others take the lead in----
    Mr. Costa. I know, but I want to understand APHIS's role.
    Ms. Bech. Yes, so we provide technical support on that, we 
do bilateral agreements with the----
    Mr. Costa. But how well are you helping USTR deal with 
those 212 trade concerns? You haven't been able to come up to 
speed on the risk management side to provide those export 
certificates.
    Ms. Bech. Well, the export certificates are to meet the 
trade obligations for the others, and what we do is provide the 
assessments. I believe that might be what you are talking 
about. However, I would like to clarify that there is no 
backlog of export certificates.
    Mr. Costa. Right.
    Ms. Bech. And we have certainly worked very carefully in 
shortening the risk assessment, categorizing it into a tiered 
process to look at the priorities to address that----
    Mr. Costa. Can you clarify the link between the pest and 
the disease challenges, how in working with your partners in 
USDA possible trade disruptions and the potential economic 
losses that would occur to our agricultural producers are 
addressed and hopefully minimized?
    Ms. Bech. Well, I think if I can clarify, if I might ask a 
clarifying question. Are you asking what we are doing with the 
other USDA agencies in addressing the disease impacts on the 
economics? Then we are providing, again, the assessments that 
go into that economic analysis and working with our Foreign 
Agriculture Service to address those issues.
    Mr. Costa. Do you have any explanation as to why only \1/3\ 
of the SPS certificates or trade concerns have been addressed?
    Ms. Bech. Well, I could get further information on it.
    [The information referred to is located on p. 234.]
    Mr. Costa. Let me, move quickly because my time is 
expiring. I would like your agency to respond to our folks who 
really rely upon you in their ability to get those trade 
certificates expedited so that we can access international 
markets.
    Ms. Bech. Yes, sir.
    Mr. Costa. Thank you.
    Ms. Pegg, enjoying Washington?
    Ms. Pegg. Yes, very much so.
    Mr. Costa. Good. She is a former Californian. We used to 
interact in the old days.
    The Chairwoman and the Ranking Member were asking you on 
your agency's various efforts on the USDA school lunch and 
breakfast programs. How to expand the commodity purchases. You 
talked about the amount of money left in this fiscal year. How 
would you, with your previous experience and background, 
suggest improvements to get healthy fruits and vegetables, and 
better diets into our schools. How would you assess our 
efforts, thus far, since the 2008 Farm Bill, both in California 
and here in Washington?
    Ms. Pegg. Well, I think the 2008 Farm Bill, because it 
established those minimums--you know, in previous years, we 
have exceeded the minimum amount, whether it was the minimum, 
$399 million, we have purchased in the $400 to $500 million 
amount. This year, we are seeing a slightly different situation 
because we aren't getting a number of bonus buy requests 
because people aren't having oversupply in the marketplace. So 
that does impact some of the products supplied to schools and 
food banks.
    I think not only is it the collective work of our 
purchases, it is also the food and nutrition standards that 
they establish, and then to schools and what they do with that. 
I mean, you are seeing a lot of schools that are really 
recognizing how they can change their menus to provide more 
variety, healthier choices for their students, and that is not 
just--it is both including bonus buy, pork buy that we may 
deliver to them, as well as complementing that with a local 
orange to make a citrus pork dish. I mean, really schools are 
being creative to provide more variety in their menus, and I 
think we are also developing a lot more programs to assist them 
in that, whether it is through more training, different 
services to those food service directors, as well as looking at 
the menu of items that we purchase directly from our Section 32 
account.
    Mr. Costa. Madam Chairperson, my time has expired. I 
appreciate the answer. Madam Chairperson, knowing how health 
conscious you are and how many marathons you run, and having a 
good healthy diet, this is an area that is a constant source of 
frustration. We see obesity continuing to increase among our 
young people. Our efforts with regard to a better healthy 
nutrition program in our schools is a step in the right 
direction. I am just not sure if this Subcommittee can continue 
to examine some new efforts on how we can do a better job. We 
grow the healthiest, most abundant food products anywhere in 
the world. Our farmers, our dairymen, our ranchers, excel in 
doing this. Trying to get those products--those healthy food 
products in our school lunch and breakfast programs is 
essential to our children
    The Chairwoman. We are going to have a hearing on that in 
the future, and I invite you to come back, but before we 
adjourn, I do have just two more questions, and looking at the 
Members here, Mr. Baca may have one, and maybe Mr. Costa so we 
may get out here in a quick dash.
    But I want to talk a little bit about block grants. State 
departments of agriculture have expressed frustration with the 
timeliness of the notice of funds available being published by 
the Office of Management and Budget, the OMB. Any delay in this 
notice creates pressure on state grant processes, which can 
discourage grants to non-state operated grant requests. What 
needs to happen to expedite this process?
    Ms. Pegg. Well, we recognize those concerns. Unfortunately, 
because of the delay in the appropriations bill which gave us 
the authority to use the funds for administrative functions, 
that was the delay in getting out that notice. So there was 
part of the reason why we had the concern. It also delayed the 
notice for the farmers market promotion and the result of 
basically a month turnaround in receiving applications. So that 
is one of the issues that we ran into this year. We need to 
look at some solutions in coming years to resolve that more 
quickly so we can be more timely in our announcements and 
getting those dollars out.
    The Chairwoman. Thank you. It is our understanding that 
states are required to submit state performance reports after 
an annual agreement is completed. The reports are supposed to 
detail the performance, outcomes, and results of the state 
block program projects. What is the status of these reports, 
and have states been submitting them in a timely manner, and if 
not, do you know why?
    Ms. Pegg. I can get you a number of how many reports we 
have received. I think one of the important things to know of 
this is that because some projects go over a 3 year period, we 
have staggering of reports so some reports we are still waiting 
for because the project has not yet been completed with the 3 
year period that a project may go on for. But I think we are 
current, but I will get you a final number of what we currently 
have and what is still left to be received. There are currently 
121 reports available.
    The Chairwoman. Thank you. Mr. Baca, do you have any 
questions?
    Mr. Baca. I do, just a quick question. Earlier, Ms. Pegg, 
you talked about the deadline of July 1st for anyone to submit 
their SCBGD grants. It seems that state departments of 
agriculture have expressed some frustration with the publishing 
timeline for the notice of funds availability. Any delays in 
this announcement creates pressure on the states, which can 
discourage grant applications. What needs to happen for this 
process to be expedited?
    Ms. Pegg. Well, just to kind of mention it, what occurred 
this year is the appropriations process, because Congress did 
not act as quickly as needed. We had initially expected but 
finally reached an agreement. We needed language in the 
appropriations bill that would allow us for issuing those funds 
and using those funds for administrative costs, so that was the 
delay until the budget for 2011 was approved. That was the 
delay in getting out the notice. So we can talk with you about 
some options and some language that could be included in future 
pieces of legislation that would assist in getting more timely 
notices out.
    Mr. Baca. We would love to hear suggestions. Hopefully we 
can work on possible improvements.
    Ms. Pegg. We would be happy to work with you on that.
    Mr. Baca. Just one more question. Several grants supporting 
the farmers market project have been approved under the SCBGP, 
even though the farm bill provides for farmers market promotion 
programs. How are these programs being coordinated? Shouldn't 
projects related to farmers markets be considered by the 
farmers market promotion program?
    Ms. Pegg. Yes, and this very important that we don't have a 
duplication or double-dipping when people are applying. So what 
occurs is when there is an application for a farmers market 
under the block grant program, in reviewing that application we 
also send that to those that administer the farmers market 
promotion program, the FISNIT Program, if it is a Rural 
Development program, to ensure that they are also not receiving 
funds under those grant projects. If they are receiving funds, 
then they must then demonstrate what is the need for why they 
must receive block grant funds. So that is part of our review 
process to ensure that there is no double-dipping.
    Mr. Baca. Does USDA have a follow-up mechanism for state 
oversight to make sure that there is no double-dipping? What 
are the consequences for those that are double-dipping?
    Ms. Pegg. We do have follow-up in terms of the site visits 
that we do to the states, the audits that they are required to 
provide. There are no penalty provisions that I am aware of for 
the double-dipping, but we would be happy to discuss that with 
you.
    Mr. Baca. Thank you. Maybe penalties is something to 
consider. If there are no penalties, if I can get away with it, 
I will get away with it.
    Ms. Pegg. Well, we hope that our process does protect from 
that ever occurring, and we hope that--yes, hopefully. We hope 
that the process is stringent enough where both programs are 
catching something, should an entity try to apply for all 
funds. And I do see those--when every grant comes to my desk, I 
do see the response of every agency, whether they have applied 
for MAP or TASC funds, FMPP, Rural Development funds, every 
grant application is reviewed upon those and there is a 
response specific to that grant application.
    Mr. Baca. Okay, thank you. With that, I have exhausted my 
time so I yield back.
    The Chairwoman. Thank you. Mr. Costa, do you any other 
questions? Thank you.
    Well, I want to thank the panelists, Ms. Pegg and Ms. Bech, 
for being here today, and I wish you luck.
    Ms. Pegg. Thank you.
    The Chairwoman. This hearing is over. Thank you.
    [Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
Supplementary Material Submitted by Rebecca Bech, Deputy Administrator 
for Plant Protection and Quarantine, Animal and Plant Health Inspection 
                Service, U.S. Department of Agriculture
    During the July 7, 2011 hearing entitled, Agricultural Program 
Audit: Examination of Specialty Crop Programs, requests for information 
were made to Rebecca Bech. The following are the information 
submissions for the record.
Insert 1
          Mr. Baca. Okay. Can you please provide the Subcommittee in 
        writing of the USDA's Office of General Counsel's opinion on 
        the current prohibition and their recommendation as to how to 
        best resolve it?
          Ms. Bech. Well, we would be happy to work with our Office of 
        General Counsel to address your request about the opinion, and 
        I am no lawyer, but I would be happy to talk a little bit about 
        it.
          We know that according to USDA's General Counsel and the 
        Department of Justice that the statute provided that the 
        Secretary can use the funds, facilities, and authorities of CCC 
        to carry out a particular program or activity. However, the 
        funding cap on administrative expenses of the CCC Charter Act 
        continues to apply, so we can work with our Office of General 
        Counsel to address your requests.

    Please see attached memorandum.

December 22, 2008

Memorandum for W. Scott Steele, Director, Office of Budget and Program 
    Analysis 

From:

Marc L. Kesseman,
General Counsel.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


Subject:

Opinion re: Use of Commodity Credit Corporation Funds for Salaries and 
Expenses

Issue:
    This memorandum sets forth the opinion of the Office of the General 
Counsel regarding when Commodity Credit Corporation (``CCC'') funds may 
be used to pay for the costs of Federal and state agencies with respect 
to the implementation of CCC programs.
    This opinion has been prepared in response to recent requests for 
the apportionment of CCC funds for the Healthy Forests Reserve Program 
(``HFRP'') and the Agricultural Management Assistance Program 
(``AMAP''). In reviewing these requests, it has become apparent that 
clear legal guidance would benefit Department officials confronting the 
question of when CCC funds may be expended for the salaries and related 
administrative costs associated with the implementation of programs 
that Congress has directed to be funded by CCC.
    As a result of amendments to section 11 of the Commodity Credit 
Corporation Charter Act made by section 161(b)(2) of the Federal 
Agricultural Improvement and Reform Act of 1996 (the ``1996 
Amendment''), there are significant limitations on the ability of CCC 
to use its funds for the payment of costs incurred by state and Federal 
agencies in the administration of CCC programs.\1\ Generally, as a 
result of the 1996 Amendment, CCC may annually use not more than 
$56,102,727 to reimburse Federal and state agencies for costs they 
incur in the administration of CCC programs.
---------------------------------------------------------------------------
    \1\ The current text of section 11 is attached as Appendix 1.
---------------------------------------------------------------------------
    The Farm Security and Rural Investment Act of 2002 (the ``2002 
Act'') authorized the use of CCC funds to pay for the salaries and 
related expenses incurred in the delivery of a number of specified 
programs. In response to a request by the Office of Management and 
Budget (``OMB''), the United States Department of Justice (``DOJ'') 
opined on the application of section 11 of the CCC Charter Act to 
specific conservation programs authorized by the 2002 Act. We conclude 
that the analysis of the 2003 DOJ opinion \2\ applies with full force 
to the question presented here.
---------------------------------------------------------------------------
    \2\ Appendix 2.
---------------------------------------------------------------------------
    As noted in the 2003 DOJ opinion, the mere reference to the use of 
CCC to carry out a program does not supersede the limitations in 
section 11 of the CCC Charter Act. The enactment of the Food, 
Conservation, and Energy Act of 2008 (the ``2008 Act'') again raises 
the question of the extent to which funds of CCC can be used to pay 
salaries and expenses in carrying out programs where the statute 
authorizing the program provides that CCC funds or authorities will be 
used with respect to such programs. Appendix 3 sets forth a 
comprehensive list of the provisions of the 2008 Act that implicate the 
use of CCC funds in the conduct of programs.
    My office has consulted with OMB before issuance of this opinion 
and OMB concurs with our conclusions.
Discussion:
I. 2002 Act
    After enactment of the 2002 Act, a question arose with respect to 
the propriety of using CCC funds to pay for the technical assistance 
costs of the Natural Resources Conservation Service relating to several 
CCC-funded conservation programs.
    Section 1241(a) of the Food Security Act of 1985 (the ``1985 Act'') 
had been amended by the 2002 Act to authorize the Secretary to ``use 
the funds, facilities, and authorities of the Commodity Credit 
Corporation to carry out'' seven listed conservation programs. As noted 
at page 4 of the 2003 DOJ opinion, although these seven programs 
provided for the use of CCC funds for program activities, the provision 
of technical assistance using CCC funds was limited by section 11 of 
the CCC Charter Act:

        We believe that section 1241(a) does not confer on the CCC a 
        source of authority, independent of section 11, for funding 
        technical assistance to the programs listed in section 1241(a).

    Subsequently, Congress amended the 1985 Act to specify that the use 
of CCC funds to pay for technical assistance, as defined in section 
1201(a)(25) of that Act would not constitute ``an allotment or fund 
transfer from the Commodity Credit Corporation for purposes of the 
limit on expenditures for technical assistance imposed by section 11 of 
the Commodity Credit Corporation Charter Act (15 U.S.C. 714i)'' \3\ 
with respect to seven programs listed in section 1241(a) of that Act:
---------------------------------------------------------------------------
    \3\ Section 1241(c) of the 1985 Act.

---------------------------------------------------------------------------
    1. The Conservation Reserve Program;

    2. The Wetlands Reserve Program;

    3. The Conservation Security Program;

    4. The Farmland Protection Program;

    5. The Grassland Reserve Program;

    6. The Environmental Quality Incentives Program; and

    7. The Wildlife Habitat Program.

    The 2008 Act added the Conservation Stewardship Program to section 
1241(a), and it is therefore treated the same as the seven programs 
originally enumerated. As a result of this Congressional action, CCC 
funds have been made available to pay salary and related costs in the 
administration of these eight programs.
II. 2008 Act
    The 2008 Act contains approximately 30 references to programs that 
use CCC funds in their implementation (see Appendix 3). While the 
majority of the 2008 Act provisions that authorize the use of CCC funds 
are not independent of section 11, the following sections of that Act 
do provide such independent authority and, therefore, CCC funds may be 
used for administrative costs without regard to the limitations in 
section 11:

    1. Section 1622--Section 1601 provides that the funds, facilities 
        and authorities of CCC shall be used to carry out Title I of 
        the 2008 Act and section 1622 further directs the Secretary of 
        Agriculture to make available $50 million to the Farm Service 
        Agency to carry out such title.

    2. Section 2510--This section amends Title XII of the 1985 Act by 
        adding a new section 12401 to authorize the establishment of 
        the Agricultural Water Enhancement Program. Section 1240I(b) of 
        the 1985 Act specifically provides that an agricultural water 
        enhancement program shall be established ``as a part of the 
        environmental quality incentives program [EQIP].'' Because EQIP 
        is one of the eight programs subject to section 1241(c) of the 
        1985 Act, CCC funds may be used to pay for technical assistance 
        expenses.

    3. Section 2605--This section amends Title XII of the 1985 Act by 
        adding a new section 1240Q to authorize the establishment of 
        the Chesapeake Bay Watershed Program (the ``CBWP''). Section 
        1240Q(c) of the 1985 Act provides that: ``The Secretary shall 
        deliver the funds made available to carry out this section 
        through applicable programs under this subtitle. . . .'' The 
        reference to ``applicable programs under this subtitle'' 
        includes those eight programs listed above. Because the CBWP is 
        not an independent program but simply an authorization to use 
        additional funds of CCC to carry out delineated programs in the 
        Chesapeake Bay Watershed, to the extent the CCC funds are used 
        to carry out one of the seven listed conservation programs, CCC 
        funds may be used to pay for technical assistance expenses.

    4. Section 3106--This section amends section 3107 of the 2002 Act 
        to provide that $84 million of CCC funds shall be used to 
        administer the McGovern-Dole International Food for Education 
        and Child Nutrition Program. Section 3107(l)(3) of the 2002 Act 
        provides that funds made available to carry out the program may 
        be used to pay related administrative expenses.

    5. Section 7410--This section amends section 7405 of the 2002 Act 
        to provide that $18 million of CCC funds shall be used to carry 
        out the Beginning Farmer and Rancher Development Program in FY 
        2009 and $19 million in each of the 2010 through 2012 Fiscal 
        Years. Section 7405(c)(7) of the 2002 Act provides that not 
        more than four percent of the funds made available to carry out 
        this program may be used for administrative expenses.

    6. Section 9001(a)--This subsection completely revises Title IX of 
        the 2002 Act. Included in this revision of Title IX is a new 
        section 9008, containing the authorization for the Biomass 
        Research and Development Board and the associated grant 
        program, which is funded by CCC. The new section 9008(f)(3) of 
        the 2002 Act specifically authorizes the Secretary to use not 
        more than four percent of the funds made available to carry out 
        this program, including the CCC funds, for the administration 
        of the authorized activities.
III. Other Statutory Provisions
    Four additional statutory provisions pre-dating the enactment of 
the 2008 Act also warrant reference in this opinion:

    1. Section 1469(a)(3) of the National Agricultural Research, 
        Extension, and Teaching Policy Act of 1977;

    2. Section 10417 of the Animal Health Protection Act;

    3. Section 442 of the Plant Protection Act; and

    4. Section 7405(c) of the 2002 Act.

    We have determined previously that these four provisions provide 
authority independent of section 11 of the CCC Charter Act to use CCC 
funds for salaries and related expenses, and we do not amend that 
determination here.
    Section 1469(a)(3) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 authorizes the Secretary to 
retain up to four percent of amounts made available for agricultural 
research, extension, and teaching assistance programs under any Act for 
the administration of those programs. A similar provision is set forth 
in section 7405(c) of the 2002 Act, as amended by section 7410 of the 
2008 Act, with respect to the Beginning Farmer and Rancher Development 
Program. Section 10417 of the Animal Health Protection Act and section 
442 of the Plant Protection Act provide for the transfer of funds 
otherwise available to the Secretary, including CCC funds, for use in 
eradicating animal and plant pests.
Conclusion
    With respect to the HFRP and AMAP, although CCC funds may be used 
to pay for salaries and related expenses, the use of CCC funds for 
these expenses would be subject to the limitations of section 11 of the 
CCC Charter Act.
    Based upon the foregoing analysis, and consistent with the 2003 DOJ 
opinion, CCC funds may be used to pay for salaries and related expenses 
attendant to programs carried out by Federal and state agencies 
independent of section 11 only with respect to activities authorized 
by:

    1. Section 1469(a)(3) of the National Agricultural Research, 
        Extension, and Teaching Policy Act of 1977;

    2. Section 10417 of the Animal Health Protection Act;

    3. Section 442 of the Plant Protection Act;

    4. Section 1241(a) of the 1985 Act;

    5. Section 1240I of the 1985 Act;

    6. Section 1240Q of the 1985 Act.

    7. Section 3107 of the 2002 Act;

    8. Section 7405(c)(7) of the 2002 Act;

    9. Section 9008 of the 2002 Act; and

    10. Section 1622 of the 2008 Act.

    This list is, of course, subject to change by Congress; but cannot 
be amended by regulation or other Administrative action.
Legislative Changes
    If the relevant policymakers decide to seek a legislative change, 
we stand ready to assist with drafting language similar to that adopted 
in 2003 by Congress to authorize the use of CCC ``program'' funds for 
technical assistance costs associated with the seven listed programs in 
section 1241(a) of the 1985 Act. I have attached Appendix 4 as one 
example of an amendment that could be enacted to address this matter.
                               appendix 1
    Sec. 11. Cooperation With Other Government Agencies.--The 
Corporation may, with the consent of the agency concerned, accept and 
utilize, on a compensated or uncompensated basis, the officers, 
employees, services, facilities, and information of any agency of the 
Federal Government, including any bureau, office, administration, or 
other agency of the Department of Agriculture, and of any state, the 
District of Columbia, any territory or possession, or any political 
subdivision thereof. The Corporation may allot to any bureau, office, 
administration, or other agency of the Department of Agriculture or 
transfer to such other agencies as it may request to assist it in the 
conduct of its business any of the funds available to it for 
administrative expenses. The personnel and facilities of the 
Corporation may, with the consent of the Corporation, be utilized on a 
reimbursable basis by any agency of the Federal Government, including 
any bureau, office, administration, or other agency of the Department 
of Agriculture, in the performance of any part or all of the functions 
of such agency. After September 30, 1996, the total amount of all 
allotments and fund transfers from the Corporation under this section 
(including allotments and transfers for automated data processing or 
information resource management activities) for a fiscal year may not 
exceed the total amount of the allotments and transfers made under this 
section in Fiscal Year 1995.
                               appendix 2
January 3, 2003

Memorandum for Philip J. Perry, General Counsel, Office of Management 
    and Budget 

Re: Funding for Technical Assistance for Agricultural Conservation 
Programs

    You have asked us to examine the sources and limits on funding for 
technical assistance provided for agricultural conservation programs 
listed in amended section 1241(a) of the Food Security Act of 1985. See 
16 U.S.C.A. 3841(a) (West, WESTLAW through Pub. L. 107-313). That 
provision instructs the Secretary of Agriculture to ``use the .funds, 
facilities, and authorities of the Commodity Credit Corporation 
[(`CCC')] to carry out,'' these programs. You have asked us to 
determine (1) whether expenditures on technical assistance for these 
programs are subject to the annual limit that Congress has placed on 
aggregate transfers of CCC funds to other components of the Department 
of Agriculture (``USDA'') under section 11 of the Commodity Credit 
Corporation Charter Act (``CCC Charter Act''), 15 U.S.C. 714i (2000), 
and (2) whether the Secretary of Agriculture may draw upon USDA's 
appropriation for Conservation Operations (``CO'') to fund technical 
assistance for these programs.
    Your Office has concluded that the section 11 cap applies to 
technical assistance expenditures for the conservation programs listed 
in section 1241(a) and that the Secretary of Agriculture may draw upon 
USDA's CO appropriation to fund technical assistance for these 
programs.\1\ USDA has concurred in your conclusions on both points.\2\ 
The Congressional Budget Office, addressing only the first point, has 
also concurred.\3\ The General Accounting Office (``GAO''), however, 
has reached contrary conclusions: it has determined that the section 11 
ceiling does not apply and that the CO appropriation is not 
available.'' \4\
---------------------------------------------------------------------------
    \1\ See Letter for Susan A. Poling, Associate General Counsel, 
General Accounting Office, from Philip J. Perry, General Counsel, 
Office of Management and Budget (Sept. 16, 2002).
    \2\ See Letter for Susan A. Poling, Associate General Counsel, 
General Accounting Office, from Nancy S. Bryson, General Counsel, U.S. 
Department of Agriculture (Sept. 16, 2002).
    \3\ See Letter for Senator Tom Harkin, Chairman, Senate Comm. on 
Agriculture, Nutrition and Forestry, from Nancy S. Bryson, General 
Counsel, U.S. Department of Agriculture (Sept. 24, 2002) (quoting 
electronic message communicating the Congressional Budget Office's 
conclusion that the section 11 ceiling remains ``applicable to the 
transfers under section 1141(a)'').
    \4\ See Letter for Senator Herb Kohl, Chairman, Subcom. on 
Agriculture, Rural Development, and Related Agencies, Senate 
Appropriation Comm.; Senator Thad Cochran, Ranking Minority Member, 
Subcom. on Agriculture, Rural Development, and Related Agencies, Senate 
Appropriation Comm.; and Representative Henry Bonilla, Chairman, 
Subcom. on Agriculture, Rural Development, FDA & Related Agencies, 
House Appropriations Comm. from Anthony H. Gamboa, General Counsel, 
U.S. General Accounting Office, Re: Funding for Technical Assistance 
for Conservation Programs Enumerated in Section 2701 of the farm bill, 
No. B-29124l (Oct. 8, 2002) (available at http://www.gao.gov) (``GAO 
Letter'').
---------------------------------------------------------------------------
    For the reasons set forth below, we conclude that the section 11 
cap applies to technical assistance expenditures for the conservation 
programs listed in section 1241(a) and that the Secretary of 
Agriculture may draw upon USDA's CO appropriation to fund technical 
assistance for these programs.
I.
    We first address whether the section 11 cap applies to technical 
assistance expenditures for the conservation programs listed in section 
1241(a).
A.
    In legislation enacted earlier this year, Congress substantially 
revised section 1241 of the Food Security Act of 1985 concerning the 
use of funds transferred from the Commodity Credit Corporation (CCC) to 
finance agricultural conservation programs. See Farm Security and Rural 
Investment Act of 2002, Pub. L. No. 107-171,  2701, 116 Stat. 134, 278 
(``2002 Farm Bill''), codified at 16 U.S.C.A. 3841 (West. WESTLAW 
through Pub. L. 107-313). Revised section 1241(a) instructs the 
Secretary of Agriculture, during Fiscal Years 2002 through 2007, to 
``use the funds, facilities, and authorities of the Commodity Credit 
Corporation to carry out [seven specified conservation programs] under 
subchapter IV [of title 16, chapter 58] (including technical 
assistance).'' 16 U.S.C.A. 3841(a). For three of the seven specified 
programs, this authorization to spend CCC funds is not subject to any 
specific dollar limitation, although acreage and eligibility 
restrictions place some limit on potential spending.\5\ The remaining 
four, in contrast, are subject to annual spending limits specified in 
section 1241(a).\6\
---------------------------------------------------------------------------
    \5\ Subsections 1241(a)(1)-(3) instruct the Secretary to use CCC 
funds, without any dollar-denominated limit, to carry out the 
Conservation Reserve Program (``CRP''), 16 U.S.C.A. 3831-3835a (West, 
WESTLAW through Pub. L. 107-313); the Wetlands Reserve Program 
(``WRP''), id. 3837-3837e; and the Conservation Security Program 
(``CSP''), id. 3838-3838c.
    \6\ Subsections 1241(a)(4)-(7) instruct the Secretary to use CCC 
funds, up to prescribed annual limits, to carry out the Farmland 
Protection Program (``FPP''), 16 U.S.C.A. 3837h-3837j (West, WESTLAW 
through Pub. L. 107-313); the Grassland Reserve Program (``GRP''), id. 
3838n-3838q; the Environmental Quality Incentives Program (``EQIP''), 
id. 3839aa-3839aa-9; and the Wildlife Habitat Incentives Program 
(``WHIP''), id. 3839bb-l.
---------------------------------------------------------------------------
    The 2002 Farm Bill also revised section 1241 to add an express 
reference to the section 11 limit on the use of CCC funds to meet 
administrative expenses. Revised. section 1241(b) provides that nothing 
in the new provisions respecting CCC funding ``affects the limit on 
expenditures for technical assistance imposed by section 714i of Title 
15 [i.e., section 11 of the CCC Charter Act].'' 16 U.S.C.A. 3841(b) 
(West, WESTLAW through Pub. L. 107-313).
    The limit on expenditures that is explicitly preserved in this 
portion of section 1241(b) restricts USDA uses of CCC funds. The CCC, a 
Federal corporation that is located within the USDA and managed by a 
Board of Directors under the supervision of the Secretary of 
Agriculture, is empowered to obtain funds through borrowing (under a 
$30 billion line of credit) as well as through direct appropriations 
from Congress.\7\ Section 11 of the CCC Charter Act authorizes the CCC 
to allot or transfer ``to any bureau, office, administration or other 
agency of the Department of Agriculture . . . any of the funds 
available to [the CCC] for administrative expenses.'' 15 U.S.C. 714i, 
including funds that the CCC raises through borrowing. In particular, 
the section 11 cap provides that:
---------------------------------------------------------------------------
    \7\ See 15 U.S.C. 714b(i) (authorizing CCC to borrow to finance its 
programs, subject to $30 billion limit on indebtedness). Borrowing from 
the United States Treasury under authority of section 714b(i) 
represents the principal source of CCC funding. The CCC repays the 
loans, thereby restoring its borrowing authority, using programmatic 
revenues (such as loan repayments by commodity producers) and annual 
appropriations. See e.g., Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 2002, Pub. L. 
No. 107-76, 115 Stat. 704, 716-17, 729 (appropriating ``such sums as 
may be necessary to reimburse the Commodity Credit Corporation for net 
realized losses sustained, but not previously reimbursed'' and specific 
amounts for overhead expenses of the commodity export guarantee 
program). Direct appropriations for certain CCC programs, made 
available through the annual Congressional appropriations process, 
provide a secondary source of funding. See generally, U.S. General 
Accounting Office, Commodity Credit Corporation: Information on the 
Availability, Use, and Management of Funds, Rep. No. GAO/RCED-98-114, 
at 1-2 (April 1998) (CCC Funds Report) (describing CCC's use or ''line-
of-credit'' financing and direct appropriations).

        After September 30, 1996, the total amount of all allotments 
        and fund transfers from the Corporation under this section 
        (including allotments and transfers for automated data 
        processing or information resource management activities) for a 
        fiscal year may not exceed the total amount of the allotments 
---------------------------------------------------------------------------
        and transfers made under this section in Fiscal Year 1995.

Id. According to OMB's figures, section 11 allotments and transfers for 
administrative expenses during Fiscal Year 1995 totaled $56 million.
B.
    Your Office and GAO have offered competing textual analyses of the 
question whether the section 11 cap applies to technical assistance 
expenditures for the conservation programs listed in section 1241(a). 
You both agree that the section 11 cap applies only to allotments and 
fund transfers made by CCC under its section 11 authority. The pivotal 
point on which your Office and GAO disagree is whether section 1241(a) 
gives CCC a source of authority, independent of section 11, for funding 
technical-assistance to these programs. GAO maintains that section 
1241(a) provides CCC independent authority; that the technical 
assistance that CCC funds for the conservation programs listed in 
section 1241(a) is pursuant to this independent authority; and that the 
section 11 cap therefore does not come into play. Your office, by 
contrast, maintains that section 11 is the sole source of authority for 
the CCC to fund technical assistance by USDA entities for farm 
conservation programs.
    We believe that section 1241(a) does not confer on the CCC a source 
of authority, independent of section 11, for funding technical 
assistance to the programs listed in section 1241(a). We note in 
particular that section 1241(a) states that ``the Secretary shall use 
the funds, facilities, and authorities of the [CCC] to carry out'' 
these programs. Rather than vesting new authority in CCC, section 
1241(a) thus states plainly that the Secretary of Agriculture shall use 
the CCC's existing ``authorities'' to provide technical assistance to 
these programs. Beyond invoking section 1241(a), GAO does not allege 
any other authority that CCC has, apart from section 11, for funding 
technical assistance to farm programs. Nor are we aware of any such 
authority that would operate separately from section 11. We therefore 
determine that insofar as the Secretary is using CCC's authorities to 
fund such technical assistance, she is relying on CCC's section 11 
authority.
    Our textual analysis is reinforced by section 1241(b), which 
provides that ``[n]othing in [section 1241] affects the limit on 
expenditures for technical assistance imposed by [section 11]. '' 16 
U.S.C.A.  1241(b). Before the 2002 Farm Bill was enacted, the section 
11 cap indisputably applied to technical-assistance funds provided to 
at least two of the programs (CRP and WRP) now listed in section 
1241(a).\8\ If, as GAO contends, the effect of section 1241(a) were to 
remove technical-assistance funding of these two programs from the 
section 11 cap, it would be highly peculiar to describe this escape 
from the section 11 cap merely as not ``affect[ing] the limit on 
expenditures for technical assistance imposed by [section 11].'' It 
would be far more natural and straightforward for any reference to the 
section 11 cap to state simply that expenditures for technical 
assistance under section 1241 are not subject to the section 11 cap.
---------------------------------------------------------------------------
    \8\ We are advised by your Office that under the statutory scheme, 
including the predecessor version of Section 1241, in effect before the 
2002 Farm Bill was enacted, OMB and USDA were of the view that (or at 
least acted as if) transfer of CCC funds for technical assistance for 
EQIP and WHIP was independently authorized. Whether or not such a view 
was permissible under the previous statutory scheme, we do nor believe 
that that view should affect our construction of the revised section 
1241. It is true that under one canon of construction ``Congress is 
presumed to be aware of an administrative . . . interpretation of 
statute: and to adopt that interpretation when it re-enacts a statute 
without change.'' Lorillard v. Pons, 434 U.S. 575, 580 (1978), but that 
canon plainly does not apply where, as here, a statute has been revised 
rather than merely re-enacted. Further, we note that one critical 
respect in which section 1241 has been revised is the specification 
that the Secretary shall use the ``authorities'' of the CCC.
---------------------------------------------------------------------------
    By contrast, section 1241(b) is sensibly phrased under our reading 
of section 1241(a). With respect to four of the seven programs that it 
lists, section 1241(a) sets forth specific amounts, totaling in the 
hundreds of millions of dollars each fiscal year, that the Secretary is 
to spend. Because section 1241(a) makes clear that the funds expended 
may be for purposes ``including the provision of technical 
assistance,'' section 1241(a), read in isolation, might suggest that, 
irrespective of section 11, any portion of these hundreds of millions 
of dollars could be used for technical assistance. Section 1241(b) 
instead succinctly makes clear that the section 11 cap continues to 
apply.
    We therefore conclude that the section 11 cap applies to technical 
assistance expenditures for the conservation programs listed in section 
1241(a).\9\
---------------------------------------------------------------------------
    \9\ GAO argues that the legislative history of the 2002 Farm Bill 
supports its reading of section 1241(a). Because we do not believe that 
GAO's reading is permitted by the text of section 1241(a), we need not 
consider its account of the legislative history. See, e.g., Barnhill v. 
Johnson, 503 U.S. 393, 401 (1992).
---------------------------------------------------------------------------
II.
    We now consider whether the Secretary of Agriculture may draw upon 
USDA's CO appropriation to fund technical assistance for the programs 
listed in section 1241(a).
A.
    Public Law 107-76 contains the Fiscal Year 2002 appropriation for 
the CO account. It provides in relevant part:

        ``For necessary expenses for carrying out the provisions of the 
        Act of April 27, 1935 (16 U.S.C. 590a-f), including preparation 
        of conservation plans and establishment of measures to conserve 
        soil and water (including farm irrigation and land drainage and 
        such special measures for soil and water management as may be 
        necessary to prevent floods and the siltation of reservoirs and 
        to control agricultural related pollutants); operation of 
        conservation plant materials centers; classification and 
        mapping of soil; dissemination of information; acquisition of 
        lands; water, and interests therein for use in the plant 
        materials program by donation, exchange, or purchase at a 
        nominal cost not to exceed $100 pursuant to the Act of August 
        3, 1956 (7 U.S.C. 428a); purchase and erection or alteration or 
        improvement of permanent and temporary buildings; and operation 
        and maintenance of aircraft, $779,000,000, to remain available 
        until expended (7 U.S.C. 2209b), of which not less than 
        $8,515,000 is for snow survey and water forecasting, and not 
        less than $9,849,000 is for operation and establishment of the 
        plant materials centers, and of which not less than $21,500,000 
        shall be for the grazing lands conservation initiative. . . .''

115 Stat. at 117. This same authority for the CO appropriation applies 
to the continuing appropriations for Fiscal Year 2003. See Pub. L. 107-
229,  101(l), 103, 116 Stat. 1465-66 (providing continuing 
appropriations for Fiscal Year 2003); Pub. L. 107-294, 116 Stat. 2062 
(extending continuing appropriations through January 11, 2003).
B.
    GAO maintains that the CO appropriation identifies the specific 
programs that it is available to fund and that it does not include the 
programs listed in section 1241(a). It also argues that section 
1241(a)'s directive that ``the Secretary shall use the funds, 
facilities, and authorities of the [CCC] to carry out the [listed] 
programs'' should be read to preclude the Secretary from using other 
funds in support of these programs. GAO contends that both a Senate 
floor colloquy on the 2002 Farm Bill and the history of funding of the 
WRP support its position. See GAO Letter, at 8-11.
    Your Office maintains instead that the CO appropriation is 
sufficiently broad to authorize funding technical assistance for the 
conservation programs listed in section 1241(a). You argue further that 
the legislative history of the CO appropriation supports your reading. 
See OMB Letter, at 2-4. You find further support in what you 
characterize as USDA's ``longstanding regular practice of using the CO 
account to fund conservation technical assistance.'' Id. at 4.
    We believe that the CO appropriation may be used to fund technical 
assistance for the conservation programs listed in section 1241(a). The 
CO appropriation provides funds ``for carrying out the provisions of 
the Act of April 27, 1935 (16 U.S.C. 590a-f).'' Although the programs 
listed in section 1241(a) are not specifically identified in 16 U.S.C. 
 590a-590f (2000), section 590a(3) ``authorizes the Secretary to 
cooperate or enter into agreements with, or to furnish financial or 
other aid to, any agency, governmental or otherwise, or any person, 
subject to such conditions as he may deem necessary, for the purposes 
of this chapter [(chapter 3B)].`` Id.  590a(3) (emphasis added). 
Further, the express purposes of chapter 3B include ``(1) preservation 
and improvement of soil fertility; (2) promotion of the economic use 
and conservation of land; (3) diminution of exploitation and wasteful 
and unscientific use of national soil resources; (4) the protection of 
rivers and harbors against the results of soil erosion in aid of 
maintaining the navigability of waters and water courses and in aid of-
flood control; . . . [and] (6) prevention and abatement of 
agricultural-related pollution.'' Id.  590g(a) (``declar[ing] . . . 
the purposes of this chapter''). Therefore, insofar, as the Secretary 
determines that providing technical assistance for the conservation 
programs listed in section 1241(a) would serve any of these purposes, 
she may use the CO appropriation to fund such technical assistance.
    We do not read section 1241(a)'s directive that ``the Secretary 
shall use the funds, facilities, and authorities of the [CCC] to carry 
out the [listed] programs'' to foreclose the Secretary from using the 
CO appropriation to fund technical assistance for these programs. 
Section 1241(a) does not state that the Secretary shall use only the 
funds, facilities, and authorities of the CCC to carry out these 
programs. In short, we see no statutory bar to the Secretary's using 
other funds, in addition to the CCC's, to carry out these programs.
    Because we believe that the text of the CO appropriation clearly 
authorizes the Secretary to use the CO account to provide technical 
assistance for the conservation programs listed in section 1241(a) to 
promote any of the purposes of chapter 3B, we need not address the 
competing legislative-history arguments that your Office and GAO 
present. Likewise, we see no reason to explore the conflicting accounts 
of the history of funding of the listed programs: even if GAO is 
correct in its assertion that the WRP was not funded out of the CO 
appropriation before the predecessor version of section 1241 was 
enacted in 1996, that would not bear meaningfully on the question 
whether the CO appropriation could have been used to fund WRP.
          * * * * *
    In sum: The section 11 cap applies to technical assistance 
expenditures for the conservation programs listed in section 1241(a). 
The Secretary of Agriculture may draw upon USDA's CO appropriation to 
fund technical assistance for these programs.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

M. Edward Whelan III,
Principal Deputy Assistant Attorney General.
                               appendix 3
Title I--Commodity Programs

    Sec. 1601. Administration Generally.
    Sec. 1622. Implementation.

Title II--Conservation

    Sec. 2101. Extension of Conservation Reserve Program.
    Sec. 2201. Wetlands Reserve Program.
    Sec. 2301. Conservation Stewardship Program.
    Sec. 2401. Farmland Protection.
    Sec. 2403. Grasslands Reserve Program.
    Sec. 2501. Environmental Quality Incentives Programs.
    Sec. 2510. Agricultural Water Enhancement Program.
    Sec. 2605. Chesapeake Bay Watershed Program.
    Sec. 2606. Voluntary Public Access and Habitat Incentive Program.
    Sec. 2706. Delivery of Technical Assistance.
    Sec. 2801. Agricultural Management Assistance Program.
    Sec. 2803. Small Watershed Rehabilitation Program.

Title III--Trade

    Sec. 3016. Food for Peace.
    Sec. 3101. Export Credit Guarantee Program.\4\
---------------------------------------------------------------------------
    \4\ While funds to cover the losses incurred under this program 
come directly from the Treasury of the United States, expenses related 
to the administration of the program are within the provisions of 
section 11 of the CCC Charter Act.
---------------------------------------------------------------------------
    Sec. 3102. Market Access Program.
    Sec. 3104. Cooperator Program.
    Sec. 3105. Food for Progress.
    Sec. 3106. McGovern-Dole International Food for Education and Child 
Nutrition Program.
    Sec. 3203. Technical Assistance for Specialty Crops.
    Sec. 3204. Emerging Markets.
    Sec. 3206. Local and Regional Food Aid Procurement Projects.

Title IV--Nutrition

    Sec. 4231. Senior Farmers' Market Nutrition Program.
    Sec. 4307. Survey of Food Purchased by School Food Authorities.
    Sec. 4406. Re-Authorization of Federal Food Assistance Programs.

Title VI--Rural Development

    Sec. 6022. Rural Micro Entrepreneur Assistance Program.
    Sec. 6029. Funding of Pending Rural Development Loan and Grant 
Applications.
    Sec. 6202. Value-Added Agricultural Market Development Program 
Grants.

Title VII--Research and Related Matters

    Sec. 7206. Organic Agriculture Research and Extension Initiative.
    Sec. 7311. Specialty Crop Research Initiative.
    Sec. 7410. Beginning Farmer and Rancher Development Program.

Title VIII--

    Sec. 8205. Healthy Forest Reserve Program.

Title IX--

    Sec. 9001. Biobased Markets Program.
                         Biorefinery Assistance.
                         Repowering Assistance.
                         Bioenergy Program for Advanced Biofuels.
                         Biodiesel Fuel Education Program.
                         Rural Energy for America Program.
                         Biomass Research and Development.
                         Feedstock Flexibility Program for Bioenergy 
                        Producers.
                         Biomass Crop Assistance Program.

Title X--

    Sec. 10106. Farmers' Market Promotion Program.
    Sec. 10109. Specialty Crop Block Grants.
    Sec. 10201. Plant Pest and Disease Management and Disaster 
Prevention.
    Sec. 10202. National Clean Plant Network.
    Sec. 10301. National Organic Certification Cost-Share.
    Sec. 10302. Organic Production and Market Data Initiatives.
    Sec. 10404. Market Loss Assistance for Asparagus Producers.

Title XI--

    Sec. 11009. National Sheep Industry Improvement Center.

Title XII--

    Sec. 12034. Fisheries Disaster Assistance.\5\
---------------------------------------------------------------------------
    \5\ This provision mandated a one time transfer of funds to the 
Department of Commerce from CCC on May 1, 2008. Accordingly, once 
transferred, these funds lost their identity as funds of CCC and are 
subject to the provisions otherwise applicable to section 312(a) of the 
Magnuson-Stevens Fishery Conservation and Management Act.

Title XIV--
    Sec. 14004. Outreach and Technical Assistance for Socially 
Disadvantaged Farmers or Ranchers.
    Sec. 14012. Determination on Merits of Pigford Claims.
                               appendix 4
Sec. 11. Cooperation With Other Government Agencies.--

    (a) In General.--

          (1) Acceptance of services.--Subject to the limitations under 
        paragraphs (2) and (4), and excluding subsections (b) and (c), 
        the Corporation, on behalf of an agency of the Department of 
        Agriculture (Department), may accept and utilize, on a 
        compensated or uncompensated basis, services, information, 
        facilities, officers, or employees provided by--

                  (A) another bureau, office, division, agency, or 
                mission area of the Department of Agriculture;
                  (B) another agency of the Federal Government; or
                  (C) a political unit such as a state, the District of 
                Columbia, a territory or possession, or a political 
                subdivision of such political unit.

          (2) Prior authorization.--Prior to receiving funding or other 
        assistance under this subsection, an agency of the Department 
        shall have statutory authorization to receive services, 
        information, facilities, officers, or employees covered under 
        paragraph (1) through the Corporation.
          (3) Administrative expenses.--The Corporation may transfer 
        funds of the Corporation to any unit of Federal Government or 
        political unit to assist the governmental unit with 
        administrative expenses incurred in the conduct of its 
        assistance to the Corporation. The total amount of funds that 
        may be transferred under this section (including transfers for 
        automated data processing or information resource management 
        activities) for a fiscal year may not exceed $57,000,000.

    (b) Transfers.--Notwithstanding subsection (a), the Secretary may, 
transfer funds of the Corporation in accordance with:

          (1) A plant or pest emergency under section 442 of the Plant 
        Protection Act (7 U.S.C. 7772);
          (2) A livestock emergency under section 10417 of the Animal 
        Health Protection Act (7 U.S.C. 8316);
          (3) Section 1469(a)(3) of the National Agricultural Research, 
        Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3315);
          (4) Section 1240I of the Food Security Act of 1985 (16 U.S.C. 
        3839aa-9);
          (5) Section 1240Q of the Food Security Act of 1985 (16 U.S.C. 
        3839bb-4);
          (6) Section 1241(a) of the Food Security Act of 1985 (16 
        U.S.C. 3841(a));
          (7) Section 7405(c)(7) of the Farm Security and Rural 
        Investment Act of 2002 (Pub. L. 107-171);
          (8) Section 9008 of the Farm Security and Rural Investment 
        Act of 2002 (Pub. L. 107-171); and
          (9) Section 1622 of the Food, Conservation, and Energy Act of 
        2008 (Pub. L. 110-246).

    (c) Administrative Expenses.--Funds made available under subsection 
(b) may, to the extent authorized in such provisions, be used to pay 
expenses incurred in the administration of such activities.
Insert 2
          Mr. Costa. Can you clarify the link between the pest and the 
        disease challenges, how in working with your partners in USDA 
        possible trade disruptions and the potential economic losses 
        that would occur to our agricultural producers are addressed 
        and hopefully minimized?
          Ms. Bech. Well, I think if I can clarify, if I might ask a 
        clarifying question. Are you asking what we are doing with the 
        other USDA agencies in addressing the disease impacts on the 
        economics? Then we are providing, again, the assessments that 
        go into that economic analysis and working with our Foreign 
        Agriculture Service to address those issues.
          Mr. Costa. Do you have any explanation as to why only \1/3\ 
        of the SPS certificates or trade concerns have been addressed?
          Ms. Bech. Well, I could get further information on it.

    APHIS does work closely with its Federal partners in addressing any 
SPS issues that arise. The U.S. Trade Representative publishes an 
annual ``Report on Sanitary and Phytosanitary Measures'' that describes 
significant barriers to U.S. food and farm exports arising from 
measures that foreign governments apply on the grounds that they are 
necessary to protect human, animal, or plant life or health from risks 
arising from the entry or spread of pests, from plant- or animal-borne 
pests or diseases, or from additives, contaminants, toxins, or disease-
causing organisms in foods, beverages, or feedstuffs.
    APHIS and our Federal partners will continue to work with 
colleagues from across the U.S. Government, as well as interested 
stakeholders, to encourage governments around the world to remove their 
unwarranted SPS rules to ensure a level playing field abroad for U.S. 
ranch and farm products.
                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    Specialty Crop Block Grant Program.
2. Subprograms/Department Initiatives
    Not applicable.
3. Brief History
    The Specialty Crops Competitiveness Act of 2004 (P.L. 108-465; 7 
U.S.C. 1621 note) authorized appropriations for Fiscal Years 2005-09 to 
provide assistance for specialty crops to all 50 states, the District 
of Columbia, and the Commonwealth of Puerto Rico. Specialty crop block 
grant funds are meant to enhance the competitiveness of specialty 
crops. Specialty crops were defined as fruits and vegetables, tree 
nuts, dried fruits, and nursery crops (including floriculture).
    From FY 2006 through FY 2008, the program was funded through 
appropriations which were made available until expended and awarded in 
the year subsequent to the appropriation. The FY 2008 appropriation 
made $8.44 million available until expended for Specialty Crop Block 
Grants, which were awarded in FY 2009. After all the eligible states 
submitted their applications by the established deadline of March 5, 
2009, fifty-two U.S. states and territories were awarded SCBGP funds.
    The FY 2008 Farm Bill, Sec. 10109, extended the Specialty Crop 
Block Grant program (SCBGP-FB) through FY 2012 and provided Commodity 
Credit Corporation funding at the following levels: $10 million in FY 
2008, $49 million in FY 2009, and $55 million for each of Fiscal Years 
2010-2012. These funds are available on an annual basis and must be 
obligated in the current year. The Act also amended the definition of 
specialty crops by adding horticulture; and added Guam, American Samoa, 
the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana 
Islands to the list of ``states'' eligible to apply for grants. State 
grants for each fiscal year are a minimum of $100,000 or \1/3\ of 1 
percent of the total amount of available funding. AMS completed 
rulemaking on these farm bill changes with publication of the final 
rule in the Federal Register on March 27, 2009. The final rule requires 
state departments of agriculture to describe their outreach efforts to 
specialty crop producers, including socially disadvantaged and 
beginning farmers; and to describe their efforts to conduct a 
competitive process to ensure maximum public input and benefit.
4. Purpose/Goals
    The purpose of the Specialty Crop Block Grant Program (SCBGP) is 
solely to enhance the competitiveness of specialty crops. Specialty 
crops are defined as ``fruits, vegetables, tree nuts, dried fruits, 
horticulture, and nursery crops (including floriculture).''
5. Success in Meeting Programmatic Purpose/Goals
    To date, the grant program has awarded over $110 million to fund 
2,500 projects that benefit the specialty crop industry in all 50 
states, the District of Columbia, American Samoa, Guam, the 
Commonwealth of Puerto Rico, and the Commonwealth of the Northern 
Mariana Islands. These projects have particularly enhanced specialty 
crop efforts in education, research, marketing and promotion, 
production, pest and plant health, and food safety.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                              No-Year Budget         Farm Bill Budget
       Fiscal Year            Authority ($ in         Authority ($ in
                                thousands)              thousands)
------------------------------------------------------------------------
             2006                    $6,930                      --
             2007                     6,930                      --
             2008                     8,400                 $10,000
             2009                        --                  49,000
             2010                        --                  55,000
             2011                        --                  55,000
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                           Appropriated No-Year      Farm Bill Annual
      Fiscal Year          Annual Outlays ($ in        Outlays ($ in
                                thousands)              thousands)
------------------------------------------------------------------------
             2006                       --                       --
             2007                   $5,147                       --
             2008                    8,412                       --
             2009                    7,744                   $3,358
             2010                       44                   14,404
         2011 YTD                      103                   19,511
------------------------------------------------------------------------

    Funds are expended over the lifetime of the grant, typically around 
3 years, as the grantee incurs costs on the projects.
8. Annual Delivery Cost (FY 2002-FY 2011)

          SCBG Farm Bill Funds--Delivery Costs ($ in thousands)
------------------------------------------------------------------------
                                                               FY 2011
                        FY 2008      FY 2009      FY 2010        Est.
------------------------------------------------------------------------
 Program Oversight             --         $328         $637         $667
       Staff Years             --            3            4            4
------------------------------------------------------------------------

    Program oversight for Specialty Crop Block Grants was not tracked 
separately until FY 2009.
9. Eligibility Criteria
    The agencies commissions or departments responsible for agriculture 
within the 50 states, the District of Columbia, the Commonwealth of 
Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and the 
Commonwealth of the Northern Mariana Islands are eligible to apply for 
grant funds directly to the USDA. States may have specific or 
additional application requirements such as: funding priorities, 
deadlines, applicant eligibility criteria, project duration, funding 
restrictions and maximum and minimum grant awards.
10. Utilization (Participation) Data
    The Specialty Crop Block Grant Program is authorized to distribute 
funds to the 56 eligible entities. In FY 2010, all 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, and the 
U.S. Virgin Islands applied for and received funding for 825 projects 
meant to enhance the competitiveness of specialty crops.
11. Duplication or Overlap with Other Programs
    The purpose of the Specialty Crop Block Grant Program is to enhance 
the competitiveness of specialty crops (fruits, vegetables, tree nuts, 
floriculture and horticulture). A grant program that has a similar 
purpose is the Specialty Crop Research Initiative, which was 
established to solve critical specialty crop industry issues through 
research and extension activities.
    Each project submitted to the USDA is reviewed to avoid duplication 
with other Federal and state grant programs. In the event that a 
project has been submitted to other Federal and/or state grant 
programs, the Specialty Crop Block Grant Program requires that the 
project indicate how Specialty Crop Block Grant Program funding will 
supplement and not duplicate or overlap the purpose of the other 
funding.
12. Waste, Fraud, and Abuse
    No reports or findings of waste, fraud and abuse have occurred or 
been published.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    National Organic Program (NOP).
2. Subprogram/Department Initiative
    Not applicable.
3. Brief History
    The Organic Foods Production Act (OFPA) of 1990 required USDA to 
develop national standards for organically produced agricultural 
products to assure consumers that agricultural products marketed as 
organic meet consistent, uniform standards. Farms and handlers of 
organic foods must be certified by a state or private agency that has 
been accredited by USDA. All agricultural products sold, labeled, or 
represented as organic in the United States must be in compliance with 
these regulations. The NOP's objective is to enforce the mandated 
requirements.
    To comply with statutory requirements, and meet industry demands, 
NOP activities consist of the following:

   Develop new standards to accommodate requests from the 
        organic industry;

   Enforce compliance and conduct audits to maintain labeling 
        credibility;

   Operate and update website content, to keep certifying 
        agents and consumers informed with the latest developments;

   Respond to public requests for information in a timely 
        manner;

   Provide accreditation of certifying agents;

   Oversee the certifying agents, including foreign-based 
        agents;

   Ensure uniform regulatory decisions by the certifying 
        agents; and

   Investigate complaints of organic standard violations

    NOP is responsible for ensuring that organically produced products 
meet consistent standards. To accomplish that, NOP accredits and 
ensures the compliance of 100 domestic and foreign Accredited 
Certifying Agents (ACAs). Theses ACAs certify that organic operations 
are in compliance with USDA standards (regulations). Proper training is 
essential for certifying agents to ensure that regulatory decisions are 
uniform regarding the correct application of the standards.
4. Purpose/Goals
    The NOP develops, implements, and administers national production, 
handling, and labeling standards in accordance with the Organic Foods 
Production Act (OFPA) of 1990 and regulations in Title 7, Part 205 of 
the Code of Federal Regulations. OFPA gives NOP the authority to 
respond to site-specific conditions by integrating cultural, 
biological, and mechanical practices that foster cycling of resources, 
promote ecological balance, and conserve biodiversity.
5. Selected Examples of Recent Progress
   On February 17, 2010, the NOP published the long-awaited 
        access to pasture rule to clarify feed and living conditions 
        for livestock production that would qualify their milk and meat 
        for USDA organic certification. The rule establishes 
        enforceable pasture practice standards to satisfy consumer 
        expectations that ruminant livestock animals graze on pasture 
        during grazing season and are not confined.

   In March 2010, the Office of Inspector General (OIG) 
        published an audit report on the NOP which recommended that the 
        program further improve administration and strengthens 
        management controls to ensure more effective enforcement of 
        program requirements. The report indicated the need to 
        strengthen oversight of certifying agents and organic 
        operations to ensure that organic products are consistently and 
        uniformly meeting NOP standards. The NOP has completed 13 out 
        of 14 corrective actions identified in the OIG audit.

   The NOP developed a quality management system and a Quality 
        Manual to align the program's accreditation program with 
        international requirements outlined in ISO 17011. Furthermore, 
        the program initiated a peer review process to have its 
        accreditation program assessed by the National Institute of 
        Standards and Technology for compliance with ISO 17011.

   On September 1, 2010, the NOP published the inaugural 
        edition of the NOP Program Handbook, designed for those who 
        own, manage, or certify organic operations by providing 
        guidance about the national organic standards and instructions 
        that outline best program practices.

   In October 2010, the NOP published draft guidance on compost 
        and vermicompost in organic crop production; wild crop 
        harvesting; outdoor access for organic poultry; commingling and 
        contamination prevention in organic production and handling; 
        and use of chlorine materials in organic production and 
        handling.

   The NOP published a number of rules on the National List of 
        Allowed and Prohibited Substances including materials 
        sunsetting in 2012; adding tetracycline and sulfurous acid to 
        the National List; and other National List substances.

   The NOP developed new training seminars on liquid 
        fertilizers, access to pasture, adverse actions procedures, 
        labeling, certification, complaint handling, wine labeling, and 
        enforcement procedures. The NOP provided training in Germany, 
        Ghana, California, Colorado, Georgia, New York and Wisconsin.

   The NOP recently held public meetings of the National 
        Organic Standards Board in Davis, California and Madison, 
        Wisconsin.

   The NOP established a complaint database to improve the 
        handling of complaints to ensure they are handled in an 
        effective and timely manner.

   Conducted on-site reviews of recognition agreements 
        currently in place with the governments of Denmark and Israel.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
             Fiscal Year               Budget Authority ($ in thousands)
------------------------------------------------------------------------
                            2002                               $1,640
                            2003                                1,494
                            2004                                1,969
                            2005                                1,975
                            2006                                1,993
                            2007                                2,001
                            2008                                3,127
                            2009                                3,867
                            2010                                6,967
                            2011                                6,919
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
             Fiscal Year               Budget Outlays  ($ in thousands)
------------------------------------------------------------------------
                            2002                               $1,384
                            2003                                1,341
                            2004                                1,918
                            2005                                1,990
                            2006                                1,807
                            2007                                1,549
                            2008                                2,871
                            2009                                3,298
                            2010                                5,736
                        2011 YTD                                3,375
------------------------------------------------------------------------
Explanation: The budget authority may be different from outlays due to
  timing of payments and the accounting process.


                                               8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                FY 2011
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010      Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Organic Program               1,493       1,413       1,983       1,955       1,883       1,897       3,000       3,575       6,244       6,387
Indirect Costs                           134         111         156         157         159         160         250         309         517         532
                                 -----------------------------------------------------------------------------------------------------------------------
  Total Costs                          1,627       1,524       2,139       2,112       2,042       2,057       3,250       3,884       6,761       6,919
                                 -----------------------------------------------------------------------------------------------------------------------
  Staff Years                             11          13          13          11          13          13          14          19          28          32
--------------------------------------------------------------------------------------------------------------------------------------------------------
Program Indirect costs as reported in the Explanatory Notes.


 
 
 
9. Eligibility Criteria
 
    Not applicable to this program.
 
10. Utilization (Participation) Data
 
    Certified Organic Operations:
 
     27,000 worldwide
 
     Approximately \2/3\ of USDA certified organic operations are located in the U.S.; \1/3\ are located in other countries
 
    Acreage: reporting of organic acreage is currently not required by regulations. The USDA Economic Research Service estimated that U.S. producers
 dedicated approximately 4.8 million acres of farmland--2.7 million acres of cropland and 2.1 million acres of rangeland and pasture--to organic
 production systems in 2008.
 
11. Duplication or Overlap with Other Programs
 
    There is no duplication with other programs. Certifying agents accredited by the National Organic Program certify eligible agricultural processing
 and handling activities, both domestically and internationally, upon request.
 
12. Waste, Fraud and Abuse
 
    NOP's Compliance & Enforcement Division (C&E) is responsible for processing and investigating complaints alleging violations of NOP regulations;
 conducting proactive compliance and outreach activities; and enforcing organic production, handling, and labeling standards.
 

    The NOP is increasing enforcement activities here in the United 
States and monitoring recognition agreements with foreign countries. 
The NOP conducted assessments in Egypt, Israel, Hungary, Denmark, China 
and Ghana. AMS auditors have also conducted organic audits in 
Argentina, Mexico, Costa Rica, Guatemala, Australia, Italy, Germany, 
and Bolivia. Certified organic operations that are found in 
noncompliance of the NOP organic standards may have their certification 
suspended or revoked. Civil penalties of up to $11,000 per violation 
are being used for willful violations of the standards.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    National Organic Certification Cost-Share Program.
2. Subprogram/Department Initiative
    National Organic Program/2008 Farm Bill.
3. Brief History
    The National Organic Certification Cost Share Program (NOCCSP) is 
open to all state agencies in all 50 states, the District of Columbia 
and the Commonwealth of Puerto Rico, Guam, American Samoa, the United 
States Virgin Islands, and the Commonwealth of the Northern Mariana 
Islands.
    The NOCCSP is authorized under 7 U.S.C. 6523. The 2002 Farm Bill 
provided $5 million for this program. Funding was exhausted before the 
2008 Farm Bill made additional funds available. Section 10301 of the 
Food, Conservation and Energy Act of 2008 mandated $22 million for the 
program from CCC funding available until expended. The Act authorizes 
the Department to provide certification cost-share assistance to 
producers and handlers of organic agricultural products in 
participating states who receive certification or continuation of 
certification from a USDA accredited certifying agent. Assistance is 
provided through participating states.
4. Purpose/Goals
    Funds under this program are made available to all 50 states, all 
U.S. Territories, the District of Columbia, and Puerto Rico to assist 
producers and handlers of agricultural products in obtaining 
certification under the Organic Foods Production Act of 1990. Payments 
are limited to 75 percent of an individual producer or handler's 
certification costs up to a maximum of $750 annually.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010, nearly $4.8 million was allocated to states to 
partially reimburse producers and handlers for the cost of organic 
certification through the National Organic Certification Cost Share 
Program. The state agencies are responsible for dispersing the 
allocated funds to producers and handlers. We estimate that these funds 
can assist over 8,000 certified organic operations. Recent efforts by 
the NOP to increase outreach and training have resulted in significant 
growth, with at least ten states requesting additional funds to meet 
their unexpected demand.
6. Annual Budget Authority (FY 2002-FY 2011)
   $5 million authorized by the 2002 Farm Bill

   $22 million authorized by the 2008 Farm Bill

------------------------------------------------------------------------
             Fiscal Year               Budget Authority ($ in thousands)
------------------------------------------------------------------------
                            2002                               $5,000
                            2003                                   --
                            2004                                   --
                            2005                                   --
                            2006                                   --
                            2007                                   --
                            2008                              $22,000
                            2009                                   --
                            2010                                   --
                            2011                                   --
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
             Fiscal Year               Budget Outlays  ($ in thousands)
------------------------------------------------------------------------
                            2002                                   --
                            2003                               $1,820
                            2004                               $1,415
                            2005                                 $222
                            2006                                 $967
                            2007                                 $342
                            2008                                   --
                            2009                               $3,446
                            2010                               $4,182
                        2011 YTD                               $3,412
------------------------------------------------------------------------
Explanation of Variance: To ensure the availability of resources through
  2012, a portion of this one-time no-year funding has been made
  available each fiscal year.


       8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
------------------------------------------------------------------------
                                                               FY 2011
                        FY 2008      FY 2009      FY 2010        Est.
------------------------------------------------------------------------
 Program Oversight             --         $149         $136         $223
       Staff Years             --            1            1            1
------------------------------------------------------------------------
For FY 2002-2007 program oversight was not tracked separately.

9. Eligibility Criteria
    Producers and handlers who have received certification or a renewal 
of certification from an accredited certifying agent (ACA) are eligible 
to participate.
    Certification is the process where a producer or handler is 
approved by an Accredited Certifying Agent as being in compliance with 
the NOP regulations and is then authorized to sell, label, or represent 
products as being ``certified organic''.
10. Utilization (Participation) Data
    NOCCSP:

   2008: 4,966 participants

   2009: 5,436 participants

   2010: 6,128 participants

   2011 year to date: 1,341 participants

     (final figures will not be available until January 
            2012; \2/3\-\3/4\ of participants usually sign up in the 
            fourth quarter of the fiscal year)
11. Duplication or Overlap with Other Programs
    The U.S. Department of Agriculture (USDA) administers two cost-
share programs to defray the costs of organic certification. The 
programs are administered by the USDA Agricultural Marketing Service 
(AMS) National Organic Program (NOP).
    The AMA Program authorizes cost-share assistance to producers of 
organic agricultural products in states that have a historically low 
participation rate in the Federal Crop Insurance Program: Connecticut, 
Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New 
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, 
Vermont, West Virginia, and Wyoming. Conversely, the NOCCSP is open to 
state agencies in all 50 the District of Columbia and the Commonwealth 
of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, 
and the Commonwealth of the Northern Mariana Islands. In addition, the 
NOCCSP provides cost-share assistance to both producers and handlers.
    The NOCCSP and the AMA are the only Federal programs which provide 
financial assistance to defray the cost of organic certification. To 
reduce possible overlap between AMA and NOCCSP, producers participating 
in the AMA program are not eligible to participate in the producer 
portion of the national program.
12. Waste, Fraud and Abuse
    No reports or finding of fraud or abuse have occurred or been 
published.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Farmers Market Promotion Program (FMPP).
2. Subprograms/Department Initiatives
    Not applicable.
3. Brief History
    The Farmers Market Promotion Program was created by the 2002 Farm 
Bill (Section 10605) which amended the Farmer-to-Consumer Direct 
Marketing Act of 1976 (7 U.S.C. 3005). This program provides non-
construction grants that target improvements and expansion of domestic 
farmers' markets, roadside stands, community-supported agriculture 
programs, agri-tourism activities, and other direct producer-to-
consumer market opportunities. That Act authorized appropriations for 
the program but did not provide funding. From Fiscal Year (FY) 2006 to 
2008, appropriations of $1 million were made available each year for 
this program. The 2008 Farm Bill further amended the Farmer-to-Consumer 
Direct Marketing Act of 1967 and provided funding from Commodity Credit 
Corporation (CCC) for Fiscal Years 2008-2012: $3 million in FY 2008, $5 
million for each of FYs 2009 and 2010, and $10 million each year of FYs 
2011 and 2012.
4. Purpose/Goals
    The primary objective of the FMPP program is to help eligible 
entities improve and expand domestic farmers markets, roadside stands, 
community-supported agricultural programs, agri-tourism activities, and 
other direct producer-to-consumer market opportunities. Eligible 
entities include agricultural cooperatives, producer networks, producer 
associations, local governments, nonprofit organizations, public 
benefit corporations, economic development corporations, regional 
farmers' market authorities, and tribal governments.
5. Success in Meeting Programmatic Purpose/Goals
    In the past 3 years, incoming applications for FMPP grants have 
increased with available funding. In Fiscal Year 2011, $10 million is 
available for the grant program. Some of the program's accomplishments 
include the following:
    2010 Accomplishments:

   Approximately 28% of the FY 2010 awards offer further 
        professional development opportunities for farmers to 
        strengthen their business management skills, including training 
        in risk management, certification, and good agricultural 
        practices.

   AMS received 509 requests in 2010 from all 50 states and the 
        District of Columbia. The program awarded a total of 81 grants 
        to 35 states for a total of $4,099,897.

    2009 Accomplishments:

   Provided $4.5 million in competitive grants to nonprofit 
        corporations, regional farmers market authorities, Tribal 
        governments, local governments, agricultural cooperatives, 
        economic development corporations to expand direct farmer-to-
        consumer sales.

   Eighty-six projects from 49 states were selected for funding 
        out of the 225 proposals received from 37 states throughout the 
        United States.

    2008 Accomplishments:

   Awarded $3,445,000 in support to 85 projects across the 
        country, including $385,375 to 18 projects for establishment/
        expansion of EBT capability.

    2007 Accomplishments:

   Provided support to 23 projects across the country with 
        $900,000 in funding, including $328,652 to eight projects for 
        establishment/expansion of EBT capability.

    2006 Accomplishments:

   Awarded $900,000 in support to 20 projects across the 
        country, including $202,480 to four projects for establishment/
        expansion of EBT capability.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
             Fiscal Year               Budget Authority ($ in thousands)
------------------------------------------------------------------------
                          2006 *                               $1,000
                          2007 *                               $1,000
                          2008 *                               $4,000
                            2009                               $5,000
                            2010                               $5,000
                            2011                              $10,000
------------------------------------------------------------------------
Note: * indicates budget authority from annual appropriations. FY 2008
  includes both a $1 million annual appropriation and $3 million 2008
  Farm Bill funding.


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
             Fiscal Year               Budget Outlays  ($ in thousands)
------------------------------------------------------------------------
                            2006                                   --
                            2007                                 $300
                            2008                                 $772
                            2009                               $2,549
                            2010                               $3,244
                        2011 YTD                               $2,789
------------------------------------------------------------------------
Funds are expended over the lifetime of the grant, typically around 3
  years, as the grantee incurs costs of the project.


                           8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
----------------------------------------------------------------------------------------------------------------
                           FY 2006        FY 2007        FY 2008        FY 2009        FY 2010      FY 2011 Est.
----------------------------------------------------------------------------------------------------------------
  Program Oversight              --             --           $175           $437           $682           $776
        Staff Years              --             --              1              3              4              4
----------------------------------------------------------------------------------------------------------------
For FY 2006 and 2007 program oversight was not tracked separately.

9. Eligibility Criteria
    Eligible entities under FMPP are agricultural cooperatives, 
producer networks or associations (added under 2008 Farm Bill); local 
governments; nonprofit corporations; economic development corporations; 
regional farmers' market authorities; and Tribal governments. All 
entities must be owned, operated, and located within one of the 50 U.S. 
or the District of Columbia.
10. Utilization (Participation) Data
    FMPP has awarded grants for 285 projects. As of June 2011, the 
Farmers Market Promotion Program is currently monitoring 157 active 
grant awards.
11. Duplication or Overlap with Other Programs
    Within USDA, there exists a small pool of grant opportunities that 
are used heavily by small farmers and ranchers due to capacity and 
other constraints that prevent them from participating in many other 
programs. Among these are the (1) Farmers Market Promotion Program, 
administered by the Agricultural Marketing Service, (2) the Community 
Food Projects program administered by the National Institute of Food 
and Agriculture (NIFA, formerly CSREES), and (3) the Risk Management 
Education and Outreach Partnerships Program, administered by the Risk 
Management Agency.
    FMPP applicants are often consumers of other USDA programs that 
appear similarly situated, including the Community Food Projects 
Competitive Grant Program (CFPCGP), administered by National Institute 
of Food and Agriculture. Since 1996, the CFPCGP has promoted self-
sufficiency and food security in low-income communities through 
community food projects and training and technical assistance projects 
(T&TA). CFPs unite the entire food system, assessing strengths, 
establishing linkages, and creating systems that improve self-reliance 
over food needs. T&TA helps successful applicants carry out and 
evaluate their projects. The CFPCGP is designed to: meet the needs of 
low-income people by increasing access to fresher, more nutritious food 
supplies; increase the self-reliance of communities in providing for 
their own food needs; promote comprehensive responses to local food, 
farm, and nutrition issues; meets specific state, local, or 
neighborhood food and agricultural needs for infrastructure improvement 
and development; plans for long-term solutions; and create innovative 
marketing activities that benefit both agricultural producers and low-
income consumers. These one-time grants require a dollar-for-dollar 
match in resources.
    Another program frequently used by FMPP stakeholders is the 
Education and Outreach Partnerships Program housed within the Risk 
Management Agency. This program combines the former ``Commodity 
Partnerships for Small Agricultural Risk Management Education 
Sessions'' and the `Community Outreach and Assistance Partnerships 
Program.'' The purpose of this combined cooperative partnership 
agreements program is to deliver crop insurance education and risk 
management training to U.S. agricultural producers to assist them in 
identifying and managing production, marketing, legal, financial and 
human risk. The program gives priority to: (1) educating producers of 
crops currently not insured under Federal crop insurance, specialty 
crops, and underserved commodities, including livestock and forage; and 
(2) providing collaborative outreach and assistance programs for 
limited resource, socially disadvantaged and other traditionally 
underserved farmers and ranchers.
12. Waste, Fraud and Abuse
    No reports or findings of waste, fraud or abuse have occurred or 
been published.
13. Effects of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Section 32.
2. Subprograms/Department Initiatives
    Specialty crop purchase requirements, Fresh Fruit and Vegetable 
Program.
3. Brief History
    Section 32 of the Act of 1935 (P.L. 74-320), amended through 7 
U.S.C.  612(c), allocated the equivalent of 30% of annual customs 
receipts to the Secretary of Agriculture. Much of these funds are 
subsequently transferred to the Food and Nutrition Service (FNS) and 
become part of the budget for USDA's Child Nutrition Programs; with a 
smaller transfer to Commerce as directed by the Fish and Wildlife Act 
of 1956 (16 U.S.C. 742a).
    Funding Availability: The 2008 Farm Bill established an amount to 
be retained for Section 32 activities each year beginning in 2009 at 
$1.173 billion and increasing gradually to $1.322 billion in 2017 and 
thereafter. The subsequent annual appropriations bills have limited the 
Section 32 availability to levels lower than authorized in the farm 
bill. AMS was also directed to transfer all funds in excess of the 
amount identified (after the required transfer to Commerce) to FNS.
    Specialty Crop Purchases: The 2002 Farm Bill established a 
requirement to purchase at least $200 million in fruits and vegetables, 
including at least $50 million in fresh fruits and vegetables. These 
purchases were incorporated into entitlement purchases for the National 
School Lunch Program. The 2008 Farm Bill established a requirement to 
purchase additional fruits, vegetables, and nuts (specialty crops) each 
year beginning in 2008 at $190 million and increasing gradually to $206 
million in 2012 and thereafter. These additional commodities are 
distributed through any of USDA's domestic food assistance programs.
    Fresh Fruit and Vegetable Program: The 2008 Farm Bill also required 
the use of Section 32 funds for the Fresh Fruit and Vegetable Program. 
Under this program, FNS distributes funds to schools to purchase fresh 
produce.
4. Purpose/Goals
    The purpose is principally to alleviate surplus supplies of 
commodities by diverting them from normal channels of trade and 
commerce and increasing utilization by low income groups. Most of the 
funds retained by AMS to carry out Section 32 are used to purchase non-
price supported commodities to meet entitlement needs of the child 
nutrition programs; to purchase additional fruits, vegetables, and nuts 
for use in domestic nutrition assistance programs; and to relieve 
market surpluses to support agricultural producers. All commodities 
purchased under Section 32 are distributed by FNS through USDA's 
domestic food assistance programs.
    Child Nutrition Entitlement Purchases: AMS purchases non-price 
supported commodities to help meet the requirements of USDA child 
nutrition programs.
    Surplus Commodities: AMS purchases non-price supported commodities 
under Section 32 authority based on economic analysis of production 
costs and market supply. Demand for this support fluctuates with market 
conditions.
    Disaster Relief: In the event of Presidentially-declared disasters, 
Section 32 funds may be used to provide commodities or replace 
entitlement commodities.
5. Success in Meeting Programmatic Purpose/Goals
    AMS has successfully met all Section 32 requirements, including 
specialty crop purchases mandated by the 2002 and 2008 Farm Bills.

                                            6. Annual Budget Authority (FY 2002-2011) (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                FY 2011
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010      Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget Authority:
  Section 32 Total Budget             995,714  1,460,006   1,287,849   1,180,858   1,523,470   1,463,888   1,095,069     963,530   1,098,000   1,065,000
   Authority
Specialty Crop Requirements:
  2002 Farm Bill Specialty Crop       200,000    200,000     200,000     200,000     200,000     200,000     200,000     200,000     200,000     200,000
   minimum
  2008 Farm Bill Specialty Crop                                                                              190,000     193,000     199,000     203,000
   minimum
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Specialty Crop              200,000    200,000     200,000     200,000     200,000     200,000     390,000     393,000     399,000     403,000
     requirement
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                                 7. Annual Outlays (FY 2002-2011) (dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                FY 2011
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010      Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays:
  Specialty Crops                     239,874    279,675     304,712     233,557     246,115     232,391     390,292     472,780     511,128     411,600
  Other                               675,671    999,237     565,847     618,185   1,079,244     467,161     349,399     475,545     575,065     653,400
                                   ---------------------------------------------------------------------------------------------------------------------
    Section 32 Total Outlays          915,545  1,278,912     870,559     851,742   1,325,359     699,552     739,691     948,325   1,086,193   1,065,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 32 program obligations are outlayed entirely in the current year. Reconciliation upon contract delivery can result in prior year recoveries
  which impact total outlays in this account.



                                               8. Annual Delivery Cost (FY 2002-FY 2011) ($ in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                FY 2011
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010      Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Delivery Cost:
  Commodity Purchases Service a         6,906     11,199      10,266      10,848      28,866      31,146      32,595      31,092      22,276      27,110
  FTE's                                    43         45          38          39          45          47          51          49          54          50
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Beginning in FY 2006, costs for WBSCM, a USDA procurement system, are included.

9. Eligibility Criteria
    AMS purchases commodities under authority of Section 32 and on 
behalf of FNS to meet other entitlement needs. The qualification 
requirements requested as part of the application package for a 
prospective contractor (commodity vendor) are a reexamination and 
revalidation of established qualification requirements as required by 
the Federal Acquisition Regulations (FAR) Part 9 and are necessary for 
AMS to carry out its procurement mission. A prospective vendor must be 
determined to be qualified by the Contracting Officer prior to 
submitting offers under an AMS solicitation. There are 142 vendors 
selling product to USDA. This includes Small, Small Disadvantaged, 
8(a), HUBZone, Service-Disabled Veteran-Owned, and Women-Owned 
Businesses.
10. Utilization (Participation) Data
    Commodities purchased with Section 32 funding are delivered to 
recipients through FNS' domestic assistance programs, including the 
National School Lunch Program, the Emergency Food Assistance Program, 
the Food Distribution Program on Indian Reservations, the Commodity 
Supplemental Food Program, and the Nutrition Services Incentive 
Program.
11. Duplication or Overlap with Other Programs
    AMS closely coordinates with FNS and FSA to avoid overlap or 
duplication.
12. Waste, Fraud, and Abuse
    No reports or findings of waste, fraud or abuse have occurred or 
been published.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    APHIS Plant Protection and Quarantine Program (PPQ)--Specialty Crop 
Pest and Disease Programs (General).
2. Subprograms/Department Initiatives
    European Grapevine Moth (EGVM), Light Brown Apple Moth (LBAM), 
Fruit Fly Exclusion and Detection Programs (FFED), Phytophthora 
ramorum, Citrus Health Response Program (CHRP), Pale Cyst Nematode 
(PCN), Golden Nematode (GN), Plum Pox Virus (PPV) and Glassy-winged 
Sharpshooter (GWSS). Please Note: All of the programs listed above, 
except for EGVM, were funded through the annual appropriations process 
or access to emergency funding (Commodity Credit Corporation or Section 
32) and not through the farm bill.

    3. Brief History

    APHIS' Plant Protection and Quarantine (PPQ) has been safeguarding 
agriculture and natural resources from the risks associated with the 
entry, establishment, or spread of animal and plant pests and noxious 
weeds to ensure an abundant, high-quality, and varied food supply for 
more than 30 years.
4. Purpose/Goals
    APHIS-PPQ safeguards agriculture and natural resources--including 
specialty crops--from the risks associated with the entry, 
establishment, or spread of animal and plant pests and noxious weeds. 
Fulfillment of its safeguarding role ensures an abundant, high-quality, 
and varied food supply, strengthens the marketability of U.S. 
agriculture in domestic and international commerce, and contributes to 
the preservation of the global environment.
5. Success in Meeting Programmatic Purpose/Goals

    European Grapevine Moth (EGVM)

    APHIS is working closely with affected counties, industry, the 
University of California, and other stakeholders to control EGVM which 
is a significant pest of grapes and other specialty crops that is 
threatening California's $3 billion wine/grape and stone fruit 
industry. In 2010 the program was successful in mitigating all grape 
export crop losses experienced in 2009 due to EGVM. Populations have 
been significantly reduced in 2011 as compared to 2010; however, 
several new detections in 2011 have resulted in the addition of new and 
expanded quarantine areas.

    Light Brown Apple Moth (LBAM)

    The LBAM program focuses on the suppression and management of the 
moth therefore reducing its impact on agriculture production and trade 
of several specialty crops located in California. The program has 
successfully maintained millions of dollars worth of specialty crop 
exports to Mexico and Canada due to regulatory requirements that assure 
our trade partners of pest free commodities.

    Fruit Fly Exclusion and Detection Programs (FFED)

    The FFED program protects the health and value of American 
agricultural resources threatened by the establishment of exotic fruit 
fly populations through (1) detection, exclusion, and emergency 
response activities in the United States; (2) prevention of the spread 
of Mediterranean fruit flies north of Chiapas, Mexico and eventually 
the United States; and (3) eradication of the Mexican fruit fly in the 
Lower Rio Grande Valley in Texas, Florida, and California. The market 
value of exotic fruit fly host commodities protected by FFED activities 
totaled about $6.5 billion in the United States in 2007, with 
approximately $5.65 billion of that grown in California and $612 
million in Florida.

    Phytophthora ramorum (Sudden Oak Death)

    The goal of the Sudden Oak Death Program is to prevent long-
distance human assisted spread of Phytophthora ramorum in nursery stock 
and other commodities and preventing the establishment of Sudden Oak 
Death beyond its current range. Program certification of nursery stock 
has reduced Phytophthora ramorum in the nursery trade by 97 percent 
(140 detections in 2004 to less than four in 2010), thereby 
safeguarding the domestic and international trade in nursery stock, as 
well protecting the forest products industry.

    Citrus Health Response Program (CHRP)

    APHIS established the Citrus Health Response Program (CHRP) to 
sustain the citrus industry in the United States, to maintain growers' 
continued access to export markets, and to safeguard citrus growing 
states against a variety of citrus diseases and pests. The CHRP works 
closely with regulatory officials in citrus-producing states, industry 
stakeholders, university scientists, and other Federal agencies to 
provide focus to citrus health research, provide domestic citrus 
industries with production guidelines and best practices for fruit and 
nursery stock production, and identify/implement appropriate survey, 
diagnostic, and mitigation measures to reduce spread of citrus pests/
diseases. The implementation of the CHRP program has allowed APHIS and 
stakeholders to facilitate safe movement of host plants, interstate 
commerce, and international trade. During the 2007-08 citrus shipping 
seasons, 17.6 million bushel cartons of fresh citrus fruit moved to 
non-citrus states, while 14.7 million bushel cartons were exported 
outside the United States. Citrus pests threaten just over 1 million 
commercial acres (137 million trees) with an annual production value 
for citrus fruit of $2.88 billion (packinghouse door equivalent--2010 
NASS Citrus Fruits Summary) not taking into account backyard citrus 
trees that also are affected.

    Pale Cyst Nematode (PCN)

    The goal of the PCN program is to detect and eradicate cyst 
nematodes that cause significant damages along with impact the export 
of U.S. potatoes from Idaho. The PCN program protects potato farmers 
and farmland in 36 producing states--1 million acres growing 43 billion 
pounds worth over $3 billion ($753 million in Idaho) and export markets 
of $1 billion in potatoes and related products.

    Golden Nematode (GN)

    The goal of the GN program is to detect and control the movement 
cyst nematodes that cause significant damage and impact the export of 
U.S. potatoes from New York. The GN program protects potato farmers and 
farmland in 36 producing states--1 million acres growing 43 billion 
pounds worth more than $3 billion. APHIS has effectively removed areas 
quarantined for GN in areas of New York through a cooperative effort 
with growers to perform treatments and restrict the movement of 
potentially infested machinery and growing media.

    Plum Pox Virus (PPV)

    The program's goal is to eradicate PPV which is a damaging disease 
of stone fruit. APHIS, in coordination with the state and growers of 
Pennsylvania, successfully eradicated PPV from the state in late 2009. 
PPV is now located only in New York. APHIS is working with New York 
state and growers to survey and place regulatory controls in place that 
will stop the spread and lead to eradication. The U.S. stone fruit 
industry is valued at an estimated $1.4 billion. PPV is considered one 
of the most economically serious virus diseases of stone fruit 
worldwide. Many varieties of peach, plum, apricot and nectarine produce 
unmarketable fruit or prematurely lose their crop when infected with 
PPV. Commercial stone fruit is the primary host of economic importance 
but a number of alternate hosts have been reported including ornamental 
Prunus and some herbaceous weeds and garden plants.

    Glassy-winged Sharpshooter (GWSS)

    The highly cooperative GWSS Program has successfully prevented 
spread of the pest to valuable wine-growing regions of California, and 
the program's rapid response methods have been very successful in 
eliminating outlier outbreaks. Due to program control and regulatory 
activities preventing further spread, the nearly 800,000 acres of grape 
production in California is maintained in spite of the GWSS being 
established in 10 of 58 counties. With GWSS present, the vine killing 
Pierce's disease threatens California's wine grape, table grape and 
raisin grape industries, valued at approximately $3 billion, and with 
annual economic impacts of more than $61 billion to California's 
economy, and more than $120 billion to the U.S. economy.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                                      Commodity Credit
   Fiscal Year        Appropriated       Corporation       Section 32
                         Funds              Funds
------------------------------------------------------------------------
                          (Dollars in thousands)
------------------------------------------------------------------------
          2002            $59,631            $45,953
          2003           $108,430            $59,531
          2004           $121,686            $47,298
          2005           $127,704           $122,094
          2006           $129,500            $14,433          $400,000
          2007           $129,921            $22,827          $100,000
          2008           $137,841            $69,539
          2009           $140,360                 $0
          2010           $150,380                 $0
          2011           $150,078            $16,922
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
       Fiscal Year              Obligations               Outlays
------------------------------------------------------------------------
                                      (Dollars in thousands)
------------------------------------------------------------------------
                          Appropriated Funding
------------------------------------------------------------------------
             2002                   $64,295                 $53,155
             2003                  $107,276                 $88,268
             2004                  $119,714                $122,906
             2005                  $134,785                $128,384
             2006                  $127,731                $108,424
             2007                  $130,141                $126,561
             2008                  $141,526                $125,647
             2009                  $154,423                $141,505
             2010                  $172,048                $165,761
             2011           (est.) $146,221         (est.) $124,288
------------------------------------------------------------------------
                      Commodity Credit Corporation
------------------------------------------------------------------------
             2002                   $86,259                 $58,082
             2003                   $48,292                 $50,794
             2004                   $46,023                 $32,706
             2005                  $105,827                 $49,647
             2006                   $17,406                 $52,724
             2007                   $29,403                 $21,112
             2008                   $53,044                 $49,657
             2009                    $5,903                 $11,161
             2010                   $22,207                 $30,317
             2011             (est.) $5,615           (est.) $5,053
------------------------------------------------------------------------
                               Section 32
------------------------------------------------------------------------
             2006                  $376,731                $376,731
             2007                  $107,105                $105,970
             2008                      $237                    $238
------------------------------------------------------------------------

    APHIS has authority to utilize three different sources of funding. 
Annual appropriations acts provide appropriations funding as well as 
access to Commodity Credit Corporation funding. Section 32 funding 
authority, under the Agricultural Marketing Service, was established by 
Congress to restore farmers' purchasing power in times of natural 
disaster, either through direct payments to farmers or through the 
Federal Government's purchase of surplus agricultural commodities. 
APHIS used this authority to make payments to commercial citrus 
producers who were negatively affected by the spread of citrus canker 
that resulted from a series of hurricanes that hit Florida in 2004 and 
2005.
    Many of the programs included in the Specialty Crop Pests group 
have no-year budget authority. In some years, obligations and outlays 
may exceed the new budget authority for the year due to carryover 
availability. These programs are cooperative efforts with state, local, 
and industry partners; APHIS provides funding to these entities through 
cooperative agreements to conduct a portion of the program activities. 
Program partners usually have one year from the date the agreement was 
signed to spend the funds. For this reason (and depending on the timing 
of the agreement), outlays of obligated funds may occur in the next 
budget year.

                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                            Annual Delivery Cost by Department Strategic Goals (Rev.)
                                        (On basis of appropriated funds)
                                             (dollars in thousands)
 
 
 
    Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.
 



 
                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011         FY 2012
 
Program
        Program
       Items--Di
       scretiona
           ry
 
Fruit Fly
 Exclusion and
 Detection
 
      Indirect             4,778           4,824           4,986           5,034           5,024           4,794
       Costs
      Program              5,972           6,030           6,232           6,292           6,279           5,992
       Operation
       al Costs
      FTEs                   479             553             453             529             443             455
                 -----------------------------------------------------------------------------------------------
Plum Pox
 
      Indirect               176             175             176             176             176             170
       Costs
      Program                220             218             220             221             220             212
       Operation
       al Costs
      FTEs                     5               5               5               5               5               5
                 -----------------------------------------------------------------------------------------------
Golden Nematode
 
      Indirect                65              64              65              66              66              66
       Costs
      Program                 81              80              82              83              83              83
       Operation
       al Costs
      FTEs                     7               7               7               7               7               7
                 -----------------------------------------------------------------------------------------------
Citrus Health
 Response
 Program
 
      Indirect             2,916           2,825           2,831           3,572           3,565           3,572
       Costs
      Program              3,646           3,531           3,539           4,466           4,457           4,466
       Operation
       al Costs
      FTEs                   125             125             125             125             125             125
                 -----------------------------------------------------------------------------------------------
Glassy-winged
 Sharpshooter
 
      Indirect             1,930           1,841           1,836           1,839           1,835           1,622
       Costs
      Program              2,413           2,301           2,295           2,298           2,294           2,028
       Operation
       al Costs
      FTEs                    16              16              16              16              16              16
                 -----------------------------------------------------------------------------------------------
Phytophthora
 ramorum/Sudden
 Oak Death
 
      Indirect               245             423             424             428             427             406
       Costs
      Program                306             529             531             535             534             507
       Operation
       al Costs
      FTEs                    19              19              19              19              19              19
                 -----------------------------------------------------------------------------------------------
Light Brown
 Apple Moth
 
      Indirect                 0              79              80              81              80             881
       Costs
      Program                  0              99             100             101             101           1,101
       Operation
       al Costs
      FTEs                     0               0               5               5               5               5
                 -----------------------------------------------------------------------------------------------
Pale Cyst
 Nematode
 
      Indirect                 0             763             664             666             665             497
       Costs
      Program                  0             953             829             833             831             622
       Operation
       al Costs
      FTEs                     0              15              15              15              15              15
                 -----------------------------------------------------------------------------------------------
Critical
 Invasive Pest
 Response/
 Miscellaneous
 Pests
 
      Indirect               284              34             167             168             168             168
       Costs
      Program                355              42             209             210             210             210
       Operation
       al Costs
      FTEs                    11               4               8               8               8               8
 

9. Eligibility Criteria
    Not applicable.
10. Utilization (Participation) Data

    European Grapevine Moth (EGVM)

    APHIS is working closely with affected counties, industry, the 
University of California, and other stakeholders to control EGVM which 
is a significant pest of grapes and other specialty crops that is 
threatening California's $2.7 billion wine/grape and stone fruit 
industry. Initial treatment efforts reduced the detections of moths in 
affected areas from 66,000 in April 2010 to just 20 moths in August 
2010.

    Light Brown Apple Moth (LBAM)

    The LBAM program works with the state and growers of several 
specialty crops located in California. The program has successfully 
maintained millions of dollars worth specialty crop exports to Mexico 
and Canada due to regulatory requirements that assure our trade 
partners of pest free commodities. The LBAM program did not receive 
funding from the FY 2011 Farm Bill. This program measures performance 
by tracking LBAM spread beyond the generally infested area. In FY 2010, 
the program found three isolated populations, compared to five in FY 
2009.

    Fruit Fly Exclusion and Detection Programs (FFED)

    The FFED program protects the health and value of American 
agricultural resources through working with Florida, California, 
Arizona, and Texas to assure citrus crops are protected from these 
pests. In FY 2010, APHIS' long-term performance measure for the number 
of exotic fruit flies outbreaks in the United States had a target of 
two severe outbreaks per year. A severe outbreak is one that spreads 
beyond its initial area. The program experienced three of these 
outbreaks in FY 2010, but will have them eradicated by October 2011.

    Phytophthora ramorum (Sudden Oak Death)

    The goal of sudden oak death program is to prevent long-distance 
human assisted spread of Phytophthora ramorum in nurserystock through 
working with states that are affected such as California, Washington, 
and Oregon along with states who might receive potentially infested 
nursery stock. APHIS works with officials in the three states to 
establish quarantines and require nursery inspections before host 
plants may be shipped interstate. In FY 2010, the program worked with 
the nursery industry to reduce the presence of the disease in the 
nursery system. It detected 22 infested nurseries in California, 
Oregon, and Washington, helping to prevent the spread of the disease. 
APHIS is continuing to support the development, communication, and 
implementation of best management practices in nurseries to reduce the 
risk of P. ramorum introduction and establishment.

    Citrus Health Response Program (CHRP)

    APHIS works with the entire U.S. citrus industry sustain the citrus 
industry in the United States while managing pest and disease threats. 
APHIS works with the citrus mutuals, California, Texas, Arizona, and 
Florida to ensure safe citrus and maintain foreign trade markets. 
During the 2009-2010 shipping season, 12.4 million bushel cartons of 
fresh citrus fruit were exported to foreign markets and 17.9 million 
bushel cartons were shipped within the United States,

    Pale Cyst Nematode (PCN)

    The PCN program works with Idaho State and growers in the state to 
detect and eradicate cyst nematodes that cause significant damages 
along with impact the export of potatoes from Idaho. In FY 2010, the 
program achieved a 90 percent reduction in viable PCN populations as a 
result of eradication activities.

    Golden Nematode (GN)

    The GN program works with New York State and growers to detect and 
control the movement cyst nematodes that cause significant damages 
along with impact the export of U.S. potatoes from New York perform 
treatments and restrict the movement of potentially infested machinery 
and growing media. Surveys conducted through 2010 allowed from the 
release of 43,000 acres from regulation, while continuing to prevent 
the spread of the pest.

    Plum Pox Virus (PPV)

    The PPV program works with New York State and growers to assure 
market access for stone fruit is maintained and mitigate the spread to 
previously infested areas. In FY 2010, the program addressed outbreaks 
in New York and continued monitoring for the disease in Pennsylvania 
and Michigan, after declaring eradication in both states in 2009.

    Glassy-winged Sharpshooter (GWSS)

    The GWSS program works with specialty crop growers and state 
officials in California particularly the grape and wine industry to 
mitigate the damages and maintain foreign trade markets. This program 
has contained GWSS within ten California counties where it is 
established and conducted area-wide management programs in major 
citrus-producing areas to suppress the pest. These programs were highly 
successful at suppressing GWSS populations and maintaining citrus 
shipments out of the regulated areas. In FY 2010, six GWSS 
interceptions occurred on nursery shipments, with five egg masses, one 
nymph, and one adult found among the shipments. This data compares to 
23 interceptions in FY 2009 with 25 egg masses. These interceptions and 
egg mass finds prevent the GWSS establishment in non-infested areas, 
where mitigation efforts would be costly and time-consuming.
11. Duplication or Overlap with Other Programs
    In instances when APHIS and another agency find it within their 
mission to address a particular pest, APHIS will meet with the other 
agency to determine the most effective combination of skills to address 
the pest. For instance, APHIS coordinates its Phytophthora ramorum with 
the Forest Service as the introduction of the disease into the National 
Forest system would be highly disruptive to the Forest Service mission.
12. Waste, Fraud and Abuse
    USDA's Office of Inspector General recently published an audit, 
USDA Payments for 2005 Citrus Canker Tree Losses, March 2011, which 
raised concerns over payments through the Canker Lost Production 
Program and Citrus Canker Tree Replacement Program. APHIS is currently 
working with OIG to address the concerns raised in the report.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Farm Bill Section 10201, Plant Pest and Disease Management and 
Disaster Prevention.
2. Subprograms/Department Initiatives
    Not applicable.
3. Brief History
    The Plant Pest and Disease Management and Disaster Prevention 
Program was authorized in the 2008 Farm Bill and has been implemented 
by APHIS from 2009 through 2011. It is funded annually with Commodity 
Credit Corporation (CCC) funding. Funding was set at $12 million in FY 
2009, $45 million in FY 2010, and $50 million in FY 2011 and beyond.
4. Purpose/Goals
    The purpose of the Pest and Disease Management and Disaster 
Prevention Program is for APHIS to partner with states, industry, 
universities, and other interested groups to prevent the entry of high-
consequence plant pests, quickly detect those that may enter into the 
United States, and enhance our emergency response capabilities. The 
program provides strong protection to America's agricultural and 
environmental resources, and helps nursery and specialty crop growers 
flourish.
    Projects are organized around six goal areas: enhancing plant pest 
analysis and survey; targeting domestic inspection activities at 
vulnerable points in the safeguarding continuum; enhancing and 
strengthening threat identification and technology; safeguarding 
nursery production; enhancing mitigation capabilities; and conducting 
outreach and education about these issues.
5. Success in Meeting Programmatic Purpose/Goals
    Over the last 2 years, Section 10201 projects have played a 
significant role in many USDA and partner successes to protect American 
agriculture and educate the public about the threat of invasive 
species. These successes include, among many others, the eradication of 
plum pox virus in Pennsylvania and a recent Mediterranean fruit fly 
outbreak in Florida, surveys for European grapevine moth in California, 
the 2010 national survey of honey bee pests and diseases, the 
monitoring of high-risk international and domestic pathways for 
invasive species, applied research to combat citrus pests, and the 
exploration of the feasibility of an audit-based certification system 
to prevent the movement of infested nursery stock.
    Selection was based on project alignment with Section 10201 goals, 
the expected impact of the project, and the technical approach. In 
addition, the reviewers considered how the suggestions would complement 
ongoing USDA programs and other Section 10201 projects. APHIS made a 
concerted effort to engage external stakeholders, such as the National 
Plant Board, Specialty Crops Farm Bill Alliance and USDA's National 
Institute of Food and Agriculture, Agricultural Research Service and 
U.S. Forest Service, in designing the evaluation criteria for the 
suggestions.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                                         Budget Authority (dollars in
             Fiscal Year                          thousands)
------------------------------------------------------------------------
                            2009                              $12,000
                            2010                              $45,000
                            2011                              $50,000
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
       Fiscal Year              Obligations               Outlays
------------------------------------------------------------------------
                                      (dollars in thousands)
------------------------------------------------------------------------
                 2009                  $11,989                  $2,340
                 2010                  $44,881                 $11,267
                 2011           $50,000 (est.)          $15,000 (est.)
------------------------------------------------------------------------

    Most Section 10201 projects are carried out by APHIS' partners 
through cooperative agreements. Most cooperators have one year from the 
date the agreement is signed to spend the funds so the funds are not 
outlaid in full until the following fiscal year.

                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                            Annual Delivery Cost by Department Strategic Goals (Rev.)
                                        (On basis of appropriated funds)
                                             (dollars in thousands)
 
 
 
    Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.
 



 
                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011         FY 2012
 
Program
        Program
       Items--Ma
        ndatory
 
Farm Bill:
 10201--Plant
 Pest & Disease
 Mgt. & Disaster
 Prevention
 
      Indirect               N/A             N/A             582           1,401           2,425           2,425
       Costs
      Program                N/A             N/A           2,947          11,099          12,575          12,575
       Operation
       al Costs
      FTEs                   N/A             N/A               1              37              37              37
 


 
 
 
9. Eligibility Criteria
 
    A 10201 evaluation team made up of government and non-government, stakeholders, and scientific members evaluate the technical factors of the
 individual suggestions using the evaluation criteria described below. If a suggestion does not address a factor, it will be evaluated as ``Low.''
    Strengths, weaknesses, deficiencies, and reviewer questions will be documented for each suggestion. At the conclusion of the independent review
 period, the entire evaluation team will meet and discuss each technical evaluation factor and agree on a consensus rating for each suggestion.
    FY 2011 suggestions have been rated in the following areas:
 
    Criteria 1: Alignment with Section 10201 Goals:
 
    The suggestion should clearly identify the goal area to be addressed and explain how the project will further the goals of the farm bill.
 Suggestions should not list more than one of the six goal areas:
 
      1. Enhance plant pest analysis and survey.
 

    2. Target domestic inspection activities at vulnerable points in 
        the safeguarding continuum.

    3. Enhance and strengthen threat identification and technology.

    4. Safeguard nursery production.

    5. Conduct outreach and education to increase public understanding, 
        acceptance, and support of plant pest and disease eradication 
        and control efforts.

    6. Enhance mitigation capabilities.

    Criteria 2: Impact:

    The suggestion should clearly address the potential benefits from 
the proposed activities or deliverables. Emphasis should be placed on 
projects that will affect high-risk states/areas, address pests of 
regulatory significance, and/or benefits specialty crop producers and 
minority or underserved communities.

    Criteria 3: Technical approach:

    The suggestion should discuss the technical approach to be 
employed, including a description of methodology and a summary of the 
various tasks to be undertaken. The suggestion should also highlight 
the cooperators (states, universities, and others) that will be working 
together to complete the project and the role each will play.
10. Utilization (Participation) Data
    In FY 2009, APHIS provided funding for 63 projects in 21 states.
    In FY 2010, APHIS provided funding for more than 270 projects.
    In FY 2011, APHIS is providing funding for more than 270 projects 
with over 100 cooperators in 50 states. Note: In FY 2011, Section 10201 
funding was not available until April, but APHIS is working diligently 
to finalize and implement the spending plan. As a result, we anticipate 
that participant numbers may change.
11. Duplication or Overlap with Other Programs
    APHIS' Pest Detection program is funded through an annual budget 
appropriation. It supports APHIS' goal of safeguarding U.S. 
agricultural and environmental resources by ensuring that new 
introductions of harmful plant pests and diseases are detected as soon 
as possible, before they cause significant damage. These efforts engage 
the scientific community, government entities, states, tribes, 
universities, the public, nonprofit entities, and industry. The 
Cooperative Agricultural Pest Survey (CAPS) program is the principle 
means of providing funds to all states and other cooperators to survey 
for pests that are not known to be in the U.S., as well as some that 
are of limited distribution and of regulatory concern. Pest-free 
regions are identified that allow the continued export of commodities 
from particular areas of the country.
    Farm Bill Section 10201 complements the Pest Detection program and 
expands upon it by specifically providing funds and technical 
assistance to specialty crop growers, organizations representing 
specialty crop growers, and state and local agencies working with 
specialty crop growers and organizations for the development and 
implementation of audit-based certification systems and nursery plant 
pest risk management systems, in collaboration with the nursery 
industry, research institutions, and other entities to address plant 
pests. This Section also provides funds for a threat identification and 
mitigation program to determine and address threats to the domestic 
production of crops. Risk assessments are being prepared of the 
potential threat to the agricultural industry of the United States from 
foreign sources, in collaboration with the National Plant Board, and 
are implementing action plans for high consequence plant pests and 
diseases.
12. Waste, Fraud and Abuse
    The program is fairly young as it was created in the 2008 Farm 
Bill. Auditing agencies, such as the Office of the Inspector General or 
the Government Accountability Office, have not conducted audits to 
date. The program is not aware of any instances of waste, fraud, or 
abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Farm Bill Section 10202, National Clean Plant Network (NCPN).
2. Subprograms/Department Initiatives
    The National Clean Plant Network is coordinated jointly by three 
USDA Agencies: the Animal and Plant Health Inspection Service (APHIS) 
(quarantine programs), Agricultural Research Service (research 
activities), and National Institute of Food and Agriculture (outreach 
initiatives). In March 2009, the three USDA Agencies signed a 
Memorandum of Understanding laying the foundation for the NCPN at the 
national level and providing direction and guidance for newly forming 
NCPN specialty crop networks.
3. Brief History
    The National Clean Plant Network was first provided dedicated 
funding in the 2008 Farm Bill. The farm bill provides NCPN with $5 
million each year (FY 2009-2012) for a total of $20 million over 4 
years. The NCPN currently funds 18 clean plant centers in 14 states 
focusing on supporting existing state infrastructures. In FY 2010/2011, 
five specialty crops were covered including fruit trees, grapes, 
citrus, berries, and hops. Several new crops are under consideration 
for the program including potatoes, sweet potatoes, olives, garlic, 
roses, and other ornamentals.
4. Purpose/Goals
    NCPN is a collaborative venture, composed of diagnostic, 
therapeutic and horticultural expertise. NCPN's goal is to ensure the 
availability of high quality propagated plant material that is free of 
plant pests, helping to ensure the global competitiveness of specialty 
crop producers. The NCPN promotes pest- and disease-free specialty 
crops, the rapid and safe introduction of new varieties from foreign 
sources, and hygienic U.S. products for export.
5. Success in Meeting Programmatic Purpose/Goals
    Over the past 2 years, the NCPN has built national, regional and 
crop-specific NCPN governing bodies composed of governmental, 
University, and industry representatives nationwide. Due to this 
initiative Clean Plant Centers were revitalized and foundation 
plantings of clean nursery stock expanded. The NCPN is currently 
supporting Clean Plant Network Centers for five specialty crops in 
multiple states including:

   Fruit Tree (Pomes and Stone Fruits): California, South 
        Carolina, and Washington.

   Grape: California, Florida, Missouri, New York, and 
        Washington.

   Citrus: Alabama, Arizona, California, Florida, Louisiana, 
        and Texas.

   Berries (Strawberries, Blueberries, Cranberries, and Cane 
        Fruit): Arkansas, North Carolina, and Oregon.

   Hops: centered out of Washington State.

    Due to the efforts of these centers, clean plants were provided to 
nurseries and growers to ensure planting sustainability and 
productivity, and quality of products. In 2009, the initial year of 
funding alone, 161 clean plant accessions consisting of fruit tree and 
grape varieties were released. NCPN continues to contribute to the 
economy by working with U.S. specialty crop producers to generate 
desirable planting stock, increase yields of healthy, high quality 
crops, and encourage competitive standards for domestic and 
international trade.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                                         Budget Authority (dollars in
             Fiscal Year                          thousands)
------------------------------------------------------------------------
                            2009                               $5,000
                            2010                               $5,000
                            2011                               $5,000
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
       Fiscal Year              Obligations               Outlays
------------------------------------------------------------------------
                                      (dollars in thousands)
------------------------------------------------------------------------
                 2009                   $3,334                    $252
                 2010                   $6,271                  $2,281
                 2011            $5,300 (est.)           $3,000 (est.)
------------------------------------------------------------------------

    The Farm Bill of 2008, Section 10202 provides that NCPN funding is 
--available until expended' (no-year) since it is understood that a 
certain `ramp-up' was anticipated for this program in its early years. 
Additionally, the program uses a cooperative agreements process with 
time built into the calendar for applicants to receive feedback from 
APHIS to enhance their proposals. The program announces recipients and 
signs the agreements near the end of the fiscal year, resulting in 
outlays that lag behind obligations.

                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                            Annual Delivery Cost by Department Strategic Goals (Rev.)
                                        (On basis of appropriated funds)
                                             (dollars in thousands)
 
 
 
    Strategic Goal 4--Ensure that all of America's children have access to safe, nutritious, and balanced meals.
 



 
                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011         FY 2012
 
Program
        Program
       Items--Ma
        ndatory
 
Farm Bill:
 10202--National
 Clean Plant
 Network
 
      Indirect               N/A             N/A           242.5             243             243             243
       Costs
      Program                N/A             N/A             258             508             508             508
       Operation
       al Costs
      FTEs                   N/A             N/A               1               2               2               2
 

9. Eligibility Criteria
    Parties eligible to receive NCPN program funding include Land-Grant 
Universities, Non Land-Grant Colleges of Agriculture, State 
Agricultural Experiment Stations, State Governments, and Federal 
Agencies.
    The following criteria are also considered when providing program 
support:

   Target Crops: Specialty crops, especially those considered 
        highly restricted due to pest pressures

   Clean Plant Centers or Programs: Extant to the extent 
        practicable

   Core Mission: Diagnostics, therapeutics, foundation 
        plantings

   Secondary Mission: Networking and education/outreach

   Performance Goals: Industry focus and consultation
10. Utilization (Participation) Data
    In FY 2011, NCPN will be focusing its efforts on five specialty 
crop groups (fruit trees, grapes, berries, citrus, and hops) 
represented by 18 supported clean plant centers or associated programs 
located in 14 states. Additionally, the NCPN national stakeholder 
database has about 500 persons enrolled as expressing specific interest 
in the program. This includes nursery and grower industries, 
scientists, state regulatory officials, and educators.
11. Duplication or Overlap with Other Programs
    We are not aware of any other program with a sufficiently similar 
mission.
12. Waste, Fraud and Abuse
    The program is fairly young as it was created in the 2008 Farm 
Bill. Auditing agencies, such as the Office of the Inspector General or 
the Government Accountability Office, have not conducted audits to 
date. The program is not aware of any instances of waste, fraud, or 
abuse.
13. Effect of Administrative PAYGO
    None.


                       AGRICULTURAL PROGRAM AUDIT

       (EXAMINATION OF FOREIGN AGRICULTURE AND FOOD AID PROGRAMS)

                              ----------                              


                        WEDNESDAY, JULY 13, 2011

        Subcommittee on Rural Development, 
      Research, Biotechnology, and Foreign 
                               Agriculture,
                  Committee on Agriculture,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:06 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Timothy 
V. Johnson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Johnson, Stutzman, Scott, 
Hultgren, Hartzler, Schilling, Costa, Cuellar, Sewell, Kissell, 
and McGovern.
    Staff present: Mike Dunlap, Tamara Hinton, John Porter, 
Debbie Smith, Suzanne Watson, Andy Baker, Liz Friedlander, John 
Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE 
                   IN CONGRESS FROM ILLINOIS

    The Chairman. This hearing of the Subcommittee on Rural 
Development, Research, Biotechnology, and Foreign Agriculture 
entitled, Agricultural Program Audit: Examination of Foreign 
Agriculture and Food Aid Programs, will now come to order.
    Good morning, and welcome to this hearing to examine our 
trade, food aid and agricultural development programs operated 
by USDA's Foreign Agricultural Service and the U.S. Agency for 
International Development. This hearing is part of a series of 
farm program audits to help us prepare for the next farm bill. 
When we are finished here, I hope that we will all have a 
better understanding of trade and food aid programs both 
individually and as part of the broader picture of foreign 
policy. Having detailed knowledge of these programs will help 
us make better policy decisions when the time comes.
    Today's hearing builds upon a discussion this Subcommittee 
had on April 7th of this year where we looked at five export 
programs in great detail. At that hearing, we reviewed how the 
programs are being implemented and how our ag policy has 
enabled the programs to expand our export of U.S. agricultural 
products.
    Along with learning more about our trade programs, we will 
hear testimony describing how our humanitarian assistance is 
meeting acute needs in the areas of crisis. As the largest 
donor of food aid in the world, the United States has been at 
the forefront of humanitarian assistance. Part of these efforts 
include agricultural developmental programs which provide 
technical assistance and training to help communities graduate 
from reliance on food aid.
    In our discussion this morning, we will take a close look 
at the administrative side of our programs, carefully reviewing 
the delivery costs and progress toward meeting the goals and 
objectives set by the Committee. One of the objectives we have 
to keep in mind for the next farm bill is reducing overall 
spending while maintaining an effective level of support for 
critical programs. In every corner of government, we are 
looking for opportunities to streamline processes, ensure 
Federal programs are delivered with maximum impact and with the 
least cost possible. It is incumbent on the agencies to 
effectively deliver each program in the most efficient manner 
possible. And it is the purview of this Committee to ensure 
that the agencies are fulfilling their responsibility. The 
current economic and fiscal environment adds urgency to this 
Committee's oversight responsibilities because it helps 
prioritize limited funds to address our most important needs.
    With us this morning, we have the operational leaders in 
the agencies in charge of implementing our trade, food and 
development programs. The two agencies represented here today 
have unique capabilities but must act in concert to achieve 
their objectives. We look forward to hearing how they are 
coordinating their efforts around the world. From the Foreign 
Agricultural Service, we are joined by Acting Administrator 
Suzanne Heinen, and with us from USAID is the Assistant 
Administrator for the Bureau for Democracy, Conflict and 
Humanitarian Assistance. We appreciate all the efforts the 
agencies have put into compiling a clear outline of how the 
programs are being implemented. I anticipate that the 
conversation this morning will be the beginning of a very frank 
discussion that will continue throughout the development of the 
next farm bill.
    Thank you both for being here and I look forward to your 
testimony.
    [The prepared statement of Mr. Johnson follows:]

  Prepared Statement of Hon. Timothy V. Johnson, a Representative in 
                         Congress from Illinois
    Good morning, and welcome to this hearing to examine our trade, 
food aid, and agricultural development programs operated by USDA's 
Foreign Agricultural Service and the U.S. Agency for International 
Development.
    This hearing is part of a series of farm program audits to help us 
prepare for the next farm bill. When we are finished here, I hope that 
we will all have a better understanding of trade and food aid programs 
both individually and as part of the broader picture of farm policy. 
Having detailed knowledge of these programs will help us make better 
policy decisions when the time comes.
    Today's hearing builds upon a discussion this Subcommittee had on 
April 7th of this year, where we looked at five export promotion 
programs in great detail. In that hearing, we reviewed how the programs 
were being implemented, and how our agricultural industry has been able 
to utilize the programs to expand U.S. agricultural exports.
    Along with learning more about our trade programs, we will hear 
testimony describing how our humanitarian assistance is meeting acute 
needs in areas of crisis. As the largest donor of food aid in the 
world, the U.S. has been at the forefront of humanitarian assistance. 
Part of these efforts includes agricultural development programs which 
provide technical assistance and training to help communities graduate 
from a reliance on food aid.
    In our discussion this morning we will take a close look at the 
administrative side of our programs, carefully reviewing the delivery 
costs and progress towards meeting the goals and objectives set by this 
Committee.
    One of the objectives we must keep in mind for the next farm bill 
is reducing overall spending while maintaining an effective level of 
support for critical programs. In every corner of government we are 
looking for opportunities to streamline processes and ensure Federal 
programs are delivered with maximum impact and with the least cost 
possible. It is incumbent upon the agencies to effectively deliver each 
program in the most efficient manner possible. And it is the purview of 
this Committee to ensure the agencies are fulfilling this 
responsibility.
    The current economic and fiscal environment adds urgency to this 
Committee's oversight responsibilities because it helps prioritize 
limited funds to address our most important needs.
    With us this morning we have the operational leaders of the 
agencies in charge of implementing our trade, food aid, and development 
programs. The two agencies represented here today have unique 
capabilities, but must act in concert to achieve their objectives. We 
look forward to hearing how they are coordinating their efforts around 
the world.
    From the Foreign Agricultural Service we are joined by Acting 
Administrator Suzanne Heinen. With us from USAID is the Assistant 
Administrator for the Bureau for Democracy, Conflict and Humanitarian 
Assistance.
    We appreciate all of the effort the agencies have put into 
compiling a clear outline of how the programs are being implemented. I 
anticipate that the conversation this morning will be the beginning of 
a very frank discussion and will continue throughout the development of 
the next farm bill. I thank both of you for being here today, and look 
forward to your testimony.

    The Chairman. I would then recognize the Ranking Member, 
Mr. Costa, for whatever statement he would like to make.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you very much, Mr. Chairman. I think that 
our efforts this morning to focus on the rural development 
research, biotechnology and foreign agriculture assistance is 
key as we continue to focus on expanding our exports for 
agricultural trade as well as our efforts to deal with food aid 
and development in different parts of the world.
    This hearing, Chairman Johnson, I think is appropriate 
given the timing. The audit hearings are an important part of 
Members' ability in the Subcommittee to focus on the United 
States Department of Agriculture's programs that I think as any 
good subcommittee we need to provide a regular review on.
    Today, the programs that we are looking at, the Foreign 
Agricultural Service which develops export markets for U.S. 
agricultural products, is important. I think there are a number 
of reasons why this program, as I have seen it implemented in 
various parts of the world, is important. One, it connects 
America and ag producers and value-added ag businesses of all 
sizes and varieties to the world markets. I believe my 
colleagues here on the Subcommittee who come from various parts 
of the country feel similarly, that nobody does it better, to 
take a title of a song, than our American farmers, ranchers and 
dairymen in terms of the production of high-quality foods and 
fibers at very abundant levels and of the safest level for 
consumers.
    But it also helps open those markets for long term while 
working to expand new markets. It helps promote a free and fair 
global trading system. I support free trade as long as it is 
fair trade, that meaning a level playing field. Certainly in 
the global economy, it gives us better access to those markets. 
It also helps us to resolve non-tariff trade barriers, 
particularly when other countries are trying to use sanitary 
and phytosanitary standards. I believe this has been nothing 
more than leverage to try to foster trade in a direction that 
would be more favorable to them, and we all know numerous 
examples. In the specialty crops, we see that having occurred 
historically.
    The five market development programs under Title III of the 
farm bill, we will be discussing today, they have unique goals. 
I would like to hear the witnesses explain to us how we are 
reaching those goals and how well they complement each other. 
Obviously we all have different interests from the agricultural 
regions we represent in the country. Mine is fairly well known, 
the specialty crops in California, some 300, are so much of 
what we able to export, last year almost $38 billion a year at 
the farm gate in California, farm gate being the gross receipts 
to farmers, ranchers and dairymen.
    So we have a lot of issues that we are focusing on. We know 
we have tight budgets. We know the 2012 Farm Bill will be 
smaller in funding than the 2008 Farm Bill, and so whether it 
is with the FAS program or other related programs, we are going 
to have to figure out how we can be as cost-effective as we 
possibly can to ensure that we get the best bang for our buck.
    So as we look at that, as we look at examining food aid and 
development programs also administered by the Foreign 
Agricultural Service and USAID. A couple years ago I was in 
Sudan and Darfur. There are a lot of places around the world 
where America's best foot forward and our ambassadorial efforts 
is to provide that aid to those most in need. You know, it is 
estimated by the U.N. that over 700 million people every night 
go to bed hungry and we lose 10,000 children a week as a result 
of malnutrition. So the USAID program I think is really a good 
effort.
    In conclusion, for over 55 years the United States has 
provided food for emergency food relief to support 
international developments, and I think we need to talk about 
how we can build on that goodwill that we have been able to 
provide. I am also reminded when we look at the Federal Food 
Aid Assistance Program of one our Presidents, Ronald Reagan, 
who once said that, and I am paraphrasing, that you can give a 
person a fish to eat and they will be fed for the day, but if 
you teach them how to fish, and I think that analogy holds 
forward in the food assistance services efforts, then they can 
sustain themselves, and certainly that is a lot of what that 
program, in my view, is all about.
    So I thank you. We look forward to the testimony and the 
questions from this panel.
    The Chairman. Thank you, Mr. Costa.
    The chair would request that other Members submit their 
opening statements for the record so the witnesses can begin 
their testimony to ensure that there is adequate time for 
questions.
    We would then welcome our first and only panel of witnesses 
to the table. Our first witness is Ms. Suzanne Heinen, Acting 
Administrator, Foreign Agricultural Service, USDA, Washington. 
You may proceed.

  STATEMENT OF SUZANNE HEINEN, ACTING ADMINISTRATOR, FOREIGN 
     AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Ms. Heinen. Thank you, Mr. Chairman.
    Mr. Chairman, Members of the Subcommittee, I am very 
pleased to appear today before you to discuss the trade, food 
aid and capacity-building programs authorized by Congress and 
administered by USDA's Foreign Agricultural Service. As 
requested, my written testimony discusses the goals of each 
program, how the program funds are allocated and how the goals 
for each program are being met.
    FAS attaches around the globe, bolstered by cooperative 
public-private partnerships, have assisted U.S. farmers and 
ranchers in achieving record agricultural export sales and have 
increased food security for some of the poorest around the 
world. In Fiscal Year 2011, we expect U.S. agricultural exports 
to reach a record $137 billion and support over one million 
American jobs. We expect to feed more than 5.2 million hungry 
people and to build agricultural capacity in dozens of 
countries around the world. Over numerous farm bills, Congress 
has authorized and refined an effective combination of 
programs. Allow me to expand on how Congress, FAS and the U.S. 
agricultural community complement each other in delivering 
effective results.
    The largest market development program operated by FAS is 
MAP, the Market Access Program. MAP forms partnerships between 
nonprofit agricultural trade organizations, cooperatives, 
nonprofit State Regional Trade Groups and small businesses to 
share the costs of overseas marketing and promotional 
activities. The 2008 Farm Bill makes available $200 million for 
MAP in 2011. That amount is more than matched with industry 
contributions. FAS allocates MAP funds through a competitive 
process which allows applicants to request funding for various 
FAS programs through a single strategically coordinated 
proposal. This process allows for efficiencies in program 
delivery while taking full advantage of the complementary 
nature of the programs provided by Congress. In 2011, MAP 
resources are being used to expand markets for food grains, 
meat and poultry, seafood, dairy, horticultural products and 
processed products in markets in every corner of the globe.
    In addition to generic promotions, MAP has a brand 
promotion component that provides funding to over 600 small 
companies and agricultural cooperatives annually. For example, 
WildRoots, a small healthy snack food company with two 
production facilities in Illinois and one in Nebraska, matched 
MAP funds to market their products in Canada. Export sales rose 
from zero in 2008 to over $4 million in 2010. This company buys 
blueberries from Michigan, corn and soy products from Illinois, 
oats from Nebraska, cranberries from Massachusetts and almonds 
from California. According to WildRoots, ``without the branded 
program, we simply would never have been able to compete 
internationally. It has moved our business to a new level and 
has promoted U.S.-based agricultural products, creating jobs in 
an economy that desperately needs them.''
    The economic impact of the MAP and Foreign Market 
Development programs, our second-largest market development 
program, is striking. A recent cost-benefit analysis concluded 
that for every dollar invested by government and industry, 
exports increased by $35.
    One of our most compelling challenges in the world is 
eradicating chronic hunger and malnourishment. The food aid and 
development programs administered by USDA and USAID are making 
a difference in the lives of poor and hungry people. The 
McGovern-Dole school feeding program was established to carry 
out preschool and school food for education programs in foreign 
countries to improve food security, reduce the incidence of 
hunger and improve literacy and primary education, particularly 
for girls, while also providing maternal, infant and child 
nutrition programs for pregnant women, nursing mothers and 
infants. This year, McGovern-Dole will provide benefits in 15 
countries including Nepal, Haiti, Guatemala, Burkina Faso and 
Senegal. Since 2003, the program has supported projects in 41 
countries and fed up to five million schoolchildren each year. 
USDA and implementing organizations developed graduation plans 
and we have moved one program into full graduation in Moldova 
and we have progress towards graduation in Kenya, Laos and 
Guinea-Bissau.
    As Administrator of FAS, I am very proud of our efforts in 
administering the farm bill authorized programs. We look 
forward to providing any support we can as Congress works on 
the next farm bill.
    This concludes my statement, and I look forward to 
answering your questions.
    [The prepared statement of Ms. Heinen follows:]

  Prepared Statement of Suzanne Heinen, Acting Administrator, Foreign 
 Agricultural Service, U.S. Department of Agriculture, Washington, D.C.
    Mr. Chairman, Members of the Subcommittee, I am pleased to appear 
before you today. I welcome the opportunity to discuss trade, food aid, 
and capacity building programs authorized by Congress and administered 
by the Foreign Agricultural Service (FAS) of the U.S. Department of 
Agriculture (USDA). As you requested, I am pleased to discuss the goals 
of each program, outline how the program funds are allocated, and 
describe how the goals for each program are being met. The efforts of 
FAS personnel around the globe, bolstered by cooperative public-private 
partnerships, have assisted U.S. farmers and ranchers in achieving 
record agricultural export sales and have increased food security for 
some of the poorest around the world. In Fiscal Year 2011, we expect 
U.S. agricultural exports to reach a new record of $137 billion, we 
expect to feed more than 5.2 million hungry people, and we expect to 
build agricultural capacity in dozens of countries around the world.
    We do much of our work in very close coordination with the U.S. 
Agency for International Development (USAID). USAID plays an important 
role in the countries in which we work.
Linking U.S. Agriculture to the World
    FAS is USDA's lead agency for addressing the challenges and 
opportunities of the dynamic global marketplace by expanding foreign 
market access for U.S. products, building new markets, improving the 
competitive position of U.S. agriculture, and addressing food security 
and capacity building in foreign countries. FAS has the primary 
responsibility within USDA for international market development and 
export financing, trade agreements and negotiations, and the analysis 
and dissemination of vital international market intelligence and data 
to agricultural producers and exporters. FAS also administers food aid 
programs and mobilizes USDA's unique resources and expertise in 
agricultural development activities.
    FAS relies on its global network of agricultural economists, market 
development experts, negotiators and trade specialists in Washington, 
DC, and its approximately 100 international offices that cover 156 
countries. FAS' agricultural counselors and attaches serving at U.S. 
Embassies are our eyes and ears around the world, providing the 
agricultural expertise to identify and seize opportunities, by 
capturing real-time information on emerging trade and market 
development issues, and averting problems before they become trade 
barriers that impede U.S. exports.
Complementary Market Development Efforts
    Over numerous farm bills, Congress has authorized and refined an 
effective combination of agricultural market development programs. 
These programs that are designed to develop markets, facilitate 
financing of overseas sales, and resolve market access barriers 
dovetail with the FAS mission. We must open, expand, and maintain 
access to foreign markets, where 95 percent of the world's consumers 
live. Participants from all corners of the U.S. agricultural community 
utilize FAS-administered trade programs to reach these consumers, 
complementing Administration efforts to open and maintain markets 
through trade negotiations, diplomacy, and enforcement of trade 
agreements.
Market Access Program
    The largest market development program operated by FAS is the 
Market Access Program (MAP). The program originally known as the 
Targeted Export Assistance Program was first authorized by Congress in 
the 1985 Farm Bill. The 1996 Farm Bill renamed the program the MAP and 
established the current statutory prohibitions on the use of MAP funds 
to promote the products of large companies.
    MAP is a cost-share program that uses funds from USDA's Commodity 
Credit Corporation (CCC) to aid in the creation, expansion, and 
maintenance of foreign markets for U.S. agricultural products. MAP 
forms partnerships between nonprofit U.S. agricultural trade 
organizations, U.S. agricultural cooperatives, nonprofit State Regional 
Trade Groups, and small-sized U.S. commercial entities to share the 
costs of overseas marketing and promotional activities, such as 
consumer promotions, market research, and trade show participation. The 
2008 Farm Bill makes available $200 million of CCC funds for MAP in FY 
2011; that amount is matched with industry contributions. Applicants 
submit MAP proposals to USDA as part of a competitive Unified Export 
Strategy (UES) process, which allows applicants to request funding for 
various USDA foreign market development programs through a single, 
strategically coordinated proposal. One strength of the UES process is 
that utilizing the complementary nature of the various market 
development programs is emphasized.
    In addition to generic promotions, MAP has a brand promotion 
component that provides export promotion funding to over 600 small 
companies and agricultural cooperatives annually. To conduct branded 
product promotion activities, individual companies must provide at 
least 50 percent of funding. Most small companies and agricultural 
producer cooperatives access market development programming through one 
of the four State Regional Trade Groups (SRTGs)--Food Export 
Association of the Midwest USA, Food Export USA Northeast, Southern 
United States Trade Association, and Western United States Agricultural 
Trade Association. The SRTGs work closely with the State Departments of 
Agriculture in their respective regions to identify eligible company 
participants and export opportunities, and then bring the two together. 
In that effort, SRTGs provide small companies with export readiness 
training and organize trade missions, as well as branded programming 
opportunities to directly access MAP funds for individual company 
promotions and trade show participation.
    WildRoots, a small healthy snack food company, with two production 
facilities in Illinois and one in Nebraska, matched MAP branded funds 
to market their products in Canada. Export sales soared from zero in 
2008 to over $4 million in 2010. The company buys blueberries from 
Michigan, corn and soy products from Illinois, oats from Nebraska, 
cranberries from Massachusetts, and almonds from California. According 
to a WildRoots' cofounder, ``Without the branded program, we simply 
would never have been able to compete with Canadian producers. It has 
moved our business to a new level and has promoted U.S.-based 
agricultural products, creating jobs in an economy that desperately 
needs them.''
Foreign Market Development Program
    The Foreign Market Development (Cooperator) Program (FMD) had its 
first participants (known as Cooperators) in 1954. FMD is currently 
authorized by Title VII of the Agricultural Trade Act of 1978, which 
directs the Secretary of Agriculture to ``establish and, in cooperation 
with eligible trade organizations, carry out a foreign market 
development cooperator program to maintain and develop foreign markets 
for United States agricultural commodities and products . . .'' Funding 
for FMD was most recently reauthorized by Congress in the 2008 Farm 
Bill.
    FMD is a cost-share program that aids in the creation, expansion, 
and maintenance of long-term export markets for U.S. agricultural 
products. The current farm bill makes available $34.5 million of CCC 
funds for FMD this year. The program fosters a market development 
partnership between USDA and U.S. agricultural producers and processors 
who are represented by nonprofit commodity or trade associations known 
as Cooperators. Under this partnership, USDA and each Cooperator pool 
their technical and financial resources to conduct overseas market 
development activities that are generic in nature. Activities must 
contribute to the maintenance or growth of demand for U.S. agricultural 
commodities and generally address long-term foreign import constraints 
and export growth opportunities. Programs focus on matters such as 
reducing infrastructural or historical market impediments, improving 
processing capabilities, modifying codes and standards, and identifying 
new markets or new applications or uses for the agricultural commodity 
or product in the foreign market. Twenty-one organizations representing 
a broad sample of U.S. agriculture, including peanuts, sunflower, 
soybeans, livestock genetics, dry beans, wheat, poultry, and rice, 
benefited from receiving a total of $34.15 million in Fiscal Year 2010 
through the FMD program.
    Through the FMD program, U.S. sunflower producers' activities in 
Spain are paying dividends. To increase awareness of confectionary 
sunflower seed and build demand in Spain, the National Sunflower 
Association (NSA) used FMD funding to create and implement an 
integrated and highly successful marketing program of trade 
advertisements, newsletters, trade shows, seminars, and trade missions. 
Through this work, U.S. sales to Spain reached nearly $270 million, 
making Spain the top market for U.S. confectionary sunflower seeds, and 
generating jobs in top sunflower producing states including Colorado, 
Kansas, Minnesota, North Dakota, Oklahoma, South Dakota, and Texas.
Economic Impact of MAP and FMD Programs
    The economic impact of the MAP and FMD programs is striking. USDA's 
Foreign Agricultural Service commissioned a cost-benefit analysis in 
March 2010 that concluded the programs effectively leveraged private 
and public sector resources in a unique partnership to increase U.S. 
food and agricultural exports. The analysis concluded for the time 
period 2002 through 2009 that U.S. food and agricultural exports 
increased by $35 for every dollar invested by government and industry 
on market development. Additionally, U.S. agricultural exports in 2009 
were $6.1 billion higher than they would have been without the 
increased investment in market development. The study also found that 
an estimated 47 percent of the programs' total trade impact accrued to 
commodities not receiving market development assistance--a phenomenon 
known as the ``halo'' effect. In other words, non-promoted U.S. 
commodities benefited from increased promotion of other U.S. 
commodities in the same market.
Emerging Markets Program
    The Emerging Markets Program (EMP) provides funding for technical 
assistance activities intended to promote exports of U.S. agricultural 
commodities and products to emerging markets in all geographic regions, 
consistent with U.S. foreign policy. The program is authorized by the 
Food, Agriculture, Conservation, and Trade Act of 1990, as amended, 
through the end of the current 2008 Farm Bill. Funding is set by 
Congress at $10 million each fiscal year from the Commodity Credit 
Corporation.
    EMP was specifically designed by Congress to improve market access 
and develop or promote exports of U.S. agricultural commodities and 
products to low and middle income emerging markets through cost-share 
assistance to eligible applicants for approved technical assistance 
activities. For this program, Congress defined an emerging market as 
any country that ``is taking steps toward a market-oriented economy 
through the food, agriculture, or rural business sectors of the economy 
of the country,'' and ``has the potential to provide a viable and 
significant market for United States agricultural commodities or 
products of United States agricultural commodities.'' EMP resources may 
be used to support exports of U.S. agricultural commodities and 
products only through generic activities, not specific brands. The EMP 
statute provides that the Secretary establish a private sector advisory 
committee to provide information and advice to USDA in developing 
strategies for providing technical assistance and enhancing markets for 
U.S. agricultural products in developing markets. More specifically, 
EMP Committee members review, from a non-governmental perspective, 
qualified proposals submitted for funding assistance. The Secretary of 
Agriculture appoints members to the Committee for 2 year terms. For 
Fiscal Year 2010, the EMP program supported 83 agricultural export 
promotion projects with funding totaling $8.3 million.
    In 2010, EMP assisted Wisconsin ginseng growers battle 
counterfeits. For more than a decade, the Ginseng Board of Wisconsin 
(GBW) has struggled with Chinese counterfeiters selling fake Wisconsin 
Ginseng. With 90 percent of its exports going to China, the GBW moved 
aggressively to regain control of its brand. Using EMP, GBW initiated 
research to develop a technique to detect trace elements of ginseng's 
valuable root to Wisconsin or where it was grown originally; initial 
findings are promising.
Technical Assistance for Specialty Crops Program
    The Technical Assistance for Specialty Crops Program (TASC) was 
authorized by Congress in the Farm Security and Rural Investment Act of 
2002. The 2008 Farm Bill reauthorized the Technical Assistance for 
Specialty Crops (TASC) Program and provided mandatory Commodity Credit 
Corporation (CCC) funds for the program. In FY 2010 the program was 
funded at $8 million and for FY 2011 and FY 2012 program funding is set 
at $9 million. Congress authorized the TASC program to assist U.S. 
organizations by providing funding for specialty crops projects that 
address sanitary, phytosanitary and related technical barriers that 
prohibit or threaten the export of U.S. specialty crops. Using TASC, 
USDA has successfully helped U.S. exporters regain market access for 
millions of dollars of products from almonds to spinach. Examples of 
project activities include seminars and workshops, study tours, field 
surveys, pest and disease research, and pre-clearance programs. TASC 
proposals are accepted from U.S. nonprofit trade associations, 
universities, agricultural cooperatives, private companies, U.S. 
Government agencies and state government agencies. FAS, which 
administers the program, provides grant funds as direct assistance to 
U.S. organizations. Applicant contributions are not required, but are 
strongly encouraged.
    Last year, TASC was instrumental in assisting the U.S. potato 
exporters in overcoming a Thai phytosanitary protocol that was 
preventing U.S. exports from certain states. Following several months 
of negotiations between the Thailand Department of Agriculture and 
USDA, the U.S. Potato Board (USPB) used TASC to arrange for Thai 
officials to visit the U.S. and review U.S. seed certification 
procedures, seed cultivation practices and phytosanitary mitigation 
measures. Following this activity, Thailand agreed to additional market 
access that more than doubles--to fourteen--the number of states 
eligible to export seed potatoes to Thailand. Seed potatoes from 
Colorado, Maine, Michigan, Minnesota, Montana, Nebraska, New York, 
North Dakota, Wisconsin and Wyoming may now be exported to Thailand. 
FAS estimates sales of $250,000 to $500,000 during the first year of 
Thai market access, while the USPB estimates that expanded market 
access could boost exports to Thailand to $1 million in 3 to 5 years.
    Another example is U.S. hops exports to Canada. Canada buys more 
than $18 million in U.S. hops, which makes it the fifth largest export 
market for U.S. hops producers. In response to limited pesticide 
tolerances in Canada that potentially threatened trade, TASC funds 
supported U.S. hop industry efforts to work with regulators in Canada 
in establishing five new hops-related maximum residue levels in Canada 
for pesticides critical to U.S. hop production. The Canadian tolerances 
were set at safe levels that allow U.S. hop growers to apply essential 
U.S. crop protection tools that significantly reduce the risk of 
shipping hops to Canada. Given that over half of U.S. hop production is 
exported, the setting of pesticide tolerances in one of the industry's 
most crucial export markets has been vital for this industry.
Export Credit Guarantee Program
    Starting in 1981, the Export Credit Guarantee Program (GSM-102) was 
originally administered under the Commodity Credit Corporation Charter 
Act. In the 1990 Farm Bill GSM-102 became specifically authorized 
under, and subject to the provisions of, the Agricultural Trade Act of 
1978, as amended. It has been continuously authorized since that time, 
but funding levels under the program were most recently authorized in 
the 2008 Farm Bill. The GSM-102 program was developed to expand U.S. 
agricultural exports by making available payment guarantees to 
encourage U.S. private sector financing of foreign purchases of U.S. 
agricultural commodities on credit terms. The payment guarantee issued 
under GSM-102 is an agreement by CCC to pay the exporter, or the U.S. 
financial institution that may take assignment of the payment 
guarantee, specified amounts of principal and interest in case of 
default by the foreign financial institution that issued the letter of 
credit for the export sale covered by the payment guarantee. By 
providing credit guarantees of up to 3 years to cover up to 100 percent 
of loan principal and a portion of the interest, the financial risk to 
U.S. lenders of foreign banks is greatly diminished. As Congress 
intended, the reduced risk in financing under GSM-102 increases export 
opportunities for U.S. exporters. This reduction in risk is most 
important for exports to developing countries, where the lack of credit 
often impedes a U.S. exporter's ability to sell and the buyer's ability 
to purchase U.S. agricultural commodities. GSM-102 is an effective 
response to the short windows of opportunity that U.S. agricultural 
exporters face when financing trade based on market-based prices and 
slim margins.
    Applicable law mandates that CCC make available for each fiscal 
year an amount of credit guarantees equal to the lesser of (a) 
$5,500,000 or (b) an amount of guarantees that CCC can make available 
using budget authority for an underlying subsidy amount of the sum of 
$40 million per year plus any unobligated budget authority from prior 
fiscal years. For the last 2 years, the program has operated at a 
``negative subsidy,'' meaning that the cash flow into the program has 
exceeded the funds needed to provide for expected losses.
    From its inception in the early 1980's through June 2011, exports 
facilitated through the use of GSM-102 have reached a total of more 
than $100 billion. In FY 2010, guarantees covered $3.10 billion in 
sales that ran the gamut from corn to Costa Rica to soybeans to 
Indonesia and from wheat to Nigeria to wood chips to Turkey. During the 
financial crisis of 2008 and 2009, FAS received a record number of 
applications for GSM-102, attesting to the success of the program in 
facilitating trade finance in times of tightened liquidity. In FY 2011, 
USDA expects to make available the full farm bill-mandated allocation 
of $5.5 billion in GSM-102 guarantees. These guarantees will facilitate 
targeting by U.S. agricultural exporters of sales to over 100 eligible 
country destinations.
Facility Guarantee Program
    Authorized by Congress under the Food, Agriculture, Conservation 
and Trade Act of 1990, the Facility Guarantee Program (FGP) was 
designed to meet the financing needs for the establishment or 
improvement of facilities in emerging markets that would benefit U.S. 
agricultural exporters. By providing credit guarantees, FGP is intended 
to reduce the financial risk to U.S. lenders of default by foreign 
banks serving as borrowers, thus improving the ultimate buyer's ability 
to acquire the agricultural-related infrastructure or services that 
will enhance U.S. export sales. Emerging markets often lack the 
infrastructure to support increased trade volume. Export sales of U.S. 
equipment or expertise to improve ports, loading and unloading 
capacity, refrigerated storage, warehouse and distribution systems, and 
other related facilities may qualify for facility guarantees, as long 
as these improvements are expected to increase opportunities for U.S. 
agricultural exports.
    From its inception, through June 2011, only one transaction has 
been guaranteed under FGP. Prior to the amendments to the statutory 
authority made in the 2008 Farm Bill, FGP required U.S. content on any 
goods guaranteed. The 2008 Farm Bill allows for a waiver of the U.S. 
content requirement, if such goods are unavailable or the use of such 
goods is impracticable. FAS is currently reviewing how to implement 
this provision. FGP operates as a subset of the GSM-102 Export Credit 
Guarantee Program and under that authority is subsumed within the same 
overall limitations on the amount of credit guarantees that CCC may 
make available.
Dairy Export Incentive Program
    The Dairy Export Incentive Program (DEIP) was enacted by Congress 
under the Food Security Act of 1985 and most recently reauthorized in 
the 2008 Farm Bill. The program provides a bonus or subsidy on a bid 
basis to exporters of dairy products. By providing a subsidy on exports 
of dairy products, Congress intended the DEIP to bridge the gap between 
world market prices and U.S. domestic prices. Commodities eligible 
under the DEIP are milk powder, nonfat dry milk, butterfat, and various 
cheeses. The authorizing legislation for the DEIP provides that the 
subsidy may be paid in cash or in commodities held by the CCC. As CCC 
inventories diminished, the DEIP evolved into the sole use of cash 
payments for the subsidy. The DEIP is subject to U.S. export subsidy 
reduction commitments under the World Trade Organization's Uruguay 
Round Agreements, and is therefore capped by both subsidy level and 
quantity in accordance with those commitments.
    The DEIP has helped to meet the needs of U.S. exporters and 
expanding markets for U.S. dairy products when world prices are 
depressed due to the application of subsidies by other nations, 
particularly the European Union. Agricultural economists at FAS 
continuously monitor the world dairy situation and have the 
responsibility for recommending issuing allocations under the DEIP as 
world dairy prices dictate. Since 2002, world dairy prices have 
warranted issuing allocations under the DEIP five times. DEIP bonuses 
were last awarded in Fiscal Year 2010 in an amount of $2.37 million. In 
2010, the DEIP was used to facilitate U.S. dairy exports around the 
globe, including mozzarella cheese to China and butter to Saudi Arabia.
International Food Assistance and Development
    One of the most significant and compelling challenges the world 
faces is eradicating chronic hunger and malnourishment. The food aid 
and development programs administered by USDA's Foreign Agricultural 
Service are making a difference in the lives of poor and hungry people. 
These programs support international assistance and development 
activities that alleviate hunger and improve nutrition, education, and 
agriculture in some of the world's poorest countries.
McGovern-Dole Program
    The McGovern-Dole International Food for Education and Child 
Nutrition Program (McGovern-Dole Program) is authorized by the Farm 
Security and Rural Investment Act of 2002. Congress established the 
McGovern-Dole Program to carry out preschool and school food for 
education programs in foreign countries to improve food security, 
reduce the incidence of hunger, and improve literacy and primary 
education, particularly among girls; and maternal, infant, and child 
nutrition programs for pregnant women, nursing mothers, infants, and 
children who are 5 years of age or younger. Under this program, USDA 
donates U.S. agricultural products and provides financial and technical 
assistance for school feeding and maternal and child nutrition projects 
in low-income, food-deficit countries that are committed to universal 
education. The 2002 Farm Bill provided $100 million of CCC funds for 
the program and authorization of appropriations through 2007. This 
authorization of appropriations has been extended through FY 2012. In 
FY 2011, Congress appropriated $199.5 million for the program. In FY 
2011, the McGovern-Dole Program will provide benefits to beneficiaries 
in 15 countries, including, Nepal, Haiti, Guatemala, Burkina Faso, and 
Senegal.
    Since 2003, the McGovern-Dole Program has supported projects in 41 
countries and has fed up to five million schoolchildren each year. USDA 
enters into agreements with implementing organizations to carry out 
activities under the program. In progress reports, implementing 
organizations provide information about the number of children being 
fed, the increases in attendance, and other benefits that lead to 
improved literacy, better diet, and graduation of the programs. 
Organizations frequently report gains in attendance of ten percent or 
more in participating schools. USDA and the implementing organizations 
develop graduation plans to ensure that progress is being made toward 
the goal of having a local entity assume responsibility for the 
program. The McGovern-Dole Program graduated a school feeding project 
in Moldova, and the Government of Moldova has continued much of the 
program since the U.S. funding ended. School feeding programs in Kenya, 
Laos, and Guinea-Bissau are nearing full graduation.
    USDA is implementing improvements in program management that will 
allow for more intensive monitoring of results. In FY 2011, USDA 
released a results framework for implementing organizations that 
outlined the objectives for the program. Organizations will begin 
reporting against these frameworks in FY 2012, and USDA will review the 
results closely to keep organizations on track. The improvements 
address a recent GAO recommendation for an improved monitoring process, 
which we agree with and had recognized as appropriate.
Food for Progress Program
    Authorized by Congress through the Food Security Act of 1985, the 
Food for Progress Program (FFPr) provides commodities on credit terms 
or on a grant basis to developing countries and emerging democracies to 
assist in the introduction of elements of free enterprise into the 
countries' agricultural economies. CCC may purchase commodities for use 
in Food for Progress if the commodities are currently not held in CCC 
inventory. The 2008 Farm Bill extends authority for the program through 
2012.
    Under FFPr, commodities are provided on a donation basis to foreign 
governments, private voluntary organizations, nonprofit organizations, 
cooperatives, or intergovernmental organizations. The implementing 
organizations request commodities and USDA purchases those commodities 
from the U.S. market. USDA donates the commodities to the implementing 
organizations and pays for the freight to move the commodity to the 
recipient country. In meeting the statutory requirements of the 
program, USDA considers proposals for all developing countries and 
territories with priority consideration given to proposals for 
countries with: per capita income at lower or lower-middle income 
standards (using World Bank statistics); greater than 20 percent 
prevalence of undernourishment as a proportion of the total population 
(World Health Organization (WHO) of the United Nations data); and 
positive movement toward freedom, including political rights and civil 
liberties (as defined by Freedom House). Depending on the agreement, 
the commodities donated through FFPr may be sold in the recipient 
country, and the proceeds used to support agricultural, economic, or 
infrastructure development programs. Assistance is provided through 
foreign governments, PVOs, nonprofit organizations, cooperatives, and 
intergovernmental organizations.
    The FFPr allocations for FY 2011 include more than 232,000 metric 
tons of U.S. rice, wheat, vegetable oil, soybean meal, soybean oil, and 
corn valued at more than $143 million. The commodity value for FFPr is 
not limited, however the statute limits the amount UDSA can pay for 
non-commodity costs to no more than $40 million annually. These 
donations will reach more than 1.6 million beneficiaries in ten 
countries, including Haiti, Bangladesh, Uganda, Malawi, and Honduras. 
For example, in FY 2010, Land O'Lakes received an FFPr grant to improve 
commercial milk production, processing and marketing in Tanzania. By 
the end of the program, the gross value of milk produced in Tanzania is 
projected to increase by $2.1 million. The project will also create 180 
new dairy sector-related jobs in private sector enterprises.
P.L. 480 Title I Program
    The P.L. 480 Title I program was authorized by Congress in 1954 to 
allow concessional sales of U.S. agricultural commodities to developing 
countries. It is now authorized under the Food for Peace Act. 
Commodities provided under this program may be sold in the recipient 
country, and the proceeds may be used to support agricultural, 
economic, or infrastructure development projects in such country. The 
primary goals of the Title I program are to provide economic assistance 
and promote food security. Priority is given to countries coping with 
limited foreign exchange reserves, chronic food shortages, poverty, and 
underdevelopment in the agricultural sector. Past Title I programs have 
targeted countries with food insecurity, countries with limited foreign 
exchange, and countries working to alleviate poverty and develop their 
agricultural economies.
    Over the program's history, USDA made concessional sales in 
response to requests from foreign governments. Concessional sales were 
made to governments that were facing food insecurity or economic 
problems or that were working to alleviate poverty and promote economic 
development. Since Fiscal Year 2006, new funding has not been requested 
or appropriated because demand for food assistance using credit 
financing has fallen and grant programs have become a more appropriate 
tool for providing food assistance.
Borlaug Fellowship Program
    The Borlaug Fellowship Program (BFP) was initiated in March 2004 by 
FAS in honor of the late Nobel Laureate Dr. Norman E. Borlaug, an 
agronomist, humanitarian, and the father of the Green Revolution. 
Congress provided statutory authorization for the program in the Food, 
Conservation, and Energy Act of 2008. The BFP provides fellowships for 
scientific training and research in the United States to potential 
agricultural leaders with the goal of promoting food security and 
economic growth.
    Since its inception in 2004, the Borlaug Fellowship Program has 
provided agricultural scientific training in the United States for 539 
Fellows from 64 countries in sub-Saharan Africa, the Middle East, the 
former Soviet Union, Asia and Latin America. Collaborative-research and 
training have spanned such fields as the plant and animal sciences, 
food safety, agricultural biotechnology, environmental sciences, 
climate change, and food security. Women agriculturalists receive 
priority consideration in the program and now comprise nearly 50 
percent of participants. During FY 2011 it is anticipated that the 
Borlaug Fellowship Program will sponsor approximately 34 individuals 
from 26 countries.
    The program has facilitated the adoption of modern agricultural 
practices in targeted countries by strengthening human and 
institutional capacity through U.S.-based training. The Borlaug 
Fellowship Program periodically conducts surveys to gather information 
from alumni about the impact of the fellowship program on their work. 
Responses from Borlaug alumni received in Fiscal Year 2010 
overwhelmingly reported that their fellowship had a positive impact on 
one or more aspects of their work. Of the 100 surveys received, the 
Fellows specifically reported that participating in the Borlaug 
Fellowship Program positively impacted their research (92 percent), 
teaching (74 percent), and policy objectives (14 percent), including 
the adoption of one or more new techniques or technologies (52 percent) 
in their home institutions.
Local and Regional Food Aid Procurement Pilot Project
    The Local and Regional Food Aid Procurement Pilot Project is a 5 
year, $60 million pilot project authorized and funded by Congress in 
the 2008 Farm Bill. Congress authorized the pilot project for the 
purpose of examining the timeliness and efficiency of local and 
regional procurement (LRP) as a tool to enhance U.S. Government food 
assistance programs. The 2008 Farm Bill established four requirements 
that USDA has met or is on track to meet in regard to the pilot 
project. First, a study of prior local and regional purchase programs 
was required. USDA submitted this study to Congress in January 2009. 
Next, in light of the study, USDA was tasked to develop project 
guidelines. The guidelines were completed in FY 2009. A third 
requirement was to implement field-based projects during FY 2009-FY 
2011. During this period, six private voluntary organizations and one 
international organization received funding to undertake 23 field-based 
projects in 19 different countries. A sample of projects supported by 
this program include: school feeding in Burkina Faso, relief for 
drought-affected households in Niger, and income-generating 
opportunities for women in Mali. At this time, all the available 
funding for the field-based projects has been obligated and 
implementation of the projects will be completed by September 30, 2011. 
The LRP pilot project's fourth and final requirement, an independent 
evaluation, is moving forward on time. USDA has a contract with an 
independent evaluator to begin work on the LRP project evaluation and 
deliver it to Congress as required in May 2012.
Conclusion
    As Administrator of USDA's Foreign Agricultural Service, I am proud 
of our efforts in administering the farm bill authorized trade, food 
aid, and development programs of the U.S. Department of Agriculture. We 
look forward to providing any support we can as Congress works on the 
next farm bill.
    This concludes my statement. I look forward to answering any 
questions you may have. Thank you.

    The Chairman. Thank you, Ms. Heinen.
    We will proceed then to Ms. Nancy Lindborg, Assistant 
Administrator for the Bureau of Democracy, Conflict, and 
Humanitarian Assistance, U.S. Agency for International 
Development, Washington, D.C.
    Let me point out that with unanimous consent, unless I hear 
otherwise, the gentleman from Massachusetts, Mr. McGovern, who 
is not a Member of this Subcommittee, has joined us today. I 
have consulted with the Ranking Member, and we are pleased to 
welcome him in joining the questioning of witnesses.

             STATEMENT OF NANCY LINDBORG, ASSISTANT
ADMINISTRATOR, BUREAU FOR DEMOCRACY, CONFLICT AND HUMANITARIAN 
                  ASSISTANCE, U.S. AGENCY FOR
          INTERNATIONAL DEVELOPMENT, WASHINGTON, D.C.

    Ms. Lindborg. Thank you, Chairman Johnson and distinguished 
Members of the Subcommittee. I appreciate very much the 
opportunity to be here today to talk about the important 
subject of food aid programs and those under Title II of the 
Food for Peace Act in the farm bill.
    For over 57 years, USAID Food for Peace programs have 
allowed the United States to offer a helping hand to those in 
need. Original recipients of food assistance include countries 
like France and Belgium in the post-World War II era and more 
recent graduates like India, who are now our friends, allies 
and trading partners. With Congress assistance, we have built 
over the years an enduring legacy that reflects the generosity 
of the American people and recognizes the importance of food 
security to our national security.
    Through the years, I have encountered many individuals from 
around the world, as I am sure you have, whose lives have been 
profoundly altered by offering that important assistance at a 
critical time in their lives. I remember well the farmer I met 
in southern Serbia who greeted me warmly with thanks for the 
Truman eggs he had received or my senior colleague at USAID who 
grew up in India with food assistance.
    The USAID's Office of Food for Peace provides assistance as 
part of the Food for Peace Act and is responsible for both 
emergency relief and development food aid programs using 
donated U.S. agricultural commodities. These programs allow us 
to provide emergency assistance in response to both natural 
disasters, such as droughts or floods, as well as in complex, 
protracted crises like Sudan. In 2010, these Title II emergency 
programs enabled us to provide critical assistance to 46.5 
million people in need in 27 countries around the world, 
helping us to alleviate malnutrition and hunger. In Pakistan, 
as you recall, epic flooding that began last year put millions 
of people in danger. We were quickly able to move U.S. 
commodities from pre-positioned warehouses, able to move our 
shipping routes, and allow our NGO and U.N. partners to borrow 
from Title II commodities already in the region. As a result, 
we were able to provide urgently needed food assistance to 
flood survivors quickly.
    Similarly, in the aftermath of the Haiti earthquake, we 
were able to get food to more than three million people 
desperately in need. In those critical early days, we moved 
food that was already on the ground in Haiti. We purchased 
3,000 tons of American rice and we dispatched over 14,000 tons 
of food aid from pre-positioned stocks in Texas to reach 
earthquake survivors in one day.
    Today, we are looking at a very serious drought in the Horn 
of Africa. We have the lowest levels of rainfall in that region 
in 60 years. This has resulted in severe food insecurity, water 
shortages, failed crops, and dying livestock, with 11 million 
people estimated to be in need. Of particular concern are the 
800,000 Somali refuges arriving at camps in Ethiopia and Kenya 
with global acute malnutrition rates well above the emergency 
threshold. We were alerted about this impending drought last 
fall through our early warning systems. We began pre-
positioning food stocks and have since been able to move food 
into the region to reach an estimated 4.2 million people. We 
remain very concerned about this drought, are working with our 
international partners, but make no mistake that our food aid 
has made a critical difference in the lives of millions.
    The Horn is one of the best illustrations of why we are 
also focusing on helping people move from food aid to more 
sustainable productivity. We can't stop droughts and floods 
from happening but we can enable farmers to be more productive 
and people to be more resilient. We do that with our 
development food aid, also part of Title II, which focuses on 
the most food-insecure countries where stunting rates are the 
highest and where people live on less than $1.25 per day. We 
know that getting the right nutrition to children under 2 can 
make the difference in a lifetime of a well-developed brain and 
the kind of opportunities that they deserve, and we know that 
agricultural productivity can help families sustainably provide 
for themselves.
    We work with U.S. non-governmental organizations, the World 
Food Programme and other U.N. partners to implement development 
food aid programs in 21 countries to assist eight million 
people, address chronic malnutrition, boost agricultural 
productivity and build resiliency. Globally, the Presidential 
Feed the Future Initiative has a mission to sustainably reduce 
hunger and poverty and ultimately enable people to move from 
food assistance to long-term food security. Our Title II 
programs complement and reinforce this initiative. Working 
across the U.S. Government and in close partnership with USDA, 
we are working to build the resiliency of vulnerable 
populations and to enable people to move into the sustainable 
productivity that will help them feed themselves. The Horn of 
Africa is a good example of where we are working to bring all 
of our resources to bear in meeting the challenges of repeated 
drought through both our emergency, our development and our 
Feed the Future resources.
    Our food aid has never been more important. As mentioned, 
somewhere between 700 million and a billion people go to bed 
hungry every night, and 3.5 million children each year die from 
malnutrition. The impacts of climate change, the severe weather 
events that we are seeing combined with densely populated urban 
centers are making people ever more vulnerable. At the same 
time, we are seeing rising food prices. We are working hard to 
increase effectiveness and efficiency and improving the quality 
of our food products. As you hold farm bill discussions where 
budgets are tight, food is more scarce and prices are high, we 
are seeking maximum flexibility to ensure that we can make the 
strategic choices for maximum impact.
    Thank you again for the support from this Committee, and we 
are very proud to have played a part in the extraordinary story 
of Title II food aid. Thank you.
    [The prepared statement of Ms. Lindborg follows:]

 Prepared Statement of Nancy Lindborg, Assistant Administrator, Bureau 
 for Democracy, Conflict and Humanitarian Assistance, U.S. Agency for 
              International Development, Washington, D.C.
Introduction
    Thank you Mr. Chairman and distinguished Members of the Committee. 
I appreciate the opportunity to be here today to address the important 
subject of food aid programs in Title II of the Food for Peace Act. I 
will discuss the programs administered by the U.S. Agency for 
International Development (USAID), the importance of the programs to 
U.S. national security and to our moral values, some of the major 
accomplishments of the programs, and the challenges and concerns we 
face today.
    For over 57 years, the USAID Food for Peace program has allowed the 
United States to live up to our historic mission to help alleviate 
hunger around the world. With Congress's assistance, we have fed 
billions of the world's neediest people--perhaps the largest and 
longest-running expression of humanity ever seen in the world. Some of 
the countries that have received Title II assistance have become self-
sufficient or even food exporters and international donors themselves. 
While we can look back on this unique American achievement with pride, 
we must also look forward and address the challenges facing us in this 
century. There are many.
    Under the Food for Peace Act, USAID has responsibility to 
administer Titles II, III, and V of the Trade portion of the farm bill. 
The Office of Food for Peace is tasked with managing programs under 
Title II of the Food for Peace Act, which consists of donating U.S. 
agricultural goods for emergency relief and development. It is 
administered through grants to U.S. nongovernmental organizations and 
the United Nations World Food Program.
Emergency Response
    Title II emergency programs aim to address two forms of 
emergencies--natural disasters such as floods or droughts, and complex 
emergencies characterized by a combination of natural disaster, 
conflict, and insecurity.
    In FY 2010, Title II emergency programs helped 46.5 million food-
insecure people in 27 countries by alleviating malnutrition and hunger. 
In FY 2010, our emergency programs accounted for over \3/4\ of our base 
funding.
    In Pakistan, when epic flooding first began last year, Food for 
Peace sourced U.S. commodities from prepositioned warehouses, altered 
shipping routes, and allowed partners to borrow from Title II 
commodities already in the region to assure a timely response.
    In the aftermath of the Haiti earthquake, we were able to pull over 
6,500 tons from food aid already on the ground, purchased over 3,000 
tons of American rice, and dispatched over 14,000 tons of food aid from 
prepositioned stocks in Texas to reach survivors.
    In FY 2011, USAID has already provided significant food assistance 
to the drought emergency affecting the Horn of Africa, particularly 
Ethiopia and Somalia, where more than ten million people require 
emergency assistance. This prolonged drought has resulted in severe 
food insecurity conditions, water shortages, and acute malnutrition 
rates above emergency thresholds, particularly among Somali refugees 
arriving at camps in Ethiopia and Kenya. The rate of new arrivals has 
significantly increased in recent weeks, with thousands of Somali 
refugees arriving weekly at refugee camps along the border, including 
the Dadaab refugee camp in northeastern Kenya. Humanitarian agencies 
operating in border areas and camps report that individuals are 
arriving in dire condition, requiring immediate life-saving support. 
The situation will deteriorate further without increased international 
attention. Even as we have provided more than $300 million in four 
countries to respond to the drought, we are working with other donors 
to help secure their contributions. Make no mistake, however, the Title 
II program, with the American flag prominently displayed, is making a 
difference for refugees and drought-affected populations in the Horn 
today.
    U.S. food aid has been critical in supporting millions of displaced 
persons in Darfur and Sudanese refugees in Chad and elsewhere, as well 
as saving lives, protecting livelihoods, and promoting the 
reintegration of returning populations in South Sudan.
    These are just a few of the examples of the live-saving work of our 
emergency response program.
Development Food Aid
    We are also focusing our development food aid programs in the most 
food insecure countries, where stunting rates are highest and people 
live on less than $1.25 per day. We have reduced the number of 
countries we work in with development food aid by 25 percent since 2008 
in order to focus and concentrate our resources for greater impact. The 
programs address chronic malnutrition, boost agricultural productivity 
and incomes, and help build resiliency. Targeted to disaster-prone 
areas, the program helps people to withstand the next drought or flood 
so they do not have to rely on emergency aid in the future.
    In FY 2010, our U.S. nongovernmental organization (NGO) partners 
implemented development food aid programs in 21 countries to benefit 
some eight million people.
    In Bangladesh, a country of 156 million people, 45 percent of the 
population does not meet the minimum food requirements. Approximately 
37 percent of children under five are underweight, and over 48 percent 
suffer from stunting. Three Title II partners aim to assist over 
580,000 households in some of the poorest and most marginalized 
communities over the course of their multi-year development programs. 
One program has already reduced stunting by 28 percent in targeted 
communities. They have also provided business training for more than 
6,000 female entrepreneurs and increased incomes by 128 percent, among 
other successes.
    Globally the President's Feed the Future initiative has a mission 
to sustainably reduce hunger and poverty. It aims to link highly 
productive geographic zones to more vulnerable areas, helping to 
increase labor opportunities for households, strengthen value chains, 
and increase rural jobs. Our Title II development programs complement 
and reinforce this initiative. Through these programs, and in 
combination with USAID's other governance, development, and disaster 
mitigation programs, we aim to build the resiliency of the vulnerable 
populations we serve.
Title III--Food for Development
    USAID also has responsibility for Food for Development (Title III), 
although funds have not been requested or appropriated for this program 
for more than a decade. USAID is authorized to donate agricultural 
commodities to a recipient country and to fund the transportation to 
the point of entry in the recipient country. These commodities may be 
monetized in least-developed countries' domestic markets and the 
revenue generated from their sale used to support and implement 
economic development and food security programs in those countries.
Title V--Farmer to Farmer Program
    The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program 
(Title V) provides voluntary technical assistance to farmers, farm 
groups, and agribusinesses in developing and transitional countries to 
promote sustainable improvements in food security and agricultural 
processing, production, and marketing. The program relies on the 
expertise of volunteers from U.S. farms, land-grant universities, 
cooperatives, private agribusinesses, and nonprofit farm organizations 
to respond to the local needs of host-country farmers and 
organizations.
    In FY 2010, implementing agencies fielded 522 volunteers from 48 
states and the District of Columbia. Volunteer assignments focused on 
technology transfer, organizational development, business and 
enterprise development, financial services, and environmental 
conservation. Volunteers worked at various levels of the commodity 
production and marketing chain, including rural services and input 
supply, on-farm production, storage and processing, and marketing.
Trends and Concerns
    Tonight, nearly one billion people will go to bed hungry and 3.5 
million children will die this year of malnutrition. And unfortunately, 
these numbers may only get worse. Food prices are projected to remain 
high for at least the next several years. Thus, the U.S. commodities 
that are at the heart of our food aid programs--wheat, corn, sorghum, 
beans, vegetable oil--are projected to become more valuable over the 
next few years. It is difficult to predict where commodity prices will 
go in the long term.
    The impacts of climate change and other extreme weather events, 
combined with the growth of densely populated urban centers in areas 
vulnerable to natural disasters, are increasing the risk of large-scale 
displacement, damage and death due to natural disasters. In addition, 
the number of people displaced from conflict or violence has increased 
from 17.4 million in 1997 to 27.5 million in 2010, and displacements 
are increasingly prolonged.
    As Title II costs per metric ton have tripled, from a low of $390 
per ton in 2001 to a current high of $1,180 per ton for FY 2011, we 
expect to ship and program less Title II food aid in Fiscal Year 2011 
than we did during Fiscal Years 2009 and 2010 for equivalent amounts of 
funding.
    In this regard, we are strongly concerned about the Fiscal Year 
2012 Title II budget of $1.03 billion passed by the House. At this 
funding level, approximately $590 million of Title II would be 
available for emergency programs in FY 2012, given the requirement to 
provide a minimum level of Title II funding for development food aid 
programs, which must increase by $25 million each year (regardless of 
appropriations levels). In FY 2012, the development food aid 
requirement is $450 million. The House cut for Title II would require 
reductions in the largest emergency food aid programs, to include 
Ethiopia, Sudan, Haiti, Somalia, Afghanistan, and Pakistan.
    It should be underscored that Title II food assistance is extended 
to people in need regardless of the political regime they live under 
and the actions of their countries' leaders, provided that adequate 
access and monitoring of the food aid is allowed. Such a policy is a 
long and proud American tradition that spans Administrations and one 
that the Administration continues.
Monetization
    While Title II provides funds for transport and distribution of 
commodities, our partners also need cash to fund other components of 
development food aid programs. Private voluntary organizations often 
monetize the Title II development food aid, selling locally and using 
the proceeds to implement activities that are part of the broader Title 
II program, such as training agricultural extension workers. But there 
are limits to the extent this can be done, and as recently recommended 
by the Government Accountability Office (GAO), we need to be very 
careful that monetization does not have negative effects on local 
markets and production.
    We have taken note of the recent GAO report on monetization. As 
food assistance is becoming an increasingly precious resource, we need 
to make sure that every food aid dollar counts in a world where hunger 
is increasing. The use of monetization has to be targeted more 
effectively.
    As part of the Feed the Future Initiative, the Administration has 
requested cash to fund integrated community development efforts that 
would otherwise be resourced through Title II via monetization. The 
community development fund would be especially useful when monetization 
is not an appropriate tool.
    We recognize that monetization practices can be improved, and we 
will consider ways to continue to improve market analyses and 
monitoring and evaluation of monetization as well as the returns we get 
on monetized food.
    In this regard, USAID continues to manage a project to help ensure 
Title II programs comply with the Bellmon Amendment, which requires 
that adequate storage facilities be available in a recipient country 
upon arrival of a commodity to prevent spoilage or waste, and that 
distribution of the commodity in the recipient country will not result 
in substantial disincentive or interference with domestic production or 
marketing in that country. The Bellmon Estimation for Title II (BEST) 
Project is conducting independent market analyses to ensure that these 
requirements are met. Studies have already been completed for a number 
of countries, which are posted on the USAID public website.
    My colleague from the U.S. Department of Agriculture (USDA) will be 
sharing with you information on their programs. We work closely with 
USDA on programming and commodity procurement. We are working to assure 
that we regularly exchange solicitations for future activities, that 
field-based staff increase collaboration, and that our monetization 
activities are well coordinated.
More Efficient and Effective Food Assistance
    Let me also mention several other measures we have taken to make 
Title II assistance more effective and efficient to assist the most 
vulnerable populations overseas.
    For more effective decision making on emergency food aid 
allocations, and to better link early warning and response to 
emergencies, we developed a new Famine Early Warning System Network 
resource (FEWS NET)--the Food Assistance Outlook Briefing--which 
provides warning of food assistance needs 6 months in the future. These 
predictions are critical because of the time required to purchase and 
ship in-kind food aid from the United States. Already this system has 
allowed us to preposition commodities near the Eastern Horn of Africa 
to provide quick delivery of commodities in response to severe 
droughts.
    Globally, we have expanded our prepositioning to six sites, 
allowing us to maintain a continuous flow of vital food aid and in some 
cases reduce our response time significantly.
    As you know, Administrator Rajiv Shah has embarked on a USAID 
Forward reform effort that prioritizes evidence-based programming. As a 
reflection of our commitment to understand and improve impact we are 
undertaking a number of steps including:

   Adding monitoring and evaluation technical experts to our 
        field team;

   Offering workshops and training to partners on monitoring 
        and evaluation;

   Refining indicators to better measure our effectiveness; and

   Conducting research to better capture and summarize results 
        and make recommendations for improved programming.
Food Aid Quality
    Looking ahead, I want to mention a new initiative underway to 
improve the overall quality of our in-kind food aid.
    Just 3 months ago, in partnership with Tufts University, we 
released a 2 year food aid quality review produced in close 
consultation with private sector stakeholders, nongovernmental 
organizations, and leading nutritionists. We recognize and are grateful 
to Congress for their support in this effort. The review identified 
several ways to better match the nutritional quality of the food USAID 
provides to help children reach their maximum potential. Nutrition 
science now tells us that if a child does not receive certain basic 
nutritional requirements in the first 1,000 days of life his or her 
brain will never fully develop and he or she can never reach his or her 
full intellectual potential.
    We are targeting young children and their mothers in our food 
programs, and we will now have a panoply of products better suited to 
meet their nutritional needs. We will improve the micronutrient 
fortification of vegetable oil and milled grains and are working on 
development of a new blended product for preventing malnutrition in 
children from 6 months to 2 years. New products will also include new 
emergency bars, biscuits, and pastes that can quickly be distributed to 
displaced, malnourished populations. Together with our partners in 
academia, industry and other stakeholders, we are developing the next 
generation of food aid commodities.
    At the International Food Aid and Development conference in June, 
we had an opportunity to discuss in detail the findings of the report 
and to continue the exchange with both our domestic and international 
food aid partners about how we can move forward together on this 
important agenda.
Broader Food Aid Reform
    As expressed earlier, to allow us to address these challenges we 
will need to continue to seek improvements in the effectiveness and 
efficiency of the food aid systems, as well as broader reform. The farm 
bill represents the greatest opportunity to address the need for 
broader food aid reform, to enable us to be more responsible stewards 
of this important national resource.
    The multiple legislative mandates for Title II in the Food for 
Peace Act create a number of operational difficulties and hinder the 
effectiveness of Title II. For example, 75 percent of development 
commodities must be processed, fortified or bagged. It is very 
difficult to meet this requirement, forcing USAID to make less than 
optimal product selections--leading to supply- rather than demand-
driven programming. Other mandates instruct USAID to:

   Monetize at least 15 percent of development food aid;

   Increase by $25 million per year the value of development 
        programs, up to no less than $450 million in Fiscal Year 2012;

   Provide no less than 1.875 million metric tons of 
        development food aid annually. (This is an unrealistic sub-
        minimum that would require close to the full Title II annual 
        budget to meet.)

    There are other technical requirements that are distinct and 
separate from the Title II food aid program, including cargo preference 
and the ``Great Lakes'' set-aside statutory requirement, where 
clarifying language in legislation would allow Title II to be free from 
such restrictions.
    Congress will hold the forthcoming farm bill discussions in a 
context where budgets are tighter than ever, food is scarcer, and 
prices are high. In light of these challenges, we will be seeking 
maximum flexibility to assure that we can make strategic choices that 
yield maximum impact. We seek your support to reduce the complex and 
inefficient directives that hamper our programming choices and minimize 
our flexibility.
Conclusion
    Food aid programs are complex, and the problems and issues that 
Title II food aid must address are increasingly complex. USAID believes 
that the area for greatest convergence of our interests is in ensuring 
what we have long held as a basic principle: that the right food should 
get to the right people at the right time, while doing no harm. As we 
look ahead, let me assure you that USAID remains committed to its role 
in supplying food aid to vulnerable people. With the support from 
Congress, we have fought and won many battles in the fight against 
hunger and malnutrition. Our programs have fed billions of the world's 
neediest people, averted famines, and helped countries lift themselves 
out of poverty and dependence.
    Assisting in this effort are our partners. USAID has forged 
tremendously important partnerships with private voluntary 
organizations, as well as the UN World Food Program, to meet the food 
assistance needs of people around the world. Their teams have carried 
out their mission successfully and often at great personal risk. We 
recognize both their commitment and their sacrifice, including the many 
humanitarian aid workers who have lost their lives while assisting 
others. Those partnerships are strong, and continue into the future.
    We would also like to acknowledge our important partners in the 
agriculture sector--the farmers (businessmen), grain elevator 
operators, truckers, bargemen, freight forwarders, port operators, 
carriers, and others--who form an unbroken chain of humanity stretching 
from this country's fertile fields to hungry families half a world 
away.
    As we reflect back on the enduring legacy that Food for Peace has 
had over the last 57 years, we should be proud of the impact we have 
had on those we have assisted and those who remember the American food 
that helped them and their families in times of need.
    I would again like to thank you for the support the Agriculture 
Committee has given to assist USAID in addressing food security needs 
abroad, demonstrating to the world the great heart of the American 
people. We should all be proud to have played a part in the 
extraordinary story of Title II food aid. Thank you.

    The Chairman. Thank you for your testimony.
    Let me ask first of Ms. Heinen, what is the total amount, 
total dollar amount that FAS has spent on salaries and expenses 
out of the CCC since Fiscal Year 2009?
    Ms. Heinen. I would say approximately $3 million. In the 
last year, we were given permission to use the program money 
instead of the CCC funds. I am trying to make a distinction 
here between the CCC Section 11 money and the program funds, 
and in the last 2 years we have used some program funds, a 
small amount. Previous to that we used about $2 million a year 
out of Section 11 funds.
    The Chairman. How does that figure in Fiscal Year 2009 
compare to the figure 2 years before, Fiscal Year 2007?
    Ms. Heinen. In Fiscal Year 2007, I believe we were able to 
cover our expenses for running the programs out of our 
appropriated salaries and expenses.
    The Chairman. Both the Fiscal Year 2011 Continuing 
Resolution and our Fiscal Year 2012 appropriation bill give 
authority for FAS to use mandatory program funds for salaries 
and expenses. Could you detail for this Committee how much of 
the program funds are being used for costs including, not 
exclusive but including technical assistance, salaries, 
expenses for the program which receive mandatory funding and 
are operated by FAS?
    Ms. Heinen. In the MAP program, I believe we have used 
about $2 million a year out of the program funds since we had 
permission to use program funds, about $300,000 under the FMD 
program, and even smaller amounts for the smaller programs, 
TASC, EMP.
    The Chairman. Would you acknowledge that that is a fairly 
unique, not totally unique but a fairly unique arrangement in 
terms of funding?
    Ms. Heinen. In our food assistance programs, we also use 
that authorization, type of authorization to fund the salaries 
of people who we use to administer the programs, so it is 
unique for us in the last couple of years but looking across 
programs in the U.S. Government, we do not believe that this is 
unique.
    The Chairman. Well, in the structure of how you are funding 
various objectives, what are you doing, what are you 
specifically doing to save money for the United States 
Government?
    Ms. Heinen. One way that we think is effective in saving 
the government money is our unified export strategy. We have 
one program, an electronic system that we have put in place 
where program participants apply for any of the programs that 
they want to use through one single entry point. This saves us 
time in evaluating between programs, and it also minimizes the 
number of people that we need to administer the programs 
because each program, each proposal and each program is matched 
with the most appropriate program that Congress has authorized 
for us to use. In our food aid programs, we have also gone to 
electronic-type systems to expedite and provide more 
transparency to the program delivery.
    The Chairman. Let me just ask quick question of Ms. 
Lindborg. In your agency's response to the annual delivery cost 
for Public Law 480, Title II, you gave us a figure of about 
$730 per metric ton. This number doesn't really tell us very 
much about the cost of implementing that program, Public Law 
480. Could you describe in the limited time that you have in a 
little more detail the individual elements of this figure such 
as how much of the program delivery cost is salaries, how much 
is administrative expenses, indirect costs, shipping, storage 
and monitoring?
    Ms. Lindborg. Mr. Chairman, I would be delighted to get you 
that information in a written form. It is a complex list. It 
does include our ocean freight, inland freight, internal 
shipping and handling in our Section 202(e) funds. We do 
continually seek to find the most effective way possible to 
ship our food. As you may be aware, there was an independent 
study done recently Cornell University that indicated that the 
taxpayers pay an extra $140 million a year because of some of 
the commodity cargo preferences approaches.
    [The information referred to is located on p. 297.]
    The Chairman. I have a few more philosophical questions 
later but I defer to the distinguished Ranking Member from 
California, Mr. Costa.
    Mr. Costa. Thank you again, Mr. Chairman.
    Ms. Lindborg, as you know, current law requires the 
submission of the international aid report by the USDA and 
USAID by April 1st. It is my understanding that that 
information has not been provided on the type and the impacts 
of the programs that have been conducted from the previous 
year, and I would like to know when we are going to get it and 
what has been the delay.
    Ms. Lindborg. Thank you, and our apologies for the delay. 
It is in its final stages, and I understand you will be 
receiving it very, very soon.
    Mr. Costa. All right.
    Ms. Heinen, the first question deals with the Technical 
Assistance for Specialty Crops, which as I noted in my opening 
statement is very important to those who grow specialty crops 
around the country but certainly in California. The 2008 Farm 
Bill authorized funding at $4 million in Fiscal Year 2008, 
increasing incrementally, as I understand it, for 2011 and 
2012. How has this increased funding been allocated?
    Ms. Heinen. As I mentioned, we have one portal for 
administering our funds but we do have a special assistance for 
the specialty crops of $9 million. We take applications from 
cooperators who work with us----
    Mr. Costa. Can you give us some idea of which countries, 
which commodities, which examples have worked best?
    Ms. Heinen. Probably any kind of horticultural crop that 
you can name has applied for these funds. Anyone who applies 
and meets the criteria does receive funds, and we work with 
applicants to ensure that they have the proper applications.
    Mr. Costa. I mentioned earlier how sometimes phytosanitary 
standards are used. Has TASC been effective in breaking down 
technical food or animal restrictions?
    Ms. Heinen. Absolutely. Just yesterday, I was talking with 
the Almond Board, and they told me that they use their TASC 
funds to change some standards that were going to impede their 
access to the Indian markets, saving them about $250 million in 
exports. We have used them to face problems with changing 
sanitary standards in countries around the globe--Mexico, 
China, pretty much everywhere.
    Mr. Costa. Well, I want to go on to some other questions, 
but you did hit my sweet spot. Someone must have tipped you 
off. I grow almonds.
    A recent economic analysis conducted by Global Insight, I 
am told, incorporating the multi-year impact of market 
development expenditures from these programs from 2002 to 2009 
indicated that for every dollar invested, there were $35 in 
agricultural export gains. I think that is a significant 
statistic, and 13 times greater than the average savings that 
the taxpayers would see from funding the program. The Market 
Access Program that you spoke of in your comments has a number 
of areas that I think are very important that I would like to 
continue in the reauthorization of the farm bill. It is under 
question by some the need to have both the Foreign Market 
Development Program and the Market Access Program. Some are 
arguing that they are both branded generic commodities while 
one program only promotes generic commodities. Why do we need 
to have two programs? Can we combine them?
    Ms. Heinen. Both programs I think serve different functions 
really. The Foreign Market Development really looks at more 
long-term things like trade servicing, which is necessary when 
you are trying to----
    Mr. Costa. But we have tight budgets and I think you are 
going to have to----
    Ms. Heinen. I understand.
    Mr. Costa.--think out of the box, because this will be 
something that the full Agriculture Committee will have to 
consider next year.
    The food assistance effort to promote market development 
efforts by the private sector, how does the USDA ensure that 
Federal funds for market promotion are not displacing these 
funds?
    Ms. Heinen. How does market promotion funds not displace--
--
    Mr. Costa. From the private sector that otherwise would be 
spent for overseas promotion.
    Ms. Heinen. We match funds with the private sector. Our----
    Mr. Costa. Can we leverage better?
    Ms. Heinen. Can we leverage better? The private sector is 
spending more than $1.50 for every dollar we put in now and in 
some cases and in some industries much more than that. Can we 
ask them to do more? Yes, we could ask them to do more. In some 
cases, it may be difficult for new entrants into programs but I 
think that they have shown their commitment to investing their 
own funds and their own time into this effort.
    Mr. Costa. Mr. Chairman, my time has expired, but I have 
some additional questions that I am going to want to focus with 
the panel as it relates to a host of our trade-related 
assistance efforts. I think there is really value added for all 
the reasons that were stated before, and as we look at the 
reauthorization of the farm bill, I think we need to make sure 
that when we talk about fair trade and giving American 
agriculture the ability to access these markets, that we need 
to ensure that we are as effective as we possibly can.
    The Chairman. Thank you, Mr. Costa.
    I would recognize then the gentleman from Indiana, 
Congressman Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman, and thank you, 
ma'am, both of you ladies for being here today. I will direct 
my questions first of all to Ms. Heinen.
    Secretary Vilsack has said that record agricultural exports 
should help support more than one million jobs across the 
country. Does FAS have any statistics on how many private 
sector jobs are created due to trade promotional programs?
    Ms. Heinen. Yes, Congressman. Our research indicates that 
for every billion dollars in exports, 8,400 jobs are generated 
in the United States. So we believe that it is very important 
to the rural economy especially.
    Mr. Stutzman. Okay. Very good. A recent press release by 
the USDA stated that overseas shipments of agricultural 
products have totaled $75 billion in the first 6 months of the 
fiscal year. Do you know what is the percentage of trade 
promotion programs within the $75 billion?
    Ms. Heinen. It is difficult to exactly say which ones but 
we do know where we have interceded in markets that have made a 
difference. We have recently concluded some programs in 
Algeria, for example, that opened up $43 billion in dairy 
exports or possibility for dairy exports. We recently concluded 
agreements with, or met the standards using some of these funds 
and partnership with agricultural community to meet a deadline 
that would have prohibited about $150 million worth of our 
trade and plant products into Vietnam. The combination of our 
program, our partnership with the ag community and our 
agricultural attaches overseas, we can trace and we can give 
you some information later if you would like to see some of the 
activities and programs that we know have made a significant 
difference in the export numbers.
    Mr. Stutzman. Sure, I would be very interested in that.
    [The information referred to is located on p. 297.]
    Ms. Lindborg, what is the total amount spent on ocean 
freight for food aid before the MARAD reimbursements?
    Ms. Lindborg. We spend--the annual delivery cost is about 
$730 per metric ton, and that is inclusive of a variety of 
costs including the internal transport shipping and handling 
and the 202(e) costs, and we are happy to give you a more 
detailed breakout.
    Mr. Stutzman. Okay. Yes, that would be helpful as well. And 
then also, could you describe the number of countries you are 
focusing on with your development programs and then also how do 
you choose which countries you are focused on?
    Ms. Lindborg. Sure. As I mentioned, our development 
programs, we work with our NGO partners in those countries that 
have the people who live on less than $1.25 per day, and we are 
working in 21 countries right now to assist about eight million 
people, and we focus particularly on those who are most in need 
and address chronic malnutrition, particularly in children 
under 2, and seek to improve agricultural productivity to 
create pathways out of the need for continued assistance.
    Mr. Stutzman. How do you choose which development project 
should move forward? I mean, if you see a malnutrition program, 
I mean, there are a variety of places that you could obviously 
be involved. How do you--is it people that approach you, you 
approach them?
    Ms. Lindborg. Obviously we can't be everywhere in the world 
with the needs globally. We choose our countries on the basis 
of where there are unmet needs, where we are able to make a 
difference with the communities and populations we are serving 
and where we have a trusted partner who is able to demonstrate 
results.
    Mr. Stutzman. And could you elaborate on some of those 
locations?
    Ms. Lindborg. On where we are currently doing those 
programs?
    Mr. Stutzman. Yes.
    Ms. Lindborg. Certainly. And another criteria that we are 
increasingly looking at is, are there ways that with that 
program we can leverage our other assistance programs, either 
through the Feed the Future Initiative or other of our aid 
programs. So, for example, in countries like Sudan, we are 
currently working, as that new nation is born, to work with 
farmers and women to improve their ability to move from what 
has been several decades of food assistance to growing crops 
that can feed the families and sustain them more productively. 
Oftentimes there are also components of increased water 
sanitation that are so important, so one important aspect of 
these programs is that they are able to work across a variety 
of sectors in a particular community.
    Mr. Stutzman. Thank you.
    Mr. Chairman, I yield back.
    The Chairman. Thank you.
    The chair would recognize the gentleman from North 
Carolina, Congressman Kissell.
    Mr. Kissell. Thank you, Mr. Chairman, and we certainly do 
welcome our witnesses here today.
    Ms. Heinen, I read today where our trade deficit is 
approaching a 3 year high, so we obviously welcome exports of 
any kind, especially in agriculture. As the Ranking Member 
said, nobody does it better than what we do. I asked this 
question in a previous hearing where we were also talking about 
agriculture exports. We know food prices are rising worldwide, 
and we are not immune from that ourselves here in the United 
States, and it does affect our families. So what are some 
internal controls that we might use as we try to increase the 
exports that we are not in some way creating supply and demand 
problems that would cause our prices to go up here in and our 
families to suffer for something that maybe we could use 
internally that we don't have to export?
    Ms. Heinen. Congressman, thank you for the question. We 
believe--we monitor the market very closely but we believe that 
we can satisfy both markets. Currently, our agricultural 
industry does depend largely on exports. Twenty-five to 30 
percent of our crop is exported. And in some cases, some 
industries are even more dependent on the export market where 
95 percent of the consumers are located. We work hard in 
agriculture to increase productivity so that we can continue to 
feed our own people at reasonable prices, prices that they have 
come to expect. We think it is important to look outside as 
well to ensure that our farmers have outlets for their product, 
and we don't have to spend a lot to support prices in this 
country. So we are in kind of a new epoch where the prices are 
much higher but we think it is important to continue to raise 
our productivity and to be a reliable supplier for our 
important customers overseas.
    Mr. Kissell. Well, I appreciate that and very much support 
the export aspect of agriculture. It is very important that we 
have these markets and the things you are doing there. We 
appreciate also just keeping an eye on the supply and demand at 
home to kind of balance that too. You are talking about the 
need to increase our productivity, and there is another hearing 
this Committee had recently on biotech, and we haven't made a 
lot of progress in the last few years in introducing new 
products. Ms. Lindborg, as we look to move some of our product 
overseas, do we find resistance in terms of some of the 
genetically altered foods that we are growing here with great 
success and the seeds that would offer solutions to some of the 
drought areas and other problem areas? Are we finding 
resistance to these moves?
    Ms. Lindborg. Different countries have different policies, 
as you know, regarding the GMO crops. We are clearly concerned 
about ensuring that our food can reach those who need it the 
most in a timely manner, and believe that we are able to 
consistently do that by focusing where we can make the most 
difference.
    Mr. Kissell. Well, one of the things our hearing pointed 
out once again is that in the last few years, we haven't been 
able to get many of these new ideas moved forward but we have a 
pretty clean history in terms of these genetically altered 
materials being proven to be safe. I know different parts of 
the world are resistant to this but hopefully this is something 
we can also use these needs and demands to translate to more of 
these foods being available and helping these folks with 
drought-resistant seeds and things like this solve their own 
problems as you talked about. Mr. Chairman, I yield back.
    The Chairman. Thank you.
    The chair would recognize the gentleman from Georgia, Mr. 
Scott.
    Mr. Scott. Thank you, Mr. Chairman, and I will be asking to 
be excused shortly because of an Armed Services Committee 
meeting, so I will be brief.
    Ms. Heinen, Ms. Lindborg, thank you for joining us today, 
and I will stick to one question and one comment, if you will, 
one promotion, maybe. What can you tell me about the 
President's outlook for trade and the role that the USDA will 
play in that? I mean, one of my primary concerns is that USDA 
will not have the role in agricultural trade relationships 
going forward that it currently does if we follow through with 
his initiative. Can you speak to that briefly?
    Ms. Heinen. Sure. As you know, OMB is in charge of this 
process to look at efficiencies in government, but we did meet 
with them and we did explain our programs and why we exist as 
we do. Of course, we want to be helpful and we want to find 
efficiencies but in going through the process, which I did 
myself, I was more and more convinced of the importance of 
having the Department of Agriculture maintain this role. We 
work very close with our regulatory partners in USDA to solve 
some of the SPS and some of the other kinds of unique issues 
with agriculture. There are certification issues, there are 
port regulatory--there are just a whole range of issues.
    In addition, our reporting overseas is really critical to 
our baseline products of supply and demand all around the 
world, and that is part of a process every month that we go 
through to determine where the needs are, where the markets 
are, and it is important to supporting our farm community here. 
We think that we have found one agency that can do a great deal 
in all the different aspects of trade and so we would like to 
maintain those efficiencies as we have. Of course, also our 
legislation, our trade programs are all centered with CCC, 
which is with the Secretary of Agriculture, so that is another 
issue that we would have to look at if we were going into a 
combined trade agency. The report, as we hear now, is 
probably--or suggestions from the report due in September, so 
we will wait to evaluate the suggestions that they have come up 
with at that time.
    Mr. Scott. My experience has been that if you are not from 
the farm, you really don't understand agriculture. My fear is 
that we have somebody outside of the USDA handling the trade 
for agriculture, that we simply won't get an effective trade 
agreement.
    Ms. Lindborg, I am going to leave this for you. This is a 
product that I came across. It is a mother-administered 
nutrition aid, and UNICEF is using this. It is essentially a 
peanut butter paste for malnourished children, and they are 
headed out of North Carolina. It is manufactured in Fitzgerald, 
Georgia. It is a charitable organization put together by 
missionaries but it is three packs a day for a malnourished 
child. It is packaged in a manner so that it would last for 2 
years no matter what the climate it is in. I will have a staff 
member bring you the information, the fact sheet on it, but if 
you don't mind, I would appreciate if you would look at it and 
just speak with me at your convenience over the next couple of 
weeks about this product and see if we can establish a 
relationship. I think it would be a very cost-effective way for 
you to help achieve some of your goals. Thank you.
    Ms. Lindborg. Thank you, Congressman. I would just note 
that improving the food quality is one of our number one goals 
to ensure that the right kind of nutritional foods are 
available to those critical first thousand days, so I look 
forward to talking to you further.
    Mr. Scott. That is what it is designed for. Thank you.
    The Chairman. The chair would recognize the gentleman from 
Massachusetts, Mr. McGovern.
    Mr. McGovern. Well, thank you, Mr. Chairman. I want to 
thank you and the Ranking Member for allowing me to sit in on 
this Subcommittee hearing. My interest for being here is that I 
care very deeply about our food aid programs, and I appreciate 
very much both USDA and USAID for a lot of the incredible work 
that you are doing as we speak. I think the Feed the Future 
Initiative is a good initiative because it connects all the 
dots and comes up with a comprehensive plan to not only deal 
with the issue of hunger but to deal with the issue of 
sustainability. Too often in this country, we are expending 
billions and billions of dollars responding to emergencies that 
probably could have been prevented or could have been better 
prepared for. And so in the long run, that will save us a great 
deal of money.
    But I was concerned during the debate on the ag 
appropriations bill that a lot of these programs like the 
McGovern-Dole program--and I should state for the record that I 
am not the McGovern in the McGovern-Dole program, although I am 
one of the primary authors of the bill. It is George McGovern 
and Robert Dole. But programs like that, which are designed to 
make sure that every child in the world gets at least one 
nutritious meal a day in a school setting, and Food for Peace 
came under attack. I realize that we are in tough budgetary 
times but I think a lot of my colleagues on both sides of the 
aisle don't quite appreciate the benefits of these programs. 
Yes, none of them are perfect and they could be better run. I 
cosponsored a request to GAO to do an audit and analysis of 
both McGovern-Dole and Food for Peace with Don Payne of New 
Jersey. There are some suggestions there that I know both USDA 
and USAID have enthusiastically embraced, which is good because 
we are always trying to improve the program. But there are 
American jobs that are created as a result of these programs, 
not just in farms but in trucking and in inspection, and on and 
on and on and on. But I also think it also fulfills a moral 
obligation we have to be proud of this global effort to end 
hunger. I am worried because hunger is one of those things that 
doesn't seem to be getting better. We are getting to the point 
where there is close to a billion people in the world who are 
hungry, and I am worried that in the Fiscal Year 2011 
Continuing Resolution and in the appropriations bill, we have 
made some cutbacks. Obviously we are making some tough choices 
but I don't see that as saving money because it creates a whole 
bunch of other problems--more refugees, more health costs, more 
emergencies. And this is more than a humanitarian issue, it is 
a national security issue. I always remind people that 
protesters in Egypt that were protesting, food was one of the 
reasons why they were protesting.
    And so I would appreciate if you could help me with a 
couple questions. One, the impacts of cutting back on these 
programs, even though we have tough budgetary times, what are 
the costs? The other thing is, some of the recommendations in 
some of the reports that have been requested talk about putting 
greater emphasis on better nutrition, which costs a little bit 
more. How do you deal with that dilemma of trying to increase 
the standards in terms of nutrition for hungry people around 
the world but at the same time dealing with the costs?
    But I think we need to do a better job of helping quantify 
for Members of Congress that a little bit of investment up 
front saves you a lot in the future. The one final thing is, 
what are we doing to try to encourage our global partners to 
step up to the plate and be as generous as we are on some of 
these issues?
    Ms. Lindborg. First of all, I thank you for your tireless 
advocacy for the hungry around the world. It makes an 
extraordinary difference, and please know that we very much 
share your concern, both with ensuring that we are able to 
continue to play the leadership role that we do in providing 
food to those who are most in need, doing it in the most cost-
effective way and doing it in partnership with others. We have 
worked closely to encourage emerging donors such as Brazil to 
be able to join us in provision of food where the needs are far 
greater than any one nation can do alone, in particular in 
places like the Horn where we have 11 million currently in 
need. We have indeed looked hard at how to improve our 
effectiveness and efficiency of how we provide food assistance 
as well as improving our monitoring and evaluation systems, and 
continue to appreciate good suggestions on how to improve that.
    On the food quality issue, thanks to the support of this 
Committee, we have spent 2 years working with Tufts University 
to look very closely at what is the nutritional composition 
that most meets the needs of children under 2. When I was in 
Kansas City at the International Food Aid Conference about a 
month ago, we launched that study. We are working in 
partnership with industry, shippers, growers and our NGO 
partners to look not just at what is the composition, what is 
the nutritional elements of the food, but how do we target that 
more effectively. We believe that that is ultimately the most 
cost-effective thing, cost-effective approach that we can take 
in ensuring that in those critical 2 years, children are able 
to get the nutrition they need. Thank you.
    The Chairman. The chair would recognize the gentleman from 
Illinois, Mr. Schilling.
    Mr. Schilling. Thank you, Chairman.
    I guess this could be for both of you or just one. I also 
have to excuse myself because I need to go after this question 
to the House Armed Services Committee meeting. Many of our 
programs utilize public and private partnerships with nonprofit 
organizations to implement individual projects. What is the 
process your agency uses to evaluate and approve the 
administrative costs for each project? How often does your 
agency reevaluate these guidelines? What is the average 
indirect support cost allowed as a percentage of the grant or 
agreement?
    Ms. Heinen. We have a number of programs, I think 13 under 
this title, so we have some different criteria. Under our 
market promotion programs, we have an open opportunity each 
year for cooperators and those who want to participate to put 
in proposals. We evaluate those and allocate the funds through 
a single process. In the case of our food assistance programs, 
each year we meet with the private voluntary organizations of 
interest. We explain to them what we will be looking for in 
programs including what are our priority countries are for that 
year, which change. That is because we can't hit all the 
countries all the years. We give them guidelines for what we 
want in the way of proving and results, and we continue to 
refine this process each year to try to make it more efficient 
and more effective.
    Mr. Schilling. Very good.
    Ms. Lindborg. We have, with our NGO partners, particularly 
working on development food aid programs, we have an open 
competitive process and we work very closely in advance of the 
guidelines being issued with our NGO partners, and then review 
with some very specific guidelines and goals of the proposals 
when we receive them. Through the course of those projects, we 
have people on the ground or visiting those programs to do 
close monitoring and evaluation, again in processes that we 
develop in partnership with the NGOs.
    Mr. Schilling. Very good. Thank you very much. With that, I 
yield back.
    The Chairman. The Chairman would recognize the lady from 
Alabama, Ms. Sewell.
    Ms. Sewell. Thank you, Mr. Chairman. I wanted to welcome 
our witnesses here today.
    I guess my question has to do with an industry that is very 
dear and near to my heart and to the district that I represent 
in Alabama, and that is catfish. I wanted to just ask you, Ms. 
Heinen, if you could tell me a little bit about what I could 
expect as far as future opportunities when it comes to catfish 
in foreign markets. Specifically, as you know, the Food Safety 
Inspection Service actually asked for comments on definition of 
what is catfish. I personally, like most of my catfish farmers, 
want a broader definition of catfish to ensure that we don't 
have any fraudulent markets of catfish. Could you please speak 
to what has been done by FAS to help ensure that catfish 
farmers and growers like those located in my district are able 
to tap into new foreign markets and expand their market share?
    Ms. Heinen. Yes. As you probably know, the comment period 
has closed now on the catfish definition, so we await FSIS's 
answers on those. The Catfish Institute is one of our 
cooperator groups that we work with every year to try to 
develop markets. I think this year they received MAP funds in 
excess of $300,000. Primarily, we look to the industry to give 
us what they think are their primary market issues and primary 
forward-looking markets, but we also use our people overseas to 
try to find markets and opportunities for different products 
that may be in demand.
    I think our greatest success with catfish has been close to 
home in Canada, which is true for many of our agricultural 
commodities. Canada is our second largest market now, but we 
are definitely working with them to try and look at new 
opportunities. One of the things that we encourage is that 
different cooperators work together to find ways that they 
might have synergies that they can help the other entrants in 
new markets where they have complementary products. So we are 
in close contact. We also have a regional trade organization in 
the South, so they work also with some of the individual 
smaller companies that might be involved in the catfish 
industry.
    Ms. Sewell. I know that you are quite aware that the 
President signed a Executive Order recently for government 
reform and reorganization, and I really wanted to talk to you a 
little if you could speak to the pros and cons of any type of 
reorganization within FAS and how that would impact farmers.
    Ms. Heinen. Well, certainly if we can find efficiencies, 
that is an advantage for the taxpayer. It is possible in a 
broader trade agency, maybe we would get more funding. On the 
other hand, we are a little bit afraid that we would be 
overwhelmed by larger agencies that might take more of the 
funding. We are concerned that we would lose a lot of our 
analysis capability that we think it is important both for 
supporting farm programs in the United States and for informing 
our farmers about what are the market opportunities overseas. 
We believe very much that our attaches provide a unique service 
to America's farmers and ranchers because agriculture exports 
is more than just promoting agriculture, it is port entry, it 
is knowing the people, it is having insights into the 
regulations and knowing when they are going to change and 
knowing how that minor word might destroy an opportunity for a 
U.S. product because of the way our industry might be 
structured and things like that. So we see some downside risks 
with really having a close cooperator partnership with the 
industry and one that can really inform us well of when things 
are changing overseas that might have impact and have to weigh 
that heavily against what efficiencies might be gained by 
having a single agency for trade.
    Ms. Sewell. Thank you.
    The Chairman. I would now call on the Ranking Member, Mr. 
Costa, who has a follow-up question or so.
    Mr. Costa. To both our witnesses, I would like to refocus 
on some comments that were made earlier regarding the Doha 
round proposal. There is discussion about putting some of the 
items developed during the Doha round into a Harvest Plus 
package. I hope you are familiar with that. That would be 
agreed upon by World Trade Organization members at the December 
ministerial meeting. Among those identified for inclusion of 
this package is the export competition pillar, I am told, for 
agriculture in the 2008 draft modalities, which includes food 
aid. That is why I think both of you I would like to have 
respond. For the USDA, Ms. Heinen, what would the impact be of 
the December 2008 draft food aid tax for the Food for Progress 
Program under these circumstances?
    Ms. Heinen. Thank you, Congressman. Well, in general at 
this point, I don't think that we see a package for early 
harvest that we think would be advantageous to the United 
States but of course we are open to continuing that discussion.
    Mr. Costa. I am told that under point 12 of the proposal 
that the language is a problem and it is not acceptable. Do you 
concur?
    Ms. Heinen. On the monetization issue, we think that we 
would have to make some significant changes in our program, 
yes.
    Mr. Costa. And what would be the impact, Ms. Lindborg, of 
the 2008 language on the Food for Peace programs? Are you 
familiar with that?
    Ms. Lindborg. Yes, I am. We are working closely with USTR 
and of course USDA to ensure that our emergency food aid 
programs are not unduly constrained. As it is currently 
framed----
    Mr. Costa. As it is currently framed, the monetization, I 
am told, to support ag development activities that support 
mother nutrition programs would be impacted.
    Ms. Lindborg. Monetization would be constrained. Emergency 
food aid under the U.N. is currently protected, and we want to 
ensure that NGOs are as well in their ability to deliver 
assistance.
    Ms. Heinen. If I might add, we do not think that the 
McGovern-Dole program would be affected at this point.
    Mr. Costa. I share my colleague, Congressman McGovern's 
concern because as I said, anecdotally, I think all of us have 
traveled abroad and seen the impact and the benefits of these 
programs. We are also mindful of the fact that there are 
challenges to getting the food to those who need it most, and 
clearly this is something that I want to work with my 
colleague, Congressman McGovern, and others on as we address 
the 2012 Farm Bill.
    Let me finally ask one more question, Ms. Heinen. The 
Subcommittee held a hearing in April examining the export 
programs. I referred to in my earlier questions, the Market 
Access Program in particular. I suggested to the USDA at that 
time, but I also think it is worth revisiting again today based 
upon the comments that some have made regarding the Market 
Access Program. Some have criticized it as a subsidy or 
corporate welfare. Those of us who are familiar with the 
program I think have a different view. Could you please explain 
to the Subcommittee Members your own take on the benefits of 
the Market Access Program?
    Ms. Heinen. Yes, Congressman. When the program was 
originally authorized by Congress, there were not constraints 
on the size of companies and I think that there were some 
recipients that people thought didn't need the assistance, but 
that has been changed in subsequent farm bills and so that now 
the monies go to nonprofit organizations, cooperatives that 
benefit the whole range of farming who represent a broad group 
of farmers.
    Mr. Costa. And give us a greater opportunity to access 
those markets to establish that fair trade that isn't always a 
two-way street.
    Ms. Heinen. Absolutely. They use these monies to look at 
barriers, sanitary, phytosanitary barriers, many communication 
barriers, all sorts of things, getting even on shelves in 
supermarkets, the kinds of things that can make the difference 
for consumers' choice.
    Mr. Costa. Thank you.
    The Chairman. Mr. McGovern, do you have a second round of 
questions?
    Mr. McGovern. Briefly, Mr. Chairman, because my commentary, 
my question was so long, Ms. Heinen, I didn't get a chance to 
allow you to respond, but just to clarify a couple things for 
the record, in terms of administrative costs for the programs 
we are talking about in terms of food aid, I mean, are they 
higher than other administrative costs in other agencies or are 
they about the same? I mean, how would you classify the 
administrative costs of some of these programs?
    Ms. Lindborg. We continually seek the flexibility that 
enables us to make the most cost-effective choices in moving 
the food because we do think it is so important that we have 
the ability to provide emergency food assistance to those in 
need.
    Mr. McGovern. My understanding is that these programs are 
pretty well run by independent analysis, and sometimes there is 
this perception out there that all we need to do is cut more 
overhead here and staff here. I mean, part of the reason why 
you need adequate staff is because we are asking for you to do 
more monitoring and to deliver things more effectively, and 
that does require additional oversight and additional staff.
    Ms. Lindborg. Absolutely, and we take the monitoring and 
evaluation very seriously, and you had asked earlier about how 
to quantify the impact, and I would say that we are very 
concerned that at a time where the needs are rising around the 
world, some of the projections for next year would leave us 
with less than half of the funding that we currently have to 
meet the needs of emergency food aid.
    Mr. McGovern. Which means that thousands or tens of 
thousands or millions of people will not be able to get food?
    Ms. Lindborg. Yes. Since 2008, we have served 140 million 
people globally. The average varies from year to year but it 
would be in the magnitude of 11 million people who we would not 
be able to reach.
    Mr. McGovern. Go ahead.
    Ms. Heinen. If I could just add that we are working closely 
with USAID and we are coordinating more to try and find 
efficiencies, but this is kind of an inherently risky 
proposition in many places that you are providing food aid, so 
those costs do go up. We are also working hard with the 
industry in the United States, which we think has a very 
important part to play in the provision of food aid and in 
helping us find better ways to package, better ways to deliver, 
better ways to serve the hungry of the world.
    Mr. McGovern. Let me just say with regard to the McGovern-
Dole program, I mean, again, I was one of the primary authors 
of that program although I am not related to the guy that it is 
named after, but that is a program that I really have been 
impressed with in terms of its ability to respond to some of 
the suggestions, whether it is through internal audits or 
whether it is through the Government Accountability Office to 
try to find ways to continue to improve and to be more 
effective and more cost-effective, if you will, but to reach 
more people. I think both within USAID and within USDA, I mean, 
that has been the case, and we need to make it clearer to 
people as to why these programs are so important and why they 
save us money, why they save lives, and why they are in our 
national security interest. I mean, there is not an actual 
constituency out there to tell Members, please continue to vote 
for a robust food aid budget for international food aid 
programs. So I appreciate your efforts in both agencies and I 
want to continue to work with you and make them even better. I 
think we need to do a better job of lifting this issue up and I 
think USAID and the Secretary of State and Secretary Vilsack 
have done a really good job with Feed the Future. People need 
to know more about that. I thank you both.
    Thank you, Mr. Chairman.
    The Chairman. Let me just conclude by a specific and a 
general question and then we will bring the hearing to a close.
    Ms. Heinen, in regard to the Borlaug Fellowship Program, 
you have highlighted that that program has provided training 
opportunities for participants from a number of countries, I 
think you said 64 countries in areas like biotechnology. Could 
you expand for us on what types of training the Borlaug fellows 
receive and how that training can be utilized to build 
regulatory capacity in their home countries?
    Ms. Heinen. Yes, Congressman. The Borlaug Fellowship 
Program, of course named after the Nobel Laureate, Norman 
Borlaug, is helping to bring science to countries that have not 
invested in science in the past, and we have good examples of 
bringing scientists here for 4 or 5 months and they go back and 
they bring new technologies to their countries. We have 
examples where they have passed new laws that can provide for 
pilot technology, where they can do better testing for 
aflatoxins; that ruins crops and poisons people in some of 
these developing countries. So we find it to be a very 
effective program to bring our science to the developing world 
so that they can participate in feeding their people.
    The Chairman. Let me just ask one concluding question that 
is neither intended as either mean-spirited or politically 
correct, and I am sure every district in the country, in my 
district, people in Taylorville, Illinois, will ask me, we have 
a fiscal crisis, huge national debt, and we have hungry people 
here at home. How do these programs that the two of you 
implement and analogous programs in our government not only 
benefit the people for whom they are intended but how do they 
benefit people here in Taylorville, Illinois, or in Boston, 
Massachusetts?
    Ms. Heinen. We have of course two kinds of programs. We 
think directly our programs that help exports are bringing jobs 
to those communities, bringing new opportunities to those 
communities, and so we think there is a very direct benefit. As 
far as our food assistance programs and helping countries 
overseas, as they can take care of themselves better, we think 
our costs for conflict and our costs for feeding the rest of 
the world will be reduced. As we make our farmers more 
efficient, we keep food prices down for our consumers here at 
home, so in those three ways I believe our programs are very 
helpful to your communities.
    The Chairman. Well, thank you, Members of the Committee. 
Thank you, Mr. McGovern, in particular for your courtesy of 
being with us today. We greatly enjoyed and benefited from your 
presence.
    Under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any questions posed by a Member.
    This hearing of the Subcommittee on Rural Development, 
Research, Biotechnology, and Foreign Agriculture is adjourned.
    [Whereupon, at 11:23 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
      Supplementary Material Submitted by Suzanne Heinen, Acting 
    Administrator, Foreign Agricultural Service, U.S. Department of 
                              Agriculture
    During the July 13, 2011 hearing entitled, Agricultural Program 
Audit: Examination of Foreign Agriculture and Food Aid Programs, a 
request for information was made to Suzanne Heinen. The following is 
the information submission for the record.
Insert
          Mr. Stutzman. Okay. Very good. A recent press release by the 
        USDA stated that overseas shipments of agricultural products 
        have totaled $75 billion in the first 6 months of the fiscal 
        year. Do you know what is the percentage of trade promotion 
        programs within the $75 billion?
          Ms. Heinen. It is difficult to exactly say which ones but we 
        do know where we have interceded in markets that have made a 
        difference. We have recently concluded some programs in 
        Algeria, for example, that opened up $43 billion in dairy 
        exports or possibility for dairy exports. We recently concluded 
        agreements with, or met the standards using some of these funds 
        and partnership with agricultural community to meet a deadline 
        that would have prohibited about $150 million worth of our 
        trade and plant products into Vietnam, so the combination of 
        our program, our partnership with the ag community and our 
        agricultural attaches overseas, we can trace and we can give 
        you some information later if you would like to see some of the 
        activities and programs that we know have made a significant 
        difference in the export numbers.
          Mr. Stutzman. Sure, I would be very interested in that.

    We recently examined the impact and effectiveness of foreign market 
development programs administered by FAS. In 2010, Global Insight, 
Inc., a private economic and financial analysis research firm, updated 
a cost-benefit analysis of two cost-share programs (the Market Access 
Program [MAP] and Foreign Market Development Program [FMD]). The 
analysis showed that for every dollar that the government and industry 
invested on market development activities an additional $35 of U.S. 
food and agricultural exports was generated. Global Insight's report 
concluded that U.S. agricultural exports in 2009 were $6.1 billion--or 
six percent--higher than they would have been without the increased 
investment in market development.
    Market development program investments can pay immediate dividends, 
such as new sales at trade shows and on trade missions as I discussed 
in my testimony. The investments can also build markets that result in 
years of sustained sales. For example, in Nigeria, a 10 year combined 
U.S. Wheat Associates and USDA investment of MAP and FMD funds 
exceeding $2.5 million resulted in increased U.S. wheat sales of over 
$750 million in FY 2010--a 265 percent increase over 2001 sales. 
Through close public-private partnerships, USDA and American producers 
can achieve real increases in market share and exports.
                                 ______
                                 
     Supplementary Material Submitted by Nancy Lindborg, Assistant 
    Administrator, Bureau for Democracy, Conflict and Humanitarian 
         Assistance, U.S. Agency for International Development
    During the July 13, 2011 hearing entitled, Agricultural Program 
Audit: Examination of Foreign Agriculture and Food Aid Programs, a 
request for information was made to Nancy Lindborg. The following is 
the information submission for the record.
Insert
          The Chairman. Let me just ask quick question of Ms. Lindborg. 
        In your agency's response to the annual delivery cost for 
        Public Law 480, Title II, you gave us a figure of about $730 
        per metric ton. This number doesn't really tell us very much 
        about the cost of implementing that program, Public Law 480. 
        Could you describe in the limited time that you have in a 
        little more detail the individual elements of this figure such 
        as how much of the program delivery costs is salaries, how much 
        is administrative expenses, indirect costs, shipping, storage 
        and monitoring?
          Ms. Lindborg. Mr. Chairman, I would be delighted to get you 
        that information in a written form. It is a complex list. It 
        does include our ocean freight, inland freight, internal 
        shipping and handling in our Section 202(e) funds. We do 
        continually seek to find the most effective way possible to 
        ship our food. As you may be aware, there was an independent 
        study done recently Cornell University that indicated that the 
        taxpayers pay an extra $140 million a year because of some of 
        the commodity cargo preferences approaches.

    Table containing information follows:

 FY10 Title II Food for Peace Title II Associated Costs (to date) for FY
                                  2010
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Commodities                                $798,162,595            37.5%
Ocean Freight                              $431,097,863            20.3%
Inland Freight                             $196,838,908             9.2%
Section 202(e)                             $221,143,220              10%
Internal Transport, Shipping, Handling     $445,827,166              21%
Personal Service Contractors                $12,057,640               1%
Miscellaneous                               $23,523,963               1%
                                       ---------------------------------
  Total                                  $2,128,651,355             100%
------------------------------------------------------------------------
Note: Amounts reflect obligated to date. Miscellaneous includes
  technical assistance, Famine Early Warning System (FEWS), office
  space, International Food Relief Partnership (IFRP), information
  technology (IT), etc.

                                 ______
                                 
                          Submitted Questions
Response from Suzanne Heinen, Acting Administrator, Foreign 
        Agricultural Service, U.S. Department of Agriculture *
---------------------------------------------------------------------------
    * There was no response from the witness by the time this hearing 
went to press.
---------------------------------------------------------------------------
Questions Submitted By Hon. Timothy V. Johnson, a Representative in 
        Congress from Illinois
    Question 1. Ms. Heinen, your testimony states that applicant 
contributions are not required in the Technical Assistance for 
Specialty Crops program when the grant funds are awarded, but 
contributions are strongly encouraged. What percentage of approved 
projects provide contributions? What type of contributions are 
generally provided? Do you think it would be helpful to require 
applicants to provide a contribution?
    Question 2. USDA has announcement changes in the Market Access 
Program and Foreign Market Development Program, yet we have not seen 
any revisions in proposed changes. Have you heard from cooperators 
about those proposed changes? Do you plan to put forward an updated 
proposal after hearing from market participants' recommendations?
    Question 3. Ms. Heinen, could you please elaborate for the record 
the unique characteristics and functions of each of our export 
promotion programs, and the distinct role each program plays in the 
creation, expansion, and maintenance of international markets for U.S. 
agricultural products? Do you see any overlap or duplication in what 
these programs are designed to achieve?
    Question 4. How much funding will be used this year from all 
sources for purchasing commodities from local or regional suppliers for 
food aid with U.S. program funds? What are your primary food safety and 
quality challenges when purchasing locally?
Question Submitted By Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question. How has USDA/FAS participated in the OMB-directed study 
related to trade reorganization of the Federal Government? How would 
USDA administered programs for market development and export credit 
guarantees be affected if they were merged into a larger, more broadly 
focused trade agency?
Response from Nancy Lindborg, Assistant Administrator, Bureau for 
        Democracy, Conflict and Humanitarian Assistance, U.S. Agency 
        for International Development
Questions Submitted By Hon. Timothy V. Johnson, a Representative in 
        Congress from Illinois
    Question 1. How much funding will be used this year from all 
sources for purchasing commodities from local or regional suppliers for 
food aid with U.S. program funds? What are your primary food safety and 
quality challenges when purchasing locally?
    Answer. The Emergency Food Security Program (EFSP) was launched in 
April 2010. It is managed by USAID's Office of Food for Peace (FFP). 
EFSP provides grants for the local or regional procurement of food 
commodities, or the use of cash or vouchers for the purchase of food in 
response to an emergency overseas. In fiscal year 2011, $300 million in 
International Disaster Assistance appropriated through the State, 
Foreign Operations Appropriations Act was used for the Emergency Food 
Security Program. As stated in the USAID International Emergency Food 
Assistance Annual Program Statement (APS), locally and regionally 
procured commodities under the EFSP must meet safety and quality 
standards. For local and regional procurement, bulk grains, legumes, 
and pulses must meet recipient country food safety standards. If the 
recipient country does not have food safety guidelines for grains, 
legumes, and pulses, then awardees must adhere to the Codex 
Alimentarius Recommended International Code of Practice. All other food 
products, including processed foods, fortified blended foods, and 
enriched foods, also must comply with the Codex Alimentarius 
Recommended International Code of Practice. Since the Emergency Food 
Security Program was started, USAID has not received any complaints 
regarding commodity safety or quality.

    Question 2. Ms. Lindborg, in your testimony you mentioned the $450 
million set-aside for development funds. Could you provide additional 
details on how this provision may impact your ability to meet 
humanitarian needs?
    Answer. Under the Food for Peace Act, USAID must provide a minimum 
level of Title II funding for development food aid programs, which must 
increase by $25 million each year (regardless of appropriations 
levels). In FY 2012, this development food aid requirement is $450 
million. The House-passed FY 2012 agriculture appropriations bill 
contained $1.032 billion for Title II, which would include the $450 
million requirement for development food aid. USAID would have 
approximately $580 million remaining for emergency programs in FY 2012. 
Compared to the FY 2012 Title II emergency request of $1.240 billion, 
this would be a cut of $660 million in emergency food aid. During FY 
2008-2010, USAID programmed approximately $1.8 billion annually in 
Title II emergency resources.

    Question 3. Ms. Lindborg, the 2008 Farm Bill provided additional 
authorities for prepositioning food aid to address urgent needs and 
reduce costs. How much have you spent on these warehousing sites? Is 
there a cost difference if the warehouse is empty?
    Answer. Since FY 2008, USAID has spent a total of approximately 
$12.9 million for overseas pre-positioning of Title II commodities. The 
pre-positioned warehouses only cost money when USAID has cargo situated 
within them. USAID does not hold leases on these warehouses. Rather, 
USAID is billed for usage.

    Question 4. Ms. Lindborg, your testimony mentioned your policy to 
swiftly respond to any instances of fraud, waste, and abuse. Do you 
feel the monitoring and evaluation of programs by your agency staff is 
adequate to avoid instances of fraud in the first place?
    Answer. USAID's Office of Food for Peace (FFP) is fully committed 
to Administrator Shah's USAID Forward reforms that promote improved 
monitoring, evaluation, and transparency of food assistance programs. 
In part thanks to the additional flexibility provided in the 2008 Farm 
Bill, FFP has increased the number of monitoring and evaluation field 
staff stationed throughout the world to provide increased oversight and 
monitoring assistance to Title II awardees. Awardees report quarterly 
on lost and damaged commodities; and FFP is currently implementing a 
series of commodity management workshops to ensure that Title II 
awardees appropriately monitor the receipt and distribution of Title II 
food aid.

    Question 5. For FY 2010, could you please elaborate on the specific 
cost components under P.L. 480 Title II, including:
    The average cost and range of costs per delivered metric ton (MT) 
for emergency food aid.
    Answer. The average costs per delivered MT for Title II emergency 
food aid during FY 2010 was $954. This includes awards made to both 
U.S. non-governmental organizations (NGOs) and the World Food Program 
(WFP). The figure includes commodity costs, shipping costs, and awardee 
implementing costs, such as internal transport, storage, and handing 
(ITSH), and section 202(e) administrative costs.

    Question 5a. How much of P.L. 480 Title II funding was implemented 
by the World Food Program (WFP), and how much was implemented by U.S. 
non-governmental organizations (NGO)?

    Answer. USAID awarded WFP $1,224,533,600 of Title II emergency 
resources in FY 2010. A combination of U.S. based and non-U.S. based 
NGOs were awarded $298,017,200 of Title II emergency resources. USAID 
also awarded NGOs $401,015,000 for the implementation of Title II 
development food assistance programs.

    Question 5b. Is there a difference in the delivered cost per metric 
ton between what the WFP implemented and that which NGOs implemented? 
What criteria does USAID use to determine whether to provide funding 
through WFP or an NGO?
    Answer. WFP's global average delivered cost per metric ton is 
$145.88 higher than NGO implemented programs. This variation is 
primarily a factor of commodity and freight price volatility, program 
locations, and programming considerations (ration mix, beneficiary 
targeting, distribution timing and methodology), rather than a measure 
of the operational efficiency of WFP or NGO partners.
    While each country context is different, the main factors 
considered when making funding decisions are:

  b Timing--When must the food be called forward in order to reach 
        beneficiaries on time? Will there be significant pipeline 
        breaks at critical periods (such as the hunger season) that 
        require assistance be sent now?

  b Nature of the needs--What are the main factors indicating a food 
        security emergency (acute malnutrition rates, significant crop 
        losses, etc.)? What is the extent or severity of the emergency/
        food insecurity in the country or area in question?

  b Appropriateness--Which or what combination of tools/resources 
        (i.e., EFSP or Title II) are most appropriate to address the 
        needs?

  b Constraints--Are there other factors (e.g., host government 
        policies, implementing partner capacity, or USG policy 
        concerns) that should influence USAID support?

  b Operational Capacity--Is the organization that submitted the appeal 
        or proposal to USAID capable of carrying out the program?

 
 
 
    Question 5c. For the WFP emergency programs, please show a breakout of average cost per metric ton of the following components: commodity, ocean
 freight, inland transportation, storage, handling, direct costs, any other specified costs, and the 7% overhead allowed for WFP indirect support costs.
 Do these costs include all costs associated with delivering the food to the recipient, as well as reporting and monitoring?
    Answer.
 


                                                             FY 2010 WFP Emergency Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            MT      Total Emergency  Commodity Price   Ocean freight    Inland freight        ITSH            202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                                    1,283,900   $1,224,533,700     $458,435,400     $188,087,700     $106,131,300     $367,167,100     $104,712,200
Average                                                     $953.76          $357.06          $146.50           $82.66          $285.98           $81.56
Percent of Total Cost                                                            37%              15%               9%              30%               9%
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
 
    The above table breaks down the cost of Title II emergency programs implemented by WFP into the following components: commodity price; ocean
 freight; inland freight; internal transportation, storage, and handling (ITSH); and section 202(e). Cost does include monitoring and evaluation. Please
 note that commodity and freight prices fluctuate throughout the year, and that not all programs incur inland freight costs. Section 202(e) funds
 include direct and other specified costs as described in the Food for Peace Act. WFP's direct support costs and other direct operational costs are
 covered through both ITSH and section 202(e) funds. The seven percent overhead allowed for WFP indirect support costs are reflected in the 202(e)
 expense category.
 
    Question 5d. When NGOs partner with WFP to deliver food aid to particular populations, do NGOs bear some of those costs?
    Answer. WFP establishes sub-agreements with its NGO partners, which may include what costs may be reimbursed as a result of these partnerships.
 
    Question 5e. Could you explain how the WFP seven percent overhead rate was determined?
    Answer. WFP's financial regulations are governed by its Executive Board. Comprising 36 State Members of the United Nations or Member Nations of the
 Food and Agriculture Organization, including the United States, the Executive Board establishes the overhead rate.
 
    Question 5f. For the NGO-implemented emergency programs, please show a breakout of average cost per metric ton of the following components:
 commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified costs, and the negotiated indirect cost recovery
 (NICRA).
 


                                                                 NGO Emergency Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            MT      Total Emergency  Commodity Price   Ocean freight    Inland freight        ITSH            202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                                      368,890     $297,888,100     $120,412,400      $51,400,500      $27,830,400      $63,413,800      $34,831,000
Average                                                     $807.53          $326.42          $139.34           $75.44          $171.90           $94.42
Percent of Total Cost                                                            40%              17%               9%              21%              12%
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
 
    The above table breaks out the cost of NGO implemented emergency programs into the following components: commodity price; ocean freight; inland
 freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout
 the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food
 for Peace Act. Indirect costs, determined by each NGO's negotiated indirect cost rate agreement (NICRA), are included in section 202(e) funds.
 
    Question 5g Could you please explain how NICRA is determined? Do these costs include all costs associated with delivering the food to the recipient
 and reporting and monitoring? Does it include any other activities beyond food distribution?
    Answer. Each NGO negotiates its indirect cost rate with one government agency that has been assigned cognizance. Usually the cognizant government
 agency is that agency which has the largest dollar volume of contracts with the firm or organization. The resulting NICRA is binding on the entire
 government. The NICRA contains both final rates for past periods and provisional (billing rates) for current and future periods. The Office of Food for
 Peace (FFP) does not apply NICRA rates to ITSH costs, equipment purchases, or sub-awards valued at greater than $25,000. Some examples of indirect
 costs are office space rental, utilities, and clerical and managerial staff salaries.
 
    Question 5h What was the average cost per metric ton for the Title II non-emergency programs? Could you please show a breakout of the average cost
 per metric ton of the following components: commodity, ocean freight, inland transportation, storage, handling, direct costs, any other specified
 costs, and the associated NICRA?
 


                                                           FY10 Title II Development Programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Total
                                            MT        Development    Commodity Price   Ocean freight    Inland freight        ITSH            202(e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total                                      500,150     $401,015,000     $171,694,400      $78,582,600      $27,466,800      $52,347,100      $70,924,100
Average                                                     $801.79          $343.29          $157.12           $54.92          $104.66          $141.81
Percent of Total Cost                                                            43%              20%               7%              13%              18%
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
 
    The above table breaks out the cost of NGO implemented development programs into the following components: commodity price; ocean freight; inland
 freight; internal transportation, storage, and handling (ITSH); and section 202(e). Please note that commodity and freight prices fluctuate throughout
 the year, and that not all programs incur inland freight costs. Section 202(e) funds include direct and other specified costs as described in the Food
 for Peace Act. Indirect costs, determined by each NGO's NICRA, are paid through section 202(e) funds.
 

                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--U.S. 
                       Department of Agriculture
1. Program Name
    P.L. 480 Title I.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The P.L. 480 Title I program was authorized in 1954 to allow 
concessional sales of U.S. agricultural commodities to developing 
countries. It is now authorized under the Food for Peace Act. The U.S. 
Department of Agriculture and the recipient country enter into an 
agreement, which may provide that the commodities may be re-sold by the 
recipient country and the proceeds used to support agricultural, 
economic, or infrastructure development projects. Since Fiscal Year 
2006, new funding has not been requested or appropriated because demand 
for food assistance using credit financing has fallen and grant 
programs have been a more appropriate tool.
4. Purpose/Goals
    Title I provides for government-to-government sales of agricultural 
commodities to developing countries under long-term credit 
arrangements. The primary goals of the Title I program are to provide 
economic assistance and promote food security. Priority is given to 
countries coping with limited foreign exchange reserves, chronic food 
shortages, poverty, and underdevelopment in the agricultural sector. 
Past Title I programs have targeted countries with food insecurity, 
countries with limited foreign exchange, and countries working to 
alleviate poverty and develop their agricultural economies.
5. Success in Meeting Programmatic Purpose/Goals
    The Title I program account has not received funding since 2006. 
Over the program's history, USDA made concessional loans in response to 
requests from foreign governments. Concessional loans were made to 
governments that were facing food insecurity or economic problems or 
that were working to alleviate poverty and promote economic 
development.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                 $146
                       2003                                 $140
                       2004                                 $132
                       2005                                 $117
                       2006                                  $64
                       2007                                   $3
                       2008                                   $3
                       2009                                   $3
                       2010                                   $3
                       2011                                   $3
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                Outlays a
------------------------------------------------------------------------
                       2002                                 $182
                       2003                                  $88
                       2004                                 $121
                       2005                                 $116
                       2006                                  $66
                       2007                                  $60
                       2008                                  $27
                       2009                                  $25
                       2010                                $17.4
                       2011                                  $16
------------------------------------------------------------------------
a Does not include subsidy reestimate.

    Not all payments (outlays) are made during the year in which budget 
authority is made available. Outlays could be made up to 5 years after 
the appropriation is received. Most payments are made by the third 
fiscal year after the appropriation. For most sales agreements under 
Title I, CCC will pay ocean freight charges only to the extent of the 
difference between U.S.-flag rates and foreign-flag rates when U.S.-
flag vessels are required to be used in order to meet cargo preference 
requirements. The difference in rates is known as the ocean freight 
differential and those costs are included the outlays above.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

----------------------------------------------------------------------------------------------------------------
                                                                                   FTEs
             FY                       Annual Cost        -------------------------------------------------------
                                                                      FTE                    Tech. Assist.
----------------------------------------------------------------------------------------------------------------
                   2007                         $3.4                       0.166                       3.373
                   2008                         $2.7                           0                       2.680
                   2009                         $2.7                           0                       2.736
                   2010                         $2.8                           0                       2.812
                   2011                  $2.8 (est.)                           0                       2.806
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Title I does not have a strict set of eligibility criteria, which 
allows the program to be flexible and to provide needs-based 
assistance. Although Title I concessional sales may be made to private 
entities, the vast majority have been made to sovereign governments. 
When making funding decisions, USDA considers food security, economic, 
and financial needs.
10. Utilization (Participation) Data
    In 2006, USDA funded two Title I concessional sales to two 
sovereign governments (Peru and the Philippines).
11. Duplication or Overlap with Other Programs
    The Food for Peace Act contains several titles, including Title II 
(administered by the U.S. Agency for International Development). 
However, Title I and Title II avoid overlap because they have distinct 
missions and goals. Title II programs target highly vulnerable 
populations in very poor countries through food security interventions 
and humanitarian assistance (including direct distribution). Title I, 
on the other hand, assists sovereign governments with broader economic 
needs and agricultural development.
12. Waste, Fraud and Abuse
    FAS is proactive in monitoring Title I for any indications of 
waste, fraud or abuse. FAS has not found any systemic problems in Title 
I.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    McGovern-Dole International Food for Education and Child Nutrition 
Program.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The McGovern-Dole International Food for Education and Child 
Nutrition Program (McGovern-Dole Program) was authorized by the Farm 
Security and Rural Investment Act of 2002. Named in honor of Ambassador 
and former Senator George McGovern and former Senator Robert Dole for 
their efforts to encourage a global commitment to school feeding and 
child nutrition, the program replaced the pilot Global Food for 
Education Initiative, which fed nearly seven million children during 
2001-2002. Since 2003, the McGovern-Dole Program has supported projects 
in 41 countries and fed 4-5 million children each year. The 2002 Farm 
Bill provided $100 million of Commodity Credit Funds for the program 
and an authorization of appropriations through 2007. This authorization 
of appropriations has been extended through FY12. In FY 2011, Congress 
appropriated $199.1 million for the program.
4. Purpose/Goals
    Congress established the McGovern-Dole Program to carry out 
preschool and school food for education programs in foreign countries 
to improve food security, reduce the incidence of hunger, and improve 
literacy and primary education, particularly with respect to girls; and 
maternal, infant, and child nutrition programs for pregnant women, 
nursing mothers, infants, and children who are 5 years of age or 
younger. Under this program, the U.S. Department of Agriculture (USDA) 
donates U.S. agricultural products and financial and technical 
assistance for school feeding and maternal and child nutrition projects 
in low-income, food-deficit countries that are committed to universal 
education.
5. Success in Meeting Programmatic Purpose/Goals
    USDA enters into agreements with implementing organizations to 
carry out projects under the McGovern-Dole Program. In progress 
reports, implementing organizations provide information about the 
number of children being fed, the increases in attendance, and other 
benefits that lead to improved literacy, better diet, and graduation of 
the programs. Organizations frequently report gains in attendance of 
ten percent or more in participating schools. Teachers indicate that 
children are more attentive, have more energy, and will attend school 
for the whole day.
    One example is a program with International Partnership and Human 
Development in Guinea-Bissau. Activities include the provision of 
nutritious meals, nets and medicines to reduce malaria, and furniture 
for the schools. Infrastructural improvements are also underway for the 
school buildings and water and sewage systems. IPHD is focused on 
graduating or transferring responsibility for the program and is 
providing training and other support to build the country's capacity. 
The program contributed to a 15 percent increase in school enrollment 
and an 11 percent reduction in absenteeism and dropout rates during the 
first 2 years. The children have more incentive and desire to attend 
school. Parents and local community members are realizing the benefits 
of education, and PTA participation is on the rise. The government has 
taken notice of IPHD's successful strategy, and the Ministry of 
Education has stationed one of its top officials in its offices.
    USDA and the implementing organizations develop graduation plans to 
ensure that progress is being made toward the goal of having a local 
entity assume responsibility for the program. The projects in 41 
countries are at different stages in achieving graduation. The 
McGovern-Dole Program graduated a school feeding project in Moldova, 
and the Government of Moldova has continued much of the program since 
the U.S. funding ended. School feeding programs in Kenya, Laos, and 
Guinea-Bissau are nearing full graduation.
    USDA is implementing improvements in program management that will 
allow for more intensive monitoring of results to ensure that 
implementing organizations are contributing to the desired results. In 
FY 2011, USDA released results frameworks that outlined the objectives 
for the program and the desired results. Organizations will begin 
reporting against these frameworks in FY 2012, and USDA will review the 
results closely to keep organizations on track or to make course 
corrections.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                   $0
                       2003                                 $100
                       2004                                  $50
                       2005                                  $87
                       2006                                  $98
                       2007                                  $99
                       2008                                  $99
                       2009                                  $85
                       2010                                 $210
                       2011                               $199.5
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                   $0
                       2003                                 $100
                       2004                                  $43
                       2005                                  $93
                       2006                                  $91
                       2007                                  $96
                       2008                                  $91
                       2009                                 $104
                       2010                                  $83
                       2011                                   $2
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which budget 
authority is made available. Outlays could be made up to 5 years after 
the appropriation is received. Most payments are made by the third 
fiscal year after the appropriation
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
           FY                   Annual Cost                 FTE
------------------------------------------------------------------------
             2007                    $1.000                       8
             2008                    $1.500                      12
           2009 a                    $3.000                      13
           2010 a                    $2.300                      13
           2011 a             $3.500 (est.)               13 (est.)
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.

9. Eligibility Criteria
    By statute, eligible entities are ``private voluntary 
organizations, cooperatives, intergovernmental organizations, 
governments of developing countries and their agencies, and other 
organizations.'' Under regulations, to be eligible to participate in 
the McGovern-Dole Program an organization must have the capacity to 
implement, monitor, and report on an award; experience working in the 
targeted country; an adequate financial framework to carry out the 
program; representation in the United States; and an operating 
financial account in the proposed target country. In addition, USDA 
publishes an annual list of McGovern-Dole priority countries in order 
to focus its resources where they are most needed. Priority countries 
must have a per capita income below $3,945; have a child growth 
stunting rate greater than 20 percent; have adult literacy rates below 
80 percent; have government commitment to education; be free of civil 
conflict; and have USDA post coverage (to facilitate monitoring).
10. Utilization (Participation) Data
    In FY 2010, the McGovern-Dole Program provided $174.1 million to 23 
organizations to implement school feeding and nutrition programs, 
assisting 4.3 million beneficiaries in 18 countries. Approximately $3.5 
million was used to cover administrative costs and an additional $10 
million was allocated to fund the Micronutrient Fortified Food Aid 
Products Pilot, as required by Congress. The remaining $21.9 million 
was rolled into FY 2011 to support programs in Haiti and Afghanistan, 
which were announced October 1, 2010.
    In FY 2011, the McGovern-Dole Program will provide $198 million to 
eight organizations in 15 countries to implement school feeding and 
nutrition programs, assisting 3.59 million beneficiaries. A detailed 
table of the FY 2011 is attached.
11. Duplication or Overlap with Other Programs
    The McGovern-Dole Program's purpose and goals do not overlap with 
those of other USDA food assistance programs. The U.S. Agency for 
International Development's Title II program also provides school 
feeding in emergency situations. The McGovern-Dole Program provides 
school feeding over a longer period with a goal of graduating the 
program by having the government or other entities in the recipient 
country assume responsibility for the program.
12.Waste, Fraud and Abuse
    The Foreign Agricultural Service (FAS) closely monitors the 
McGovern-Dole Program to ensure that participating organizations carry 
out agreements in accordance with program regulations. In recent years, 
financial, programmatic and compliance controls have been strengthened 
to identify and address any problematic issues or potential violations. 
FAS has also increased monitoring at the field level and invested in 
information systems to better implement program controls. Where any 
indications of waste, fraud and abuse have been found, FAS has been 
aggressive in pursuing corrective action, including criminal 
prosecution, to secure the recovery of funds and prevent recurrence. 
However, vigorous monitoring and oversight procedures have kept such 
indications to a minimum, and FAS has not found any systemic problems 
in the McGovern-Dole Program. The FAS Compliance staff routinely 
reviews McGovern-Dole Program agreements to document compliance and to 
ensure the effectiveness of FAS's internal controls. The McGovern-Dole 
Program also is frequently audited by both the USDA Office of Inspector 
General and the Government Accountability Office, each of which 
provides detailed reports and recommendations for improvement. The most 
recent GAO report was released on May 19, 2011 (GAO-11-544). Finally, 
the McGovern-Dole Program is included in the Commodity Credit 
Corporation's annual audit, and is subject to additional government-
wide oversight and reporting requirements as well, including the 
Improper Payments Information Act of 2002.
13. Effect of Administrative PAYGO
    None.
                               attachment
Fiscal Year 2011

   Fiscal Year 2011 McGovern-Dole International Food for Education and
                     Child Nutrition (McGovern-Dole)
      McGovern-Dole Program: Approved Fiscal Year 2011 Allocations
------------------------------------------------------------------------
                   Participant/Commodity                    Est. Value
     Country                 *             Beneficiaries    (Million $)
------------------------------------------------------------------------
Bangladesh        World Food Program/            350,000           $30.0
                   Wheat
Burkina Faso      Catholic Relief                130,000           $13.5
                   Services/Bulgur,
                   Cornmeal, Lentils,
                   Vegetable Oil
Congo             International                  110,000           $14.0
                   Partnership for Human
                   Development/Beans,
                   Dehydrated Potatoes,
                   Milled Rice,
                   Vegetable Oil
Guatemala         SHARE/Beans, Milled            160,000           $23.0
                   Rice, Soybean Meal,
                   Vegetable Oil
Guinea-Bissau     International                  110,000           $16.0
                   Partnership for Human
                   Development/Beans,
                   Dehydrated Potatoes,
                   Milled Rice,
                   Vegetable Oil
Laos              World Food Program/            250,000           $10.0
                   Corn Soy Blend,
                   Milled Rice,
                   Vegetable Oil
Mali              Catholic Relief                180,000           $18.0
                   Services/Milled Rice,
                   Peas, Vegetable Oil
Nepal             World Food Program/            270,000            $6.0
                   Vegetable Oil, Wheat
Nicaragua         Food for the Poor/             100,000           $12.5
                   Beans, Nonfat Dry
                   Milk, Milled Rice,
                   Textured Soy Protein,
                   Vegetable Oil
Afghanistan       World Vision/Milled             80,000           $11.9
                   Rice, Peas, Vegetable
                   Oil
Haiti             Haiti Vision/Beans,             30,000            $4.5
                   Milled Rice,
                   Vegetable Oil
Haiti             World Food Program/            250,000            $6.0
                   Lentils, Milled Rice,
                   Vegetable Oil
Kenya             World Food Program/            650,000            $9.4
                   Bulgur, Corn Soy
                   Blend, Peas,
                   Vegetable Oil
Liberia           World Food Program/            350,000            $6.4
                   Bulgur, Peas,
                   Vegetable Oil
Malawi            World Food Program/            300,000            $8.3
                   Corn Soy Blend
Senegal           Counterpart                    270,000            $8.5
                   International/Bulgur,
                   Lentils, Vegetable
                   Oil
                                         -------------------------------
  Total           McGovern-Dole Program        3,590,000          $198.0
                   Allocations
------------------------------------------------------------------------

                                 ______
                                 
1. Program Name
    Local and Regional Food Aid Procurement Projects.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The USDA Local and Regional Food Aid Procurement Pilot Project 
(USDA LRP Project) is a 5 year, $60 million pilot authorized and funded 
by Congress in Section 3206 of the Food, Conservation, and Energy Act 
of 2008 (Farm Bill) for the purpose of examining the timeliness and 
efficiency of local and regional procurement (LRP) as a tool to enhance 
U.S. Government food assistance programs. The LRP pilot provides cash 
grants for the purchase of food from surplus-producing areas in the 
country or region to respond to a natural disaster or other food 
crisis.
4. Purpose/Goals
    The goal of the USDA LRP Project is to produce an independent 
evaluation of field based LRP projects, which will help inform 
Congressional discussions regarding the future use of local and 
regional procurement in U.S. Government food assistance programming. 
The evaluation is specifically to examine: the benefits to local 
agriculture; the impact on markets and consumers; the period of time 
required for procurement and delivery; quality and safety assurances; 
and implementation costs.
5. Success in Meeting Programmatic Purpose/Goals
    To achieve the goal of the USDA LRP, the authorizing law 
established four objectives that have been met or are on course to be 
met.. The first objective required a study of prior local and regional 
purchases, which USDA completed and submitted to Congress in January 
2009. The second objective called for development of project 
guidelines, and these were completed in FY 2009. The third objective 
concerned implementing field-based projects during FY 2009-2011. All 
available funding for the projects has been obligated, and 
implementation will be completed by September 30, 2011. The fourth 
objective called for an independent evaluation of the project to be 
completed by June 2012. USDA has contracted with Management Services 
International has to conduct the evaluation.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                   $0
                       2003                                   $0
                       2004                                   $0
                       2005                                   $0
                       2006                                   $0
                       2007                                   $0
                       2008                                   $0
                       2009                                   $5
                       2010                                  $25
                       2011                                  $25
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                   $0
                       2003                                   $0
                       2004                                   $0
                       2005                                   $0
                       2006                                   $0
                       2007                                   $0
                       2008                                   $0
                       2009                                   $0
                       2010                                   $1
                       2011                                  $39
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the project is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                        Annual Cost                       FTE
              ----------------------------------------------------------
                 Section 11 &
      FY           General       Prog. Funds
                appropriations   for Admin.        FTE       Tech Assist
                 Admin. Cost       Support
------------------------------------------------------------------------
        2007
        2008
      2009 a                             $.3             1             1
      2010 a                            $1.0             2             1
      2011 a              $0            $1.6      2 (est.)             1
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
This program began in FY 2009.
Beginning in FY 2009, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempts program funds used to pay authorized
  administrative costs from counting against the CCC section 11 cap. In
  FYs 2010 and 2011 Appropriations Act provisions continued to allow
  program funds to be used for administrative costs.

9. Eligibility Criteria
    By statute, private voluntary organizations and international 
organizations are eligible.
10. Utilization (Participation) Data
    During FY 2009 to FY 2011, six private voluntary organizations and 
one international organization (the World Food Program) received 
funding. The participants implemented 23 projects in 19 different 
countries. About 1.7 million beneficiaries received assistance.
11. Duplication or Overlap with Other Programs
    While the pilot aspect of the USDA LRP Project is unique the 
individual emergency response field-based projects funded under the 
USDA LRP Project can be similar to projects funded by USAID's Food for 
Peace Office (FFP) under the Emergency Food Security Program. The USDA 
LRP Project team actively shares information, and collaborates, with 
FFP to avoid duplication or overlap with their programs. In addition to 
the emergency response projects, the USDA LRP Project allows for 
funding of projects that focus on the development of suppliers in 
recipient countries. USAID's program funds emergency response projects 
only.
12. Waste, Fraud and Abuse
    None identified.
13. Effect of Administrative PAYGO
    None.

                                                   attachment
                  USDA Local and Regional Procurement Project Funding Allocations FY 2009-2011
----------------------------------------------------------------------------------------------------------------
                              Recipient  Program                      Funding                          Total
     FY        Organization    Country     Type       Awards         Available        Admin.        Unobligated
----------------------------------------------------------------------------------------------------------------
    1  2009   WFP            Mali        Develop      $1,049,752
                                          ment
    2  2009   WFP            Malawi      Develop      $1,700,001
                                          ment
    3  2009   WFP            Tanzania    Develop      $2,000,185
                                          ment
             ---------------------------------------------------------------------------------------------------
                       FY 2009 Sub-total              $4,749,938      $5,000,000        $250,062              $0
             ---------------------------------------------------------------------------------------------------
    4  2010   Mercy Corps    Niger       Emergen      $4,577,747
                                          cy
    5  2010   Land O'Lakes   Bangladesh  Develop      $2,619,919
                                          ment
    6  2010   CRS            Guatemala   Emergen      $1,751,205
                                          cy
    7  2010   CRS            Mali        Develop        $106,098
                                          ment
    8  2010   CRS            Benin       Develop      $1,278,694
                                          ment
    9  2010   CRS            Burkina     Develop        $985,965
                              Faso        ment
   10  2010   IRD            Cambodia    Develop        $710,138
                                          ment
   11  2010   Land O'Lakes   Zambia      Develop      $3,624,017
                                          ment
   12  2010   WFP            Mali        Develop      $1,104,906
                                          ment
   13  2010   Fabretto       Nicaragua   Develop        $675,147
                                          ment
   14  2010   WFP            Congo,      Emergen      $2,449,128
                              Republic    cy
                              of
   15  2010   WFP            Cameroon    Emergen        $819,885
                                          cy
   16  2010   WFP            Chad        Emergen      $3,107,000
                                          cy
             ---------------------------------------------------------------------------------------------------
                       FY 2010 Sub-total             $23,809,851     $25,000,000      $1,178,000         $12,149
             ---------------------------------------------------------------------------------------------------
   17  2011   World Vision   Uganda      Develop      $3,965,025
                                          ment
   18  2011   WFP            Cameroon    Emergen      $2,180,808
                                          cy
   19  2011   UMCOR          Zimbabwe    Emergen      $1,623,177
                                          cy
   20  2011   WFP            Mozambique  Emergen      $3,498,791
                                          cy
   21  2011   WFP            Pakistan    Emergen      $5,719,963
                                          cy
   22  2011   CRS            Niger       Emergen      $4,465,632
                                          cy
   23  2011   World Vision   Kenya       Emergen      $1,871,750
                                          cy
             ---------------------------------------------------------------------------------------------------
                       FY 2011 Sub-total             $23,325,146     $25,000,000      $1,573,000        $101,854
             ===================================================================================================
                         Total Funded                $51,884,934     $55,000,000      $3,001,062        $114,004
----------------------------------------------------------------------------------------------------------------

                                 ______
                                 
1. Program Name
    Food for Progress.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Food for Progress (FFPr) program was authorized by the Food for 
Progress Act of 1985. Most recently, it was reauthorized through 2012 
in the 2008 Farm Bill. Since 1985, FFPr has provided donated U.S. 
agricultural commodities to developing countries and emerging 
democracies committed to introducing and expanding free enterprise in 
their agricultural sectors. Donated commodities are typically 
``monetized'' (or sold on the local market), and the proceeds are used 
to support agricultural development activities.
4. Purpose/Goals
    The FFPr program uses the food resources of the United States to 
support market-based agricultural development to improve agricultural 
productivity and to expand trade of agricultural products in food-
deficit developing countries and emerging democracies.
5. Success in Meeting Programmatic Purpose/Goals
    During FY 2010, the FFPr program funded 12 programs in 11 
countries. These programs are reaching approximately 3,985,000 
beneficiaries through agricultural development activities including 
construction of irrigation systems, agricultural production training, 
microfinance, and dairy value chain development. For example, Land 
O'Lakes received an FFPr grant to improve commercial milk production, 
processing and marketing in Tanzania. By the end of the program, the 
gross value of milk produced in Tanzania is projected to increase by 
$2.1 million. The project will also create 180 new dairy sector-related 
jobs in private sector enterprises.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                 $126
                       2003                                 $137
                       2004                                 $138
                       2005                                 $122
                       2006                                 $131
                       2007                                 $147
                       2008                                 $155
                       2009                                 $216
                       2010                                 $146
                       2011                                 $192
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                 $202
                       2003                                 $203
                       2004                                 $113
                       2005                                  $93
                       2006                                 $154
                       2007                                 $120
                       2008                                 $219
                       2009                                 $155
                       2010                                 $117
                       2011                                 $189
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the program is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                        Annual Cost                       FTE
              ----------------------------------------------------------
                 Section 11 &
      FY           General       Prog. Funds
                appropriations   for Admin.        FTE       Tech Assist
                 Admin. Cost       Support
------------------------------------------------------------------------
        2007            $2.1                             3          4.62
        2008              $0                             0          4.62
      2009 a                          $0.009             1          4.62
      2010 a                            $2.1             2          4.62
      2011 a              $0     $3.4 (est.)             5          4.62
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempted CCC program funds used to pay
  authorized administrative costs for FFPr from counting against the cap
  on CCC funds used to pay for salaries and administrative costs imposed
  by Section 11 of the CCC Charter Act. The Department of Defense and
  Full-Year Continuing Appropriations Act of 2011 continued the
  exemption from the CCC section 11 cap for CCC funds used to pay
  authorized administrative costs of FFPr.

9. Eligibility Criteria
    Consistent with CFR 1499.3, to be eligible to participate in the 
FFPr program an organization must have: the capacity to implement, 
monitor, and report on an award; experience working in the targeted 
country; an adequate financial framework to carry out the program; 
representation in the United States; and an operating financial account 
in the proposed target country. Additionally, USDA publishes an annual 
list of FFPr priority countries in order to focus its resources where 
they are most needed. Priority countries must: have a per capita income 
below $3,945; have a malnutrition rate greater than 20 percent; be 
ranked free or partly free by Freedom House; and have USDA post 
coverage (to facilitate monitoring).
10. Utilization (Participation) Data
    In FY 2011 the FFPr program will fund 13 projects reaching 
approximately 1,678,000 beneficiaries. A table of the FY 2011 
allocations is attached.
11. Duplication or Overlap with Other Programs
    Food for Progress is similar in scope to the Multi-year Assistance 
Programs (MYAPs) funded under Title II of the Food for Peace Act 
(administered by USAID). Both programs monetize agricultural 
commodities to support development activities. However, these programs 
complement and do not duplicate one another because of their difference 
in mission. Title II programs target highly vulnerable populations in 
very poor countries through food security interventions. FFPr, on the 
other hand, works to promote private sector agricultural development in 
emerging democracies. Additionally, these programs further avoid 
overlap by coordinating closely to ensure that their different 
activities complement and do not duplicate one another.
12. Waste, Fraud and Abuse
    FAS closely monitors all food aid programs to ensure that 
participating organizations carry out agreements in accordance with 
program regulations. In recent years, financial, programmatic and 
compliance controls have been strengthened to identify and address any 
problematic issues or potential violations. FAS has also increased 
monitoring at the field level and invested in information systems to 
better implement program controls. Where any indications of waste, 
fraud and abuse are found, FAS has been aggressive in pursuing 
corrective action, including criminal prosecution, to secure the 
recovery of funds and prevent recurrence. However, vigorous monitoring 
and oversight procedures have kept such indications to a minimum, and 
FAS is not aware of any systemic problems in FFPr. The FAS Compliance 
staff routinely reviews FFPr agreements to document compliance and to 
ensure the effectiveness of FAS's internal controls. In FY2010 
Compliance reviewed $330,471,030 across all FAS programs and disallowed 
$227,159, which was returned by participants. The FFPr program also is 
frequently audited by both the USDA Office of Inspector General and the 
Government Accountability Office, each of which provides detailed 
reports and recommendations for improvement. Finally, FAS programs are 
subject to the same oversight and documentation requirements common to 
all USDA programs, including the Improper Payments Information Act.
13. Effect of Administrative PAYGO
    None.
                               attachment
Fiscal Year 2011

                Fiscal Year 2011 Food for Progress (FFPr)
             Food for Progress: Fiscal Year 2011 Allocations
------------------------------------------------------------------------
                   Participant/Commodity                    Est. Value
     Country                 *             Beneficiaries    (Million $)
------------------------------------------------------------------------
Bangladesh        Small Enterprise                13,200           $17.5
                   Assistance Funds/
                   Wheat
Bangladesh        Winrock International/         411,600            $4.3
                   Wheat
Benin             Partners for                    30,000            $5.5
                   Development/Soybean
                   Oil, Rice
Burkina Faso      International Relief           213,840            $8.6
                   and Development/Rice
Haiti             FINCA International/           148,500            $6.1
                   Wheat
Haiti             Inter-American                    126            $8.5
                   Institute for
                   Cooperation on
                   Agriculture/Soybean
                   Oil, Wheat
Honduras          Government of Honduras/         36,000           $11.0
                   Corn, Wheat, Soybean
                   Meal
Kenya             TechnoServe/Wheat               10,090           $14.8
Liberia           Land O'Lakes/Rice,              11,650           $16.6
                   Vegetable Oil
Malawi            Land O'Lakes/Wheat,            564,542           $18.1
                   Soybean Oil
Philippines       Catholic Relief                 64,648           $13.9
                   Services/Soybean Meal
Uganda            Mercy Corps/Wheat               83,200           $11.2
Uganda            National Cooperative            90,215           $12.0
                   Business Association/
                   Soybean Oil
                                         -------------------------------
  Total                                        1,677,611          $148.1
------------------------------------------------------------------------
* Commodities and tonnages are subject to change, pending negotiation of
  food aid agreements with program participants.
 Grant will improve inspection facilities, estimated to benefit six
  million people in the agricultural sectors of Haiti and the Dominican
  Republic.

                                 ______
                                 
1. Program Name
    Bill Emerson Humanitarian Trust (BEHT).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The trust was originally authorized by the Agricultural Act of 1980 
as the Food Security Wheat Reserve and the BEHT was later established 
in 1998 by the Bill Emerson Humanitarian Trust Act. The 2002 Farm Bill 
extended the authority through 2007, and the 2008 Farm Bill extends the 
authority through Fiscal Year 2012. The BEHT complements the 
traditional P.L. 480 food aid programs, particularly Title II. The 
trust can be replenished only through open market purchases (requiring 
either appropriations or transfer of P.L. 480 funds as reimbursement 
for prior releases) or by designation of Commodity Credit Corporation 
stocks of eligible commodities. Cash held in the BEHT may be used to 
purchase commodities to meet emergency food needs overseas. By statute, 
the funds and commodities held in the trust shall be made available on 
a determination by the USAID Administrator that funds available for 
emergency needs under Title II for a fiscal year are insufficient to 
meet emergency needs. The trust has undergone significant 
transformation over the years and has evolved from being an all-wheat 
reserve to an all-cash reserve today. The trust currently holds $311 
million in cash.
4. Purpose/Goals
    The purpose of the trust is to meet humanitarian food needs in 
developing countries by using BEHT assets during periods of tight 
supply to meet unanticipated emergency food aid needs.
5. Success in Meeting Programmatic Purpose/Goals
    Assets from the BEHT are used to meet unanticipated emergency food 
aid needs on an as-needed basis. They were used most recently in 2008 
to avoid famine in the Democratic Peoples' Republic of Korea (North 
Korea).

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                 $175
                       2003                                 $212
                       2004                                   $0
                       2005                                 $377
                       2006                                   $0
                       2007                                   $0
                       2008                                 $266
                       2009                                   $7
                       2010                                   $0
                       2011                                   $0
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                 $175
                       2003                                 $212
                       2004                                   $0
                       2005                                 $377
                       2006                                   $0
                       2007                                   $0
                       2008                                 $188
                       2009                                  $83
                       2010                                   $0
                       2011                                   $0
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
           FY                   Annual Cost                FTEs
------------------------------------------------------------------------
                 2007                      $.1                       1
                 2008                      $.1                       1
                 2009                      $.1                       1
                 2010                       $0                       0
                 2011                       $0                       0
------------------------------------------------------------------------

9. Eligibility Criteria
    Any country in need of P.L. 480 title II emergency food aid from 
the United States is eligible. USAID requests the release of BEHT 
assets.
10. Utilization (Participation) Data
    There are currently no countries (or beneficiaries) that are 
receiving food under the BEHT.
11. Duplication or Overlap with Other Programs
    The BEHT is the only emergemny food reserve program of the U.S. 
Government for international assistance.
12. Waste, Fraud and Abuse
    There have not been any instances of waste, fraud, or abuse, 
including overpayments, which USDA or other government agencies have 
determined to be problems.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Export Credit Guarantee Program, GSM-102.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    Currently authorized by Congress under section 202 of the 
Agricultural Trade Act of 1978, as amended, the GSM-102 program of the 
Commodity Credit Corporation (CCC) was developed to expand U.S. 
agricultural exports by making available payment guarantees to 
encourage U.S. private sector financing of foreign purchases of U.S. 
agricultural commodities on credit terms. The program has been in 
continuous operation since 1981.
4. Purpose/Goals
    By providing credit guarantees of up to 3 years that cover 98 
percent of loan principal and a portion of the interest, the financial 
risk to U.S. lenders (banks or exporters) of foreign banks is greatly 
diminished. This reduced risk in financing increases export 
opportunities in primarily developing countries, where the lack of 
credit impedes an exporter's ability to sell and a buyer's ability to 
acquire U.S. agricultural commodities.
5. Success in Meeting Programmatic Purpose/Goals
    From inception through June 2011, exports facilitated through the 
use of the program have reached $100 billion. During the financial 
crisis of 2008 and 2009, the program experienced record applications, 
attesting to its value in facilitating trade finance in times of 
tightened liquidity.

------------------------------------------------------------------------
             Fiscal Year                Guarantees Issued ($ billions)
------------------------------------------------------------------------
                       2002                                 $2.93
                       2003                                 $2.54
                       2004                                 $2.93
                       2005                                 $2.17
                       2006                                 $1.36
                       2007                                 $1.44
                       2008                                 $3.12
                       2009                                 $5.36
                       2010                                 $3.10
                       2011                               * $5.4
------------------------------------------------------------------------
* Full year (est.).

6. Annual Budget Authority (FY 2002-FY 2011)
    Applicable law mandates that CCC make available for each fiscal 
year an amount of credit guarantees equal to the lesser of (a) 
$5,500,000 or (b) an amount of guarantees that CCC can make available 
using budget authority for an underlying subsidy amount of the sum of 
$40 million per year plus any unobligated budget authority from prior 
fiscal years. For the last 2 years, the program has operated at a 
``negative subsidy,'' meaning that the cash flow into the program has 
exceeded the funds needed to provide for expected losses.
7. Annual Outlays (FY 2002-FY 2011)
    Under Credit Reform legislation, budget authority is reflective of 
the ``subsidy'' or estimated level of yearly funding provisioned to 
cover the expected losses incurred by the government on issuance of a 
direct loan or guarantee--not the dollar value of the loans disbursed 
or guaranteed. Since 2010, the GSM-102 program has operated with a 
negative subsidy--meaning that the cash flows into the program are in 
excess of the funds needed to provision for expected losses.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.
     A separate appropriation of $6.8 million (FY 2011) is used to 
cover the salaries and other administrative costs of the program (S&E). 
An additional $1.6 million (FY 2011) of Commodity Credit Corporation 
funds is used to maintain the program's information technology support 
for web interface, system of records and database to preserve claims 
status and pursue recoveries from defaulting parties.
9. Eligibility Criteria
    Please explain who is eligible for participation in this program. 
Also list any special considerations (for example priority areas or 
carve-outs for certain eligible producers).
     All potential participants--exporters, U.S. financial 
institutions, foreign banks and countries can participate--provided 
they are not suspended, debarred or otherwise prohibited from 
participation in U.S. Government programs. In addition, exporters must 
have an office in the United States; U.S. financial institutions must 
be regulated; and foreign banks are subject to extensive individual 
financial review to determine creditworthiness. By law, credit 
guarantees cannot be issued to any country that cannot adequately 
service the debt associated with particular export sales.
10. Utilization (Participation) Data
    Please provide the number of participants in the program. If there 
is a backlog, please explain that as well. Where appropriate, please 
include additional information, such as the number of acres enrolled in 
the program.
    At this time, 159 foreign banks have approved credit lines and 52 
U.S. banks are approved for participation. Exporters who have been 
issued guarantees by year are shown below.

------------------------------------------------------------------------
                                            Number of  Participants
             Fiscal Year                          (exporters)
------------------------------------------------------------------------
                       2002                                116
                       2003                                110
                       2004                                 90
                       2005                                 91
                       2006                                 74
                       2007                                 64
                       2008                                 59
                       2009                                 77
                       2010                                 77
                       2011                                 76
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    If the purpose/goals or mission of this program are similar to 
those of other programs, please list those other programs along with an 
explanation.
     In establishing guidelines for the program, Congress saw the need 
to offer U.S. Government supported finance options that are responsive 
to the financing needs of exporters of U.S. agriculture and the unique 
way their products are traded on international markets. GSM-102 evolved 
to respond efficiently and quickly to the short windows of opportunity 
available on products traded on market-based prices and slim margins as 
compared to industrial and other goods. GSM-102 is a niche program that 
complements other U.S. Government trade finance programs.
12. Waste, Fraud and Abuse
    Please provide examples of waste, fraud, and abuse including 
overpayments that the Department or other government agency has 
determined is a problem and how the Department is combating such 
problems.
    USDA is proactive in reviewing this program and its participants. 
Where there is any indication of waste, fraud and abuse, the Department 
is aggressive in investigating those incidents. At this time we have no 
confirmed evidence of waste, fraud and abuse under GSM-102. This 
program has fully implemented, documented and tests at least annually 
its internal controls in accordance with both, OMB Circular A-123, 
which implements requirements of the Federal Managers' Financial 
Integrity Act of 1982, and the Improper Payments Information Act of 
2002 (IPIA).
13. Effect of Administrative PAYGO
    See PAYGO table attached.

                                                                       attachment
                                                             Administrative PAYGO Scorecard
                                                                (In Millions of Dollars)
 
                                               2006       2007       2008       2009       2010       2011       2012       2013       2014       2015
 
Savings:
  GSM-102 implementation of risk based        (139.0)    (139.0)    (139.0)    (139.0)    (139.0)
   approach (FAS/GSM)
  RMA Terminations not previously counted                                        (4.6)     (23.0)     (23.4)     (23.7)     (24.1)
   (RMA/Crop Ins.)
  Forest Service Increase Timber and           (51.0)
   Payment to State Receipts (FS/KV)
  2008 $2 CRP Maintenance Reduction--                                            (0.1)      (0.6)     (24.6)     (28.7)     (31.6)
   present & future (FSA/CRP)
  2009 Reduction in CRP Maintenance                                             (43.6)      (1.5)
   payments (FSA/CRP)
  2010 CRP Modification (Duck, Quail, SAFE/                                                   0.0        0.0        0.0        0.0        0.0      (2.9)
   Reduction in bottomland hardwood) (FSA/
   CRP)
  Crop Insurance Standard Risk Agreement                                                (2,000.0)
   (RMA/Crop Ins.)
Costs:
  Title XIX Treatment Facilities (FNS/            3.0        4.0        6.0        6.0        6.0
   SNAP)
  Forest Service Change in K-V Trust Fund          51         18
   Spending (FS/KV)
  Factor Removal (RMA/Crop Ins.)                                        0.4        2.7        8.3
  RMA Crop Expansions (RMA/Crop Ins.)                                              0.6       12.8
  CCC Section 4 Limit (FSA/CCC)                   7.5       10.8        6.9        5.3
  Food Aid Commodity Swaps (FSA/CCC)                        77.0       60.0      111.0       67.0
  Federal Base Acre reinstatement (FSA/                                            5.0
   Direct and Countercyclical)
  Wetlands Incentives (FSA/CRP)                                                    7.8       14.6       17.3       19.2       20.8
  CREP Incentives (FSA/CRP)                                                        0.7        2.3        7.3        9.5       10.8
  ACRE Sign-up extension (FSA/ACRE)                                                          30.0
  2009 CRP extensions (FSA/CRP)                                                   19.0
  July 2009 Increase in minimum dairy                                              7.0
   prices (CCC/Dairy Product Price
   Support)
  RMA--PRF-RI in MT (Board Approved) (RMA/                                         4.6       23.0       23.4       23.7       24.1
   Crop Ins.)
  CRP Initiatives (FSA/CRP)                                                                 500.0
  Crop Insurance Initiatives (FSA/Crop                                                    1,500.0
   Ins.)
                                           -------------------------------------------------------------------------------------------------------------
    Available Savings                         (128.5)     (29.2)     (65.7)     (17.6)      (0.0)        0.0        0.0      (0.0)        0.0      (2.9)
 

                                 ______
                                 
1. Program Name
    Market Access Program.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Market Access Program (MAP), previously known as the Market 
Promotion Program, is administered by the Foreign Agricultural Service 
and uses funds from the Commodity Credit Corporation (CCC). The 
Targeted Export Assistance Program was originally authorized in the 
Food Security Act of 1985 and was subsequently reauthorized and renamed 
as the Market Promotion Program in the 1990 Farm Bill. The 1996 Farm 
Bill renamed the program as MAP and established a prohibition on the 
use of MAP funds to promote the products of large companies. Today, 
only small companies and agricultural cooperatives may promote their 
brands with MAP funding. MAP funding was re-authorized through 2012 by 
the 2008 Farm Bill.
4. Purpose/Goals
    Goals of the MAP are to encourage the creation, expansion, or 
maintenance of foreign agricultural export markets. Under the MAP, the 
CCC enters into agreements with eligible participants to share the cost 
of certain overseas marketing and promotion activities. MAP helps 
United States commercial entities conduct brand promotion activities 
including advertising, trade shows, in-store demonstrations, and trade 
seminars. Under MAP, program participants are reimbursed for their 
expenses in carrying out approved promotional activities.
5. Success in Meeting Programmatic Purpose/Goals
    MAP applications undergo a competitive review process based on 
criteria as specified in the MAP regulations and an annual Federal 
Register announcement. Funds are awarded to applicants that demonstrate 
effective performance based on a clear, long-term strategic plan. FAS 
also considers the extent to which a proposed project targets markets 
with the greatest growth potential. The FAS allocates funds in a manner 
that effectively supports the strategic decision making initiatives of 
the Government Performance and Results Act (GPRA) of 1993. In 2007, FAS 
commissioned a cost-benefit analysis of USDA's market development 
programs with an independent economic analysis firm, Global Insight 
Inc., and recently received the results of an update of that study. The 
study reported that U.S. agricultural exports were $6.1 billion higher 
in 2009, compared to what they would have been without the increased 
investment in market development. Every dollar of increased investment 
in the MAP and FMD resulted in $35 in exports.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                 $100
                       2003                                 $110
                       2004                                 $125
                       2005                                 $140
                       2006                                 $200
                       2007                                 $200
                       2008                                 $200
                       2009                                 $200
                       2010                                 $200
                       2011                                 $200
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                  $97
                       2003                                 $103
                       2004                                 $124
                       2005                                 $139
                       2006                                 $158
                       2007                                 $184
                       2008                                 $179
                       2009                                 $219
                       2010                                 $202
                       2011                                 $207
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the project is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                         Annual Cost                      FTE
               ---------------------------------------------------------
      FY                        Prog. Funds
                  Section 11     for Admin.        FTE       Tech Assist
                 Admin. Cost      Support
------------------------------------------------------------------------
        2007              $2                             5             1
        2008              $2                             5             1
      2009 a              $0          $1.75              5             1
      2010 a              $0          $2.10              5             1
      2011 a              $0    $2.1 (est.)              5             1
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempted CCC program funds used to pay
  authorized administrative costs for MAP from counting against the cap
  on CCC funds used to pay for salaries and administrative costs imposed
  by Section 11 of the CCC Charter Act. The Department of Defense and
  Full-Year Continuing Appropriations Act of 2011 continued the
  exemption from the CCC section 11 cap for CCC funds used to pay
  authorized administrative costs of MAP.

9. Eligibility Criteria
    To participate in the MAP, an applicant must be a nonprofit U.S. 
agricultural trade organization, a nonprofit state regional trade group 
(SRTG), a U.S. agricultural cooperative, or a state government agency. 
In addition, small-sized U.S. commercial entities may receive MAP 
funding to promote their branded products. To conduct branded product 
promotion activities, individual companies must provide at least 50 
percent of funding. For generic promotion activities, trade 
associations and others must meet a minimum ten percent match 
requirement.
10. Utilization (Participation) Data
    For FY 2011 there were 70 applicants competing for $200 million in 
program funding. Attached is a chart of FY 2011 Market Access Program 
allocations.
11. Duplication or Overlap with Other Programs
    MAP is complementary to other FAS/USDA market development programs 
whereby funding is made available to address priority, market-specific 
issues or to undertake activities not already serviced by or unsuitable 
for funding under other FAS marketing programs, such as the Foreign 
Market Development Program, the Emerging Market Program, the Technical 
Assistance for Specialty Crops Program, and the Quality Samples 
Program.
12. Waste, Fraud and Abuse
    FAS is proactive in monitoring its programs for any indications of 
waste, fraud and abuse. Where such indications are found, FAS has been 
aggressive in pursuing corrective action, including criminal 
prosecution, to secure the recovery of funds and prevent recurrence. 
For example, in 2006 an incarceration and ongoing restitution payments 
were secured for fraud involving MAP funds. However, vigorous 
monitoring and oversight procedures have kept such indications to a 
minimum, and FAS is not aware of any systemic problems in MAP. The FAS 
Compliance staff routinely reviews MAP agreements to document 
compliance and to ensure the effectiveness of FAS's internal controls. 
FAS programs also are audited by both the USDA Office of Inspector 
General and the Government Accountability Office, each of which 
provides detailed reports and recommendations for improvement. Finally, 
FAS programs are subject to the same oversight and documentation 
requirements common to all USDA programs, including the Improper 
Payments Information Act.
13. Effect of Administrative PAYGO
    None.
                               attachment

                            Fiscal Year 2011
    Fiscal Year 2011 Market Access Program Program Allocations (MAP)
------------------------------------------------------------------------
                   MAP Participant                        Allocation
------------------------------------------------------------------------
AHEC, APA, SEC, SFPA *                                        $8,568,725
Alaska Seafood Marketing Institute                            $4,326,996
American Biomass Trade Cooperative                              $145,000
American Peanut Council                                       $2,414,321
American Seed Trade Association                                  $90,419
American Sheep Industry Association                             $381,466
American Soybean Association                                  $4,465,558
Blue Diamond Growers/Almond Board of California               $3,079,916
Brewers Association Inc.                                        $385,015
California Agricultural Export Council                          $993,079
California Asparagus Commission                                 $114,709
California Cherry Advisory Board                                $743,127
California Cling Peach Board                                    $353,475
California Fresh Tomato Growers/Florida Tomato                  $505,603
 Committee
California Kiwifruit Commission                                 $184,268
California Pear Advisory Board                                  $378,267
California Prune Board                                        $3,339,658
California Strawberry Commission                                $789,070
California Table Grape Commission                             $3,494,622
California Tree Fruit Agreement                               $2,053,685
California Walnut Commission                                  $4,614,261
Cherry Marketing Institute                                      $259,988
Cotton Council International                                 $20,234,954
Cranberry Marketing Committee                                 $1,767,921
Distilled Spirits Council                                       $211,127
Florida Department of Citrus                                  $4,937,966
Food Export Association of the Midwest USA                   $10,919,428
Food Export USA Northeast                                     $8,152,605
Georgia Pecan Growers                                           $200,000
Ginseng Board of Wisconsin                                      $209,597
Hawaii Papaya Industry Association                              $173,027
Hop Growers of America                                          $177,301
Intertribal Agriculture Council                                 $741,009
National Association of State Departments of                  $2,750,562
 Agriculture
National Confectioners Association                            $1,685,845
National Hay Association                                         $32,445
National Potato Promotion Board                               $4,870,824
National Renderers Association                                  $831,676
National Sunflower Association                                $1,218,250
National Watermelon Promotion Board                             $254,406
New York Wine and Grape Foundation                              $376,215
Northwest Wine Promotion Coalition                              $805,130
Organic Trade Association                                       $435,293
Pear Bureau Northwest                                         $3,632,830
Pet Food Institute                                            $1,601,375
Raisin Administrative Committee                               $2,677,594
Southern United States Trade Association                      $5,831,384
Sunkist Growers, Inc.                                         $3,107,359
Texas Produce Export Association                                 $95,654
The Catfish Institute                                           $335,605
The Popcorn Board                                               $319,607
U.S. Apple Export Council                                       $685,480
U.S. Dairy Export Council                                     $4,529,746
U.S. Dry Bean Council                                         $1,150,793
U.S. Grains Council                                           $8,621,582
U.S. Hide, Skin & Leather Association                           $140,228
U.S. Livestock Genetics Export, Inc.                          $1,097,601
U.S. Meat Export Federation                                  $16,261,732
U.S. Wheat Associates                                         $6,798,051
USA Dry Pea and Lentil Council                                $1,122,955
USA Poultry and Egg Export Council                            $5,461,208
USA Rice Federation/U.S. Rice Producers Association           $3,758,042
Washington Apple Commission                                   $5,199,788
Washington State Fruit Commission                             $1,192,087
Welch Foods, Inc.                                               $907,824
Western Pistachio Association/Cal-Pure Pistachios               $770,497
 Inc.
Western United States Agricultural Trade Association         $10,859,171
Wine Institute                                                $5,585,230
                                                     -------------------
  Reserve                                                     $5,589,768
                                                     ===================
    Total Available FY 2011 Funding                        $200,000,000
------------------------------------------------------------------------
* American Hardwood Export Council, APA--The Engineered Wood
  Association, Softwood Export Council, Southern Forest Products
  Association.

                                 ______
                                 
1. Program Name
    Technical Assistance for Specialty Crops (TASC).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Farm Security and Rural Investment Act of 2002 authorized the 
TASC program and authorized the use of $2 million of Commodity Credit 
Corporation (CCC) resources in each fiscal year (FY) from 2002 through 
2007. The Food, Conservation, and Energy Act of 2008 continued the TASC 
program through 2012. The 2008 Farm Bill authorized the TASC program at 
$4 million in FY 2008, $7 million in FY 2009, $8 million in FY 2010, 
and $9 million for FY 2011 and FY 2012.
4. Purpose/Goals
    The legislation calls for the TASC program to assist U.S. 
organizations by providing funding for projects that address sanitary, 
phytosanitary (SPS) and related technical barriers that prohibit or 
threaten the export of U.S. specialty crops.
5. Success in Meeting Programmatic Purpose/Goals
    The TASC review and allocation process is especially thorough with 
each proposal undergoing both a sufficiency check for adherence to 
program regulations and policy and content review by three reviewers 
from different divisions. Further, FAS has several application and 
reporting requirements to assure program effectiveness. When submitting 
proposals, applicants must include performance measures and objectives 
in their applications as evaluation criteria. FAS also requires 
quarterly and final project reports and a final financial report that 
fully describes and analyzes the effectiveness of each project. Future 
awards are contingent upon successful completion of the project and 
acceptance of performance and financial reports. The TASC program has 
successfully funded research for developing pest mitigations, technical 
visits by foreign officials to observe industry export practices, and 
export preclearance programs that have assisted in addressing SPS 
barriers to trade. Many of these projects would not likely have taken 
place without TASC program assistance.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                   $2
                       2003                                   $2
                       2004                                   $2
                       2005                                   $2
                     2006 a                                   $2
                       2007                                   $1
                       2008                                   $4
                       2009                                   $7
                       2010                                   $8
                       2011                                   $9
------------------------------------------------------------------------
a An additional $0.6 million was made available through FAS direct
  appropriations.


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                   $0
                       2003                                   $1
                       2004                                   $2
                       2005                                   $2
                       2006                                   $2
                       2007                                   $1
                       2008                                   $1
                       2009                                   $2
                       2010                                   $3
                       2011                                   $7
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the project is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                         Annual Cost                      FTE
               ---------------------------------------------------------
      FY         Section 11 &   Prog. Funds
                   General       for Admin.        FTE       Tech Assist
                 Admin. Cost      Support
------------------------------------------------------------------------
        2007             $.1                             1           .29
        2008             $.1                             1           .29
      2009 a              $0           $0.1              1           .29
      2010 a              $0           $.03              1           .29
      2011 a      $.2 (est.)     $.4 (est.)              1           .29
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempted CCC program funds used to pay
  authorized administrative costs for TASC from counting against the cap
  on CCC funds used to pay for salaries and administrative costs imposed
  by Section 11 of the CCC Charter Act. The Department of Defense and
  Full-Year Continuing Appropriations Act of 2011 continued the
  exemption from the CCC section 11 cap for CCC funds used to pay
  authorized administrative costs of TASC.

9. Eligibility Criteria
    Any U.S. organization, including, but not limited to, U.S. 
Government agencies, state government agencies, nonprofit trade 
associations, universities, agricultural cooperatives, and private 
companies are eligible to receive TASC funding. The term ``specialty 
crop'' is defined as all cultivated plants and the products thereof 
produced in the United States except wheat, feed grains, oilseeds, 
cotton, rice, peanuts, sugar, and tobacco.
10. Utilization (Participation) Data
    To date, for Fiscal Year 2011, funding has been allocated to 26 
organizations for 32 TASC projects. In a typical year, between 25 and 
35 projects are funded. Attached is a chart of FY 2010 TASC Program 
allocations.
11. Duplication or Overlap with Other Programs
    TASC does not duplicate other programs. TASC is an excellent tool 
that facilitates USDA and the horticultural industry working in 
partnership with USDA to resolve sanitary and phytosanitary barriers 
and successfully maintaining and increasing export market opportunities 
for U.S. horticultural products.
12. Waste, Fraud and Abuse
    FAS is not aware of any examples of waste, fraud, and abuse in this 
program, including overpayments that the Department or other government 
agency has determined is a problem. FAS program areas closely monitor 
all agency agreements to ensure that participants carry out activities 
in accordance with program regulations. In addition, the FAS Compliance 
staff routinely reviews FAS agreements agency-wide to document 
compliance, and to ensure that FAS maintains sufficient internal 
controls. Further, FAS programs are audited by both the USDA Office of 
Inspector General and the Government Accountability Office, each of 
which provides detailed reports and recommendations for improvement. 
Finally, FAS programs are subject to the same oversight and reporting 
requirements common to all USDA programs, including testing of 
transactions under the Improper Payments Improvement Act. Together 
these internal and external monitoring and evaluation practices serve 
to catch and correct instances of waste, fraud, and abuse before they 
result in loss of public funds.
13. Effect of Administrative PAYGO
    None.
                               attachment

                            Fiscal Year 2011
Fiscal Year 2010 Technical Assistance for Specialty Crops (TASC) Program
                               Allocations
------------------------------------------------------------------------
         Participant                  Project Title             Amount
------------------------------------------------------------------------
Almond Board of California    European Union Health and          $24,750
                               Port Authorities Seminar and
                               Tour
Bryant Christie, Inc.         Maximum Residue Level             $450,662
                               Database Funding for
                               Specialty Crops and Hawaiian
                               Papayas
California Citrus Quality     California Navel Valencia         $124,562
 Council                       Exports to Korea Program,
                               Korea Inspectors' Visit
California Department of      Minimizing Trade Barriers         $500,000
 Food and Agriculture          through Field Surveys for
                               the European Grapevine Moth
California Dried Plum Board   Retaining Export and Food       $1,458,772
                               Security of U.S. Specialty
                               Crops: Low-Emission Methyl
                               Bromide Fumigation for
                               Quarantine and Pre-Shipment
                               Uses
California Fig Advisory       Encourage Japanese Government     $100,000
 Board                         To Allow Potassium Sorbate
                               Treatment on High-Moisture
                               Figs
California Grape and Tree     To Develop Efficacy Data           $54,388
 Fruit League                  Through a Pilot Systems
                               Approach for Peach Twig
                               Borer for U.S. Stone Fruit
                               to Australia
California Pistachio Export   Improve Navel Orange Worm       $1,195,500
 Council                       Control in Pistachios To
                               Overcome Sanitary and
                               Phytosanitary Barriers in
                               Major Export Markets
California Specialty Crops    Global Maximum Residue Levels      $98,000
 Council                       Engaging Specialty Crops in
                               Priority Setting, Planning,
                               and Compliance
California Strawberry         Spotted Wing Drosophila            $46,989
 Commission                    Impacts in Strawberry
                               Exports
California Table Grape        Post-Harvest Control of Light      $90,000
 Commission                    Brown Apple Moth on Fresh
                               Grapes
California Table Grape        Australian Phytosanitary          $150,000
 Export Association            Preclearance Program
California Walnut Commission  Development of Technical           $66,836
                               Brochures
Citrus Research Board of      Mortality of Asian Citrus         $216,303
 California                    Psyllid, Diaphorina Citri,
                               in California Citrus During
                               Packaging and Export to
                               Australia
Florida Citrus Packers        Determination of Canker           $489,447
                               Survival and Transmission
                               via Canker-Blemished Fruit
                               Relative to International
                               Market Access
Florida Fruit and Vegetable   Management, Maintenance, and      $389,464
 Association                   Expansion of the U.S.-Canada
                               Pesticide Harmonization
                               Database
Georgia Peach Council/South   Export of Fresh, Systems-         $240,000
 Carolina Peach Council        Protected Georgia and South
                               Carolina Peaches to Mexico
Indian River Citrus League    Best Post-Harvest Handling        $120,000
                               Practices to Assure Canker-
                               Free Fresh Citrus Fruit
                               Exports
Northwest Horticultural       Changing India's                   $66,060
 Council                       Phytosanitary Access
                               Requirements for Pacific
                               Northwest Cherries; OFM
                               Monitoring and Verification
                               at Origin Program for the
                               Export of Peaches and
                               Nectarines to Mexico; Study
                               of Potential Health Effects
                               Associated with the Use of
                               Wax Coatings on Produce
Rutgers University, IR-4      Actions To Facilitate Global      $627,199
 Project                       Maximum Residue Levels for
                               Priority Use on Specialty
                               Crops
U.S. Apple Export Council     Apple Maggot and Other Pests      $158,122
                               of Concern--Identification
                               Treatment Methodologies and
                               Data Collection
USDA, Agricultural Research   Classical Biological Control      $155,710
 Service                       of the Invasive White Peach
                               Scale on Papaya in Hawaii;
                               Phosphine Fumigation
                               Treatment for Post-Harvest
                               Inspect Control on Lettuce;
                               Evaluating the Efficacy of
                               Systems Approach Components
                               for the Western Cherry Fruit
                               Fly
USDA, Animal and Plant        Development of Irradiation        $175,000
 Health Inspection Service     Treatment for High-Impact
 (APHIS)                       Invasive Species and
                               Evaluation of Commodity
                               Tolerance to Irradiation
                               Treatments
USDA, APHIS, Center for       Development of Infrastructure     $165,000
 Plant Health Science and      and Capacity for U.S. Export
 Technology (CPHST)            Specialty Crops Irradiation
                               Treatments
USDA, APHIS, Plant            A Prototype Electronic            $133,907
 Protection and Quarantine     Identification Resource To
 and CPHST                     Support Agricultural
                               Commodity Trade: California
                               Table Grapes
Washington State Department   Establishment of Japan             $38,000
 of Agriculture                ``Import Tolerance'' Maximum
                               Residue Level for Bifenezate
                               in Red Raspberries
                                                            ------------
  Total                                                       $7,334,671
------------------------------------------------------------------------
Foreign Agricultural Service (November 2010).

                                 ______
                                 
1. Program Name
    Emerging Markets Program (EMP).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The original 1990 legislation authorized an annual program to 
promote U.S. agricultural exports by providing technical assistance to 
emerging democracies. The program, which was referred to as the 
Emerging Democracies Program, initially focused on central and eastern 
Europe and the former Soviet Union. In 1996, legislation refocused the 
program on all emerging markets (defined as countries that USDA 
determines have the potential to provide viable and significant markets 
for U.S. agricultural products). Funding is made available for 
programming through three channels: (1) the Central Fund, the principal 
means of funding, made available through a public announcement; (2) the 
Technical Issues Resolution Fund (TIRF), to address technical barriers 
to those issues that are time sensitive and are strategic areas of 
longer term interest; and (3) the Quick Response Marketing Fund (QRMF), 
to assist with short-term time-sensitive marketing opportunities.
4. Purpose/Goals
    EMP helps improve market access and develop or promote exports of 
U.S. agricultural commodities and products to emerging markets. Through 
cost-share assistance to eligible applicants, EMP funds may be approved 
for generic technical assistance activities and projects that assess 
the food and rural business systems needs of such markets and identify 
and carry out specific opportunities and projects to enhance the 
effectiveness of those systems. Emerging markets are defined as those 
individual target countries or regional country groupings with per 
capita income of less than $11,115 (the current ceiling on upper middle 
income economies as determined by the World Bank) and populations 
greater than one million. The program is not intended for projects 
targeted at end-user consumers.
5. Success in Meeting Programmatic Purpose/Goals
    The EMP review and allocation process is especially thorough with 
each proposal undergoing both a sufficiency check for adherence to 
program regulations and policy and content review by no less than five 
reviewers. Further, FAS has several application and reporting 
requirements to assure program effectiveness. When submitting 
proposals, applicants must include performance measures and objectives 
in their applications as evaluation criteria. FAS also requires a final 
project report and financial report that fully describes and analyzes 
the effectiveness of each project. The final 15 percent of a 
participant's funding is withheld until an acceptable final report is 
approved by FAS. Future awards are contingent upon successful 
completion of the project and acceptance of performance and financial 
reports. The EMP program has successfully funded assessments of the 
food and agricultural business systems of emerging markets for many 
agricultural commodities including vitamin-enriched rice in El Salvador 
and seed potatoes in Egypt. Further, EMP funds have been used to train 
emerging market importers or provide technical assistance on the use 
and high quality nature of U.S. agricultural products. These projects 
would not likely have taken place without EMP program assistance.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                  $10
                       2003                                  $10
                       2004                                  $10
                       2005                                  $10
                       2006                                  $10
                       2007                                   $4
                       2008                                  $10
                       2009                                  $10
                       2010                                   $9
                       2011                                  $10
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                   $2
                       2003                                  $14
                       2004                                   $5
                       2005                                   $6
                       2006                                  $10
                       2007                                   $9
                       2008                                  $17
                       2009                                   $3
                       2010                                   $9
                       2011                                   $7
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the project is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                         Annual Cost                      FTE
               ---------------------------------------------------------
      FY         Section 11 &   Prog. Funds
                   General       for Admin.        FTE       Tech Assist
                 Admin. Cost      Support
------------------------------------------------------------------------
        2007            $0.6                             2          0.39
        2008            $0.6                             2          0.39
      2009 a              $0           $0.1              2          0.39
      2010 a              $0           $0.3              2          0.39
      2011 a            $0.4    $0.8 (est.)              2          0.39
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempted CCC program funds used to pay
  authorized administrative costs for EMP from counting against the cap
  on CCC funds used to pay for salaries and administrative costs imposed
  by Section 11 of the CCC Charter Act. The Department of Defense and
  Full-Year Continuing Appropriations Act of 2011 continued the
  exemption from the CCC section 11 cap for CCC funds used to pay
  authorized administrative costs of EMP.

9. Eligibility Criteria
    Any U.S. private or public entity with a role or interest in the 
exports of U.S. agricultural commodities or products is eligible to 
participate in the Emerging Markets Program. Preference is given to 
proposals indicating significant support and involvement by private 
industry. Proposals are considered from research and consulting 
organizations only as long as they can demonstrate evidence of 
substantial participation by U.S. industry. For-profit entities are 
also eligible, but may not use program funds to conduct private 
business, promote private self-interests, supplement the costs of 
normal sales activities, or promote their own products or services 
beyond specific uses approved for a given project.
10. Utilization (Participation) Data
    For FY 2011 to date, FAS has evaluated 59 proposals from the 
private sector and 72 proposals from the public sector. Through the 
course of eight tranches, FAS has approved funding for 41 private 
sector and 34 public sector projects obligating $9,923,737. In a 
typical year, between 75 and 100 projects are awarded funded. Attached 
is a chart with a complete list of FY 2010 EMP allocations.
11. Duplication or Overlap with Other Programs
    EMP is complementary to other USDA/FAS market development programs 
whereby funding may be approved to address priority, market-specific 
issues or to undertake activities not already serviced by or are 
unsuitable for funding under other FAS market development programs, 
such as the Foreign Market Development Program (FMD) and Market Access 
Program (MAP).
12. Waste, Fraud and Abuse
    FAS is proactive in monitoring its programs for any indications of 
waste, fraud and abuse. Where such indications are found, FAS has been 
aggressive in pursuing corrective action, including criminal 
prosecution, to secure the recovery of funds and prevent recurrence. 
However, vigorous monitoring and oversight procedures have kept such 
indications to a minimum, and FAS is not aware of any systemic problems 
in EMP. The FAS Compliance staff routinely reviews EMP agreements to 
document compliance and to ensure the effectiveness of FAS's internal 
controls. FAS programs also are audited by both the USDA Office of 
Inspector General and the Government Accountability Office, each of 
which provides detailed reports and recommendations for improvement. 
Finally, FAS programs are subject to the same oversight and 
documentation requirements common to all USDA programs, including the 
Improper Payments Information Act.
13. Effect of Administrative PAYGO
    None.
                               Attachment

                            Fiscal Year 2011
       Fiscal Year 2010 Emerging Markets Program Allocations (EMP)
------------------------------------------------------------------------
          Market                    Activity Title              Amount
------------------------------------------------------------------------
Bangladesh                 Cotton USA Technical Assistance      $200,000
                            Initiative in Bangladesh for
                            the Cotton Council
                            International
Brazil                     Brazil Craft Beer School              $30,000
                            Seminars for the Brewers
                            Association
Brazil                     Market Feasibility Study of           $15,041
                            Brazil for the Alaska Seafood
                            Marketing Institute
China                      Food Consumption in China's          $468,600
                            Second-Tier Cities: The New
                            Frontier for U.S. Agricultural
                            Export Opportunities for the
                            University of Florida
China                      Exporting U.S. Dairy Genetics to     $277,632
                            China for Cooperative Resources
                            International
China                      Hotel, Restaurant, and               $212,000
                            Institutional Sector
                            Development for USDA/Foreign
                            Agricultural Service/Chengdu
China                      Distributor Development Program      $183,000
                            for Emerging City Markets for
                            USDA/Foreign Agricultural
                            Service
China                      Global Food Safety Forum: China      $174,431
                            Exchange for the GIC Group
China                      Phase Three of the China Moon        $120,000
                            Cake Project for the California
                            Agricultural Export Council
China                      Fresh Produce in China:              $101,011
                            Identifying Logistic
                            Constraints and Consumer Trends
                            for SIAM Professionals, LLC
China                      Turkey Market Development in          $90,000
                            China--Expanding Demand for
                            U.S. Turkey in China by
                            Increasing its Use in Local
                            Cuisine for the Minnesota
                            Department of Agriculture
China                      China Familiarization Tour of         $90,000
                            Organic Farms, Retail, and
                            Processors for the Organic
                            Trade Association
China                      China Pecan Project for the
                            Georgia Pecan Growers
                            Association$70,800
China                      Implementation of Science-based       $52,560
                            Principles in Risk Management
                            for USDA/Foreign Agricultural
                            Service
China                      Assessment of Exports of Hawaii       $79,818
                            Fresh and Processed
                            Agricultural Products to China
                            Markets Under a Memorandum of
                            Understanding with the Chinese
                            Ministry of Commerce, Beijing
                            International Brand Management
                            Center for the Hawaii
                            Department of Agriculture
China                      China Beer Distributors               $35,000
                            Education Program for the
                            Brewers Association
China                      China Food Safety Law Training        $27,406
                            for USDA/Foreign Agricultural
                            Service
China                      Reverse Trade Mission of Chinese      $14,400
                            Tanneries for the U.S. Hide,
                            Skin and Leather Association
Egypt                      Food and Drug Administration           $4,690
                            Middle East and North Africa
                            Food Safety Workshop for
                            Regulators for USDA/Foreign
                            Agricultural Service
El Salvador                U.S. Rice Market Research for         $31,000
                            the U.S. Rice Producers
                            Association
Ghana                      Ghana Lake Volta Soy in               $96,475
                            Aquaculture Program for the
                            American Soybean Association
Global Emerging Markets    Exploratory Market Research To       $259,000
                            Identify Opportunities and
                            Launch Preliminary Trade
                            Servicing, Education, and/or
                            Promotional Activities in
                            Emerging Markets for the U.S.
                            Apple Export Council
Global Emerging Markets    Exporting Genomic-Proven U.S.        $206,100
                            Dairy Genetics, Enhancing
                            Producer Product Knowledge,
                            Demonstrating U.S. Genomic Sire
                            Proofs and the New Generation
                            of Dairy Sires for Cooperative
                            Resources International
Global Emerging Markets    Global Pesticide Tolerance           $196,770
                            Initiative for U.S. Specialty
                            Crops: Technical and Policy
                            Guidance to Emerging Markets
                            for USDA/Foreign Agricultural
                            Service
Global Emerging Markets    Technical Support for U.S. Seed      $195,000
                            Potato Exports, Introduction of
                            Cut Seeds to Foreign Markets
                            for the National Potato
                            Promotion Board
Global Emerging Markets    Foreign Country Audits of U.S.       $184,400
                            Red Meat Facilities for the
                            U.S. Meat Export Federation
Global Emerging Markets    Worldwide Market Development for      $60,000
                            the Northwest Wine Promotion
                            Coalition
Global Emerging Markets    Access and Benefit Sharing for        $55,566
                            Genetic Resources Used in U.S.
                            Food and Agriculture Exports
                            for USDA/Foreign Agricultural
                            Service
Global Emerging Markets    Translations of Foreign World         $52,000
                            Trade Organization Sanitary and
                            Phytosanitary and Technical
                            Barriers to Trade Notifications
                            for USDA/Foreign Agricultural
                            Service
Global Emerging Markets    Advancing U.S. Positions on            $9,880
                            Pesticide Regulatory Standards
                            for USDA/Foreign Agricultural
                            Service
Guatemala                  U.S. Rice Market Research for         $31,000
                            the U.S. Rice Producers
                            Association
India                      India Food Safety Seminars for        $89,175
                            USDA/Foreign Agricultural
                            Service
India                      Reverse Trade Mission for             $75,438
                            Retailers and Wholesalers from
                            India for the Produce Marketing
                            Association
India                      India Export Market Opportunity       $75,000
                            Assessment and Familiarization
                            Tour for the Organic Trade
                            Association
India                      India Retail Education                $60,000
                            Activities Reverse Mission
                            Retail Training Seminars for
                            the Pear Bureau Northwest
India                      India Pecan Project for the           $55,200
                            Georgia Pecan Growers
                            Association
Indonesia                  Indonesia-U.S. Partnership:           $51,000
                            Agricultural Technology and
                            Investment Forum for the Texas
                            A&M Norman Borlaug Institute
Indonesia                  Technical Assistance for the          $41,014
                            Republic of Indonesia's
                            National Agency for Drug and
                            Food Control to Better
                            Understand the U.S. System To
                            Ensure the Safety of Processed
                            Foods for USDA/Foreign
                            Agricultural Service
Indonesia                  Product Introduction, Care and        $14,000
                            Handling, and Merchandising
                            Technique Seminars for Fresh
                            Sweet Cherries for the
                            Washington State Fruit
                            Commission
Iraq                       Trade Mission to Iraq for USDA/      $137,352
                            Foreign Agricultural Service
Jamaica                    U.S. Technical and Regulatory         $17,676
                            Orientation for Jamaican Food
                            Import Authorities for USDA/
                            Foreign Agricultural Service/
                            Dominican Republic
Malaysia                   Agricultural Biotechnology           $130,535
                            Outreach to Malaysian Officials
                            for USDA/Foreign Agricultural
                            Service/Kuala Lumpur
Malaysia                   Technical Workshop on Coated          $56,086
                            Foods Applications for the USA
                            Dry Pea and Lentil Council
Mongolia                   2010 Microbiology and                 $21,650
                            International Residue Training
                            Seminars for International
                            Government Laboratory Officials
                            for USDA/Foreign Agricultural
                            Service/Beijing
Mongolia                   Food Safety and Inspection            $21,650
                            Service Meat and Poultry
                            Inspection Seminar for USDA/
                            Foreign Agricultural Service/
                            Beijing
Nigeria, Senegal,          Increasing Access to U.S. Soy        $250,000
 Cameroon                   Products in Nigeria, Senegal,
                            and Cameroon for the American
                            Soybean Association
Pakistan                   U.S. Soy Food Product Promotion      $152,224
                            in Pakistan for the American
                            Soybean Association
Pakistan                   Opening Pakistan to U.S. Dairy       $111,755
                            and Genetics for World Wide
                            Sires, Ltd.
Philippines                Philippines Agricultural              $63,584
                            Biotechnology Regulatory
                            Outreach for USDA/Foreign
                            Agricultural Service/Manila
Poland                     Second Phase of Market               $100,000
                            Development in Poland for
                            California Almonds for the
                            Almond Board of California
Regional: Asia-Pacific     APEC High-Level Policy Dialogue      $153,936
 Economic Cooperation       Workshop on Approaches and
 (APEC)                     Tools To Promote Investment in
                            Agricultural Biotechnology for
                            USDA/Foreign Agricultural
                            Service
Regional: APEC             APEC Export Certification            $108,800
                            Roundtable for USDA/Foreign
                            Agricultural Service
Regional: APEC             APEC High-Level Policy Dialogue      $187,174
                            on Agricultural Biotechnology
                            for USDA/Foreign Agricultural
                            Service
Regional: Caribbean Basin  Central American Microbiological     $142,356
                            Standards Program for USDA/
                            Foreign Agricultural Service
Regional: Caribbean Basin  Maintaining Access for U.S.           $96,270
                            Exports to the Caribbean for
                            USDA/Foreign Agricultural
                            Service
Regional: Caribbean Basin  Caribbean Food Safety Program         $93,300
                            for USDA/Foreign Agricultural
                            Service
Regional: Central America- Food Safety Standard-Setting          $97,400
 Dominican Republic Free    Training for Participants in
 Trade Agreement (CAFTA-    CAFTA-DR for USDA/Foreign
 DR)                        Agricultural Service
Regional: Latin America    Furthering Approvals of              $413,785
                            Genetically Engineered Plants
                            Through Promotion of Data
                            Transportability for the
                            International Life Sciences
                            Institute Research Foundation
Regional: Latin America    U.S. Outreach Effort To              $157,378
                            Influence Negotiation by
                            Parties to the Cartagena
                            Protocol for Biosafety for USDA/
                            Foreign Agricultural Service
Regional: Latin America    Inter-American Institute for          $72,140
                            Cooperation on Agriculture
                           Workshop for Latin America
                            Countries on the Annex (LLP
                            Annex) to the Codex Guideline
                            for the Conduct of Food Safety
                            Assessment of Foods Derived
                            from Recombinant-DNA Plants for
                            USDA/Foreign Agricultural
                            Service
Regional: Latin America    Promotion of Consumer-Oriented        $56,462
                            Agricultural Products for Latin
                            America through the
                            International Supermarket
                            Management Class for IGA
                            International, Inc.
Regional: Latin America,   Western Hemisphere Codex             $103,310
 Caribbean Basin            Delegates' Colloquium for USDA/
                            Foreign Agricultural Service
Regional: Latin America,   Enhancing Latin American and         $100,000
 Caribbean Basin            Caribbean Participation in
                            Codex for USDA/Foreign
                            Agricultural Service
Regional: Southeast Asia   Southeast Asia Fruit and             $223,218
                            Vegetable Consumer Trends,
                            Preferences Research for the
                            Washington Apple Commission
Regional: Southeast Asia   Increasing Understanding of U.S.     $137,850
                            and International Flavor Safety
                            Evaluation Processes for the
                            Flavor and Extract
                            Manufacturers Association
Regional: Southeast Asia   Baking with Pea Flour in              $63,573
                            Southeast Asia for the USA Dry
                            Pea and Lentil Council
Regional: Southeast Asia   Nutritional and Technical             $46,820
                            Information on Dry Beans for
                            Southeast Asian Buyers for the
                            U.S. Dry Bean Council
Regional: Southeast Asia   Second Phase of U.S. Dairy in         $37,667
                            Selected Asian Bakery Markets
                            Project for the California Milk
                            Advisory Board
Russia                     Review of U.S. Poultry Slaughter     $120,000
                            and Cold Storage Facilities for
                            the USA Poultry and Egg Export
                            Council
Russia                     Russia Retail Education               $87,200
                            Activities Reverse Mission
                            Retail Training Seminars for
                            the Pear Bureau Northwest
Russia                     Research To Identify                  $70,000
                            Opportunities and Launch Trade
                            Servicing, Education, and
                            Promotion in Russia for the
                            California Prune Board
Russia                     U.S.-Russia Bilateral                 $26,342
                            Consultative Mechanism on
                            Biotechnology Technical
                            Exchange Meeting for USDA/
                            Foreign Agricultural Service
South Africa, Mauritius,   Southern Africa Biotechnology        $109,265
 Zimbabwe, Mozambique       Outreach for South Africa,
                            Mauritius, Zimbabwe, and
                            Mozambique for USDA/Foreign
                            Agricultural Service/Pretoria
Sri Lanka                  Prospecting for U.S. Feedstuff        $84,206
                            and Soymeal Sales in Sri Lanka
                            for the Iowa Soybean
                            Association
Sri Lanka                  Biotechnology Training for             $5,000
                            Senior Level Sri Lankan
                            Officials for USDA/Foreign
                            Agricultural Service
Thailand                   Thailand Importer Developer          $185,535
                            Program for the Southern United
                            States Trade Association
Thailand                   Technical Support to U.S. Frozen      $84,235
                            Potato Tariff Reduction Efforts
                            in Thailand for the National
                            Potato Promotion Board
Thailand                   Restrictive Labeling                  $36,450
                            Requirements for Alcoholic
                            Beverages to Thailand for USDA/
                            Foreign Agricultural Service
Turkey                     Biotech Speakers for Istanbul         $38,680
                            Seminar and Public Outreach for
                            USDA/Foreign Agricultural
                            Service/Ankara
Turkey                     U.S. Dairy Genetics to Turkey,        $22,551
                            Overcoming Unjustifiable
                            Regulatory Barriers for the
                            National Association of Animal
                            Breeders
Turkey                     Expanding Indiana Hardwood            $20,900
                            Exports in Turkey for the
                            Indiana State Department of
                            Agriculture
Vietnam                    Vietnamese Wet Blue Buyers Team       $32,450
                            to the United States for the
                            Leather Industries of America
                                                            ------------
  Total                                                       $8,361,172
------------------------------------------------------------------------
Foreign Agricultural Service (November 2010).

                                 ______
                                 
1. Program Name
    Foreign Market (Cooperator) Development Program.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Foreign Market (Cooperator) Development Program (FMD), also 
known as the Cooperator program, is administered by the Foreign 
Agricultural Service and uses funds from the Commodity Credit 
Corporation (CCC). FMD's first participants entered into agreements 
with FAS in 1954 The program is currently authorized by Title VII of 
the Agricultural Trade Act of 1978. Funding for FMD was reauthorized 
through 2012 by the 2008 Farm Bill.
4. Purpose/Goals
    The purpose of the program is to create, expand, and maintain 
foreign markets for U.S. agricultural commodities and products through 
cost-share assistance. FMD benefits U.S. farmers, processors, and 
exporters by assisting their organizations in maintaining or increasing 
market share in existing markets by addressing long-term foreign market 
import constraints and by identifying new markets or new uses for the 
agricultural commodity or product in the foreign market. Overseas 
promotions focus on generic U.S. commodities, rather than brand-name 
products, and are targeted toward long-term development. Projects under 
the Cooperator Program are jointly funded by the U.S. Government and 
industry groups.
5. Success in Meeting Programmatic Purpose/Goals
    FMD applications undergo a competitive review process based on 
criteria as specified in the FMD regulations and an annual Federal 
Register announcement. Funds are awarded to applicants that demonstrate 
effective performance based on a clear, long-term strategic plan. The 
FAS also considers the extent to which a proposed project targets 
markets with the greatest growth potential and a program effectiveness 
time line against which results can be measured at specific intervals 
using quantifiable product or country goals. The FAS allocates funds in 
a manner that effectively supports the strategic decision making 
initiatives of the Government Performance and Results Act (GPRA) of 
1993. In 2007, FAS commissioned a cost-benefit analysis of USDA's 
market development programs with an independent economic analysis firm, 
Global Insight Inc., and recently received the results of an update of 
that study. The study analyzed the impact of the increase in foreign 
market development investment that took place under the 2002 Farm Bill 
through 2009. The study reported that U.S. agricultural exports were 
$6.1 billion higher in 2009, compared to what they would have been 
without the increased investment in market development. Every dollar of 
increased investment in the MAP and FMD resulted in $35 in exports.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                  $34
                       2003                                  $34
                       2004                                  $34
                       2005                                  $34
                       2006                                  $34
                       2007                                  $34
                       2008                                  $34
                       2009                                  $34
                       2010                                  $34
                       2011                                  $34
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Please explain changes between budget authority and outlays.
 


------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                  $31
                       2003                                  $32
                       2004                                  $37
                       2005                                  $36
                       2006                                  $36
                       2007                                  $36
                       2008                                  $33
                       2009                                  $36
                       2010                                  $32
                       2011                           $37 (est.)
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which the 
program agreement is entered into. Outlays could be made up to 5 years 
after the project is implemented. Most payments are made by the third 
fiscal year.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
                        Annual Cost                       FTE
              ----------------------------------------------------------
                 Section 11 &
      FY           General       Prog. Funds
                Appropriations   for Admin.        FTE       Tech Assist
                 Admin. Cost       Support
------------------------------------------------------------------------
        2007            $0.3                             1          0.29
        2008            $0.3                             1          0.29
      2009 a            $0.3                             1          0.29
      2010 a              $0            $0.3             1          0.29
      2011 a              $0            $0.4             1          0.29
------------------------------------------------------------------------
a Source: Explanatory Notes Available Funds Table. Includes direct
  administrative costs but does not include miscellaneous indirect
  costs.
For FY 2009 and FY 2010, Section 103 of the American Recovery and
  Reinvestment Act (ARRA) exempted CCC program funds used to pay
  authorized administrative costs for FMD from counting against the cap
  on CCC funds used to pay for salaries and administrative costs imposed
  by Section 11 of the CCC Charter Act. The Department of Defense and
  Full-Year Continuing Appropriations Act of 2011 continued the
  exemption from the CCC section 11 cap for CCC funds used to pay
  authorized administrative costs of FMD.

9. Eligibility Criteria
    To participate in the FMD program an applicant must be a nonprofit 
U.S. trade organization. An applicant must agree to contribute 
resources to its proposed promotional activities. The contribution must 
be at least 50 percent of the value of resources provided by CCC for 
activities conducted under the project agreement.
10. Utilization (Participation) Data
    For FY 2011 there were 22 applicants competing for $34.5 million in 
appropriated funding. Attached is a chart of FY 2011 Foreign Market 
Program Development allocations.
11. Duplication or Overlap with Other Programs
    FMD is complementary to other FAS/USDA market development programs 
whereby funding to address priority, market-specific issues or to 
undertake activities not already serviced by or unsuitable for funding 
under other FAS marketing programs, such as the Market Access Program, 
the Emerging Market Program, the Technical Assistance for Specialty 
Crops Program, and the Quality Samples Program.
12. Waste, Fraud and Abuse
    FAS is not aware of any examples of waste, fraud, and abuse in this 
program, including overpayments that the Department or other government 
agency has determined is a problem. FAS program areas closely monitor 
all agency agreements to ensure that participants carry out activities 
in accordance with program regulations. In addition, the FAS Compliance 
staff routinely reviews FAS agreements agency-wide to document 
compliance, and to ensure that FAS maintains sufficient internal 
controls. Further, FAS programs are audited by both the USDA Office of 
Inspector General and the Government Accountability Office, each of 
which provides detailed reports and recommendations for improvement. 
Finally, FAS programs are subject to the same oversight and reporting 
requirements common to all USDA programs, including testing of 
transactions under the Improper Payments Improvement Act. Together 
these internal and external monitoring and evaluation practices serve 
to catch and correct instances of waste, fraud, and abuse before they 
result in loss of public funds.
13. Effect of Administrative PAYGO
    None.
                               attachment

                            Fiscal Year 2011
        Fiscal Year 2011 Foreign Market Development Program (FMD)
------------------------------------------------------------------------
                     Cooperator                           Allocation
------------------------------------------------------------------------
AHEC, APA, SEC, SFPA *                                        $2,796,545
American Peanut Council                                         $628,631
American Seed Trade Association                                 $219,486
American Sheep Industry Association                             $161,354
American Soybean Association                                  $6,648,054
Cotton Council International                                  $4,532,356
Leather Industries of America                                   $135,224
Mohair Council of America                                         $8,808
National Hay Association                                         $80,110
National Renderers Association                                  $837,791
National Sunflower Association                                  $252,192
North American Millers Association                               $23,833
U.S. Dairy Export Council                                       $595,464
U.S. Dry Bean Council                                           $103,611
U.S. Grains Council                                           $4,386,866
U.S. Hide, Skin and Leather Association                          $98,092
U.S. Livestock Genetics Export, Inc.                            $670,213
U.S. Meat Export Federation                                   $1,612,357
U.S. Wheat Associates                                         $5,033,535
USA Dry Pea and Lentil Council                                  $157,319
USA Poultry and Egg Export Council                            $1,262,021
USA Rice Federation                                           $1,457,865
                                                     -------------------
  Reserve                                                     $2,798,273
                                                     ===================
    Total Available FY 2011 Funding                         $34,500,000
------------------------------------------------------------------------
* American Hardwood Export Council, APA--The Engineered Wood
  Association, Softwood Export Council, Southern Forest Products
  Association.

                                 ______
                                 
1. Program Name
    Facility Guarantee Program.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    Authorized by Congress under section 1542 of the Food, Agriculture, 
Conservation and Trade Act of 1990 to meet the financing needs for the 
establishment or improvement of facilities or the provision of services 
in emerging markets that would primarily benefit the export of U.S. 
agricultural commodities.
4. Purpose/Goals
    By providing credit guarantees consistent with the Organisation for 
Economic Co-operation and Development's (OECD) ``Arrangement on 
Officially Supported Export Credits'', for loan tenors of up to 10 
years, the financial risk to U.S. lenders (banks or exporters) of 
foreign banks is greatly diminished. This reduced risk in financing 
increases export opportunities in those emerging markets where the lack 
of credit impedes an exporter's ability to sell and a buyer's ability 
to acquire agriculture-related infrastructure or services that will 
primarily enhance sales of U.S. agricultural commodities.
5. Success in Meeting Programmatic Purpose/Goals
    From inception through June 2011, only one transaction has been 
guaranteed. Prior to the 2008 Farm Bill statutory amendments, FGP 
required U.S. content on any goods guaranteed. The 2008 Farm Bill, 
however, allowed for a ``waiver'' of U.S. content requirement if such 
goods were unavailable or the use of such goods is not practicable. The 
program also requires a determination of downstream benefit to the 
export of U.S. agricultural commodities. As the FGP program is required 
to adopt a premia structure consistent with the OECD Arrangement on 
Officially Supported Export Credits, capital goods programs offered by 
the U.S. Export-Import Bank were more attractive, as exporters did not 
need to develop rational trade arguments for the downstream benefits to 
U.S. agriculture. In light of the waiver provision for U.S. content, we 
are reviewing ways to use such authority with as little impact on U.S. 
manufacturing concerns as possible. FGP operates as a subset of the 
GSM-102 Export Credit Guarantee Program and under that authority is 
subsumed within the same overall limitations on the amount of credit 
guarantees that CCC may make available, which is now effectively capped 
in each fiscal year at $40 million of annual budget authority for 
``subsidy.'' FGP subsidy estimates, because of much longer average loan 
tenors, have been historically higher than those of the GSM-102 
program, which in turn requires an evaluation of the best way for USDA 
to satisfy immediate demand for credit guarantees.
6. Annual Budget Authority (FY 2002-FY 2011)
    Applicable law mandates that CCC make available for each fiscal 
year an amount of credit guarantees (both GSM-102 and FGP) equal to the 
lesser of (a) $5,500,000 or (b) an amount of guarantees that CCC can 
make available using budget authority for an underlying subsidy amount 
of the sum of $40 million per year plus any unobligated budget 
authority from prior fiscal years.
7. Annual Outlays (FY 2002-FY 2011)
    N/A.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.
     FGP delivery costs fall under the separate appropriation of $6.8 
million (FY 2011) used to cover the salaries and other administrative 
costs (S&Es) of the Export Credit Guarantee Program (GSM-102). The 
program's information technology support for web interface, system of 
records and database are included in the overall costs to maintain the 
Export Credit Guarantee program information technology.
9. Eligibility Criteria
    Please explain who is eligible for participation in this program. 
Also list any special considerations (for example priority areas or 
carve-outs for certain eligible producers).
     All potential participants--exporters, U.S. financial 
institutions, foreign banks and countries--can participate provided 
they are not suspended, debarred or otherwise prohibited from 
participation in U.S. Government programs. Loan terms will be in 
accordance with OECD guidelines. In addition exporters must have an 
office in the United States, U.S. financial institutions must be 
regulated and foreign banks are subject to extensive individual 
financial review to determine creditworthiness. By law, credit 
guarantees cannot be issued to any country that cannot adequately 
service the debt associated with particular export sales.
10. Utilization (Participation) Data
    Please provide the number of participants in the program. If there 
is a backlog, please explain that as well. Where appropriate, please 
include additional information, such as the number of acres enrolled in 
the program.
    From inception through June 2011, only one transaction has been 
guaranteed.
11. Duplication or Overlap with Other Programs
    If the purpose/goals or mission of this program are similar to 
those of other programs, please list those other programs along with an 
explanation.
    The Export Import Bank offers very similar programs--but is 
absolutely limited to the guarantee of U.S. origin capital goods and 
U.S. services Ex-Im's primary mission is to expand the export of the 
U.S. capital goods or services, while the primary mission of the FGP is 
to enhance the export of U.S. agricultural commodities.
12. Waste, Fraud and Abuse
    Please provide examples of waste, fraud, and abuse including 
overpayments that the Department or other government agency has 
determined is a problem and how the Department is combating such 
problems.
    USDA is proactive in reviewing this program and its participants. 
Where there is any indication of waste, fraud and abuse, the Department 
is aggressive in investigating those incidents. This program when 
operational will fully implement, document and test at least annually 
its internal controls in accordance with both, OMB Circular A-123, 
which implements requirements of the Federal Managers' Financial 
Integrity Act of 1982, and the Improper Payments Information Act of 
2002 (IPIA).
13. Effect of Administrative PAYGO
    N/A.
                                 ______
                                 
1. Program Name
    Dairy Export Incentive Program (DEIP).
2. Subprograms/Department Initiatives
3. Brief History
    Authorized by Congress under Sec. 153 of the Food Security Act of 
1985, the program provides a bonus or subsidy on a bid basis to 
exporters of eligible dairy products (butterfat, nonfat dry milk, whole 
milk powder and various cheeses). The payments may be made in cash or 
in commodities held by the Commodity Credit Corporation (CCC). 
Initially, the program provided the bonuses ``in-kind'' from surplus 
stocks of dairy products held by CCC. This `in-kind' payment was 
replaced by the issuance of ``generic certificates'' redeemable for any 
inventory held by the CCC. As inventories diminished, the program 
evolved into the sole use of cash payments for the subsidy. As this 
program provides an export subsidy, it is subject to the subsidy 
reduction commitments of the United States under the Uruguay Round 
Agreements of the World Trade Organization (WTO). The program is 
therefore subject to both budget and quantity limits in accordance with 
those reduction commitments.
4. Purpose/Goals
    By providing a subsidy on exports of eligible dairy products, an 
amount intended to bridge the gap between world market prices and the 
U.S. domestic price, DEIP enables exporters to meet the lower world 
market prices, often influenced by the application of subsidies by 
other exporting countries--primarily the European Union (EU).
5. Success in Meeting Programmatic Purpose/Goals
    The program has been very successful in meeting the needs of 
exporters and expanding markets for U.S. dairy products when world 
prices are depressed due to the application of subsidies by other 
countries. This was most evident leading up to and during the 
implementation period of the Uruguay Round subsidy reduction 
commitments. At that time, the EU was aggressively subsidizing dairy 
exports. Almost 250,000 metric tons of dairy products were exported 
under DEIP in Fiscal Year 1995 and $162 million in bonus payments were 
committed under DEIP in Fiscal Year 1993.
6. Annual Budget Authority (FY 2002-FY 2011)
    This is a mandatory program with spending capped by our commitments 
under the WTO Uruguay Round Agreements. These are product specific and 
follow:

------------------------------------------------------------------------
        Dairy Product         Budgetary Cap ($Mil)    Quantity Cap (MT)
------------------------------------------------------------------------
       Nonfat dry milk                  $82.46                68,201
             Butterfat                  $30.49                21,097
                Cheese                   $3.63                 3,030
Other (whole milk powder)               $0.021                    34
                             -------------------------------------------
  Total.....................          $116.601                   N/A
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
    Please explain changes between budget authority and outlays:

------------------------------------------------------------------------
                                 Subsidy Awarded
         Fiscal Year                 ($Mil)             Quantity (MT)
------------------------------------------------------------------------
                  2002                  $54.62                86,473
                  2003                  $32.52                86,155
                  2004                   $2.68                48,498
                  2005                       0                     0
                  2006                       0                     0
                  2007                       0                     0
                  2008                       0                     0
                  2009                  $18.89                50,886
                  2010                   $2.37                 4,811
                  2011                       0                     0
------------------------------------------------------------------------

    The budget authority is restricted to the budgetary limits of our 
subsidy reduction commitments under the Uruguay Round Agreements. DEIP 
is designed to meet, not set, world market prices. Years where there 
has been limited use of DEIP reflect the United States' competitiveness 
in the world market without the need for a subsidy. This condition 
exists today.
8. Annual Delivery Cost (FY 2002-FY 2011)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.
    Delivery costs are a function of collateral duty when the program 
is operating. When not operating, program delivery costs are estimated 
at 0.10 FTE--largely a function of closing outstanding performance 
issues. When operational, USDA estimates that no more than two FTE 
equivalents are utilized to operate the program. In fiscal 2010, the 
program operated for one month and estimated delivery costs were under 
$40,000. In 2011, estimated delivery costs are under $10,000. The 
software costs for the program are under $1,000 per year.
9. Eligibility Criteria
    Please explain who is eligible for participation in this program. 
Also list any special considerations (for example priority areas or 
carve-outs for certain eligible producers).
     All potential exporters of U.S. dairy products can participate 
provided they have an agent in the United States and they are not 
suspended, debarred or otherwise prohibited from participation in U.S. 
Government programs.
10. Utilization (Participation) Data
    Please provide the number of participants in the program. If there 
is a backlog, please explain that as well. Where appropriate, please 
include additional information, such as the number of acres enrolled in 
the program.
     To date 115 exporters of dairy products have participated in DEIP 
since inception.
    The following is a list of the number of participants for the 
period 2002-2011:

------------------------------------------------------------------------
             Fiscal Year                         Participants
------------------------------------------------------------------------
                      2002                                    17
                      2003                                    12
                      2004                                     4
                      2005                                     0
                      2006                                     0
                      2007                                     0
                      2008                                     0
                      2009                                    17
                      2010                                    12
                      2011                                     0
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    If the purpose/goals or mission of this program are similar to 
those of other programs, please list those other programs along with an 
explanation.
    None.
12. Waste, Fraud and Abuse
    Please provide examples of waste, fraud, and abuse including 
overpayments that the Department or other government agency has 
determined is a problem and how the Department is combating such 
problems.
    USDA is proactive in reviewing this program and its participants. 
Payments are not made until the exporters provide appropriate export 
documentation that is reviewed for compliance with program 
requirements. Where there is any indication of waste, fraud and abuse, 
the Department is aggressive in investigating those incidents. At this 
time we have no confirmed evidence of waste, fraud or abuse under DEIP.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    The Cochran Fellowship Program.
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Cochran Fellowship Program was established in September 1984 
and was authorized in section 1543 of the Food, Agriculture, 
Conservation, and Trade Act of 1990, as amended. The program provides 
short-term agricultural fellowships in the United States for senior and 
mid-level specialists and administrators working in such areas as 
agricultural trade and policy, agribusiness development, management, 
animal, plant, and food sciences, extension services, and agricultural 
marketing. Since its start the Cochran Fellowship Program has trained 
over 14,300 international participants from 123 countries.
4. Purpose/Goals
    The purpose of the Cochran Fellowship Program is to provide 
agricultural fellowships to individuals from middle-income countries, 
emerging markets and emerging democracies. By statute, the goals are 
for participants to gain knowledge and skills through training that 
will: ``(1) assist eligible countries to develop agricultural systems 
necessary to meet the food and fiber needs of their domestic 
populations; and (2) strengthen and enhance trade linkages between 
eligible countries and agricultural interests in the United States.''
5. Success in Meeting Programmatic Purpose/Goals
    The more than 14,000 Cochran alumni comprise an impressive network 
of agricultural specialists that have both enhanced food security in 
their home countries and strengthened trade linkages with the United 
States. Alumni include the current President of Albania and several 
Ministers of Agriculture from different regions of the world. The 
Cochran Fellowship Program can play an important role in resolving 
agricultural trade issues. For example, in March 2011 the Minister of 
Agriculture in Iraq lifted the import ban of U.S. livestock genetics 
shortly after a Cochran training demonstrated the quality of U.S. 
bovine genetics to three Iraqi agricultural specialists. A Cochran 
Fellow from China trained in U.S. food retailing practices in 1996 now 
runs a high-end supermarket chain in Shanghai that carries nearly 3000 
American products with annual sales of $44 million.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                       2002                                   $4
                       2003                                   $5
                       2004                                   $4
                       2005                                   $4
                       2006                                   $4
                       2007                                   $4
                       2008                                   $3
                       2009                                   $5
                       2010                                   $5
                       2011                                   $3
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                       2002                                   $4
                       2003                                   $4
                       2004                                   $5
                       2005                                   $3
                       2006                                   $4
                       2007                                   $5
                       2008                                   $4
                       2009                                   $3
                       2010                                   $5
                       2011                            $3 (est.)
------------------------------------------------------------------------

    Not all payments (outlays) are made during the year in which budget 
authority is made available. Outlays could be made up to 5 years after 
the appropriation is received. Most payments are made by the third 
fiscal year after the appropriation.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    To the best of the Department's ability, please outline costs 
associated with delivery of program, including FTE's, technical 
assistance, software, etc.

------------------------------------------------------------------------
           FY                   Annual Cost                FTEs
------------------------------------------------------------------------
                 2007                      5.2                      14
                 2008                      4.0                      12
                 2009                      2.6                      12
                 2010                      4.9                      12
                 2011               4.5 (est.)               13 (est.)
------------------------------------------------------------------------

    These funds not only support personnel cost, but participants' 
travel and training cost.
9. Eligibility Criteria
    The Cochran Fellowship Program is open to the staff of 
agribusinesses, government departments, universities, and other 
agricultural organizations. In their own countries, applicants may be 
private agricultural producers, managers, technicians, scientists, 
specialists, professors, administrators, and/or policy makers from both 
the public and private sectors. Country eligibility includes middle-
income countries, emerging democracies, and emerging markets.
10. Utilization (Participation) Data
    Between 2002 and 2010 the program provided fellowships to 5835 
individuals from 107 countries. During FY 2011 it is anticipated that 
the Cochran program will sponsor approximately 425 individuals from 60 
countries. The yearly totals are as displayed below:

----------------------------------------------------------------------------------------------------------------
                   Year                      2002   2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Number of Cochran Fellows                     969    853    864    501    551    706    520    395    476    425
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    The Cochran Fellowship Program distinguishes itself from 1031 other 
project grants listed in the Catalog of Federal Domestic Assistance 
through its targeted audience, scope of training, approach and goals. 
Fellows from middle-income and countries in transition are 
strategically targeted, based on self-identified agricultural needs in 
their own countries and the priorities of FAS's strategy. Candidates 
are often mid-level professionals--from both the public and private 
sector--and receive specialized training related to trade capacity or 
market access needs. Cochran's short-term training for 2 to 3 weeks 
differs from other fellowship programs that are year-long (or longer) 
programs (Fulbright, Humphrey, USAID-sponsored development assistance 
scholarships) or targeted to academia (Borlaug, Faculty Exchange 
Program, Agricultural Research & Development (AWARD) Fellowship 
Program--USAID).
12. Waste, Fraud and Abuse
    All funding for the Cochran Fellowship Program is obligated 
according to FAS agency-wide fund control procedural and policy 
guidance. Obligations are recorded on a timely basis in agency and 
departmental financial systems to ensure that program implementation 
can proceed in order to meet program objectives over the required 
timeline. A separate accounting code is established for each discrete 
Cochran training, ensuring that all expenditures are tied to a specific 
country and/or training focus. Each training budget is reviewed and 
modified by program staff to ensure that the amounts expended are 
appropriate. In addition, Federal travel guidelines are adhered to 
regarding lodging and per diem, as well as daily salary rates. Federal 
regulatory requirements relating to administration, cost principles and 
audits are included with each cooperative agreement. Reconciliation of 
all obligations and expenditures is performed at various intervals to 
be sure official accounting records are accurate. Timely reviews of 
unliquidated balances are performed based on OMB Circular A123, 
Management and Accountability Act.
    FAS is proactive in monitoring the Cochran program for any 
indications of waste, fraud and abuse. FAS has not found any systemic 
problems in the Cochran Program.
13. Effect of Administrative PAYGO
    N/A.
                                 ______
                                 
1. Program Name
    The Borlaug International Agricultural Science and Technology 
Fellowship Program (Borlaug Fellowship Program).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Borlaug Fellowship Program (BFP) was initiated in March 2004 in 
honor of the late Nobel Laureate Dr. Norman E. Borlaug, an agronomist, 
humanitarian, and the father of the Green Revolution. Congress provided 
statutory authorization for the program in the Food, Conservation and 
Energy Act of 2008 (7 U.S.C. 3319j). The BFP provides fellowships for 
scientific training and research in the United States to potential 
agricultural leaders from eligible countries to promote food security 
and economic growth. Since its inception in 2004, the BFP has enhanced 
the scientific, regulatory and agribusiness knowledge and skills of 
over 500 Borlaug Fellows from 64 developing countries.
4. Purpose/Goals
    The Borlaug Fellowship Program helps developing countries 
strengthen food security and improve agricultural productivity by 
providing U.S.-based scientific training and collaborative research 
opportunities to visiting scientists, policymakers, and university 
faculty. Training for Borlaug Fellows increases their scientific 
knowledge and promotes long-term collaboration with mentors at U.S. 
land-grant universities, USDA and other government agencies, and 
international research centers. The program also strives to help 
developing countries strengthen agricultural practices through the 
transfer of new science and agricultural technologies, including those 
related to production, processing and marketing; addresses obstacles to 
the adoption of technology, such as ineffective policies and 
regulations; and promotes the extension of knowledge gained by Fellows 
to ``users and intermediaries in the marketplace.''
5. Success in Meeting Programmatic Purpose/Goals
    The program has facilitated the adoption of modern agricultural 
practices in targeted countries by strengthening human and 
institutional capacity through U.S.-based training. The Borlaug 
Fellowship Program periodically conducts surveys to gather information 
from Borlaug alumni about the impact of the fellowship program on their 
work. Responses from Borlaug alumni received in Fiscal Year 2010 
overwhelmingly reported that their fellowship had a positive impact on 
one or more aspects of their work. Of the 100 surveys received, the 
Fellows specifically reported that participating in the Borlaug 
Fellowship Program positively impacted their research (92 percent), 
teaching (74 percent), and policy objectives (14 percent), including 
the adoption of one or more new techniques or technologies (52 percent) 
in their home institutions. For example, A 2008 African Woman in 
Science Borlaug Alumnus trained in dairy management and nutrition 
reported that her training resulted in significant increases in milk 
production and calf births at the Kakoma Estate, a medium size Malawian 
dairy cooperative enterprise, where she is managing director. A Borlaug 
Alumnus from Romania with the University of Agricultural Science in 
Timisoara, Romania, reported that the lab experience he gained through 
his 2006 Fellowship allowed him to spearhead a research program at his 
home institution in applied microbiology and biofuels.

      6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                   BA
------------------------------------------------------------------------
                  2004-2006                                   $2
                       2007                                   $2
                       2008                                   $2
                       2009                                   $2
                       2010                                   $2
                       2011                                 $1.5
------------------------------------------------------------------------


           7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
                 FY                                 Outlays
------------------------------------------------------------------------
                  2004-2006                                   $2
                       2007                                   $2
                       2008                                   $2
                       2009                                 $2.3
                       2010                                 $2.1
                       2011                          $1.5 (est.)
------------------------------------------------------------------------


        8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
------------------------------------------------------------------------
           FY                   Annual Cost                FTEs
------------------------------------------------------------------------
                 2007                   $1.400                       4
                 2008                    $.974                       6
                 2009                   $1.625                       6
                 2010                   $1.785                       8
                 2011            $1.500 (est.)                8 (est.)
------------------------------------------------------------------------

    These funds support personnel cost and participants' travel and 
training cost such as training at Texas A&M University and Prairie View 
A&M University.
9. Eligibility Criteria
    Individuals, who specialize in agricultural education, research and 
extension, from the public and private sectors in developing countries 
that are eligible for U.S. economic assistance.
10. Utilization (Participation) Data
    Since 2004, the Borlaug Fellowship Program has trained Fellows from 
64 countries in sub-Saharan Africa, the Middle East, the former Soviet 
Union, Asia and Latin America to receive scientific agricultural 
training in the United States. Collaborative-research and training have 
spanned such fields as the plant and animal sciences, food safety, 
agricultural biotechnology, environmental sciences, climate change, and 
food security. Women agriculturalists receive priority consideration in 
the program and now comprise nearly 50 percent of participants. During 
FY 2011 it is anticipated that the Borlaug Fellowship Program will 
sponsor approximately 34 individuals from 26 countries. The yearly 
totals are displayed below:

------------------------------------------------------------------------
           Year             2004-2006   2007   2008   2009   2010   2011
------------------------------------------------------------------------
Number of Borlaug Fellows         268     94     66     63     48     34
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    There is no duplication or overlap with other Federal programs.
12. Waste, Fraud and Abuse
    All funding for the Borlaug Fellowship Program is obligated 
according to FAS agency-wide fund control procedural and policy 
guidance. Obligations are recorded on a timely basis in agency and 
departmental financial systems to ensure that program implementation 
can proceed in order to meet program objectives over the required 
timeline. A separate accounting code is established for each discrete 
Borlaug training, ensuring that all expenditures are tied to a specific 
country and/or training focus. Each training budget is reviewed and 
modified by program staff to ensure that the amounts expended are 
appropriate. In addition, Federal travel guidelines are adhered to 
regarding lodging and per diem, as well as daily salary rates. Federal 
regulatory requirements relating to administration, cost principles and 
audits are included with each cooperative agreement. Reconciliation of 
all obligations and expenditures is performed at various intervals to 
be sure official accounting records are accurate. Timely reviews of 
unliquidated balances are performed based on OMB Circular A123, 
Management and Accountability Act.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--U.S. 
                  Agency for International Development
1. Program Name
    Food for Peace Act/USAID Title II, III, and V.
2. Subprograms/Department Initiatives
    A. Title II: Emergency and Private Assistance Programs

    Under Title II, USAID provides emergency food aid to address needs 
arising from natural disasters, such as floods or droughts, and complex 
emergencies often characterized by insecurity and population 
displacement. USAID also provides development food aid as part of 
multi-year, development (non-emergency) programs integrated with USAID 
strategies to address the underlying causes of chronic food insecurity.

    B. Title III: Food for Development

    Title III is a USAID-administered program for enhancing food 
security and supporting long-term economic development in least-
developed countries. USAID is authorized to donate agricultural 
commodities to a recipient country and funds the transportation to the 
point of entry in the recipient country. These commodities may be sold 
on the domestic market and the revenue generated from their sale is 
used to support and implement economic development and food security 
programs. Funds have not been requested or appropriated for Title III 
for more than a decade.

    C. Title V: Farmer to Farmer Program

    The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program 
provides voluntary technical assistance to farmers, farm groups, and 
agribusinesses in developing and transitional countries to promote 
sustainable improvements in food security and agricultural processing, 
production, and marketing. The program relies on the expertise of 
volunteers from U.S. farms, land-grant universities, cooperatives, 
private agribusinesses, and nonprofit farm organizations to respond to 
the local needs of host-country farmers and organizations.
3. Brief History
    On July 10, 1954, President Dwight D. Eisenhower signed the 
Agricultural Trade Development Assistance Act--or Public Law (P.L.) 
480--into law. Since that day, the lasting benefits President 
Eisenhower envisioned have come to pass. The more than 120 million 
metric tons of American food the United States has sent overseas over 
the past 57 years under Title II, the largest part of P.L. 480, have 
kept billions of people overseas from hunger, malnutrition, and 
starvation.
    Early in his Administration, President John F. Kennedy underlined 
the importance of P.L. 480 to the United States--and the rest of the 
world--by renaming it ``Food for Peace'' and placing it in the newly 
created U.S. Agency for International Development. ``Food is strength, 
and food is peace, and food is freedom, and food is a helping hand to 
people around the world whose good will and friendship we want,'' 
Kennedy said. Since its inception, Food for Peace has adapted several 
times to accommodate changing needs around the world. Programs 
currently focus primarily on sub-Saharan Africa and Asia. Despite these 
changes, the objectives have remained the same: fighting hunger and 
malnutrition and promoting sustained economic growth and development.
    For over 57 years, the Food for Peace program has brought hope and 
nourishment to the hungry corners of the world. Over three billion 
people in over 150 countries have benefited directly from our food.
    Upon reaching its destination, the food is used in a variety of 
ways, and always for the people most vulnerable to the effects of 
hunger: children under age 5, pregnant women, the elderly, and the 
poorest families in a community. During an emergency in which people 
face threat of imminent starvation, food--wheat, sorghum, corn and 
other commodities--are distributed to save their lives. If the symptoms 
of extreme malnutrition have already appeared, a nutritionally 
fortified ration with blended, fortified, and processed food is 
provided. In less dire circumstances, food can be used to compensate 
people for work, such as building roads or repairing water and 
irrigation systems. In turn, these projects help protect communities 
from future hunger by providing them access to local markets for their 
produce, keeping them healthy, and improving their harvests.
    Title II programs have an immediate impact of protecting lives and 
maintaining consumption levels, while also contributing to longer-term 
impacts, including enhancing community and household resilience to 
shocks, helping people build more durable and diverse livelihood bases 
(enhancing assets, resources, and infrastructure), and enhancing the 
capabilities of individuals through improvements in health, nutrition 
and education.
    Title V, the Farmer-to-Farmer Program, exemplifies this U.S. 
helping hand in food aid. Since the program's inception in 1985, over 
12,000 volunteer assignments have been completed in over 80 countries. 
Over one million farmer families (representing about five million 
people) have directly benefitted from the Farmer-to-Farmer Program. 
Volunteers help host individuals and organizations build local 
institutions and linkages to resolve local problems and have provided 
direct hands-on training to over 80,000 people. Approximately 43 
percent of all individuals trained by Farmer-to-Farmer volunteers are 
women. Under the current program, 15 organizations are providing 
volunteer services in 25 core countries. Current programs field 
approximately 600 volunteers per year.
4. Purpose/Goals
    The Food for Peace Act, as the statute has been renamed, states the 
following with respect to the programs authorized under the Act:

        It is the policy of the United States to promote its foreign 
        policy by enhancing the food security of the developing world 
        through the use of agriculture commodities and local currencies 
        accruing under this Act to:

                (1) Combat world hunger and malnutrition and their 
                causes;
                (2) Promote broad-based, equitable and sustainable 
                development, including agricultural development;
                (3) Expand international trade;
                (4) Foster and encourage the development of private 
                enterprise and democratic participation in developing 
                countries; and
                (5) Prevent conflicts.

    The Farmer-to-Farmer Program goal is to help promote agricultural 
sector growth and food security in developing countries and to increase 
international understanding of the United States and U.S. development 
programs by involving American citizens in people-to-people exchanges 
for work on agricultural development.
5. Success in Meeting Programmatic Purpose/Goals

    Title II: Emergency and Private Assistance (Development) Programs

    Administered by the USAID Office of Food for Peace in the Bureau 
for Democracy, Conflict, and Humanitarian Assistance, in FY 2010, Title 
II programs (emergency and development (non-emergency)) provided more 
than 2.1 million tons of commodities, with a program cost of 
approximately $1.9 billion, to assist approximately 55 million people 
in 46 countries.
    For more information on Food for Peace Title II program 
accomplishments, please see attached text from the FY 2010 
International Food Assistance Report (Attachment B), as well as the FY 
2007-2009 International Food Assistance Reports (attached).

    Title V: Farmer to Farmer Program

    The USAID Bureau for Food Security administers this program. In FY 
2010, implementing agencies fielded 522 volunteers from 48 states and 
the District of Columbia. The top five states providing volunteers 
were: California (58 assignments), Wisconsin (50 assignments), North 
Carolina (28 assignments), Florida (25 assignments), and Minnesota (19 
assignments). Of these assignments, 433 were completed by men (83 
percent) and 89 by women (17 percent). In FY 2010, 522 volunteer 
assignments focused on technology transfer (68%), organizational 
development (12%), business/enterprise development (17%), financial 
services (2%), and environmental conservation (1%). Volunteers worked 
at various levels of the commodity production and marketing chain, 
including: rural services and input supply (35%), on-farm production 
(40%), storage and processing (14%), and marketing (11%).
    See attached examples (Attachment C) of the program's successes in 
meeting the goals and purposes.
6. Annual Budget Authority (FY 2002-FY 2011)
    For USAID's annual budget authority (FY 2002-2011), please see 
Attachment A.
7. Annual Outlays (FY 2002-FY 2011)
    For USAID's annual Title II outlays (FY 2002-2011), please see 
Attachment A.
8. Annual Delivery Cost (FY 2002-FY 2011)
    The annual average Title II delivery cost (FY 2002-FY2011) is $730 
per metric ton.
9. Eligibility Criteria
    Those eligible for Title II emergency resources are:

   A private voluntary organization or cooperative that is, to 
        the extent practicable, registered with the USAID 
        Administrator, or

   A Public International Organization (PIO), such as the U.N. 
        World Food Program.

    Pursuant to section 402 of the Food for Peace Act, this includes 
U.S. and non-U.S. nonprofit organizations.
    Title V, the Farmer-to-Farmer Program, is implemented by U.S. 
private voluntary organizations, cooperatives, and universities. During 
FY 2010, eleven private voluntary organizations and four universities 
participated in the program.
10. Utilization (Participation) Data
    Food for Peace (Title II) assisted the following number of 
beneficiaries in FY 2008 through FY 2010:

------------------------------------------------------------------------
           FY                    Emergency              Development
------------------------------------------------------------------------
                 2008             37.9 million             7.6 million
                 2009               55 million             7.1 million
                 2010             46.5 million             7.9 million
------------------------------------------------------------------------

    During FY 2010, the Farmer to Farmer Program (Title V) provided 
assistance to 455 local organizations (cooperatives, farmer groups, 
agribusinesses, rural financial organizations and others), directly 
assisting 34,080 people. The program provided training to 16,853 
people.
11. Duplication or Overlap with Other Programs
    Food for Peace Title II is the largest USG international food aid 
program and the only program with a primary responsibility for 
emergency food assistance. Title II development programs are integrated 
into country level strategic plans and as such are designed to 
complement other mission development objectives. Emergency food aid 
complements food security programs by addressing the most vulnerable 
populations.
    At the country level, the Farmer-to-Farmer Program (Title V) 
generally works with and through partners' programs. Frequently, these 
partners' programs are other on-going USAID agricultural and rural 
development projects. Implementing private voluntary organization 
country program arrangements and USAID country Missions collaborate to 
ensure coordination with national development efforts and on-going 
programs. Coordination and sustainability are ensured through working 
closely with local host organizations on their farm and business 
development efforts.
12. Waste, Fraud and Abuse
    The USAID Office of Food for Peace works aggressively to avoid 
waste, fraud, and abuse, and works closely with the USAID Office of 
Inspector General (OIG) to review Title II, III or V audit findings and 
respond accordingly with management decisions and actions, as 
applicable.
13. Effect of Administrative PAYGO
    N/A.

                                                                      attachment a
                                                         Budget Authority and Outlays--Title II
                                                               Total Funding Availability
                                                                  (in Hundred Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010   FY 2011 To
                                      Final      Final       Final       Final       Final       Final       Final       Final       Final       Date
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appropriations                          958.8    1,809.6     1,185.0     1,413.0     1,488.5     1,664.7     2,060.9     2,320.9     1,840.0     1,497.0
  Base Enacted                          863.8    1,192.2     1,185.0     1,173.0     1,138.5     1,214.7     1,210.9     1,225.9     1,690.0     1,497.0
  Supplemental Appropriations            95.0    * 617.4         0.0       240.0       350.0       450.0       850.0     1,095.0       150.0         0.0
                                   ---------------------------------------------------------------------------------------------------------------------
    Outlays **                          922.0    1,063.0     1,535.0     1,339.0     1,294.0     2,550.0     2,618.5     2,013.0     1,639.0         N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
* $69 million was legislated to be transferred to the Bill Emerson Humanitarian Trust.
** as reported in the President's annual budget appendix.

                              attachment b
Excerpts from FY 2010 International Food Assistance Report
U.S. International Food Assistance Overview
    U.S. international food assistance has long played a critical role 
in responding to global food insecurity. This tradition continued in FY 
2010, with the USG providing more than 2.5 million metric tons (MT) of 
commodities to more than 65 million beneficiaries in 73 countries 
worldwide. Current U.S. international assistance programs stretch from 
sub-Saharan Africa to the former Soviet Union and from Latin America 
and the Caribbean to south Asia. These programs have been adaptable and 
flexible as food needs have evolved around the world.
Expanded Prepositioning of Commodities
    USAID announced a major expansion of its global food aid 
prepositioning system in Fall 2010. USAID awarded contracts for six 
prepositioning sites, in the United States (Texas), Sri Lanka, 
Djibouti, Kenya, South Africa, and Togo.
    USAID's prepositioning system operates as part of a modern supply 
chain management system. When food aid is needed somewhere, USAID first 
uses commodities from the global prepositioning system--either in 
warehouses or in transit to them--and then reorders commodities to 
replace them. This process allows USAID to maintain a continuous flow 
of vital food aid in response to emergencies. Food aid supplies are 
stockpiled in or near regions of the world with historically high 
emergency food aid needs. This system allowed USAID to respond to the 
floods in Pakistan, for example, by dispatching food aid from its 
prepositioning warehouse in Djibouti.
Response to Disasters in Haiti and Pakistan
    The continued need for humanitarian food assistance was 
demonstrated throughout FY 2010, particularly in response to the 
earthquake in Haiti and the floods in Pakistan.
    After the devastating earthquake in Haiti in January, USAID was the 
driving force in rapidly expanding the food aid response to assist 
Haitians in need.
    USAID's abilities to divert over 6,500 tons of food aid already on 
the ground as part of ongoing programs, as well as to purchase 3,564 
tons of commercial rice of U.S. origin in Haiti with assistance from 
USDA, were critical to jump-starting the large-scale distributions. 
USAID also dispatched 14,550 tons of food aid from USAID prepositioned 
stocks in Texas. After the initial emergency food response, USAID 
transitioned to more targeted distributions to vulnerable groups (e.g., 
women and children under 5) assisting approximately three million 
beneficiaries.
    After the July floods in Pakistan, USAID dispatched peas and 
vegetable oil from USAID's prepositioning site in Djibouti and 
contributed approximately $130 million of Title II and Emergency Food 
Security Program (EFSP) resources to the World Food Program (WFP) to 
ensure food distributions at the start of the floods. With an 
additional USAID contribution of $90 million at the end of 2010, WFP 
worked to assist more than seven million flood-affected people.
Contribution of Food Aid to Feed the Future
    USAID and USDA continue to improve the management of the food aid 
programs and to link the programs to the Feed the Future Initiative. 
USAID and USDA have increased coordination at both the headquarters and 
field levels to ensure that the programs supported country-led 
strategies and a whole-of-government approach. Both USAID and USDA have 
required applicants for development food aid programs to demonstrate 
how proposed projects would support country-led investment plans.
    Monitoring and evaluation (M&E) are an increasingly important 
component of program management. USDA and USAID continue to review and 
update indicators so that, where appropriate, results of food aid 
programs can be reported against the Feed the Future Strategic Results 
Framework.
Bellmon Estimation for Title II (BEST) Project
    The USAID BEST Project continues to conduct independent market 
analyses to ensure that USAID complies with the Bellmon Amendment, 
which requires that adequate storage facilities be available in a 
recipient country upon arrival of a commodity to prevent spoilage or 
waste, and that distribution of the commodity in the recipient country 
will not result in substantial disincentive or interference with 
domestic production or marketing in that country. The USAID BEST 
Project has conducted 13 independent market analyses to ensure that 
these requirements are met. Studies can be found at http://
www.usaid.gov/our_work/humanitarian_assistance/ffp/bellmonana.html.
New Famine Early Warning Tool
    To better link early warning and response to emergencies, USAID 
developed a new Famine Early Warning System Network (FEWS NET) 
resource--the Food Assistance Outlook Briefing--which provides warning 
of potential food assistance needs 6 months in the future. These 
predictions are critical because of the time required to purchase and 
ship in-kind food aid from the United States. This tool also creates 
evidence-based analysis that is useful to USAID and national decision-
makers as they take measures to respond to potential food insecurity. 
This monthly outlook can be found at www.fews.net.
USAID's Famine Early Warning Systems Network (FEWS NET)
    USAID's Famine Early Warning Systems Network exemplifies the U.S. 
commitment to anticipating and responding to humanitarian 
vulnerabilities and crises. Using interagency agreements with the U.S. 
Geological Survey, National Aeronautics and Space Administration, 
National Oceanic and Atmospheric Administration, and USDA, FEWS NET 
continues to monitor, collect and analyze, and disseminate critical 
data and information on conditions of food availability and access in 
the most food insecure countries. FEWS NET provides decision-makers in 
the U.S. Government, host country governments, and a variety of other 
regional and international partners timely, unbiased, and insightful 
early warning and vulnerability information. FEWS NET information 
products can be found at www.fews.net.
    In response to rising needs for more and better food security 
monitoring information in countries not covered by a FEWS NET presence, 
and where global drivers of food security are ever more present, USAID, 
through FEWS NET, defined, tested, and is currently implementing an 
innovative non-presence-based ``remote monitoring'' strategy. This 
strategy uses FEWS NET partners to assist in the identification and 
early warning of significant changes in food availability and food 
access that might potentially lead to a food security crisis. Sectoral 
monitoring priorities for remote monitoring include weather and 
climate, crop condition and output, food markets and trade, and 
livelihoods. Data to monitor these priority areas is gathered from FEWS 
partners NOAA, NASA, USDA and the USGS, as well as satellite imagery 
and in-country sources.
    FEWS NET also uses remote monitoring for some countries where 
direct monitoring does not occur. This light form of monitoring has 
already provided important evidence for decision-making in Yemen, where 
it challenged the accuracy of nutritional surveys in the north, and in 
Tajikistan where it provided important context for understanding the 
limited food security implications of a drop in remittances to the 
country.
Monitoring and Evaluation (M&E)
    In 2010, through its cooperative agreement with the Food and 
Nutrition Technical Assistance project (FANTA), USAID's Office of Food 
for Peace launched Discussion-TIIME, a free e-mail listserv and website 
where Food for Peace Title II monitoring and evaluation practitioners 
can learn from each other and have access to technical expertise. The 
listserv and website are geared especially to those practitioners in 
the field working on USAID Title II development and emergency 
assistance programs. The goals of Discussion-TIIME are to promote the 
professional development of development and emergency food assistance 
M&E staff; to help introduce new staff to Title II M&E and to keep 
experienced staff abreast of emerging issues; and to improve the 
quality of Title II M&E.
Food Aid Quality
    In December 2010, USAID's Office of Food for Peace issued a draft 
report with recommendations for public comment from a 2 year Food Aid 
Quality Review (FAQR). The review, a collaborative effort undertaken 
with Tufts University Friedman School of Nutrition, and in consultation 
with industry, PVOs, technical experts, UN agencies, and others, aimed 
to identify ways to better match the nutritional quality of Title II 
food aid with the nutritional requirements of vulnerable populations 
overseas.
    Given new understandings in nutrition science and the importance of 
nutrition during the 1,000 days between a child's conception and 2 
years of age, the review identified the need to focus on the 
nutritional requirements of older infants, young children, and pregnant 
and lactating women. The recommendations focused on:

   Reformulating fortified, blended foods by enhancing 
        micronutrient content and adding animal protein to improve both 
        absorption and growth;

   Improving both composition and use of fortified vegetable 
        oil;

   Improving fortified cereals used in general food 
        distributions;

   Using ready-to-use products when appropriate;

   Modifying programming guidance so that the quality 
        improvements can be used more cost-effectively to achieve 
        specific nutritional outcomes; and

   Changing the processes used to approve new products, develop 
        specifications, procure, and monitor the use of food aid 
        commodities.

    The final report will be issued in April 2011. The implementation 
of these recommendations should dramatically enhance the nutritional 
impact of food aid rations in both emergency and development settings.
Technical Capacity Building
    In 2010, USAID awarded a Technical and Operational Performance 
Support (TOPS) Program to advance networking among Title II emergency 
and development partners through training and information sharing on 
best practice and lessons learned. The near term priorities of TOPS are 
commodity management, nutrition and food technology, social and 
behavior change, and gender equity. TOPS works closely with and 
complements the work of FANTA, which is engaged in a number of 
important research studies on issues such as household dietary 
diversity and developing exit strategies that will inform future 
programming guidance.
Gender
    During 2009-2010, USAID, with the support of the FANTA, led a 
process to develop a framework that will enable Food for Peace to 
enhance its focus on gender integration into Title II programs. The 
review and consultative process, as well as recommendations that 
emerged, are summarized in Occasional Paper #7 Gender Integration in 
USAID/DCHA Office of FFP Operations. This Occasional Paper is located 
at www.fantaproject.org. Some key recommendations include developing 
comprehensive guidelines specific to gender and food security for 
effective monitoring and evaluation of Title II programming, 
strengthening staff competencies on gender integration in food 
security, and supporting pilot efforts to determine how best to empower 
women in food assistance programming.
Program Descriptions and Fiscal Year 2010 Accomplishments
    2. Title II: Emergency and Private Assistance (Development) 
Programs:

    Administered by the USAID Office of Food for Peace in the Bureau 
for Democracy, Conflict, and Humanitarian Assistance (DCHA), in FY 
2010, Title II programs (emergency and development) provided more than 
2.1 million MT of commodities, with a program cost of approximately 
$1.9 billion, to assist approximately 55 million people in 46 
countries.
    Title II programs focus to reduce food insecurity in vulnerable 
populations and improve resiliency to shocks--an essential first step 
toward household self-sufficiency and economic independence. In support 
of this approach, Title II development programs incorporate many 
activities to strengthen local capacity to respond to natural 
disasters.

    a. Title II: Emergency Programs:

    Title II emergency programs aim to address two forms of 
emergencies: natural disasters, such as floods or droughts, and complex 
emergencies characterized by a combination of natural disaster, 
conflict, and insecurity. All of these elements pose substantial 
programmatic and operational challenges in responding effectively to 
the needs of food-insecure populations.
    In FY 2010, Title II emergency programs provided more than 1.6 
million MT of emergency food aid, with a program cost of more than $1.5 
billion, to help alleviate malnutrition and hunger in 27 countries. In 
all, Title II emergency programs reached approximately 46.5 million 
food-insecure people in 27 countries in FY 2010.

    Food for Peace Title II: Emergency Program Highlights:

    Ethiopia: Throughout the first 9 months of 2010, most regions 
experienced normal to above normal rainfall, thus improving the overall 
food security situation, even resulting in suspension of emergency 
distributions in the south as of September. However, in parts of the 
Amhara, Afar, Oromiya, Tigray, Gambella, and Somali regions the rains 
also brought devastating floods and related mudslides that destroyed 
crops and displaced people, requiring emergency food rations. In FY 
2010, the bulk of Title II assistance, totaling more than $319 million, 
was in the form of relief food assistance to flood victims, primarily 
distributed through WFP and a relief consortium led by Catholic Relief 
Services (CRS).
    USAID also continued its support of the Government of Ethiopia's 
Productive Safety Net Program (PSNP), by providing approximately $132 
million of food assistance through PVO partners to chronically food 
insecure populations. In exchange for food (or cash) transfers, 
beneficiaries of the PSNP engage in public works projects such as soil 
and water conservation, water development, and rural feeder road 
construction and maintenance, in order to address the underlying 
factors for food insecurity in the beneficiary communities--mainly lack 
of availability, access to, and utilization of food resources. As one 
example, CRS undertook public works projects for water development, 
including excavation of more than 27,000 m3 for ponds, 88 km of 
irrigation canals, and more than 7,000 km of trenches for pipelines. 
Programs also included crop and livestock management training, training 
community focal persons on child malnutrition, and training in 
agribusiness skills, among others.
    Niger: Due to severe drought, Niger's 2010 harvest could meet less 
than a quarter of the country's annual food requirements. A Niger 
household food security survey in early 2010 estimated that 3.3 million 
people in Niger, representing approximately 22 percent of the overall 
population, would be highly or extremely food insecure and require 
emergency food assistance to meet basic food needs through September 
2010. As a result, in 2010 the Government of Niger launched a large 
humanitarian intervention to prevent the worst effects of the food 
crisis.
    Beginning in November 2009, based on early warning of the crisis, 
USAID ordered U.S. food aid for a FY 2010 total of $48.8 million, or 
approximately 46,000 MT, which it distributed through WFP and two PVOs.
    In addition, USAID made three awards, totaling $26.8 million, under 
the EFSP to complement the Title II assistance already given. These 
grants helped assist 1.7 million individuals affected by drought by 
providing beneficiaries with locally purchased food and vouchers for 
the purchase of food in local markets. This EFSP program gave USAID and 
its partners the flexibility to fill a critical food aid gap in 
response to emergency food aid needs in Niger.
    Continued food assistance will be needed in 2011 in order to 
address the high acute malnutrition rates and to build capacity within 
Niger's agricultural sector to be able to prevent and respond to future 
crises.

    b. Title II: Private Assistance Programs (Development):

    In FY 2010, 16 awardees implemented 42 Title II development food 
aid programs in 21 countries. Approximately 500,000 MT of food 
assistance, valued at more than $400 million, was used to support 
programs that benefited more than 7.9 million people.

    Food for Peace Title II: Development Program Highlights:

    Guatemala: Guatemala has the highest national level of chronic 
malnutrition in the Western Hemisphere and one of the highest in the 
world. Food insecurity is most severe in the highlands and some areas 
in the east where drought is recurrent and many people eke out a living 
on non-irrigated subsistence agriculture.
    The USAID Guatemala Food Security Program is one of the largest 
Title II food security programs in the Western Hemisphere. It 
coordinates with other USAID programs in health, local governance, 
enterprise and trade as well as with Government of Guatemala entities, 
international organizations and PVOs to reduce food insecurity among 
at-risk Guatemalans.
    In target municipalities with the highest chronic childhood 
malnutrition, the program integrates income generation and maternal/
child health interventions that reduce food insecurity while improving 
the family's livelihood and health. USAID implementing partners use 
food aid rations for targeted supplementary feeding for 6 to 36 month 
old children and pregnant/lactating women, while they work with 
families to improve and diversify agricultural production (i.e., soil 
management and conservation practices), micro-enterprise, and marketing 
activities that augment farm income sources. In just one program 
implemented by SHARE, more than 450 farmers were supported with micro-
loans, technical assistance, and commercial relationships in order to 
develop their market access. Using food for work, activities are 
underway to improve infrastructure in food insecure areas, to ease 
communities' access to markets, and to lower business transaction 
costs. Through these initiatives, USAID reaches approximately 400 
communities and helps 56,000 families each year.
    Liberia: Seven years after the end of the conflict in Liberia, the 
country is on the road to recovery. Yet threats remain to Liberia's 
food security, including residual effects of the war, population 
displacement, limited infrastructure, and poor sanitation and water 
quality. Countrywide, 30 percent of children are stunted, and 19 
percent are underweight. With its agricultural capacity severely 
diminished by the conflict, Liberia is working to rebuild its 
agricultural sector, with the aim to transition from food aid to 
market-driven development.
    Building upon the successes of the Catholic Relief Services-led 
Liberia Integrated Assistance Program supported by USAID, which ended 
in 2010, USAID awarded ACDI/VOCA $40 million over 5 years to implement 
the Liberian Agricultural Upgrading, Nutrition and Child Health 
(LAUNCH) project to reduce food insecurity. The project will build the 
technical and business management skills of Liberian farmers, as well 
as work to prevent malnutrition through interventions at the household, 
community and facility levels. This will be complemented by 
Opportunities Industrialization Centers International's (OICI) program 
Health, Agriculture and Nutrition Development for Sustainability 
(HANDS) in two of the most food insecure counties of Liberia, Grand 
Geddeh and River Ghee. Combined, these projects aim to assist over 
300,000 Liberians in the first year of the awards.
    Uganda: The hunger situation in Uganda has generally improved over 
the last several years. However, hunger challenges remain in distinct 
areas, with the northeastern Karamoja region considered the most food 
insecure. The combination of frequent natural disasters, gun violence, 
severe environmental degradation, extreme poverty, poor hygiene, and 
other factors has eroded people's capacity to cope with repeated 
shocks. One particular population vulnerable to food insecurity is 
displaced persons returning to their land, who may not have the 
agricultural inputs necessary to begin farming again.
    To respond to the chronic food insecurity, USAID has given multi-
year development awards to ACDI/VOCA and Mercy Corps. In 2010, USAID 
allocated $25 million to assist more than 320,000 individuals.
    Projects undertaken in 2010 have included improving agricultural 
yields, creating food producer groups and women's gardening groups, 
improving sanitation and hygiene through construction of latrines and 
water wells, and opening of access roads to assist farmers in taking 
their products to market. As just two examples, in 2010 Mercy Corps 
established 95 new producer groups in the Kitgum and Pader districts, 
and 54 km of road were constructed in these same districts using food 
for work. Together with other initiatives, these projects take a 
holistic approach to addressing food insecurity.
    In addition, USAID awarded $15 million of emergency assistance to 
WFP in 2010 for drought-stricken areas and refugee assistance.
    Bangladesh: In a country of 156 million people, 45 percent of the 
population does not meet their minimum food requirements. Approximately 
37 percent of children under 5 are underweight, and over 48 percent 
suffer from stunting.
    In 2010, USAID contributed $42 million of Title II development 
funds, amounting to 94,340 MT of food aid, to develop the agricultural 
sector, improve maternal and child health and nutrition, strengthen 
livelihoods and entitlements, empower women, increase disaster 
preparedness, and other initiatives. Three Title II partners in 
Bangladesh--CARE, ACDI/VOCA, and Save the Children--aim to assist over 
580,000 households in some of the poorest and most marginalized 
communities over the course of their multi-year development programs. 
As one example, CARE's Strengthening Household Ability to Respond to 
Development Opportunities (SHOUHARDO) program has already reduced 
stunting by 28 percent in targeted communities. It has also provided 
business training for over 6,000 female entrepreneurs, and increased 
income by 128 percent, among other successes.

    c. International Food Relief Partnership:

    In November 2000, the U.S. Congress passed the International Food 
Relief Partnership (IFRP) Act. The law, which was renewed and extended 
under the 2008 Farm Bill, enables USAID to award grant agreements to 
eligible U.S. nonprofit organizations to produce and stockpile shelf-
stable, prepackaged commodities. Through the IFRP program, commodities 
are made available to eligible nonprofit U.S. organizations and 
international organizations for transportation, delivery and 
distribution in emergency food aid relief programs.
    In FY 2010, FFP awarded approximately $8.9 million in Title II IFRP 
production and distribution grants. Over the course of the FY, 24 IFRP 
distribution grants were awarded to 17 U.S.-based nonprofit 
organizations. IFRP awardees distributed commodities to over 312,415 
beneficiaries in 17 countries.
    The organizations that received grants in FY 2010 to transport and 
distribute the commodities were: Food for the Hungry, ADRA, Amigos 
Internacionales, Batey Relief Alliance, Church of Bible Understanding, 
CitiHope International, Counterpart International, Cross International, 
Evangelical International Ministries, International Partnership for 
Human Development, International Relief Teams, Medical Missionaries, 
Nascent Solutions, Planet Aid, Project Concern International, Resource 
and Policy Exchange, and World Help.

 Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage--Fiscal Year
                                                      2010
----------------------------------------------------------------------------------------------------------------
                                                                         Recipients                  Total Cost
       Country           Awardee                 Commodity                 (000s)      Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burundi                        WFP  Cornmeal, Corn Soy Blend,                      3         3,240      $3,578.1
                                     Vegetable Oil, Yellow Peas
Cameroon                       WFP  Rice                                          81         3,350      $4,550.1
Central African                WFP  Cornmeal, Corn Soy Blend, Yellow           1,538         3,830      $5,953.1
 Republic                            Split Peas
Chad                           WFP  Cornmeal, Corn Soy Blend, Rice,            5,614        70,310     $98,217.6
                                     Sorghum, Vegetable Oil, Wheat,
                                     Wheat Flour, Yellow Split Peas
Democratic Republic            WFP  Cornmeal, Corn Soy Blend,                    445        59,280     $85,699.3
 of the Congo (DRC)                  Vegetable Oil, Yellow Split Peas
Djibouti                       WFP  Corn Soy Blend, Rice, Wheat Flour,           365         2,040      $2,128.7
                                     Yellow Peas
Ethiopia                      CARE  Vegetable Oil, Wheat, Yellow Split            31           290        $125.2
                                     Peas
                               CRS  Corn Soy Blend, Sorghum, Vegetable            24       227,870    $126,796.9
                                     Oil, Wheat, Yellow Split Peas
                              REST  Vegetable Oil, Wheat, Yellow Split           696        45,730     $23,544.6
                                     Peas
                               SCF  Vegetable Oil, Wheat, Yellow Split           215        11,080      $9,027.6
                                     Peas
                               WFP  Corn Soy Blend, Pinto Beans                  644       324,200    $230,048.1
                                     Vegetable Oil, Wheat, Yellow
                                     Split Peas
Kenya                          WFP  Cornmeal, Corn Soy Blend, Sorghum,         2,121       109,840    $101,975.4
                                     Vegetable Oil, Wheat Flour,
                                     Yellow Split Peas
Madagascar                     WFP  Sorghum, Yellow Peas, Yellow Split         1,501         5,630      $4,511.6
                                     Peas
Niger                          CRS  Bulgur, Corn Soy Blend, Great                194         8,060      $8,909.9
                                     Northern Beans, Lentils,
                                     Vegetable Oil
                               CPI  Corn Soy Blend, Rice, Vegetable               42         2,310      $2,851.9
                                     Oil
                               WFP  Bulgur, Corn Soy Blend, Lentils,              13        20,340     $36,974.5
                                     Rice, Sorghum, Vegetable Oil
Republic of Congo              WFP  Rice, Vegetable Oil, Yellow Split            195         2,980      $4,793.8
                                     Peas
Rwanda                         WFP  Corn, Cornmeal, Corn Soy Blend,              537         2,980      $4,167.2
                                     Pinto Beans, Vegetable Oil
Somalia                        WFP  Corn Soy Blend, Sorghum, Vegetable             4        18,650     $15,002.6
                                     Oil, Yellow Split Peas
Sudan                          NPA  Lentils, Sorghum, Vegetable Oil              123         2,660      $5,493.0
                               WFP  Corn Soy Blend, Lentils, Sorghum,             49       315,840    $270,162.3
                                     Vegetable Oil, Yellow Split Peas
Tanzania                       WFP  Cornmeal, Corn Soy Blend, Green              198         5,950      $6,051.2
                                     Split Peas, Vegetable Oil
Uganda                         WFP  Corn Soy Blend, Cornmeal, Pinto            3,837        15,530     $15,334.5
                                     Beans, Sorghum, Vegetable Oil,
                                     Yellow Split Peas
Zimbabwe                       CRS  Bulgur, Pinto Beans, Vegetable                --         6,460     $22,713.9
                                     Oil, Yellow Split Peas
                               WFP  Bulgur, Sorghum, Vegetable Oil,               11        24,470     $38,428.8
                                     Yellow Peas, Yellow Split Peas
                              WVUS  Unspecified Commodities                       --            --     $18,308.3
                     -------------------------------------------------------------------------------------------
  Sub-Total Africa                                                            18,481     1,292,920  $1,145,348.2
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                    WFP  Wheat, Wheat Flour, Vegetable Oil             29        43,810     $42,630.3
Algeria                        WFP  Great Northern Beans, Lentils,               125         6,550      $6,212.6
                                     Rice, Vegetable Oil, Wheat Flour
Laos                           WFP  Rice                                         175         3,280      $3,342.7
Nepal                          WFP  Garbanzo Beans, Rice, Vegetable              549         4,620      $4,130.3
                                     Oil, Yellow Split Peas
Pakistan                       WFP  Rice, Vegetable Oil, Wheat Flour,             43       110,210     $96,850.8
                                     Yellow Split Peas
Philippines                    WFP  Rice, Vegetable Oil                            3        15,200     $15,757.8
Sri Lanka                      WFP  Lentils, Vegetable Oil, Wheat,                 4        22,230     $17,821.5
                                     Wheat Flour, Yellow Split Peas
Yemen                          WFP  Great Northern Beans, Pinto Beans,           995        13,880     $12,699.7
                                     Vegetable Oil, Wheat, Wheat
                                     Flour, Yellow Split Peas
                     -------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     1,923       219,780    $199,445.7
----------------------------------------------------------------------------------------------------------------
                                                  Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan                     SCF  Lentils, Vegetable Oil, Wheat                 90         5,970      $9,817.1
                                     Flour
                     -------------------------------------------------------------------------------------------
  Sub-Total Central Asia                                                          90         5,970      $9,817.1
----------------------------------------------------------------------------------------------------------------
                                            Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Colombia                       WFP  Pinto Beans, Rice, Vegetable Oil,          1,590         8,260      $9,057.8
                                     Wheat Flour
Ecuador                        WFP  Lentils, Vegetable Oil, Wheat                 19           820        $814.3
                                     Flour
Guatemala                      CRS  Corn Soy Blend, Pinto Beans, Rice,           207         4,440      $7,404.4
                                     Vegetable Oils
                               SCF  Corn Soy Blend, Pinto Beans, Rice,            10         3,190      $7,436.7
                                     Vegetable Oil
                               WFP  Black Beans, Corn Soy Blend,                 470         2,090      $2,572.1
                                     Vegetable Oil
Haiti                    ACDI/VOCA  Bulgur, Corn Soy Blend, Yellow               150         2,430      $3,184.3
                                     Peas
                               CRS  Bulgur, Corn Soy Blend, Green                128        18,000     $19,563.6
                                     Peas, Pinto Beans, Vegetable Oil
                               WFP  Black Beans, Corn Soy Blend, Pinto             6        64,490     $85,066.8
                                     Beans, Rice, Vegetable Oil,
                                     Yellow Peas
                              WVUS  Bulgur, Corn Soy Blend, Lentils,              10        30,400     $32,839.8
                                     Pinto Beans, Vegetable Oil
                     -------------------------------------------------------------------------------------------
  Sub-Total Latin America/Caribbean                                            2,590       134,120    $167,939.8
                                                                       =========================================
    Worldwide Total                                                           23,084     1,652,790  $1,522,550.8
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011.
  Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for
  Peace Information System report, January 3, 2011. Recipient values are reflective of commodity rations and are
  derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due
  to either monetization of commodities (thus no recipients), or the late distribution of commodities carried
  over from the previous fiscal year that prevented reporting.
Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list.


Appendix 5: USAID Title II Development Activities: Summary Budget, Commodity, Recipient and Tonnage--Fiscal Year
                                                      2010
----------------------------------------------------------------------------------------------------------------
                                                                         Recipients                  Total Cost
       Country           Awardee                 Commodity                 (000s)      Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso                   CRS  Bulgur, Cornmeal, Lentils, Rice,             103         8,920     $12,957.5
                                     Vegetable Oil
Burundi                        CRS  Bulgur, Cornmeal, Corn Soy Blend,            430        12,690      $7,510.8
                                     Vegetable Oil, Wheat, Yellow Peas
Chad                      Africare  Bulgur, Wheat Flour Bread                     27         4,840      $5,675.0
Democratic Republic           ADRA  Cornmeal, Green Peas, Wheat                   20        12,660      $4,991.1
 of the Congo
                               FHI  Cornmeal, Vegetable Oil, Wheat                24        12,310      $5,577.2
                               MCI  Cornmeal, Vegetable Oil, Wheat,               87        10,150      $5,006.1
                                     Yellow Split Peas
Ethiopia                      CARE  Lentils, Vegetable Oil, Wheat,               185        18,490     $13,072.0
                                     Yellow Peas
                               CRS  Bulgur, Corn Soy Blend, Rice,                224        25,040     $14,981.8
                                     Vegetable Oil, Wheat, Yellow
                                     Split Peas
                               FHI  Vegetable Oil, Wheat, Yellow Peas            187        18,840     $11,662.6
                              REST  N/A                                           --            --      $3,239.4
                          SCF-UK *  Lentils, Vegetable Oil, Wheat,               557        32,660     $19,159.1
                                     Yellow Peas
Liberia                       ACDI  Bulgur, Corn Soy Blend, Rice,                106         8,150      $8,427.4
                                     Vegetable Oil, Wheat, Yellow
                                     Split Peas
                              OICI  Rice, Soybeans, Soy Flour, Wheat             208         7,100      $6,572.8
                                     Flour
Madagascar                     CRS  Corn Soy Blend, Rice, Sorghum,               260        14,340     $17,111.0
                                     Vegetable Oil
Malawi                         CRS  Corn Soy Blend, Crude Vegetable               29        17,190     $18,000.1
                                     Oil, Pinto Beans, Wheat,
                                     Vegetable Oil
Mali                      Africare  Bulgur, Vegetable Oil                         32         1,650      $2,434.5
                               CRS  Bulgur, Corn Soy Blend, Green                 72         4,800      $7,806.1
                                     Split Peas, Vegetable Oil
Mauritania                     CPI  Bulgur, Corn Soy Blend, Lentils,              62         7,820      $5,000.1
                                     Vegetable Oil, Wheat
Mozambique                    ADRA  Wheat                                         --        10,000      $4,042.8
                               FHI  Wheat                                         --         8,820      $3,413.6
                               SCF  Wheat                                         --        17,480      $7,309.0
                              WVUS  Wheat                                         --        12,740      $4,789.9
Niger                     Africare  Bulgur, Corn Soy Blend, Red Beans,            40         4,510      $4,054.6
                                     Rice
                       Counterpart  Corn Soy Blend, Rice, Vegetable                5         3,380      $3,754.1
                                     Oil
                               CRS  Bulgur, Rice                                  16         7,260      $7,191.3
Sierra Leone             ACDI/VOCA  Corn Soy Blend, Rice, Vegetable               10        10,800     $11,999.9
                                     Oil, Wheat Flour
Sudan                         ADRA  Lentils, Vegetable Oil                        47         2,030     $30,293.1
Uganda                   ACDI/VOCA  Corn Soy Blend, Wheat, Vegetable             504        20,010     $16,046.4
                                     Oil
                               MCI  Corn Soy Blend, Cornmeal, Green                8        10,170      $8,953.6
                                     Split Peas, Wheat, Vegetable Oil
Zambia                         CRS  Bulgur, Lentils                               10           930      $7,254.2
                     -------------------------------------------------------------------------------------------
  Sub-Total Africa                                                             3,253       325,780    $278,287.1
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                   WVUS  Rice, Vegetable Oil, Wheat Flour,          2,233        10,290     $15,500.0
                                     Yellow Peas
Bangladesh               ACDI/VOCA  Lentils, Vegetable Oil, Wheat                 45        19,270      $9,000.0
                              CARE  Wheat                                         --        57,010     $23,000.0
                               SCF  Vegetable Oil, Wheat, Yellow Split           174        18,060     $10,000.1
                                     Peas
India                          CRS  Bulgur, Vegetable Oil                        125         7,000      $3,733.7
                     -------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     2,577       111,630     $61,233.8
----------------------------------------------------------------------------------------------------------------
                                            Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala
                               CRS  Corn Soy Blend, Crude Vegetable               26         5,760      $5,773.5
                                     Oil, Pinto Beans, Rice, Vegetable
                                     Oil
                               MCI  Corn Soy Blend, Crude Vegetable              102         9,490      $9,458.8
                                     Oil, Pinto Beans, Rice, Vegetable
                                     Oil
                               SCF  Corn Soy Blend, Crude Vegetable               12         4,890      $4,733.1
                                     Oil, Pinto Beans, Rice, Vegetable
                                     Oil
                             SHARE  Corn Soy Blend, Crude Vegetable               16         4,960      $5,034.4
                                     Oil, Pinto Beans, Rice, Vegetable
                                     Oil
Haiti                    ACDI/VOCA  Bulgur, Corn Soy Blend, Wheat                 43         8,040     $10,125.2
                                     Flour, Vegetable Oil, Yellow Peas
                               CRS  Bulgur, Corn Soy Blend, Green                 90        11,610     $10,498.7
                                     Peas, Vegetable Oil, Wheat Flour
                              WVUS  Bulgur, Corn Soy Blend, Lentils,             127        17,990     $15,870.4
                                     Vegetable Oil, Wheat Soy Blend
                     -------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                        416        62,740     $61,494.1
                                                                       =========================================
    Worldwide Total                                                            6,246       500,150    $401,015.0
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Final Budget Summary Report, January 11, 2011.
  Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from Food for
  Peace Information System report, January 3, 2011. Recipient values are reflective of commodity rations and are
  derived separately from program beneficiary totals. Recipient values reported as zero or low typically are due
  to either monetization of commodities (thus no recipients), or the late distribution of commodities carried
  over from the previous fiscal year that prevented reporting.

                              attachment c
Farmer to Farmer Program Examples of Success in Meeting Programmatic 
        Purpose/Goals
    Mr. El-Feki's wife, Neamat, who milks the cows and cares for the 
calves, is also following the recommendations to produce clean milk. 
The income from the milk production is used to purchase all the grocery 
needs for the family. Neamat is now confident that her family and 
especially her grandchildren now always have access to clean, healthy 
milk.
Volunteer Unites Two Agribusiness Groups
    The Carrot Growers Association (CAGA) is an organization of 
vegetable producers at Ashanti-Mampong in the Sekyere West District of 
the Ashanti Region of Ghana. The association was established in 2007 
with a membership of 50 farmers. CAGA members produce 5,000 bags of 
carrots each week and market their produce in 50 kg bags in the retail 
market. Oftentimes the members are exploited with low prices from the 
market women. The leadership of the association lacked adequate 
knowledge of how associations should operate to function as a business 
entity. An organizational development volunteer, Diana Lilla, worked 
with CAGA to develop a strategic business plan with step-by-step 
implementation procedures for the association. Diana also trained the 
leadership on methods to improve services rendered to their members. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Diana Lilla with members of CAGA.

    With the lobbying efforts of the volunteer, CAGA was able to secure 
100 acres of land from the local chief, Nana Osei Bonsu, for the 
farmers to expand their activities. Diane also succeeded in uniting 
CAGA with a sub association, the carrot marketing association, to form 
the Carrot Growers and Marketers Association. This combination will 
further increase services available to members of the new association. 
The increased opportunity to access services through the association 
enticed more farmers to enroll as members of the group, and the 
membership has grown from 50 to 211 farmers.
Volunteer Introduces a New Product to Improve Children's Health and 
        Nutrition in Rural Mali
    Malnutrition threatens the life of many Malian children. With 72% 
of the country living off of less than $1/day, many families do not 
have access to nutritious food to feed their children. In turn, these 
children are underweight and lethargic, and some even face the 
inevitable--death.
    In order to provide nourishment for Malian people and to cut the 
import costs on milk and dairy products, the Government of Mali sought 
to develop local milk production and collection points. The government 
accomplished this by creating milk centers throughout the country to 
produce higher concentrations of fresh milk and to meet the demand for 
fresh milk during the dry season. While this venture was very 
successful, producers and retailers were faced with the problem of 
spoilage due to the short shelf life of fresh milk. For this reason, 
the FtF program created a volunteer assignment for the Women's Local 
Milk Stockist Cooperative and recruited Dr. Poul Hansen for his first 
visit in September 2009. Hansen introduced new technologies, which 
enabled the cooperative to handle excess milk and develop new products.
    Returning to Mali just one year later in August 2010, Hansen was 
asked to focus on infant yogurt to supplement infant milk for newborn 
orphans and infants who are in need of alternative feeding. Hansen 
visited with many of the women members of the Women's Local Milk 
Stockist Cooperative around the city of Bamako to assess their 
potential and provide a tailor-made, hands-on, technical training. He 
taught the co-op members how to process clean and safe regular yogurt, 
infant yogurt, as well as Indian ``paneer'' cheese using a thermometer, 
particular yogurt cultures, and an incubator. Hansen also talked with 
the co-op members about necessary hygiene and sanitation measures. He 
went door-to-door to see many of the members at work in their own 
households, to determine if they were putting what they learned into 
practice. Now, the members of the cooperative are able to produce the 
yogurt on their own and can supplement their children's diet with this 
important source of nutrition.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Dr. Hansen provides hands-on training to women processors in 
        the hygiene and sanitation measures of preparing child.

    Hansen's assignment received extensive radio and TV coverage for 
everyone to follow. At the end of the training sessions, the President 
of the Cooperative, Dana Niangadou, proclaimed, ``This is what we've 
been talking about--some new ideas to make a difference! Now with this 
new infant formula, the nutrition and health status of our children in 
need will change for the better, as will the income of women 
processors.''
    ``We wasted a lot of resources on many different training modules 
and, so far, none of them compares to the hands-on Volunteer Technical 
Assistance we received thanks to the USAID funded Farmer-to-Farmer 
Program,'' notes coordinator Moussa Diabate during the closing 
ceremony.
    Dr. Hansen's last words to Mr. Diabate just before departing Mali 
summed up his commitment to the FtF Program, ``This is, with no doubt, 
the best assignment I've ever had in all my life, and I would 
appreciate Winrock/Mali recruiting me once more to transfer some other 
important technologies wherever needed.''
Reducing Post Harvest Losses and Increasing Food Security
Nigerian Farmers Learn to Make New Nutritional Products
    Fifty percent of the population in Kaduna State, Nigeria is living 
in poverty. Many farmers depend on crops such as yam as both an income 
source as well as an important nutrition source for their families. 
Nevertheless, despite reasonable productivity, many families still 
struggle to feed their children.
    During the dry season, fresh yams do not last long. Without proper 
post harvest processing and preservation techniques, farmers face the 
double consequences of having to discard leftover yam and living with 
food insecurity during several months of the year.
    Fortunately, for a group of farmers in Kaduna State, this is no 
longer a problem.
    After identifying the need for post-harvest processing and 
preservation training, Land O'Lakes, engaged international agriculture 
and food science expert, Dr. Ramana Govin, to provide assistance. Dr. 
Govin worked with Nehemiah Foundation International, a local service 
provider working with 5,250 farmers in four Nigerian states, and a 
selected group of 65 farmers in Kaduna, to provide training and 
technical assistance on yam processing. He demonstrated methods for 
washing, slicing, drying, and pounding the yam into flour. He also 
showed the farmers how to apply the same techniques to cassava. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Farmers in Kaduna State practice making yam flour for the first 
        time.

    These techniques reduce post-harvest losses and increase the number 
of months that families have a reliable food source. Instead of leaving 
leftover yam to rot, farmers can process the yam into flour, which can 
be used throughout the year. Immediately after the training, farmers 
already started realizing the benefits of what they had learned. After 
the first day of the training, one farmer went home, dug some yams, and 
processed the yams to make flour, just as Dr. Govin had demonstrated. 
He brought the flour to the workshop the next day and stated, ``I never 
believed it was possible because of how simple the method seemed, until 
I tried it myself.''
    Emmanuel Nehemiah of the Nehemiah Foundation states, ``Dr. Govin's 
assignment was successful. Before he came, the farmers did not have any 
method of processing and preserving yam. The methodologies used are so 
simple yet the farmers didn't know about it before now. It has been 
very effective for them and beneficial. Many of them are right now 
processing and preserving their yams with the new method and they are 
happy about it.''
    The impacts of this assignment go beyond the 65 farmers who 
directly participated. Immediately after Dr. Govin's training, the 
farmers met with Nehemiah Foundation and decided to appoint trainers 
who will go out and train others in nearby villages. One month later, 
25 of these trainers are now branching out into rural communities and 
offering instruction in indigenous languages on Dr. Govin's techniques 
to additional farmers, enabling even more people to improve their 
family's food security.
                            attached reports
      U.S. International Food Assistance Report 2007_January 2008
    Under Public Law 480, Section 407(f), ``the President shall prepare 
an annual report concerning the programs and activities implemented 
under this law for the preceding fiscal year.'' As required, this 
report is hereby submitted to Congress.

    This Report May Be Ordered From:

USAID Development Experience Clearinghouse
8403 Colesville Road, Suite 210
Silver Spring, MD 20910-6368
Telephone: (301) 562-0641
Fax: (301) 588-7787
URL: http://www.dec.org/
Table of Contents
Executive Summary
Introduction
I. Food Security
II. U.S. International Food Assistance

  A. Public Law 480

    P.L. 480 Title I: Trade and Development Assistance
    P.L. 480 Title II: Emergency and Non-Emergency Assistance
    P.L. 480 Title III: Food for Development
    P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

  B. Section 416(b) of the Agricultural Act of 1949: Surplus 
        Commodities
  C. Food for Progress
  D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
  E. Bill Emerson Humanitarian Trust

III. Appendices

  Appendix 1: List of Abbreviations
  Appendix 2: List of Partner Organizations
  Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal 
        Year 2007
  Appendix 4: USAID Title II Emergency Activities: Summary Budget, 
        Commodity, andTonnage--Fiscal Year 2007
  Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, 
        Commodity,Recipient, and Tonnage Tables--Fiscal Year 2007
  Appendix 6: USDA Food for Progress Program--CCC-funded Grants--Fiscal 
        Year 2007
  Appendix 7: McGovern-Dole International Food for Education and Child 
        Nutrition Program--Fiscal Year 2007: Donations by Country and 
        Cooperating Sponsor
  Appendix 8: Public Law 480 Title II Congressional Mandates--Fiscal 
        Year 2007
  Appendix 9: Countries with Approved U.S. Food Assistance Programs--
        Fiscal Year 2007
Executive Summary
    The United States is committed to the goal of global food security 
through its international food assistance and other foreign assistance 
programs. In Fiscal Year (FY) 2007, the United States provided more 
than $2.1 billion of food aid to 78 developing countries, reaching tens 
of millions of people worldwide. The following summary shows U.S. food 
assistance allocated by legislative authority for FY 2007.\1\
---------------------------------------------------------------------------
    \1\ All costs represent commodities plus freight and distribution.

------------------------------------------------------------------------
                                                          U.S. Dollars
              Program                  Tonnage (MT)        (Millions)
------------------------------------------------------------------------
P.L. 480 Title II *                         2,127,804             $1,870
------------------------------------------------------------------------
  Subtotal P.L. 480 Title II                2,127,804             $1,870
------------------------------------------------------------------------
Food for Progress:
  Title I-funded                               23,210                $17
  CCC-funded                                  240,630               $113
------------------------------------------------------------------------
  Subtotal Food for Progress                  273,840               $130
------------------------------------------------------------------------
Section 416(b) **                               5,000                $20
------------------------------------------------------------------------
  Subtotal 416(b)                               5,000                $20
------------------------------------------------------------------------
Food for Education                            103,230                $99
------------------------------------------------------------------------
  Subtotal Food for Education                 103,230                $99
------------------------------------------------------------------------
Bill Emerson Humanitarian Trust                    --                 --
Farmer-to-Farmer (FTF)                             --                $10
------------------------------------------------------------------------
  Subtotal Bill Emerson and FTF                    --                $10
                                   =====================================
    Grand Total                             2,509,874             $2,129
------------------------------------------------------------------------
* Values provided for P.L. 480 Title II include $25 million in 202(e)
  for WFP, $16 million in general contribution to WFP, $20 million in
  freight overruns. These costs are offset by $201 million in funding
  adjustments ($192.3 million of carry-in and $9.6 million in MARAD
  reimbursements).
** Commodities shipped in FY 2007 were associated with prior year
  agreements on an ``as available'' basis. There was no new 416(b)
  programming approved in FY 2007.

    Over the course of FY 2007, USAID and USDA international food 
assistance programs have proven increasingly responsive to global 
efforts at reducing food insecurity and targeting those most in need. 
By responding to assessment and situational information, focusing on 
reducing risk and vulnerability, targeting the poorest of the poor, and 
better integrating individual programs into larger--often 
international--efforts, the U.S. Government aims to improve the 
effectiveness of aid and to reach global targets for reducing hunger, 
malnutrition and poverty.
    This aid is essential in emergency situations, including the 
ongoing crisis in Sudan. In FY 2007, more than 354,630 MT of USAID 
Title II commodities, valued at $356 million, were provided to an 
estimated 6.4 million beneficiaries in Sudan alone. Meanwhile, in 
Zimbabwe, 88,900 MT of emergency food assistance helped almost 700,000 
people cope with the dual burdens of a deteriorating economic situation 
and poor agricultural performance. Finally, recognizing the importance 
of linking development opportunities within a relief setting, 
Ethiopia's Productive Safety Net Program continued to implement 
activities that targeted both chronic and acute malnutrition, to the 
benefit of over seven million individuals. In all, over 32 million 
people benefited from emergency food aid activities provided through 
Title II.\2\
---------------------------------------------------------------------------
    \2\ Updated as of April 21, 2008.
---------------------------------------------------------------------------
    At the same time, USAID non-emergency programs continued to focus 
on increasing agricultural production, and supporting programs to 
address health, nutrition, HIV and others aimed at investing in people. 
Special emphasis is placed on combating the root causes of hunger and 
malnutrition, and interventions are often multi-sectoral in nature as a 
result. Over the course of the year, more than 8.6 million people in 26 
countries benefited from USAID Title II non-emergency food assistance.
    USDA Title I, 416(b), and Food for Progress programs provided 
commodities to food-insecure populations through The World Food 
Programme (WFP), private voluntary organizations (PVOs) and foreign 
governments. These resources supported a variety of food security 
objectives in developing countries, such as humanitarian assistance, 
HIV mitigation, and agricultural and rural development. In FY 2007, 
USDA continued the McGovern-Dole International Food for Education and 
Child Nutrition Program, providing commodities for school feeding as 
well as nutrition programs for mothers, infants, and children under 5, 
positively impacting the lives of more than 3.3 million beneficiaries.
Introduction
    Since the passage of P.L. 480 in 1954, U.S. international food 
assistance programs have evolved to address multiple objectives. The 
most recent changes came with the Farm Security and Rural Investment 
Act of 2002. The `2002 Farm Bill' restated the objectives that guide 
U.S. food assistance programs. These objectives are:

   Combat world hunger and malnutrition and their causes;

   Promote broad-based, equitable, and sustainable development, 
        including agricultural development;

   Expand international trade;

   Develop and expand export markets for U.S. agricultural 
        commodities;

   Foster and encourage the development of private enterprise 
        and democratic participation in developing countries; and

   Prevent conflicts.
U.S. International Food Assistance
    The U.S. international food assistance program is established by 
several legislative authorities implemented by two Federal agencies. 
USAID administers Titles II, III, and V of P.L. 480. USDA administers 
Section 416(b) of the Agricultural Act of 1949, Title I of P.L. 480, 
Food for Progress, and McGovern-Dole International Food for Education 
and Child Nutrition. The list below provides a brief description of 
each activity.

    1. P.L. 480: Agricultural Trade Development and Assistance Act of 
        1954 (Food for Peace)--the principal mechanism for U.S. 
        international food assistance.

       P.L. 480 Title I: Trade and Development Assistance--
            concessional sales of U.S. agricultural commodities to 
            developing countries and private entities.

       P.L. 480 Title II: Emergency and Development 
            Assistance--direct donation of U.S. agricultural 
            commodities for emergency relief and development.

       P.L. 480 Title III: Food for Development--government-to-
            government grants of agricultural commodities tied to 
            policy reform.

       P.L. 480 Title V: Farmer-to-Farmer (FTF) Program--
            voluntary technical assistance to farmers, farm groups and 
            agribusinesses.

    2. Section 416(b) of the Agricultural Act of 1949--overseas 
        donations of surplus food and feed grain owned by the USDA 
        Commodity Credit Corporation (CCC).

    3. Food for Progress Act of 1985--commodity donations available to 
        emerging democracies and developing countries committed to the 
        introduction or expansion of free enterprise in their 
        agricultural economies.

    4. McGovern-Dole International Food for Education and Child 
        Nutrition Program (authorized in the 2002 Farm Bill)--donations 
        of U.S. agricultural products, as well as financial and 
        technical assistance, for school feeding and maternal and child 
        nutrition projects in low-income countries.

    5. Bill Emerson Humanitarian Trust (originally authorized by the 
        Agricultural Trade Act of 1980)--food reserve administered 
        under the authority of the Secretary of Agriculture. This 
        reserve is available to meet emergency humanitarian food needs 
        in developing countries, allowing the United States to respond 
        to unanticipated food crises.
I. Food Security
Defining a Long-Term Global Strategy
    U.S. international food assistance has long played a critical role 
in responding to global food insecurity. This tradition continued in FY 
2007, with the U.S. Government providing over 2.5 million metric tons 
of commodities. The implementing programs have also evolved to reflect 
greater understanding of (and a focus on addressing) the causes of 
famine, food emergencies, and large-scale hunger around the world. In 
the 1990 Farm Bill, for example, food security was narrowly defined as 
dependent primarily on the availability of food at the national level. 
It was broadened in a 1992 policy paper to begin to address 
distribution and nutritional quality, calling for ``all people at all 
times [to] have both physical and economic access to sufficient food to 
meet their dietary needs for a productive and healthy life.'' \3\ This 
definition includes three elements judged essential to achieving food 
security, and forms the basis for much of the U.S. Government's 
international food assistance activity:
---------------------------------------------------------------------------
    \3\ USAID Policy Determination Number 19, April 1992.

   Food availability: sufficient quantities of food from 
        household production, other domestic output, commercial imports 
---------------------------------------------------------------------------
        or food assistance.

   Food access: adequate resources to obtain appropriate foods 
        for a nutritious diet, which depends on income available to 
        households and on the price of food.

   Food utilization: a diet providing sufficient calories and 
        essential nutrients, potable water and adequate sanitation, as 
        well as household knowledge of food storage and processing 
        techniques, basic principles of nutrition and proper child care 
        and illness management.

    In recent years, attention has focused on the continued challenges 
that hamper efforts at reducing global food insecurity. Progress has 
been uneven across the developing world, with some countries in all 
regions gaining and others losing ground. International food assistance 
programs also face increasingly frequent and severe natural and man 
made disasters with growing humanitarian demands on both U.S. and 
international humanitarian assistance resources.
Improving the Efficiency and Effectiveness of International Food 
        Assistance
    In April 2007, the Government Accountability Office (GAO) issued a 
report entitled ``Foreign Assistance: Various Challenges Impede the 
Efficiency and Effectiveness of U.S. Food Aid.'' \4\ This report 
captured the results of extensive assessments of U.S. Government 
international food assistance programs and contained recommendations 
for USAID and USDA to improve the efficiency and effectiveness of their 
food aid programs. Since the document was released, USAID and USDA have 
taken a number of steps to address the issues highlighted in the 
report. These include:
---------------------------------------------------------------------------
    \4\ ``Foreign Assistance: Various Challenges Impede the Efficiency 
and Effectiveness of U.S. Food Aid'' (GAO-07-560) (April 2007).

   expanding monitoring of food aid in the two largest, most 
        complex emergency programs (Sudan and Zimbabwe) and formally 
        requesting that Congress provide authority to use Title II to 
---------------------------------------------------------------------------
        support monitors for non-emergency programs;

   reviewing how to improve food aid logistics by awarding a 
        contract for an independent review of various logistics options 
        and exploring long-term maritime service contracts;

   improving assessments by collecting and starting to index 
        PVO assessment tools to expand utility; and

   updating food aid specifications by issuing a solicitation 
        for an independent review of the nutritional quality and cost 
        effectiveness of food aid commodities.

    FY 2007 saw increased inter-agency cooperation between USAID and 
USDA in several critical actions. In an effort to make the Food Aid 
Consultative Group (FACG) more consultative, USDA and USAID spearheaded 
the creation of an Executive Committee (EXCOM), providing leadership 
for the overall agenda and critical discussion points for FACG members. 
EXCOM is composed of two representatives from USAID, USDA, the 
commodities industry and PVOs, plus observers from the transportation 
industry.
    USAID and USDA also began collaborating on a comprehensive review 
of food aid specifications and products, including: a thorough 
initiation of contracting procedures; an evaluation of USDA product 
specifications; and a review of options on nutritional quality and cost 
effectiveness of commodities currently provided as food aid, in order 
to ensure that the food meets the nutritional requirements necessary to 
address beneficiaries' needs.
USAID's Famine Early Warning System (FEWS NET)
    Saving lives and preventing famine are key objectives of the U.S. 
Government. FEWS NET is a USAID-funded activity that collaborates with 
international, national and regional partners to monitor, collect and 
disseminate critical data on conditions of food availability and 
access, as well as the environmental and socioeconomic hazards that 
lead to food insecurity and famine. The goal of FEWS NET is to inform 
efforts to manage the risk of food insecurity through the provision of 
timely and analytical early warning and vulnerability information, so 
that decision makers have ample time to prepare and take preventive 
action. In 2007, FEWS NET had 23 offices that covered 25 countries.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    FEWS NET exemplifies the U.S. commitment to anticipating and 
responding to humanitarian vulnerabilities and crises. FEWS NET has 
interagency agreements with U.S. Geological Survey (USGS), National 
Aeronautics and Space Administration (NASA), National Oceanic and 
Atmospheric Administration (NOAA) and USDA that provide information to 
the U.S. Government, local governments and a variety of other regional 
and international partners to assist in averting famine.
Food for Peace's Institutional Capacity Building Grants
    FFP's Institutional Capacity Building grants (ICBs) give PVOs funds 
to build their organizational capacity. This pertains to both 
headquarters and field management of Title II programming. ICB grants 
allow groups to enrich their knowledge, enhance their Title II program 
management and practices, and better serve their communities. 
Currently, the funds are used for training, travel, workshops, 
assessments, equipment, tool development and activities that enable 
each organization to strengthen itself from within and also to mentor 
and to partner with other Title II PVOs and/or sub-recipients. The 14 
participating organizations began their programs in FY 2004 and will 
conclude at the end of FY 2008.\5\
---------------------------------------------------------------------------
    \5\ ACDI/VOCA, Adventist Development & Relief Agency International 
(ADRA), Africare, American Red Cross, CARE, Catholic Relief Services 
(CRS), Counterpart International (CPI), Food for the Hungry (FHI), Land 
O'Lakes, Inc. (LOL), Mercy Corps International (MCI), Opportunities 
Industrialization Centers International (OICI), Project Concern 
International (PCF), Save the Children Federation (SCF) and World 
Vision, Inc. (WV).
---------------------------------------------------------------------------
    To capitalize on positive achievements and capture projects already 
in development, FFP has encouraged the grantees to focus on exit 
strategies and how to preserve the results of their success. 
Additionally, FFP created an index that captures all of the tools that 
have been developed by the PVOs using ICB funds. The index will be 
distributed to the PVOs and be posted in two online databases.
    In FY 2007, FFP conducted extensive reviews of the grantees' mid-
term evaluations, annual performance reports, annual work plans and 
plans for a final evaluation. Following these reviews, the findings, 
common themes and suggested areas for greater focus and attention in 
the future were noted and shared with grantees. For example, grantees 
were encouraged to prioritize their ICB activities and increase 
linkages to Title II programs for greater impact. In addition, the 
findings stressed the importance of capturing lessons learned and 
success stories, to both enhance and foster program performance and 
innovation.
A Conceptual Framework for Integrating Food Aid and HIV Programs
    In many countries, there is a complex interface between chronic 
food insecurity and HIV. While there is already close collaboration 
between FFP P.L. 480 Title II food aid and the President's Emergency 
Plan for AIDS Relief (PEPFAR) programs, in mid-FY 2007, FFP and PEPFAR 
developed a Conceptual Framework to establish and facilitate a 
programmatic continuum to address the nutrition, dietary 
supplementation and food security needs of HIV-infected and -affected 
populations.\6\ The Conceptual Framework, to be implemented in 2008, 
provides guidance to target Title II food aid and to increase 
collaboration and joint programming with PEPFAR where possible. For 
example, FFP and PEPFAR are mapping program locations so as to identify 
priority areas, gaps, and develop a clearer vision of coverage needs, 
and working to determine standardized eligibility and exit criteria.
---------------------------------------------------------------------------
    \6\ This report is available at http://www.usaid.gov/our_work/
humanitarian_assistance/ffp/pepfar_conceptual.pdf.
---------------------------------------------------------------------------
II. U.S. International Food Assistance Program Descriptions and Fiscal 
        Year 2007 Accomplishments
A. Public Law 480
    The primary mechanism of U.S. international food assistance is the 
Agricultural Trade Development and Assistance Act of 1954 (P.L. 480), 
commonly known as Food for Peace.

    1. P.L. 480 Title I: Trade and Development Assistance

    The P.L. 480 Title I authority provides funding for both a 
concessional sales program, supporting Trade and Development, and for 
the Food for Progress grant program, supporting Agricultural 
Development in emerging democracies. In FY 2007, no new concessional 
sales agreements were made.
    The USDA-administered Food for Progress Program, authorized under 
the Food for Progress Act of 1985, assists developing countries, 
particularly emerging democracies ``that have made commitments to 
introduce or expand free enterprise elements in their agricultural 
economies through changes in commodity pricing, marketing, input 
availability, distribution, and private sector involvement.'' The 
program authorizes the Commodity Credit Corporation (CCC) to carry out 
the sale and exportation of U.S. agricultural commodities on credit 
terms or on a grant basis, with the use of either CCC financing or P.L. 
480 Title I funds. Grants under the Food for Progress program are 
awarded to governments or PVOs, nonprofit agriculture organizations, 
cooperatives, intergovernmental organizations or other private 
entities.

      a. P.L. 480 Title I: Food for Progress Highlights

    In FY 2007, P.L. 480 Title I funding provided 23,210 MT in Food for 
Progress assistance, with an estimated value of $17 million. The 
summaries below provide examples of Title I-funded Food for Progress 
agreements signed in FY 2007.

   Afghanistan: USDA donated 8,210 MT of soybean oil to the 
        Government of the Islamic Republic of Afghanistan. The 
        government will sell the oil and use the proceeds to finance 
        agricultural and rural development activities with the 
        objective of alleviating poverty, creating employment and 
        promoting economic and agricultural development. This will be 
        accomplished through support for higher education, rural 
        extension services, plant and animal disease diagnostics and 
        control, food safety and natural resource management.

   Ethiopia: USDA donated approximately 15,000 MT of wheat to 
        the Government of Ethiopia to replenish the grain stocks of the 
        Ethiopian Food Security Reserve Agency, which provides 
        assistance to food-insecure Ethiopians in times of crisis.

    2. P.L. 480 Title II: Emergency and Non-Emergency Assistance

    More than 85% of U.S. international food aid is used to respond to 
emergency situations and to implement development projects under Title 
II, administered by the USAID Office of Food for Peace in the Bureau 
for Democracy, Conflict, and Humanitarian Assistance.\7\ In FY 2007, 
approximately $1.87 billion, or 2.13 million MT of commodities, was 
administered under Title II. In the process, FFP partnered with 
cooperating sponsors (CSs) to implement activities in 64 countries 
worldwide. These programs benefitted over 40 million people.\8\
---------------------------------------------------------------------------
    \7\ Total value equivalent. Metric tonnage equivalent is 84%.
    \8\ Updated as of April 21, 2008.
---------------------------------------------------------------------------
    The focus of Title II programs is to reduce food insecurity in 
vulnerable populations. This focus on vulnerability to food insecurity 
targets improving resiliency to shocks, an essential first step for 
household self-sufficiency and economic independence. In support of 
this strategy, as well as USAID's overarching goal of saving lives and 
reducing suffering, many Title II emergency programs encompass a number 
of development-relief transition activities. Similarly, the non-
emergency development portfolio incorporates activities to strengthen 
local capacity to respond to famine, natural disasters and complex 
emergencies, as well as to provide safety nets in some cases.

      a. P.L. 480 Title II: Emergency Programs

    Title II emergency programs aim to address two forms of 
emergencies: natural disasters, such as floods or droughts; and complex 
emergencies characterized by a combination of natural disaster, 
conflict and insecurity, a collapse in civil society and/or political 
stability. All of these elements pose substantial program and operating 
challenges in responding effectively to the needs of food-insecure 
populations.
    In FY 2007, Title II emergency programs provided 1.5 million MT of 
emergency food aid, at a cost of $1.4 billion, to help alleviate 
malnutrition and hunger in 30 countries.\9\ In all, Title II emergency 
programs reached approximately 32.2 million food-insecure people in FY 
2007.\10\
---------------------------------------------------------------------------
    \9\ Does not include IFRP programming. See page 11 for details.
    \10\ Updated as of April 21, 2008.

---------------------------------------------------------------------------
    P.L. 480 Title II: Emergency Program Highlights

    C-SAFE/Zimbabwe:

    C-SAFE is the Consortium for the Southern Africa Food Security 
Emergency, and includes the PVO organizations World Vision, CARE and 
Catholic Relief Services (CRS). During FY 2007, the Consortium operated 
under exceedingly difficult circumstances that included crop failure, 
drought, the world's highest rate of inflation and extreme logistical 
difficulties. Although the food security situation in Zimbabwe 
continued to deteriorate, C-SAFE worked to prevent a further decline of 
the nutritional situation among its 688,000 beneficiaries.
    In FY 2007, FFP provided 88,900 MT of food to C-SAFE for 
distribution in Zimbabwe. Utilizing six distinct feeding programs, C-
SAFE carried out short-term food transfers through interventions 
including food for assets (FFA), safety net feeding, food support for 
the chronically ill, supply of subsidized food to urban markets, 
emergency school-based feeding and institutional feeding.

    WFP/Sudan:

    As in previous years, Title II emergency activities played a key 
role in the prevention of famine in Darfur, Sudan. In FY 2007, FFP 
provided 50 percent of WFP's Sudan appeal, representing more than 67 
percent of all contributions received by WFP from all donors. Sizable 
and timely contributions from FFP ensured that WFP was able to meet 100 
percent of its prepositioning targets for Darfur and Southern Sudan in 
2007. This achievement prevented WFP from having to airlift any 
commodities to the region, lowering program cost and ensuring timely 
commodity deliveries during the most critical time of the year. In 
total, WFP reached more than 3.1 million people in Darfur with food 
assistance during the critical hunger gap from July-September 2007, and 
met, on average, more than 92 percent of its monthly target caseload in 
Darfur throughout all of 2007--despite rampant insecurity and regular 
attacks on humanitarian staff.
    Additionally, Title II emergency assistance was provided to more 
than 170,000 newly displaced persons fleeing violence in Eastern Chad 
in 2007, while continuing to meet the needs of over 232,000 refugees 
from Darfur.

    Productive Safety Net Program/Ethiopia:

    Working in one of the world's most food-insecure countries, 
Ethiopia's Productive Safety Net Program (PSNP) represents an 
innovative approach toward combating both chronic and acute 
malnutrition. Taking into account the short- and long-term challenges 
faced by food-insecure households, the program attempts to 
simultaneously stabilize incomes--thus preventing the sale of assets 
during hunger periods--and to increase community productivity through 
public works projects such as soil and water conservation.
    In FY 2007, donor coordination with the Government of Ethiopia 
(GOET) continued to be a vital part of the success of the PSNP. The 
program reached approximately 7.3 million beneficiaries in chronically 
food-insecure households. These beneficiaries received food (45 percent 
of beneficiaries) or cash (55 percent of beneficiaries) in return for 
participating in public works programs in their communities during the 
6 months of the year between harvest and planting season. Results to 
date have been promising.
    During the year, work centered on establishing graduation criteria 
for the 2008 PSNP cycle and discussions on an increase of the wage 
rate. Donor/GOET working groups have also established guidelines for 
pilot PSNP programs for pastoralist areas that will roll out in 2008 in 
Afar, parts of Oromiya, and selected zones of Somali Region. In FY 
2007, USAID contributed 244,310 MT worth--to eight cooperating sponsors 
implementing the PSNP: CARE, CRS, FHI, Relief Society of Tigray (REST), 
SCF, SCF-UK, WV and WFP.

      b. P.L. 480 Title II: Non-Emergency Programs

    The P.L. 480 Title II development (non-emergency) food aid program 
constitutes the single largest source of USAID funding in promoting 
long-term food security in such areas as:

    1. Agriculture and Natural Resource Management activities.

    2. Health and household nutrition activities.

    3. Education, Humanitarian Assistance, and Microenterprise.

    In FY 2007, 16 cooperating sponsors implemented 78 Title II non-
emergency activities in 26 countries. Approximately 594,840 MT, valued 
at $348 million, of food assistance was used to support programs that 
benefited an estimated 8.6 million people.

    P.L. 480 Title II: Non-Emergency Program Highlights

    The examples below illustrate the breadth of Title II non-emergency 
food resources implemented by cooperating sponsors as well as how these 
activities have helped in allaying food insecurity and fostering self-
sufficiency.

    World Vision/Uganda:

    World Vision's Development Assistance Program for Gulu and Kitgum 
districts of northern Uganda combats high rates of food insecurity 
prevalent in that region. In FY 2007, two main areas of programming 
were health and nutrition monitoring and agricultural technology and 
practices. Activities included 82 nutritional and hygiene-focused 
training sessions, with almost 2,500 beneficiaries, mothers and foster 
parents participating. Additionally, using improved seeds and 
technology, a total of 228,335 tree seedlings were raised at central 
demonstration nurseries and community tree planting groups. The 
community nurseries scaled up production by 150 percent compared with 
FY 2006.

    Catholic Relief Services (CRS)/Malawi:

    In Malawi, CRS aims to reduce food insecurity of vulnerable 
populations by improving agricultural techniques and practices. In FY 
2007, the Improving Livelihoods through Increased Food Security (I-
LIFE) DAP program focused on improving program quality and scale by 
fine-tuning strategies and realigning interventions based on lessons 
learned over its first 2 years of implementation. The program delivered 
13,360 MT of commodities and achieved success across all indicators and 
results beyond set targets. For example, agricultural production 
increased due to improved agriculture practices, use of quality seeds 
and increased uptake of winter cropping through small-scale irrigation. 
As a result, almost 95 percent of beneficiaries planted improved crop 
varieties, representing an impressive (91 percent increase from almost 
50 percent last year) adoption of sound agricultural practices. The 
value of agricultural production per vulnerable household for the 2 
seasons was equivalent to $402.87--a 113 percent increase in income per 
vulnerable household from the previous fiscal year.

    Save the Children Federation (SCF)/Bangladesh:

    During FY 2007, SCF's Jibon-O-Jibika program assisted more than 2.8 
million beneficiaries in the Division of Barisal, Bangladesh. Focusing 
on enhancing household food security, the program matches critical 
health and nutrition interventions alongside activities such as 
homestead gardening, vulnerability mapping, emergency preparedness 
planning and basic health education services. Some of the greatest 
impact was demonstrated in the health sector: Jibon-O-Jibika pioneered 
one-stop service delivery to ensure antenatal care, expanded program 
for immunization (EPI) and growth monitoring and promotion (GMP) in 
combined outreach sessions through joint planning with the Ministry of 
Health and PVOs. Combining immunization and growth monitoring 
interventions resulted in outcomes that often exceeded program targets: 
GMP sessions reached 100 percent coverage (101 percent of goal 
achieved) and EPI coverage went up from 87 percent in FY 2005 to 99 
percent during FY 2007 (115 percent of goal achieved). SCF delivered 
65,440 MT at an approximate value of $10 million.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Food Assistance in the Fight against HIV
 
    HIV-affected populations often cite food as one of their greatest
 needs. HIV can cause and worsen food insecurity and malnutrition among
 infected and affected populations, including orphans and vulnerable
 children (OVCs). In particular, the infection affects metabolism and
 causes wasting, especially in more advanced stages and in the absence
 of anti-retroviral therapy (ART). Food insecurity can also lead people
 to adopt livelihood strategies that increase the risk of HIV
 transmission. During FY 2007, there was increased recognition of the
 interrelationship between food and nutrition security and HIV. During
 the year, FFP partners continued to provide support to HIV-infected and
 -affected food-insecure families in a number of countries including
 Ethiopia, Ghana, Kenya, Rwanda, Uganda and Malawi. In addition, FFP and
 the PEPFAR collaborated on a conceptual framework for joint work in HIV
 and Food Security.
    Beginning a new program focusing on the reintegration of Internally
 Displaced Persons in Northern Uganda, ACDI/VOCA worked with The AIDS
 Service Organization to develop a client eligibility survey for direct
 food support. In the first year of this effort, 13,400 beneficiaries
 were identified to receive food supplements designed to support their
 care. A number of these beneficiaries have since improved their health
 enough to be incorporated into agricultural activities and \2/3\ of
 these families no longer need to receive food supplementation.
    During FY 2007 programming in Malawi, the I-LIFE consortium reached
 more than 9,000 households who hosted orphans or had chronically ill
 household members. With the inclusion of these vulnerable households in
 a range of development activities such as home gardening, irrigation
 and Village Savings and Loans groups, beneficiaries were able to
 improve their livelihood capacities to a level where they could
 graduate from food assistance. In a partnership with PEPFAR and UNICEF,
 meanwhile, I-LIFE supported home-based care for the chronically ill,
 and staff were trained to improve program quality.
------------------------------------------------------------------------


      c. International Food Relief Partnership
    In an effort to expand and diversify P.L. 480's sources of food aid 
commodities and FFP's current base of implementing partners, the U.S. 
Congress created the International Food Relief Partnerships (IFRP) 
Initiative in November 2000. This initiative enables USAID to award 
grant agreements to eligible U.S. nonprofit organizations to produce 
and stockpile shelf-stable, pre-packaged commodities. Through the IFRP 
program, commodities are made available to eligible nonprofit U.S. 
organizations and international organizations for transportation, 
delivery, and distribution in emergency food aid relief programs.

    In FY 2007, the Office of Food for Peace awarded approximately $7 
million in Title II IFRP supplier and distribution grants. The 
program's primary supplier, Breedlove Dehydrated Foods, produced a 
micronutrient-fortified, dried vegetable soup mix which is used as a 
meal supplement for humanitarian relief operations overseas. Over the 
course of the year, 32 nonprofit U.S.-based organizations distributed 
the commodity to beneficiaries in 32 countries.\11\ A list of these 
countries is provided in Appendix 9.
---------------------------------------------------------------------------
    \11\ Represents IFRP organizations with program agreements in FY 
2007. These organizations include: Amigos Internacionales, Batay Relief 
Alliance, Bless the Children, CRS, Center for International Health, 
Child Life International, Church of Bible Understanding, CitiHope 
International, Convoy of Hope, Coprodeli, Evangelistic International 
Ministry, Fabretto Children's Foundation, Family Outreach, Feed the 
Children, Haiti Vision, Healing Hands International, Hope Education 
Foundation, International Crisis Aid, International Partnership for 
Human Development, International Relief and Development, Inc., 
International Relief Teams, Legacy World Missions, Medical 
Missionaries, Nascent Solutions, NOAH Project, OICI, PCI, Project Hope, 
Resource & Policy Exchange, Salvation Army World Service, Share Circle 
and Uplift International.

---------------------------------------------------------------------------
    3. P.L. 480 Title III: Food for Development

    The P.L. 480 Title III program is a USAID-administered tool for 
enhancing food security and supporting long-term economic development 
in the least-developed countries. The U.S. Government donates 
agricultural commodities to the recipient country and funds their 
transportation to the point of entry in the recipient country. These 
commodities are sold on the domestic market and the revenue generated 
from their sale is used to support and implement economic development 
and food-security programs. Funds were not appropriated for Title III 
in FY 2007.

    4. P.L. 480 Title V: John Ogonowski Farmer-to-Farmer Program

    The Farmer-to-Farmer (FTF) Program provides voluntary technical 
assistance to farmers, farm groups and agribusinesses in developing and 
transitional countries, in an effort to promote sustainable 
improvements in food processing, production and marketing. The program 
relies on the expertise of volunteers from U.S. farms, land-grant 
universities, cooperatives, private agribusinesses and nonprofit farm 
organizations to respond to the local needs of host-country farmers and 
organizations. In general, these volunteers are not overseas 
development professionals, but rather individuals who have domestic 
careers, farms and agribusinesses, or are retired persons who want to 
participate in development efforts. Typically, volunteers spend about 
20 to 30 days in the host country.
    The FTF Program was initially authorized by Congress in the 1985 
Farm Bill and funded through Title V of Public Law 480. It was re-
authorized by the 2002 Farm Bill to operate from FY 2004 until FY 2008. 
The Program has been renamed the John Ogonowski Farmer-to-Farmer 
Program to honor the pilot on American Airlines Flight 11 that crashed 
into the World Trade Center in New York City on September 11, 2001.

    P.L. 480 Title V: FTF Highlights

    During FY 2007, USAID provided $10.1 million for FTF programs of 
eight cooperating sponsors. The FTF programs funded 734 volunteer 
assignments (up from 690 volunteers in FY 2006) in 37 countries. 
Volunteers provided developing country organizations with technical 
assistance services which directly benefited over 148,700 women and men 
in FY 2007. The following examples illustrate the types of activities 
undertaken by the program:

    Improving Quality of Products for Export/El Salvador:

    In order to assist El Salvadoran dairy farmers and processors with 
preparing their products to market abroad, a FTF volunteer with more 
than 50 years of experience in processing cheeses in Wisconsin, 
traveled to El Salvador to share his knowledge with local cheese 
industries. Working with managers, technicians, and owners of various 
cheese factories, the volunteer helped demonstrate improved cheese and 
yogurt formulations and processes. Such techniques will enable cheese 
manufacturers to develop new high-value products and reinvent 
traditional ones for high-end markets abroad. Manufacturers in 
Agrosania, for example, have improved the flavor of their Monterey Jack 
cheese, while in La Salud they are now using bean gum to improve their 
cream cheese and fresh cheese.

    Introduction of New Products and Techniques/Moldova:

    In Moldova, a FTF volunteer introduced the idea of growing seedless 
watermelons to the ``AgroAccess'' Vegetable Marketing Cooperative, and 
a survey confirmed the market viability of the unique product. 
Cooperative members were trained in appropriate soil mixes, tray 
preparation, seeding, and optimal conditions for greenhouse growing of 
healthy seedlings. Even though hail in July 2007 affected 50 percent of 
the planned yield, local farmers plan to expand cultivation of seedless 
watermelons to 15,000 (an increase from 1,200) seedlings and a drip-
irrigation system. New crops and progressive production methods are 
creating new opportunities and generating higher incomes for many hard-
working farmers.

             Farmer-to-Farmer Volunteer Assignments: FY 2007
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                       Angola                   6
                                     Ethiopia                  26
                                        Ghana                  24
                                       Guinea                   6
                                        Kenya                  13
                                       Malawi                  13
                                         Mali                   9
                                   Mozambique                  10
                                      Nigeria                  17
                                 South Africa                  30
                                       Uganda                  25
                                       Zambia                  13
                                                   ---------------------
  Subtotal Africa.................................            192
                                                   ---------------------
                                      Bolivia                   4
                                  El Salvador                  22
                                    Guatemala                  20
                                       Guyana                  25
                                        Haiti                  23
                                     Honduras                  30
                                      Jamaica                  22
                                    Nicaragua                  12
                                         Peru                   3
                                                   ---------------------
  Subtotal Latin America/Caribbean................            161
                                                   ---------------------
                                      Armenia                  17
                                   Azerbaijan                  19
                                      Belarus                  16
                                      Georgia                  19
                                      Moldova                  27
                                       Russia                  92
                                      Ukraine                  35
                                                   ---------------------
  Subtotal Europe/Eurasia.........................            225
                                                   ---------------------
                                   Bangladesh                   9
                                        India                  16
                                    Indonesia                   8
                                   Kazakhstan                  22
                                   Kyrgyzstan                  41
                                        Nepal                  22
                                   Tajikistan                  25
                                 Turkmenistan                  11
                                      Vietnam                   2
                                                   ---------------------
  Subtotal Asia/Near East.........................            156
                                                   =====================
    Total.........................................            734
------------------------------------------------------------------------

B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities
    The Agricultural Act of 1949 authorizes the donation by USDA of 
surplus food and feed grain owned by the CCC. Section 416(a) authorizes 
surplus food assistance to be distributed domestically, and surplus 
food shipped to developing countries for assistance programs is covered 
under Section 416(b). Surplus commodities acquired by the CCC as a 
result of price-support operations may be made available under Section 
416(b) if they cannot be sold or otherwise disposed of without 
disrupting price-support programs or at competitive world prices. These 
donations are prohibited from reducing the amounts of commodities 
traditionally donated to domestic feeding programs or agencies, from 
preventing the fulfillment of any agreement entered into under a 
payment-in-kind program, or from disrupting normal commercial sales.

    1. Section 416(b): Surplus Commodities Highlights

    During FY 2007, USDA provided approximately 5,000 MT of non-fat dry 
milk and associated freight, valued at $20 million. All of these 
shipments were associated with prior year agreements whereby USDA would 
provide milk in FY 2007 only if surplus commodity became available. 
There was no new programming in FY 2007 under this program.
C. Food for Progress
    The USDA-administered Food for Progress Program, authorized under 
the Food for Progress Act of 1985, assists developing countries, 
particularly emerging democracies ``that have made commitments to 
introduce or expand free enterprise elements in their agricultural 
economies through changes in commodity pricing, marketing, input 
availability, distribution, and private sector involvement.'' The 
program authorizes the CCC to carry out the sale and exportation of 
U.S. agricultural commodities on credit terms or on a grant basis, with 
the use of either CCC financing or P.L. 480 Title I funds. Agreements 
for Food for Progress are awarded to governments or PVOs, nonprofit 
agriculture organizations, cooperatives, intergovernmental 
organizations or other private entities.
    The 2002 Farm Bill extended the authority for the Food for Progress 
Program to provide assistance in the administration and monitoring of 
food assistance programs to strengthen private-sector agriculture in 
recipient countries through FY 2007. The CCC is authorized to use $15 
million for administrative costs under the grants and $40 million for 
transportation expenses.

    1. CCC-funded Food for Progress Highlights

    In FY 2007, CCC funding financed the purchase and shipment of 
250,630 MT of commodities to 13 countries, with an estimated value of 
$113 million. The summaries below provide examples of CCC-funded Food 
for Progress agreements signed in FY 2007.

   Bolivia: USDA donated 11,500 MT of wheat to Food for the 
        Hungry International (FHI), for use in Bolivia. FHI will sell 
        the wheat and use the proceeds to establish: supply chains for 
        higher value agricultural products; develop commodity-producer 
        associations and micro-enterprises; increase agricultural 
        productivity and post-harvest system efficiency; improve access 
        to financial services; and, create strategic alliances with 
        public and private sector organizations in Bolivia. The program 
        will directly benefit 2,500 farmers and 2,500 households 
        indirectly.

   Mozambique: USDA donated 21,060 MT of wheat to TechnoServe 
        (TS), a private voluntary organization, for use in Mozambique. 
        TS will sell the wheat in Mozambique and use the proceeds to 
        carry out development work in the poultry industry. TS will 
        expand capacity for poultry farmers, train poultry industry and 
        related government agencies in bio-security and disease 
        prevention, and provide matching grants to large-scale 
        processors to help upgrade facilities. TS will also provide 
        marketing services to promote improved market access and work 
        with government ministries to improve analysis of policy, 
        regulatory and administrative issues impacting the poultry 
        industry.

   Niger: USDA donated 5,600 MT of agricultural commodities, 
        including rice and soy-fortified bulgur to International Relief 
        and Development, Inc. (IRD) for use in Niger. IRD will sell the 
        rice in Niger and use the proceeds to help pastoralists 
        reconstitute goat herds, expand water sources for animals, 
        develop pasture reserves, increase vegetable production, and 
        build capacity of local NGOs. This program also includes a food 
        for work (FFW) component, in which 1,600 MT of soy-fortified 
        bulgur will be distributed to workers participating in the 
        water source expansion and pasture development activities.

   Nicaragua: USDA donated 15,000 MT of wheat and 1,000 MT of 
        crude degummed soybean oil to FINCA International for use in 
        Nicaragua. FINCA will sell the commodities and use the proceeds 
        over a 3 year period to increase loan capital and microfinance 
        services to micro-entrepreneurs in agriculture-related 
        businesses. This program will directly benefit 8,415 farmers 
        and indirectly benefit 37,867 family members.
D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
    An estimated 120 million children around the world do not attend 
school, due in part to hunger or malnourishment. The majority of them 
are girls. Following the success of the Global Food for Education 
Initiative, created in July 2000, the United States has demonstrated 
its continued commitment to education and child nutrition with the 2002 
Farm Bill's authorization of the McGovern-Dole International Food for 
Education and Child Nutrition Program (FFE) through FY 2007.
    Modeled on the U.S. Government's school meals program, the program 
is named in honor of former Senators George McGovern and Robert Dole 
for their tireless efforts to promote education and school feeding. The 
FFE program uses U.S. commodities and financial assistance to provide 
incentives for children to attend and remain in school, as well as to 
improve child development through nutritional programs for women, 
infants and children under 5. In its inaugural year, FFE provided 
119,320 MT of commodities, worth $93.1 million, to support programs 
implemented by WFP and PVOs in 20 countries. In FY 2007, the FFE 
program provided more than 103,000 MT of commodities to support child 
nutrition and school feeding programs in 15 countries, the total value 
of which was over $98 million. The following are examples of new FFE 
programs that were funded in FY 2007:

   Mozambique: USDA donated 23,670 MT of corn-soy blend and 
        rice to Joint Aid Management (JAM) for a child education 
        program in Mozambique. From 2007 to 2009, JAM will implement 
        school feeding for 220,000, 242,000 and 271,000 beneficiaries 
        respectively, construct 610 school warehouses and kitchens, and 
        provide a tri-annual take-home incentive ration for 16,000, 
        19,000 and 21,000 girls, respectively, and 20,000 orphans and 
        vulnerable children. Complementary projects under this program 
        include water and sanitation improvements, the provision of 180 
        water wells, and a school gardens initiative in 45 schools. All 
        of these projects include community and student education 
        activities on nutrition, sanitation and health.

   Liberia: USDA donated 600 MT of vegetable oil, rice and 
        beans to Visions in Action (VIA) for a school feeding program 
        in Liberia. During 2007 and 2008, VIA will use the resources in 
        a comprehensive program which covers many aspects of education. 
        VIA will improve the quality of the primary school education 
        environment in community schools in underprivileged areas by: 
        paying teachers supplemental salaries; providing needed school 
        supplies, benches and textbooks; building new schools in 
        underserved areas; and, providing seeds and tools for school 
        gardens. The program aims to increase student continuation and 
        promotion by providing monthly take-home rations to students 
        with high attendance levels, and to improve the overall quality 
        of education by establishing a teacher training certificate 
        program for primary school teachers at centers run by the 
        Ministry of Education. Finally, the program includes the goal 
        of improving student nutrition and health through educational 
        posters, the organization and implementation of nutrition 
        workshops, and a take-home ration to teachers who incorporate 
        health and nutrition into the school curriculum.

   Cambodia: USDA donated 11,130 MT of commodities to the WFP 
        for a school feeding program in Cambodia. WFP will use the 
        vegetable oil and peas as part of a larger, internationally-
        sponsored program that provides hot lunches at schools with the 
        aim of increasing school enrollment and attendance rates and 
        reducing dropout rates in primary schools. The program also 
        provides take-home rations to girls during the last three 
        grades of primary school, to encourage parents to keep their 
        daughters in school until completion. WFP's school feeding 
        program also provides community support to women's groups, 
        Parent Teacher Associations and School Canteens Management 
        Committees.
E. Bill Emerson Humanitarian Trust
    Although the Bill Emerson Humanitarian Trust (BEHT) is not a food 
aid program, it is a valuable resource that can be used to respond to 
unforeseen humanitarian food crises in developing countries. The 
Emerson Trust is a food reserve of up to 4 million MT of wheat, corn, 
sorghum, and rice administered under the authority of the Secretary of 
Agriculture. When an unanticipated emergency arises that cannot be met 
with P.L. 480 resources, the Secretary of Agriculture may authorize the 
release of commodities from the reserve in order to meet those 
immediate needs. Each year, 500,000 MT may be released, plus up to 
another 500,000 MT that was not released in prior years.
    The reserve was originally authorized by the Agricultural Trade Act 
of 1980 as the Food Security Wheat Reserve and was later broadened to 
include a number of other commodities. In 1998 the reserve was renamed 
the Bill Emerson Humanitarian Trust and was reauthorized through 2007 
under the 2002 Farm Bill. In FY 2007, the Emerson Trust held 900,000 MT 
of wheat; however, no commodities were released.
III. Appendices

                    Appendix 1: List of Abbreviations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                   BEHT   Bill Emerson Humanitarian Trust
                    CCC   Commodity Credit Corporation
                     CS   cooperating sponsor
                 C-SAFE   Consortium for Southern Africa Food Security
                           Emergency
                    DAP   Development Assistance Program
                    EPI   Expanded Program for Immunization
                  EXCOM   Executive Committee (for the FACG)
                    FAC   Food Aid Convention
                   FACG   Food Aid Consultative Group
               FEWS NET   Famine Early Warning System Network
                    FFA   food for assets
                    FFE   McGovern-Dole International Food for Education
                           and Child Nutrition Program (formerly Global
                           Food for Education Initiative)
                    FFP   Office of Food for Peace (USAID)
                  FFP/W   Food for Peace Washington Office
                    FFW   Food for work
                    FTF   Farmer-to-Farmer Program of P.L. 480, Title V
                     FY   fiscal year
                    GAO   Government Accountability Office
                    GMP   Growth monitoring promotion
                    HBC   Home-based care
                    HIV   Human Immunodeficiency Virus
                    ICB   Institutional Capacity Building
                   IDPs   Internally Displaced Persons
                   IFRP   International Food Relief Partnership
                     I-LIFImproving Livelihoods through Increased Food
                           Security
                  MARAD   Maritime Administration
                     MT   metric ton
                   NASA   National Aeronautics and Space Administration
                    NGO   non-governmental organization
                   NOAA   National Oceanic and Atmospheric
                           Administration
                    OVC   Orphans and Vulnerable Children
                     P.L. U.S. Public Law 480
                 PEPFAR   President's Emergency Plan for AIDS Relief
                      PLWHPeople Living with HIV
                   PSNP   Productive Safety Net Program (Ethiopia)
                    PVO   private voluntary organization)
                     UN   United Nations
                  USAID   U.S. Agency for International Development
                   USDA   U.S. Department of Agriculture
                   USGS   U.S. Geological Survey
                    WFP   United Nations World Food Programme
------------------------------------------------------------------------


                Appendix 2: List of Partner Organizations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    The following organizations implemented U.S. Government food
        assistance programs in Fiscal Year 2007:
------------------------------------------------------------------------
              ACDI/VOCA   Agriculture Cooperative Development
                           International/ Volunteers in Overseas
                           Cooperative Assistance
                   ADRA   Adventist Development and Relief Agency
                           International, Inc.
               Africare   Africare
                     AI   Amigos Internacionales
                    ARC   American Red Cross
                    BRA   Batay Relief Alliance
                     BC   Bless the Children
                Caritas   Caritas
                   CARE   Cooperative for Assistance and Relief
                           Everywhere, Inc.
                    CBU   Church for Bible Understanding
                    CIH   Center for International Health
               Citihope   Citihope International
                      CLI Child Life International
                     CH   Convoy of Hope
              Coprodeli   Coprodeli
                    CPI   Counterpart International
                    CRS   Catholic Relief Services
                  EFSRA   Ethiopian Food Security Reserve Agency
                    EIM   Evangelistic International Ministry
                    FCF   Fabretto Children's Foundation, Inc.
                     FO   Family Outreach
                    FHI   Food for the Hungry International
                  FINCA   FINCA International
                    FTC   Feed the Children
                   GOAF   Government of Afghanistan
                    GOB   Government of Bangladesh
                   GOET   Government of Ethiopia
           Haiti Vision   Haiti Vision
                    HHI   Healing Hands International
                    HEF   Hope Education Foundation
                    ICA   International Crisis Aid
                   IPHD   International Partnership for Human
                           Development
                    IRD   International Relief and Development, Inc.
                    IRT   International Relief Teams
                    JAM   Joint Aid Management
                       LOLLand O'Lakes
                       LWMLegacy World Missions
                     MM   Medical Missionaries
                    MCI   Mercy Corps International
                Nascent   Nascent Solutions
                   NOAH   NOAH Project
                    NPA   Norwegian People's Aid
                   OICI   Opportunities Industrialization Centers
                           International
                    PCI   Project Concern International
                     PH   Project Hope
                 PRISMA   Asociacion Benefica PRISMA
                   REST   Relief Society of Tigray
                    RPX   Resource & Policy Exchange
         Salvation Army   Salvation Army World Service
                    SCF   Save the Children Federation
                 SCF-UK   Save the Children UK
           Share Circle   Share Circle
                  SHARE   SHARE Guatemala
                   TASO   The AIDS Service Organization
                     TS   TechnoServe
                 Uplift   Uplift International
                    VIA   Visions in Action
                    WFP   United Nations World Food Programme
                     WS   World Share
                    WVI   World Vision International, Inc.
                   UNDP   United Nation Development Program
                 UNICEF   United Nations Children's Fund
------------------------------------------------------------------------


 Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year
                                  2007
                            Title I Programs
                        Food for Progress Grants
------------------------------------------------------------------------
                                                               Tonnage
           Country                        Sponsor                (MT)
------------------------------------------------------------------------
                                 Africa
------------------------------------------------------------------------
Ethiopia                       GOET                               15,000
                              ------------------------------------------
  Subtotal Africa                                                 15,000
------------------------------------------------------------------------
                                Near East
------------------------------------------------------------------------
Afghanistan                    GOAF                                8,210
                              ------------------------------------------
  Subtotal Near East                                               8,210
                                                            ============
  Total                                                           23,210
------------------------------------------------------------------------


    Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, and Tonnage_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
                    Cooperating                                       Recipients *                   Total Cost
    Country           Sponsor                Commodities                 (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso                   WFP  Corn Soy Blend, Veg. Oil                   668.5         2,500      $2,280.9
Burundi                        WFP  Cornmeal, Corn Soy Blend,                    2.5        11,380     $10,071.5
                                     Veg. Oil, Yellow Peas,
                                     Yellow Split Peas
Cameroon                       WFP  Bagged Corn, Corn Soy Blend,                30.0           970        $797.8
                                     Red Beans, Veg. Oil
Central African                WFP  Corn Soy Blend, Cornmeal,                  204.0        14,860     $14,149.0
 Republic                            Green Peas, Veg. Oil, Yellow
                                     Split Peas
Chad                           WFP  Corn Soy Blend, Soft White               1,000.1        37,270     $37,735.6
                                     Wheat, Sorghum (bulk),
                                     Sorghum (bagged), Veg. Oil,
                                     Yellow Split Peas
Congo                          WFP  Rice (bagged), Veg. Oil,                   308.5         1,220      $1,196.8
 (Brazzaville)                       Yellow Split Peas
Congo (DRC)                    FHI  Corn Soy Blend, Cornmeal,                     --         5,350      $6,175.4
                                     Green Peas, Veg. Oil
                               WFP  Corn Soy Blend, Cornmeal,                3,368.3        28,470     $31,662.2
                                     Lentils, Veg. Oil, Yellow
                                     Peas, Yellow Split Peas
Cote d'Ivoire                  WFP  Cornmeal                                   922.5         6,810      $5,000.1
Djibouti                       WFP  Corn Soy Blend, Lentils,                    57.2         1,350        $994.9
                                     Wheat Flour
Ethiopia                      CARE  Corn Soy Blend, Hard Red                   545.3        25,280     $12,700.4
                                     Winter Wheat, Veg. Oil
                               CRS  Bulgur, Corn Soy Blend, Hard               449.9        17,480      $9,375.7
                                     Red Winter Wheat, Lentils,
                                     Rice (Bagged), Veg. Oil
                               FHI  Green Peas, Green Split Peas,              802.9        17,110      $8,945.6
                                     Hard Red Winter Wheat, Veg.
                                     Oil, Yellow Peas
                               WFP  Corn Soy Blend, Hard Red                     7.0       195,940    $101,916.5
                                     Winter Wheat, Veg. Oil,
                                     Yellow Peas, Yellow Split
                                     Peas
                              REST  Green Peas, Hard Red Winter                952.6        67,610     $33,453.5
                                     Wheat, Veg. Oil
                               SCF  Hard Red Winter Wheat                       89.1         3,970      $1,684.3
                            SCF-UK  Green Peas, Hard Red Winter                835.8        19,270      $9,472.8
                                     Wheat, Lentils, Yellow Peas,
                                     Yellow Split Peas
                                WV  Corn Soy Blend, Hard Red                   210.3         6,880      $3,988.2
                                     Winter Wheat, Veg. Oil,
                                     Yellow Peas
Guinea                         WFP  Bulgur, Veg. Oil, Yellow                 1,234.7         1,760      $1,519.4
                                     Split Peas
Kenya                          WFP  Bulgur, Corn Soy Blend,                    961.1       112,429     $80,870.0
                                     Cornmeal, Green Split Peas,
                                     Veg. Oil, Wheat Flour,
                                     Yellow Split Peas
Lesotho                         WV  Cornmeal, Pinto Beans, Veg.                138.7        12,040     $14,605.0
                                     Oil, Yellow Peas, Yellow
                                     Split Peas
Liberia                        WFP  Bulgur, Corn Soy Blend, Veg.             1,330.7        10,700      $9,146.7
                                     Oil, Yellow Split Peas
Madagascar                     WFP  Green Peas, Pinto Beans, Rice              337.5         6,460      $4,563.0
                                     , Sorghum
Mali                           WFP  Cornmeal, Veg. Oil, Yellow                 740.0         4,390      $4,138.9
                                     Split Peas
Mauritania                     WFP  Corn Soy Blend, Hard Red                   254.0         4,890      $3,510.9
                                     Winter Wheat, Soft White
                                     Wheat, Soy-Fortified Sorghum
                                     Grits, Wheat Soy Blend, Veg.
                                     Oil
Niger                          WFP  Corn Soy Blend, Veg. Oil                     2.9         6,890      $5,763.1
Rwanda                         WFP  Corn Soy Blend, Cornmeal,                1,085.0         3,260      $2,996.3
                                     Veg. Oil, Yellow Peas
Somalia                       CARE  Corn Soy Blend, Lentils,                   460.0        13,250     $10,289.2
                                     Sorghum, Veg. Oil
                               WFP  Corn, Corn Soy Blend, Hard                   4.3        36,740     $25,016.8
                                     Red Winter Wheat, Sorghum,
                                     Veg. Oil, Yellow Peas,
                                     Yellow Split Peas
Southern Africa                WFP  Black Beans, Bulgur, Corn Soy            5,534.0       122,915    $102,601.3
 Region                              Blend, Cornmeal, Kidney
                                     Beans, Lentils, Pink Beans,
                                     Pinto Beans, Red Beans,
                                     Sorghum, Veg. Oil, Yellow
                                     Peas, Yellow Split Peas
Sudan                         ADRA  Lentils, Sorghum, Veg. Oil                  83.5           780        $774.0
                              CARE  Corn Soy Blend, Lentils,                   164.3         3,550      $2,625.6
                                     Sorghum, Veg. Oil
                               WFP  Corn Soy Blend, Lentils,                    12.2       341,070    $339,805.9
                                     Sorghum, Veg. Oil
                               NPA  Lentils, Sorghum, Veg. Oil                 196.8         9,230     $12,938.7
Tanzania                       WFP  Corn Soy Blend, Cornmeal,                  580.0        14,210     $11,731.3
                                     Pinto Beans, Veg. Oil,
                                     Yellow Split Peas
Uganda                         WFP  Black Beans, Corn Soy Blend,                10.5        64,210     $44,413.7
                                     Cornmeal, Kidney Beans,
                                     Pinto Beans, Sorghum, Veg.
                                     Oil, Yellow Split Peas
Zambia                         WFP  Sorghum                                     67.0         1,330        $795.0
Zimbabwe                        WV  Bulgur, Cornmeal, Great                     10.0        88,920     $95,800.7
                                     Northern Beans, Sorghum,
                                     Veg. Oil
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                          23,661.8     1,322,744  $1,065,506.7
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                    WFP  Green Peas, Soft White Wheat,                6.6        89,250     $59,996.0
                                     Veg. Oil
East-Timor                     WFP  Corn Soy Blend, Red Beans,                 165.0         2,290      $2,171.6
                                     Veg. Oil
Lebanon                        WFP  Red Hard Winter Wheat                         --           700        $444.2
Nepal                          WFP  Garbanzo Beans, Lentils,                   333.2         6,470      $6,056.3
                                     Rice, Veg. Oil
Sri Lanka                      WFP  Lentils, Soft Red Winter                 1,423.9        24,200     $14,085.9
                                     Wheat, Veg. Oil, Wheat Flour
Syria                          WFP  Lentils, Rice, Veg. Oil                     30.0           820        $644.2
West Bank/Gaza                 WFP  Garbanzo Beans, Veg. Oil,                  665.0        27,090     $19,487.7
                                     Wheat Flour
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                 232,623.7     23150,820  23$102,885.9
----------------------------------------------------------------------------------------------------------------
                                                  Latin America
----------------------------------------------------------------------------------------------------------------
Colombia                       WFP  Green Peas, Lentils, Veg. Oil              725.0         4,830      $4,858.4
El Salvador                    WFP  Pinto Beans, Veg. Oil                      470.0           160        $176.9
Guatemala                      WFP  Pinto Beans, Veg. Oil                      470.0           240        $263.0
                                WS  Corn Soy Blend, Pinto Beans,                58.8         1,100      $1,057.7
                                     Rice, Veg. Oil
Honduras                       WFP  Pinto Beans, Veg. Oil                      470.0           260        $286.9
Nicaragua                      WFP  Pinto Beans, Veg. Oil                      470.0           210        $229.5
                ------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                    2,663.8         6,800      $6,872.4
                                                                  ----------------------------------------------
  Unallocated Preposition plus Unallocated                                        --        52,600     $36,501.2
                                                                  ----------------------------------------------
  Pending Approval                                                                --            --    $183,233.8
                                                                  ----------------------------------------------
  Funding Adjustments (IFRP, PSCs, Prepositioning and CSB                         --            --     $42,000.0
   Mitigation)
                                                                  ==============================================
  Worldwide Total                                                           28,949.3     1,532,964  $1,437,000.0
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January
  2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
  totals.
Table does not include International Food Relief Partnership activities. See page 11 for specific details.


     Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient, and Tonnage
                                             Tables_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
                    Cooperating                                       Recipients *                   Total Cost
    Country           Sponsor                Commodities                 (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso              Africare  Defatted Soy Flour, Pinto                    7.0         5,710      $4,914.3
                                     Beans, Potato Flakes, Rice,
                                     Soy-Fortified Bulgur, Veg.
                                     Oil
                               CRS  Lentils, Soy-Fortified                     356.8        14,760     $11,693.9
                                     Bulgur, Soy-Fortified
                                     Cornmeal, Rice, Veg. Oil
Chad                      Africare  Rice, Wheat Flour                             --         4,120      $3,722.4
Ghana                         ADRA  Soy-Fortified Bulgur                     2,667.0           400      $1,926.0
                               CRS  Corn Soy Blend, Northern                   204.8        22,070     $12,075.8
                                     Spring Wheat, Soy-Fortified
                                     Bulgur, Soy-Fortified
                                     Sorghum Grits, Veg. Oil,
                              OICI  Northern Spring Wheat, Soy-                  4.0         9,580      $4,107.3
                                     Fortified Bulgur, Soy-
                                     Fortified Sorghum Grits,
                                     Veg. Oil, Wheat Soy Blend
Guinea                        OICI  Green Peas, Soy-Fortified                   10.7         2,330      $2,494.9
                                     Cornmeal, Veg. Oil
Kenya                         ADRA  Corn Soy Blend, Green Peas,                 79.1         7,120      $2,569.6
                                     Hard Red Winter Wheat, Soy-
                                     Fortified Bulgur, Veg. Oil
                              CARE  Corn Soy Blend, Hard Red                     4.5         5,960      $2,145.0
                                     Winter Wheat, Veg. Oil,
                                     Yellow Split Peas
                               FHI  Corn Soy Blend, Green Split                  8.8         6,960      $2,844.5
                                     Peas, Hard Red Winter Wheat,
                                     Soy-Fortified Bulgur, Veg.
                                     Oil
Liberia                        CRS  Bulgur, Hard Red Spring                     17.9         9,170      $6,998.4
                                     Wheat, Lentils, Rice, Veg.
                                     Oil, Wheat Flour
Madagascar                    ADRA  Corn Soy Blend, Crude De-                   12.4         8,620      $4,707.7
                                     Gummed Veg. Oil, Hard Red
                                     Winter Wheat, Rice, Veg. Oil
                              CARE  Corn Soy Blend, Crude De-                   68.2        11,700      $6,607.4
                                     Gummed Veg. Oil, Great
                                     Northern Beans, Rice, Veg.
                                     Oil
                               CRS  Corn Soy Blend, Crude De-                   65.4         8,870      $5,494.5
                                     Gummed Veg. Oil, Great
                                     Northern Beans, Hard Red
                                     Winter Wheat, Rice, Veg. Oil
Malawi                         CRS  Corn Soy Blend, Cornmeal,                   21.4        13,360     $15,000.1
                                     Crude De-Gummed Veg. Oil,
                                     Pinto Beans, Veg. Oil
Mauritania                     CPI  Corn Soy Blend, Hard Red                    25.3         9,510      $3,849.5
                                     Winter Wheat, Veg. Oil,
                                     Yellow Split Peas
Mozambique                    ADRA  Hard Red Winter Wheat,                        --         5,290      $1,967.1
                                     Northern Spring Wheat
                          Africare  Hard Red Winter Wheat,                        --         3,230      $1,187.6
                                     Northern Spring Wheat
                              CARE  Hard Red Winter Wheat,                        --         7,720      $2,743.2
                                     Northern Spring Wheat
                               FHI  Hard Red Winter Wheat,                        --         5,920      $2,143.6
                                     Northern Spring Wheat
                               SCF  Hard Red Winter Wheat,                        --         4,720      $1,841.9
                                     Northern Spring Wheat
                                WV  Hard Red Winter Wheat,                        --        22,970      $8,177.1
                                     Northern Spring Wheat
Niger                     Africare  Rice, Soy-Fortified Bulgur                  19.0         3,280      $3,334.3
                               CRS  Rice, Soy-Fortified Bulgur                  40.5         6,040      $4,650.6
Rwanda                   ACDI/VOCA  Corn Soy Blend, Soy-Fortified                2.0         2,930      $4,337.5
                                     Bulgur, Veg. Oil
                               CRS  Bulgur, Corn Soy Blend, Veg.                26.9         2,940      $3,101.2
                                     Oil
                                WV  Corn Soy Blend, Soy-Fortified                5.9         2,760      $4,015.8
                                     Bulgur, Veg. Oil
Senegal                        CPI  Corn Soy Blend, Lentils,                    44.1         6,560      $4,832.1
                                     Potato Flakes, Rice, Soy-
                                     Fortified Bulgur, Veg. Oil
Sierra Leone                  CARE  Bulgur, Hard Red Winter                     30.4        14,290      $9,734.4
                                     Wheat, Kidney Beans, Rice,
                                     Veg. Oil
Uganda                   ACDI/VOCA  Corn Soy Blend, Hard Red                    21.2        14,650      $9,579.2
                                     Winter Wheat, Veg. Oil
                               SCF  Corn Soy Blend, Hard Red                     4.9         4,800      $3,534.5
                                     Winter Wheat, Lentils, Soy-
                                     Fortified Cornmeal, Veg. Oil
                                WV  Hard Red Winter Wheat                         --         2,510      $1,262.3
Zambia                         CRS  Bulgur, Hard Red Winter                      5.3         8,410      $6,807.7
                                     Wheat, Lentils, Sorghum
                               LOL  Northern Spring Dark Wheat                    --         4,500      $3,044.3
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           3,753.6       263,760    $167,445.7
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh                    CARE  Hard Red Winter Wheat, Soft                129.7        65,440     $25,567.4
                                     Red Winter Wheat, Soft White
                                     Wheat, Veg. Oil, Yellow
                                     Split Peas
                               SCF  Hard Red Winter Wheat, Soft                160.0        24,760     $10,040.0
                                     White Wheat, Veg. Oil,
                                     Yellow Split Peas
India                         CARE  Green Peas, Veg. Oil                          --        22,060     $16,531.4
                               CRS  Bulgur, Veg. Oil                           718.0        21,410     $14,506.4
Indonesia                     CARE  Green Split Peas, Northern                  15.3         1,870      $1,837.8
                                     Spring Dark Wheat, Veg. Oil
                               CRS  Corn Soy Blend, Lentils,                    93.0         2,940      $1,568.8
                                     Northern Spring Dark Wheat,
                                     Veg. Oil
                               MCI  Green Split Peas, Northern                  26.1         3,670      $3,322.2
                                     Spring Dark Wheat, Veg. Oil
                               SCF  Northern Spring Dark Wheat,                 52.0         3,430      $2,895.0
                                     Veg. Oil
                                WV  Green Split Peas, Hard White                37.2         2,580      $1,327.5
                                     Wheat, Northern Spring Dark
                                     Wheat, Veg. Oil
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                   1,231.1       148,160     $77,596.5
----------------------------------------------------------------------------------------------------------------
                                                  Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan                    CARE  Lentils, Veg. Oil, Wheat                    47.6         5,660      $8,477.6
                                     Flour
                ------------------------------------------------------------------------------------------------
  Sub-Total Central Asia                                                        47.6         5,660      $8,477.6
----------------------------------------------------------------------------------------------------------------
                                                  Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia                       ADRA  Corn Soy Blend, Green Peas,                 17.7         6,330      $4,079.4
                                     Lentils, Soy-Fortified
                                     Bulgur, Wheat Flour
                              CARE  Corn Soy Blend, Green Peas,                  7.9         8,320      $5,391.3
                                     Lentils, Soy-Fortified
                                     Bulgur, Wheat Flour
                               FHI  Corn Soy Blend, Green Peas,                 15.8         8,960      $5,704.1
                                     Lentils, Soy-Fortified
                                     Bulgur, Wheat Flour
                               SCF  Corn Soy Blend, Green Peas,                 31.6         7,520      $4,874.2
                                     Lentils, Wheat Flour
Guatemala                      CRS  Corn Soy Blend, Crude De-                   84.0         5,220      $3,971.8
                                     Gummed Veg. Oil, Pinto
                                     Beans, Rice, Veg. Oil
                               SCF  Corn Soy Blend, Crude De-                   12.7         4,630      $3,534.4
                                     Gummed Veg. Oil, Pinto
                                     Beans, Rice, Veg. Oil
                                WS  Corn Soy Blend, Crude De-                   12.7         5,940      $4,488.8
                                     Gummed Veg. Oil, Pinto
                                     Beans, Rice, Veg. Oil
Haiti                         CARE  Hard Red Winter Wheat,                      46.2        11,316      $5,048.3
                                     Lentils, Soy-Fortified
                                     Bulgur, Veg. Oil, Wheat Soy
                                     Blend
                               CRS  Cornmeal, Crude De-Gummed                  227.5        21,421     $12,008.0
                                     Veg. Oil, Hard Red Winter
                                     Wheat, Lentils, Soy-
                                     Fortified Bulgur, Veg. Oil,
                                     Wheat Soy Blend
                               SCF  Hard Red Winter Wheat,                     127.1        12,567      $5,787.4
                                     Lentils, Soy-Fortified
                                     Bulgur, Veg. Oil, Wheat Soy
                                     Blend
                                WV  Hard Red Winter Wheat,                      53.1        24,036      $9,514.9
                                     Lentils, Soy-Fortified
                                     Bulgur, Veg. Oil, Wheat Soy
                                     Blend
Honduras                      ADRA  Corn Soy Blend, Northern                    10.9         9,220      $3,835.0
                                     Spring Wheat, Red Beans,
                                     Rice, Veg. Oil
                              CARE  Corn Soy Blend, Red Beans,                   1.5           120         $86.3
                                     Rice, Veg. Oil
                               SCF  Corn Soy Blend, Northern                     5.3         8,555      $3,637.3
                                     Spring Wheat, Red Beans,
                                     Rice, Veg. Oil
                                WV  Corn Soy Blend, Kidney Beans,                8.4        10,555      $5,169.0
                                     Northern Spring Wheat, Red
                                     Beans, Rice, Veg. Oil
Nicaragua                     ADRA  Corn Soy Blend, Lentils,                     1.9         8,500      $3,490.8
                                     Northern Spring Wheat, Rice,
                                     Veg. Oil
                               CRS  Corn Soy Blend, Lentils,                     8.5         6,650      $2,672.9
                                     Northern Spring Wheat, Rice,
                                     Veg. Oil
                               PCI  Corn Soy Blend, Lentils,                    11.0         6,440      $2,490.5
                                     Northern Spring Wheat, Rice,
                                     Veg. Oil
                               SCF  Corn Soy Blend, Cornmeal,                    6.4         6,520      $2,584.5
                                     Crude De-Gummed Veg. Oil,
                                     Lentils, Northern Spring
                                     Wheat, Rice, Veg. Oil
Peru                          ADRA  Crude De-Gummed Veg. Oil                      --         1,630      $2,131.1
                            PRISMA  Crude De-Gummed Veg. Oil                      --           410      $3,138.2
                      Caritas Inc.  Crude De-Gummed Veg. Oil                      --         2,400      $3,138.2
                ------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                      690.2       177,260     $94,273.3
                                                                  ----------------------------------------------
  Pending Approval                                                                --            --        $706.9
                                                                  ==============================================
    Worldwide Total                                                          5,722.6       594,840    $348,500.0
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and 202(e) totals derived from FFP Preliminary Final Budget Summary Report, January
  2008. Commodities and Recipients derived from Food for Peace Information System report, January 9, 2008.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
  totals.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.


Appendix 6: USDA Food for Progress Program_CCC-funded Grants_Fiscal Year
                                  2007
------------------------------------------------------------------------
                                       Cooperating      Tonnage Donated
              Country                    Sponsor              (MT)
------------------------------------------------------------------------
                                 Africa
------------------------------------------------------------------------
Kenya                                             LOL             25,000
                                                WOCCU             26,610
Liberia                                          ACDI             10,000
Madagascar                                        LOL             12,450
                                                  CRS              6,190
Malawi                                            PAI             10,000
Mozambique                                         TS             21,060
                                                  PAI             10,000
                                                 GOMZ              4,500
                                                  IRD              5,600
Niger                                            GONI             17,000
Tanzania                                        FINCA             20,000
                                   -------------------------------------
  Subtotal Africa                                                168,410
------------------------------------------------------------------------
                           Europe and Eurasia
------------------------------------------------------------------------
Armenia                                           WFP                920
                                                  ATG              2,500
Azerbaijan                                        VRF             10,800
Georgia                                           IRD             15,000
                                   -------------------------------------
  Subtotal Europe and Eurasia                                     29,220
------------------------------------------------------------------------
                     Latin America and the Caribbean
------------------------------------------------------------------------
Bolivia                                          FFTH             11,500
El Salvador                                      GOEL             15,500
Nicaragua                                       FINCA             16,000
                                   -------------------------------------
  Subtotal Latin America and the Caribbean                        43,000
                                                      ==================
    Worldwide Total                                              240,630
------------------------------------------------------------------------


  Appendix 7: McGovern-Dole International Food for Education and Child
Nutrition Program_Fiscal Year 2007: Donations by Country and Cooperating
                                 Sponsor
------------------------------------------------------------------------
                                       Cooperating      Tonnage  Donated
              Country                    Sponsor              (MT)
------------------------------------------------------------------------
                                 Africa
------------------------------------------------------------------------
Benin                                             CRS                480
Congo (Brazzaville)                              IPHD              6,300
Guinea                                            WFP             11,460
Guinea-Bissau                                    IPHD              4,710
Kenya                                             WFP             14,350
Liberia                                            VA                600
Madagascar                                       CARE              3,190
Malawi                                            WFP              8,280
Mali                                              CRS              7,380
Mozambique                                      JAMGT              5,890
Senegal                                           CPI              3,240
                                   -------------------------------------
  Subtotal Africa                                                 65,880
------------------------------------------------------------------------
                                  Asia
------------------------------------------------------------------------
Cambodia                                           SM              1,750
Cambodia                                          WFP             11,130
Pakistan                                          WFP              7,170
                                   -------------------------------------
  Subtotal Asia                                                   17,300
------------------------------------------------------------------------
                     Latin America and the Caribbean
------------------------------------------------------------------------
Guatemala                                        FFTP             10,060
Guatemala                                       SHARE              6,500
Nicaragua                                        GLIM                740
                                   -------------------------------------
  Subtotal Latin America and the Caribbean                        20,050
                                                      ==================
    Grand Total                                                  103,230
------------------------------------------------------------------------


                   Appendix 8: Public Law 480 Title II Congressional Mandates_Fiscal Year 2007
----------------------------------------------------------------------------------------------------------------
                                                                                                Bagged in United
                        Minimum           Subminimum        Monetization       Value-added           States
----------------------------------------------------------------------------------------------------------------
FY 2007 Target             2,500,000          1,875,000              15.0%              75.0%              50.0%
Status September           2,573,215            682,353              74.3%              44.8%              54.8%
 2007
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
 against target.
 
Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations
 and WFP. Metric ton grain equivalent used to report against target.
 
Monetization: Percentage of approved Title II programs that are monetization programs.
 
Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.
 
Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the
 United States.
----------------------------------------------------------------------------------------------------------------
Source: USAID Bureau for Democracy, Conflict, and Humanitarian Assistance, Office of Food for Peace, FY
  2007Preliminary Budget Summary Overview, January 9, 2008.


Appendix 9: Countries with Approved U.S. Food Assistance Programs_Fiscal
                                Year 2007
 
 
------------------------------------------------------------------------
                          Title I (0 countries)
------------------------------------------------------------------------
                         Title III (0 countries)
------------------------------------------------------------------------
               CCC-Funded Food for Progress (13 countries)
------------------------------------------------------------------------
Armenia            Azerbaijan         Bolivia           El Salvador
Georgia            Kenya              Liberia           Madagascar
Malawi             Mozambique         Nicaragua         Niger
Tanzania
------------------------------------------------------------------------
             Title I-Funded Food for Progress (2 countries)
------------------------------------------------------------------------
Afghanistan        Ethiopia
------------------------------------------------------------------------
                        Title II * (64 countries)
------------------------------------------------------------------------
Afghanistan        Angola            Armenia  **      Azerbaijan
Bangladesh         Benin              Bolivia           Burkina Faso
Burundi            Cambodia  **      Cameroon         Cape Verde
Central African    Chad               Colombia          Congo
 Rep.                                                   (Brazzaville) 
                                                          **
Congo (DRC)       Cote d'Ivoire      Djibouti          Dominican Rep. 
                                                         **
East Timor         Ecuador  **       El Salvador  **  Ethiopia 
Gambia             Ghana             Guatemala        Guinea 
Haiti             Honduras          India            Indonesia 
Kenya             Kosovo  **        Kyrgyzstan  **   Lebanon
Lesotho            Liberia            Madagascar        Malawi 
Mali               Mauritania         Mozambique        Nepal
Nicaragua         Niger              Peru             Philippines  **
Romania  **       Rwanda             Senegal           Sierra Leone
Somalia            South Africa  **  Sri Lanka         Sudan
Swaziland         Syria              Tajikistan  **   Uganda 
Uzbekistan  **    West Bank/Gaza     Zambia           Zimbabwe 
------------------------------------------------------------------------
                    Food for Education (15 countries)
------------------------------------------------------------------------
Benin              Cambodia           Congo             Guatemala
                                       (Brazzaville)
Guinea             Guinea-Bissau      Kenya             Liberia
Madagascar         Malawi             Mali              Mozambique
Nicaragua          Pakistan           Senegal
------------------------------------------------------------------------
                     Farmer-to-Farmer (37 countries)
------------------------------------------------------------------------
Angola             Armenia            Azerbaijan        Bangladesh
Belarus            Bolivia            El Salvador       Ethiopia
Georgia            Ghana              Guatemala         Guinea
Guyana             Haiti              Honduras          India
Indonesia          Jamaica            Kazakhstan        Kenya
Kyrgyzstan         Malawi             Mali              Moldova
Mozambique         Nepal              Nicaragua         Nigeria
Peru               Russia             South Africa      Tajikistan
Turkmenistan       Uganda             Ukraine           Vietnam
Zambia
------------------------------------------------------------------------
* Represents Title II programs with commodities approved in FY 2007, or
  that remain active with resources allocated in the prior fiscal year.
 Represents IFRP programs with commodities approved in FY 2007, or that
  remain active with resources allocated in the prior fiscal year.
** Title II countries served by IFRP programming only.

                                 ______
                                 
             U.S. International Food Assistance Report 2008
    Under Food for Peace Act Section 407(f)(1)(A), ``Not later than 
April 1 of each fiscal year, the Administrator [of USAID] and the 
Secretary [of Agriculture] shall jointly prepare and submit to the 
appropriate committees of Congress a report regarding each program and 
activity carried out under this Act during the prior fiscal year.'' As 
required, this report is hereby submitted to Congress.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        USAID-supported school feeding program for refugee children 
        from Cote d'Ivoire in Liberia, October 2007. Photo by Anne 
        Shaw, USAID.

    This Report May Be Ordered From:

USAID Development Experience Clearinghouse
8403 Colesville Road, Suite 210
Silver Spring, MD 20910-6368
Telephone: (301) 562-0641
Fax: (301) 588-7787
URL: http://www.dec.org/
Table of Contents
Executive Summary
Introduction
I. Food Security
II. U.S. International Food Assistance

  A. Food for Peace Act

    Food for Peace Title I: Trade and Development Assistance

    Food for Peace Title II: Emergency and Private Assistance Programs

    Food for Peace Title III: Food for Development

    Food for Peace Title V: John Ogonowski and Doug Bereuter Farmer-to-
        Farmer Program

  B. Section 416(b) of the Agricultural Act of 1949: Surplus 
        Commodities
  C. Food for Progress
  D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
  E. Bill Emerson Humanitarian Trust

III. Appendices

  Appendix 1: List of Abbreviations
  Appendix 2: List of Grantees
  Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal 
        Year 2008
  Appendix 4: Food for Peace Title II Emergency Activities: Summary 
        Budget, Commodity and Tonnage--Fiscal Year 2008
  Appendix 5: Food for Peace Title II Non-Emergency Activities: Summary 
        Budget, Commodity, Recipient and Tonnage Tables--Fiscal Year 
        2008
  Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget, 
        Commodity, Recipient and Tonnage Tables--Fiscal Year 2008
  Appendix 7: USDA Food for Progress Program--Commodity Credit 
        Corporation-funded Grants by Country and Commodity--Fiscal Year 
        2008
  Appendix 8: McGovern-Dole International Food for Education and Child 
        Nutrition Program--Fiscal Year 2008: Donations by Country and 
        Commodity
  Appendix 9: Food for Peace Title II Congressional Mandates--Fiscal 
        Year 2008
  Appendix 10: Countries with Approved U.S. Food Assistance Programs--
        Fiscal Year 2008
Executive Summary
    The United States is committed to the promotion of global food 
security through its international food assistance and other foreign 
assistance programs. In Fiscal Year (FY) 2008, the United States 
provided more than $2.8 billion from U.S. food aid programs to 
developing countries, reaching tens of millions of people worldwide. 
The following summary shows U.S. food assistance allocated by 
legislative authority for FY 2008.\1\
---------------------------------------------------------------------------
    \1\ All costs represent commodities plus freight and distribution.

------------------------------------------------------------------------
             Program                  Metric Tons      Total Cost (000)
------------------------------------------------------------------------
    Food for Peace Title II             2,306,110        $2,350,693.3
Bill Emerson Humanitarian Trust           323,820          $265,781.5
          Food for Progress               220,890            $166,000
             Section 416(b)                    --                  --
         Food for Education                86,860             $99,000
           Farmer-to-Farmer                    --             $10,000
                                 ---------------------------------------
  Grand Total...................        2,937,680        $2,891,474.8
------------------------------------------------------------------------

    Over the course of FY 2008, the United States Agency for 
International Development (USAID) and the United States Department of 
Agriculture (USDA) international food assistance programs have proven 
increasingly responsive to global efforts at reducing food insecurity 
and targeting those most in need. By responding to assessment and 
situational information, focusing on reducing risk and vulnerability, 
targeting the poorest of the poor and better integrating individual 
programs into larger--often international--efforts, the U.S. Government 
aims to improve the effectiveness of aid and to reach global targets 
for reducing hunger, malnutrition and poverty.
    This aid is essential in emergency situations, which in FY 2008 
included a regional drought in the Horn of Africa, exacerbated by 
conflict in Somalia and Kenya; an ongoing crisis due to conflict and 
displacement in Sudan and the Democratic Republic of the Congo; drought 
in Afghanistan; hyperinflation and poor harvests in Zimbabwe; 
hurricanes in Haiti; and a cyclone in Burma. In all, approximately 43 
million people in 38 countries benefited from emergency food aid 
activities provided through Food for Peace Title II programs.
    At the same time, USAID non-emergency programs continued to focus 
on increasing agricultural production and supporting programs to 
address health, nutrition, HIV and others aimed at investing in people. 
Special emphasis is placed on combating the root causes of hunger and 
malnutrition. Over the course of the year, more than 7.2 million people 
in 28 countries benefited from USAID Title II non-emergency food 
assistance.
    Food for Progress and McGovern-Dole International Food for 
Education and Child Nutrition programs, both implemented by USDA, 
provided commodities to food-insecure populations through the World 
Food Program (WFP), private voluntary organizations (PVOs) and foreign 
governments. These resources supported a variety of food security 
objectives in developing countries, such as agricultural sector 
development, rural development, humanitarian assistance, HIV mitigation 
programs, school feeding and maternal and child health programs. In FY 
2008, USDA's McGovern-Dole International Food for Education and Child 
Nutrition Program provided commodities for in-school feeding, take-home 
rations to keep girls enrolled in school, as well as nutrition programs 
for mothers, infants and children under age 5, positively impacting the 
lives of more than 2.6 million beneficiaries.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Student eating U.S.-provided school lunch in Kyrgyzstan. Photo 
        by Mercy Corps.
Introduction
    Since the passage of Public Law 480 (the Agricultural Trade 
Development and Assistance Act of 1954, renamed the Food for Peace Act 
in 2008), U.S. international food assistance programs have evolved to 
address multiple objectives. The most recent changes came with the Food 
for Peace Act of the Food, Conservation, and Energy Act of 2008. 
Commonly known as the 2008 Farm Bill, the Food, Conservation, and 
Energy Act of 2008 restated the objectives that guide U.S. food 
assistance programs. These objectives are:

   Combat world hunger and malnutrition and their causes;

   Promote broad-based, equitable and sustainable development, 
        including agricultural development;

   Expand international trade;

   Foster and encourage the development of private enterprise 
        and democratic participation in developing countries; and

   Prevent conflicts.
U.S. International Food Assistance
    The U.S. international food assistance program was established by 
several legislative authorities implemented by two Federal agencies. 
USAID administers Titles II, III and V of the Food for Peace Act. USDA 
administers Section 416(b) of the Agricultural Act of 1949, Title I of 
the Food for Peace Act, Food for Progress, and McGovern-Dole 
International Food for Education and Child Nutrition Program. The list 
below provides a brief description of each activity.

    1. Food for Peace Act (formerly the Agricultural Trade Development 
        and Assistance Act of 1954)--the principal mechanism for U.S. 
        international food assistance.

       Title I: Economic Assistance and Food Security--
            concessional sales of U.S. agricultural commodities to 
            developing countries and private entities.

       Title II: Emergency and Private Assistance Programs--
            direct donation of U.S. agricultural commodities for 
            emergency relief and development.

       Title III: Food for Development--government-to-
            government grants of agricultural commodities tied to 
            policy reform.

       Title V: John Ogonowski and Doug Bereuter Farmer-to-
            Farmer (FTF) Program--voluntary technical assistance to 
            farmers, farm groups and agribusinesses.

    2. Section 416(b) of the Agricultural Act of 1949--overseas 
        donations of surplus food and feed grain owned by the USDA 
        Commodity Credit Corporation (CCC).

    3. Food for Progress Act of 1985--commodity donations available to 
        emergingdemocracies and developing countries committed to the 
        introduction or expansion of freeenterprise in their 
        agricultural economies.

    4. McGovern-Dole International Food for Education and Child 
        Nutrition Program--donations of U.S. agricultural products, as 
        well as financial and technical assistance, for school feeding 
        and maternal and child nutrition projects in low-income 
        countries.

    5. Bill Emerson Humanitarian Trust--food reserve administered under 
        the authority of the Secretary of Agriculture. This reserve is 
        available to meet emergency humanitarian food needs in 
        developing countries, allowing the United States to respond to 
        unanticipated food crises. Under the 2008 Food for Peace Act, 
        the Administrator of USAID oversees release and use of these 
        funds.
   
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
        A USAID-supported World Food Program initiative in eastern Sri 
        Lanka assisted these conflict-affected children in FY 2008. 
        Photo by Kathryn Schein, USAID.
I. Food Security
Defining a Long-Term Global Strategy
    U.S. international food assistance has long played a critical role 
in responding to global food insecurity. This tradition continued in FY 
2008, with the U.S. Government providing more than 2.8 million metric 
tons (MT) of commodities. The programs have also evolved to reflect 
greater understanding of--and a focus on addressing--the causes of 
famine, food emergencies and large-scale hunger around the world. In 
the Food, Agriculture, Conservation, and Trade Act of 1990, for 
example, food security was narrowly defined as dependent primarily on 
the availability of food at the national level. It was broadened in a 
1992 policy paper to begin to address distribution and nutritional 
quality, calling for ``all people at all times [to] have both physical 
and economic access to sufficient food to meet their dietary needs for 
a productive and healthy life.'' \2\ This definition includes three 
elements judged essential to achieving food security and forms the 
basis for much of the U.S. Government's international food assistance 
activity:
---------------------------------------------------------------------------
    \2\ USAID Policy Determination Number 19, April 1992.

   Food availability: sufficient quantities of food from 
        household production, other domestic output, commercial imports 
---------------------------------------------------------------------------
        or food assistance.

   Food access: adequate resources to obtain appropriate foods 
        for a nutritious diet, which depends on income available to 
        households and on the price of food.

   Food utilization: a diet providing sufficient calories and 
        essential nutrients, potable water and adequate sanitation, as 
        well as household knowledge of food storage and processing 
        techniques, basic principles of nutrition and proper child care 
        and illness management.

    In recent years, attention has focused on the continued challenges 
that hamper efforts at reducing global food insecurity. International 
food assistance programs also face increasingly frequent and severe 
natural and manmade disasters with growing humanitarian demands on both 
U.S. and international humanitarian assistance resources.
Food Price Crisis Response
    In FY 2008, prices of major food commodities increased 
significantly worldwide, pushing an estimated 40 million more people 
into hunger, according to the United Nations Food and Agriculture 
Organization. This brought the total population of undernourished 
people to an estimated 963 million in 2008. Multiple factors 
contributed to higher food prices, including low world grain stocks, 
poor harvests in traditional exporting countries and food export 
controls.
    In response, President George W. Bush in April 2008 directed the 
Secretary of Agriculture to draw down on the Bill Emerson Humanitarian 
Trust, a U.S. food reserve of up to 4 million MT of commodities, to 
meet emergency food aid needs abroad. With this action, USAID provided 
emergency food aid to Afghanistan, Ethiopia, Kenya and Zimbabwe.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Unloading corn-soy blend at the port in Djibouti for delivery 
        to Ethiopia, January 2008. Photo by Suzanne Poland, USAID.

    In addition, President Bush in May 2008 asked Congress for $350 
million in supplemental FY 2008 funding for Title II emergency food 
aid. Congress in June 2008 appropriated $850 million in the 
Supplemental Appropriations Act of 2008 for additional Title II 
emergency food aid for FY 2008. On June 30, 2008, President Bush signed 
the Supplemental Appropriations Act. Within days, USAID and USDA 
collaborated to expedite commodity procurement procedures to ensure 
rapid arrival of lifesaving assistance where it was needed most. This 
significant U.S. Government response to the food price crisis enabled 
delivery of substantial and timely food aid.
    The Supplemental Appropriations Act of 2008 included $200 million 
in development assistance funding in FY 2009 to help developing 
countries address the international food crisis. As required under the 
Act, the Secretary of State submitted a report to the Committees on 
Appropriations within 45 days of enactment on the proposed uses of the 
funds. As noted in that report, U.S. Government strategy targets 
increasing food productivity in sub-Saharan Africa--where the world's 
food needs are greatest--focusing on countries where significant 
expansion of food production is feasible and then reducing barriers to 
the movement and procurement of food throughout sub-Saharan Africa.
    The development assistance funds are being used largely to support 
urgent agricultural and trade measures to address high food prices. 
These include actions to increase agricultural productivity; alleviate 
transportation, distribution and post harvest supply-chain bottlenecks; 
and promote sound market-based principles. Development assistance funds 
are also being used to support local and regional procurement of food 
simultaneously to meet emergency humanitarian needs and address urgent 
measures to improve markets for African smallholder farmers.
USAID Food Security Task Force
    In April 2008, then-USAID Administrator Henrietta H. Fore 
established a USAID Food Security and Food Price Increase Task Force 
responsible for coordinating USAID policy and new programs, developing 
a new USAID food security strategy and interacting with interagency and 
multilateral groups and initiatives related to the impact of global 
food price increases on the most vulnerable.
    In addition to coordinating additional emergency assistance in 
response to the global food price increases, the Task Force served as a 
coordination point for information sharing and joint planning among 
USAID bureaus and with other government agencies on food security and 
food price increase impacts.
Title II Food Security Programming Frameworks
    Title II non-emergency food aid programs are increasingly being 
initiated with development of a comprehensive framework indicating how 
Title II resources could be targeted, programmed and integrated with 
other resources to reduce food insecurity among vulnerable populations. 
These Food Security Programming Frameworks define objectives, 
approaches, geographic foci and institutional partnerships for 
effective use of U.S. Government resources to reduce food insecurity. 
The frameworks inform country-specific guidance to grant applicants 
developing new non-emergency proposals, and support integration of 
various U.S. Government resources dedicated to reducing food 
insecurity.
Local and Regional Procurement of Food Aid
    The ability to procure food aid commodities locally (in the country 
where the food aid is needed) and regionally (in a country in the same 
region where food aid is needed) offers an exceptional opportunity to 
meet humanitarian needs in an efficient and timely fashion, fill 
pipeline gaps prior to the arrival of food shipped from the United 
States and increase the total amount of lifesaving food aid U.S. 
assistance resources can provide.
    Local and regional procurement also has the potential to strengthen 
and expand commercial markets, stimulate local and regional food 
production and economies, and ultimately, reduce emergency food aid 
requirements.
    For several years, the Administration has requested from Congress 
the authority to use up to 25 percent of Title II funds for the local 
or regional purchase of food aid commodities to assist people 
threatened by a food security crisis.
    The 2008 Food for Peace Act authorized and directed the Secretary 
of Agriculture to implement a 5 year, $60 million pilot local and 
regional purchase program for food aid.
Improving the Effectiveness and Efficiency of International Food 
        Assistance
    In August 2008, Food for Peace (FFP) issued a Request for 
Information (RFI) on Increasing the Effectiveness and Efficiency of 
Title II Food Aid Program Management. The RFI sought information from 
potential grantees as to their interest, priorities and capacities to 
participate in or undertake Cooperative Agreements to increase the 
effectiveness and efficiency of Title II food aid programs. The purpose 
of the Cooperative Agreements is to improve the FFP program technical 
and operational procedures and to promote best practices through 
coordination and delivery of capacity building and technical assistance 
for current and prospective Title II food aid grantees and programs 
worldwide.
    The principal objectives of the proposed Cooperative Agreements 
are:

    1. Identify best practices in FFP program management and capacity 
        building;

    2. Design and undertake training in best practices in program 
        management and capacity building;

    3. Communicate and disseminate information on best practices in 
        program management and capacity building; and

    4. Strengthen the coordination and collaboration among current and 
        prospective Title II grantees.
Monitoring and Oversight
    The 2008 Food for Peace Act gave FFP the flexibility and the 
mandate to improve oversight of non-emergency programs. As a result, 
FFP is implementing a number of steps, including increasing food aid 
staff levels in the field, with 12 additional staff in chronically 
highly food-insecure countries. This will enhance monitoring capability 
to anticipate emergency needs.
    FFP is helping Missions and governments to plan and implement in-
depth food security assessments as they relate to the programming of 
Title II non-emergency resources. Working with Missions, governments 
and other stakeholders, FFP is applying assessment results to prepare 
food security strategies that define objectives, approaches and 
institutional partnerships for effective use of Title II non-emergency 
resources to reduce food insecurity.
    In addition, FFP is expanding the Layers monitoring system, which 
uses hand-held computers to collect and analyze program information 
from a random sample of program sites. Once the data are collected, 
Layers generates a report on the performance of grantees in 
implementing Title II programs. A wide variety of issues can be 
evaluated, ranging from the conditions of storage in commodity 
warehouses and record keeping for commodity losses, to the quality of 
services delivered by Title II grantees. Layers is currently utilized 
in Ethiopia, Haiti and Madagascar, and will be expanded to other 
countries that receive Title II non-emergency assistance, including 
Guatemala, Mali and Uganda.
    FFP is also analyzing lessons learned when programs end. Factors 
that lead to success in sustaining program benefits after Title II non-
emergency food assistance has ended are being examined, with the goal 
of deriving recommendations for effective Title II non-emergency exit 
strategies.
    FFP has launched a 3 year pilot project to help USAID comply with 
the Bellmon Amendment, which requires that adequate storage facilities 
would be available in a recipient country upon arrival of a commodity 
to prevent spoilage or waste, and that distribution of the commodity in 
the recipient country will not result in substantial disincentive or 
interference with domestic production or marketing in that country. The 
Bellmon Estimation for Title II (BEST) Project is conducting 
independent market analyses to ensure that these requirements are met. 
Studies have already been completed and published for Malawi and 
Madagascar, and more are underway.
    Finally, FFP is offering training in the field on monitoring and 
evaluation for non-emergency program grantees to help them harmonize 
impact and output indicators and design baseline assessments.
USAID's Famine Early Warning Systems Network
    Saving lives and preventing famine are key objectives of the U.S. 
Government and the international community. The Famine Early Warning 
Systems Network (FEWS NET) is a USAID-funded activity that collaborates 
with international, national and regional partners to monitor, collect 
and disseminate critical data on conditions of food availability and 
access, as well as the environmental and socioeconomic hazards that 
lead to food insecurity and famine. The goal of FEWS NET is to manage 
the risk of food insecurity through the provision of timely and 
analytical early warning and vulnerability information, so that 
decision makers have ample time to prepare and take preventive action.
    In 2008, FEWS NET covered 20 countries in Africa, Central America, 
Central Asia and the Caribbean. Its reporting products, maps, data and 
satellite imagery are posted to the website www.fews.net, which 
receives an average of approximately 20,000 page hits per month.
    To more closely track changes in food prices, FEWS NET in FY 2008 
launched a monthly ``Price Watch'' publication that reports on staple 
food prices in key markets in urban and town centers in food-insecure 
countries. This price information provides advance warning to better 
target U.S. food aid resources to the most vulnerable.
    FEWS NET exemplifies the U.S. commitment to anticipating and 
responding to humanitarian vulnerabilities and crises. FEWS NET has 
interagency agreements with the U.S. Geological Survey, National 
Aeronautics and Space Administration, National Oceanic and Atmospheric 
Administration and USDA that provide information to the U.S. 
Government, host country governments and a variety of other regional 
and international partners to assist in averting famine.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        A demonstration garden in Lira District, northern Uganda, where 
        VEDCO, a local partner of USAID grantee ACDI/VOCA, instructs 
        farmers on improving agricultural production practices. Photo 
        by Anne Shaw, USAID.
A Conceptual Framework for Integrating Food Aid and HIV Programs
    FFP and the Office of the U.S. Global AIDS Coordinator, which leads 
implementation of the President's Emergency Plan for AIDS Relief 
(PEPFAR), continued to work together during 2008, increasing their 
coordination to address the links between nutrition and HIV. In Uganda, 
for example, USAID supported a proposal to develop a food-by-
prescription policy (supplementary or therapeutic food is provided 
according to clinical assessment) that included FFP grantees with a 
focus on the most food-insecure areas in the country. In Haiti, USAID 
has developed a proposal for umbrella funding to support organizations 
that work to reduce food insecurity among HIV-affected families. This 
strategy, developed by the health team, working together with FFP and 
other offices within the mission, provides the possibility of a best 
practice and will offer PVOs access to funds for livelihood activities 
to support HIV-affected families.
Food Aid Quality Review
    Over the last 15 years, USAID has conducted a number of reviews of 
its processed and fortified foods, making some adjustments in the 
formulations. Recently, USDA has also looked at the foods on the FFP 
commodity list and is in the process of updating its specifications and 
quality control for those foods.
    Continuing emphasis in the Food for Peace Act on the importance of 
micronutrients and FFP's experience with the use of foods in preventing 
malnutrition in children under age 2 have encouraged a much deeper 
review of the food aid basket.
    FFP issued a Request for Proposals (RFP) in FY 2008 to review the 
role of food aid commodities in meeting beneficiaries' nutritional 
needs. In FY 2009, FFP awarded a contract to carry out this review, 
which will examine the nutritional needs of FFP's current beneficiary 
populations and the commodities currently available to meet those 
needs. In addition, the contract will use a consultative process to 
reach out to the many FFP grantees in order to arrive at a consensus on 
needed reformulations and/or the development of new foods not currently 
available. As part of this contract, any recommendations for 
reformulation or new foods will be accompanied by the description of 
the process necessary to test and evaluate the efficacy and 
effectiveness of these foods.
II. U.S. International Food Assistance
Program Descriptions and Fiscal Year 2008 Accomplishments
A. Food for Peace Act
    The primary mechanism of U.S. international food assistance is the 
Agricultural Trade Development and Assistance Act of 1954 (P.L. 480, 
renamed the Food for Peace Act in 2008).

    1. Title I: Trade and Development Assistance

    The Title I authority provides funding for both a concessional 
sales program, supporting Trade and Development and for the Food for 
Progress grant program, supporting agricultural development in emerging 
democracies. In FY 2008, no new concessional sales agreements were 
made.
    The USDA-administered Food for Progress Program, authorized under 
the Food for Progress Act of 1985, assists developing countries, 
particularly emerging democracies ``that have made commitments to 
introduce or expand free enterprise elements in their agricultural 
economies through changes in commodity pricing, marketing, input 
availability, distribution and private sector involvement.'' The 
program authorizes the Commodity Credit Corporation (CCC) to carry out 
the sale and exportation of U.S. agricultural commodities on credit 
terms or on a grant basis, with the use of either CCC financing or Food 
for Peace Title I funds. Grants under the Food for Progress program are 
awarded to governments or PVOs, nonprofit agriculture organizations, 
cooperatives, intergovernmental organizations or other private 
entities.

      a. Title I: Food for Progress Highlights

    In FY 2008, Food for Progress Title I funding provided 10,900 MT in 
assistance, with an estimated value of $13 million. The summaries below 
provide examples of Title I-funded Food for Progress agreements signed 
in FY 2008.

   Tajikistan: USDA donated 6,570 MT of wheat flour and 300 MT 
        of vegetable oil to WFP for use in its Protracted Relief and 
        Recovery Operation. In Tajikistan, WFP works to prevent hunger 
        among chronically food-insecure households in marginalized 
        geographic areas during the lean period through vulnerable 
        group feeding and food for work activities; to promote 
        education through the provision of hot meals in primary schools 
        and take-home rations for girls in secondary schools; to 
        rehabilitate malnourished children and pregnant and lactating 
        women through the provision of supplementary food and to meet 
        the basic food needs of tuberculosis patients; and to support 
        government capacity building in managing national food 
        assistance programs.

   East Timor: USDA donated approximately 1,600 MT of corn-soy 
        blend, 850 MT of kidney beans, 900 MT of rice and 260 MT of 
        vegetable oil to WFP for use in its Protracted Relief and 
        Recovery Operation. In East Timor, WFP is carrying out three 
        main activities: maternal and child health, school feeding and 
        emergency preparedness and response. These activities aim to 
        improve the nutritional status of the most vulnerable 
        population groups during critical times of their lives; the 
        potential for agricultural production; and the access to and 
        utilization of schools as a means for human capacity 
        development.

    2. Title II: Emergency and Private Assistance Programs

    In FY 2008, more than \3/4\ of U.S. international food aid was used 
to respond to emergency situations and to implement development 
projects under Title II, administered by the USAID Office of Food for 
Peace in the Bureau for Democracy, Conflict, and Humanitarian 
Assistance. In FY 2008, Title II programs (emergency and non-emergency) 
and contributions from the Bill Emerson Humanitarian Trust provided 
more than 2.6 million MT of commodities, with a program cost of more 
than $2.6 billion, to assist approximately 56 million people in 49 
countries worldwide.
    The focus of Title II programs is to reduce food insecurity in 
vulnerable populations. This focus on vulnerability to food insecurity 
targets improving resiliency to shocks, an essential first step for 
household self-sufficiency and economic independence. In support of 
this strategy, the non-emergency development portfolio incorporates 
some activities to strengthen local capacity to respond to natural 
disasters.

      a. Title II: Emergency Programs

    Title II emergency programs aim to address two forms of 
emergencies: natural disasters, such as floods or droughts, and complex 
emergencies characterized by a combination of natural disaster, 
conflict and insecurity. All of these elements pose substantial program 
and operating challenges in responding effectively to the needs of 
food-insecure populations.
    In FY 2008, Title II emergency programs and contributions from the 
Bill Emerson Humanitarian Trust provided more than 2.2 million MT of 
emergency food aid, with a program cost of more than $2.2 billion, to 
help alleviate malnutrition and hunger in 39 countries. In all, Title 
II emergency programs reached approximately 43 million food-insecure 
people in FY 2008.

    Food for Peace Title II: Emergency Program Highlights

    Horn of Africa

    Approximately 19 million people in Ethiopia, Somalia, Kenya and 
Djibouti needed emergency food assistance in FY 2008 because of a 
regional drought, with several conflicts in the Horn of Africa. FFP 
responded with more than 1 million MT of food aid, valued at nearly 
$853 million, which helped to avert a humanitarian catastrophe.
    This response included 735,140 MT of food aid for Ethiopia, valued 
at $561.5 million; 211,320 MT for Somalia, valued at $197.4 million; 
87,300 MT for Kenya, valued at $91.3 million; and 2,360 MT for 
Djibouti, valued at $2.7 million.
    In Somalia, despite sustained periods of drought and civil 
conflict, the robust food aid response by FFP helped to stave off 
significant mortality and mass migration.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Emergencies in Urban Settings
 
    While the majority of the world's food-insecure population resides
 in rural areas, low-income urban populations are vulnerable to market-
 induced food security shocks, as occurred in 2008 with the rise of food
 prices worldwide. The urban poor are particularly vulnerable to price
 increases because such a large portion of their income goes to
 purchasing food.
    In 2008, FFP published Emergencies in Urban Settings: A Technical
 Review of Food-Based Program Options. This review, which emerged from a
 workshop with private voluntary organizations and World Food Program
 experts, is a programming manual that will improve targeting and
 delivery of food aid to those most impacted by rising food prices. It
 compares program options when food aid is determined to be an
 appropriate response to an emergency--including targeted household food
 distribution, food for work, food for training, ``wet'' feeding, and
 community-based management of acute malnutrition programs.
------------------------------------------------------------------------

    In Ethiopia, donors including USAID are working with the Government 
of Ethiopia to mitigate the effects of recurrent cycles of drought and 
food shortages through the innovative Productive Safety Net Program 
(PSNP), which targets 7.2 million of the country's most food-insecure 
people. These recipients receive cash and/or food transfers on a 
predictable basis that allow them to withstand the worst periods of 
food shortages without selling their assets. In return, they provide 
labor for local public works projects during the 6 months of the year 
between harvest and planting season. These projects have resulted in 
the development and protection of thousands of water sources, such as 
springs, hand-dug wells and water harvesting structures, making water 
available for human and animal consumption as well as irrigation. They 
have also provided 33,000 kilometers of rural access roads and the 
construction of community facilities such as farmer training centers, 
health posts and schools. PSNP participants withstood the effects of 
the 2008 drought much better than non-beneficiaries who might have 
received aid, but on a less predictable basis.
    In Kenya, FFP provided nearly 55 percent of WFP emergency resources 
that assisted up to one million Kenyan marginal farming and pastoralist 
families affected by drought as well as approximately 300,000 
internally displaced Kenyans during calendar year 2008. The United 
States is the single largest donor to WFP for its emergency operation 
in Kenya.

    Sudan

    USAID continues to be the world's leading donor of food assistance 
to Sudan, having provided more than $1.5 billion in food assistance 
since the Darfur crisis began in 2004. The United States contributed 
approximately half of WFP's Sudan appeals for 2008 and 2009, by far the 
largest contribution from any donor. Timely contributions from FFP 
helped WFP ensure a continued flow of assistance during the critical 
hunger period from June to September. Despite rampant insecurity, WFP 
met, on average, more than 93 percent of its monthly target caseload in 
Darfur throughout 2008.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Loading USAID food in Port Sudan for World Food Program 
        distribution in Sudan, May 2008. Photo by Tyler Beckelman, 
        USAID.

      b. Title II: Private Assistance Programs (Non-Emergency)

    The Food for Peace Title II development (non-emergency) food aid 
program constitutes one of the largest sources of USAID funding in 
promoting long-term food security in such areas as:

    1. Agriculture and Natural Resource Management activities;

    2. Health and household nutrition activities; and

    3. Education, Humanitarian Assistance and Microenterprise.

    In FY 2008, 20 grantees implemented 92 Title II non-emergency 
activities in 28 countries. Approximately 341,280 MT of food 
assistance, valued at more than $354 million, was used to support 
programs that benefited more than 7.2 million people.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Preventing Malnutrition in Children Under Two Approach (PM2A)
 
    The USAID-funded Food and Nutrition Technical Assistance (FANTA)
 grantee and its partners, the International Food Policy Research
 Institute and Cornell University, together with FFP grantee World
 Vision, recently completed the evaluation of a new approach to
 supplementary feeding in Haiti.
    Instead of providing food only as part of the recuperation of
 malnourished children, the PM2A targets all children from 6 to 24
 months with food supplementation and provides mothers with a supplement
 as well from pregnancy until the baby is 6 months old. Receipt of the
 food requires the mother's participation in improved health and
 nutritional services, which include a Behavior Change Communications
 program oriented toward improving family nutritional status and how the
 infant and young child is cared for. A careful evaluation in Haiti
 documented that the PM2A was both successful and cost effective in
 reducing chronic malnutrition (stunting), wasting and underweight in
 Haiti when compared with a similar maternal and child health and
 nutrition program that used the traditional food aid approach of
 providing supplementary feeding only to already malnourished children
 as part of their recuperation.
    As a result of this study, World Vision and the other two grantees
 in Haiti are scaling up the use of the PM2A approach to the entire
 population of Haiti benefiting from FFP non-emergency support. World
 Vision has also incorporated the use of the PM2A approach into its new
 multi-year program beginning in FY 2008 in Afghanistan.
    See: Marie T. Ruel, et al. ``Age-based Preventive Targeting of Food
 Assistance and Behavior Change and Communication for Reduction of
 Childhood Malnutrition in Haiti: A Cluster Randomized Trial.'' The
 Lancet 371 (Feb. 16, 2008): 588-595.
------------------------------------------------------------------------

    Food for Peace Title II: Non-Emergency Program Highlights

    The following examples illustrate the breadth of Title II non-
emergency food resources implemented by grantees as well as how these 
activities have helped in allaying food insecurity and fostering self-
sufficiency.

    Burkina Faso

    Africare, a USAID grantee, was awarded the Government of Burkina 
Faso's highest honor in 2008 for the achievements of its Zondoma Food 
Security Initiative, which reached all 104 villages in the northern 
province of Zondoma, a highly food-insecure region. Africare was the 
only PVO to receive the award, Chevalier de l'Ordre National. Funded 
through Title II of the Food for Peace Act, the initiative benefited 
160,000 people by promoting diversified crop production and employment 
opportunities, improving household nutrition, educating about HIV/AIDS 
prevention and providing nutritional support to HIV/AIDS-affected 
households. Food security in Zondoma province is threatened by factors 
including low rainfall, high levels of infant morbidity and out-
migration of workers.

    Bangladesh

    USAID contributed 64,500 MT of commodities valued at $47.8 million 
to non-emergency Title II programs in Bangladesh in FY 2008.
    Save the Children Federation has been implementing a Title II 
development program called Jibon-O-Jibika (Life and Livelihoods) in 
three coastal districts of south-central Bangladesh since October 2004. 
The program includes interventions to increase household food 
availability and access, enhance maternal and child health and 
nutrition and improve community disaster preparedness. The selected 
costal areas are considered highly vulnerable due to high malnutrition 
rates and their geographical location in the cyclone belt of 
Bangladesh, which means they are constantly threatened by natural 
disasters. An assessment of disaster preparedness and response 
conducted in the Jibon-O-Jibika areas of operation in FY 2008 found 
that cyclone warning awareness has increased substantially during the 
course of the program's activities. Nearly 100 percent of inhabitants 
in the areas had received cyclone warning messages prior to Cyclone 
Sidr in November 2007, a significant improvement from 2005, when a 
baseline assessment showed that warnings were reaching only 19 to 51 
percent of households in the targeted communities. As a result of 
improved cyclone warning, many households successfully evacuated before 
Cyclone Sidr, and some were able to use cyclone shelters in their 
communities.
    A 5 year program implemented by CARE--Strengthening Household 
Ability to Respond to Development Opportunities (SHOUHARDO)--is 
reaching more than 407,000 vulnerable households in 2,205 villages and 
137 urban slums with activities aimed at sustainably reducing chronic 
and transitory food insecurity. One significant SHOUHARDO activity is a 
flood early warning system called the Climate Forecast Application in 
Bangladesh, which is being developed by a consortium including the 
Georgia Institute of Technology, the National Center for Atmospheric 
Research and the Asian Disaster Preparedness Center. The first tier of 
this system, which provides a 10 day warning of impending floods, was 
completed, tested and handed over to the Bangladesh Water Development 
Board in FY 2008. Test results indicated a reliability level of more 
than 90 percent.

    Haiti

    USAID contributed 44,400 MT of Title II non-emergency food aid 
valued at $34.2 million to Haiti in FY 2008. USAID's grantees in Haiti 
work with the poorest of the poor to increase food production, improve 
health and nutrition, increase livelihoods and household incomes, and 
provide a food safety net for the most vulnerable people in the 
population. FFP's non-emergency programs were critical in a year when 
Haiti was hit by dramatic food and fuel price increases and three 
hurricanes in quick succession.
    In addition to providing support for agricultural activities and 
emergency food distribution following the hurricanes, ACDI/VOCA 
developed an early warning system to monitor slow-onset disasters in 34 
communities in southeastern Haiti, collecting rainfall and food price 
data in order to mitigate the effects of drought and price shocks.
    Catholic Relief Services trained 525 farmers in soil and water 
conservation techniques and nursery management, and helped farmers 
establish 36 demonstration plots in southwestern Haiti to evaluate 
improved varieties of bean, corn and cassava.
    Non-emergency programs in Haiti also included activities that 
promoted maternal and child health. World Vision fully vaccinated 
nearly 7,500 children under age 5, provided prenatal and postnatal 
health services for more than 6,500 women, and provided an average of 
nearly 22,000 monthly food rations to approximately 88,000 children, 
pregnant and lactating women, and people living with AIDS.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Primary school students Jayrin Munoz Videa, left, and Carla 
        Antonieta Maradiaga, right, eating lunch provided by 
        International Food Relief Partnership grantee Fabretto 
        Children's Foundation at Mama Margarita School in Somoto, 
        Nicaragua. Photo: Rafael I. Merchan, Fabretto Children's 
        Foundation.

      c. International Food Relief Partnership

    In November 2000, the U.S. Congress passed the International Food 
Relief Partnership (IFRP) Act. This law enables USAID to award grant 
agreements to eligible U.S. nonprofit organizations to produce and 
stockpile shelf-stable, pre-packaged commodities. Through the IFRP 
program, commodities are made available to eligible nonprofit U.S. 
organizations and international organizations for transportation, 
delivery and distribution in emergency food aid relief programs.
    In FY 2008, the Office of Food for Peace awarded approximately $8 
million in Title II IFRP supplier and distribution grants. The 
program's primary supplier, Breedlove Dehydrated Foods, produced a 
micronutrient-fortified, dried vegetable soup mix which is used as a 
meal supplement for humanitarian relief operations overseas. Over the 
course of the year, 30 IFRP distribution grants were awarded to 27 
nonprofit U.S.-based organizations, which distributed the commodity to 
beneficiaries in 30 countries. A list of these countries is provided in 
Appendix 2, List of Grantees.

    3. Title III: Food for Development

    The Food for Peace Title III program is a USAID-administered tool 
for enhancing food security and supporting long-term economic 
development in the least-developed countries. The U.S. Government 
donates agricultural commodities to the recipient country and funds 
their transportation to the point of entry in the recipient country. 
These commodities are sold on the domestic market and the revenue 
generated from their sale is used to support and implement economic 
development and food-security programs. Funds were not appropriated for 
Title III in FY 2008.

    4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer 
        Program

    The John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) Program 
provides voluntary technical assistance to farmers, farm groups and 
agribusinesses in developing and transitional countries to promote 
sustainable improvements in food processing, production and marketing. 
The program relies on the expertise of volunteers from U.S. farms, 
land-grant universities, cooperatives, private agribusinesses and 
nonprofit farm organizations to respond to the local needs of host-
country farmers and organizations. Volunteers are recruited from all 50 
states and the District of Columbia. In general, these volunteers are 
not overseas development professionals, but rather individuals who have 
domestic careers, farms and agribusinesses or are retired persons who 
want to participate in development efforts. Typically volunteers spend 
about 20 to 30 days in the host country.
    The FTF Program was initially authorized by Congress in the Food 
Security Act of 1985 and funded through Title V of the Agricultural 
Trade Development and Assistance Act of 1954. The U.S. Congress 
authorized the current FY 2009-2013 phase of the FTF Program in the 
2008 Food for Peace Act, designating it the ``John Ogonowski and Doug 
Bereuter Farmer-to-Farmer Program'' in honor of Ogonowski, one of the 
pilots killed on September 11, 2001, and former Congressman Bereuter, 
who initially sponsored the program.

    Title V: FTF Highlights

             Farmer-to-Farmer Volunteer Assignments: FY 2008
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                            Angola                                5
                          Ethiopia                               22
                             Ghana                                6
                            Guinea                                7
                             Kenya                               14
                            Malawi                               11
                              Mali                                5
                        Mozambique                                6
                           Nigeria                                1
                      South Africa                               37
                            Uganda                               22
                            Zambia                               12
                                          ------------------------------
  Subtotal Africa........................                       148
                                          ------------------------------
                           Bolivia                                1
                       El Salvador                                8
                         Guatemala                                7
                            Guyana                               17
                             Haiti                               25
                          Honduras                               13
                           Jamaica                               32
                         Nicaragua                                4
                              Peru                                1
                                          ------------------------------
  Subtotal Latin America--Caribbean......                       108
                                          ------------------------------
                           Armenia                               18
                        Azerbaijan                               16
                           Belarus                               17
                           Georgia                                8
                           Moldova                               31
                            Russia                               81
                           Ukraine                               49
                                          ------------------------------
  Subtotal Europe-Eurasia................                       220
                                          ------------------------------
                        Bangladesh                                9
                             India                                4
                         Indonesia                                2
                             Nepal                                5
                        Kazakhstan                               20
                        Kyrgyzstan                               33
                        Tajikistan                               21
                      Turkmenistan                               18
                           Vietnam                                1
                                          ------------------------------
  Subtotal Asia-Near East................                       113
                                          ==============================
    Total................................                       589
------------------------------------------------------------------------

    During FY 2008, USAID provided $9.8 for FTF programs of eight 
implementing agencies. The FTF programs funded a total of 589 volunteer 
assignments in 37 countries. Volunteers provided developing country 
host organizations with technical assistance services with an estimated 
value of more than $6.3 million. Volunteer efforts helped hosts 
mobilize $11.3 million in grants and loans. In addition, volunteers 
provided direct formal training to 22,822 beneficiaries (of which 45 
percent were women). The following examples illustrate the types of 
activities undertaken by the FTF program:

    FTF volunteer Larry Swalheim helps strengthen the cooperative and 
lifts members' spirits:

    In April 2008, FTF volunteer Larry Swalheim visited the Farmer 
Cooperative in Ukraine to work with its members on cooperative service 
development. As the Chief Executive Officer of Landmark Cooperative in 
Wisconsin, Mr. Swalheim is very familiar with a diverse set of products 
and services, including animal feed production, petroleum marketing and 
sales of fertilizer and seeds. During his work with the Farmer 
Cooperative, Mr. Swalheim was able to draw on his extensive experience 
to teach the cooperative's members methods of strengthening their 
organization and improving services to farmer members. During his 
assignment, Mr. Swalheim conducted seven seminars in six towns.

    FTF Volunteer Strengthens Broiler Processing Value-chain in 
Bangladesh:

    Bangladesh Broiler Processing Center (BBPC), an agro-enterprise of 
BRAC, the largest PVO in Bangladesh, was established as a semi-
automatic broiler processing facility in 2003 in Tongi/Gazipur, near 
Dhaka. BBPC faced numerous challenges--lack of hygienic processing; 
lack of adequate freezing, storage and transportation facilities; and 
inefficient cooling and refrigeration systems.
    In May 2005 and September 2006, the FTF Program fielded Dr. Omar 
Oyarzabal, a highly experienced broiler processing specialist, to help 
improve BBPC's processing facilities and upgrade staff technical and 
management capabilities. Based on his recommendations, BBPC instituted 
many important modifications to the plant's technical facilities to 
bring about tangible improvements in the entire broiler processing 
value chain. Notable among them were:

   Installed a new blast freezing system to significantly 
        enhance carcass freezing efficiency;

   Improved air-conditioning of the processing and grading 
        spaces to maintain room temperatures below 15 Celsius;

   Upgraded freezer and chiller rooms to allow more space to 
        hold the processed products before refrigeration; and

   Improved maintenance of chill tanks and made changes in the 
        practices of carcass storage.

    In 2008, an analysis was conducted to determine the impact of the 
FTF volunteer assistance. It was found out that as an outcome of these 
important improvements, production of processed broiler meat has 
increased by 63 percent (from 80 MT/month to 130 MT/month) as of August 
2008; monthly gross value of sales has increased by 128 percent (from 
$148,235 to $338,382); and monthly average net income has increased by 
97 percent (from $16,471 to $32,500).
B. Section 416(b) of the Agriculture Act of 1949: Surplus Commodities
    The Agricultural Act of 1949 authorizes the donation by USDA of 
surplus food and feed grain owned by the CCC. Section 416(a) authorizes 
surplus food assistance to be distributed domestically and surplus food 
shipped to developing countries for assistance programs is covered 
under Section 416(b). Surplus commodities acquired by the CCC as a 
result of price-support operations may be made available under Section 
416(b) if they cannot be sold or otherwise disposed of without 
disrupting price-support programs or at competitive world prices. These 
donations are prohibited from reducing the amounts of commodities 
traditionally donated to domestic feeding programs or agencies, from 
preventing the fulfillment of any agreement entered into under a 
payment-in-kind program or from disrupting normal commercial sales.
    In FY 2008, no commodities were made available by CCC, and 
consequently, no donations were made under the program.
C. Food for Progress
    The USDA-administered Food for Progress Program, authorized under 
the Food for Progress Act of 1985, assists developing countries, 
particularly emerging democracies ``that have made commitments to 
introduce or expand free enterprise elements in their agricultural 
economies through changes in commodity pricing, marketing, input 
availability, distribution and private sector involvement.'' The 
program authorizes the CCC to carry out the sale and exportation of 
U.S. agricultural commodities on credit terms or on a grant basis, with 
the use of either CCC financing or Food for Peace Title I funds. 
Agreements for Food for Progress are awarded to governments or PVOs, 
nonprofit agriculture organizations, cooperatives, intergovernmental 
organizations or other private entities.
    The 2008 Farm Bill extended the authority for the Food for Progress 
Program to provide assistance in the administration and monitoring of 
food assistance programs to strengthen private-sector agriculture in 
recipient countries through FY 2012. The CCC is authorized to use $15 
million for administrative costs under the grants and $40 million for 
transportation expenses.

    1. CCC-funded Food for Progress Highlights

    In FY 2008, CCC funding financed the purchase and shipment of 
199,600 MT of commodities to 15 countries, with an estimated value of 
$162 million. The summaries below provide examples of CCC-funded Food 
for Progress agreements signed in FY 2008.

   Afghanistan: USDA donated 12,500 MT of wheat to Roots of 
        Peace (ROP), a PVO, for use in Afghanistan. ROP will use 
        proceeds from the sale of the wheat in Afghanistan to assist 
        approximately 14,400 farmers expand horticultural production in 
        Afghanistan. ROP aims to accomplish this by helping plant new 
        orchards and providing extension support for fruit and nut tree 
        farmers; expanding grape production by establishing grape vine 
        nurseries, upgrading vineyards through trellising and providing 
        extension support for grape farmers; providing post-harvest 
        training, services and facilities to farmers; providing 
        training to farmers in literacy, numeracy, business, marketing 
        and financial management; and establishing a line of credit 
        with a local financial institution to provide loans to eligible 
        farmers and merchants. Fruits and nuts are among the most 
        valuable agricultural exports of Afghanistan. The opportunity 
        to expand horticultural production by converting existing 
        irrigated grain fields into high market-value fruit and nut 
        production represents the most practical way of increasing farm 
        incomes and focusing production away from illicit crops.

   Ethiopia: USDA donated 20,000 MT of wheat to ACDI/VOCA, a 
        PVO, for use in Ethiopia. Proceeds from the sale of the wheat 
        will be used to develop the animal feed industry, thereby 
        increasing profitability for smallholder livestock owners and 
        pastoralists. Activities include feed formulation and 
        manufacturing, feedlot management and forage production and 
        strengthening the feed distribution channel. The program will 
        benefit more than 72,000 livestock owners, including 53,300 
        cooperative member farmers and 19,300 pastoralists. 
        Approximately half of Ethiopia's population lives in poverty, 
        while another 15 percent is extremely susceptible to poverty as 
        a result of drought and other shocks. With an estimated 40.9 
        million cattle and 37 million sheep and goats, the livestock 
        sector is one of Ethiopia's key agricultural industries, 
        contributing 30 to 35 percent of agricultural gross domestic 
        product and 15 to 18 percent of total export earnings and 
        employs a third of Ethiopia's rural population.

   The Gambia, Guinea-Bissau and Senegal: USDA donated 4,500 MT 
        of vegetable oil to International Relief and Development, Inc. 
        (IRD), a PVO, for use in The Gambia, Guinea-Bissau and Senegal. 
        Lying within the drought-prone Sahel region, these countries 
        have fragile ecosystems and unstable climates and the regional 
        effects of protracted civil conflict increases vulnerability to 
        food insecurity. IRD will sell the vegetable oil in The Gambia 
        and use the proceeds to assist cashew farmers in The Gambia, 
        southern Senegal and northern Guinea-Bissau. Activities include 
        capacity building of cashew farmer associations, increasing the 
        productivity and quality of cashews, adding value through 
        processing and increasing local consumption of cashews. IRD 
        seeks to increase yield by 60 percent and farmer income by 50 
        percent; 100,000 farmers will benefit from this program.

   Honduras: USDA donated 8,800 MT of soybean meal to 
        TechnoServe, a PVO, for use in Honduras. TechnoServe will sell 
        the commodity in Honduras and use the proceeds to assist 750 
        smallholder farmers diversify production by integrating 
        jatropha with other high-value products like fine cocoa, roots 
        and tubers and dairy. The program will help agribusinesses 
        access export markets, raise incomes for smallholder farmers, 
        reforest degraded lands, rehabilitate soils and reduce erosion 
        and supply the demand for raw materials to produce 
        competitively priced biodiesel. Over 3 years, small producers 
        in the program will earn $3 million in incremental annual 
        sales, improving living standards for 4,000 rural poor. Despite 
        the fact that Honduras has made important gains in liberalizing 
        its economy (it is ranked as having one of the most open 
        economies in Central America and has favorable year-round 
        growing conditions) Honduran agricultural producers remain 
        mired in poverty, with nearly 70 percent of the rural 
        population engaged in subsistence farming. Per capita income is 
        $1,121 and 63 percent of the population lives in poverty.

   Niger: USDA donated 2,410 MT of vegetable oil to Catholic 
        Relief Services (CRS), a PVO, for use in Niger. CRS will sell 
        the commodity and use the proceeds over 3 years to carry out a 
        program to increase production, processing and marketing of 
        sesame, okra, onion and other vegetables in approximately 60 
        villages, all in the western region of the country. The project 
        will enhance private sector development and give producers the 
        ability to support their financial needs through the sale of 
        locally grown agricultural commodities in national and 
        international markets. The project will assist 8,000 recipients 
        directly and benefit another 32,000 indirectly.
D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
    An estimated 120 million children around the world do not attend 
school, due in part to hunger or malnourishment. The majority of them 
are girls. Following the success of the Global Food for Education 
Initiative, created in July 2000, the United States has demonstrated 
its continued commitment to education and child nutrition with the 2008 
Farm Bill's re-authorization of the McGovern-Dole International Food 
for Education and Child Nutrition Program (FFE) through FY 2012.
    Modeled on the U.S. Government's school meals program, the FFE 
program is named in honor of former Senators George McGovern and Robert 
Dole for their tireless efforts to promote education and school 
feeding. The FFE program uses U.S. commodities and financial assistance 
to provide incentives for children to attend and remain in school, as 
well as to improve child development through nutritional programs for 
women, infants and children under age 5. In FY 2008, the FFE program 
provided more than 125,500 MT of commodities to support child nutrition 
and school feeding programs in 17 countries, the total value of which 
exceeded $99 million. The following are examples of new FFE programs 
that were funded in FY 2008:

   Bangladesh: Bangladesh has the third-highest number of 
        hungry poor in the world after India and China. The estimated 
        gross enrollment rate of pre-primary children (aged 4-5 years) 
        in Bangladesh is 23 percent for boys and 26 percent for girls, 
        which is low in comparison to other Asian countries in the 
        region. Additionally, economic hardship forces parents to keep 
        their children at home for domestic and paid work. To increase 
        relief in this region, USDA signed an FFE agreement with WFP to 
        donate 30,000 tons of wheat. WFP will directly distribute the 
        wheat in the form of fortified biscuits to 350,000 students. In 
        addition to direct feeding, this program will include 
        activities to enhance awareness of nutrition and education 
        issues among children, parents, teachers and School Management 
        Committees; de-worming; hygiene, sanitation and nutrition 
        counseling; and HIV/AIDS education.

   Ethiopia: Food insecurity is very prevalent in Ethiopia and 
        is demonstrated by widespread chronic malnutrition resulting 
        from inadequate dietary intake, inadequate health 
        infrastructure and limited access to education. As a result, 
        Ethiopia has one of the most nutritionally deprived populations 
        in the world and the large number of children not in school is 
        linked to physical and psychological impairments resulting from 
        malnutrition in early childhood. Though improvement has been 
        observed in the past in regard to enrollment, the enrollment 
        rate in emerging pastoralist regions such as Somali and Afar is 
        still very low, with 30.3 percent and 21.9 percent 
        respectively, compared to the national average gross enrollment 
        rate of 85.8 percent. To help ease this situation, USDA donated 
        7,020 MT of corn-soy blend and 1,600 MT of vegetable oil to 
        WFP, which will use the food to feed 160,000 students in 
        pastoralist regions.

   Guatemala: Guatemala is a post-conflict, poor, multi-ethnic 
        nation with a population of 12 million. According to UNICEF, 
        31.5 percent of the adult population is illiterate, rising to 
        73 percent in the rural Mayan highlands where Asociacion SHARE 
        deGuatemala (SHARE) will implement an FFE program. USDA donated 
        280 MT of vegetable oil, 560 MT of dark-red kidney beans, 560 
        MT of milled rice and 2,400 MT of soybean meal for use in 
        Guatemala. SHARE will sell the soybean meal locally and use the 
        remainder of commodities to provide daily meals for 72,300 
        teachers and children. Take-home rations will benefit another 
        18,000 students. In addition to food provisions, the program 
        will provide training for teachers, educational materials and 
        infrastructure improvements. SHARE will also support 
        approximately 300 schools with the supplies and training 
        necessary to implement school gardens. The harvest from these 
        gardens will provide additional complementary and nutritious 
        foods for the daily school snack and will teach students the 
        importance of caring for the environment and working as a team.

   Laos: The United States is committed to helping Laos end the 
        threat posed by unexploded ordnance and improve education for 
        Laotian children in the districts of Mahaxy, Boualapha and 
        Ngommalat and in Khammouane Province. Since 2006, with the 
        assistance of the Humpty Dumpty Institute (HDI) and IRD, USDA 
        has provided 1.3 million nutritious mid-morning snacks of corn 
        soy blend and more than 45,000 take-home rations to the 
        children and teachers who maintain a monthly school attendance 
        rate of 80 percent. As a result of this school-feeding program, 
        school enrollment is up 21 percent for girls and 13 percent for 
        boys. Over 450 teachers have received training and 110 schools 
        have implemented vegetable gardens, rehabilitation projects, 
        health-education programs and school kits (pencils and 
        notebooks) distributions. In addition, the Mines Advisory Group 
        removed more than 2,220 items of unexploded ordnance and 
        cleared approximately 200,000 square meters of land and roads. 
        This land is now safe for agriculture and travel for school 
        children and the community.

   Kyrgyzstan: With Kyrgyzstan's independence after the fall of 
        the Soviet Union in 1991 came the collapse of most social 
        services, including the education system. Nationwide, primary 
        school enrollment has dropped ten percent since 1991. Further, 
        many families cannot afford the unofficial costs of a primary 
        or preschool education, such as school meals and textbooks and 
        elect to send only their sons, not their daughters, to school. 
        As a result, school attendance for girls has dropped to nearly 
        ten percent lower than for boys. USDA and Mercy Corps 
        International (MCI) signed an FFE agreement for 200 MT of wheat 
        flour, 150 MT of rice and 150 MT of soybean oil to implement a 
        12 month school feeding program in all 40 rural regions of the 
        Kyrgyz Republic. The program's goal is to empower communities 
        and government toward sustained, improved educational 
        achievement in schools in the most underserved educational 
        institutions, through food distribution to 30,000 students. 
        Additionally, MCI will undertake school infrastructure projects 
        and provide educational grants to school children.

   Mozambique: Mozambique has more than 1.5 million orphans, 
        close to 400,000 of whom are AIDS orphans. Many of these 
        children face grave difficulties in surviving, often making 
        school attendance impossible because they are needed for income 
        generation, food production or care for their siblings. USDA 
        signed an FFE agreement with Joint Aid Management (JAM), a PVO, 
        for the donation of 2,100 MT of corn-soy blend and 3,790 MT of 
        milled rice. JAM will use the commodities to provide a daily 
        nutritional meal to 113,000 students and take-home rations to 
        16,000 girls and 2,200 cooks. JAM's program also includes 
        training seminars and infrastructure development, as well as 
        the establishment of school gardens.

   Rwanda: Chronic food insecurity, frequent drought and 
        structural poverty seriously reduce opportunities for children 
        in many parts of Rwanda to complete primary education. Lack of 
        food prevents many children from enrolling in school, forces 
        them to be frequently absent and reduces their learning ability 
        and academic performance. Although primary net enrollment has 
        increased from 73 percent in 2002 to 92 percent in 2005, pupil 
        to teacher ratios have increased and the availability of 
        teaching and learning materials and infrastructure has not kept 
        pace with enrollment. As a result, examination pass rates have 
        declined and the primary completion rate has stagnated. To 
        combat this, USDA signed an FFE agreement with WFP to donate 
        18,360 MT of cornmeal, 4,860 MT of beans and 1,620 MT of 
        vegetable oil. WFP will directly distribute these commodities 
        to 300,000 students in 12 food-insecure, drought-prone 
        districts in the eastern and southern provinces of Rwanda that 
        show low overall rates of primary enrollment and low attendance 
        of schoolchildren. WFP will also conduct school infrastructure 
        projects and supply kitchen equipment, health related equipment 
        and agricultural tools to schools.
E. Bill Emerson Humanitarian Trust
    The Bill Emerson Humanitarian Trust (BEHT) is a food reserve 
designed to hold up to 4 million MT of wheat, corn, sorghum and rice 
administered under the authority of the Secretary of Agriculture. When 
an unanticipated emergency arises that cannot be met with Food for 
Peace Act resources, the Secretary of Agriculture may authorize the 
release of commodities from the reserve in order to meet those 
immediate needs. Each year, 500,000 MT may be released, plus up to 
another 500,000 MT that was not released in prior years.
    The reserve was originally authorized by the Agricultural Trade Act 
of 1980 as the Food Security Wheat Reserve and was later broadened to 
include a number of other commodities. In 1998, the reserve was renamed 
the Bill Emerson Humanitarian Trust.
    In FY 2008, USDA converted wheat in the trust into cash.
III. Appendices

                    Appendix 1: List of Abbreviations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                   BBPC   Bangladesh Broiler Processing Center
                   BEHT   Bill Emerson Humanitarian Trust
                    CCC   Commodity Credit Corporation
                    CSB   Corn Soy Blend
               FEWS NET   Famine Early Warning System Network
                    FFE   McGovern-Dole International Food for Education
                           and Child Nutrition Program (formerly Global
                           Food for Education Initiative)
                    FFP   Office of Food for Peace (USAID)
     Food for Peace Act   U.S. Food for Peace Act (formerly P.L. 480)
                    FTF   Farmer-to-Farmer Program of Food for Peace
                           Act, Title V
                     FY   Fiscal year
                    HIV   Human Immunodeficiency Virus
                   IFRP   International Food Relief Partnership
                     MT   Metric ton
                 PEPFAR   President's Emergency Plan for AIDS Relief
                   PM2A   Preventing Malnutrition in Children Under Two
                           Approach
                    PSC   Personnel Services Contract
                   PSNP   Productive Safety Net Program (Ethiopia)
                    PVO   Private voluntary organization
                    RFI   Request for Information
                    RFP   Request for Proposal
                 UNICEF   United Nations Children's Fund
                  USAID   U.S. Agency for International Development
                   USDA   U.S. Department of Agriculture
                    WFP   United Nations World Food Program
------------------------------------------------------------------------


                      Appendix 2: List of Grantees
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    The following grantees implemented U.S. Government food assistance
                   programs in Fiscal Year 2008:
------------------------------------------------------------------------
              ACDI/VOCA   Agriculture Cooperative Development
                           International/Volunteers in Overseas
                           Cooperative Assistance
                   ADRA   Adventist Development and Relief Agency
                           International, Inc.
               Africare   Africare
                   CARE   Cooperative for Assistance and Relief
                           Everywhere, Inc.
                   CNFA   Citizens' Network for Foreign Affairs
                    CPI   Counterpart International
                    CRS   Catholic Relief Services
                   FFPI   Food for the Poor, Inc.
                    FHI   Food for the Hungry International
            Florida A&M   Florida A&M University
                    GoA   Government of Afghanistan
                      GLIMGlobal Impact, Inc.
                    HDI   The Humpty Dumpty Institute
                   IPHD   International Partnership for Human
                           Development
                    IRD   International Relief and Development, Inc.
                       LOLLand O'Lakes
                       LWMLegacy World Missions
                    MCI   Mercy Corps International
                   NOAH   NOAH Project
                    NPA   Norwegian People's Aid
                   OICI   Opportunities Industrialization Centers
                           International Partners of the Americas
                    PCI   Project Concern International
                    PFD   Partners for Development
                   REST   Relief Society of Tigray
                    ROP   Roots of Peace
                    SCF   Save the Children Federation
                 SCF-UK   Save the Children UK
                  SHARE   SHARE Guatemala
                   TAMU   Texas A&M University
                     TS   TechnoServ
                  UMCOR   United Methodist Committee on Relief
                    VSU   Virginia State University
                    WFP   United Nations World Food Program
                Winrock   Winrock International
                   WVUS   World Vision US
------------------------------------------------------------------------
    The following organizations served as grantees with the Title II-
 Funded International Food Relief Partnership in Fiscal Year 2008:
------------------------------------------------------------------------
                    ACT   ACTS International
                     AI   Amigos Internacionales
                    BRA   Batay Relief Alliance
                     BC   Bless the Children
                    CRS   Catholic Relief Services
                    CIH   Center for International Health
                    CBU   Church for Bible Understanding
               Citihope   Citihope International
                     CH   Convoy of Hope
              Coprodeli   Coprodeli
                    CPI   Counterpart International
                    EIM   Evangelistic International Ministry
                    FCF   Fabretto Children's Foundation
      Feed the Children   Feed the Children
           Haiti Vision   Haiti Vision
                    IRD   International Relief and Development/Cambodia
                    IRT   International Relief Teams
                    JAM   Joint Aid Management
                     MM   Medical Missionaries
                Nascent   Nascent Solutions
                     PA   Planet Aid
                    PCI   Project Concern International
                     PH   Project Hope
         Salvation Army   Salvation Army World Service
                   SERV   Serv Ministries
                    RPX   The Resource and Policy Exchange
                 Uplift   Uplift International
                     WH   World Help
------------------------------------------------------------------------


                   Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                     Beneficiaries                   Total Cost
    Country           Grantee                 Commodity                  (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Tajikistan                     WFP  Vegetable Oil, Wheat Flour                    65         6,870        $7,998
East Timor                     WFP  Vegetable Oil, Rice, Beans,                 36.2         3,610      $4,987.3
                                     Corn Soy Blend
                                                                  ----------------------------------------------
  Sub-Total Asia/Near East                                                     101.3        10,480     $12,985.3
                                                                  ==============================================
    Worldwide Total                                                            101.3        10,480     $12,985.3
----------------------------------------------------------------------------------------------------------------


     Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity and Tonnage_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                    Recipients *                    Total Cost
    Country          Grantee                 Commodity                 (000s)        Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso                  WFP  Corn Soy Blend, Vegetable                 1,337         2,160       $2,599.80
                                    Oil
Burundi                       WFP  Corn (bagged), Yellow Peas,                 2.7         7,380       $8,241.20
                                    Vegetable Oil
Central                       WFP  Cornmeal, Corn Soy Blend,                   597         7,490      $10,122.40
 African                            Vegetable Oil, Yellow Split
 Republic                           Peas
Cameroon                      WFP  Cornmeal, Corn Soy Blend,                    85         4,830       $5,136.70
                                    Red Beans, Vegetable Oil
Chad                          WFP  Cornmeal, Corn Soy Blend,              1,590.10     49,970.00      $60,925.90
                                    Rice (bagged), Sorghum
                                    (bulk), Vegetable Oil,
                                    Yellow Split Peas
Democratic                    FHI  --                                           --            --    ** $2,041.50
 Republic of
 the Congo
                              WFP  Cornmeal, Corn Soy Blend,                  13.4        42,940      $68,969.10
                                    Green Peas, Green Split
                                    Peas, Pinto Beans,
                                    Vegetable Oil, Yellow Split
                                    Peas
Djibouti                      WFP  Corn Soy Blend, Lentils,                  137.2         2,360       $2,735.00
                                    Vegetable Oil, Wheat Flour
Ethiopia                     CARE  Hard Red Winter Wheat,                    904.8        36,620      $29,309.40
                                    Lentils, Sorghum (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
                              CRS  Bulgur, Corn Soy Blend, Hard              615.9       116,570         $83,563
                                    Red Winter Wheat, Rice
                                    (bagged), Sorghum (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
                              FHI  Green Peas, Hard Red Winter               580.3        37,890      $28,482.30
                                    Wheat, Sorghum (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
                             REST  Hard Red Winter Wheat,                 1,767.40       100,270      $75,147.90
                                    Sorghum (bulk), Vegetable
                                    Oil, Yellow Peas, Yellow
                                    Split Peas
                              SCF  Green Split Peas, Hard Red                254.6         9,150       $8,056.50
                                    Winter Wheat, Vegetable Oil
                           SCF-UK  Hard Red Winter Wheat,                    863.2        54,800      $42,364.20
                                    Lentils, Sorghum (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
                              WFP  Corn Soy Blend, Green Peas,                 350       266,960     $202,638.40
                                    Hard Red Winter Wheat,
                                    Lentils, Sorghum (bulk),
                                    Vegetable Oil, Wheat Flour,
                                    Yellow Peas, Yellow Split
                                    Peas
                             WVUS  Hard Red Winter Wheat,                    200.9        10,660       $8,692.60
                                    Vegetable Oil, Yellow Peas
The Gambia                    WFP  Rice (bagged)                              13.5           680         $577.00
Kenya                         WFP  Bulgur, Cornmeal, Corn Soy             1,357.00     61,230.00      $64,633.30
                                    Blend, Vegetable Oil, Wheat
                                    Flour, Yellow Split Peas
Liberia                       WFP  Bulgur, Vegetable Oil                       767         1,460       $1,741.60
Mali                          WFP  Corn Soy Blend                              210         1,540       $1,647.40
Mauritania                    WFP  Corn Soy Blend, Hard Red                  678.8        11,620      $11,552.30
                                    Winter Wheat, Soft Red
                                    Winter Wheat, Vegetable Oil
Mozambique                    WFP  Cornmeal                                    5.5         3,190       $2,793.40
Niger                         WFP  Cornmeal, Corn Soy Blend,                   5.8        11,080      $13,060.80
                                    Rice (bagged), Vegetable
                                    Oil
Rwanda                        WFP  Cornmeal, Corn Soy Blend,              1,627.50         3,340       $3,830.40
                                    Kidney Beans, Pinto Beans,
                                    Vegetable Oil
Somalia                      CARE  Corn Soy Blend, Lentils,                  369.6        81,030      $70,606.00
                                    Sorghum (bulk), Vegetable
                                    Oil, Yellow Peas
                              WFP  Corn Soy Blend, Green Peas,                17.8       130,290     $126,793.80
                                    Green Split Peas, Lentils,
                                    Sorghum (bulk), Vegetable
                                    Oil, Yellow Peas, Yellow
                                    Split Peas
Sudan                        ADRA  Lentils, Sorghum (bagged),                 44.1           730         $994.80
                                    Vegetable Oil
                             CARE  Lentils, Sorghum (bagged),                   14         1,500       $1,466.90
                                    Vegetable Oil
                              CRS  Corn Soy Blend, Lentils,                  146.3         3,950       $5,782.20
                                    Sorghum (bagged), Vegetable
                                    Oil
                              NPA  Lentils, Sorghum (bulk),                  208.2         7,140       $9,795.90
                                    Vegetable Oil
                              WFP  Lentils, Sorghum (bulk),                   49.6       395,090     $494,876.80
                                    Vegetable Oil, Yellow Split
                                    Peas
Tanzania                      WFP  Cornmeal, Corn Soy Blend,                 733.8        16,900      $14,562.10
                                    Green Peas, Sorghum
                                    (bagged), Soy Fortified
                                    Cornmeal, Yellow Peas
Uganda                        WFP  Corn Soy Blend, Cornmeal,                  10.9        47,850      $46,283.30
                                    Pinto Beans, Sorghum
                                    (bagged), Sorghum (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
Zambia                        WFP  Green Split Peas, Sorghum                    91         3,090       $2,806.10
                                    (bagged), Sorghum (bulk),
                                    Yellow Split Peas
Zimbabwe                      WFP  Bulgur, Green Peas, Pinto              2,234.50     47,900.00      $58,603.80
                                    Beans, Sorghum (bulk),
                                    Vegetable Oil, Yellow Peas
                             WVUS  Bulgur, Cornmeal, Sorghum                  10.1     42,010.00      $45,261.30
                                    (bulk), Vegetable Oil,
                                    Yellow Peasv
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                       17,894.50     1,621,670   $1,616,695.10
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                   WFP  Green Split Peas, Hard Red                 44.6    141,930.00     $144,843.20
                                    Winter Wheat, Soft White
                                    Wheat, Vegetable Oil, Wheat
                                    Flour, Wheat Flour Bread,
                                    Yellow Peas
Algeria                       WFP  Corn Soy Blend, Yellow Split                125         5,940       $6,816.10
                                    Peas, Vegetable Oil, Wheat
                                    Flour Bread
Bangladesh                   CARE  Hard Red Winter Wheat,                       39         9,290       $5,967.10
                                    Yellow Split Peas,
                                    Vegetable Oil
                              SCF  Hard Red Winter Wheat,                     17.5         8,810       $7,948.90
                                    Yellow Split Peas,
                                    Vegetable Oil
                              WFP  Soft Red Winter Wheat                      38.9     22,350.00      $17,295.60
                                    (bulk), Vegetable Oil, Rice
                                    (bagged), Rice (bulk),
                                    Yellow Split Peas
Burma                         WFP  Corn Soy Blend, Garbanzo                  1,749        23,640      $28,063.00
                                    Beans, Rice (bagged),
                                    Vegetable Oil
East Timor                    WFP  Rice (bagged), Vegetable Oil                105         1,040       $1,150.00
Iraq                          WFP  Navy Beans, Vegetable Oil,                1,500        17,500      $23,761.60
                                    Wheat Flour
Nepal                         WFP  Garbanzo Beans, Lentils,                  328.4        15,830      $18,832.80
                                    Rice (bagged), Vegetable
                                    Oil, Yellow Split Peas
Pakistan                      WFP  Soft Red Winter Wheat,                      132         2,450       $2,551.20
                                    Vegetable Oil
Sri Lanka                     WFP  Hard Red Winter Wheat                       5.7        31,360      $28,562.90
                                    (bulk), Lentils, Soft White
                                    Wheat (bulk), Vegetable Oil
Syria                         WFP  Bulgur, Lentils, Navy Beans,              1,086        11,520      $14,031.60
                                    Vegetable Oil
Yemen                         WFP  Green Peas, Hard Red Winter               115.5      2,540.00       $2,201.30
                                    Wheat, Kidney Beans, Rice
                                    (bagged), Wheat Flour
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                5,286.60       294,200     $302,025.30
----------------------------------------------------------------------------------------------------------------
                                                  Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan                    WFP  Wheat Flour                               590.8           180         $173.30
               -------------------------------------------------------------------------------------------------
  Sub-Total Central Asia                                                     590.8           180         $173.30
----------------------------------------------------------------------------------------------------------------
                                                 Latin America
----------------------------------------------------------------------------------------------------------------
Colombia                      WFP  Green Peas, Lentils, Pinto                2,315         7,680      $10,628.60
                                    Beans, Vegetable Oil, Wheat
                                    Flour
Ecuador                       WFP  Hard Red Winter Wheat                      11.7         1,020         $892.90
                                    (bagged)
Haiti                         CRS  Corn Soy Blend, Cornmeal,                   765         7,880      $10,327.70
                                    Lentils, Sorghum (bagged),
                                    Soy Fortified Bulgur,
                                    Vegetable Oil, Yellow Peas
                              WFP  Corn Soy Blend, Pinto Beans,                1.4        20,060      $25,001.80
                                    Rice (bagged), Vegetable
                                    Oil, Yellow Peas
                             WVUS  Cornmeal, Corn Soy Blend,                   294         8,720      $10,002.20
                                    Lentils, Soy Fortified
                                    Bulgur, Vegetable Oil,
                                    Yellow Peas
Nicaragua                     CRS  Corn Soy Blend, Red Beans,                    5           660       $1,699.40
                                    Rice (bagged), Vegetable
                                    Oil
                              WFP  Corn Soy Blend, Rice                         80         2,760       $3,294.50
                                    (bagged)
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                 3,472.10        48,780      $61,847.10
                                                                ------------------------------------------------
  Funding Adjustments (IFRP, PSCs, Prepositioning and CSB                       --            --      $15,664.20
   Mitigation)
                                                                ================================================
  Worldwide Total                                                           27,244     1,964,830   $1,980,740.80
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
  March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16,
  2009.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
  totals.
** Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY. Table does
  not include IFRP activities. See page 18 for specific details.


      Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage
                                             Tables_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                    Recipients *                    Total Cost
    Country          Grantee                 Commodity                 (000s)        Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso             Africare  Potatoes (flakes), Rice                     0.8         2,850        $2,929.8
                                    (bagged)
                              CRS  Lentils, Rice (bagged), Soy               253.4         7,620          $7,094
                                    Fortified Bulgur, Soy
                                    Fortified Cornmeal,
                                    Vegetable Oil
Burundi                       CRS  Corn Soy Blend, Soy                        58.4         5,510        $4,947.6
                                    Fortified Bulgur, Soy
                                    Fortified Cornmeal, Hard
                                    Red Winter Wheat (bulk),
                                    Vegetable Oil
Chad                     Africare  Soy Fortified Bulgur, Wheat                20.5         3,410        $4,454.7
                                    Flour Bread
Democratic                   ADRA  Cornmeal, Hard Red Winter                  14.4         4,910          $3,490
 Republic of                        Wheat (bulk), Vegetable Oil
 the Congo
                              FHI  Cornmeal, Hard Red Winter                   2.8         3,650        $3,108.3
                                    Wheat (bulk), Vegetable Oil
                              MCI  Cornmeal, Hard Red Winter                     5         3,180        $3,192.1
                                    Wheat, Vegetable Oil
Ethiopia                     CARE  Hard Red Winter Wheat,                     24.9         3,210        $3,627.1
                                    Vegetable Oil, Yellow Split
                                    Peas
                              CRS  Bulgur, Corn Soy Blend, Hard                 45         5,610        $6,314.4
                                    Red Winter Wheat, Lentils,
                                    Rice (bagged), Vegetable
                                    Oil
                              FHI  --                                           --            --         ** $500
                             REST  --                                           --            --         ** $768
                              SCF  Green Split Peas, Hard Red                 76.3         3,650        $4,639.8
                                    Winter Wheat, Vegetable Oil
                           SCF-UK  Hard Red Winter Wheat,                     53.7         6,370        $7,372.4
                                    Vegetable Oil, Yellow Split
                                    Peas
Ghana                         CRS  Corn Soy Blend, Soy                       223.5         5,650        $4,736.7
                                    Fortified Bulgur, Soy
                                    Fortified Sorghum Grits,
                                    Vegetable Oil
                             OICI  Soy Fortified Bulgur, Hard                  2.5         2,840        $2,209.5
                                    Red Winter Wheat (bulk)
Guinea                       OICI  Cornmeal, Green Peas,                       4.3         1,850        $2,992.8
                                    Vegetable Oil
Kenya                        ADRA  Corn Soy Blend, Dark                       50.3         4,280        $3,571.9
                                    Northern Spring Wheat
                                    (bulk), Vegetable Oil
                             CARE  Corn Soy Blend, Dark                          5         3,590        $3,096.8
                                    Northern Spring Wheat
                                    (bulk)
                              FHI  Corn Soy Blend, Dark                       10.6         3,210        $2,753.4
                                    Northern Spring Wheat
                                    (bulk), Green Split Peas,
                                    Soy Fortified Bulgur,
                                    Vegetable Oil
Liberia                       CRS  Bulgur, Lentils, Vegetable                 36.5         2,730        $7,672.5
                                    Oil
Madagascar                   ADRA  Corn Soy Blend, Rice                        9.9         1,540        $5,615.8
                                    (bagged), Vegetable Oil
                             CARE  Corn Soy Blend, Great                        14         1,550        $5,766.5
                                    Northern Beans, Rice
                                    (bagged), Vegetable Oil
                              CRS  --                                           --            --       ** $368.8
Malawi                        CRS  Cornmeal, Corn Soy Blend,                   8.3        17,120       $17,874.4
                                    Hard Red Winter Wheat
                                    (bulk), Pinto Beans,
                                    Vegetable Oil
Mali                     Africare  --                                           --            --         ** $990
                              CRS  --                                           --            --       ** $989.7
Mauritania                    CPI  Corn Soy Blend, Hard Red                   32.3         7,610        $4,962.2
                                    Winter Wheat (bulk),
                                    Lentils, Vegetable Oil
Mozambique                   ADRA  Hard Red Winter Wheat (bulk)                 --         6,440        $4,039.5
                              FHI  Hard Red Winter Wheat (bulk)                 --         5,430        $3,359.4
                              SCF  Hard Red Winter Wheat (bulk)                 --        11,580        $7,502.4
                             WVUS  Hard Red Winter Wheat (bulk)                 --         7,490        $4,964.6
Niger                    Africare  Corn Soy Blend                             11.5           480        $3,024.5
                              CPI  --                                           --            --     $2,534.0 **
                              CRS  --                                           --            --     $7,262.1 **
Rwanda                  ACDI/VOCA  Corn Soy Blend, Soy                         2.6         1,930        $3,396.3
                                    Fortified Bulgur, Vegetable
                                    Oil
                              CRS  Bulgur, Corn Soy Blend,                      26         2,370        $3,143.3
                                    Vegetable Oil
                             WVUS  Corn Soy Blend, Soy                        22.8         2,910        $4,810.5
                                    Fortified Bulgur, Vegetable
                                    Oil
Senegal                       CPI  Corn Soy Blend, Lentils,                   33.3         5,160        $4,070.2
                                    Rice (bagged), Soy
                                    Fortified Bulgur, Vegetable
                                    Oil
Sierra Leone                 CARE  Bulgur, Green Peas,                        32.4         3,450        $6,948.5
                                    Vegetable Oil
Uganda                  ACDI/VOCA  Corn Soy Blend, Hard Red                     42        23,350       $17,576.6
                                    Winter Wheat, Vegetable Oil
                              CRS  --                                           --            --         ** $350
                              MCI  Cornmeal, Corn Soy Blend,                   2.4         3,740        $3,498.2
                                    Hard Red Winter Wheat,
                                    Vegetable Oil
                              SCF  Corn Soy Blend, Hard Red                    4.5         3,980        $3,423.5
                                    Winter Wheat, Lentils, Soy
                                    Fortified Cornmeal,
                                    Vegetable Oil
                             WVUS  Hard Red Winter Wheat                        --         2,100        $1,517.4
Zambia                        CRS  Bulgur, Lentils, Sorghum                     15         1,710        $5,431.5
                                    (bulk)
                              LOL  Hard Red Winter Wheat                        --         3,760        $3,689.2
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                        1,144.90       187,820      $206,580.9
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                  WVUS  Rice (bagged), Vegetable                   11.5         6,820        $9,886.1
                                    Oil, Wheat Flour
Bangladesh                   CARE  Hard Red Winter Wheat, Hard               103.3        50,740       $36,857.9
                                    Red Winter Wheat (bulk),
                                    Soft White Wheat, Soft
                                    White Wheat (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
                              SCF  Hard Red Winter Wheat, Hard                 113        13,760       $10,961.5
                                    Red Winter Wheat (bagged),
                                    Soft White Wheat (bulk),
                                    Vegetable Oil, Yellow Split
                                    Peas
India                        CARE  --                                           --            --     ** $6,872.8
                              CRS  Bulgur, Vegetable Oil                     555.1         6,730        $6,611.0
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                   782.9        78,050       $71,189.3
----------------------------------------------------------------------------------------------------------------
                                                  Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia                      ADRA  --                                           --            --     ** $1,905.3
                             CARE  --                                           --            --       ** $300.0
                              FHI  Corn Soy Blend, Green Peas,                47.4           770        $3,215.4
                                    Lentils, Soy Fortified
                                    Bulgur
                              SCF  Corn Soy Blend, Green Peas,                39.4           780        $3,564.7
                                    Lentils
Guatemala                     CRS  Corn Soy Blend, Pinto Beans,                 66         3,470        $4,625.7
                                    Rice (bagged), Vegetable
                                    Oil
                              SCF  Corn Soy Blend, Pinto Beans,               12.8         3,500        $4,628.3
                                    Rice (bagged), Vegetable
                                    Oil
                            SHARE  Corn Soy Blend, Pinto Beans,               16.4         3,810        $4,627.3
                                    Rice (bagged), Vegetable
                                    Oil
Haiti                   ACDI/VOCA  Corn Soy Blend, Hard Red                      2         6,380        $5,050.5
                                    Winter Wheat, Lentils, Soy
                                    Fortified Bulgur, Vegetable
                                    Oil
                              CRS  Corn Soy Blend, Hard Red                   35.2        16,175       $11,729.8
                                    Winter Wheat (bulk),
                                    Lentils, Soy Fortified
                                    Bulgur, Vegetable Oil
                             WVUS  Corn Soy Blend, Hard Red                    202        21,845       $17,456.8
                                    Winter Wheat (bulk),
                                    Lentils, Soy Fortified
                                    Bulgur, Vegetable Oil
Honduras                     ADRA  Corn Soy Blend, Northern                   45.1         3,770        $3,532.1
                                    Spring Wheat (bulk), Red
                                    Beans, Rice (bagged),
                                    Vegetable Oil
                              SCF  Corn Soy Blend, Northern                      5         3,660        $3,265.2
                                    Spring Wheat (bulk), Red
                                    Beans, Rice (bagged),
                                    Vegetable Oil
                             WVUS  Corn Soy Blend, Red Beans,                  8.7         2,250        $3,352.9
                                    Rice (bagged), Vegetable
                                    Oil
Nicaragua                    ADRA  Corn Soy Blend, Lentils,                   26.3         2,200        $2,268.2
                                    Northern Spring Wheat
                                    (bulk), Rice (bagged),
                                    Vegetable Oil
                              CRS  Corn Soy Blend, Lentils,                    7.1         2,290        $2,385.3
                                    Northern Spring Wheat
                                    (bulk), Rice (bagged),
                                    Vegetable Oil
                              PCI  Corn Soy Blend, Lentils,                      4         2,310        $2,363.0
                                    Northern Spring Wheat
                                    (bulk), Rice (bagged),
                                    Vegetable Oil
                              SCF  Corn Soy Blend, Northern                     34         2,200        $2,247.6
                                    Spring Wheat (bulk)
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                    551.4        75,410       $76,518.1
                                                                ------------------------------------------------
    Worldwide Total                                                       2,479.20       341,280      $354,288.3
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
  March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, February 16,
  2009.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
  totals.
** Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements. Some
  programs received Section 202e and/or ITSH funds without receiving commodities.


       Appendix 6: Bill Emerson Humanitarian Trust: Summary Budget, Commodity and Tonnage_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                      Recipients *                   Total Cost
    Country           Grantee                 Commodity                  (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia                       WFP  Corn Soy Blend, Sorghum                      3.8        83,380      59,982.1
                                     (bulk), Vegetable Oil
Kenya                          WFP  Cornmeal, Corn Soy Blend,                    1.2        14,990      17,246.5
                                     Vegetable Oil, Yellow Split
                                     Peas
Zimbabwe                       WFP  Green Peas, Pinto Beans,                 2,232.2        12,510      18,155.8
                                     Vegetable Oil
                              WVUS  Bulgur, Cornmeal, Sorghum                    4.1        49,080      54,275.9
                                     (bulk), Vegetable Oil,
                                     Yellow Peas
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           2,241.3       159,960     149,660.3
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                    WFP  Hard Red Winter Wheat,                       6.6        15,590      22,405.3
                                     Vegetable Oil, Yellow Peas
North Korea                    MCI  Corn (bulk), Corn Soy Blend,               941.2        38,000      23,583.6
                                     Soy Beans (bulk), Vegetable
                                     Oil
                               WFP  Corn (bulk), Soft White Wheat                5.7       110,270      70,132.3
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     953.5       163,860     116,121.2
                                                                  ==============================================
    Worldwide Total                                                          3,194.8       323,820     265,781.5
----------------------------------------------------------------------------------------------------------------
Source: Tonnage, Values and Section 202(e) totals derived from FFP Preliminary Final Budget Summary Report,
  March 11, 2009. Commodities and Recipients derived from Food for Peace Information System report, March 20,
  2009.
Note: Values include commodities plus freight. Recipients listed as approved in cooperative agreements.
* Recipient values are reflective of commodity rations and are derived separately from program beneficiary
  totals.


                      Appendix 7: USDA-CCC Funded_Food for Progress Grants_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                  Beneficiaries *                   Total Cost
    Country          Grantee                 Commodity                 (000s)        Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia                ACDI/VOCA  Wheat                                      72.6        20,000       $12,656.1
The Gambia                    IRD  Vegetable Oil                               800         4,500         $10,000
 Regional
Malawi                         PA  Wheat                                     252.2        10,000          $5,590
Mozambique                     PA  Wheat, Textured Soy Protein               145.5        20,070        $9,161.1
                               TS  Wheat                                        12        10,530        $3,832.9
                              LOL  Wheat                                     787.2        15,600       $11,883.1
Liberia                        MC  Soybean Oil                                28.5         2,360        $5,321.8
Niger                         IRD  Soy Fortified Bulgur                       92.4         1,000          $6,841
                                   Vegetable Oil                                           2,500
                              CRS  Vegetable Oil                              10.5         2,410        $5,836.2
Senegal                       CPI  Vegetable Oil                               194         4,260        $7,427.1
Tanzania                      PFD  Wheat                                        36        15,750       $13,210.5
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           2,431       108,980       $91,759.9
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                   ROP  Wheat Flour                               101.4        12,500       $10,233.8
                              GoA  Soybean Oil                                  --         5,500       $10,312.5
Mongolia                      MCI  Wheat                                   1,594.6        25,000         $13,750
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                   1,696        43,000       $34,296.3
----------------------------------------------------------------------------------------------------------------
                                                     Europe
----------------------------------------------------------------------------------------------------------------
Armenia                     UMCOR  Soybean Meal                              126.5         6,000        $4,402.5
               -------------------------------------------------------------------------------------------------
  Sub-Total Europe                                                           126.5         6,000        $4,402.5
----------------------------------------------------------------------------------------------------------------
                                                  Latin America
----------------------------------------------------------------------------------------------------------------
Bolivia                       PCI  Lentils                                    50.8           500        $9,418.2
                                   Peas                                                      500
                                   Wheat                                                  15,370
Guatemala                    TAMU  Soybean Meal                               25.4        15,000          $9,975
Honduras                       TS  Soybean Meal                                4.1         8,800          $5,588
Nicaragua                     PCI  Wheat                                      24.5        12,340        $6,771.4
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                    104.7        52,510       $31,752.6
                                                                ================================================
    Worldwide Total                                                        4,358.2       210,490      $153,050.2
----------------------------------------------------------------------------------------------------------------
* Beneficiary figures are both direct and indirect.


     Appendix 8: McGovern-Dole International Food for Education and Child Nutrition Program_Fiscal Year 2008
                                       Donations by Country and Commodity
----------------------------------------------------------------------------------------------------------------
                                                                     Beneficiaries                   Total Cost
    Country           Grantee                 Commodity                  (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Cameroon                       CPI  Beans, Milled Rice, Vegetable                 25         1,130        $3,900
                                     Oil
Chad                           WFP  Cornmeal, Vegetable Oil                    194.2         4,290        $4,800
Democratic                    IPHD  Rice, Pinto Beans, Soybean                  70.2         3,970          $600
 Republic of                         Oil
 the Congo
Ethiopia                       WFP  Corn Soy Blend, Vegetable Oil              160.4         3,910        $4,300
Kenya                          WFP  Bulgur, Corn Soy Blend, Green              1,100        10,700        $9,900
                                     Split Peas, Vegetable Oil
Malawi                         WFP  Corn Soy Blend                             437.2         6,280        $6,500
Mozambique                     JAM  Milled Rice, Wheat Soy Blend                 281         8,510        $6,800
Rwanda                         WFP  Pinto Beans, Corn Meal,                      300         8,280        $8,300
                                     Vegetable Oil
Senegal                        CPI  --                                            --            --       ** $100
Sierra Leone                   CRS  Bulgur, Corn Soy Blend,                     29.5         1,260        $2,900
                                     Lentils, Vegetable Oil
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           2,597.5        48,330       $54,400
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh                     WFP  Bulk Wheat                                   350        11,500        $7,800
Cambodia                       IRD  Small Red Beans, Soybean Oil,               25.6           620        $1,300
                                     Canned Salmon, Corn Soy
                                     Blend
Laos                           HDI  Black Turtle Beans, Canned                  13.4           660        $3,700
                                     Salmon, Corn Soy Blend,
                                     Milled Rice, Vegetable Oil
                               WFP  Canned Salmon, Corn Soy                       50         2,240        $3,100
                                     Blend, Rice, Vegetable Oil
Pakistan                       WFP  Vegetable Oil                              259.0         4,690        $9,900
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     698.0        19,710       $25,800
----------------------------------------------------------------------------------------------------------------
                                                  Central Asia
----------------------------------------------------------------------------------------------------------------
Kyrgyzstan                     MCI  Milled Rice, Soybean Oil,                   30.0           500        $2,500
                                     Wheat Flour
                ------------------------------------------------------------------------------------------------
  Sub-Total Central Asia                                                        30.0           500        $2,500
----------------------------------------------------------------------------------------------------------------
                                                  Latin America
----------------------------------------------------------------------------------------------------------------
Guatemala                    SHARE  Corn Soy Blend, Dark Red                    82.8         7,240        $7,600
                                     Kidney Beans, Milled Rice,
                                     Soybean Meal, Vegetable Oil
                              FFPI  Rice, Light Red Kidney Beans,              210.0        10,200        $7,800
                                     Textured Soy Protein,
                                     Soybean Oil, Buckwheat
                                     Groats, Yellow Corn, Nonfat
                                     Dry Milk, Canned Salmon
Nicaragua                     GLIM  Small Red Kidney Beans, Corn                13.0           880        $1,200
                                     Meal, Milled Rice
                ------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                      305.8        18,320       $16,600
                                                                  ==============================================
    Worldwide Total                                                          3,631.3        86,860        99,300
----------------------------------------------------------------------------------------------------------------
** Senegal CPI--provision of cash in FY 2008 to support multi-year agreement. Commodities were supplied in
  previous year.
Source: Commodities, Tonnage and Values derived from McGovern-Dole Food for Education signed agreements and
  final budgets.
Note: Values include commodities plus freight. Beneficiaries listed as approved for direct distribution in
  cooperative agreements.


                   Appendix 9: Food for Peace Title II Congressional Mandates_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                                                Bagged in United
                        Minimum           Subminimum        Monetization       Value-added           States
----------------------------------------------------------------------------------------------------------------
FY 2008 Target             2,500,000          1,875,000              15.0%              75.0%              50.0%
Status as of               2,695,133            379,029              66.3%              47.6%              27.2%
 September 2008
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
 against target.s0
 
Subminimum: Metric tons for approved non-emergency programs through PVOs and community development organizations
 and WFP. Metric ton grain equivalent used to report against target.
 
Monetization: Percentage of approved Title II programs that are monetization programs.
 
Value-added: Percentage of approved non-emergency programs that are processed, fortified, or bagged.
 
Bagged in U.S.: Percentage of approved non-emergency bagged commodities that are whole grain to be bagged in the
 United States.
----------------------------------------------------------------------------------------------------------------
Source: USAID Bureau for Democracy, Conflict and Humanitarian Assistance, Office of Food for Peace, FY 2008
  Preliminary Budget Summary Overview, March 11, 2009.


        Appendix 10: Countries with Approved U.S. Food Assistance
                        Programs_Fiscal Year 2008
 
 
------------------------------------------------------------------------
                          Title I (0 countries)
------------------------------------------------------------------------
             Title I--Funded Food for Progress (2 countries)
------------------------------------------------------------------------
East Timor         Tajikistan
------------------------------------------------------------------------
               CCC-Funded Food for Progress (15 countries)
------------------------------------------------------------------------
Afghanistan        Armenia            Bolivia           Ethiopia
The Gambia         Guatemala          Honduras          Liberia
Malawi             Mongolia           Mozambique        Nicaragua
Niger              Senegal            Tanzania
------------------------------------------------------------------------
                       Title II  * (48 countries)
------------------------------------------------------------------------
Afghanistan        Algeria            Bangladesh        Bolivia 
Burkina Faso       Burma              Burundi           Cameroon 
Central African    Chad               Colombia          Democratic
 Republic                                                Republic of the
Congo              Djibouti           East Timor        Ecuador
Ethiopia           The Gambia         Ghana             Guatemala 
Guinea             Haiti             Honduras         India 
Iraq               Kenya             Liberia           Madagascar
Malawi            Mali               Mauritania        Mozambique
Nepal              Nicaragua         Niger             Pakistan
Rwanda             Senegal           Sierra Leone      Somalia
Sri Lanka          Sudan              Syria             Tajikistan 
Tanzania          Uganda            Yemen             Zambia
Zimbabwe 
------------------------------------------------------------------------
  Title II-Funded International Food Relief Partnership (26 countries)
------------------------------------------------------------------------
Angola             Bolivia            Cambodia          Cameroon
Democratic         Congo *            Dominican         El Salvador
 Republic of the                       Republic
Ethiopia *         Georgia            Guatemala         Haiti
Honduras           India              Indonesia         Kenya
Kyrgyzstan         Malawi             Nicaragua         Peru
Philippines        Senegal            South Africa      Tajikistan
Tanzania           Uganda             Zimbabwe
------------------------------------------------------------------------
                         Title III (0 countries)
------------------------------------------------------------------------
                Title V--Farmer-to-Farmer (37 countries)
------------------------------------------------------------------------
Angola             Armenia            Azerbaijan        Bangladesh
Belarus            Bolivia            El Salvador       Ethiopia
Georgia            Ghana              Guatemala         Guinea
Guyana             Haiti              Honduras          India
Indonesia          Jamaica            Kazakhstan        Kenya
Kyrgyzstan         Malawi             Mali              Moldova
Mozambique         Nepal              Nicaragua         Nigeria
Peru               Russia             South Africa      Tajikistan
Turkmenistan       Uganda             Ukraine           Vietnam
Zambia
------------------------------------------------------------------------
              Bill Emerson Humanitarian Trust (5 countries)
------------------------------------------------------------------------
Afghanistan        Ethiopia           Kenya             North Korea
Zimbabwe
------------------------------------------------------------------------
                    Food for Education (17 countries)
------------------------------------------------------------------------
Bangladesh         Cambodia           Cameroon          Chad
Congo, Republic    Ethiopia           Guatemala         Kenya
 of the
Kyrgyzstan         Laos               Malawi            Mozambique
Nicaragua          Pakistan           Rwanda            Senegal
Sierra Leone
------------------------------------------------------------------------
 Represents Title II programs with commodities approved in FY 2008, or
  that remain active with resources allocated in the prior fiscal year.
* Represents IFRP programs with commodities approved in FY 2007, or that
  remain active with resources allocated in the prior fiscal year.

             U.S. International Food Assistance Report 2009

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Cover photo: USAID.
Transmittal to Congress
    Under Food for Peace Act Section 407(f)(1)(A), ``Not later than 
April 1 of each fiscal year, the Administrator [of USAID] and the 
Secretary [of Agriculture] shall jointly prepare and submit to the 
appropriate committees of Congress a report regarding each program and 
activity carried out under this Act during the prior fiscal year.'' As 
required, this report is hereby submitted to Congress.
April 2010

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        A USAID-supported World Food Program initiative in eastern Sri 
        Lanka. USAID.

    This report may be found online:

USAID Development Experience Clearinghouse
Telephone: (202) 712-0579
URL: http://www.dec.org/ and at http://www.usaid.gov
Table of Contents
Executive Summary
Introduction
I. U.S. International Food Assistance

  A. Bellmon Estimation for Title II (BEST) Project
  B. Title II Non-emergency Food Security Country Frameworks
  C. USAID's Famine Early Warning Systems Network (FEWS NET)
  D. Monitoring and Evaluation (M&E)
  E. Food Aid Quality
  F. Food and Nutrition Technical Assistance (FANTA) Project
  G. Preventing Malnutrition in Children Under Two Approach (PM2A)

II. Program Descriptions and Fiscal Year 2009 Accomplishments

  A. Food for Peace Act

    1. Title I: Economic Assistance and Food Security
    2. Title II: Emergency and Private Assistance Programs
    3. Title III: Food for Development
    4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) 
        Program

  B. Section 416(b) of the Agricultural Act of 1949: Surplus 
        Commodities
  C. Food for Progress
  D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
  E. Bill Emerson Humanitarian Trust (BEHT)
  F. Local and Regional Food Aid Procurement Pilot Project (PPP)

III. Appendices

  Appendix 1: List of Abbreviations
  Appendix 2: List of Awardees
  Appendix 3: USDA Title I Program: Food for Progress Grants--Fiscal 
        Year 2009
  Appendix 4: USAID Title II Emergency Activities: Summary Budget, 
        Commodity, Recipient and Tonnage--Fiscal Year 2009
  Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, 
        Commodity, Recipient and Tonnage--Fiscal Year 2009
  Appendix 6: USDA-CCC Funded--Food for Progress Grants--Fiscal Year 
        2009
  Appendix 7: McGovern-Dole International Food for Education and Child 
        Nutrition Program--Fiscal Year 2009 Donations by Country and 
        Commodity
  Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget, 
        Commodity, Recipient and Tonnage--Fiscal Year 2009
  Appendix 9: Local and Regional Procurement Pilot Program--Fiscal Year 
        2009
  Appendix 10: Food for Peace Title II Congressional Mandates--Fiscal 
        Year 2009
  Appendix 11: Countries with U.S. International Food Assistance 
        Programs under the FFP Act--Fiscal Year 2009
Executive Summary
    The United States is committed to the promotion of global food 
security through its international food assistance and other foreign 
assistance programs. In Fiscal Year (FY) 2009, the United States 
provided more than $2.9 billion of food assistance to developing 
countries approximately 2.8 million metric tons, reaching over 70 
million people worldwide. The following summary shows U.S. food 
assistance, by legislative authority, for FY 2009.\1\
---------------------------------------------------------------------------
    \1\ All costs represent commodities, freight, and distribution. 
Beneficiary totals for USAID represent beneficiaries reached in FY 
2009. Beneficiary totals for USDA represent planned beneficiary totals 
associated with the FY 2009 award.

------------------------------------------------------------------------
             Program                  Metric Tons      Total Cost (000)
------------------------------------------------------------------------
  Food for Progress Title I                14,300           $22,000.0
    Food for Peace Title II             2,396,314        $2,552,061.6
Food for Development Title III                 --                  --
Farmer-to-Farmer Program Title                 --           $12,500.0
                          IV
             Section 416(b)                    --                  --
      Food for Progress CCC               274,230          $215,816.6
              McGovern-Dole               126,523          $168,414.8
  Procurement Pilot Project                    --            $4,750.0
Bill Emerson Humanitarian Trust            21,000            $5,638.4
                                 ---------------------------------------
  Grand Total...................        2,832,367        $2,981,181.4
------------------------------------------------------------------------

    More than one billion people--nearly \1/6\ of the world's 
population--suffer from chronic hunger. It is a crisis with devastating 
and far-reaching effects. Hunger weakens immune systems and stunts 
child development. Half of all child deaths in the developing world are 
related to undernutrition. Chronic hunger and undernutrition primarily 
result from poverty--people who are poor often simply cannot afford to 
buy food. Hungry families spend over half their income to buy the food 
they need to survive. Food often cannot travel from surplus to deficit 
regions within and across countries because of poor roads, barriers at 
borders and checkpoints along the way. Without enough food, adults 
struggle to work and children struggle to learn, making sustainable 
economic development difficult to achieve.
    Ensuring global food security will only become more challenging in 
the future as demand for food is projected to increase by 50 percent 
over the next 20 years. Increased demand will come primarily from 
population growth in the developing world and income growth in middle-
income countries. Growth in agricultural productivity, which is already 
lagging globally, also faces increasing threats from climate change, 
scarce water supplies, and competition for energy resources from 
industry and urbanization.
    Addressing these issues will require a whole-of-government 
approach, and the U.S. Agency for International Development (USAID) and 
the U.S. Department of Agriculture (USDA) have been working closely 
with the U.S. State Department and other U.S. Government agencies to 
develop the Administration's new Global Hunger and Food Security 
Initiative, ``Feed the Future.'' The focus and coordination promoted in 
this initiative will strengthen all U.S. Government (USG) food security 
programming, including USG food assistance. By targeting the poorest of 
the poor and better integrating food aid programs into larger--often 
multilateral--efforts, USAID and USDA food assistance programs are 
aiming to improve the effectiveness of food aid and increase its 
contribution to global targets for reducing hunger, malnutrition and 
poverty.

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        Children receiving USAID-supported food aid in Sudan. USAID.
Introduction
    Since the passage of Public Law 480 or the Agricultural Trade 
Development and Assistance Act of 1954, U.S. international food 
assistance programs have evolved to address multiple objectives. The 
most recent changes came with the Food for Peace Act of the Food, 
Conservation, and Energy Act of 2008. Commonly known as the 2008 Farm 
Bill, the Food, Conservation, and Energy Act of 2008 restated the 
objectives that guide U.S. food assistance programs. These objectives 
are to:

   Combat world hunger and malnutrition and their causes;

   Promote broad-based, equitable and sustainable development, 
        including agricultural development;

   Expand international trade;

   Foster and encourage the development of private enterprise 
        and democratic participation in developing countries; and

   Prevent conflicts.
U.S. International Food Assistance.
    The U.S. international food assistance program was established by 
several legislative authorities and is implemented by two Federal 
agencies. USAID administers Titles II, III and V of the Food for Peace 
Act. USDA administers Section 416(b) of the Agricultural Act of 1949, 
Title I of the Food for Peace Act, Food for Progress, the McGovern-Dole 
International Food for Education and Child Nutrition Program, and the 
Local and Regional Food Aid Procurement Pilot Project. The list below 
provides a brief description of each activity.

    1. Food for Peace Act.

     Title I: Economic Assistance and Food Security--
            concessional sales of U.S. agricultural commodities to 
            developing countries and private entities.

     Title II: Emergency and Private Assistance Programs--
            direct donation of U.S. agricultural commodities for 
            emergency relief and development.

     Title III: Food for Development--government-to-government 
            grants of agricultural commodities tied to policy reform.

     Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer 
            (FTF) Program--voluntary technical assistance to farmers, 
            farm groups and agribusinesses.

    2. Section 416(b) of the Agricultural Act of 1949--overseas 
        donations of surplus food and feed grain owned by the USDA 
        Commodity Credit Corporation (CCC).

    3. Food for Progress Act of 1985--commodity donations or 
        concessional financing available to emerging democracies and 
        developing countries committed to the introduction or expansion 
        of free enterprise in their agricultural economies.

    4. McGovern-Dole International Food for Education and Child 
        Nutrition Program--donations of U.S. agricultural products, as 
        well as financial and technical assistance, for school feeding 
        and maternal and child nutrition projects in low-income 
        countries.

    5. Bill Emerson Humanitarian Trust--food reserve administered under 
        the authority of the Secretary of Agriculture. This reserve is 
        available to meet emergency humanitarian food needs in 
        developing countries, allowing the United States to respond to 
        unanticipated food crises. Under the 2008 Food for Peace Act, 
        the Administrator of USAID oversees the release and use of 
        these funds.

    6. Local and Regional Food Aid Procurement Pilot Project (PPP)--
        local and regional purchase of commodities to help meet urgent 
        food needs due to food crises and disasters. This program was 
        authorized as a 5 year pilot program under the 2008 Farm Bill.

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        Beneficiaries of a USAID-supported food aid activity in Malawi. 
        USAID.
I. U.S. International Food Assistance
    U.S. international food assistance has long played a critical role 
in responding to global food insecurity. This tradition continued in FY 
2009, with the USG providing more than 2.8 million metric tons (MT) of 
commodities to more than 70 million beneficiaries and 73 countries 
worldwide.
    In recent years, attention has focused on the continued challenges 
that hamper efforts at reducing global food insecurity. The 
Administration's new Global Hunger and Food Security Initiative, ``Feed 
the Future,'' has been designed to begin to address these challenges, 
including those faced in our food assistance programs. Starting in FY 
2010, coordinated efforts promoted by the initiative will strengthen 
all USG food security programming. USAID and USDA have already made 
significant improvements to better target and monitor their food aid 
programs through a series of new initiatives. USAID's Food for Peace 
(FFP) office's recent 3 year pilot Bellmon Estimation for Title II 
(BEST) Project collects and analyzes data and information from USAID, 
USDA, and other sources to better inform the need, targeting, and 
potential use of food aid commodities. FFP's recent adoption of the 
Preventing Malnutrition in Children Under Two Approach (PM2A) builds on 
research-based successes from targeting this beneficiary category, and 
improves the cost effectiveness, design and content of such programs. 
The recent hiring of additional FFP nonemergency (development) food aid 
program field monitors, meanwhile, increases FFP's ability to analyze, 
monitor and respond to food security and food aid concerns. FFP and 
USDA are also funding efforts aimed at improving the nutritional 
quality and content of food aid to better serve and respond to the 
specific needs of food aid beneficiaries.
A. Bellmon Estimation for Title II (BEST) Project
    The BEST Project conducts independent market analyses to ensure 
that FFP complies with the Bellmon Amendment, which requires that 
adequate storage facilities be available in a recipient country upon 
arrival of a commodity to prevent spoilage or waste, and that 
distribution of the commodity in the recipient country will not result 
in substantial disincentive or interference with domestic production or 
marketing in that country. The BEST Project is conducting independent 
market analyses to ensure that these requirements are met. Using the 
results of these analyses, FFP, USDA, and other food aid partners are 
better able to target food aid most fully to those countries and 
beneficiaries in need. A number of studies have already been completed 
and can be found at http://www.usaid.gov/our_work/
humanitarian_assistance/ffp/bellmonana.html.
B. Title II Nonemergency Food Security Country Frameworks
    In FY 2009, FFP continued to develop Food Security Programming 
Frameworks (FSPF) that define objectives, approaches, geographic foci 
and institutional partnerships for effective use of Title II 
nonemergency resources to reduce food insecurity. The FSPFs provide 
country-specific guidance to partners developing new Title II multi-
year nonemergency assistance proposals (MYAPs). During FY 2009, FFP and 
respective Regional Bureaus and Missions developed FSPFs for 
Bangladesh, Burkina Faso, Liberia and Sierra Leone. The FSPFs provide a 
broad overview of contextual factors and cross-cutting issues that 
promote or constrain food security programming in the country; identify 
the determinants of food insecurity and the geographic distribution of 
food insecurity and malnutrition, including areas of greatest food 
insecurity, risks and vulnerabilities; describe existing policies, 
strategies, initiatives, and programs related to reducing food 
insecurity in the country; and identify priority objectives, program 
areas, activities, partners, and geographic foci for Title II food 
security programs. A number of FSPFs have already been completed and 
can be found at http://www.usaid.gov/our_work/humanitarian_assistance/
ffp/countryspec.html.
C. USAID's Famine Early Warning Systems Network (FEWS NET)
    USAID's Famine Early Warning Systems Network (FEWS NET) exemplifies 
the U.S. commitment to anticipating and responding to humanitarian 
vulnerabilities and crises. Using interagency agreements with the U.S. 
Geological Survey, National Aeronautics and Space Administration, 
National Oceanic and Atmospheric Administration and USDA, FEWS NET 
continues to monitor, collect and disseminate critical data on 
conditions of food availability and access. FEWS NET provides decision 
makers in the USG, host country governments, and a variety of other 
regional and international partners timely and analytical early warning 
and vulnerability information. FEWS NET information products can be 
found at www.fews.net.
    In response to rising needs for more and better food security 
monitoring information in additional countries where food security 
could become a significant problem, in FY 2009 USAID, working with FEWS 
NET, defined and tested a nonpresence-based monitoring strategy, 
referred to as the ``remote monitoring'' initiative. This strategy 
prioritizes the identification and early warning of significant changes 
in food availability and food access that might potentially lead to a 
food security crisis. Sectoral monitoring priorities for the remote 
monitoring include weather and climate, crop condition and output, food 
markets and trade, and a livelihood food security framework for each 
country.
    Using a minimal number of on-the-ground visits and focusing heavily 
on FEWS NET's existing global monitoring resources and building and 
sustaining collaborations and partnerships with organizations already 
established in each country, FEWS NET developed methods, tools and 
agreements that promote a continuous stream of monitoring data from 
three remote monitoring pilot countries: Yemen, Tajikistan and Burundi.
D. Monitoring and Evaluation (M&E)
    The renewed Monitoring and Evaluation (M&E) emphasis within FFP 
ensures that Title II resources are being used effectively and 
efficiently to achieve the best possible food security outcomes, and 
that food aid program staff continually learn from past experiences to 
improve program implementation.
    In this regard, FFP continued its practice of delivering 4 to 5 day 
M&E workshops to newly awarded Multi-Year Assistance Program (MYAP) 
partners in order to improve the quality of Title II M&E data, as well 
as USG staff charged with monitoring those programs. The workshops help 
improve the design of program results frameworks, baselines, and M&E 
plans, and ensure that required indicators from FFP and Missions are 
included in partner M&E plans and that data are collected in a 
consistent manner. The workshops also strengthen Mission and partner 
knowledge of Title II programs and reinforce their understanding of M&E 
procedures. Workshops have now been held in Mali and in Mozambique (for 
16 newly awarded MYAPs), as well as in Ethiopia, Madagascar, and 
Malawi. Additional workshops will be held as new MYAPs are awarded in 
FY 2010, for Bangladesh, Burkina Faso, Liberia, Sierra Leone and South 
Sudan.
    FFP also released updated guidance that describes the key M&E 
responsibilities of MYAP awardees and potential awardees, providing 
additional detail to existing M&E policies. This guidance can be found 
at http://www.usaid.gov/our_work/humanitarian_assistance/ffp/
ffpib.html. In addition, during FY 2009, FFP held a technical 
assistance workshop on food aid commodity management for Title II 
awardees. Held in the field, in Maputo, Mozambique, the workshop 
provided a hands-on component that included observations of commodity 
management activities at a seaport. Participants also learned the 
general tenets of Title II commodity management from a field 
perspective. The training strengthened the capacity of Title II 
partners to properly manage commodities within their own programs, and 
to improve commodity management practices among local sub-awardees.
    USDA initiated efforts in FY 2009 to improve results-oriented 
management for its food aid programs. USDA has worked with grantees and 
results-oriented specialists to develop specific objectives and 
measures for the programs. Grant agreements completed in FY 2009 
included more specific measures to gauge the success of the programs. 
USDA is continuing work in this area to define objectives and to 
develop monitoring and evaluation procedures that will be used in 
administering the programs. USDA plans to fully incorporate results-
oriented management in the programs by FY 2011.
E. Food Aid Quality
    In FY 2009, FFP awarded Tufts University's School of Nutrition a 
contract to examine the nutritional needs of food aid beneficiaries and 
the commodities currently available to meet those needs in the context 
of total available food resources. The beneficiaries studied include 
orphans and vulnerable children, pregnant and lactating women, students 
in grades K-8, food-insecure adolescents and adults, and people living 
with HIV.

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        A mother and child with their food aid ration in Ghana. USAID.

    As part of their study, technical briefing papers will be produced 
on the following topics:

   Review of past recommendations and their implementation to 
        date;

   Enrichment and fortification in USAID activities and in 
        Title II commodities;

   Recommendations to improve Title II enrichment and 
        fortification formulations; and

   Food aid and nutritional support for people living with HIV.

    A final report will include an expanded executive summary of the 
findings and recommendations of all four briefing papers, and 
recommendations for next steps and implementation of these 
recommendations. It will also include a description of a process for 
periodic and ongoing review of the nutritional quality of Title II food 
aid commodities.
    Furthermore as part of this review, FFP and Tufts developed and 
maintain a public, interactive website (www.foodaidquality.org) to 
serve as a general space for information about the Food Aid Quality 
Review project, including summaries of meetings and presentations, as 
well as draft documents and preliminary recommendations for comment. On 
the site, there is also a discussion forum on topics related to the 
Food Aid Quality Review project, where those in the community are 
invited to participate by commenting on or starting their own 
discussion topic.
F. Food and Nutrition Technical Assistance (FANTA) Project
    Under the USAID supported FANTA Project-2, FFP continued to publish 
a number of Title II relevant publications, guides and tools to support 
Title II partners and USAID and USDA staff in strengthening knowledge 
in food security and nutrition activities. A list of the publications 
can be found at www.fantaproject.org/focus/foodaid.shtml.
    One of the persistent challenges to Title II nonemergency programs 
is to assure that the impacts they achieve are sustained after the 
program has ended. All Title II nonemergency programs are now required 
to incorporate an ``exit strategy'' that aims at sustaining program 
impact. However, little guidance exists on how to implement successful 
exit strategies. To address this gap, FFP, with the help of Tufts 
University through FANTA Project-2, is developing guidance on the 
design of such strategies. For that purpose, a set of studies is being 
conducted in several countries where Title II nonemergency programs are 
ending.
    Each country study protocol calls for a review of Title II 
awardees' planned exit strategies and their implementation of that 
strategy during the final MYAP year, followed by a qualitative review 
one year after the MYAP has ended, as well as in-depth qualitative and 
quantitative assessments 2 years after exit to assess the extent to 
which the impacts of the MYAP were maintained or improved, and to 
understand factors of success or failure in the specific exit 
strategies that were used.
G. Preventing Malnutrition in Children Under Two Approach (PM2A)
    The Preventing Malnutrition in Children Under Two Approach (PM2A) 
is a food-assisted program aimed at reducing the prevalence of child 
malnutrition by targeting a package of health and nutrition 
interventions to all pregnant women, mothers of children 0-23 months 
and children under 2 in food-insecure program areas, regardless of 
nutritional status. Because they are the most nutritionally-vulnerable 
members of the population, the program targets everyone in these groups 
to protect children from malnutrition and its long-term consequences, 
including diminished psychomotor skills, work capacity, intelligence 
and income. PM2A integrates best practices in maternal and child health 
and nutrition (MCHN) programming and combines them with food 
assistance. USAID now strongly encourages Title II partners that submit 
MYAP proposals to design their MCHN intervention on the basis of 
preventive actions. In FY 2009, utilizing Title II resources, USAID 
awarded PM2A MYAPs for Guatemala and Burundi.
II. Program Descriptions and Fiscal Year 2009 Accomplishments
A. Food for Peace Act

    1. Title I: Economic Assistance and Food Security

    The Title I authority of the Food for Peace Act provides funding 
for both a concessional sales program, supporting trade and development 
and for the Food for Progress grant program, supporting agricultural 
development in emerging democracies. The primary objective of the 
concessional sales component is to provide food assistance to targeted 
developing countries in order to promote economic growth. By gradually 
reducing the concessionality of support and eliminating ocean freight 
financing, the program is intended to assist in the recipient country's 
transition from aid to commercial trade. There were no Title I-funded 
concessional sales programs active in FY 2009.
    Title I resources were used to support the Food for Progress grant 
program in FY 2009, providing 14,300 MT in assistance to two countries, 
Burundi and the Central African Republic, with an estimated value of 
$22 million. Additional information on Title I-funded activities is 
included in the Food for Progress section of this report.

    2. Title II: Emergency and Private Assistance Programs

    More than \3/4\ of U.S. international food aid was used in FY 2009 
to respond to emergency situations and to implement development 
projects as part of the Title II program. Administered by the USAID 
Office of Food for Peace in the Bureau for Democracy, Conflict, and 
Humanitarian Assistance (DCHA), in FY 2009, Title II programs 
(emergency and nonemergency) provided more than 2.3 million MT of 
commodities, with a program cost of approximately $2.6 billion, to 
assist approximately 61 million people in 61 countries.
    The focus of Title II programs is to reduce food insecurity in 
vulnerable populations, and improving resiliency to shocks is an 
essential first step toward household self-sufficiency and economic 
independence. In support of this strategy, the nonemergency development 
portfolio incorporates many activities to strengthen local capacity to 
respond to natural disasters.

      a. Title II: Emergency Programs

    Title II emergency programs aim to address two forms of 
emergencies: natural disasters, such as floods or droughts, and complex 
emergencies characterized by a combination of natural disaster, 
conflict, and insecurity. All of these elements pose substantial 
programmatic and operational challenges in responding effectively to 
the needs of food-insecure populations.
    In FY 2009, Title II emergency programs provided more than 1.9 
million MT of emergency food aid, with a program cost of more than $2.1 
billion, to help alleviate malnutrition and hunger in 38 countries. In 
all, Title II emergency programs reached approximately 54 million food-
insecure people in FY 2009.

    Food for Peace Title II: Emergency Program Highlights

    Pakistan: With fighting between government forces and militants in 
Pakistan's North-West Frontier Province on the rise, the number of 
internally displaced persons (IDPs) increased exponentially in early 
2009, with estimated figures growing from several hundreds of thousands 
to over two million in mere months. As the number of IDPs grew--
reaching as many as 2.2 million by the end of May 2009--so did the 
level of Title II assistance. In all, FFP provided 62,730 MT of food 
aid to the World Food Program (WFP) in FY 2009, valued at $55 million, 
to help meet the needs of Pakistan's IDP population. Importantly, FFP 
was able to meet the demands of a rising IDP population by using 
prepositioned commodities (see box on following page) and ship 
diversions to expedite the transport, arrival, and distribution of U.S. 
food aid. Moreover, as security conditions improved and IDPs began to 
return to their places of origin, FFP continued to provide assistance 
to IDPs and returnees, serving as an important safety net until their 
livelihoods could be restored.

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        U.S. food aid being prepared for distribution at an IDP camp in 
        Pakistan. USAID.

    Ethiopia: In FY 2009, FFP continued to support the Government of 
Ethiopia's Productive Safety Net Program (PSNP) by providing an 
estimated $120 million of food assistance through its nongovernmental 
organization (NGO) partners to chronically food insecure beneficiaries. 
In exchange for food (or cash) transfers, beneficiaries of the PSNP 
carry out public works projects such as soil and water conservation, 
community road construction and rehabilitation, small-scale irrigation, 
and school and health post renovation and construction, among others. 
The food and cash transfers prevent the depletion of household assets 
(such as the sale of livestock or the eating of the next season's 
seeds), and the public works projects create community assets, such as 
roads and health posts.

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        Beehives being distributed to a youth group in Ethiopia as part 
        of an income generating activity. FHI.

    In addition to support for the PSNP, Food for Peace provided over 
$266 million of relief food assistance through WFP and Catholic Relief 
Services (CRS) to drought-affected beneficiaries. These people can 
normally meet their own food requirements. However, because of 
successive seasons of insufficient rain and inadequate harvests, they 
required emergency food assistance.

------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Prepositioning Warehousing
    USAID's warehouse program supports the strategic prepositioning of
 Food for Peace commodities by increasing the number of warehouses from
 two up to five in regions that show historic need or are situated along
 trade routes. Under the new program, the Agency expects to store
 packaged and bulk food commodities, as needed, in at least five
 warehouses throughout Africa, in South Asia, and within the United
 States.
    Prepositioning warehouses are an integral part of USAID's food aid
 program. They offer USAID the capability to significantly reduce
 transit times of food commodities in the midst of a crisis.
    USAID uses prepositioning sites to maintain a continuous flow of
 vital food aid. The Agency stores commonly needed commodities in the
 prepositioning warehouses and, as needs arise, ships the food directly
 from the warehouse to the region in need.
    Expansion of the USAID prepositioning program was made possible by
 new authorities provided by Congress in the 2008 Farm Bill.
------------------------------------------------------------------------


      b. Title II: Private Assistance Programs (Nonemergency)

    The Food for Peace Title II development (nonemergency) food aid 
program constitutes one of the largest sources of USAID funding in 
promoting long-term food security in such areas as:

   Agriculture and Natural Resource Management activities;

   Health and household nutrition activities (e.g., MCHN 
        including PM2A); and

   Education, Humanitarian Assistance, and Microenterprise.

    In FY 2009, 19 awardees implemented 78 Title II nonemergency 
programs in 31 countries. Approximately 474,350 MT of food assistance, 
valued at more than $370 million, was used to support programs that 
benefited more than seven million people.

    Food for Peace Title II: Nonemergency Program Highlights

    Guatemala: High levels of malnutrition are especially harmful for 
children under the age of 2, who can experience life-long impairments 
in their physical and cognitive development. In the northern department 
of Alta Verapaz in Guatemala, more than 60 percent of children under 5 
are chronically malnourished, while infant and maternal mortality rates 
are among the worst in the country. To improve food security in Alta 
Verapaz, FFP provided Mercy Corps International (MCI) 3,370 MT of food 
aid in FY 2009, valued at $7.6 million, to implement a program using 
the Preventing Malnutrition in Children Under Two Approach. Working in 
tandem with government health counterparts and FANTA for operations 
research support, MCI provided food assistance to 227,000 Guatemalan 
children under 2 and malnourished children under 5, as well as nursing 
and pregnant mothers in the Alta Verapaz, Peten and Quiche regions. In 
addition, by the end of the PM2A program in Guatemala in FY 2013, 
health providers will have increased their capacity to plan for 
community health needs, and program beneficiaries are expected to have 
improved their nutritional status and access to sustainable, quality 
health care.
    Liberia: While Liberia continues on its path to recovery and 
development after decades of poor governance and civil war, high rates 
of chronic malnutrition persist. As part of the U.S. President's Food 
Security Response Initiative (PFSRI), FFP allocated 4,860 MT of food 
aid commodities in FY 2009, valued at $6.3 million, for nonemergency 
assistance in Liberia. Using these resources, CRS and over a dozen 
international and domestic NGOs are working with 35,380 beneficiaries 
in 24 districts to improve agricultural production, infrastructure and 
emergency preparedness. The program also aims to improve the management 
of childhood illnesses, rehabilitate malnourished children, and provide 
life skills education for children and adolescents impacted by HIV.

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        A father and son bringing home their USAID food aid ration in 
        Tajikistan. USAID.

    Focusing on building the capacity of local NGOs to manage food 
security activities and interventions, CRS's program made significant 
achievements in FY 2009. One activity in the remote area of Nyor-
Diaply--rehabilitating community fish ponds left dormant due to the war 
and providing associated training--led to the rehabilitation of 21 fish 
ponds by seven community-based organizations. Eleven of the ponds 
produced 1,084 kg of tilapia and catfish, from which community members 
were able to feed themselves and sell the rest for a profit of USD 
$650. The fish farming groups involved plans to save a portion of the 
profits and expand their fish farming activities in the community.
    Uganda: Following decades of civil insecurity and successive 
seasons of poor rains and harvests, northern and northeastern Uganda 
remain highly food insecure. As part of a Title II-funded MYAP, ACDI/
VOCA and its sub-grantees are implementing activities in 17 rural 
districts in northern and eastern Uganda. Using 19,850 MT in food aid 
in FY 2009, valued at $12.7 million, ACDI/VOCA provided over 116,000 
beneficiaries with food assistance, agricultural training and support, 
income generation services and grants, and activities in health, 
nutrition, and hygiene. Using the support provided, the 1,955 farmer 
savings groups formed under the program amassed a cumulative savings of 
$162,668 in 2 years. In addition, the program focuses extensively on 
People Living with HIV/AIDS (PLWHA). In addition to food aid provided, 
in FY 2009, 96,970 PLWHAs, including their families, were provided with 
income generating grants, agricultural support, and other support 
services upon graduation from direct food distributions.

      c. International Food Relief Partnership

    In November 2000, the U.S. Congress passed the International Food 
Relief Partnership (IFRP) Act. The law, which was renewed and extended 
under the recent farm bill, enables USAID to award grant agreements to 
eligible U.S. nonprofit organizations to produce and stockpile shelf-
stable, prepackaged commodities. Through the IFRP program, commodities 
are made available to eligible nonprofit U.S. organizations and 
international organizations for transportation, delivery and 
distribution in emergency food aid relief programs.
    In FY 2009, FFP awarded approximately $8.6 million in Title II IFRP 
production and distribution grants. As part of the production grant, 
Breedlove Dehydrated Foods produced a vitamin-fortified, dried 
vegetable soup mix that is prepared and used as meals, predominantly in 
institutional settings. Over the course of the FY, 30 IFRP distribution 
grants were awarded to 23 nonprofit U.S.-based organizations. IFRP 
awardees distributed the commodity to over 90,000 beneficiaries in 23 
countries.
    The organizations that received grants in FY 2009 to transport and 
distribute the commodities were: ACTS International; Amigos 
Internacionales; Batey Relief Alliance; Catholic Relief Services; 
Center for International Health; Children's Hunger Fund; Church of 
Bible Understanding; CitiHope; Convoy of Hope; Coprodeli USA; 
Counterpart International; Cross International; Evangelistic 
International Ministries; Fabretto Children's Foundation; Feed the 
Children; Food for the Hungry; Haiti Vision; International Partnership 
for Human Development; International Relief and Development; 
International Relief Teams; Nascent Solutions; Project Concern 
International; Resource and Policy Exchange; and World Help.

    3. Title III: Food for Development

    The Food for Peace Title III program is a USAID-administered tool 
for enhancing food security and supporting long-term economic 
development in the least-developed countries. The USG donates 
agricultural commodities to the recipient country and funds their 
transportation to the point of entry in the recipient country. These 
commodities are sold on the domestic market and the revenue generated 
from their sale is used to support and implement economic development 
and food-security programs. Funds were neither requested nor 
appropriated for Title III in FY 2009.

    4. Title V: John Ogonowski and Doug Bereuter Farmer-to-Farmer (FTF) 
        Program

    The John Ogonowski and Doug Bereuter FTF Program provides voluntary 
technical assistance to farmers, farm groups, and agribusinesses in 
developing and transitional countries to promote sustainable 
improvements in food processing, production, and marketing. The program 
relies on the expertise of volunteers from U.S. farms, land-grant 
universities, cooperatives, private agribusinesses, and nonprofit farm 
organizations to respond to the needs of host-country farmers and 
organizations. Volunteers are recruited from all 50 states and the 
District of Columbia. In general, these volunteers are not overseas 
development professionals but rather individuals who have domestic 
careers, farms, and agribusinesses or are retired persons who want to 
participate in development efforts. Typically, volunteers spend about 
20 to 30 days in the host country.
    The FTF Program was initially authorized by Congress in the Food 
Security Act of 1985 and funded through Title V of the Agricultural 
Trade Development and Assistance Act of 1954. The U.S. Congress 
authorized the current FY 2009-2013 phase of the FTF Program in the 
2008 Food for Peace Act, designating it the ``John Ogonowski and Doug 
Bereuter Farmer-to-Farmer Program'' in honor of Ogonowski, one of the 
pilots killed on September 11, 2001, and former Congressman Bereuter, 
who initially sponsored the program.
    During FY 2009, USAID provided $12.5 million for FTF programs. Over 
approximately 6 months of active implementation during the fiscal year, 
218 volunteer assignments were completed in 23 countries, strengthening 
163 host organizations--cooperatives, farmer associations, 
agribusinesses, and NGOs--and directly assisting 10,533 persons, 
including training 5,951 persons. Approximately 35 percent of FTF 
beneficiaries were female. Importantly, new FTF programs were 
implemented in 20 core countries, developing 5 year work plans for 41 
country projects, focusing on agricultural productivity and value-chain 
development for dairy, horticulture, staple food crops, aquaculture, 
and other commodities. Four special projects were launched, involving 
new implementing organizations and targeting special issues such as 
avian influenza prevention, organic coffee production, and food 
security.

             Farmer-to-Farmer Volunteer Assignments: FY 2009
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                                 Africa
------------------------------------------------------------------------
                                       Angola                   4
                                        Egypt                  18
                                     Ethiopia                   1
                                        Ghana                  13
                                        Kenya                  16
                                       Malawi                  15
                                         Mali                   5
                                   Mozambique                  12
                                      Nigeria                  13
                                     Tanzania                  12
                                       Uganda                  10
                                                   ---------------------
  Sub-Total Africa................................            119
------------------------------------------------------------------------
                         Latin America/Caribbean
------------------------------------------------------------------------
                                      Bolivia                   1
                           Dominican Republic                   4
                                       Guyana                   5
                                        Haiti                   7
                                      Jamaica                   7
                                    Nicaragua                  12
                                         Peru                   2
                                                   ---------------------
  Sub-Total Latin America/Caribbean...............             38
------------------------------------------------------------------------
                             Europe/Eurasia
------------------------------------------------------------------------
                                      Belarus                   5
                                      Georgia                  23
                                      Moldova                  15
                                                   ---------------------
  Sub-Total Europe/Eurasia........................             43
------------------------------------------------------------------------
                             Asia/Near East
------------------------------------------------------------------------
                                             Lebanon           16
                                   Tajikistan                   2
                                                   ---------------------
  Sub-Total Asia/Near East........................             18
                                                   =====================
    Worldwide Total...............................            218
------------------------------------------------------------------------

    Title V: FTF Program Highlights

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
        FTF-supported green pepper producer women's group in El 
        Salvador. USAID.

    Egypt: The Four Thousand Tons per Day Program, a USAID Global 
Development Alliance (GDA) activity in Egypt, targets over 8,000 
smallholder farmers to help them to become reliable and profitable 
suppliers for both local processors and export markets. FTF volunteers 
provide invaluable technical and training assistance through the 
program. For example, in FY 2009, volunteers provided technical 
assistance to farmer groups in the Nubariya region, and introduced new 
technologies for managing soil fertility, irrigation water use, and 
seedling production. One of the beneficiaries, a smallholder tomato 
producer in the region, almost doubled his yield from the previous year 
as well as his net income, in part from savings incurred from lower 
production costs. Using some of the proceeds generated, his household 
plans to purchase small livestock and rent additional land to increase 
the area under cultivation next season.
B. Section 416(b) of the Agricultural Act of 1949: Surplus Commodities
    The Agricultural Act of 1949 authorizes the donation by USDA of 
surplus food and feed grain owned by the CCC. Section 416(a) authorizes 
surplus food assistance to be distributed domestically, and surplus 
food donated to developing countries for assistance programs is covered 
under Section 416(b). Surplus commodities acquired by the CCC as a 
result of price-support operations may be made available under Section 
416(b) if they cannot be sold or otherwise disposed of without 
disrupting price-support programs at competitive world prices. In FY 
2009, no commodities were made available by CCC for use in the 416(b) 
program and, consequently, no donations were made under the program.
C. Food for Progress
    The USDA-administered Food for Progress Program, authorized under 
the Food for Progress Act of 1985, assists developing countries, 
particularly emerging democracies ``that have made commitments to 
introduce or expand free enterprise elements in their agricultural 
economies through changes in commodity pricing, marketing, input 
availability, distribution and private sector involvement.'' The 
program authorizes the CCC to carry out the sale and exportation of 
U.S. agricultural commodities on credit terms or on a grant basis, with 
the use of either CCC financing or Title I funds. Agreements under the 
Food for Progress Program are awarded to governments or private 
voluntary organizations (PVOs), nonprofit agricultural organizations, 
cooperatives, intergovernmental organizations or other private 
entities.
    The 2008 Farm Bill extended the authority for the Food for Progress 
Program to provide assistance in the administration and monitoring of 
food assistance programs to strengthen private-sector agriculture in 
recipient countries through FY 2012. The CCC is authorized to use $15 
million for administrative costs under the grants, and $40 million for 
transportation expenses.
    In FY 2009, CCC funding financed the purchase and shipment of 
274,230 MT of commodities to 14 countries, with an estimated value of 
$216 million. In total, the Food for Progress Program--through CCC and 
Title I funding--provided over $238 million in food assistance in FY 
2009, which supported the purchase and shipment of 288,530 MT of 
commodities.

    Food for Progress Program Highlights

    Afghanistan: As part of the USG's long-term commitment to help 
Afghanistan rebuild after years of war, USDA provided 25,000 MT of 
monetized wheat--valued at $12.1 million--to Shelter for Life 
International (SFL) to implement programs that combat food insecurity. 
SFL is rehabilitating irrigation systems, building storage facilities, 
facilitating information sharing, and extending credit to local 
farmers. Through training and the technical support provided, increases 
are expected in agricultural productivity, local markets will be made 
more accessible, and grain mills will be improved.
    Bangladesh: Although having made great strides in meeting the food 
needs of its growing population, Bangladesh remains among the poorest 
and most densely populated countries in the world. Approximately 50 
percent of the total population live in poverty, 34 percent live on 
less than $1 per day, and over 52 percent of children under 5 years of 
age face severe malnutrition. To combat these problems, Cornell 
University is using the proceeds from 4,850 MT of monetized crude 
degummed soybean oil--valued at $10.5 million--to implement programs 
that fight poverty in the region. Specifically, Cornell is providing 
training and micro-loans to small farmers to enhance agricultural 
production technology in liming, bedding, and arsenic management. It is 
also improving the capacity of national agricultural institutions, 
NGOs, and input suppliers to provide technical support and 
infrastructure development to farmers. The goals of the program are to 
increase crop productivity of the farms assisted by Cornell's program 
by 40 percent and expand incomes of local farmers by 25 percent.
    Burundi: Burundi has a high population density and very limited 
natural resources, with 90 percent of Burundians dependent on 
subsistence farming. Despite recent improvements in the political and 
security landscapes, food insecurity persists after more than a decade 
of civil war. High food prices are also impacting vulnerable people in 
both rural and urban areas. To mitigate food security challenges, Food 
for Progress funding was provided to WFP to support the recovery 
process in six provinces characterized by high levels of food 
insecurity. Using 3,500 MT of corn, 2,250 MT of yellow split peas, and 
1,500 MT of vegetable oil, WFP provided general food distribution and 
support for vulnerable groups, carried out school feeding, and 
implemented activities aimed at asset creation, skills training, and 
improved nutrition. These activities reached approximately 65,000 
beneficiaries in 2009.
    Dominican Republic: Food insecurity and malnutrition are most 
widely seen in the underserved sugar cane farming communities (bateyes) 
in the Dominican Republic where access to farming and agricultural 
production is limited. The Batey Relief Alliance (BRA) is implementing 
programs designed specifically to address the pressing needs of 
millions in the Dominican Republic, especially in the bateyes. BRA is 
monetizing 1,250 MT of crude degummed soybean oil and is using the 
proceeds to implement program activities that address some of the 
country's food needs. Using $2 million in Food for Progress resources 
over the life of the program, BRA is improving the region's 
agricultural productivity by establishing new agricultural cooperatives 
where BRA will provide credit and train local farmers in agricultural 
management. Through a Food for Work program, farmers and farm families 
will assist in the construction of storage facilities and irrigation 
systems for improved crop management, help repair roads for improved 
market access, and assist with repairs to latrines, schools, and homes 
for improved sanitary and health conditions among agricultural 
populations. The objectives of the program are to increase agricultural 
production by 20 percent and decrease crop losses by 20 to 25 percent. 
Income and food sales are planned to increase by 20 percent, and 
beneficiary access to markets is expected to increase by 35 percent. 
Finally, the program may provide 1,400 people with access to potable 
and clean water.
    Ethiopia: Ethiopia is among the most underdeveloped countries in 
the world, ranking 171 of 177 countries in the 2009 United Nations 
Human Development Index. Malnutrition is rampant, affecting an 
estimated 50 percent of the population. The World Council of Credit 
Unions (WOCCU) is using proceeds from 23,000 MT of monetized hard red 
winter wheat provided through the Food for Progress program to 
implement activities that address food insecurity in the areas of 
Tigray, Amhara, and Oromia. The program, valued at $13.8 million, is 
developing a supportive commercial environment for agriculture by 
providing technical assistance on productivity, post-harvest handling, 
and marketing strategies to farmer members of existing rural credit 
unions. Infrastructure such as storage facilities, irrigation systems, 
access roads, bridges, basic sanitation facilities, and other support 
projects will improve through the support of community self-help 
activities. Finally, WOCCU is strengthening community-based 
agricultural credit unions in order to expand credit and micro-loans to 
local farmers. These activities are hoped to increase output, yields, 
and income for local farmers by 30 percent by the end of the 4 year 
program.
    Malawi: Over \1/2\ of Malawi's 13.6 million inhabitants live in 
poverty, with 30 to 50 percent of the population at risk of food 
insecurity. To support sustainable economic and agricultural 
development, USDA provided the Foundation for International Community 
Assistance International (FINCA) 10,000 MT of hard red spring wheat to 
implement programs aimed at reducing food insecurity. The total value 
of FINCA's grant for FY 2009 equaled $8.5 million. Using the proceeds 
from the monetization of the wheat, FINCA is expanding microfinance 
services to agribusiness entrepreneurs in rural areas as well as 
conducting social and economic assessments to determine the influence 
of loans on household welfare and agriculture-related businesses. 
Moreover, training and support is provided to local farmers to promote 
long-term sustainable agricultural growth. These activities will 
contribute toward the following objectives: increase individual 
business sales and income for loan recipients by ten percent annually 
and increase access to tools, equipment, inputs, marketing 
opportunities, and financial services for rural clients by 15 percent.
    Philippines: While experiencing a period of economic growth and 
decreasing poverty rates nationwide, poor agricultural practices, 
natural disasters, and conflict have prevented sustainable development 
in the Mindanao provinces of the Philippines. In response, USDA 
provided a Food for Progress grant valued at $5.7 million to CRS in FY 
2009. CRS is monetizing 9,000 MT of soybean meal provided through the 
program and will use the proceeds to implement activities aimed at 
increasing food production and reducing poverty in selected Mindanao 
provinces. The program will focus on: enhancing technical support to 
farmers; increasing post-harvest capacity; improving post-harvest 
practices; increasing crop diversification for cash crops; and linking 
farmers to financial institutions and markets. This agreement will 
build upon the successes of CRS/Philippines' ongoing USDA-assisted 
Small Farms and Marketing Program, which has been implemented in five 
pilot sites throughout Mindanao. CRS's objectives are to increase farm 
incomes of resource-poor farmers by an average of 50 percent, provide 
agricultural extension and marketing services for 10,000 farmers, and 
increase rice, cacao, and coffee production.
    Senegal: To combat high rates of poverty and malnutrition in 
Senegal, USDA provided a Food for Progress grant in FY 2009 to the 
National Cooperative Business Association (NCBA) totaling $8.3 million. 
NCBA is using proceeds from 4,200 MT of monetized crude degummed 
soybean oil to implement programs aimed at strengthening producer 
organizations, enhancing millet production, improving market linkages, 
and increasing access to financial services. Training programs include 
financial management, efficient production and processing methods, 
marketing strategies, and business development. NCBA is also 
distributing improved seeds locally, promoting conservation farming, 
establishing information systems for farmers, and providing a range of 
financial services and financial training opportunities for producer 
groups and processors. Over 9,000 people are benefiting from this 
assistance.
D. McGovern-Dole International Food for Education and Child Nutrition 
        Program
    An estimated 120 million children around the world do not attend 
school, due in part to hunger or malnourishment. The majority of them 
are girls. Following the success of the Global Food for Education 
Initiative, created in July 2000, the USG has demonstrated its 
continued commitment to education and child nutrition with the 2008 
Farm Bill's reauthorization of the McGovern-Dole International Food for 
Education and Child Nutrition Program (McGovern-Dole Program) through 
FY 2012.
    Modeled after the USG's school meals program, the McGovern-Dole 
Program is named in honor of former Senators George McGovern and Robert 
Dole for their tireless efforts to promote education and school 
feeding. The McGovern-Dole Program uses U.S. commodities and financial 
assistance to provide incentives for children to attend and remain in 
school, as well as to improve child development through nutritional 
programs for women, infants, and children under age 5. In FY 2009, the 
McGovern-Dole Program provided more than 126,523 MT of commodities to 
support child nutrition and school feeding programs in 18 countries, 
the total value of which exceeded $168 million.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Schoolgirls taking part in a McGovern-Dole-supported WFP 
        program in Bangladesh. USDA.

    McGovern-Dole Program Highlights

    Cambodia: Decades of war and internal strife continue to impede 
Cambodia's economic growth. Low per capita Gross Domestic Product (GDP) 
in combination with high inflation in recent years has had major 
implications for the country's largest economic sector--agriculture--
where poor farming practices, inadequate irrigation systems, and 
unfavorable market conditions already hamper development, with negative 
impacts on food security and nutrition. In response, International 
Relief and Development (IRD) is using 1,930 MT of USDA-donated 
commodities to meet the following goals: increase school enrollment by 
29 percent, expand attendance by 20 percent, and raise the continuation 
rate to 86 percent in 51 schools in Kampong Chhanang Province over the 
3 years of the program. IRD will provide nutritious on-site meals and 
take-home rations to girls, to students who complete the sixth grade, 
and to high performing teachers. Program activities will reach 31,100 
students, 200 teachers, and 1,300 families. In addition to meals 
provided, each targeted school will have active health and nutrition 
education programs to combat the province's high malnutrition rates 
more effectively.
    Guatemala: While the country suffers from high rates of 
malnutrition nationwide, high rates are especially pronounced in rural 
areas. In areas such as the central and northwestern highlands, they 
run as high as 80 percent. With the goal of increasing the nutritional 
and educational status of children in targeted areas of the rural Mayan 
highlands, the McGovern-Dole Program donated 13,780 MT of commodities 
to Asociacion SHARE de Guatemala (SHARE) in FY 2009. Targeting 
approximately 385 schools in these areas, SHARE's program includes 
direct feeding, the provision of take-home rations, establishing and 
training members of Parent Teacher Associations (PTAs), developing 
school infrastructure, promoting capacity building of indigenous 
organizations, and establishing school gardens for educational and 
nutritional purposes. Through this program, SHARE will directly reach 
over 70,000 students and 2,300 teachers each year. The program's 
targets are to increase enrollment by 17 percent and attendance by 19 
percent. In addition, the promotion rate is expected to rise to 79.5 
percent.
    Liberia: With a fractured economy and few services available 
following years of civil war and poor governance, Liberia remains one 
of the poorest countries in the world. Upwards of 40 percent of 
children under 5 years old suffer from malnutrition and more than \1/3\ 
of the population lives on less than $1 per day. Life expectancy is a 
mere 45 years, and the adult literacy rate is 52 percent. With the 
Government of Liberia's renewed focus on economic development and food 
security, IRD is implementing a 3 year McGovern-Dole Program-funded 
program in five counties in Liberia: Montserrado, Grand Bassa, 
Maryland, Grand Kru, and River Gee. Each year, program activities will 
directly benefit 30,000 students and 600 teachers, and indirectly reach 
25,000 families through a combination of direct feeding, health/
nutrition activities, HIV/AIDS education, school resource and 
infrastructure improvements, and the building of sustainability through 
PTAs, school farms, and youth clubs. The program also provides school 
supplies and printed materials that support literacy and numeracy to 
targeted schools. The program is focused on increasing total enrollment 
by 30 percent and attendance by 44 percent.
    Pakistan: Nutrition and education remain priorities in Pakistan, 
where malnutrition rates average 37 percent for children under 5 and 
the national literacy rate is 55 percent. The McGovern-Dole Program has 
been providing assistance to WFP since 2005, offering female 
beneficiaries in targeted food-insecure districts access to development 
opportunities through three primary activities. The first focuses on 
improving enrollment, attendance, and retention rates among girls at 
targeted primary schools. The second focuses on pregnant mothers, who 
are provided with quality health services during pre- and post-natal 
periods. Lastly, WFP supports asset creation and livelihood improvement 
activities to improve the socioeconomic condition of rural women and 
their families. WFP has reached over 6.4 million Pakistanis since 2005 
and received $7 million in McGovern-Dole Program support in FY 2009. 
During that year, WFP continued to build upon program successes that 
included an increase in the completion rate of 22 percent for females 
in targeted schools and an increase in enrollment of over 450 percent 
for females in targeted schools between 2005 and 2008. In that same 
time period, deliveries by trained birth attendants increased from 51 
percent to 93 percent and in 2008, 234,066 women received routine 
health services. Furthermore, the number of families with access to 
clean drinking water increased by ten percent in 2008.
    Uganda: The Karamoja region of Uganda is one of the country's most 
vulnerable areas, where malnutrition and lack of education remain 
pressing issues. Only 18 percent of men and six percent of women are 
literate and only an estimated 33 percent of children are enrolled in 
school, based on 2007 statistics. In FY 2009, the McGovern-Dole Program 
granted WFP 5,680 MT of commodities, a donation valued at $19 million, 
for 3 years of support to assist the government in improving the 
cognitive performance of primary school children in the region. WFP 
provided school meals to students in both day and boarding schools and 
allocated take-home rations to girls achieving 80 percent attendance 
per term. The objectives of the program are to increase total 
enrollment by 30 percent and attendance for girls and boys by 23 
percent and 11 percent, respectively, above 2008 levels. Importantly, 
the Government of Uganda plans to gradually integrate itself into 
program administration and activities to ensure program sustainability.
E. Bill Emerson Humanitarian Trust (BEHT)
    The Bill Emerson Humanitarian Trust (BEHT) is a reserve of 
commodities and cash that is used to meet unanticipated food aid needs. 
The BEHT can hold wheat, rice, corn, and sorghum in any combination, 
but the only commodity ever held has been wheat. USDA has recently sold 
the remaining wheat in the trust (about 915,000 MT) so that currently 
the BEHT holds only cash--$315 million. The cash would be used by USDA 
to purchase U.S. food products when USAID determines it is needed for 
emergency food aid.
    The 2008 Farm Bill reauthorizes the BEHT through FY 2012 and allows 
the Secretary of Agriculture to invest the funds from the trust in low-
risk, short-term securities or instruments so as to maximize its value.
    FFP used $5.6 million of BEHT resources in FY 2009, which was 
converted into 21,000 MT of food aid commodities, to respond to 
declining food security conditions in North Korea.
F. Local and Regional Food Aid Procurement Pilot Project (PPP)
    The USDA Local and Regional Food Aid Procurement Pilot Project 
(PPP) was authorized as a pilot program under the 2008 Farm Bill. The 
primary objective of the project is to use local and regional purchase 
to help meet urgent food needs due to food crises and disasters 
quickly. The goal is to protect against a decline in food consumption, 
save lives, and reduce suffering. In FY 2009, $4.75 million was 
allocated for programming in three countries, of which $2.73 million 
was used for local and regional procurement of commodities and $2.02 
million for associated costs including inland transportation and 
storage and handling. All three pilot programs in FY 2009 in Malawi, 
Mali, and Tanzania were implemented by WFP.

    PPP Program Highlights:

    Malawi: Ranking 160 of 177 countries in the United Nations 2009 
Human Development Index, with half of its 12 million citizens living 
below the poverty line and 20 percent of the population extremely poor, 
Malawi proved an ideal candidate for PPP assistance in FY 2009. USDA 
provided WFP with funding support from the PPP to address the food 
needs of households that are at risk of hunger and poverty. In addition 
to providing food to vulnerable groups, WFP specifically focuses on 
procuring food including cereals, pulses, and corn-soy blend, from 
smallholder farmer groups through pro-smallholder tendering practices. 
Through this process, WFP hopes to strengthen the engagement of 
smallholders and small/medium-scale traders in the markets, stimulate 
agricultural production and cohesion within smallholder farmer 
organizations, and raise smallholder/trader income levels. Support 
provided through the PPP in Malawi will provide food to 24,999 
households, or an estimated 124,995 beneficiaries, for approximately 3 
months.
    Mali: A landlocked Sahelian country with a poverty rate of over 
59.3 percent, Mali suffers from high levels of food and nutritional 
insecurity that is most pronounced in rural areas. As part of PPP, USDA 
provided almost $1.1 million to WFP to assist with their Country 
Program and Protracted Relief and Recovery Operation (PRRO). Under 
these programs, WFP provides support for basic education, rural 
development, and food security. Specifically, the programs include 
nutrition interventions among children aged 6 to 59 months, food 
assistance for vulnerable groups, and communication activities on 
nutritional information. Support provided through the PPP in Mali will 
provide food to 28,000 pregnant and lactating women for 6 months and to 
15,000 people through food for work/food for training activities for 3 
months.
    Tanzania: While Tanzania is one of Africa's more politically stable 
countries, the country is categorized as a low-income and food-deficit 
country, with almost 80 percent of its total population dependent on 
subsistence agriculture for their livelihood. In FY 2009, USDA provided 
WFP $2 million in PPP resources to assist with their Country Program 
and PRRO in Tanzania. Under the Country Program, WFP provides support 
to HIV/AIDS-affected households, implements food for asset creation 
activities, and provides supplementary feeding to vulnerable children 
and lactating and pregnant women. The PRRO, meanwhile, provides basic 
food needs to refugees and the most vulnerable Tanzanians living in 
northwestern Tanzania. Activities under this program enable poor 
communities to acquire livelihood skills to build resilience to future 
shocks and support education, health care, and agricultural services. 
Support provided through the PPP in Tanzania will provide food to over 
125,000 beneficiaries, including refugees, for one to 5 months.
III. Appendices

                    Appendix 1: List of Abbreviations
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                    BCC   Behavior Change Communication
                   BEHT   Bill Emerson Humanitarian Trust
                    CCC   Commodity Credit Corporation
                    CSB   Corn Soy Blend
                  FANTA   Food and Nutrition Technical Assistance
               FEWS NET   Famine Early Warning System Network
                    FFP   Office of Food for Peace (USAID)
                   FSPF   Food Security Programming Framework
                    FTF   Farmer-to-Farmer Program of Food for Peace
                           Act, Title V
                     FY   Fiscal year
                    GDA   Global Development Alliance (USAID)
                    GDP   Gross Domestic Product
                  GHFSI   Global Hunger and Food Security Initiative
                    GOE   Government of Ethiopia
                    HIV   Human Immunodeficiency Virus
                   HPSC   Health Practices, Strong Communities
                    IDP   Internally Displaced Person
                   IFRP   International Food Relief Partnership
                   ITSH   Internal Transportation, Storage and Handling
                    M&E   Monitoring and Evaluation
                   MCHN   Maternal and Child Health and Nutrition
                    MDG   Millennium Development Goal
                     MT   Metric ton
                   MYAP   Multi-Year Assistance Program
                    NGO   Nongovernmental Organization
                 PEPFAR   President's Emergency Plan for AIDS Relief
                  PFSRI   President's Food Security Response Initiative
                      PLWHPeople Living with HIV/AIDS
                   PM2A   Preventing Malnutrition in Children Under Two
                           Approach
                    PPP   Procurement Pilot Project
                   PRRO   Protracted Relief and Recovery Operation
                   PSNP   Productive Safety Net Program
                    PTA   Parent Teacher Association
                    RFI   Request for Information
                    RFP   Request for Proposal
                 UNICEF   United Nations Children's Fund
                  USAID   U.S. Agency for International Development
                   USDA   U.S. Department of Agriculture
                    USG   U.S. Government
                    WFP   World Food Program
------------------------------------------------------------------------


                      Appendix 2: List of Awardees
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    The following awardees implemented U.S. Government food assistance
                   programs in Fiscal Year 2009:
------------------------------------------------------------------------
              ACDI/VOCA   Agriculture Cooperative Development
                           International/Volunteers in Overseas
                           Cooperative Assistance
                   ACTS   ACTS International
                   ADRA   Adventist Development and Relief Agency
                           International, Inc.
               Africare   Africare
                     AI   Amigos Internacionales
                    BRA   Batey Relief Alliance
                   CARE   Cooperative for Assistance and Relief
                           Everywhere, Inc.
                Caritas   Caritas
                    CBU   Church of Bible Understanding
                     CH   Convoy of Hope
                    CHF   Children's Hunger Fund
                  CHOUF   Cooperative Housing Foundation
                    CIH   Center for International Health
               Citihope   Citihope International
              Coprodeli   Coprodeli USA
                    CPI   Counterpart International
                  Cross   Cross International
                    CRS   Catholic Relief Services
                     CU   Cornell University
                    EIM   Evangelistic International Ministries
                    FCF   Fabretto Children's Foundation
      Feed the Children   Feed the Children
                   FFTP   Food for the Poor
                    FHI   Food for the Hungry International
                  FINCA   Foundation for International Community
                           Assistance International
                    GDR   Government of the Dominican Republic
                  GIROA   Government of the Islamic Republic of
                           Afghanistan
                   GoPK   Government of Pakistan
                     HV   Haiti Vision
                   IPHD   International Partnership for Human
                           Development
                    IRD   International Relief and Development
                    JAM   Joint Aid Management
                       LOLLand O'Lakes
                    MCI   Mercy Corps International
                Nascent   Nascent Solutions
                   NCBA   National Cooperative Business Association
                    NPA   Norwegian People's Aid
                   OICI   Opportunities Industrialization Centers
                           International
                    PAI   Planet Aid International
                    PCI   Project Concern International
                 PRISMA   Asociacion Benefica Prisma
                   REST   Relief Society of Tigray
                     RI   Relief International
                    ROP   Roots of Peace
                    RPX   Resource and Policy Exchange
                    SCF   Save the Children Federation
                 SCF-UK   Save the Children UK
                     SFL  Shelter for Life International
                  SHARE   Asociacion SHARE de Guatemala
                    TNS   TechnoServ
                  UMCOR   United Methodist Committee on Relief
                     WH   World Help
                    WFP   World Food Program (United Nations)
                  WOCCU   World Council of Credit Unions
                   WVUS   World Vision US
------------------------------------------------------------------------


                   Appendix 3: USDA Title I Program: Food for Progress Grants_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
                                                                     Beneficiaries                   Total Cost
    Country           Grantee                 Commodity                  (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burundi                        WFP  Corn, Vegetable Oil, Yellow                   65         7,250     $10,000.0
                                     Split Peas
Central African                WFP  Cornmeal, Corn Soy Blend,                     65         7,050     $12,000.0
 Republic                            Vegetable Oil, Yellow Split
                                     Peas
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                               130        14,300    $22,000.0
                                                                  ==============================================
    Worldwide Total                                                              130        14,300     $22,000.0
----------------------------------------------------------------------------------------------------------------


  Appendix 4: USAID Title II Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage_Fiscal Year
                                                      2009
----------------------------------------------------------------------------------------------------------------
                                                                    Recipients *                    Total Cost
    Country          Grantee                 Commodity                 (000s)        Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burundi                       WFP  Cornmeal, Corn Soy Blend,                     2         3,720        $4,101.7
                                    Vegetable Oil, Yellow Peas
Cameroon                      WFP  Cornmeal, Vegetable Oil,                    170         4,690        $4,868.5
                                    Yellow Peas
Central                       WFP  Cornmeal, Corn Soy Blend,                   367         3,430        $5,431.4
 African                            Kidney Beans, Rice,
 Republic                           Vegetable Oil
Chad                          WFP  Cornmeal, Corn Soy Blend,                 1,746       100,950      $138,482.2
                                    Sorghum, Vegetable Oil,
                                    Yellow Peas, Yellow Split
                                    Peas
Cote d'Ivoire                 WFP  Cornmeal, Corn Soy Blend,                     2         4,980        $6,608.1
                                    Pinto Beans, Vegetable Oil
Democratic                    WFP  Cornmeal, Corn Soy Blend,                   328        72,080      $111,654.1
 Republic of                        Pinto Beans, Vegetable Oil,
 the Congo                          Yellow Split Peas
Ethiopia                     CARE  Vegetable Oil, Wheat, Yellow                202        19,180       $13,188.5
                                    Split Peas, Lentils
                              CRS  Corn Soy Blend, Peas,                        26       168,790       $92,987.3
                                    Sorghum, Vegetable Oil,
                                    Wheat
                              SCF  Vegetable Oil, Wheat, Yellow                161        21,230       $17,887.6
                                    Split Peas
                           SCF-UK  Lentils, Vegetable Oil,                     628        46,170       $30,230.8
                                    Wheat, Yellow Split Peas
                              WFP  Corn Soy Blend, Pinto Beans,                587       249,410      $173,740.5
                                    Sorghum, Vegetable Oil,
                                    Wheat, Yellow Split Peas
Kenya                         WFP  Cornmeal, Corn Soy Blend,                 3,910       125,610      $133,722.8
                                    Green Split Peas, Vegetable
                                    Oil, Wheat Flour, Yellow
                                    Split Peas
Rwanda                        WFP  Cornmeal, Pinto Beans,                      705         2,430        $2,932.9
                                    Vegetable Oil, Corn Soy
                                    Blend
Somalia                      CARE  Corn Soy Blend, Vegetable                   123        14,200       $11,195.5
                                    Oil, Sorghum
                              WFP  Corn Soy Blend, Lentils,                     17       142,440      $112,242.0
                                    Sorghum, Vegetable Oil,
                                    Yellow Peas, Yellow Split
                                    Peas
Sudan                      ADRA *  --                                           --            --          $332.7
                              CRS  Corn Soy Blend, Lentils,                    243         5,130        $8,678.4
                                    Sorghum, Vegetable Oil
                              NPA  Lentils, Sorghum, Vegetable                 197         2,860        $6,234.0
                                    Oil
                              WFP  Lentils, Sorghum, Vegetable                  47       476,360      $532,202.5
                                    Oil, Yellow Split Peas
Tanzania                      WFP  Cornmeal, Corn Soy Blend,                   512         9,480        $9,718.7
                                    Pinto Beans, Vegetable Oil
Uganda                        WFP  Corn Soy Blend, Cornmeal,                 1,943        19,520       $18,546.1
                                    Pinto Beans, Sorghum,
                                    Vegetable Oil, Yellow Peas,
                                    Yellow Split Peas
Zimbabwe                      WFP  Bulgur, Pinto Beans,                          9        96,340       $92,487.3
                                    Sorghum, Vegetable Oil,
                                    Yellow Peas
                             WVUS  Bulgur, Cornmeal, Sorghum,                    4        92,370       $73,397.0
                                    Vegetable Oil, Yellow Peas
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                          11,928     1,681,370    $1,600,870.6
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                   WFP  Corn Soy Blend, Green Peas,                  16        62,190       $59,509.7
                                    Wheat, Vegetable Oil
Algeria                       WFP  Beans, Corn Soy Blend, Rice,                125         6,470        $6,880.3
                                    Vegetable Oil, Wheat Flour
Georgia                       WFP  Kidney Beans, Vegetable Oil,                100         1,550        $1,840.9
                                    Wheat Flour Bread
Nepal                         WFP  Lentils, Rice, Vegetable                    550         7,450        $8,793.0
                                    Oil, Yellow Split Peas
Pakistan                      WFP  Vegetable Oil, Wheat Flour,               1,207        62,730       $55,386.7
                                    Yellow Split Peas
Philippines                   WFP  Rice                                          2         1,480        $1,855.0
Sri Lanka                     WFP  Lentils, Vegetable Oil,                   2,352        38,550       $28,727.8
                                    Wheat
West Bank/Gaza                WFP  Garbanzo Beans, Vegetable                 1,030        21,430       $20,715.4
                                    Oil, Wheat Flour
Yemen                         WFP  Beans, Wheat                                 72         3,900        $2,432.0
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                   5,454       205,750      $186,140.8
----------------------------------------------------------------------------------------------------------------
                                                  Central Asia
----------------------------------------------------------------------------------------------------------------
Tajikistan                    SCF  Vegetable Oil, Wheat Flour,                  70         4,090        $6,091.1
                                    Yellow Peas
               -------------------------------------------------------------------------------------------------
  Sub-Total Central Asia                                                        70         4,090        $6,091.1
----------------------------------------------------------------------------------------------------------------
                                             Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Colombia                      WFP  Green Peas, Lentils, Pinto                1,590         8,660       $11,046.4
                                    Beans, Vegetable Oil, Wheat
                                    Flour
Haiti                        CARE  Lentils, Bulgur, Vegetable                   49           870        $1,495.5
                                    Oil
                              CRS  Bulgur, Vegetable Oil,                       14           910        $2,478.0
                                    Yellow Peas
                              WFP  Corn Soy Blend, Pinto Beans,              1,603        16,110       $21,253.4
                                    Rice, Vegetable Oil, Yellow
                                    Peas
                             WVUS  Bulgur, Corn Soy Blend,                      52         2,000        $3,040.0
                                    Lentils, Vegetable Oil,
                                    Yellow Peas
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America/Caribbean                                          3,309        28,550       $39,313.3
                                                                ------------------------------------------------
  Funding Adjustments (Program Support Costs, Prepositioning,                   --            --      $333,553.4
   and Unallocated Resources)
                                                                ================================================
  Worldwide Total                                                           20,760     1,919,760    $2,165,969.2
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
  24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
  Food for Peace Information System reports, December 4, 2009 and November 13, 2009, respectively. Recipient
  values are reflective of commodity rations and are derived separately from program beneficiary totals.
* Some programs receive Section 202(e) and/or ITSH funds without receiving commodities in the same FY.
Table does not include IFRP awardees. See page 14 for a list of awardees and page 38 for the country list.


      Appendix 5: USAID Title II Non-Emergency Activities: Summary Budget, Commodity, Recipient and Tonnage
                                             Tables_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
                                                                                                    Total Cost
    Country          Grantee                 Commodity           Recipients (000s)   Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Burkina Faso             Africare  Bulgur, Pinto Beans, Rice,                   21         2,390        $3,498.1
                                    Soy Flour, Vegetable Oil
                              CRS  Bulgur, Cornmeal, Lentils,                  214         8,460        $9,807.8
                                    Rice, Vegetable Oil
Burundi                       CRS  Bulgur, Corn Soy Blend,                      59        20,900       $16,013.8
                                    Vegetable Oil, Wheat,Yellow
                                    Peas
Chad                     Africare  Bulgur, Wheat Flour Bread                    99         5,680        $8,110.5
Democratic                   ADRA  Cornmeal, Green Peas,                        21         5,410        $4,654.5
 Republic of                        Vegetable Oil, Wheat
 the Congo
                              FHI  Cornmeal, Vegetable Oil,                      3         5,100        $4,465.7
                                    Wheat
                              MCI  Cornmeal, Vegetable Oil,                      3         6,020        $5,223.1
                                    Wheat, Yellow Split Peas
Ethiopia                      CRS  Bulgur, Corn Soy Blend,                     192        25,080       $17,066.5
                                    Rice, Vegetable Oil, Wheat,
                                    Yellow Split Peas
                              FHI  Green Peas, Wheat                           195        19,690       $12,368.4
                             REST  Vegetable Oil, Wheat, Yellow                755        46,070       $25,485.7
                                    Peas
                         SCF-UK *  --                                           --            --        $3,526.8
Ghana                        OICI  Bulgur, Vegetable Oil, Wheat                  7         4,990        $4,500.0
Guinea                       OICI  Cornmeal, Green Peas,                        14         1,400        $2,500.9
                                    Vegetable Oil
Liberia                       CRS  Rice                                         --         4,860        $6,300.9
Madagascar                   ADRA  --                                           --            --           $71.2
                              CRS  Corn Soy Blend, Rice,                       135         3,640       $16,186.1
                                    Sorghum, Vegetable Oil
Malawi                        CRS  Corn Soy Blend, Pinto Beans,                 34        25,230       $18,963.0
                                    Wheat, Vegetable Oil
Mali                     Africare  Bulgur, Vegetable Oil                        37         1,600        $2,821.2
                              CRS  Bulgur, Corn Soy Blend,                      63         5,120        $8,755.2
                                    Green Split Peas, Vegetable
                                    Oil
Mauritania                    CPI  Bulgur, Corn Soy Blend,                      99         7,140        $5,000.1
                                    Lentils, Vegetable Oil,
                                    Wheat
Mozambique                   ADRA  Wheat                                        --         8,830        $3,974.9
                              FHI  Wheat                                        --         8,640        $3,654.2
                              SCF  Wheat                                        --        16,550        $7,454.8
                             WVUS  Wheat                                        --        11,540        $4,968.0
Niger                    Africare  Red Beans, Rice                              14         3,400        $4,486.7
                      Counterpart  Corn Soy Blend, Rice,                        12         3,400        $3,038.5
                                    Vegetable Oil
                              CRS  Bulgur, Rice                                 23         6,340        $6,568.7
Rwanda                  ACDI/VOCA  Bulgur, Corn Soy Blend,                       3         1,010        $1,415.8
                                    Vegetable Oil
                              CRS  Bulgur, Corn Soy Blend,                      26         1,810        $2,130.3
                                    Vegetable Oil
                             WVUS  Bulgur, Corn Soy Blend,                      49         2,570        $3,815.5
                                    Vegetable Oil
Senegal                       CPI  Bulgur, Corn Soy Blend,                      43         3,600        $3,355.1
                                    Lentils, Potato (flakes),
                                    Rice, Vegetable Oil
Sierra Leone                 CARE  Bulgur, Vegetable Oil,                       27         9,460        $7,850.5
                                    Wheat, Yellow Split Peas
Uganda                  ACDI/VOCA  Corn Soy Blend, Wheat,                       42        19,850       $12,748.6
                                    Vegetable Oil
                              MCI  Corn Soy Blend, Cornmeal,                     8        10,170        $8,446.1
                                    Green Split Peas, Wheat,
                                    Vegetable Oil
Zambia                        CRS  Bulgur, Lentils                              15         1,710        $8,002.2
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           2,212       307,660      $257,229.4
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                  WVUS  Rice, Vegetable Oil, Wheat                  138         8,190       $13,500.0
                                    Flour, Yellow Peas
Bangladesh                   CARE  Vegetable Oil, Wheat, Yellow                228        50,100       $21,582.9
                                    Split Peas
                              SCF  Vegetable Oil, Wheat, Yellow                180        18,320        $8,445.4
                                    Split Peas
India                      CARE *  --                                           --            --        $6,000.0
                              CRS  Bulgur, Vegetable Oil                       422         8,200        $7,465.5
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     968        84,810       $56,993.8
----------------------------------------------------------------------------------------------------------------
                                             Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala                     CRS  Corn Soy Blend, Pinto Beans,                 85         4,310        $4,556.2
                                    Rice, Vegetable Oil
                              MCI  Corn Soy Blend, Pinto Beans,                 16         3,370        $7,614.7
                                    Rice, Vegetable Oil
                              SCF  Corn Soy Blend, Pinto Beans,                 12         5,540        $5,534.7
                                    Rice, Vegetable Oil
                            SHARE  Corn Soy Blend, Pinto Beans,                 17         4,110        $4,337.6
                                    Rice, Vegetable Oil
Haiti                   ACDI/VOCA  Bulgur, Corn Soy Blend,                      44        17,710        $8,679.6
                                    Wheat, Vegetable Oil,
                                    Yellow Peas
                              CRS  Bulgur, Corn Soy Blend,                      91        13,930       $10,297.9
                                    Green Peas, Vegetable Oil,
                                    Wheat
                             WVUS  Bulgur, Corn Soy Blend,                     107        31,490       $16,522.5
                                    Lentils, Vegetable Oil,
                                    Wheat,
Honduras                     ADRA  Corn Soy Blend, Red Beans,                   36           330        $1,310.1
                                    Rice, Vegetable Oil
                              SCF  Corn Soy Blend, Red Beans,                    5           650        $2,451.9
                                    Rice, Vegetable Oil
                             WVUS  Corn Soy Blend, Rice,                         4           440        $2,008.8
                                    Vegetable Oil
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America                                                      418        81,880       $63,314.0
                                                                ================================================
    Worldwide Total                                                          3,597       474,350      $377,537.2
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
  24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
  Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity
  rations and are derived separately from program beneficiary totals.
* Some programs receive Section 202e and/or ITSH funds without receiving commodities in the same FY.


                      Appendix 6: USDA-CCC Funded_Food for Progress Grants_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
                                                                    Beneficiaries *                  Total Cost
    Country           Grantee                 Commodity                  (000s)        Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Ethiopia                     WOCCU  Wheat                                         37        23,000     $13,750.0
Malawi                       FINCA  Wheat                                         21        10,000      $8,520.0
                               PAI  Wheat                                        325        30,000     $26,620.0
Mozambique                     PAI  Wheat                                        145        20,000      $8,746.0
Niger                        IRD *  --                                            --            --        $416.7
                             CRS *  --                                            --            --        $255.7
Senegal                       NCBA  Soybean Oil                                    9         4,200      $8,330.0
                          Africare  Soybean Meal                                  15        16,500      $9,830.0
Uganda                       FINCA  Wheat                                         25        15,000      $9,200.0
                ------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                               577       118,700     $85,668.4
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Afghanistan                GIROA *  --                                            --            --         $73.7
                               SFL  Wheat                                         30        25,000     $12,100.0
                            ROP **  Wheat Flour                                   14            --      $4,472.8
                             GIROA  Soybean Oil                                   70        10,600     $17,500.0
Bangladesh                      CU  Soybean Oil                                  829         4,850     $10,490.0
Mongolia               MCI/CHOUF *  --                                            --            --      $1,703.5
Pakistan                   WFP ***  --                                            --   --$13,283.0
                              GoPk  Wheat                                      2,700        50,000     $30,800.0
                                    Soybean Oil                                   --         6,800            --
Philippines                    CRS  Soybean Meal                                  10         9,000      $5,660.0
                         ACDI/VOCA  Soybean Meal                                  23        13,200     $10,500.0
                               LOL  Soybean Meal                                  22         9,730      $8,699.9
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     3,698       129,180    $115,283.0
----------------------------------------------------------------------------------------------------------------
                                                     Europe
----------------------------------------------------------------------------------------------------------------
Armenia                      WFP *  --                                            --            --         $15.6
                           UMCOR *  --                                            --            --        $143.2
                ------------------------------------------------------------------------------------------------
  Sub-Total Europe                                                                 _             _        $158.8
----------------------------------------------------------------------------------------------------------------
                                             Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Bolivia                      PCI *  --                                            --            --      $1,216.5
Dominican                      BRA  Crude Vegetable Oil,                           8         1,350      $1,990.0
 Republic                            Vegetable Oil
                               GDR  Wheat                                         --        25,000     $11,500.0
                ------------------------------------------------------------------------------------------------
  Sub-Total Latin America/Caribbean                                                8        26,350     $14,706.5
                                                                  ----------------------------------------------
    Worldwide Total                                                            4,283       274,230    $215,816.6
----------------------------------------------------------------------------------------------------------------
* Represents prior year agreements with costs incurred in FY 2009.
** Represents part of an FY 2008 award billed in FY 2009.
*** Represents internal distribution costs only, no commodity costs.


     Appendix 7: McGovern-Dole International Food for Education and Child Nutrition Program_Fiscal Year 2009
                                       Donations by Country and Commodity
----------------------------------------------------------------------------------------------------------------
                                                                   Beneficiaries                    Total Cost
    Country          Grantee                 Commodity                 (000s)        Metric Tons      (000s)
----------------------------------------------------------------------------------------------------------------
                                                     Africa
----------------------------------------------------------------------------------------------------------------
Angola                        JAM  Corn Soy Blend                              200        14,400       $29,500.0
Cameroon                      CPI  Beans, Rice, Vegetable Oil                   28         1,130        $2,850.0
Chad                          WFP  Cornmeal, Vegetable Oil                     104         4,440        $5,504.1
Ethiopia                      WFP  Corn Soy Blend, Vegetable                   160         3,910        $5,343.2
                                    Oil
Guinea-Bissau                IPHD  Beans, Dehydrated Potatoes,                 105         9,020       $18,300.0
                                    Rice, Vegetable Oil
Kenya                         WFP  Bulgur, Rice, Vegetable Oil,              1,100        11,900        $9,488.7
                                    Yellow Split Peas
Liberia                       IRD  Soy Flour, Soy Protein                      135         7,260        $8,800.0
                                    Isolate, Wheat
                              WFP  Beans, Rice, Vegetable Oil                    3           243          $170.4
Malawi                        WFP  Corn Soy Blend                              400         5,520        $6,084.8
Mozambique                    JAM  Rice, Wheat Soy Blend                       271         9,270        $7,800.0
Niger                          RI  Corn Soy Blend, Rice,                        25         9,600       $13,200.0
                                    Vegetable Oil
Rwanda                        WFP  Beans, Cornmeal, Vegetable                  300         8,020        $8,832.3
                                    Oil
Sierra Leone                  CRS  Bulgur, Corn Soy Blend,                      55         1,330        $2,850.0
                                    Lentils, Vegetable Oil
Uganda                        WFP  Corn Soy Blend, Cornmeal,                   245         5,680       $19,000.0
                                    Vegetable Oil
               -------------------------------------------------------------------------------------------------
  Sub-Total Africa                                                           3,131        91,723      $137,723.5
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
Bangladesh                    WFP  Wheat                                       350        14,490        $5,315.5
Cambodia                      IRD  Beans, Canned Salmon, Corn                   25         1,260        $1,230.0
                                    Soy Blend, Soybean Oil
Laos                          WFP  Canned Salmon, Corn Soy                     100         2,010        $2,886.6
                                    Blend, Rice, Vegetable Oil
Pakistan                      WFP  Vegetable Oil                               300         5,410        $7,000.0
               -------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     775        23,170       $16,432.1
----------------------------------------------------------------------------------------------------------------
                                             Latin America/Caribbean
----------------------------------------------------------------------------------------------------------------
Guatemala                    FFTP  Beans, Corn, Rice, Salmon,                  260         3,660        $6,000.0
                                    Soybean Oil
                            SHARE  Beans, Corn Soy Blend, Rice,                 72         7,970        $8,259.2
                                    Soybean Meal, Vegetable Oil
               -------------------------------------------------------------------------------------------------
  Sub-Total Latin America/Caribbean                                            332        11,630       $14,259.2
                                                                ================================================
    Worldwide Total                                                          4,238       126,523      $168,414.8
----------------------------------------------------------------------------------------------------------------


 Appendix 8: Bill Emerson Humanitarian Trust: Summary Budget, Commodity, Recipient and Tonnage_Fiscal Year 2009
----------------------------------------------------------------------------------------------------------------
                                                                                                     Total Cost
    Country           Grantee                 Commodity            Recipients (000s)   Metric Tons     (000s)
----------------------------------------------------------------------------------------------------------------
                                                 Asia/Near East
----------------------------------------------------------------------------------------------------------------
North Korea                    MCI  Corn                                       941.2        21,000     $5,638.40
                ------------------------------------------------------------------------------------------------
  Sub-Total Asia/Near East                                                     941.2        21,000     $5,638.40
                                                                  ==============================================
    Worldwide Total                                                              941        21,000      $5,638.4
----------------------------------------------------------------------------------------------------------------
Source: Metric tonnage and total cost values derived from FFP Preliminary Final Budget Summary Report, November
  24, 2009. Awardees listed as approved in cooperative agreements. Commodity types and recipients derived from
  Food for Peace Information System report, December 4, 2009. Recipient values are reflective of commodity
  rations and are derived separately from program beneficiary totals.


  Appendix 9: Local and Regional Procurement Pilot Program_Fiscal Year
                                  2009
------------------------------------------------------------------------
              Country                    Awardee       Total Cost (000s)
------------------------------------------------------------------------
Malawi                                            WFP             $1,700
Mali                                              WFP             $1,050
Tanzania                                          WFP             $2,000
                                   -------------------------------------
  Sub-Total Africa                                               $4,750
                                                      ==================
    Worldwide Total                                               $4,750
------------------------------------------------------------------------


                  Appendix 10: Food for Peace Title II Congressional Mandates_Fiscal Year 2008
----------------------------------------------------------------------------------------------------------------
                                                                                                Bagged in United
                        Minimum           Subminimum        Monetization       Value-added           States
----------------------------------------------------------------------------------------------------------------
FY 2009 Target             2,500,000          1,875,000              15.0%              75.0%              50.0%
Status as of               2,824,033            535,195              58.1%              53.9%              25.9%
 November 2009
----------------------------------------------------------------------------------------------------------------
Minimum: Total approved metric tons programmed under Title II. Metric ton grain equivalent used to report
 against target.
 
Subminimum: Metric tons for approved nonemergency programs through PVOs and community development organizations
 and WFP. Metric ton grain equivalent used to report against target.
 
Monetization: Percentage of approved Title II programs that are monetization programs.
 
Value-added: Percentage of approved nonemergency programs that are processed, fortified, or bagged.
 
Bagged in U.S.: Percentage of approved nonemergency bagged commodities that are whole grain to be bagged in the
 United States.
----------------------------------------------------------------------------------------------------------------
Source: FFP Preliminary Final Budget Summary Report, November 24, 2009.


 Appendix 11: Countries with U.S. International Food Assistance Programs
                   under the FFP Act_Fiscal Year 2009
 
 
------------------------------------------------------------------------
                          Title I (0 countries)
------------------------------------------------------------------------
             Title I-Funded Food for Progress (2 countries)
------------------------------------------------------------------------
Burundi            Central African
                    Republic
------------------------------------------------------------------------
                         Title II (54 countries)
------------------------------------------------------------------------
Afghanistan        Algeria            Bangladesh        Bolivia *
Burkina Faso       Burma *            Burundi           Cameroon
Central African    Chad               Colombia          Cote d'Ivoire
 Republic
Democratic         Djibouti           Ecuador *         Ethiopia
 Republic of the
 Congo
Gambia *           Georgia            Ghana             Guatemala
Guinea             Haiti              Honduras          India
Indonesia *        Iraq *             Kenya             Lesotho *
Liberia            Madagascar         Malawi            Mali
Mauritania         Mozambique         Nepal             Nicaragua *
Niger              Pakistan           Peru *            Philippines
Rwanda             Senegal            Sierra Leone      Somalia
Sri Lanka          Sudan              Syria *           Tajikistan
Tanzania           Uganda             West Bank/Gaza    Yemen
Zambia             Zimbabwe
------------------------------------------------------------------------
  Title II-Funded International Food Relief Partnership (23 countries)
------------------------------------------------------------------------
Bolivia *          Cambodia           Cameroon          Central African
                                                         Rep.
Dominican          El Salvador        Ethiopia          Georgia
 Republic
Guatemala          Haiti              Honduras          Kenya
Kyrgyzstan         Laos               Lesotho           Malawi
Namibia            Nicaragua          Peru              Senegal
Tajikistan         Uganda             Uzbekistan
------------------------------------------------------------------------
                         Title III (0 countries)
------------------------------------------------------------------------
                Title V--Farmer-to-Farmer (23 countries)
------------------------------------------------------------------------
Angola             Belarus            Bolivia           Dominican
                                                         Republic
Egypt              Ethiopia           Georgia           Ghana
Guyana             Haiti              Jamaica           Kenya
Lebanon            Malawi             Mali              Moldova
Mozambique         Nicaragua          Nigeria           Peru
Tajikistan         Tanzania           Uganda
------------------------------------------------------------------------
               CCC-Funded Food for Progress (14 countries)
------------------------------------------------------------------------
Afghanistan        Armenia            Bangladesh        Bolivia
Dominican          Ethiopia           Malawi            Mongolia
 Republic
Mozambique         Niger              Pakistan          Philippines
Senegal            Uganda
------------------------------------------------------------------------
                    Food for Education (18 countries)
------------------------------------------------------------------------
Angola             Bangladesh         Cambodia          Cameroon
Chad               Ethiopia           Guatemala         Guinea-Bissau
Kenya              Laos               Liberia           Malawi
Mozambique         Niger              Pakistan          Rwanda
Sierra Leone       Uganda
------------------------------------------------------------------------
               Bill Emerson Humanitarian Trust (1 country)
------------------------------------------------------------------------
North Korea
------------------------------------------------------------------------
                 Procurement Pilot Project (3 countries)
------------------------------------------------------------------------
Malawi             Mali               Tanzania
------------------------------------------------------------------------
* Active program(s) funded in previous fiscal year(s).



                       AGRICULTURAL PROGRAM AUDIT

                (EXAMINATION OF USDA FARM LOAN PROGRAMS)

                              ----------                              


                        THURSDAY, JULY 14, 2011

    Subcommittee on Department Operations, 
                     Oversight, and Credit,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:00 p.m., in 
Room 1300, Longworth House Office Building, Hon. Jeff 
Fortenberry [Chairman of the Subcommittee] presiding.
    Members present: Representatives Fortenberry, Crawford, 
Fudge, McGovern, Baca, and Owens.
    Staff present: Tamara Hinton, Brandon Lipps, Josh Maxwell, 
John Porter, Debbie Smith, Pelham Straughn, Heather Vaughan, 
Liz Friedlander, Anne Simmons, Suzanne Watson, John Konya, and 
Jamie Mitchell.

OPENING STATEMENT OF HON. JEFF FORTENBERRY, A REPRESENTATIVE IN 
                     CONGRESS FROM NEBRASKA

    The Chairman. The Subcommittee on Department Operations, 
Oversight, and Credit hearing entitled, Agricultural Program 
Audit: Examination of USDA Farm Loan Programs, will come to 
order.
    I would like to welcome our guests. Good afternoon. Thank 
you for joining us here at the fifth farm bill audit hearing. 
These audits help Members of the Agriculture Committee gather 
data on farm programs so that we can evaluate each of them for 
effectiveness and efficiency. Having accurate and comprehensive 
information on current farm policy will help us develop the 
next farm bill in an integrated fashion so we can best serve 
America's farmers and ranchers.
    We are joined today by Bruce Nelson. Mr. Nelson is the 
Administrator of the Farm Service Agency. The Farm Service 
Agency administers several loan programs that ensure that 
farmers, ranchers and rural businesses have access to the 
credit they need to purchase and maintain their operations.
    It is difficult to imagine an industry that is more reliant 
on credit and access to capital than farming and ranching. Farm 
equipment can run upwards of $\1/2\ million. Combines cost more 
than most homes, especially here on Capitol Hill. And the cost 
of land can be prohibitive in and of itself. For beginning 
farmers with no credit history, obtaining a loan can be 
impossible.
    My district is home to a growing community of farmers who 
raise food specifically for local farmers markets and other 
emerging food retailers. With little historical data on farmers 
producing for new markets, commercial credit institutions are 
sometimes reluctant to offer them credit. Farm Service Agency 
loan programs ensure that new farmers have access to the credit 
they need to get started.
    It isn't only the new farmers that need access, however. 
All farmers operate in a risky environment subject to volatile 
swings in both weather patterns as well as commodity prices. 
The swings and the effect on farm income can cause commercial 
credit markets to tighten. The Farm Service Agency loans ensure 
that farmers don't lose access to credit during such difficult 
times.
    Today we will hear how the Farm Service Agency administers 
its loan programs and how these programs are received in the 
countryside.
    I don't think I need to remind anyone here that we are 
operating in a challenging fiscal environment. Today's audit 
will help us prioritize the programs that are most valuable to 
America's farmers and ranchers while making the most efficient 
use of the taxpayer dollar.
    Mr. Nelson, thank you for joining us today, and I look 
forward to hearing your testimony and learning how we may 
actually improve our loan programs.
    [The prepared statement of Mr. Fortenberry follows:]

   Prepared Statement of Hon. Jeff Fortenberry, a Representative in 
                         Congress from Nebraska
    Good afternoon. Thank you all for joining us here today at the 
fifth farm bill audit hearing.
    These audits help Members of the Agriculture Committee gather data 
on current farm programs so that we can evaluate each of them for 
effectiveness and efficiency. Having accurate and comprehensive 
information on current farm policy will help us develop the next farm 
bill in an integrated fashion, so that we can better serve America's 
farmers and ranchers.
    We are joined today by Bruce Nelson, the Administrator of the Farm 
Service Agency.
    The Farm Service Agency administers several loan programs that 
ensure farmers, ranchers and rural businesses have access to the credit 
they need to purchase and maintain their operations.
    It's difficult to imagine an industry more reliant on credit and 
access to capital than farming and ranching. Farm equipment can run 
upwards of $\1/2\ million. Combines cost more than most homes. It's 
cheaper to buy a house on Capitol Hill than it is to buy certain cotton 
pickers. And the cost of land can be prohibitive in and of itself.
    For beginning farmers with no credit history, obtaining a loan can 
be impossible. My district is home to a growing community of farmers 
who raise food specifically for local farmers' markets and other 
emerging food retailers. With little historical data on farmers 
producing for new markets, commercial credit institutions are sometimes 
reluctant to offer them credit. Farm Service Agency loan programs 
ensure that new farmers have access to the credit they need to start 
farming.
    It isn't only new farmers that need access to credit; however. All 
farmers operate in a risky environment, subject to volatile swings in 
both weather patterns and commodity prices. These volatile swings and 
the effect on farm income can cause commercial credit markets to 
tighten. The Farm Service Agency loans ensure that farmers don't lose 
access to credit during difficult times.
    Today we will hear how the Farm Service Agency administers its loan 
programs and how these loans are received in the countryside.
    I don't think I need to remind anyone here that we are operating in 
a challenging fiscal environment. Today's audit will help us prioritize 
the programs that are most valuable to America's farmers and ranchers, 
while making the most efficient use of taxpayer dollars.
    Mr. Nelson, thank you for joining us today. I look forward to 
hearing your testimony and learning how we might improve our loan 
programs.

    The Chairman. With that, I would also like to recognize our 
Ranking Member, Ms. Fudge, from Ohio, for any opening 
commentary she might have.

OPENING STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN 
                       CONGRESS FROM OHIO

    Ms. Fudge. Thank you very much, Mr. Chairman, and thank you 
for holding this hearing to review the Farm Service Agency 
credit programs. This hearing is a good complement to the 
information we gathered during the April hearing on national 
credit conditions. The testimony offered and questions asked 
today will help move us a step closer to understanding and 
addressing credit concerns for producers in the next farm bill.
    So I am pleased to have the opportunity to both listen to 
and ask questions of Mr. Nelson again. Thank you, sir.
    As I mentioned in April, I represent Cleveland and many of 
its eastern suburbs. So there are not a lot of farms in my 
district. However, the farmers who grow food close to my 
district are very important to me. Like many urban communities, 
Cleveland is one of the largest food deserts in the nation. 
Fresh fruits and vegetables are not plentiful or affordable in 
my district. Many of my constituents depend on food banks, and 
my food banks depend on locally grown produce.
    Thankfully, farmers markets and urban gardening are 
becoming more prevalent. Many people are struggling to make 
ends meet during these hard economic times, so these outlets 
are vital considering the high cost of fruits and vegetables.
    With that said, I am concerned about the soundness and 
adequacy of the credit extended to farmers by the FSA and how 
that affects the affordability and availability of food in 
urban areas like Cleveland.
    Additionally, I look forward to learning how agricultural 
lenders are responding to some of the developments I see in our 
cities and suburban areas like the increased interest in 
locally produced foods and the real problem of food deserts. I 
want to ensure that FSA is meeting the needs of young and 
innovative producers who can fill these gaps.
    Finally, I want to make sure that FSA is reaching out to 
minority farmers with adequate and equal credit. This has been 
a difficult and ongoing problem at USDA, and although progress 
appears to have been made, it is our responsibility to ensure 
that both the structure and the implementation of FSA programs 
is fair. Sufficient and unbiased access to credit is critical 
for successful farming and ranching operations of all sizes in 
all states and locales.
    So again, welcome to our witness. I look forward to hearing 
your testimony.
    Thank you very much, Mr. Chairman. I yield back.
    The Chairman. We are also joined today by the gentleman 
from New York, Mr. Owens, who is not a Member of this 
Committee, but who in consultation with the Ranking Member, we 
are happy to have on the panel for questions later.
    Mr. Owens. Thank you very much. I appreciate it, Mr. 
Chairman.
    The Chairman. We move now to our witness. Mr. Bruce Nelson 
is the Administrator of the Farm Service Agency, and he is 
accompanied by Mr. Jim Radintz, the Assistant Deputy 
Administrator of the Farm Service Agency.
    Mr. Nelson, please begin.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, 
 U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED 
                        BY JIM RADINTZ,
           ASSISTANT DEPUTY ADMINISTRATOR, FSA, USDA

    Mr. Nelson. Mr. Chairman and Members of the Committee, 
thank you for the opportunity to discuss credit conditions in 
rural America. I am Bruce Nelson, Administrator of the Farm 
Service Agency, and today I look forward to giving you an 
overview and an update of FSA's farm loan programs.
    Farmers and ranchers who are unable to obtain commercial 
credit can turn to FSA's Farm Loan Program. While we have been 
known as the lender of last resort by some, we have really 
become the lender of first opportunity to many in rural 
America. FSA assists farmers through both direct and guaranteed 
loan programs. Direct loans are made and serviced by FSA 
employees, and direct loans are not intended to be a permanent 
source of credit; rather, they are intended to help borrowers 
transition to commercial credit. Guaranteed loans are made and 
funded by a commercial lender. FSA guarantees up to 95 percent 
of the loan principal and interest, and guaranteed lenders are 
then accountable for loan servicing under this guarantee.
    FSA farm loan programs are discretionary programs funded 
through annual appropriations, and because the vast majority of 
these loans are repaid, FSA loans carry a low cost for the 
taxpayer. Last year, for example, $155 million in 
appropriations supported over $5.2 billion in loans, and as of 
June 30 of this year, $124.8 million in Fiscal Year 2011 
appropriations have supported more than $3.9 billion in 
lending.
    As in recent years, demand for loans has remained quite 
high. While higher commodity prices have benefited some 
producers, rising input costs such as feed, fuel, and 
fertilizer have remained high. In addition, as land prices 
continue to rise, commercial lenders in many regions are 
maintaining tight credit standards in general. All of these 
factors contribute to continuing demand for FSA loans.
    Term limits on FSA loans have also affected credit 
availability. Federal statute presently limits borrowers with 
guaranteed operating loans to 15 years of eligibility. This has 
been suspended in the past, but the latest suspension expired 
on December 31 of last year, making about 4,500 guaranteed loan 
borrowers ineligible for further guaranteed loans as a result.
    We at FSA are always working to improve the way we 
administer and service loans. In Fiscal Year 2010, I am proud 
to report that the loss rate in the Direct Loan Program fell to 
1.2 percent, its second lowest level since 1986. The direct 
loan delinquency rate stood at 5.6 percent in Fiscal Year 2010, 
its lowest point in 2 decades. And the direct loan foreclosure 
rate stood at just \1/10\ of 1 percent last year.
    While working to keep trouble loan numbers low, we are also 
able to graduate more than 2,000 direct loan borrowers to a 
guaranteed loan last year. This is a very important progress 
because helping farmers build relationships with their 
community lenders is a key step in establishing their future 
success in agriculture.
    We are also processing loans more quickly than ever before. 
This improvement is largely due to modernized IT systems which 
help our field office staff to deliver our programs more 
efficiently. Support in Congress for these critical 
infrastructure improvements has made these great strides and 
service possible, and I am grateful for that support.
    Finally, I would like to speak on the issue of equal access 
to our loans.
    Secretary Vilsack has been extremely clear that improper 
treatment of those that USDA and FSA serve will not be 
tolerated. Under this Secretary's leadership, FSA has improved 
processing of civil rights complaints, and we have requested an 
external analysis of our field office program delivery. Our 
team here in Washington and across the country shares my 
commitment and Secretary Vilsack's commitment to equal access 
and opportunity for all those customers that FSA serves.
    Mr. Chairman and Members of the Subcommittee, again thank 
you for allowing me to share this snapshot of FSA loan 
activities with you, and I am available to answer your 
questions now or at anytime in the future.
    Thank you very much.
    [The prepared statement of Mr. Nelson follows:]

Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency, 
            U.S. Department of Agriculture, Washington, D.C.
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear before you to provide an update on the credit 
conditions rural America now faces and the current status and 
operations of the farm loan programs at the Farm Service Agency (FSA).
Credit Conditions
    The farm economy strengthened in 2010. However, farm income, 
especially net farm income, is very unevenly distributed. Much of the 
improvement in farm economic conditions is driven by higher commodity 
prices. While higher prices have been beneficial for some crop 
producers, they have also resulted in higher feed costs which are 
squeezing profits among livestock and dairy producers.
    A combination of higher commodity and energy prices is 
significantly increasing the amount of capital required to finance 
agricultural production. Crop-related expenses grew 77 percent between 
2002 and 2008, and are expected to rise by 9.5 percent in 2011. 
Livestock expenses increased by 64.4 percent between 2002 and 2008, and 
are forecast to increase by 6.8 percent in 2011. These higher 
production costs increase the demand for operating credit, increase 
financial leverage, and strain liquidity.
    Recent Federal Reserve Surveys indicate commercial lenders in most 
regions are continuing to maintain stringent credit standards. 
Concerned that a combination of factors may be pushing farmland values 
quite high, the Federal Deposit Insurance Corporation has issued 
guidance to its examiners to scrutinize farm loans more rigorously, 
particularly in financial institutions with a concentration of farm 
lending. The combination of high feed and other input costs, increased 
operating capital needs, and a continued high level of loan scrutiny by 
lenders means some farmers are still being denied commercial credit.
    FSA Farm Loan Programs. Family farmers who are denied commercial 
credit due to lender standards, but are otherwise creditworthy, can 
turn to the farm loan programs administered by FSA. The Agency assists 
farmers through direct and guaranteed farm loans. Direct loans are made 
and serviced by FSA; agency employees provide supervision and technical 
assistance to direct loan borrowers. Direct loans are not intended to 
be a permanent source of credit and borrowers agree to obtain 
commercial credit and refinance their FSA debts when they are able to 
do so.
    Guaranteed loans are made, funded and serviced by a commercial 
lender. FSA typically guarantees up to 90 percent of the loan principal 
and interest. FSA employees must evaluate and make a credit decision on 
all guaranteed loans. Guaranteed lenders must retain at least the non-
guaranteed portion of the loan in their portfolio and are accountable 
for loan servicing under the FSA guarantee.
    Funding. FSA farm loan programs are discretionary programs funded 
through annual appropriations. In accordance with the Federal Credit 
Reform Act of 1990 (as amended), appropriations for FSA farm loans are 
based on the projected total cost of loans when they are made. Federal 
budget resources are able to be significantly leveraged through the 
loan programs. In Fiscal Year (FY) 2010, for example, $155.3 million in 
appropriations supported $5.29 billion in direct and guaranteed FSA 
loans.
    Loan Demand. Activity in FSA's farm loan programs indicates that a 
significant number of farmers continue to be unable to obtain 
commercial credit under current conditions. Farm loan program demand is 
usually a reflection of financial conditions in the farm economy: when 
the over-all farm economy is strong, farm loan activity declines; 
during times of financial stress in the farm economy, demand for FSA's 
loans rises. This makes sense, since a basic requirement to qualify for 
the loan programs is to be unable to meet the criteria for commercial 
credit.
    In early FY 2009, loan demand surged to levels that had not been 
seen since the early 1980s. Demand for farm loan program assistance in 
FY 2009 and FY 2010 reached its highest levels since FY 1985. Demand 
has continued at, and in some programs increased above, those near-
record FY 2009 levels (Chart 1). Use of the guaranteed farm ownership 
program in FY 2010 reached an all-time high. FY 2010 direct operating 
and farm ownership obligations nearly doubled compared to FY 2008 
levels. Application activity in FY 2011 reflects demand levels similar 
to the higher levels of FY 2009 and FY 2010. The demand for new loans 
in FY 2011 is in addition to the credit provided through the $7.97 
billion in direct loans and $10.35 billion in guaranteed loans 
outstanding in the FSA portfolio at the beginning of the fiscal year To 
manage the increase demand, FSA has proposed shifting budget authority 
from the guaranteed operating loan interest assistance program, where 
demand is down, to the direct operating loan program and the guaranteed 
farm ownership loan program, where a shortfall is expected. On June 27, 
2011 Secretary Vilsack signed letters to the Chairmen and Ranking 
Members of the appropriate Appropriations Subcommittees of the House 
and Senate, advising them of the proposed transfer. The planned 
transfer will fund the approved and pending applications for direct 
operating loans and provide adequate guaranteed ownership funding for 
the remainder of FY 2011. Some, but not all of the unfunded direct 
ownership loans will be funded from other transfers that are required 
by law in August and September.
    Over the past 2 years, an unusually high number of direct operating 
loan applications have been received from new customers. Normally, 
about 20 percent of direct operating loan applications in any given 
year are from farmers who do not have FSA loans. Since 2009, over 40 
percent of direct operating loan applications have been from farmers 
who are not FSA borrowers. As of July 7, 2011, 44 percent of the direct 
operating loans made in FY 2011 were to customers who did not have 
existing FSA operating loans.
Performance and Portfolio Conditions
    Farm loan programs continue to emphasize the importance of 
processing applications in a timely manner. Between FY 2001 and FY 
2011, farm loan programs reduced its direct loan application processing 
timeframes by 11.5 days (31 percent), and reduced guaranteed loan 
processing timeframes by 2 days (ten percent). As of March 30, 2011, 
the average time from application receipt to final decision for direct 
loans was 27.8 days, and for guaranteed loans, 9.4 days. It is 
remarkable that even though loan demand has surged, there has not been 
a noticeable deterioration in application processing time. This is a 
testament to the dedication of FSA field staff and the effectiveness of 
the Information Technology (IT) solutions farm loan programs has 
deployed.
    As of June 30, 2011, the FSA direct loan portfolio consisted of 
$8.14 billion owed by 70, 937 borrowers, while the guaranteed portfolio 
consisted of $10.86 billion owed by 34,832 borrowers. The quality of 
our portfolio has continued to improve, with foreclosure and loss rates 
falling while borrower ``graduation'' to commercial loans has 
increased.
    Loss Rates. In FY 2010, losses in the direct loan program fell to 
their second lowest level since 1986--just 1.2 percent (Chart 2). 
Losses for FY 20l0 in the guaranteed loan program were 0.6 percent, 
(Chart 2).
    Delinquency Rates. As with losses, the direct loan delinquency 
rates have been at historic lows for the past 2 decades at 5.9 percent 
for FY 2010 (Chart 3). This is the result of steady and dramatic 
decreases, from a 23.8 percent delinquency rate in FY 1995. The 
decrease was facilitated by expanded authority, since 1996, to offset 
delinquent borrowers' loan obligations with their Federal payments, 
salaries and income tax refunds. In the guaranteed program, the FY 2010 
delinquency rate was 1.69 percent, the second lowest since 1995 (Chart 
3).
    Foreclosures. Foreclosure rates continue to be very low in the 
direct loan program. In 2010, FSA completed 64 foreclosures. This 
represents less than \1/10\ of 1 percent of the agency's direct loan 
caseload of 70,905 (as of September 30, 2010). The extremely low 
foreclosure rate is the result of the use of all available servicing 
tools and a structured review process to ensure that all options to 
assist the borrower have been exhausted before a foreclosure action is 
started.
    Inventory Properties. Inventory farm properties those that have 
come into government ownership through voluntary conveyance or 
foreclosure are also at historic lows, with just 86 farms totaling 
10,900 acres in FY 2010 (Chart 4). In 1995, FSA held nearly 1,800 farms 
totaling 598,000 acres. Many of those inventory properties were sold to 
established and beginning farmers, providing those individuals with 
prime opportunities to expand or create new operations.
    Graduation Rates. Federal law requires FSA to ``graduate'' its 
borrowers to commercial credit when they have made sufficient progress 
to be able to qualify for loans from other lenders. They are assisted 
by the agency in refinancing their direct loans with FSA guaranteed 
loans from commercial lenders. Some 2,221 direct loan borrowers were 
able to graduate in FY 2010.
Equitable Treatment and Participation
    Secretary Vilsack has been extremely clear that improper and 
inequitable treatment of individuals the United States Department of 
Agriculture (USDA) and FSA serve will not be tolerated. On April 21, 
2009, the Secretary announced several actions in a comprehensive 
approach to ensure fair and equitable treatment of USDA employees and 
constituents. These actions included an initiation of several 
improvements in processing civil rights complaints, requesting an 
external analysis of program delivery by USDA service center agencies, 
and 90 day suspension of FSA farm foreclosures, which has provided us 
time to ensure that all producers have received their statutory 
protections. In FY 2010, while FSA received more than 48,000 loan 
applications, more than 4,000 loan servicing requests, and tens of 
thousands of applications for various farm commodity, support, and 
disaster programs, the Assistant Secretary for Civil Rights received 
only 37 civil rights complaints related to FSA programs. While this is 
the lowest number of FSA civil rights complaints received since records 
have been kept, it is our goal to further reduce this number.
    I, along with all members of the FSA management team, remain fully 
committed to providing to equal access and opportunity for all those 
FSA serves. I will closely monitor the operations of farm loan programs 
and all other FSA programs to assure that our producers, program 
applicants, and employees receive fair and equitable treatment. I want 
to update you on a few key activities dealing with these important 
issues.
    Program participation. An examination of the composition of FSA's 
loan portfolio indicates that FSA finances socially disadvantaged 
farmers at a much higher rate than that groups' proportion of the farm 
population (Chart 5). FSA has significantly increased the amount of 
loan funds provided to socially disadvantaged applicants. Between 1995 
and 2010, the FSA direct loan caseload for socially disadvantaged 
borrowers increased from 3,260 to 14,840. Between 1997 and 2010, the 
FSA guaranteed loan caseload for socially disadvantaged borrowers 
increased from 1,730 to 2,998.
    In the 2008 Farm Bill, Congress re-affirmed the focus for FSA 
programs on beginning farmers and ranchers. FSA continues to strive to 
reach more beginning farmers and ranchers and has increased the amount 
of loan funds provided to beginning farmers and ranchers. The FSA 
direct loan caseload for beginning farmers increased from 3,474 in 1995 
to 27,111 borrowers in 2010. Guaranteed caseloads for beginning farmers 
and ranchers were first reported in 1997. The FSA guaranteed loan 
caseload for beginning farmers increased from 3,617 in 1997 to 9,477 
borrowers in 2010.
    IT Modernization. Farm loan programs has also implemented modern, 
Web-based systems to manage the loan application, approval and funding 
process. This system provides real-time management data on application 
activity and allows the Agency to better cope with funding problems and 
act quickly when necessary. For example, when the Agency received 
supplemental funding in the American Revitalization and Recovery Act, 
over 2,000 farmers were waiting for desperately needed direct operating 
loans to pay 2009 planting and other farming expenses. When funds were 
made available to FSA, the Agency was able to process obligations 
overnight, and funds began flowing into farmers' bank accounts only 3 
days later. I am proud to say that FSA was one of the first agencies in 
the government to get recovery dollars flowing to those who desperately 
needed it. The modern, web-based IT systems in place for farm loan 
programs, such as the Direct Loan System (DLS) and the Program Funds 
Control System (PFCS), were a key factor in our ability to provide such 
timely service.
    This past year we have completed the final phase of moving all 
automated farm loan systems to the Web. With the completion of this 
project, duplicate data collection is eliminated and farm loan services 
are being delivered even more efficiently This project allows our 
employees to conduct USDA business from any location where there is 
broadband, WiFi or dial-up Internet access. This allows us to conduct 
business with producers at locations and times convenient to them. 
Additionally, this information is stored on a centralized server 
allowing employees to quickly access portfolio information and provide 
real time management reports. FLP staff no longer relies on antiquated 
operating environments for program delivery.
    In addition to the business plan and loan accounting systems, other 
IT systems have been developed and implemented which also enhance the 
efficiency of FSA employees. Agency appraisers have recently been 
provided state of the art agricultural software that allows collateral 
valuations to be done more expeditiously, which facilitates faster 
access to capital for loan applicants. Automated Web-based systems have 
been developed for program oversight, including Farm Loan Programs Risk 
Assessment (FLPRA) and the District Director Oversight System (DDORS), 
which help to ensure the integrity of FSA's farm loan programs.
Conclusion
    Through modernization efforts, maintaining focus on program 
objectives, and the hard work and dedication of FSA employees, FSA farm 
loan program staff has made great strides in improving program 
performance. Loan failures and losses have declined which is a strong 
indication that the program mission of helping farmers become 
successful is being accomplished. At the same time, increased 
assistance to small, beginning, and socially disadvantaged farmers, 
reflects remarkable success as well.
    However, we continue to face challenges. Government resources are 
increasingly limited and the agriculture production landscape is 
changing. It will require every bit of innovation, management 
expertise, and determination that we can muster to maintain the 
efficiency and efficacy of farm loan programs over the next several 
years.
    We are experiencing a unique set of conditions in the credit and 
banking sectors, and to a large extent, in agriculture. These changes 
pose significant barriers and challenges to the groups that FSA farm 
loan programs are intended to assist. These issues create major 
challenges for the agency as well, since the success of the program 
depends on those whom the programs are intended to serve. To keep pace 
with these changes, we look forward to working with you to continue 
efforts to modernize our delivery systems, and to refine and adjust 
program requirements and operations to maximize the opportunities for 
our nation's small, beginning, and socially disadvantaged farmers and 
ranchers.
    Because of our rural delivery system and experienced loan officers, 
FSA's farm loan programs staff is well positioned to continue providing 
high quality delivery of existing programs and new initiatives to 
assist small, beginning, and socially disadvantaged family farmers. We 
look forward to working with this Subcommittee to address the 
challenges we face in accomplishing this worthwhile mission to 
strengthen family farmers and rural America.
    Thank you for allowing me to share our Department of Agriculture 
perspective as you seek to address this important issue. I am available 
to answer your questions now or at any time in the future.
                                 Charts
Chart 1
Total All Loans
Comparison of Obligations
(in Billion Dollars)

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 2
Farm Loan Programs Loss Rates
10 Year Trend

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 3
Farm Loan Programs Dollar Delinquency Rate
10 Year Trend

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Chart 4
Farm Loan Programs Inventory Property

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                                     Chart 5
                                       FY 2010 Borrower Case Load by Race
                                      (As Compared to 2007 Ag Census Data)
----------------------------------------------------------------------------------------------------------------
                                                               Percent of                          Percent of
                        Percent of 2007   Percentage of FY  Population being  Percentage of FY  Population being
                           Ag  Census       2010  Direct      served by FSA    2010 Guaranteed    served by FSA
                           Population         Caseload         Direct Farm        Caseload       Guaranteed Farm
                                                                  Loans                               Loans
----------------------------------------------------------------------------------------------------------------
            White               96.45              89.15              2.99             95.53              1.56
            Black                1.40               3.10              7.18              0.53              0.60
    Asian/Hawaiin                0.57               0.89              5.00              2.21              6.05
Amer Ind./AI Nat.                1.58               3.46              7.07              1.58              1.57
       Hispanic *                 N/A               3.31               N/A              0.11               N/A
            Other                 N/A               0.10               N/A              0.04               N/A
----------------------------------------------------------------------------------------------------------------
Hispanic Americans are not a separate category within the 2007 Census of Agriculture; therefore, no reliable
  comparison can be established.

    The Chairman. Thank you, Mr. Nelson.
    Let me begin with the questions, then I will turn to our 
Ranking Member.
    Let's talk about this issue of the term of the guaranteed 
loan. There seems to be--let's just unpack that further as to 
the policies that led to the 15 year term, and suspension of 
the term so that it could be extended into much longer periods 
of time. Yet that has to be held in comparison with wanting 
people to move actually away from this type of product, this 
type of guarantee, particularly if they are in a successful 
situation.
    So what do you anticipate emerging in this regard?
    Mr. Nelson. Mr. Chairman, I really appreciate your question 
because it gives an opportunity not only to talk about the 
issue of possibly extending the term limits, but it gives me an 
opportunity to emphasize that the vast majority of FSA 
borrowers do stay within the term limits.
    For example, for our operating loans, the average time of 
participation of our borrowers is between 5\1/2\ and 6 years. 
And for the farm ownership loans, it is about 12 years. So 
again, I think it is important to have on the record the fact 
that, again, the vast majority of the borrowers stay within the 
term limits.
    But I am a farmer from out in Montana. My family has been 
there for about 100 years on the place that my grandparents 
homesteaded. And like a lot of families, most of the farmers 
and ranchers around the country are in business for 40 or 50 
years, and it is likely that in that 40 to 50 year period that 
you are going to have 10 or 15 or 20 bad years because of, for 
example, low commodity prices or disaster situations that are 
beyond the control of the individual producer.
    Now, we have recognized, as you mentioned in your opening 
statement, that there are inherent risks in agriculture that 
are beyond the control of individual producers, and it is why 
the ag safety net was created in the first place. And we have 
also realized that if you have enough hard years that affect 
enough producers, you can actually affect the food security of 
the nation.
    So what I would ask you to consider on term limits is some 
flexibility so that we at FSA can look at the individual 
borrower on a case-by-case basis and determine whether or not 
the fact that that producer may need to have a term extension 
is because of factors beyond their control, again because of 
low commodity prices or disaster situations, or whether it was 
something that was within the producer's control. And in the 
case where it was something that happened to them because of 
situations beyond their control or factors beyond their 
control, we ought to have the flexibility to look at extending 
the term, but where it was something that was clearly within 
the producer's control, then we probably shouldn't.
    The Chairman. How is this balanced with the dual 
responsibility the agency has to graduate farmers to the 
commercial loan market?
    Mr. Nelson. Well, I believe that always ought to be our 
objective and, as I mentioned in my statement, we were proud to 
graduate over 2,000 borrowers last year, and that needs to 
become the intention and continue to be the intention.
    The Chairman. What percent is that of the overall program?
    Mr. Nelson. We have about 70,000, I believe, borrowers in 
the Direct Loan Program. So that was 2,000 of 70,000, and we 
will make sure that we clarify those numbers if I don't have it 
right, Mr. Chairman.
    The Chairman. Okay. With that, I will turn to our Ranking 
Member for any questions she may have.
    Ms. Fudge. Thank you very much, Mr. Chairman. I have just a 
few quick questions.
    Mr. Nelson, in the district I represent, instead of having 
the traditional farmers obviously, we have young innovators and 
creative entrepreneurs who are growing gardens on rooftops or 
on abandoned lots and turning them into thriving farms. And 
there are many who garden indoors because we have very harsh 
winters in Ohio, which I am sure you know. And we encourage 
this kind of gardening.
    So while they aren't your garden variety farmers, they do 
consider themselves farmers and do need financial assistance. 
Under your rules, are these producers qualified for FSA loans?
    Mr. Nelson. That is another good question because again, 
there is an impression out there that because our loan program 
is agricultural in nature that that means it is strictly rural 
in nature. That is not the case because our agricultural loans 
are available for producers whether they are in the middle of a 
city, or in the suburbs, or out in the rural countryside.
    And so this is a good opportunity to help get the word out 
about that because we do have examples in the Farm Service 
Agency of having made loans around the country for just the 
type of roof-type gardens that you are talking about, for small 
apiaries that are in or near cities, and also for community-
sponsored agriculture, CSA, so that we can help local producers 
create the food networks to supply food to food deserts like 
your hometown of Cleveland.
    Now, the Department of Agriculture has started on a ``Know 
Your Farmer--Know Your Food'' Program and I like that, as a 
dryland wheat farmer from Montana, because that helps get the 
word out to the American people about the importance of 
agriculture. It is a program designed to make them understand 
and appreciate farmers and ranchers. But also in the situation 
you are talking about, it is a program designed to help link up 
those local producers with local markets.
    Now, one thing I will say, though, is we are pretty new to 
urban areas, and so we could certainly use some help from you 
folks in terms of how better to serve the agricultural 
producers in our cities.
    Ms. Fudge. And I appreciate that because you are saying to 
me that you are trying to find ways to work with the very 
people that we are talking about. And I would like to at some 
point talk to you further about that because I think it is very 
important. And I am glad to see that you are taking the 
initiative to find ways to work with that particular population 
of farmers. So I thank you.
    My last question is can you give us just a brief update on 
how the reduced funding in the Continuing Resolution will 
affect credit programs. And specifically, how has FSA been able 
to weather the cuts to the Agriculture Credit Insurance Fund of 
some $430 some odd million and to the Farm Assistance Fund of 
another $44 million.
    Mr. Nelson. Under the 2011 Appropriations Act, and I am 
going to turn this over to Jim in a minute, we were given the 
authority to transfer funds. And so pursuant to that authority, 
back on June 27 Secretary Vilsack did notify the appropriators 
of our intention to transfer funds from the Guaranteed Interest 
Assist Program, where there wasn't as much demand, into the 
Direct Operating Loan Program. And we anticipate that if that 
transfer goes through, which we haven't heard any issues that 
the appropriators have had with it, that we will be able to 
cover our direct operating loan demand.
    We also do have a backlog on the farm ownership side, and 
there are target designations that will come off some of our 
loans in August and September that will free up those funds to 
hopefully cover our farm ownership approved loans out there.
    Jim, do you have anything to add to that.
    Mr. Radintz. I just would clarify that while we will be 
able to use some of those transfers late in the year to address 
some of the backlog, there will be some folks with approved 
direct ownership loans that won't be funded until fiscal 2012 
because even with the transfers we just have more demand than 
we will be able to have funding for.
    Ms. Fudge. Thank you so much. Mr. Chairman, I yield back.
    The Chairman. I thank the Ranking Member. I should inform 
the Members of the Committee that votes have been called. I 
think if we can all aggressively manage time we might be able 
to get through, each Member will have a question if it is kept 
at about 2 minutes. So with that I will turn to Mr. Crawford.
    Mr. Crawford. Okay. Real quick. Mr. Nelson, I understand 
that by law emergency loans offered by the SBA are not 
available to farmers although they once were back in the 1980s 
and that change was made in 1986 because some viewed that as a 
degree of overlap. At this time, the loan structure of SBA 
loans is actually a lot more favorable than FSA, giving SBA 
borrowers lower interest rates, longer periods of maturity and 
higher loan amounts. I am wondering if there is any way we can 
model the FSA emergency loans after the SBA loans to get those 
more favorable rates and terms.
    Mr. Nelson. Congressman Crawford, I am going to turn that 
over to Mr. Radintz because my experience in history with Farm 
Service Agency lending program is that we work together with 
the Small Business Administration. And so in emergency 
situations, if there is a Secretarial designation, FSA 
emergency loans are triggered for farmers and ranchers along 
with SBA assistance to the Main Street businesses that are also 
adversely affected by the natural disaster.
    If you are suggesting modeling the Farm Service Agency Loan 
Program more after SBA, we would be happy to look at that and 
advise you, our technical experts, within FSA during your 
consideration of the farm bill debate and see where we may be 
able to improve things.
    By the way, Congressman, I did appreciate the opportunity 
to come up and visit with you about the Farm Storage Facility 
Loan Program that day. Thank you again for the invitation.
    Mr. Crawford. You bet.
    Mr. Radintz. Regarding the Emergency Loan Program and 
comparing it with Small Business Administration disaster 
recovery loans, there are a couple of factors. We could lower 
the interest rates. That is a decision that the Secretary would 
need to make. But of course any change in the interest rates of 
the loan programs would have some budgetary impact for us.
    The other conditions, rates and terms and so forth, would 
require some statutory modification, and that is something that 
we could certainly work with the Committee on.
    Mr. Crawford. Gentlemen, thank you. I yield back.
    The Chairman. Thank you.
    Mr. McGovern is recognized.
    Mr. McGovern. Thank you, and I will be brief.
    I am new to the Agriculture Committee, but I have a 
district similar to Ms. Fudge. I represent a primarily urban-
suburban district. And I am particularly interested in, as I 
mentioned to your predecessor, who was here not too long ago, 
that I am particularly interested in reaching out to smaller 
and medium-sized farms and smaller producers as well as 
speciality crop producers.
    And I assume that you think that in most regions of the 
country there continues to be a need for the FSA to provide 
credit.
    And then my second question is how does participation in 
your programs vary across types of producers as well as in 
various areas of the country? Are there certain parts of the 
country where FSA plays a bigger role than commercial credit?
    Where I am from, what I hear constantly from these farmers, 
who I didn't know existed until I got on the Agriculture 
Committee, is that it is a challenge for them to access credit 
because of their proximity to an urban area.
    And I would just appreciate your comments on those.
    Mr. Nelson. Well, Congressman, I appreciate that, again in 
response to Congressman Fudge's question earlier, we are 
challenged in the Farm Service Agency with going beyond our 
traditional customers out there. And we look forward to working 
with you to better reach folks in urban areas and around urban 
areas because, again, this is an agricultural program. It is 
not a rural program. It is supposed to serve agricultural 
producers everywhere in the country. And with respect to 
smaller producers, in fact most of our borrowers are on the 
small end of the spectrum. If you look at the gross sales and 
the equity positions and the net income positions of our 
borrowers, we loan primarily to folks on the small end of the 
producer spectrum. And that makes sense because those are with 
the emphasis on beginning farmers, for example, most people 
aren't going to start out big.
    And so again we would look forward to working with you to 
try to develop ways to reach folks out there. And I look 
forward to those conversations and, during your consideration 
of the farm bill, what we can do in that to help.
    Mr. McGovern. I appreciate it. Just my final point, are 
there certain parts of the country where FSA plays a bigger 
role than commercial credit?
    Mr. Nelson. If your question is do we play a bigger role 
than commercial credit, I will have to get back to you on that. 
I can answer the question about where we historically have our 
most loans, and that is we have our most loans in the most 
intensely agricultural parts of the country, which is the 
Midwest primarily over to the Missouri River. And again, our 
challenge is to reach out beyond those traditional 
constituencies.
    So I would turn it over to Mr. Radinitz to see if he has 
anything to add. And we would look forward to providing you 
with more detailed information.
    [The information referred to is located on p. 459.]
    Mr. McGovern. I appreciate your offer to work with us and I 
look forward to working with you. It sounds like the issue is 
that we just need to get to know each other better rather than 
there is any kind of barrier from getting help.
    Mr. Nelson. No barriers. Looking forward to it.
    Mr. McGovern. Thank you.
    The Chairman. Mr. Owens, you are recognized.
    Mr. Owens. Mr. Nelson, first I want to thank you obviously 
for being here today, but you also were a great deal of help to 
me in a conversation we had about 2 weeks ago regarding the 
potential for SBA loans for people in my district affected by 
dramatic flooding.
    I want to ask, in your testimony there was appended several 
graphs and one is entitled, Farm Loan Programs Loss Rates 10 
Year Trend. Very interesting to me because we are looking at 
direct loan loss rates and guaranteed loan loss rates. When 
they blend together they are about .9 percent.
    Would it be fair to say that you compare quite favorably 
with commercial bank loan loss rates?
    Mr. Nelson. I am going to have to defer that question to 
Mr. Radintz because I don't know of the commercial loss rates, 
Congressman.
    Mr. Owens. Thank you.
    Mr. Radintz. In our Guaranteed Loan Program, the loss rates 
are somewhat marginally higher than commercial rates but again 
these are loans made by commercial lenders with an FSA 
guarantee, so the rates are somewhat close. The loss rates in 
the Direct Loan Program are somewhat higher. I would say 
probably maybe double. But again we are talking about the 
difference between maybe \3/4\ of a percent for commercial 
lender versus 1\1/2\ to 2 for a direct loan, and remember these 
are borrowers that direct lenders won't even take the risk. So 
they are very high-risk borrowers, and we are still able to 
keep our loss rates fairly comparable, at least tracking with 
commercial lenders.
    Mr. Owens. Thank you very much. I yield back.
    The Chairman. Mr. Baca of California.
    Mr. Baca. Thank you very much, Mr. Chairman.
    Let me ask this question. I am pleased that Secretary 
Vilsack and President Obama are committed to turning the page 
when it comes to civil rights at USDA. Unfortunately, the loan 
discriminations of the past are still often associated with 
USDA today. Can you please speak to the Subcommittee a little 
bit more regarding the Farm Service Agency's effort to 
eliminate discrimination once and for all in all U.S. loan 
programs?
    And I am going to ask a second question. Given the 
discrimination suits of various groups such as the African 
Americans, Latinos, Native Americans, and female farmers, is 
there more that Congress can do when we look at the next farm 
bill to ensure equitable access to credit for everyone in rural 
America?
    Mr. Nelson. Well, I appreciate that comment and question, 
Congressman, because it gives me the opportunity to reemphasize 
not only----
    The Chairman. Mr. Nelson, if you could suspend for one 
moment. There are 2 minutes left in the vote, just to inform 
you all. I will continue the hearing for another moment or two, 
and then we may proceed afterward but if you need to leave it 
is okay.
    Mr. Nelson.--to the President and Secretary's commitment to 
making sure that we are serving everyone, and I believe that 
the Farm Loan Program numbers of Farm Service Agency since 1995 
to 2010 bear out with, for example, we are--in the Direct Loan 
Program since 1995, we have increased the number of direct loan 
SDA borrowers from 3,260 to almost 15,000. That is a 4\1/2\-
fold increase. In the Guaranteed Program, we have more than 
doubled them.
    And I want to emphasize that overall those are good loans 
because those folks are keeping up their end of the bargain and 
in that period of time----
    Mr. Baca. I don't think I am questioning the good loans. I 
just wanted to make sure there is no discrimination, that there 
is an equitable distribution.
    Mr. Nelson. I appreciate that, Congressman. And that is 
absolutely what we are committed to. Absolutely.
    Mr. Baca. Thank you.
    The Chairman. Mr. Baca, do you think you need to proceed 
with further questioning after the vote?
    Mr. Baca. No, Mr. Chairman. Thank you.
    The Chairman. Well, gentlemen, you have come at an awkward 
time, but it is always awkward up here. I apologize.
    Under the rules of the Committee the record of today's 
hearing will remain open for 10 calendar days to receive any 
additional supplementary material and written responses from 
you from any questions posed by the Members.
    The hearing of the Subcommittee on Department Operations, 
Oversight, and Credit is adjourned.
    [Whereupon, at 2:35 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
 Supplementary Material Submitted by Bruce Nelson, Administrator, Farm 
             Service Agency, U.S. Department of Agriculture
    During the July 14, 2011 hearing entitled, Agricultural Program 
Audit: Examination of USDA Farm Loan Programs, a request for 
information was made to Bruce Nelson. The following is the information 
submission for the record.
Insert
          Mr. McGovern. . . . Just my final point, are there certain 
        parts of the country where FSA plays a bigger role than 
        commercial credit?
          Mr. Nelson. If your question is do we play a bigger role than 
        commercial credit, I will have to get back to you on that. I 
        can answer the question about where we historically have our 
        most loans, and that is we have our most loans in the most 
        intensely agricultural parts of the country, which is the 
        Midwest primarily over to the Missouri River. And again, our 
        challenge is to reach out beyond those traditional 
        constituencies.
          So I would turn it over to Mr. Radinitz to see if he has 
        anything to add. And we would look forward to providing you 
        with more detailed information.

    While overall the total share of debt provided through direct and 
guaranteed programs is less than 10%, there are localized regions where 
farmers are more dependent on FSA loan programs.
    Specifically, regions where FSA loan programs are more important 
include the Mississippi Delta, Southeastern Coastal Plains, New 
England, Southern & Northern High Plains, and the Inter-mountain west 
(see Attachment 1).
    In many of the counties within these regions, FSA appears to serve 
over half of the indebted farmers through either the direct or 
guaranteed credit programs.
    Since FSA tends not to be the primary credit source in most 
situations (i.e., Provides <50% of an individual farmer's credit), the 
share of farmers served provides a better picture of FSA's market 
presence than the market share of total debt.
    The share of farmers served can be examined by comparing the number 
of FSA borrowers with the number of indebted farmers. The Census of 
Agriculture provides data on the number of farmers with interest 
expense by county. In developing this measure, farmers with less than 
$500 of interest expense per year were excluded, as it was judged that 
these observations likely represented interest expense on accounts 
payable and not loans. The number of FSA borrowers was determined based 
on year-end 2010 to reflect the most recent data.
    Thus, market penetration by county was estimated as:


 
 
 
  No. of farmers with either a direct or Guaranteed FSA loan in 2010
----------------------------------------------------------------------------------------------------------------
  No. of farmers with over $500 of interest expense in 2007 (Census of Ag)
 


    Since the numerator and denominator represent two different time 
periods, this is a proxy rather than a measure for market penetration. 
The Census of Agriculture is collected only once every 5 years and is 
the only county-level data available on farm indebtedness. Still, debt 
levels do not change dramatically from year-to-year, and counties with 
high numbers of indebted farmers in 2007 are likely to have high 
numbers of indebted farmers in 2010. Note that if a farmer held both a 
direct and guaranteed loan, they were counted only once.
    There were 222 counties with over 100 borrowers through either the 
direct or guaranteed loan programs. Most were in Wisconsin (19), 
Oklahoma (18), Minnesota (17), Louisiana (15), Nebraska (14), Iowa 
(13), Texas (12), and North Dakota (12) (see Attachment 2).
    There were 147 counties where the number of Farm Loan Program (FLP) 
borrowers in 2010 was over half the number of indebted farmers in 2007. 
Many of the borrowers were either in Texas or the Mississippi Delta, 
with Louisiana holding the highest (21) number of borrowers, followed 
by Arkansas (14), Texas (14) and Tennessee (5) (see Attachment 3).
    There are also areas with few farmers, but FSA tends to be a 
relatively important source of credit. This includes West Virginia, 
northern Michigan, northern Wisconsin, Long Island, and areas of New 
England.
                              attachments
Attachment 1
Total FSA Loan Program Borrowers (2010)/Total No. of Farms With >$500 
        of Int. Exp (2007)
 
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
Attachment 2

            Counties With 100 or More FSA Farm Loan Borrowers
------------------------------------------------------------------------
                                                                 FSA
     County, State      FSA Financed      County, State        Financed
                          Farmers *                           Farmers *
------------------------------------------------------------------------
Lafayette, Wisconsin            504   Merced, California             126
Grant, Wisconsin                406   Morehouse, Louisiana           126
LeFlore, Oklahoma               316   Washita, Oklahoma              126
Yakima, Washington              285   Tripp, South Dakota            126
Seneca, Ohio                    276   Dodge, Wisconsin               126
Marshall, Minnesota             263   Nemaha, Kansas                 125
Green, Wisconsin                261   Avoyelles, Louisiana           125
Hale, Texas                     260   Pointe Coupee,                 125
                                       Louisiana
Polk, Minnesota                 252   Cedar, Nebraska                125
Franklin, Louisiana             250   Cuming, Nebraska               125
Conway, Arkansas                247   Ward, North Dakota             125
Washington, Arkansas            234   Jackson, Oklahoma              125
Wood, Ohio                      234   Dunklin, Missouri              124
Delaware, Iowa                  229   Bottineau, North               124
                                       Dakota
Hancock, Ohio                   224   Crawford, Ohio                 124
Richland, Louisiana             221   Haywood, Tennessee             124
West Carroll,                   219   Shawano, Wisconsin             124
 Louisiana
Otter Tail, Minnesota           217   Clay, Minnesota                123
Vernon, Wisconsin               217   Brookings, South               123
                                       Dakota
Sanilac, Michigan               214   Vermilion, Illinois            122
Clinton, Iowa                   212   Renville, Minnesota            122
Vermilion, Louisiana            212   Custer, Oklahoma               122
McCurtain, Oklahoma             212   Day, South Dakota              121
Dubuque, Iowa                   209   Desha, Arkansas                120
Manitowoc, Wisconsin            209   Pondera, Montana               120
Lancaster,                      208   Crockett, Tennessee            120
 Pennsylvania
La Salle, Illinois              203   Wharton, Texas                 120
Clark, Wisconsin                202   Graves, Kentucky               119
Lincoln, Nebraska               201   Sibley, Minnesota              119
Clayton, Iowa                   195   Holt, Nebraska                 119
Buchanan, Iowa                  195   Chautauqua, New York           119
Huron, Michigan                 193   Okanogan, Washington           119
Malheur, Oregon                 189   Faribault, Minnesota           117
Aroostook, Maine                183   Beadle, South Dakota           117
Gage, Nebraska                  182   Swisher, Texas                 117
Putnam, Ohio                    179   Emery, Utah                    117
Caddo, Oklahoma                 178   Colusa, California             116
Monroe, Wisconsin               177   Morrow, Ohio                   116
Sutter, California              175   Cross, Arkansas                115
St. Landry, Louisiana           175   Labette, Kansas                115
Walsh, North Dakota             174   Duplin, North                  115
                                       Carolina
Lonoke, Arkansas                173   Craig, Oklahoma                115
Tuscola, Michigan               173   Hockley, Texas                 115
Stearns, Minnesota              171   Terry, Texas                   115
Addison, Vermont                168   Acadia, Louisiana              114
Kittson, Minnesota              165   Shiawassee, Michigan           114
Traill, North Dakota            163   Thayer, Nebraska               114
Jackson, Iowa                   162   Washington, New York           114
Phillips, Arkansas              161   Sanpete, Utah                  114
Pembina, North Dakota           161   Grady, Oklahoma                113
Grant, North Dakota             159   Rockingham, Virginia           113
Carroll, Iowa                   158   Marion, Oregon                 112
Charles Mix, South              158   Matagorda, Texas               112
 Dakota
Sandusky, Ohio                  157   Weld, Colorado                 111
Marathon, Wisconsin             155   Warren, Illinois               111
Fond Du Lac, Wisconsin          154   Fayette, Iowa                  111
Hancock, Illinois               153   Catahoula, Louisiana           111
Hillsdale, Michigan             151   Sheridan, Nebraska             111
Grant, Washington               151   Shelby, Illinois               110
Bingham, Idaho                  150   Pulaski, Kentucky              110
Murray, Minnesota               150   Richland, Illinois             109
Cavalier, North Dakota          150   Stephenson, Illinois           109
Parmer, Texas                   150   Kiowa, Oklahoma                109
Lubbock, Texas                  150   Meade, South Dakota            109
Jefferson Davis,                149   Polk, Wisconsin                109
 Louisiana
Roseau, Minnesota               149   Sumner, Kansas                 108
Lyon, Iowa                      148   Nowata, Oklahoma               108
Hopkins, Texas                  148   Lamb, Texas                    108
Franklin, Vermont               148   Mississippi, Arkansas          107
Knox, Nebraska                  147   Grant, Indiana                 107
Dodge, Nebraska                 147   Richland, Montana              107
Minidoka, Idaho                 146   Cass, North Dakota             107
Harmon, Oklahoma                146   Umatilla, Oregon               107
Iowa, Wisconsin                 146   Union, South Dakota            107
Hutchinson, South               145   Orleans, Vermont               107
 Dakota
Sauk, Wisconsin                 145   Trempealeau,                   107
                                       Wisconsin
Sioux, Iowa                     144   Lee, Arkansas                  106
Garfield, Oklahoma              143   Meeker, Minnesota              106
Dawson, Nebraska                142   Stoddard, Missouri             106
Oconto, Wisconsin               142   Kay, Oklahoma                  106
Buena Vista, Iowa               141   Dane, Wisconsin                106
Reno, Kansas                    139   Colquitt, Georgia              105
Haskell, Oklahoma               139   Carroll, Arkansas              104
East Carroll,                   138   Poinsett, Arkansas             104
 Louisiana
Madison, Louisiana              138   Knox, Illinois                 103
Chicot, Arkansas                137   Adams, Illinois                103
Stanislaus, California          137   Harrison, Kentucky             103
Okmulgee, Oklahoma              136   Barry, Missouri                103
Saluda, South Carolina          136   Otoe, Nebraska                 103
Mitchell, Georgia               134   Stutsman, North                103
                                       Dakota
Greene, Illinois                134   Hawaii, Hawaii                 102
Concordia, Louisiana            134   Winneshiek, Iowa               102
Spink, South Dakota             134   Ottawa, Ohio                   102
Washington, Kansas              133   Beckham, Oklahoma              102
Grand Forks, North              133   Bryan, Oklahoma                102
 Dakota
Douglas, South Dakota           133   Nacogdoches, Texas             102
Franklin, Washington            132   Falls, Texas                   102
Tensas, Louisiana               131   Twin Falls, Idaho              101
Gratiot, Michigan               131   Lyon, Minnesota                101
San Joaquin,                    130   Nobles, Minnesota              101
 California
Hardin, Ohio                    130   Scotts Bluff,                  101
                                       Nebraska
Barron, Wisconsin               130   Butler, Nebraska               101
Iowa, Iowa                      129   Herkimer, New York             101
Lenawee, Michigan               129   Emmons, North Dakota           101
Lac Qui Parle,                  129   Fulton, Illinois               100
 Minnesota
St. Lawrence, New York          129   Christian, Kentucky            100
Cassia, Idaho                   128   Plymouth,                      100
                                       Massachusetts
Breckinridge, Kentucky          128   Norman, Minnesota              100
Redwood, Minnesota              128   Custer, Nebraska               100
Fresno, California              127   Choctaw, Oklahoma              100
Morton, North Dakota            127   Outagamie, Wisconsin           100
------------------------------------------------------------------------
* Total Number of Farmers With Either a Direct or Guaranteed FSA Loan in
  FY 2010.

Attachment 3

                Counties Highly Dependent on FSA Lending
                (50%+ of all farmers using FSA financing)
------------------------------------------------------------------------
                                                              Percent of
               FSA       Percent of                 FSA          all
 County,     Financed   all  Farmers   County,    Financed     Farmers
  State     Farmers *    Financed by    State    Farmers *   Financed by
                           FSA **                               FSA **
------------------------------------------------------------------------
Graham,             29       54.72%   Daniels,           76       50.00%
 Arizona                               Montana
Phillips,          161      100.00%   Nance,             90       53.89%
 Arkansas                              Nebrask
                                       a
Chicot,            137      100.00%   Dawes,             97       53.01%
 Arkansas                              Nebrask
                                       a
Lee,               106      100.00%   Frontier           76       51.70%
 Arkansas                              ,
                                       Nebrask
                                       a
Desha,             120       94.49%   Hayes,             63       51.22%
 Arkansas                              Nebrask
                                       a
Conway,            247       88.21%   Hidalgo,           32       50.00%
 Arkansas                              New
                                       Mexico
St.                 83       72.81%   Martin,            71       78.02%
 Francis,                              North
 Arkansas                              Carolin
                                       a
Lonoke,            173       72.69%   Bertie,            66       67.35%
 Arkansas                              North
                                       Carolin
                                       a
Cross,             115       72.33%   Tyrrell,           17       65.38%
 Arkansas                              North
                                       Carolin
                                       a
Monroe,             64       70.33%   Northamp           74       60.66%
 Arkansas                              ton,
                                       North
                                       Carolin
                                       a
Prairie,            99       69.72%   Sioux,             80       78.43%
 Arkansas                              North
                                       Dakota
Ashley,             77       62.60%   Traill,           163       66.80%
 Arkansas                              North
                                       Dakota
Woodruff,           63       58.88%   Pembina,          161       64.14%
 Arkansas                              North
                                       Dakota
Mississip          107       54.87%   Grant,            159       63.60%
 pi,                                   North
 Arkansas                              Dakota
Poinsett,          104       54.45%   Steele,            86       56.95%
 Arkansas                              North
                                       Dakota
Martin,             84       88.42%   Seneca,           276       62.73%
 Florida                               Ohio
Baker,              54       96.43%   Hancock,          224       59.89%
 Georgia                               Ohio
Mitchell,          134       79.76%   Wood,             234       57.07%
 Georgia                               Ohio
Pulaski,            33       70.21%   Sandusky          157       55.67%
 Georgia                               , Ohio
Terrell,            44       65.67%   Ottawa,           102       54.55%
 Georgia                               Ohio
Lee,                42       63.64%   Harmon,           146      100.00%
 Georgia                               Oklahom
                                       a
Calhoun,            36       54.55%   Greer,             87       50.58%
 Georgia                               Oklahom
                                       a
Colquitt,          105       53.57%   Haskell,          139       50.18%
 Georgia                               Oklahom
                                       a
Marion,             25       52.08%   Saluda,           136      100.00%
 Georgia                               South
                                       Carolin
                                       a
Miller,             48       50.00%   Barnwell           67       94.37%
 Georgia                               , South
                                       Carolin
                                       a
Butte,              64       68.09%   Marlboro           59       92.19%
 Idaho                                 , South
                                       Carolin
                                       a
Minidoka,          146       59.35%   Dillon,            59       88.06%
 Idaho                                 South
                                       Carolin
                                       a
Cassia,            128       51.00%   Clarendo           93       75.00%
 Idaho                                 n,
                                       South
                                       Carolin
                                       a
Greene,            134       63.21%   Williams           82       72.57%
 Illinois                              burg,
                                       South
                                       Carolin
                                       a
Saline,             59       51.75%   Lee,               58       63.74%
 Illinois                              South
                                       Carolin
                                       a
Grant,             107       53.77%   Darlingt           58       50.43%
 Indiana                               on,
                                       South
                                       Carolin
                                       a
Logan,              60       54.55%   Douglas,          133       70.00%
 Kansas                                South
                                       Dakota
Pratt,              86       51.19%   Bennett,           83       60.14%
 Kansas                                South
                                       Dakota
Fulton,             41       65.08%   Jackson,           86       59.31%
 Kentucky                              South
                                       Dakota
Hickman,            65       56.52%   Shannon,           53       58.89%
 Kentucky                              South
                                       Dakota
Richland,          221      100.00%   Custer,            53       56.99%
 Louisian                              South
 a                                     Dakota
Vermilion          212      100.00%   Potter,            57       55.34%
 ,                                     South
 Louisian                              Dakota
 a
West               219      100.00%   Jones,             39       54.17%
 Carroll,                              South
 Louisian                              Dakota
 a
Concordia          134      100.00%   Haakon,            76       51.35%
 ,                                     South
 Louisian                              Dakota
 a
Madison,           138      100.00%   Crockett          120      100.00%
 Louisian                              ,
 a                                     Tenness
                                       ee
Pointe             125      100.00%   Haywood,          124       90.51%
 Coupee,                               Tenness
 Louisian                              ee
 a
East               138      100.00%   Tipton,            97       70.80%
 Carroll,                              Tenness
 Louisian                              ee
 a
Tensas,            131      100.00%   Dyer,              80       50.63%
 Louisian                              Tenness
 a                                     ee
St.                 47       95.92%   Lake,              13       50.00%
 Martin,                               Tenness
 Louisian                              ee
 a
St.                175       88.83%   Hale,             260       95.94%
 Landry,                               Texas
 Louisian
 a
Morehouse          126       88.73%   Baylor,            58       75.32%
 ,                                     Texas
 Louisian
 a
Acadia,            114       86.36%   Parmer,           150       73.17%
 Louisian                              Texas
 a
Jefferson          149       86.13%   Swisher,          117       73.13%
 Davis,                                Texas
 Louisian
 a
Iberia,             55       82.09%   Wilbarge           95       67.38%
 Louisian                              r,
 a                                     Texas
Franklin,          250       78.86%   Terry,            115       64.25%
 Louisian                              Texas
 a
Caldwell,           44       74.58%   Reeves,            29       61.70%
 Louisian                              Texas
 a
Catahoula          111       70.25%   Refugio,           29       61.70%
 ,                                     Texas
 Louisian
 a
Avoyelles          125       63.78%   Briscoe,           46       54.12%
 ,                                     Texas
 Louisian
 a
Evangelin           70       61.95%   Hockley,          115       53.49%
 e,                                    Texas
 Louisian
 a
lberville           26       57.78%   Crosby,            68       51.91%
 ,                                     Texas
 Louisian
 a
St. Mary,           18       56.25%   Matagord          112       50.91%
 Louisian                              a,
 a                                     Texas
Aroostook          183       72.33%   Dawson,            86       50.00%
 , Maine                               Texas
Hancock,            18       64.29%   Cottle,            36       50.00%
 Maine                                 Texas
Presque             33       52.38%   Garfield           37       94.87%
 Isle,                                 , Utah
 Michigan
Kittson,           165       70.51%   Piute,             52       83.87%
 Minnesot                              Utah
 a
Mahnomen,           76       57.14%   Emery,            117       82.39%
 Minnesot                              Utah
 a
Humphreys           77       90.59%   San                53       79.10%
 ,                                     Juan,
 Mississi                              Utah
 ppi
Jasper,             95       84.07%   Wayne,             46       64.79%
 Mississi                              Utah
 ppi
Calhoun,            90       66.67%   Beaver,            50       59.52%
 Mississi                              Utah
 ppi
Sunflower           86       61.43%   Carbon,            27       50.94%
 ,                                     Utah
 Mississi
 ppi
Quitman,            49       59.76%   Addison,          168       63.88%
 Mississi                              Vermont
 ppi
Tallahatc           76       58.02%   Franklin          148       58.73%
 hie,                                  ,
 Mississi                              Vermont
 ppi
Webster,            30       56.60%   Nicholas           29       63.04%
 Mississi                              , West
 ppi                                   Virgini
                                       a
Washingto           76       56.30%   Monroe,            94       57.67%
 n,                                    West
 Mississi                              Virgini
 ppi                                   a
Newton,             76       51.01%   Roane,             64       50.79%
 Mississi                              West
 ppi                                   Virgini
                                       a
Dunklin,           124       59.05%   Lafayett          504       77.90%
 Missouri                              e,
                                       Wiscons
                                       in
Pemiscot,           67       53.17%   Ashland,           35       66.04%
 Missouri                              Wiscons
                                       in
Richland,          107       54.04%   Bayfield           60       57.69%
 Montana                               ,
                                       Wiscons
                                       in
Pondera,           120       51.50%
 Montana
------------------------------------------------------------------------
* Total Number of Farmers Indebted for Either a Direct or Guaranteed FSA
  Loan in 2010.
** As share of farmers in the county with >$500 int. in 2007 Census.


                   States with FSA Dependent Counties
------------------------------------------------------------------------
                State                              Counties
------------------------------------------------------------------------
                           Louisiana                          21
                      Texas                                   14
                   Arkansas                                   14
                Mississippi                                    9
                    Georgia                                    9
               South Dakota                                    8
             South Carolina                                    8
                       Utah                                    7
                  Tennessee                                    5
                       Ohio                                    5
               North Dakota                                    5
             North Carolina                                    4
                   Nebraska                                    4
                  Wisconsin                                    3
              West Virginia                                    3
                   Oklahoma                                    3
                    Montana                                    3
                      Idaho                                    3
                    Vermont                                    2
                   Missouri                                    2
                  Minnesota                                    2
                      Maine                                    2
                   Kentucky                                    2
                     Kansas                                    2
                   Illinois                                    2
                 New Mexico                                    1
                   Michigan                                    1
                    Indiana                                    1
                    Florida                                    1
------------------------------------------------------------------------

    For additional explanation of rationale behind development of these 
tables, please refer to document fsaconcentration.docx.
                                 ______
                                 
                          Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. 
        Department of Agriculture
Questions Submitted By Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. On the term limits for guaranteed borrowers issue, can 
you provide us a breakdown of how many producers have been using the 
program for more than 15 years and how many borrowers for each year 
beyond the 15th?
    Answer. FSA currently has 4,558 borrowers who have received loans 
through the guaranteed operating loan program or a combination of the 
direct and guaranteed operating loan programs for more than 15 years. 
An additional 1,503 borrowers will only be able to utilize the program 
for one more year and another 2,189 borrowers will only be able to 
utilize the program for two more years.

    Question 2. The 2008 Farm Bill reestablished a separate 
conservation loan program at FSA. Can you tell us how much interest 
there was in the program before the funding for FY11 got cut in the 
continuing resolutions? Did you get any money out the door?
    Answer. Since the implementation of the Conservation Loan program 
in August 2010, FSA has approved and funded 231 direct conservation 
loans totaling $16,351,101 and three guaranteed loan requests totaling 
$703,500.
Question Submitted By Hon. William L. Owens, a Representative in 
        Congress from New York
    Question. As you may know, two types of business structures that 
are increasingly common among family farms do not qualify for loans 
through FSA. Today many family farms have both a farm ownership LLC and 
farm operating LLC to facilitate ownership of multiple family members. 
This may be done for liability protection and to facilitate the 
transfer of a farm business between generations. However, because the 
operator of the farm does not own the farm, the farm is not eligible 
for a loan. Farms operating with an embedded entity structure to 
facilitate estate planning are also currently ineligible for an FSA 
guarantee. In your view, is access to credit through FSA for family 
farms with these business structures an issue that needs to be 
addressed?
    Answer. Current statute prevents operators with multiple or 
embedded entities from receiving a loan guarantee through FSA. Removing 
this statutory restriction would allow FSA to assist family farms using 
more complex organizational structures, such as multiple or embedded 
entities. USDA is available to provide technical assistance to Members 
on this or any other statutory matter.
                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    Farm Ownership Loan (FO).
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    Through its nationwide network of service centers, often in 
geographically isolated areas with few private or commercial lenders, 
FSA provides agricultural financing to small and family size farmers 
and ranchers for farm ownership purposes, including costs associated 
with acquiring or enlarging a farm or ranch or to make a down payment 
of a farm or ranch; make capital improvements to a farm owned by the 
applicant, for construction, purchase or improvement of farm dwellings, 
service buildings or other facilities and improvements essential to the 
farming operation; promote soil and water conservation and protection; 
pay loan closing costs; and to refinance a bridge loan under specific 
and limited conditions.
    FO loans are sub-categorized by targeted funding type, i.e., 
regular interest rate eligible; limited resource rate; Socially 
Disadvantaged Applicant; and Beginning Farmer and/or Beginning Farmer 
Socially Disadvantaged Applicant. There is no limited resource 
Guaranteed FO loan.
    In addition to the aforementioned FO loan types, FSA offers two 
other subprograms under the main FO umbrella: Participation FO and 
Beginning Farmer Down Payment loans. Each of these sub-categories are 
further identified by targeting Socially Disadvantaged FO loan 
applicants by ethnicity and gender to broaden and ensure availability 
of limited appropriations for all members of the agricultural 
community. For example, an FO loan application can be funded as 
``Direct FO--Beginning Farmer Down Payment--Socially Disadvantaged--
Gender.''

    Direct FO--Participation

    A Direct FO Participation loan is made as part of a joint financing 
arrangement and the amount of FSA's loan does not exceed 50 percent of 
the total amount financed. In such arrangements, an applicant may 
obtain financing from a commercial lender, a state program, or the 
seller of a farm. The other lender's portion of the loan may be 
guaranteed by FSA. Utilization of this program allows FSA to extend 
credit to more farmers than the Agency would be able to finance if the 
farmer relied solely on FSA Direct or Guaranteed loan funding.

    Direct FO--Beginning Farmer Down Payment

    Down Payment FO loans are used to partially finance the purchase of 
a family farm by an eligible Beginning Farmer or Socially Disadvantaged 
Applicant. This is the only FSA loan program that requires the loan 
applicant to provide a minimum downpayment of five percent of the 
purchase price of the farm. Additional limitations specific to the 
Beginning Farmer Down Payment FO loan is that the maximum FSA loan 
amount is not tied to the statutory limitations. Rather, Down Payment 
loans may not exceed 45 percent of the lessor of: (1) the purchase 
price; (2) the appraised value of the farm to be acquired; or (3) 
$500,000. Financing provided by FSA and all other creditors must not 
exceed 95 percent of the purchase price. Any financing provided by 
eligible lenders may be guaranteed by FSA.

    Direct FO--Socially Disadvantaged Applicant (SDA)

    A Socially Disadvantaged loan applicant is not a program type; 
rather it distinguishes a specific funding source. Therefore, the loan 
process and all loan requirements are identical for SDA applicants to 
those for non-SDA applicants. To be eligible for SDA loan 
consideration, the applicant must belong to a socially disadvantaged 
group whose members have been subject to racial, ethnic or gender 
prejudice, which includes American Indians or Alaskan Natives, Asians, 
Blacks or African Americans, Native Hawaiians or other Pacific 
Islanders, Hispanics, and women. Loan applicants must voluntarily 
provide his or her ethnicity, race and gender on the loan application. 
If an applicant does not voluntarily provide this information, targeted 
funding will not be available. Direct FO assistance for SDA applicants 
is available for all FO purposes and authorities.

    Guaranteed FO

    An FSA Guaranteed FO loan is a contract between the loan applicant 
and commercial lender that allows for the extension of financial credit 
for a period not to exceed 40 years. FSA guarantees the loan against 
possible loss up to 95 percent principal and interest.

    Guaranteed--Beginning Farmer/Rancher

    Beginning farmer loans are targeted to loan applicants who have not 
operated a farm or ranch for more than 10 years and do not own real 
farm property, directly or indirectly, which does not exceed 30 percent 
of the median acreage of the farms in the county where the property is 
located. FSA guarantees the loan against possible loss up to 95 percent 
of principal and interest.

    Guaranteed--Socially Disadvantaged Applicant

    A Socially Disadvantaged loan applicant is not a program type; 
rather it distinguishes a specific funding source. To be eligible for 
SDA loan consideration, the applicant must belong to a socially 
disadvantaged group whose members have been subject to racial, ethnic 
or gender prejudice, which includes American Indians or Alaskan 
Natives, Asians, Blacks or African Americans, Native Hawaiians or other 
Pacific Islanders, Hispanics, and women. FSA issues a guarantee that 
protects the lender against possible loss up to 95 percent of principal 
and interest.

    3. Brief History

    The Farm and Rural Development Act, as amended, Subtitle B, 
Sections 311-317, Public Law 92-419, 7 U.S.C. 1942 enabled operators of 
not larger than family farms, through the extension of credit and 
supervisory assistance, to make efficient use of their land, labor, and 
other resources, and to establish and maintain financially viable 
farming and ranching operations.
    Title III of the Agricultural Act of 1961, The Consolidated Farm 
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006, provided a major overhaul and expansion of farm 
lending authorities.
    The 1978 Agriculture Credit Act changed existing programs by 
authorizing farm loans to family corporations, cooperatives, and 
partnerships as well as to individuals; changed the interest rate for 
farm ownership loans so that the rate is now based on the cost of 
borrowing to the government; and limited resource farmers and limited 
resource rates were identified and established.
    The Food Security Act of 1985 (December 23, 1985) made major 
changes in farm loan eligibility and provided protections for borrowers 
undergoing serious financial difficulty. Loan eligibility was expanded 
to include ``joint operators'' and persons related by blood or 
marriage.
    Targeted participation rates for Direct and Guaranteed FO loans are 
found in the Agricultural Credit Act of 1987 (January 6, 1988), Section 
355 of the CONACT.
    FO Down Payment loans were authorized through the Agricultural 
Credit Improvement Act of 1992 (October 29, 1992), Section 310E of the 
CONACT. Section 246(b)(2) of this same Act contains the authorities for 
targeted funds to beginning farmers. This Act also provided for the 
inclusion of women in the definition of Socially Disadvantaged 
Applicants.
    Through the Federal Agriculture Improvement and Reform (FAIR) Act 
of 1995 (April 4, 1996), Public Law 104-127, farm lending programs were 
reauthorized, placing new restrictions on loan purposes and the length 
of time borrowers are eligible for new credit assistance. This law also 
established the targeted funding for beginning farmers.
    In Fiscal Year 1988, FSA was given authority to offer FO-SDA loans.
4. Purpose/Goals
    The basic objective of the FO loan program is to provide credit and 
management assistance to eligible farmers and ranchers to become owner-
operators of family-sized farms or to continue such operations when 
credit is not available elsewhere. FSA's farm ownership loan assistance 
enables family-farm operators to procure land and to improve their 
living and financial conditions so that they can graduate fully to 
commercial credit.
    FSA direct loans facilitate the provision of credit, which can help 
support low farm family incomes, assist minority and beginning farmers, 
or help farmers adopt new technology that will make their farming 
operations more economical. FSA has the responsibility of providing 
credit counseling and supervision to its direct borrowers by making a 
thorough assessment of the farming operation. The Agency helps 
applicants evaluate the adequacy of the real estate and facilities, 
machinery and equipment, financial and production management, and the 
farmer's goals. FSA assists the applicant in identifying and 
prioritizing areas needing improvement in all phases of the operation. 
An FSA official then works one-on-one with the farmer to develop and to 
help strengthen the identified areas that ultimately result in the 
farmer's graduation to commercial credit.
     Because special skills may be needed to evaluate farm loans, and 
because much farm production occurs in geographically isolated areas 
that have few lenders, some farmers may face less competitive markets 
for their loans that can result in higher rates, less favorable terms, 
and/or no access to loan funds. Farmers may have trouble demonstrating 
their credit worthiness to lenders because of the economic 
uncertainties of production agriculture as well. This can be 
particularly true for beginning farmers, women, and minorities, as they 
typically operate smaller farms, have less equity, or lack a sufficient 
credit or production histories. To address these issues, each year FSA 
allocates a share of loan funding for use by beginning farmers and 
socially disadvantaged, including racial, ethnic minorities, and women 
farmers, who by statute are deemed more likely to have problems 
accessing needed credit than other high-risk family-sized farm 
borrowers.
    The Guaranteed Loan Program plays an important role in facilitating 
the extension of credit to farmers, not only through collaboration with 
partner lenders but also with FSA's Direct Loan Program. Often times a 
borrower's credit needs are met through a combination of a Guaranteed 
loan and an FSA direct loan. For example, a Farm Ownership loan will be 
made by a commercial lender with an FSA guarantee to purchase farmland 
and the borrower will also obtain a direct operating loan from FSA to 
cover annual operating expenses.
    The ``credit gaps'' which farm loan guarantees are designed to fill 
are associated with farm businesses that usually have debt burdens and/
or repayment capacities that do not meet private sector lending 
standards. These high-risk farms might fail to meet industry standards 
due to a lack of production or credit history, limited equity, being a 
start-up business, defined as 10 or less years of farming experience, 
or by being able to offer only single purpose collateral. Another 
factor limiting access to capital is that some farm production occurs 
in geographically isolated areas that tend to have fewer lenders 
specializing in agricultural lending. As a result, farmers may face 
limited competition loans in these areas, which can result in higher 
interest rates, unfavorable loan terms, and/or a shortage of loan 
funds. By reducing the lenders' exposure to risk, the 90 to 95 percent 
guarantee provided lenders on eligible farm loans allows farmers to 
obtain loans to finance annual operating expenses, equipment, 
livestock, and farmland purchases and improvements.
5. Success in Meeting Programmatic Purpose/Goals
    FSA has been very successful in accomplishing its long-term 
performance goals for the Farm Ownership Loan Program. Loss rates, 
delinquency rates, and lending to beginning farmers, minorities, and 
women have all shown significant long-term progress.
    Reduce First Year Delinquency Rates on New Loans: The 1st year 
delinquency rate is calculated based on the number of new loans issued 
in the previous calendar year and is primarily and indicator of credit 
quality. The formula is the total number of delinquent first year loans 
plus any first year loans restructured divided by the total number of 
loans issued in the previous calendar year. Note: Data reported is for 
all Direct FO and Operating Loans (OL) loans, Guaranteed loans are not 
included.

------------------------------------------------------------------------
             Fiscal Year                      Actual Performance
------------------------------------------------------------------------
                       2007                                 7.4%
                       2008                                 6.2%
                       2009                                10.5%
                       2010                                 9.2%
                       2011
------------------------------------------------------------------------

    Increase Lending to Minorities, Woman, and Beginning Farmers and 
Ranchers: FSA establishes annual performance goals to increase its 
lending to beginning and socially disadvantaged farmers. Performance is 
measured by calculating the percentage of total loan obligations in a 
given fiscal year that are issued to farmers in the targeted groups. 
Note: Data reported is for all Direct and Guaranteed FO and OLs.

------------------------------------------------------------------------
             Fiscal Year                      Actual Performance
------------------------------------------------------------------------
                       2007                                40.7%
                       2008                                43.2%
                       2009                                41.0%
                       2010                                37.7%
                       2011
------------------------------------------------------------------------

    Reduce the Average Processing Time for Direct and Guaranteed Loan 
Applications: A core component of FSA's mission is to provide an 
economic safety net for America's farmers and ranchers. Therefore, it 
is important that financial assistance is provided timely when the need 
arises. The average processing time is calculated from the date of 
application receipt until the date a loan decision is made. Note: Data 
reported includes the average processing time for FO and OL loans.

------------------------------------------------------------------------
    Program Category            Fiscal Year          Actual Performance
------------------------------------------------------------------------
            Direct FO                      2007               27.0 days
                                           2008               27.8 days
                                           2009               29.9 days
                                           2010               30.8 days
                                           2011
------------------------------------------------------------------------
        Guaranteed FO                      2007               12.6 days
                                           2008                8.6 days
                                           2009               8.75 days
                                           2010              10.24 days
                                           2011
------------------------------------------------------------------------

    Decrease Delinquency Rates for Direct and Guaranteed Loans: A low 
delinquency rate indicates that borrowers are experiencing greater 
success in meeting their financial obligations, which is an indicator 
of greater financial strength and viability. The Direct Delinquency 
rate is calculated by dividing the amount delinquent by the unpaid 
principal plus unpaid interest held by all Direct loan borrowers. The 
loan delinquency rate performance measure for FSA Guaranteed loans is 
calculated by taking the total amount past due, as reported by lenders 
nationwide on form FSA-2248, ``Guaranteed Farm Loan Default Status 
Report'', divided by the total amount outstanding on all guaranteed 
loans nationwide.

------------------------------------------------------------------------
    Program Category            Fiscal Year          Actual Performance
------------------------------------------------------------------------
            Direct FO                      2007                    7.1%
                                           2008                    6.5%
                                           2009                    6.3%
                                           2010                    5.9%
                                           2011
------------------------------------------------------------------------
        Guaranteed FO                      2007                   1.32%
                                           2008                   1.18%
                                           2009                   1.69%
                                           2010                   1.69%
                                           2011
------------------------------------------------------------------------

    Decrease the Loss Rate for Direct and Guaranteed Loans: Low loss 
rates indicate that borrowers are experiencing greater success in 
meeting their financial obligations, which is an indicator of financial 
strength and economic viability. The Direct Loss rate is calculated by 
dividing the amount of losses processed during the fiscal year by the 
amount of unpaid principal at the beginning of the fiscal year. The 
Guaranteed Loss rate is calculated by dividing the amount of losses 
processed during the fiscal year by the amount unpaid principal at the 
beginning of the fiscal year.

------------------------------------------------------------------------
    Program Category            Fiscal Year          Actual Performance
------------------------------------------------------------------------
            Direct FO                      2007                    2.3%
                                           2008                    1.6%
                                           2009                    0.8%
                                           2010                    1.1%
                                           2011
------------------------------------------------------------------------
        Guaranteed FO                      2007                   0.30%
                                           2008                   0.33%
                                           2009                   0.39%
                                           2010                   0.58%
                                           2011
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
    See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
    See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
    See Attachment 3.
9. Eligibility Criteria
    The eligibility criteria for all FO loan applicants include the 
following:

   Have no disqualifying convictions for controlled substances, 
        including drug trafficking and possession;

   Possess the legal capacity to incur the obligation of the 
        loan

   Be a citizen of the United States, a United States non-
        citizen national, or a qualified alien under applicable Federal 
        immigration laws;

   Have an acceptable credit history demonstrated by debt 
        repayment;

   Have not caused the Agency a loss by receiving debt 
        forgiveness;

   Have not received debt forgiveness or incurred a loss to the 
        government relating to a guaranteed loan loss;

   Have the inability to obtain credit elsewhere, with or 
        without an FSA guarantee;

   Not be in delinquent status on any Federal debt, excluding 
        debt under the Internal Revenue Code of 1986 at the time of 
        loan closing;

   Have no outstanding unpaid judgments obtained by the United 
        States in any court, excluding those filed as a result of 
        action in the United States Tax Courts;

   May not be ineligible due to disqualification resulting from 
        Federal Crop Insurance violation(s) according to 7 CFR 718;

   Have sufficient farm managerial ability as demonstrated by a 
        combination of education, on-the-job training, and farming 
        experience;

   Must agree to meet borrower training requirements, if FSA 
        determines the training to be necessary for success; and

   Be the owner-operator or tenant-operator of a family farm or 
        ranch.

    The loan eligibility criterion for an FO loan to a Socially 
Disadvantaged Applicant, including women, includes all general 
eligibility requirements outlined above. As stated previously, a 
Socially Disadvantaged loan only specifies a funding source. Therefore, 
the loan process and all loan requirements are identical for SDA 
applicants to those for non-SDA applicants. Loan applicants must 
voluntarily provide his or her ethnicity, race, and gender on the loan 
application to qualify for the targeted funding.
    Specific to the Direct FO loan program is the requirement that the 
applicant, or one or more members constituting a majority interest of 
an entity applicant, must have participated in the business operations 
of a farm or ranch for at least 3 years out of the 10 years prior to 
the date the application is submitted. The factors to determine 
participation in the business operations of a farm are similar to those 
for determining adequate farming experience necessary to ensure a 
reasonable prospect of success.
    The Direct FO program also has term limits attached to it. To meet 
the program-specific eligibility requirement, the loan applicant must: 
(1) meet the definition of a beginning farmer; (2) have not had a 
Direct FO loan outstanding for more than a total of 10 years prior to 
the date the new FO loan is closed; or (3) have never received a Direct 
FO loan.
10. Utilization (Participation) Data

                                  Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
                            FY 2007            FY 2008           FY 2009           FY 2010          FY 2011 *
----------------------------------------------------------------------------------------------------------------
        Direct FO                 303                382               560               702               425
    Guaranteed FO                 949              1,170             1,272             1,605             1,456
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
    FSA Guaranteed Farm Loan Program serve separate purposes and are 
generally not duplicative with other Federal and state credit programs. 
While other Federal or state credit programs are available to family 
farm businesses, these programs lack national scope, are focused on 
narrow market segments, and are not specifically designed to serve 
high-risk farm businesses. FSA's Direct Farm Loan Program serves high-
risk farmers with similar purposes, but this program is designed to 
assist even less creditworthy borrowers; those unable to obtain credit, 
even with a Federal loan guarantee. Studies of the economic profiles of 
both Direct and Guaranteed program participants indicate the two 
delivery systems serve different high-risk borrower segments. In 
addition, the FSA Direct Loan Program is narrower in scope because of 
the more limited funding and is more highly targeted to underserved 
market segments of beginning start-up farm operations and socially 
disadvantaged borrowers.
    Across other Federal agencies, the Small Business Administration 
(SBA), and USDA's Rural Business Service (RBS) provide loan guarantee 
programs that may serve agriculture. The RBS loan guarantee programs do 
not duplicate those of FSA because they serve agribusiness and value-
added farm enterprises. The SBA programs are not designed to meet 
specialized agricultural needs and participating SBA lenders' program 
delivery is geographically limited. In FY 2007, SBA accounted for only 
3.5 percent of all federally guaranteed loans made to farmers, with FSA 
accounting for the remainder. Many SBA agricultural loan guarantees are 
made to farms that would not meet FSA eligibility requirements. Overlap 
between FSA and SBA was mostly limited to poultry and nursery farms.
    Some state governments also provide farm loan guarantees, but 
funding and geographic coverage for such programs is limited. The 
National Council of State Agricultural Finance Programs indicates that 
only 18 states have an established loan guarantee program. However, 
only four states have programs that are actively providing loan 
guarantees to farmers. State programs typically target specific 
purposes, such as value-added or single-purpose livestock facilities, 
have limited or sporadic funding, or limited geographical availability, 
hence seldom duplicating FSA loan objectives. Again, eligibility 
criteria and intended purposes differ significantly from FSA Direct and 
Guaranteed Loan Programs, and funding can be sporadic. A more common 
type of state financing assistance is provided through ``Aggie Bonds,'' 
which are tax exempt bonds, issued by states under specific eligibility 
requirements.
12. Waste, Fraud and Abuse
    FSA has a robust internal controls program for its farm loan 
programs, which consists of OMB Circular A-123 reviews, Farm Loan 
Program Risk Assessments, the County Operations Review program, Lender 
Reviews, and National Office Loan Origination File Reviews. 
Additionally, farm loan programs are subject to periodic audit and 
review by the Office of Inspector General and the Government 
Accountability Office. No material weaknesses related to fraud, waste, 
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Emergency Loan (EM).
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    Emergency loans may be categorized as being a: (1) real estate 
physical loss; (2) chattel physical loss; or (3) a production loss.

    Real Estate Physical Loss

    EM loan funds for real estate physical losses may only be used to 
repair or replace essential property damaged or destroyed as a result 
of a disaster for purchasing real estate, if authorized; establishing a 
new site for a farm dwelling and service buildings outside of a flood 
or mudslide area; soil and water conservation, land and water resource 
placement and land and water development when existing structures are 
damaged or destroyed during the disaster.

    Chattel Physical Loss

    EM loan funds may be used for chattel physical losses only to 
repair or replace essential property damaged or destroyed as a result 
of a disaster to purchase livestock or farm equipment; repair or 
replace household contents damaged by the disaster; pay the costs to 
restore perennials which produce an agricultural commodity; pay family 
living expenses and farm operating expenses for farmers and ranchers 
suffering from livestock losses or losses to stored crops held for 
sale; or for refinancing farm-related debts caused by the designated or 
declared disaster.

    Production Loss

    Production losses to agricultural commodities are eligible for FSA 
EM loan assistance to pay costs associated with reorganizing the farm 
or ranch; to pay annual operating expenses; pay costs associated with 
Federal or state-approved standards under the Occupational Safety and 
Health Act of 1970 (19 U.S.C. 655 and 667); pay essential family living 
expenses; or refinance farm debt which resulted from the designated or 
declared disaster.
3. Brief History
    Federal Farm Loan Act of 1916--Emergency crop and seed loans.
    Disaster Loan Act of 1949--Emergency farm loans.
    Rural Development Act of 1972, Section 321 of the CONACT--Emergency 
Loan Program.
    Title III of the Agricultural Act of 1961, The Consolidated Farm 
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006.
4. Purpose/Goals
    EM loans are made to eligible loan applicants who have incurred 
substantial financial losses from a natural disaster or quarantine. 
These disasters may be either Presidential declarations or declared by 
the Secretary of Agriculture.
5. Success in Meeting Programmatic Purpose/Goals
    Performance in the EM program is consistent with other farm loan 
programs in terms of loan processing timeliness, delinquency rates, and 
losses. These results are especially noteworthy considering the very 
high risk nature of these loans, as they are issued to borrowers who 
have suffered financial losses resulting from natural disaster.
6. Annual Budget Authority (FY 2002-FY 2011)
    See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
    See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
    See Attachment 3.
9. Eligibility Criteria
    Emergency loans may be made to farmers and ranchers who:

   Own or operate land located in a county declared by the 
        President or designated by the Secretary of Agriculture as a 
        primary disaster area or quarantine area. All counties 
        contiguous to the declared, designated, or quarantined primary 
        counties also are eligible for emergency loans. A disaster 
        designation by the FSA administrator authorizes emergency loan 
        assistance for physical losses only in the designated and 
        contiguous counties;

   Are established family farm operators and have sufficient 
        farming or ranching experience;

   Are citizens or permanent residents of the United States;

   Have suffered at least a 30 percent loss in crop production 
        or a physical loss to livestock, livestock products, real 
        estate or chattel property;

   Have an acceptable credit history;

   Are unable to receive credit from commercial sources;

   Can provide collateral to secure the loan;

   Have repayment ability; and

   Submit applications within 8 months of the county's disaster 
        or quarantine designation date.

    In addition to eligibility criteria, FSA loan requirements are 
different from those of other lenders. Some of the more significant 
differences are borrowers must keep acceptable farm records, must 
operate in accordance with a farm plan developed with the local FSA 
staff, may be required to participate in a financial management 
training program, and may be required to obtain crop insurance.
    All emergency loans must be fully collateralized. The specific type 
of collateral may vary depending on the loan purpose, repayment ability 
and the individual circumstances of the applicant. If applicants cannot 
provide adequate collateral, their repayment ability may be considered 
as collateral to secure the loan. A first lien is required on property 
or products acquired, produced or refinanced with loan funds.
    Loans for crop, livestock, and non-real estate losses are normally 
repaid within one to 7 years, depending on the loan purpose, repayment 
ability and collateral available as loan security. In special 
circumstances, terms of up to 20 years may be authorized. Loans for 
physical losses to real estate are normally repaid within 30 years but, 
in certain circumstances, may be extended up to a maximum of 40 years.
10. Utilization (Participation) Data

                                  Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
                            FY 2007            FY 2008           FY 2009           FY 2010          FY 2011 *
----------------------------------------------------------------------------------------------------------------
        Emergency                  75               44.9              30.4              35.5                29
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
    The FSA Farm Loan Programs serves separate purposes and is 
generally not duplicative with other Federal and state credit programs. 
While other Federal or state credit programs are available to family 
farm businesses, these programs lack national scope, are focused on 
narrow market segments, and are not specifically designed to serve 
high-risk farm businesses. FSA's EM program serves an even higher-risk 
farmer who have suffered financial setback resulting from natural 
disasters.
    Some state governments also provide farm loan assistance but 
funding and geographic coverage is limited. Emergency assistance, if 
available, would be only available on an ad hoc basis.
12. Waste, Fraud and Abuse
    FSA has a robust internal controls program for its farm loan 
programs, which consists of OMB Circular A-123 reviews, Farm Loan 
Program Risk Assessments, the County Operations Review program, Lender 
Reviews, and National Office Loan Origination File Reviews. 
Additionally, farm loan programs are subject to periodic audit and 
review by the Office of Inspector General and the Government 
Accountability Office. No material weaknesses related to fraud, waste, 
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Operating Loan (OL).
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    Through its nationwide network of service centers, often in 
geographically isolated areas with few private or commercial lenders, 
FSA provides agricultural financing to small and family size farmers 
and ranchers for farm operating costs, including costs associated with 
reorganizing a farm to improve its profitability; farm equipment and 
other chattel purchases; family and annual farm operating expenses; 
refinancing farm related debts; land and water development, and other 
farm needs. Federally regulated lenders with experience in agricultural 
lending are eligible to participate in the FSA Guaranteed Farm Loan 
Program as Standard, Certified, or Preferred Lenders, depending upon 
their experience and level of participation.

    Direct OL

    An annual OL is designed to finance farm operating expenses, family 
living expenses, or small purchase costs that are repayable within one 
year or a maximum of 18 months. The maximum number of years a farmer 
may receive annual direct OL assistance is 7 years, which may be 
consecutive or non-consecutive. There is no limit on the number of 
loans closed in a single year. On a case-by-case basis, it is possible 
for farmers and ranchers to be granted a one-time waiver for an 
additional 2 years of direct loan assistance. This limitation is not 
applicable if the farm or ranch is subject to the jurisdiction of an 
Indian tribe.
    A term OL is designed to finance costs associated with reorganizing 
a farm, such as changing enterprises, production practices, marketing 
methods or purchasing shares in value-added processing and marketing 
cooperatives; land and water development; and other similarly related 
farm expenses. Term Operating loans allow for an extended repayment 
period not to exceed 7 years. The maximum number of years a farmer may 
receive term direct OL assistance is 7 years, which may be consecutive 
or non-consecutive. There is no limit on the number of loans closed in 
a single year. On a case-by-case basis, it is possible for farmers and 
ranchers to be granted a one-time waiver for an additional 2 years of 
direct loan assistance. This limitation is not applicable if the farm 
or ranch is subject to the jurisdiction of an Indian tribe.

    Direct OL--Limited Resource

    A limited resource Direct OL is designed to assist family farmers 
and ranchers unable to develop a farm business plan with a positive 
cash flow and reasonable prospects for loan repayment using FSA's 
regular interest rates. A limited resource interest rate is intended to 
reflect an interest rate below FSA's regular interest rate during 
periods of otherwise high interest rates. Limited resource loans are 
available for all OL loan purposes and authorities with repayment 
periods from one to 7 years depending upon the loan purpose, type of 
security and repayment ability. Limited resource farmers and ranchers 
are expected to graduate to FSA's regular rates and terms upon 
achieving stronger financial solvency. The maximum number of years a 
farmer may receive term Direct OL limited resource assistance is 7 
years, which may be consecutive or non-consecutive. There is no limit 
on the number of loans closed in a single year. On a case-by-case 
basis, it is possible for farmers and ranchers to be granted a one-time 
waiver for an additional 2 years of direct loan assistance. This 
limitation is not applicable if the farm or ranch is subject to the 
jurisdiction of an Indian tribe.

    Direct OL--Rural Youth

    Rural Youth loans are utilized to finance modest, income-
generating, agriculture-related educational projects while 
participating in 4-H Clubs, Future Farmers of America, or similar 
organizations. Applicants must be between the ages of 10 to 20 years. 
Youth loan funds may be used only to pay the expenses associated with 
the approved project. A 4-H club advisor, vocational teacher, county 
extension agent or other organizational sponsor is required for 
supervision and technical assistance, and parental consent must be 
obtained.

    Direct OL--Beginning Farmer/Rancher

    Beginning farmer loans are targeted to loan applicants who have not 
operated a farm or ranch for more than 10 years and do not own real 
farm property, directly or indirectly, which does not exceed 30 percent 
of the median acreage of the farms in the county where the property is 
located. Beginning farmer loan recipients are often required to 
participate in production and financial management training in an 
effort to ensure success of the operation by providing the guidance and 
technical support necessary. Beginning farmer loans are available for 
all OL purposes and authorities with repayment periods from one to 7 
years depending upon the loan purpose, type of security and repayment 
ability. The maximum number of years a beginning farmer may receive 
Direct OL assistance is 10 years. This limitation is not applicable if 
the farm or ranch is subject to the jurisdiction of an Indian tribe.

    Direct OL--Socially Disadvantaged Applicant (SDA)

    A Socially Disadvantaged loan applicant is not a program type; 
rather it distinguishes a specific funding source. Therefore, the loan 
process and all loan requirements are identical for SDA applicants to 
those for non-SDA applicants. To be eligible for SDA loan 
consideration, the applicant must belong to a socially disadvantaged 
group whose members have been subject to racial, ethnic or gender 
prejudice, which includes American Indians or Alaskan Natives, Asians, 
Blacks or African Americans, Native Hawaiians or other Pacific 
Islanders, Hispanics, and women. Loan applicants must voluntarily 
provide his or her ethnicity, race and gender on the loan application. 
If an applicant does not voluntarily provide this information, targeted 
funding will not be available. Direct OL assistance for SDA applicants 
is available for all OL purposes and authorities with repayment periods 
from one to 7 years depending upon the loan purpose, type of security 
and repayment ability. The maximum number of years a farmer may receive 
term Direct OL limited resource assistance is 7 years, which may be 
consecutive or non-consecutive. There is no limit on the number of 
loans closed in a single year. On a case-by-case basis, it is possible 
for farmers and ranchers to be granted a one-time waiver for an 
additional 2 years of Direct loan assistance. This limitation is not 
applicable if the farm or ranch is subject to the jurisdiction of an 
Indian tribe.

    Guaranteed OL

    An FSA Guaranteed Line of Credit is a contract between the loan 
applicant and commercial lender that allows for the extension of 
financial credit where the loan principal may fluctuate throughout the 
term of the contract. The term of the contract may not extend beyond 5 
years. FSA issues a guarantee that protects the lender against possible 
loss up to 95 percent principal and interest.
    An FSA Guaranteed Operating term loan is a contract between the 
loan applicant and commercial lender that allows for the extension of 
financial credit for a period not to exceed 7 years. FSA guarantees the 
loan against possible loss up to 95 percent principal and interest.

    Guaranteed OL--Beginning Farmer/Rancher

    Beginning farmer loans are targeted to loan applicants who have not 
operated a farm or ranch for more than 10 years and do not own real 
farm property, directly or indirectly, which does not exceed 30 percent 
of the median acreage of the farms in the county where the property is 
located. FSA guarantees the loan against possible loss up to 95 percent 
of principal and interest.

    Guaranteed OL--Socially Disadvantaged Applicant

    A Socially Disadvantaged loan applicant is not a program type; 
rather it distinguishes a specific funding source. To be eligible for 
SDA loan consideration, the applicant must belong to a socially 
disadvantaged group whose members have been subject to racial, ethnic 
or gender prejudice, which includes American Indians or Alaskan 
Natives, Asians, Blacks or African Americans, Native Hawaiians or other 
Pacific Islanders, Hispanics, and women. FSA issues a guarantee that 
protects the lender against possible loss up to 95 percent of principal 
and interest.

    Guaranteed OL--Interest Assistance

    FSA's Interest Assistance program is intended to assist family 
farmers and ranchers who have low production or who are suffering the 
effects of a natural disaster or adverse economic conditions. This is 
helpful to beginning farmers who traditionally face difficulties in 
obtaining access to private credit programs. In exchange for 
reimbursing a commercial lender four percentage points on the 
Guaranteed OL, the commercial lender reduces the interest rate charged 
to the farmer by that amount, thus allowing the farmer a greater 
opportunity to accrue farm assets and become financially viable. FSA 
also issues a guarantee that protects the lender against possible loss 
up to 95 percent of principal and interest.
3. Brief History
    The Farm and Rural Development Act, as amended, Subtitle B, 
Sections 311-317, Public Law 92-419, 7 U.S.C. 1942 enabled operators of 
not larger than family farms through the extension of credit and 
supervisory assistance, to make efficient use of their land, labor, and 
other resources, and to establish and maintain financially viable 
farming and ranching operations.
    Title III of the Agricultural Act of 1961, The Consolidated Farm 
and Rural Development Act (CONACT), as amended, through Public Law 109-
171, Feb. 8, 2006, provided a major overhaul and expansion of farm 
lending authorities.
    Congressional appropriations are the sole source of funding for 
FSA's Direct loan program. Funding for this program was initially 
authorized through Title III of the Consolidated Farm and Rural 
Development Act of 1961 (CONACT), as amended, and amended by every 
subsequent farm bill.
    The Rural Development Act of 1972 (August 20, 1972), Section 
311(b)(1) of the CONACT, established the use of the guarantee 
provisions for commercial lenders and authorized the Rural Youth loan 
program, and has been amended in every subsequent farm bill. Loan 
authorities provided within this Act initially authorized FSA's 
Guaranteed loan program, which also has been amended by each subsequent 
farm bill.
    The 1978 Agriculture Credit Act changed existing programs by 
authorizing farm loans to family corporations, cooperatives, and 
partnerships as well as to individuals; changed the interest rate for 
farm ownership loans so that the rate is now based on the cost of 
borrowing to the government; and limited resource farmers and limited 
resource rates were identified and established.
    The Emergency Agricultural Credit Act of 1984 (April 10, 1984) 
increased the maximum repayment period for rescheduled or consolidated 
loans and allowed for borrowers to have their loan changed to a limited 
resource loan, if qualified. This Act also permitted interest rates on 
operating loans that are deferred, consolidated, rescheduled or re-
amortized to be set at the original rate or current rate, whichever is 
lower and required a target of 20 percent of operating funds to be 
targeted to limited resource borrowers.
    The Food Security Act of 1985 (December 23, 1985) made major 
changes in farm loan eligibility and provided protections for borrowers 
undergoing serious financial difficulty. Loan eligibility was expanded 
to include ``joint operators'' and persons related by blood or 
marriage.
    The targeting of direct and guaranteed Operating Loan funds to 
Socially Disadvantaged Applicants was initially authorized in the Food, 
Agriculture, Conservation and Trade Act of 1990 (November 28, 1990), 
Section 355 of the CONACT. The inclusion of women as Socially 
Disadvantaged farmers occurred in the Agricultural Act of 1992, Section 
355 of the CONACT.
    Targeted direct and guaranteed Operating Loan funds to Beginning 
Farmers and Ranchers were authorized through the Agricultural Credit 
Improvement Act of 1992, Section 346(b)(2) of the CONACT, and as 
amended in every subsequent farm bill.
    Through the Federal Agriculture Improvement and Reform (FAIR) Act 
of 1995 (April 4, 1996), Public Law 104-127, farm lending programs were 
reauthorized, placing new restrictions on the purposes for which loans 
can be used and the length of time borrowers are eligible for new 
credit assistance. This law also established the targeted funding for 
beginning farmers.
    Section 806 of the Omnibus Consolidated and Emergency Supplemental 
Appropriations Act, 1999 (Public Law 106-277), amended the maximum 
Guaranteed loan limits for farm operating loans in Section 305 and 313 
of the CONACT. Beginning in Fiscal Year 2000, this cap is adjusted 
annually if the ``Prices Paid by Farmers Index'', as compiled by the 
National Agricultural Statistics Service for the 12 month period ending 
in August of year exceeds the value for the 12 month period ending 
August 31, 1996.
4. Purpose/Goals
    FSA direct loans facilitate the provision of credit, which can help 
support low farm family incomes, assist minority and beginning farmers, 
or help farmers adopt new technology that will make their farming 
operations more economical. FSA has the responsibility of providing 
credit counseling and supervision to its direct borrowers by making a 
thorough assessment of the farming operation. The Agency helps 
applicants evaluate the adequacy of the real estate and facilities, 
machinery and equipment, financial and production management, and the 
farmer's goals. FSA assists the applicant in identifying and 
prioritizing areas needing improvement in all phases of the operation. 
An FSA official then works one-on-one with the farmer to develop and to 
help strengthen the identified areas that ultimately result in the 
farmer's graduation to commercial credit.
    Because special skills may be needed to evaluate farm loans, and 
because much farm production occurs in geographically isolated areas 
that have few lenders, some farmers may face less competitive markets 
for their loans that can result in higher rates, less favorable terms, 
and/or no access to loan funds. Consequently, farmers may face a 
competitively limited market for their loans that can result in higher 
rates, unfavorable terms, and a shortage of loan funds. Farmers may 
have trouble demonstrating their credit worthiness to lenders because 
of the economic uncertainties of production agriculture as well. This 
can be particularly true for beginning farmers, women, and minorities, 
as they typically operate smaller farms, have less equity, or lack a 
sufficient credit or production histories. To address these issues, 
each year FSA allocates a share of loan funding for use by beginning 
farmers and socially disadvantaged, including racial, ethnic 
minorities, and women farmers, who by statute are deemed more likely to 
have problems accessing needed credit than other high-risk family-sized 
farm borrowers.
    The Guaranteed Loan Program plays an important role in facilitating 
the extension of credit to farmers, not only through collaboration with 
partner lenders but also with FSA's Direct Loan Program. Often times a 
borrower's credit needs are met through a combination of a Guaranteed 
loan and an FSA direct loan. For example, a Farm Ownership loan will be 
made by a commercial lender with an FSA guarantee to purchase farmland 
and the borrower will also obtain a direct operating loan from FSA to 
cover annual operating expenses.
    The ``credit gaps'' which farm loan guarantees are designed to fill 
are associated with farm businesses that usually have debt burdens and/
or repayment capacities that do not meet private sector lending 
standards. These high-risk farms might fail to meet industry standards 
due to a lack of production or credit history, limited equity, being a 
start-up business, defined as 10 or less years of farming experience, 
or by being able to offer only single purpose collateral. Another 
factor limiting access to capital is that some farm production occurs 
in geographically isolated areas that tend to have fewer lenders 
specializing in agricultural lending. As a result, farmers may face 
limited competition loans in these areas, which can result in higher 
interest rates, unfavorable loan terms, and/or a shortage of loan 
funds. By reducing the lenders' exposure to risk, the 90 to 95 percent 
guarantee provided lenders on eligible farm loans allows farmers to 
obtain loans to finance annual operating expenses, equipment, 
livestock, and farmland purchases and improvements.
    Current program measures and targets, which cover FY 2007-2011, 
were established in FY 2006 by the Farm Loan Programs Goal Working 
Group. The group, which was comprised of FSA senior managers and 
stakeholders, considered numerous factors when developing the 
performance targets, including past program performance and economic 
forecast for the agricultural sector. Out-year targets for the loss and 
delinquency goals may not seem overly ambitious, on the surface, given 
the current performance levels. However, it is important to note that 
both losses and delinquencies are at historically low levels. The 
historical loss rate covers a long-term period and reflects the high-
risk nature of agricultural operations, where success often depends 
upon circumstances beyond the control of lenders and borrowers. The 
historic loss rate is a more accurate gauge of the cyclical nature of 
agriculture and is a more relevant comparison than measuring against 
the extremely low losses attained in recent years.
    It must be understood that FSA's loan program was designed to 
provide access to capital for those farmers who cannot obtain credit 
with or without a guarantee, equating to an extremely high probability 
of loss. The long-term measures focus on an outcome of keeping losses 
and delinquency low but not so low as to no longer meaningfully reflect 
the purpose of the program. FSA's goals for Fiscal Years 2007 through 
2011 are as follow:
    Loan Making: (1) reduce first year delinquency rates on new loans; 
(2) increase lending to minorities, women and beginning farmers and 
ranchers; (3) reduce the average processing time for direct loans; and 
(4) reduce the average processing time for Guaranteed loans.
    Loan Servicing: (1) decrease the delinquency rate on direct loans; 
(2) decrease the loss rate for direct loans; (3) decrease the loss rate 
on guaranteed loans and (4) decrease the delinquency rate of Guaranteed 
loans.
    Measures for loss and delinquency rates are valuable in two 
respects. First, they are indicators of the financial well being of 
borrowers. Second, they are indicators of the overall quality of the 
FSA underwriting standards and loan servicing.
    Regarding the measure to ``increase the percentage of beginning 
farmers, minorities, and women financed by FSA,'' FSA continues to 
provide increased levels of assistance to these targeted groups. 
Measurement of this goal was revised in 2002 to be a more outcome-
oriented indicator of FSA success in providing credit assistance to 
these historically underserved groups. This performance is noteworthy, 
given the relatively low numbers of farmers in the targeted groups in 
the U.S. farm sector.
    An external factor that could impact progress and accomplishment of 
these measures includes widespread or prolonged natural disasters that 
can significantly reduce farm production and, therefore, reduce net 
income. Also, substantial inflation in farm expenses or depressed 
commodity prices could have a similar effect. If economic conditions 
deteriorate in the agricultural sector, rural lending institutions 
contract their delivery of capital, which increases demand for FSA Farm 
Loan Programs. Such conditions reduce borrower repayment ability, 
increase delinquencies and losses, and reduce the ability of direct 
borrowers to obtain guaranteed credit. Such an event would also 
dramatically increase workload of Service Center employees, hindering 
the ability to provide needed assistance to producers in a timely 
manner. To mitigate these factors, FSA encourages farmers to use 
various risk management practices such as crop insurance, and marketing 
tools, such as forward contracting.
5. Success in Meeting Programmatic Purpose/Goals
    FSA has been very successful in accomplishing its long-term 
performance goals for the Operating Loan Program. Loss rates, 
delinquency rates, and lending to beginning farmers, minorities, and 
women have all shown significant long-term progress. (See 
specifications on page 467.)
6. Annual Budget Authority (FY 2002-FY 2011)
    See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
    See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
    See Attachment 3.
9. Eligibility Criteria
    The eligibility criteria for the Operating Loan--Annual, Operating 
Loan--Term, Operating Loan--Limited Resource applicants and Beginning 
Farmers is as follows:

   Have no disqualifying convictions for controlled substances, 
        including drug trafficking and possession;

   Possess the legal capacity to incur the obligation of the 
        loan;

   Be a citizen of the United States, a United States non-
        citizen national, or a qualified alien under applicable Federal 
        immigration laws;

   Have an acceptable credit history demonstrated by debt 
        repayment;

   Have not caused the Agency a loss by receiving debt 
        forgiveness;

   Have not received debt forgiveness or incurred a loss to the 
        government relating to a guaranteed loan loss; and

   Have the inability to obtain credit elsewhere, with or 
        without an FSA guarantee;

   Not be in delinquent status on any Federal debt, excluding 
        debt under the Internal Revenue code of 1986 at the time of 
        loan closing;

   Have no outstanding unpaid judgments obtained by the United 
        States in any court, excluding those filed as a result of 
        action in the United States Tax Courts;

   May not be ineligible due to disqualification resulting from 
        Federal Crop Insurance violation(s) according to 7 CFR 718;

   Have sufficient farm managerial ability as demonstrated by a 
        combination of education, on-the-job training and farming 
        experience;

   Must agree to meet borrower training requirements, if FSA 
        determines the training to be necessary for success; and

   Be the owner-operator or tenant-operator of a family farm or 
        ranch.

    The loan eligibility criterion for an Operating Loan to a Socially 
Disadvantaged Applicant, including women, includes all general 
eligibility requirements outlined above. As stated previously, a 
Socially Disadvantaged loan only specifies a funding source. Therefore, 
the loan process and all loan requirements are identical for SDA 
applicants to those for non-SDA applicants. Loan applicants must 
voluntarily provide his or her ethnicity, race and gender on the loan 
application to qualify for the targeted funding.
    Rural Youth loan eligibility criteria include all general 
eligibility requirements except a youth loan applicant does not need to 
demonstrate managerial ability, is not subject to borrower training 
requirements, does not need to operate a farm, and is not subject to OL 
term limits for loan assistance.
10. Utilization (Participation) Data

                                  Program Loan Funds Use (dollars in millions)
----------------------------------------------------------------------------------------------------------------
                            FY 2007            FY 2008           FY 2009           FY 2010          FY 2011 *
----------------------------------------------------------------------------------------------------------------
         Direct OL                600              629.1           1,226.4           1,242.3               917
     Guaranteed OL                917              1,032             1,235           1,510.1           1,015.2
   (unsubsidized)
     Guaranteed OL                271                175             149.7             181.5              52.1
    (interest as-
        sistance)
----------------------------------------------------------------------------------------------------------------
* As of June 30, 2011.

11. Duplication or Overlap with Other Programs
    The FSA Guaranteed Farm Loan Program serves separate purposes and 
is generally not duplicative with other Federal and state credit 
programs. While other Federal or state credit programs are available to 
family farm businesses, these programs lack national scope, are focused 
on narrow market segments, and are not specifically designed to serve 
high-risk farm businesses. FSA's Direct Farm Loan Program serves high-
risk farmers with similar purposes, but this program is designed to 
assist even less creditworthy borrowers; those unable to obtain credit, 
even with a Federal loan guarantee. Studies of the economic profiles of 
both Direct and Guaranteed program participants indicate the two 
delivery systems serve different high-risk borrower segments. In 
addition, the FSA Direct Loan Program is narrower in scope because of 
the more limited funding and is more highly targeted to underserved 
market segments of beginning start-up farm operations and socially 
disadvantaged borrowers.
    Across other Federal agencies, the Small Business Administration 
(SBA), and USDA's Rural Business Service (RBS) provide loan guarantee 
programs that may serve agriculture. The RBS loan guarantee programs do 
not duplicate those of FSA because they serve agribusiness and value-
added farm enterprises. The SBA programs are not designed to meet 
specialized agricultural needs and delivery by participating SBA 
lenders' program delivery is geographically limited. In FY 2007, SBA 
accounted for only 3.5 percent of all federally guaranteed loans made 
to farmers, with FSA accounting for the remainder. Many of SBA 
agricultural loan guarantees are made to farms that would not meet FSA 
eligibility requirements. Overlap between FSA and SBA was mostly 
limited to poultry and nursery farms.
    Some state governments also provide farm loan guarantees, but 
funding and geographic coverage for such programs is limited. The 
National Council of State Agricultural Finance Programs indicates that 
only 18 states have an established loan guarantee program. However, 
only four states have programs that are actively providing loan 
guarantees to farmers. State programs typically target specific 
purposes, such as value-added or single-purpose livestock facilities, 
have limited or sporadic funding, or limited geographical availability, 
hence seldom duplicating FSA loan objectives. Again, eligibility 
criteria and intended purposes differ significantly from FSA Direct and 
Guaranteed Loan Programs, and funding can be sporadic. A more common 
type of state financing assistance is provided through ``Aggie Bonds,'' 
which are tax exempt bonds, issued by states under specific eligibility 
requirements.
12. Waste, Fraud and Abuse
    FSA has a robust internal controls program for its farm loan 
programs, which consists of OMB Circular A-123 reviews, Farm Loan 
Program Risk Assessments, the County Operations Review program, Lender 
Reviews, and National Office Loan Origination File Reviews. 
Additionally, farm loan programs are subject to periodic audit and 
review by the Office of Inspector General and the Government 
Accountability Office. No material weaknesses related to fraud, waste, 
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Indian Tribal Land Acquisition Program (ITLAP).
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    ITLAP was authorized by 5 U.S.C. 301 and 25 U.S.C.
4. Purpose/Goals
    Some Indian reservation allotments are co-owned by hundreds of 
people. This is because with the passing of each generation, there are 
an increasing number of heirs who have inherited undivided interests in 
the same allotments. This increase in co-ownership, or fractionation, 
often renders the consolidation of title into one owner nearly 
impossible. There are limited sources of funding to consolidate 
fractionated interest. FSA's ITLAP extends credit to Indian Tribes or 
Tribal corporations which do not qualify for standard commercial loans 
to purchase land within their own reservation or Alaskan community.
5. Success in Meeting Programmatic Purpose/Goals
    The ITLAP program has been successful in meeting the programmatic 
purpose. The amount appropriated each year limits the program benefits 
because the funding available is insufficient to meet the needs of the 
Tribes interested in participating in the program.
6. Annual Budget Authority (FY 2002-FY 2011)
    See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
    See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
    See Attachment 3.
9. Eligibility Criteria
    Native American Tribes must meet the following eligibility 
requirements to be eligible for an ITLAP loan:

   The Tribe must show credit from other sources is not 
        available to purchase the real estate.

   The land must be located within the Tribe's reservation for 
        use by the members of the Native American tribe or Tribal 
        Corporation.

   A feasibility plan for the use of lands and a method of 
        repayment of the loan funds must be provided.

   The Tribe must be in good standing with all Federal Agencies 
        and not subject to a judgment lien against the Tribe's property 
        due to a debt to the United States.

   The Tribe must not have received a write-down on any other 
        loans within the past 5 years.

   The amount of the loan funds must not exceed the market 
        value of the land determined by the current appraisal.
10. Utilization (Participation) Data
    Since 2000, seven loans valued at a total of $2.88 million have 
been made through ITLAP.
11. Duplication or Overlap with Other Programs
    The Bureau of Indian Affairs' Indian Land Consolidation Pilot 
Program, which began in 1999, is a result of Congressional Acts and 
Supreme Court decisions that sought to remedy problems associated with 
fractional land.
12. Waste, Fraud and Abuse
    There has been no known instance of waste, fraud or abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Boll Weevil Eradication Loan Program.
    Prepared by the U.S. Department of Agriculture's (USDA) Farm 
Service Agency (FSA).
2. Subprograms/Department Initiatives
    There are no subprograms or department initiatives for the Boll 
Weevil Eradication Loan program.
3. Brief History
    USDA has been involved with Boll Weevil Eradication since the 
1970's through the USDA Animal and Plant Health Inspection Service 
(APHIS), the Agency that initially funded the program along with the 
member states. The Boll Weevil Eradication Loan Program was authorized 
by 5 U.S.C. 301; 7 U.S.C. 1989 and Public Law 104-180, 110 Stat. 1569, 
to essentially provide the full funding needed to complete the 
eradication of the boll weevil. The first Boll Weevil Eradication Loan 
was made by FSA in 1997, and since that time the boll weevil has been 
successfully eradicated from most states.
4. Purpose/Goals
    Through the use of FSA's loan authorities, this loan program serves 
two primary objectives: reducing pesticide requirements of cotton 
producers and increasing overall cotton production in the United 
States. The FSA Boll Weevil Eradication Loan program is a supplemental 
program to the USDA/APHIS Boll Weevil Eradication program and differs 
only in that FSA administers a Boll Weevil Eradication Loan program and 
APHIS offers Federal grants as well as provides technical assistance 
and program oversight.
    The goal of the Boll Weevil Eradication Loan Program is to support 
APHIS and farmer eradication efforts at minimal cost.
5. Success in Meeting Programmatic Purpose/Goals
    The Boll Weevil Eradication Loan program has been very successful 
in meeting its programmatic purpose. The reduction in the number of 
boll weevils has greatly reduced the amount of pesticides used by 
cotton producers. At one time, cotton growers applied more than 41 
percent of all insecticides in agricultural use, regularly spraying 
their cotton as many as 15 times a season. In contrast, since the 
establishment of the Boll Weevil Eradication Loan Program, annual 
pesticide applications have been reduced to nearly zero. The program 
has no delinquent accounts and no losses with minimal administrative 
program cost.
6. Annual Budget Authority (FY 2002-FY 2011)
    See Attachment 1.
7. Annual Outlays (FY 2002-FY 2011)
    See Attachment 2.
8. Annual Delivery Cost (FY 2002-FY 2011)
    See Attachment 3.
9. Eligibility Criteria
    An eligible applicant must:

   Meet all requirements prescribed by APHIS to qualify for 
        cost-share grants;

   Have the appropriate charter and legal authority as a 
        nonprofit corporation or state organization specifically 
        organized to operate the boll weevil eradication program in any 
        state or region (Individual producers are not eligible for 
        loans);

   Possess the legal authority to enter into contracts, 
        including debt instruments;

   Operate in an area in which producers have approved a 
        referendum authorizing producer assessments and in which an 
        active eradication or post-eradication program is underway or 
        scheduled to begin; and

   Have the legal authority to pledge producer assessments as 
        security for loans from FSA.
10. Utilization (Participation) Data
    Ten states have benefited from the Boll Weevil Eradication Loan 
program; obtaining a total of 49 loans for a total of $992,412,496. At 
present, only two states remain active in this program with a total 
outstanding debt of slightly more than $61,000,000.
11. Duplication or Overlap with Other Programs
    There is no known duplication with other programs beyond the APHIS 
grant program for Boll Weevil Eradication. As stated earlier the APHIS 
program was supplemented by the FSA loan program in order to provide 
full funding to the eradication initiative.
12. Waste, Fraud and Abuse
    FSA has a robust internal controls program for its farm loan 
programs, which consists of OMB Circular A-123 reviews, Farm Loan 
Program Risk Assessments, the County Operations Review program, Lender 
Reviews, and National Office Loan Origination File Reviews. 
Additionally, farm loan programs are subject to periodic audit and 
review by the Office of Inspector General and the Government 
Accountability Office. No material weakness related to fraud, waste, 
and abuse have been identified through these processes for many years.
13. Effect of Administrative PAYGO
    None.

                                                                      Attachment 1
                                      Appendix I: ACIF Historical Program Subsidy Budget Authority and Loan Levels
                                                                     ($ in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        2002      2003      2004      2005      2006      2007      2008      2009      2010      2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACIF
  Annual Subsidy Budget Authority                          190       248       198       144       151       148       153       241       156       155
Direct Loan Level
  Farm ownership                                           147       169       142       272       275       303       382       560       702       474
  Farm operating                                           611       690       610       556       641       600       629     1,056     1,220     1,049
  Emergency disaster                                        25        96        30        24        51        75        46        30        36        66
  Indian tribe land acquisition                              2         0         2         0         0         0         0         0         0         4
  Boll weevil eradication                                  100        99        98        83        22         6       100       100         0       100
  Indian Highly Fractionated Land                          N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         5        11
  Farm Operating ARRA                                      N/A       N/A       N/A       N/A       N/A       N/A         0       170        22         0
                                                     ---------------------------------------------------------------------------------------------------
    Total Direct Loan Levels                               885     1,054       882       935       989       984     1,157     1,916     1,985     1,704
                                                     ---------------------------------------------------------------------------------------------------
Direct Loan Appropriated Subsidy
  Farm ownership                                             4        20        31        15        14        13        17        36        29        33
  Farm operating                                            55       119        88        56        64        70        80       125        58        64
  Emergency disaster                                         3        19         4         3         6         9         5         4         1         7
  Indian tribe land acquisition                              0         0         0         0         0         0         0         0         0         0
  Boll weevil eradication                                    0         0         0         0         0         0         0         0         0         0
  Seed cotton                                                0         0       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A
  Indian Highly Fractionated Land                          N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
  Farm Operating ARRA                                      N/A       N/A       N/A       N/A       N/A       N/A         0        20         1         0
                                                     ---------------------------------------------------------------------------------------------------
    Total Direct Loan Subsidy                               62       158       123        74        84        92       102       185        89       104
                                                     ---------------------------------------------------------------------------------------------------
Guaranteed Loan Level
  Farm ownership                                         1,161     1,231     1,103     1,027       949       965     1,171     1,273     1,606     1,906
  Farm operating, unsubsidized                           1,548     1,013       951       885       937       918       946     1,235     1,510     1,498
  Farm operating, subsidized                               511       418       278       283       272       272       135       150       182        65
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         1
                                                     ---------------------------------------------------------------------------------------------------
                                                         3,220     2,662     2,332     2,195     2,158     2,155     2,252     2,658     3,298     3,470
                                                     ---------------------------------------------------------------------------------------------------
Guaranteed Loan Appropriated Subsidy
  Farm ownership                                             5         9         6         5         5         6         5         4         6         7
  Farm operating, unsubsidized                              54        32        34        27        28        23        23        31        35        35
  Farm operating, subsidized                                69        49        35        38        34        27        23        21        26         9
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
                                                     ---------------------------------------------------------------------------------------------------
                                                           128        90        75        70        67        56        51        56        67        51
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                      Attachment 2
                                                             ACIF Historical Program Outlays
                                                                       ($Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        2002      2003      2004      2005      2006      2007      2008      2009      2010      2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACIF
  Direct Loan Subsidy Outlays
  Farm ownership                                             5        17        30        15        13         9        19        30        28        33
  Farm operating                                            56       109        87        56        61        70        77       107        67        64
  Emergency disaster                                        28        18         4         3         5         7         5         4         1         7
  Indian tribe land acquisition                              0         0         0         0         0         1         0         0         0         0
  Boll weevil eradication                                    0         0         0         0         0         0         0         0         0         0
  Indian Highly Fractionated Land                          N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
  Farm Operating ARRA                                      N/A       N/A       N/A       N/A       N/A       N/A         0        18         2         0
                                                     ---------------------------------------------------------------------------------------------------
    Total Direct                                            89       144       121        74        79        87       101       159        98       104
                                                     ---------------------------------------------------------------------------------------------------
Guaranteed Loan Subsidy Outlays
  Farm ownership                                             5         9         6         5         4         5         4         4         5         7
  Farm operating, unsubsidized                              48        32        33        28        28        35        23        30        35         9
  Farm operating, subsidized                                63        49        31        37        34        15        18        21        25        35
  Conservation                                             N/A       N/A       N/A       N/A       N/A       N/A         0         0         0         0
                                                     ---------------------------------------------------------------------------------------------------
    Total Guaranteed                                       116        90        70        70        66        55        45        55        65        51
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                      Attachment 3
 
 
 
    Department Strategic Goal: Assist rural communities to create prosperityso they are self-sustaining, repopulating, and economically thriving.
 



 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Farm Loans
 
      Direct Farm Ownership               12,712          16,990          35,560          28,675          26,520
       Loans
      Direct Farm Operating               70,147          79,959         124,545          58,889          47,500
       Loans
      Guaranteed Farm Ownership            5,599           4,955           4,200           5,942           5,559
       Loans
      Guaranteed Farm Operating           27,379          23,341          20,645          25,529          23,902
       Loans
      Guaranteed Farm Operating           22,666          22,908          30,754          35,338          35,126
       Loans, unsub.
      Emergency Disaster Loans             8,891           5,135           4,323           1,314           6,000
      Indian Tribe Land                        0               0               0               0               0
       Acquisition Loans
      Boll Weevil Eradication                114               0               0               0               0
       Loans
      Indian Fractionated Land                 0               0               0               0             793
       Loans
      Direct Conservation Loans                0               0               0               0               0
      Guaranteed Conservation                  0               0               0               0               0
       Loans
      Program Loan Cost Expenses           7,920           7,920           7,920           7,920           7,920
      Individual Development                   0               0               0               0               0
       Account Grants
      Administrative costs               243,993         277,206         305,903         309,848         304,655
       (direct)
      Indirect costs 2                   146,791          23,979           4,214           4,273           8,518
                                 -------------------------------------------------------------------------------
        Total Costs 1                    546,212         462,393         538,064         477,728         466,493
        FTEs                               2,809           2,752           2,923           2,804           2,804
 
      Performance Measure: Maintain or reduce avg processing time for direct and guaranteed loans.
 
        Direct Loans (# of                 27.00           27.80           33.50           30.80           32.50
         days):
        Guaranteed Loans (# of             12.60            8.50           13.50           13.25           13.00
         days):
      Performance Measure: Increase % of beginning farmers, racial and ethnic minority farmers, and women
       farmers financed by FSA.
 
        Percent:                          15.90%          16.22%          17.40%          19.90%          18.00%
 
1 For loan programs reflects subsidy budget authority to support loan levels.
2 Indirect costs include a small amount related to State Mediation Grants.



                       AGRICULTURAL PROGRAM AUDIT

           (EXAMINATION OF USDA ENERGY AND FORESTRY PROGRAMS)

                              ----------                              


                        WEDNESDAY, JULY 20, 2011

 Subcommittee on Conservation, Energy, and 
                                  Forestry,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300, Longworth House Office Building, Hon. Glenn Thompson 
[Chairman of the Subcommittee] presiding.
    Members present: Representatives Thompson, Goodlatte, 
Gibbs, Southerland, Roby, Huelskamp, Hultgren, Ribble, Holden, 
Schrader, Owens, McIntyre, Costa, Walz, Pingree, and Sablan.
    Staff present: Patricia Barr, Brent Blevins, Tamara Hinton, 
Josh Maxwell, Mary Nowak, Debbie Smith, Lauren Sturgeon, 
Heather Vaughan, John Konya, Nona Darrell, Liz Friedlander, 
Anne Simmons, and Jamie Mitchell.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    The Chairman. Good morning, everyone, this hearing of the 
Subcommittee on Conservation, Energy, and Forestry, entitled, 
Agricultural Program Audit: Examination of USDA Energy and 
Forestry Programs, will come to order.
    We will start with opening statements. I want to welcome 
everyone to today's hearing to audit the USDA energy and 
forestry programs.
    Today we will hear from USDA about the farm bill programs 
administered under the energy and forestry titles. As with each 
farm audit we are holding, we will learn basic information 
about programs as well as whether any programs are duplicative. 
The first energy title was created in the 2002 Farm Bill, and 
it was designed to help develop feedstock for renewables fuels 
and to assist farmers and ranchers with energy efficiency.
    The 2008 Farm Bill expanded the energy title and committed 
more than a billion dollars in mandatory funding to help foster 
the development of advanced biofuels.
    Many of these programs, such as the Biomass Crop Assistance 
Program, were created with the purpose of fostering the 
creation of the next generation of advanced biofuels by 
developing dedicated energy crops. Other programs, like the 
Rural Energy for America Program, were expanded to better 
assist rural America's producers and small businesses to 
implement energy efficiency measures and renewable energy 
systems.
    As we consider these programs and to what extent they have 
fulfilled their purpose, we must be aware that we face a 
significant challenge in the next farm bill. Thirty-seven 
programs in the farm bill do not have a budget baseline beyond 
the expiration of the current farm bill, including every 
program in the energy title.
    For those of you who are not familiar with the 
Congressional budgeting process, this means that none of the 
energy title programs have mandatory funding beyond the 
expiration of the 2012 Farm Bill. Therefore, if we wish to see 
any of these programs continue into the future in their current 
form, we will be faced with the challenge of finding funding 
elsewhere.
    Now that will be challenging in these fiscal times as we 
are looking for ways to cut spending and make government more 
efficient. It is not as simple as reallocating funds from one 
title to another when the 37 programs I mentioned previously 
are spread through 12 titles of the farm bill.
    In addition to energy, we will also examine USDA forestry 
programs today. The Committee shares jurisdiction of forestry 
matters with the Natural Resources Committee.
    Our Committee's jurisdictions over forestry is focused on 
state and private forestry and landowner assistance programs, 
forestry research as well as oversight of the Forest Service. 
The forestry title is one of the smaller titles of the farm 
bill but no less important.
    Several Members of the Subcommittee, including me, have 
forestlands in their districts and appreciate the important 
relationship the Forest Service maintains with rural America. 
Though most of the forestry programs have a permanent 
authorization, it is important for us to review these programs 
to ensure that they are being carried out in a manner 
consistent with their purpose.
    I want to welcome our panel of witnesses from USDA. The 
Subcommittee looks forward to hearing your testimony and your 
thoughts on the programs we are examining today, and I look 
forward to working with you all in the future as we craft the 
next farm bill.
    [The prepared statement of Mr. Thompson follows:]

Prepared Statement of Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
    Good morning. I want to welcome everyone to today's hearing to 
audit USDA energy and forestry programs.
    Today, we will hear from USDA about the farm bill programs they 
administer under the energy and forestry titles.
    As with each farm audit we are holding, we will learn basic 
information about the programs, as well as whether any programs are 
duplicative.
    The first energy title was created in the 2002 Farm Bill. It was 
designed to help develop feedstocks for renewable fuels and to assist 
farmers and ranchers with energy efficiency.
    The 2008 Farm Bill expanded the energy title and committed more 
than $1 billion in mandatory funding to help foster the development of 
advanced biofuels.
    Many of these programs, such as the Biomass Crop Assistance 
Program, were created with the purpose of fostering the creation of the 
next generation advanced biofuels by developing dedicated energy crops.
    Other programs, like the Rural Energy for America Program, were 
expanded to better assist rural America's producers and small 
businesses to implement energy efficiency measures and renewable energy 
systems.
    As we consider these programs, and to what extent they have 
fulfilled their purpose, we must be aware that we face a significant 
challenge in the next farm bill.
    Thirty seven programs in the farm bill do not have a budget 
baseline beyond the expiration of the current farm bill, including 
every program in the energy title.
    For those of you who are not familiar with the Congressional 
budgeting process, this means that none of the energy title programs 
have mandatory funding beyond the expiration of the 2012 Farm Bill.
    Therefore, if we wish to see any of these programs continue into 
the future in their current form, we will be faced with the challenge 
of finding funding elsewhere.
    That will be challenging in these fiscal times, as we are looking 
for ways to cut spending and make government more efficient.
    It is not as simple as reallocating funding from one title to 
another when the 37 programs I mentioned previously are spread through 
12 titles of the farm bill.
    In addition to energy, we will also examine USDA forestry programs 
today.
    The Committee shares jurisdiction of forestry matters with the 
Natural Resources Committee.
    Our Committee's jurisdiction over forestry is focused on state and 
private forestry and landowner assistance programs, forestry research, 
as well as oversight of the Forest Service.
    The forestry title is one of the smaller titles of the farm bill, 
but no less important.
    Several Members of this Subcommittee, including me, have 
forestlands in their district, and appreciate the important 
relationship the Forest Service maintains with rural America.
    Though most of the forestry programs have a permanent 
authorization, it is important for us to review these programs to 
ensure that they are being carried out in a manner consistent with 
their purpose.
    I want to welcome our panel of witnesses from USDA. The 
Subcommittee looks forward to hearing your testimony and your thoughts 
on the programs we are examining today.
    I look forward to working with you all in the future as we craft 
the next farm bill.
    I now yield to the gentleman from Pennsylvania, Mr. Holden, for his 
opening statement.

    The Chairman. I now yield to the gentleman from 
Pennsylvania, Mr. Holden, for his opening statement.

   OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    Mr. Holden. Thank you, Mr. Chairman.
    I would like to thank our witnesses and guests for being 
here this morning. This hearing presents an important 
opportunity for Members of the Subcommittee to review the state 
of USDA energy and forestry programs. The Farm Service Agency, 
Rural Development and U.S. Forest Service, through the 
authority of this Committee, currently administer the energy 
and forestry titles and programs contained in the 2008 Farm 
Bill.
    This bill expanded many of the renewable energy programs 
originally authorized in the 2002 bill and introduced many new 
provisions intended to ensure that agriculture played an 
important role in moving this country towards energy 
independence.
    This Committee crafted a bill to encourage a move toward 
advanced biofuels by promoting research, development and 
demonstration of biomass-based renewable energy and by 
providing over $1 billion in investments needed to show a 
promising but fragile industry that we are committed to 
renewable energy production.
    Implementation of many of these energy title programs, 
however, has been slow, leading to uncertainty in an industry 
we intended to strengthen and support. In addition, the energy 
title does not have mandatory money for these programs after 
the 2008 Farm Bill expires. This leaves this Committee and the 
agencies before us today in a difficult situation during a 
difficult fiscal environment.
    Similarly the forestry title, which impacts forestland 
management in the 155 National Forests and 20 grasslands in the 
National Forest System does not have any mandatory funding. To 
ensure the Forest Service continues to meet the needs of 
present and future generations, we must ensure that forestry 
title policies are efficient and accessible.
    It is important for us to find out today which programs 
have been implemented and are accomplishing our goal of a well-
managed agency dedicated to forest stewardship. We must all 
work together to make certain taxpayer dollars are being spent 
wisely and as intended if we are to sustain healthy, diverse 
and productive forests and expand domestic production of 
renewable energy to decrease our dependence on foreign oil.
    I look forward to hearing from our witnesses today and 
yield back my time, Mr. Chairman.
    The Chairman. I thank the gentleman.
    The chair would request that other Members submit their 
opening statements for the record so that the witnesses may 
begin their testimony and to ensure there is ample time for 
questions.
    [The prepared statement of Ms. Fudge follows:]

    Prepared Statement of Hon. Marcia L. Fudge, a Representative in 
                           Congress from Ohio
    Thank you Chairman Thompson and Ranking Member Holden, for 
convening today's hearing and thank you Mr. Tidwell, Ms. Canales, and 
Mr. Garcia for educating us on energy and forestry provisions of the 
farm bill. As a new Member of this Committee, I appreciate these 
opportunities to learn some substance about the issues that will be 
relevant for the next iteration of the farm bill.
    I am particularly interested in the USDA's renewable energy 
research programs, and specifically, the Biodiesel Fuel Education 
Program. On one hand, the price of commodities like petroleum and oil 
have shot up over the past decade, so it is important for the U.S. as a 
nation to explore cheaper, cleaner, renewable fuel sources. There are 
institutions and organizations in my district that are blazing the path 
for new energy technology and this program represents a great funding 
opportunity for them and similar institutions across the country. 
Moreover, being able to use biomass to produce cleaner, renewable fuel 
will have a positive effect on the economy and make it less expensive 
for food producers to provide the fresh and nutritious foods that 
people depend on both here and abroad.
    I am also interested in the Urban and Community Forestry Program as 
I represent an urban district. Scientific evidence of green spaces has 
been mounting for some time now. For example, One tree can remove 26 
pounds of carbon dioxide from the atmosphere annually, equaling 11,000 
miles of car emissions. Plants have been shown to reduce the urban heat 
island effect, i.e., where buildings, asphalt, and concrete absorb 
solar radiation and then reemit it as heat, causing the air temperature 
of the city to rise, directly by shading heat absorbing surfaces, and 
indirectly through evaporative cooling. Green spaces can also reduce 
noise pollution, by dense screens of trees and shrubs, and can even 
cleanse partially-treated wastewater. I have worked on awareness around 
childhood obesity and youth fitness, so programs that make the outdoors 
safer and more inviting are certainly of interest to me.
    Again, I thank the Chairman for holding today's hearing and I look 
forward to hearing from our witness.

    The Chairman. I am pleased to welcome our panel of 
witnesses to the table today. First, we have Mr. Tom Tidwell, 
Chief of the U.S. Forest Service, U.S. Department of 
Agriculture; Ms. Judy Canales, Administrator of the Rural 
Business Cooperative Service, USDA; and Mr. Juan Garcia, Deputy 
Administrator of the Farm Service Agency.
    Chief Tidwell, begin when you are ready.

        STATEMENT OF THOMAS TIDWELL, CHIEF, U.S. FOREST
            SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
                        WASHINGTON, D.C.

    Mr. Tidwell. Thank you.
    Mr. Chairman, Members of the Subcommittee, I want to thank 
you for the opportunity to be here in front of you today to 
discuss the forestry title of the farm bill.
    The Forest Service not only manages 193 million acres of 
National Forest, but we also work with our partners across the 
country to help manage over 750 million acres of our nation's 
forests. Two-thirds of our nation's forests, over 500 million 
acres, are in non-Federal ownership. Over ten million families 
own forests.
    Our nation's forests are a primary source of clean water, 
clean air, wildlife habitat and recreational settings. They are 
also the key component of America's rural landscape, supporting 
our healthy rural communities and economies and supporting 
well-paying jobs.
    Forests are a key part of our rural economies. In fact, 
roughly 75 million acres of forests belong to working farms 
with over 900,000 jobs nationwide that rely on our private 
forests. The programs we will talk about today help keep 
America's forests working, keeps them productive, rather than 
having our forests go to some other use, like some form of 
development.
    The Forest Service, primarily through our state and private 
forestry programs, we provide technical assistance and cost-
share financial assistance to landowners to help conserve and 
enhance the benefits from our nation's forests.
    These programs are delivered by our expanding network of 
partners centered around the state forestry agencies. These 
efforts are a key part of Secretary Vilsack's ``All Lands'' 
vision for the nation's forests.
    This Federal investment, it leverages the capacity of our 
state foresters and their partners to manage the state and 
private lands to continue to produce the ecological, social and 
economic benefits that the American people rely on.
    In the 2008 Farm Bill, it placed an increased emphasis on 
forestry and forest landowners. For the first time, the farm 
bill set priorities for private forest conservation to conserve 
and manage our working forest landscapes for multiple values 
and uses, to protect forests from threats and to enhance the 
public benefits from our private forests.
    Furthermore, the 2008 Farm Bill requires each state and 
territory to develop an assessment of the forest resource 
conditions and develop a long-term forest research strategy to 
address the threats and identify the resources that are needed.
    The resulting forest action plans, really a nationwide 
strategy, are a long-term plan for how we should prioritize our 
limited resources to achieve our national conservation goals. 
These action plans address the primary threats facing the 
nation's forests, including changing ownership of private 
forestlands, forest fragmentation, water quality and quantity 
issues, increasing urbanization and increasing amounts of the 
wildland/urban interface that we have to deal with during fire 
seasons, and also addresses the effects from the changing 
climate, wildfire, and invasive species.
    I don't have to have point out what we have been seeing in 
this country this year, as far as the devastating natural 
disasters that have been occurring with the floods, the 
tornadoes and the wildfires and in the drought that this 
country has been experiencing across the entire southern tier 
of this country.
    There are about 325 million acres of private forests that 
are currently at risk from a catastrophic wildfire; 58 million 
acres are at risk of being overtaken by insect and disease and 
invasive species; and urban development could swallow another 
57 million acres of forests by 2030.
    It is essential that we work together, the various 
agencies, our state partners, so that we can help to address 
these issues across not only the public lands but also our 
private forested lands, so that we can ensure that the 
generations to come will have the same benefits that we have 
enjoyed from our nation's forests.
    The Forest Service, we administer a number of programs that 
are authorized by the farm bill. These programs are not 
mandated funding programs, but they do receive discretionary 
appropriations each year. The first is our Forest Health 
Management Program. This is a program that helps to identify 
and project where we are going to see the next insect, disease 
and invasive outbreaks that are going to occur.
    It provides the information that not only we rely on the 
public lands, but also our private landowners rely on this 
information so that they know where we need to be moving 
forward to be able to address the next threat.
    Some of the invasives that we are dealing with are the 
emerald ash borer, the Asian longhorn beetle, dealing with 
sudden oak death and hemlock wooly adelgid.
    Our next program is our Cooperative Fire Assistance, and 
there are two parts of this. The State Fire Assistance, this 
program provides matching Federal assistance for our fire 
management activities with our states, including to help make 
sure that the states are prepared; they have their plans in 
place; they are able to provide the training, not only to their 
personnel but also to our rural volunteer fire departments; and 
then also it provides funding for hazardous fuel treatments.
    The second part is with our Volunteer Fire Assistance 
Program, which is focused on our volunteer fire departments 
across this country, to be able to make sure they have the 
technology and equipment that they need to be able to respond.
    Volunteer rural fire departments, they represent really the 
first line in dealing with wildland fire. They provide nearly 
80 percent of initial attack on wildland fires in the United 
States since almost \2/3\ of all wildland fires in this country 
are on non-Federal lands.
    Our next program is the Forest Stewardship Program. This 
program delivers forestry technical assistance to individual 
forest landowners to help them to be able to develop a 
management plan for their lands. This is focused on the 
individual landowners that not always will have the access to 
the technology, the access to the expertise, to really 
understand what they should be doing, what they need to be 
doing on their lands to make sure that we can sustain the 
forests that are on their lands.
    Since the authorization of this in 1990, the Forest 
Stewardship Program has provided funding for more than 330,000 
forest management plans, covering 38 million acres nationwide 
and has reached more than five million private forest 
landowners.
    Our next program is the Urban and Community Forestry 
Program. With 80 percent of Americans now living in our cities 
and our towns, this program has really made a difference to 
help the communities understand the benefits of having tree 
cover in our urban settings. Some of the things that we are 
doing is with our i-Tree program, which is a Web-based program 
that allows not only cities and communities but also 
individuals to be able to use that program to actually see 
where planting trees on their property, where to place trees on 
their property, will significantly reduce the amount of energy 
that they are using. And also with our communities, we have had 
some great success with the cities using this program to 
actually be able to reduce the costs of having to deal with 
storm water runoff because of an increase in their forest cover 
within their cities.
    Our next program is the Forest Legacy Program. This is a 
program that helps us to protect environmentally important 
private forest areas that are threatened by conversion to non-
forest or to development. We work with willing landowners to 
provide a conservation easement to ensure that that private 
landowner can stay on their land and that we can continue to 
have productive working forestlands.
    In addition to these programs, the 2008 Farm Bill 
authorized four new programs that are administered by the 
Forest Service. The first is the Community Forest and Open 
Space Conservation Program that allows us to work with our 
tribal governments, local governments and qualified nonprofit 
entities so that they can acquire private forestland that is 
threatened by conversion and non-forest uses and establish 
community forests that provide access and community benefits.
    The next is the Pest and Disease Revolving Loan Fund that 
provides loans to local government to finance the purchase of 
equipment that is needed for management to address disease or 
pest-infested trees.
    Our Community Wood Energy Program provides the states and 
local governments with grants to develop community wood energy 
plans to either acquire or to upgrade community wood energy 
systems. But this is primarily focused on universities, medical 
service areas, that we are trying to encourage expansion of 
biomass plants that deal with much larger areas instead of just 
individual offices or individual schools.
    And then the last is our Forest Biomass for Energy Program 
that directs the Forest Service to conduct a competitive 
research and development program to encourage the use of forest 
biomass for energy.
    In conclusion, sound management of our nation's forestlands 
is important to all Americans. Once again, there are over 500 
million acres of non-Federal forestland in the United States. 
Our recent research has shown that every year, large areas are 
lost to development sprawl. The majority of the acres at risk, 
more than 430 million acres, are owned by individual families. 
And some of these private forest owners, they just lack the 
financial and technical resources to be able to hold on to 
their lands and manage their forests effectively. The farm bill 
programs offer the opportunity for those folks to be able to 
stay on their land, to be able to continue to have productive, 
working forested farms and ranches.
    I want to thank you for the opportunity to be here to 
discuss the Forest Service's farm bill programs, and I am happy 
to answer any questions that you may have today.
    [The prepared statement of Mr. Tidwell follows:]

Prepared Statement of Thomas Tidwell, Chief, U.S. Forest Service, U.S. 
              Department of Agriculture, Washington, D.C.
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to appear before you today to discuss the Forestry Title of 
the farm bill.
    The Forest Service not only manages the 193 million acres of 
National Forests, but also works with partners across the country to 
help manage all 750 million acres of our nation's forests. Two thirds 
of our nation's forests, over 500 million acres, are in non-Federal 
ownership. These state, private and tribal forests comprise about 20 
percent of our nation's land base. Management practices on these lands 
impact everyone, both socially and economically, as well as affecting 
the natural environment. The nation's private forests are a key 
component of America's rural landscapes, stimulating healthy rural 
communities and economies, and supporting well-paying jobs.
    The Forest Service, primarily through its State and Private 
Forestry Programs, provides both technical assistance and cost-share 
financial assistance to landowners and resource managers to help 
conserve and enhance the benefits from our nation's forests and protect 
them from harm. These State and Private Forestry Programs are delivered 
by an ever expanding network of partners centered around the State 
Forestry agencies. As a result, we work where Federal, state, and local 
interests intersect. We also work closely with a variety of Federal 
agencies helping them deliver their programs to benefit America's 
forests and the American people. These efforts are a key part of 
Secretary Vilsack's ``All Lands'' vision for our nation's forests. This 
Federal investment leverages the capacity of State Foresters and their 
partners to manage state and private lands and produce ecological, 
social and economic benefits for the American people.
2008 Farm Bill: State-Wide Assessments and Strategies for Forest 
        Resources
    The 2008 Farm Bill contained an increased focus on forestry and 
forest landowners. For the first time, the farm bill set priorities for 
private forest conservation: (1) conserving and managing working forest 
landscapes for multiple values and uses; (2) protecting forests from 
threats; and (3) enhancing public benefits from private forests 
(section 8001). To help ensure success in focusing on these priorities, 
section 8002 of the 2008 Farm Bill required each state and territory, 
by June 2010, to develop an assessment of the forest resource 
conditions within its boundaries and develop a long-term forest 
resource strategy to address threats and describe necessary resources. 
All states and territories submitted these Assessments to the Forest 
Service by the deadline and they now represent the first-ever 
``strategic plan'' for the nation's forests. The resulting Statewide 
Assessments and Strategies, or Forest Action Plans, provide an analysis 
of forest conditions and trends and delineate priority landscape areas 
in each state and territory. They offer practical, long-term plans for 
focusing state, Federal and other resources on priorities that will be 
most effective in achieving national conservation goals.
    The approach for developing these plans varied widely among states 
and territories, reflecting differences in the way that national, 
state, and local priorities came together, the differing challenges 
each faced, and the resources available to tackle those challenges. 
Many states engaged in wide-ranging stakeholder involvement processes 
and involved a variety of partners in establishing their priorities. 
They used an ``All Lands'' approach that considered all forestland 
within their boundaries, regardless of ownership. The primary trends 
and threats facing the nation's forests, as revealed in the Forest 
Action Plans, include changing ownerships of private forestlands, 
forest fragmentation, water quality and quantity issues, increasing 
urbanization, increasing amounts of Wildland Urban Interface areas, and 
the effects of climate change, wildfire, and invasive species. Each of 
these issues intertwines with the others. Cooperation and coordination 
across jurisdictional boundaries are clearly needed to address these 
issues, most of which can only be addressed meaningfully at a landscape 
level. By focusing on priority outcomes that address landscape-scale 
issues, the Forest Action Plans provide a tool to guide investments 
that will conserve, protect, and enhance our forests.
2008 Farm Bill: Forestry Programs
    To achieve the priorities of conserving, protecting and enhancing 
the nation's forests, the Forest Service administers a number of 
programs through its State and Private Forestry Deputy Area that are 
authorized by the farm bill. Many of these programs stem from older 
laws, like the 1911 Weeks Act, the 1924 Clarke-McNary Act, and the 
Cooperative Forestry Assistance Act of 1978. However, in recent years, 
these laws have most often been amended in the farm bill and new 
private forestland programs administered by the Forest Service have 
been authorized. Also, Forest Service programs authorized by the farm 
bill are funded through discretionary appropriations each year.
    This testimony provides an overview and status for six of the 
Forest Service programs, as well as the forestry programs housed in the 
Natural Resources Conservation Service and Farm Service Agency.
    Forest Health Management--Federal and Cooperative Lands: The Forest 
Health Management (FHM) program is truly all-lands. It is made up of 
two components: Forest Health Protection on Federal lands and Forest 
Health Protection on Non-Federal lands. Funding for these components 
come in both the State and Private and Wildland Fire Management 
appropriations. The FHM program provides insect, disease, and invasive 
plant survey and monitoring information and technical and financial 
assistance to prevent, suppress, and control outbreaks threatening 
forest resources. FHM utilizes science, active land management, and 
technology transfer expertise to restore and sustain forest 
landscapes--across urban, private, state, Tribal, and Federal forests. 
Recently completed Forest Action Plans have, in many cases, identified 
forest health as a key state priority. These Plans are being used to 
help guide priorities at the national and regional levels. The 
technical and financial assistance that FHM provides help to ensure 
that forests remain healthy and resilient by minimizing impacts of 
native and invasive insects and diseases, and invasive plants.
    The FHM program works collaboratively with other agencies, 
especially the Animal and Plant Health Inspection Service (APHIS), to 
combat several damaging invasive pests, such as emerald ash borer, 
Asian long horned beetle, sudden oak death, and hemlock woolly adelgid. 
FHM also plays an active role in international activities. Many of the 
current forest health issues regarding invasive and exotic insects and 
diseases are directly related to the international arena. During Fiscal 
Year (FY) 2010, FHM specialists were involved in approximately 50 
international-related activities in 17 countries, including biological 
control of invasive insects, providing training in bark beetle 
management and identification, and technology transfer for aerial 
survey detection.
    In FY 2010, FHM received $78 million in funding for this work on 
Federal lands and $60 million in funding for this work on non-Federal 
lands. Over the last 3 years, FHM has protected almost 4 million acres 
of Federal and non-Federal lands from invasive and native pests.
    The President's FY 2012 Budget proposes $118.9 million for Forest 
Health Management.
    Cooperative Fire Assistance--State Fire Assistance: The State Fire 
Assistance (SFA) program provides matching financial assistance through 
partnership agreements to State Foresters for all fire management 
activities including preparedness activities, planning, training, 
hazardous fuel treatments, and the purchase and maintenance of 
equipment. Funds provide financial assistance, technical training, and 
equipment to ensure that Federal, state, and local fire agencies can 
deliver a coordinated response to wildfire. The emphasis is on 
improving fire planning, initial attack capabilities, and use of the 
Incident Command System and wildland fire techniques training for local 
fire agencies. This program also supports programs such as the Smokey 
Bear fire prevention campaign, Firewise, and Ready, Set, Go! Funds are 
provided in both the State and Private and Wildland Fire Management 
appropriations. We emphasize funding in areas that have developed or 
are developing Community Wildfire Protection Plans (CWPPs), FEMA hazard 
mitigation plans, or other collaboratively developed hazard mitigation 
plans. Recipients of SFA funds are required to provide a 50 percent 
cost-share match, which leverages the amount of work that is completed 
with SFA funds.
    In FY 2010, the agency received $110 million in SFA funds for this 
work, which were used, in part, to train almost 15,000 firefighters 
across the county and conduct over 19,000 prevention and education 
programs. In the past 3 years, this program has assisted over 13,000 
communities at risk from wildland fire in developing management plans 
and provided funding for over 660,000 acres of hazardous fuels 
treatments near communities.
    The President's FY 2012 Budget proposes $78.8 million for State 
Fire Assistance.
    Cooperative Fire Assistance--Volunteer Fire Assistance: Originally 
authorized in Title IV of Public Law 921-419, ``The Rural Development 
Act of 1972,'' the Volunteer Fire Assistance (VFA) program provides 
Federal financial, technical, and other assistance to State Foresters 
and other appropriate officials to organize, train and equip fire 
departments in rural communities (population of 10,000 or less) to 
suppress fires. A department may buy fire equipment, pay for training 
or training materials, or cover the cost of department incorporation, 
as long as the funds are matched. Volunteer fire departments receiving 
VFA funds are required to provide a 50 percent cost-share match. Funds 
are provided in both the State and Private and Wildland Fire Management 
appropriations.
    Volunteer fire departments play a major role in suppressing 
wildfires on Federal lands. Rural Fire Departments represent the first 
line of defense in coping with fires and other emergencies in rural 
areas and rural communities. They provide nearly 80% of initial attack 
on wildland fires in the United States. These departments are charged 
with the protection of lives, homes and business investments in rural 
America. Their presence enhances rural development opportunities and 
economic vitality, thereby improving standards of living in rural 
areas.
    The Forest Service and the Department of the Interior land 
management agencies have entered into cooperative agreements with many 
rural volunteer fire departments for the purpose of protection of both 
communities and natural resources. A level of fire protection is 
attained that would be impossible without such cooperation. Interagency 
agreements provide a cost-effective means of enhancing fire protection.
    In FY 2010, the agency received $15.7 million in VFA funds. These 
funds were used to train over 9,000 firefighters in rural areas and 
helped to expand or create 18 fire departments in rural communities. In 
the past 3 years, the program has assisted almost 38,000 volunteer fire 
departments.
    The President's FY 2012 Budget proposes $13.4 million for Volunteer 
Fire Assistance.
    Forest Stewardship Program: The Forest Stewardship Program is the 
only Forest Service program focused on private forestland management. 
The program delivers assistance by leveraging a national network of 
forestry technical assistance providers and programs. Because of this 
unique role--and since most of America's forests are privately owned--
the Forest Stewardship Program is central to addressing forest resource 
management issues. Individual forest landowners are assisted within the 
context of forest resource management issues that cross boundaries and 
encompass multiple ownerships and jurisdictions. The Forest Stewardship 
Program plays a fundamental role in keeping forests as forests, 
preparing forest landowners for forest products and ecosystem services 
markets, qualifying them for incentive programs, and maintaining jobs 
and diverse forest products markets in rural communities. Since its 
authorization in 1990, the Forest Stewardship Program has provided 
funding for more than 330,000 comprehensive forest management plans 
covering 38 million acres nationwide and has reached more than five 
million private forest landowners through a variety of technical and 
educational assistance programs.
    In FY 2010, the agency received $29.4 million in Forest Stewardship 
funds. These funds were used to conduct landowner education programs 
for almost 230,000 landowners and fund almost 15,000 new or revised 
Forest Stewardship Plans. In FY 2010, over 1.8 million acres of 
nonindustrial private forestland was being managed sustainably under 
Forest Stewardship Management Plans.
    The President's FY 2012 Budget proposes $29.4 million for the 
Forest Stewardship program.
    Urban and Community Forestry Program: The Urban and Community 
Forestry Program (U&CF) fosters the creation of healthier, more livable 
urban environments across the nation by promoting benefits of tree 
cover in urban areas and communities, encouraging maintenance of trees 
and community forests, and expanding research and education efforts 
intended to improve the understanding of trees' economic, 
environmental, social and psychological, and energy conservation 
benefits. With 80% of Americans living in cities, suburbs and towns, 
there are strong environmental, social, and economic cases to be made 
for the conservation of green spaces to guide growth and revitalize 
city centers and older suburbs. The Urban and Community Forestry 
Program is helping to improve the condition and extent of the 100 
million acres of community trees and forests in cities, suburbs, and 
towns where people live, work and play.
    All Americans benefit from the multitude of services that the urban 
tree canopy provides, including improved human health and wellbeing, 
green jobs, energy conservation, improved air and water quality, carbon 
sequestration, recreation, and wildlife habitat. Urban and Community 
Forestry also provides support and funding for cutting-edge 
technologies and information, such as the ``i-Tree'' suite of local 
decision support tools that include urban forest benefits assessment, 
pest detection and storm response protocols.
    In FY 2010, the Forest Service received $30.4 million in Urban and 
Community Forestry funds. These funds were used to assist over 7,000 
communities reaching a total of 177 million people. In the past 3 
years, the program has helped over 21,000 communities.
    In FY 2012 the President's Budget includes $32.4 million for the 
Urban and Community Forestry program.
    Forest Legacy Program: The Forest Legacy Program (FLP) protects 
environmentally important private forest areas that are threatened by 
conversion to non-forest uses. In partnership with participating 
states, private landowners, and other conservation partners the FLP 
works to identify important forestlands and protect them for future 
generations. The FLP provides the opportunity for the continuation of 
traditional forest uses, including forest management activities and 
outdoor recreation. Using conservation easements and fee-simple 
purchases, FLP gives priority to lands that have important scenic or 
recreational values, riparian areas, fish and wildlife values, and 
other ecological values. Family forest owners and timber companies 
currently face increasing pressure to sell, subdivide, and develop 
their land. This program provides financial incentives to help private 
landowners stay on their land to conserve their forests, thereby 
protecting outdoor recreation opportunities, fish and wildlife habitat, 
water quality and resource-based economies. The program operates on a 
``willing buyer-willing seller'' basis and is a non-regulatory, 
incentive-based land conservation program.
    Funds for the FLP program are provided through the Land and Water 
Conservation Fund. In FY 2010, the agency received $78.96 million in 
FLP funding. Since its inception, the program has protected over 2 
million acres of important forest from conversion.
    In FY 2012, the President's Budget includes $135 million for the 
Forest Legacy program.
    In addition to these programs, the 2008 Farm Bill authorized four 
new programs administered by the Forest Service, which are in various 
stages of implementation.

    1. Community Forest and Open Space Conservation Program: This 
        program, authorized under Section 8003 of the 2008 Farm Bill, 
        directs the Forest Service to provide grants to Tribal 
        governments, local governments, and qualified nonprofit 
        entities to acquire private forestland that is threatened by 
        conversion to non-forest uses, and establish community forests 
        that provide accessible community benefits. The benefits 
        include public recreation, improvement of environmental health, 
        economic activity, and forest-based educational programs. This 
        program received $500,000 in funding in FY 2010 and $1 million 
        in FY 2011. The Forest Service is still in the process of 
        finalizing the regulations for this program. The agency engaged 
        in government-to-government consultation with tribes during a 
        145 day period, and conducted a 60 day public comment period, 
        which ended on March 7, 2011. The Forest Service analyzed 
        comments received during both processes and prepared final 
        regulations for the program. The final regulation is planned 
        for publication in the Federal Register later this year.

    2. Pest and Disease Revolving Loan Fund: The Pest and Disease 
        Revolving Loan program was authorized in section 10205 of the 
        2008 Farm Bill. The program is authorized to provide loans to 
        local governments to finance the purchase of equipment needed 
        for the management of diseased or pest-infested trees. The 
        agency has implemented an interim procedure to help address 
        pest and disease issues, using its existing grant authorities 
        to make grants to the states, which in turn, make grants 
        available to local governments.

    3. Community Wood Energy Program: Section 9013 of the 2008 Farm 
        Bill directs the Forest Service to establish the Community Wood 
        Energy Program. This program authorizes appropriations of $5 
        million per year for fiscal years from 2009 through 2012 for a 
        grant program to provide state and local governments up to 
        $50,000 to develop community wood energy plans. Competitive 
        grants could also be available to acquire or upgrade community 
        wood energy systems that primarily service public facilities 
        owned or operated by the governmental entity and that use woody 
        biomass as the primary fuel. To date, this program has not been 
        funded.

    4. Forest Biomass for Energy Program: Section 9012 of the 1008 Farm 
        Bill directs the Forest Service to conduct a competitive 
        research and development program to encourage use of forest 
        biomass for energy. The agency's Research and Development 
        Deputy Area would administer this program. To date, this 
        program has not been funded.

    Biomass Commercial Utilization Grant Program: The agency also 
implements a program, the Biomass Commercial Utilization Grant Program, 
that authorizes grants to an owner or operator of a facility that uses 
biomass for wood-based products or other commercial purposes, to offset 
the costs incurred to purchase biomass. Section 203 of the Health 
Forests Restoration Act provided an authorization of appropriations for 
this program through Fiscal Year 2008. Through appropriations acts, the 
agency has provided $5 million of hazardous fuels funds for the biomass 
utilization grants each year since 2005. From 2005 to 2010, the grants 
have focused on assisting businesses and communities with the 
production, delivery, and utilization of wood residues. The Forest 
Service has provided grants for equipment such as grinders, harvesters, 
new trucking methods, energy production facilities, roundwood 
manufacturing, and production of wood shavings for animal bedding 
markets. In FY 2010, 13 biomass grant awards were made to small 
businesses and community groups in six states. In 2011, the emphasis 
was changed to focus on engineering design, permitting, and other 
preconstruction work for wood energy facilities. Grants for biomass 
utilization have totaled over $30 million to 123 grant recipients in 21 
states since 2005.
2008 Farm Bill: Cultural and Heritage Cooperation
    Subtitle B, Cultural and Heritage Cooperation Authority applies 
specifically to the Forest Service's interactions and capacity for 
cooperation with federally recognized Indian tribes. Section 8106, 
``Prohibition on Disclosure,'' exempts certain information received by 
the agency from the Tribes from disclosure under the Freedom of 
Information Act. Other provisions in Subtitle B relate to reburial of 
human remains and cultural items, temporary closures for traditional 
and cultural purposes, and gathering of forest products by Tribes.
    In addition to the Forest Service, USDA's Natural Resource 
Conservation Service (NRCS) and Farm Service Agency (FSA) also have 
forestry programs authorized in the 2008 Farm Bill.
Natural Resources Conservation Service--Forestry Activities
    USDA's NRCS assists private forest owners in managing the nation's 
nonindustrial private forests through technical and financial 
assistance. NRCS has a long-term combined objective for forestland with 
an expected outcome of healthy forestlands that are productive, 
diverse, resilient, and provide a wide range of ecosystem services. 
During the past 3 years, about 4.7 million acres of private forestland 
have received conservation treatment through NRCS assistance.
    In 2010, the Environmental Quality Incentives Program (EQIP) 
authorized under the Conservation Title of the farm bill, provided 
about $51 million (about six percent of total EQIP funding) to private 
forest owners to improve forest health. This level of assistance has 
steadily increased since enactment of the 2008 Farm Bill. Conservation 
practices funded by EQIP include forest health treatments, tree 
planting and reforestation activities, and plan development to help 
guide the stewardship of forestlands into the future. So far in FY 
2011, EQIP has funded 1,443 new forest management plans. Additionally, 
over 20 percent of the FY 2010 funds under the Wildlife Habitat 
Incentive Program (WHIP) have supported wildlife habitat improvement on 
private forestlands with special emphasis in the Longleaf Pine 
Ecosystem Restoration Initiative in the southeast and the New England/
New York Forestry Initiative.
    The Conservation Stewardship Program (CSP) takes a different 
approach than other programs by encouraging existing good stewards to 
continue and expand their forest management. In the past 2 years, about 
2.1 million acres of nonindustrial private forestland were enrolled in 
CSP. The most popular CSP forest practices include prescribed burning, 
forest stand improvement, and building shelters and structures for 
wildlife. Additionally the Cooperative Conservation Partnership 
Initiative (CCPI) component of EQIP, WHIP, and CSP program funds were 
leveraged with resources from state and local governments and 
conservation organizations in seven focused forested landscapes with 
projects ranging from restoring salmon spawning grounds to reducing 
sediment loss from timber harvesting operations.
    Through the Healthy Forests Reserve Program (HFRP), NRCS assists 
landowners in restoring, enhancing, and protecting forest ecosystems 
to: (1) promote the recovery of threatened and endangered species; (2) 
improve biodiversity; and (3) enhance carbon sequestration. 
Participants may enroll in HFRP through restoration agreements, 
contracts, and easements depending on their objectives. An FY 2010 HFRP 
project in Oregon is working to increase Northern Spotted Owl habitat 
while maintaining a working forest. The effort is a partnership between 
NRCS, the U.S. Fish and Wildlife Service, the Oregon Department of 
Forestry and 11 private landowners. The project includes long-term 
plans for stand management and provides the landowners with assurances 
that if they manage their property in accordance with the plan, they 
will avoid future regulatory restrictions on the use of that land under 
the Endangered Species Act. In FY 2010, over 5,600 acres were enrolled 
in 13 states for about $6.5 million in financial assistance.
Farm Service Agency--Forestry Activities
    USDA's Farm Service Agency (FSA) implements the Emergency Forest 
Restoration Program (EFRP), a program that provides payments for 
nonindustrial private forestland to carry out emergency measures to 
restore land damaged by a natural disaster. Funding for EFRP is by 
appropriations. For FY 2010, $18 million was made available by 
supplemental appropriations.
    To be eligible for EFRP, nonindustrial private forestland must have 
existing tree cover (or had tree cover immediately before the natural 
disaster occurred and is suitable for growing trees). EFRP program 
participants may receive financial assistance of up to 75 percent of 
the cost to implement approved emergency forest restoration practices. 
A payment limitation of $500,000 per person or legal entity applies per 
disaster.
    EFRP program participants may implement emergency forest 
restoration practices including emergency measures necessary to repair 
damage caused by a natural disaster to natural resources on 
nonindustrial private forestland and to restore forest health and 
forest related resources on the land.
Conclusion
    In conclusion, sound management of our nation's forestlands is 
important to all Americans. There are over 500 million acres of non-
Federal forestland in the United States and recent research has shown 
that every year, large areas are lost to development and sprawl. The 
majority of the acres at risk, more than 430 million acres, are owned 
by families and individuals. Some of these private forest owners lack 
the financial and technical resources to hold on to and manage their 
forests effectively. Farm bill programs offer protection for forests 
and support for these working landscapes by directing technical support 
and resources to these forest landowners--helping to keep working 
forests intact, providing quality jobs in rural America, and keeping 
privately-owned forestlands together for future generations.
    The Forest Service's State and Private Forestry Deputy Area 
administers these programs through robust partnerships with states, 
private landowners, and other partners. These programs and partnerships 
help private landowners and rural communities care for their forests, 
strengthen local economies, and maintain a high quality of life.
    Thank you for the opportunity to be here today to discuss the 
Forest Service's farm bill programs. I am happy to answer any questions 
from the Subcommittee Members.

    The Chairman. Thank you, Chief.
    Administrator Canales, go ahead and proceed whenever you 
are ready. Thank you.

   STATEMENT OF JUDY CANALES, ADMINISTRATOR, RURAL BUSINESS 
     COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Ms. Canales. Chairman Thompson, Ranking Member Holden, and 
Members of the Subcommittee, thank you for the opportunity to 
review Rural Development's energy programs, accomplishments in 
creating jobs and building a cleaner, more secure, more 
sustainable and domestically produced energy sector for future 
generations.
    The mission of Rural Development's Rural Business Service 
programs is to enhance the quality of life for rural Americans 
by providing leadership in building competitive businesses. We 
provide funding opportunities for the development and 
commercialization of renewable energy sources to change the way 
people power their homes, businesses and industries.
    We meet these goals by providing financial and technical 
assistance to businesses and cooperatives located in rural 
communities and establishing strategic alliances and 
partnerships that leverage public, private and cooperative 
resources to create jobs and stimulate rural economies.
    Through USDA's Rural Business Service, four title IX 
programs are implemented to assist the agriculture sector in 
finding energy solutions and helping rural residents and 
communities access renewable energy systems and to use energy 
more efficiently. These four programs are section 9003, the 
Biorefinery Assistance Program; section 9004, the Repowering 
Assistance Program; section 9005, the Advanced Biofuel Payment 
Program; and section 9007, the Rural Energy for America 
Program, REAP.
    The section 9003 Biorefinery Assistance Program provides 
much-needed assistance in the development of new and emerging 
technologies to develop advanced biofuels.
    My agency, Rural Business Service, is currently reviewing 
ten applications totaling over $1 billion in funding requests. 
Through the section 9004 Repowering Assistance Program, we will 
provide payments to biorefineries who switch from using fossil 
fuels to using renewable biomass to produce heat or power for 
their facilities. We are currently reviewing applications at 
this moment.
    The section 9005 Advanced Biofuels Payment Program provides 
payments to eligible producers to support and expand the 
production of advanced biofuels. To date, almost $30 million in 
assistance payments have been provided to 141 advanced biofuel 
producers. The section 9007 Rural Energy for America Program, 
REAP, is the longest running renewable energy program that 
Rural Business operates. In Fiscal Year 2010, we provided 2,400 
grants and loan guarantees, totaling $159 million in support of 
energy audits and energy efficiency and renewable energy 
projects, including projects, such as windmills, methane 
digesters and geothermal systems.
    REAP provides an immediate impact and engages all types of 
communities.
    For example, the Menard family, a farming couple located in 
New York, received a $31,000 grant for a solar electric 
generating system. The system has already saved this farm and 
this family over $11,000 in electric costs.
    Since the signing of the 2008 Farm Bill, our renewable 
energy programs have invested over $460 million in 
biorefineries and renewable energy and energy efficiency 
systems.
    Through Fiscal Year 2010, over 6,100 awards were made, 
saving or generating enough energy to support 2.3 million 
households for a year. These programs are distinct and unique 
in the Federal Government. There are no other programs that 
solely support cellulosic and advanced biofuel production or 
the conversion of biorefinery power systems to renewable 
energy.
    REAP is also unique, creating a multitude of methods to 
support the energy sector.
    The USDA Rural Business Service, my agency, is the only 
Federal agency that is focused and dedicated to promoting rural 
communities and businesses in rural communities. Our field 
office structure reaches out to the poorest, most rural 
counties in America, providing Federal support to businesses 
who will not receive financial aid from any other source.
    We are the leader in promoting the creation and expansion 
of renewable energy in rural areas.
    Advancing biomass and biofuel production, which has the 
potential to create jobs, is one of the many ways we are 
looking to rebuild and revitalize rural America. By producing 
renewable energy, especially biofuels, America's farmers, 
ranchers and rural communities have the ability to be help 
ensure our nation's energy security, environmental security and 
economic security.
    In conclusion, thank you for your time, Mr. Chairman, and 
Members of the Subcommittee. We at the USDA Rural Business 
Service are committed to promoting renewable energy in rural 
communities through our grants, our loan guarantees and payment 
programs.
    I will be happy to respond to questions from the Committee. 
Thank you.
    The Chairman. Thank you, Administrator.
    Deputy Administrator Garcia, go ahead and proceed whenever 
you are ready.

 STATEMENT OF JUAN GARCIA, DEPUTY ADMINISTRATOR, FARM SERVICE 
                   AGENCY, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.

    Mr. Garcia. Chairman Thompson, Ranking Member Holden, 
Members of the Subcommittee, thank you for the opportunity to 
appear before you today. My name is Juan Garcia, Acting Deputy 
Administrator for Farm Programs at the Farm Service Agency. My 
remarks will focus on FSA's energy programs.
    As part of the Energy Policy Act of 2005, Congress created 
the first renewable fuel standard calling for 7.5 billion 
gallons of corn starch ethanol in our national fuel supply by 
2012. When Congress modified the renewable fuel standard in 
2007, it increased the biofuel targets to 36 billion gallons by 
2022.
    It has taken more than 20 years to introduce just over 10 
billion gallons of biofuels, but now the nation must achieve 20 
billion gallons more biofuels in half the time.
    Meeting this goal means growing new crops in greater 
quantities. Some of these crops will take several years from 
establishment to maturity before they can be harvested and will 
be used in facilities that may not yet be completed.
    Producers growing these new crops are subject to greater 
risks in the establishment, production and marketing of the 
biomass crops, as compared to the production of conventional 
crops.
    The 2008 Farm Bill created a program designed to jump start 
the establishment of bioenergy crops and reduce the risk to 
producers. This is a Biomass Crop Assistance Program, BCAP, 
which offers incentives to farmers, ranchers and forest 
landowners to establish, maintain and harvest a dedicated 
energy crop for heat, power, biobased products and fuels.
    Two types of assistance are available under BCAP. First, 
establishment costs and annual payments may be available to 
producers who enter into contracts with FSA to produce eligible 
crops within approved project areas. Participants may receive 
up to 75 percent of the establishment costs for perennial crops 
and annual payments for up to 5 years for non-woody crops or up 
to 15 years for woody crops.
    Second, matching payments may be available to producers for 
the collection, harvest, storage and transport of eligible 
biomass to qualified facilities that produce heat, power, 
biobased products or advanced biofuels from that biomass.
    In July 2009, FSA issued a notice of funds availability for 
the matching payments portion of the BCAP program, issuing the 
first payment in August of 2009. FSA published a proposed rule 
in February of 2010 to implement the full program. After review 
of over 24,000 comments, the final rule for BCAP was published 
on October 27, 2010, and FSA began accepting applications for 
BCAP project areas.
    Earlier this year, FSA began the sign up for Iowa farmers 
seeking matching payments for the delivery of crop residues to 
a qualified biomass conversion facility located in South 
Dakota. FSA also announced the first BCAP project area, 
comprising of 39 contiguous counties in Missouri and Kansas 
that proposed the enrollment of up to 50,000 acres of native 
grasses, including switchgrass from manufacturing into pellet 
fuels. And, last month, FSA announced four more BCAP project 
areas, in Arkansas, Missouri, Ohio and Pennsylvania, designated 
to grow giant Miscanthus, a sterile hybrid warm-season grass 
intended for bioenergy conversion.
    On April 14 of this year, funding for BCAP was 
legislatively reduced from $432 million to $112 million that 
must be obligated by the end of this fiscal year. In order to 
meet this timeframe, FSA announced that BCAP project area 
proposals must be submitted no later than May 27 of this year.
    Interest in BCAP has been significant. FSA received 41 
project proposals from 21 states where project area sponsors 
requested an estimated $1 billion to enroll more than 1.5 
million acres in dedicated energy crops over 5 to 15 years. FSA 
soon will announce a final project area selection for Fiscal 
Year 2011.
    In addition to BCAP, the 2008 Farm Bill also authorizes the 
establishment of the Feedstock Flexibility Program. This 
program was authorized to prevent the accumulation of 
government-held sugar stocks that otherwise can impede price 
recovery, by allowing USDA to sell the surplus sugar to 
bioenergy producers as a fuel feedstock.
    Domestic sugar demand has increased significantly and is 
expected to remain strong relative to supplies in Fiscal Years 
2011 and 2012. USDA does not anticipate an immediate need for 
the Feedstock Flexibility Program.
    Mr. Chairman and Members of the Subcommittee, this 
concludes my remarks. I will be prepared to answer any 
questions that you may have. Thank you.
    [The joint prepared statement of Ms. Canales and Mr. Garcia 
follows:]

Joint Prepared Statement of Judy Canales, Administrator, Rural Business 
 Cooperative Service; Juan Garcia, Deputy Administrator, Farm Service 
        Agency, U.S. Department of Agriculture, Washington, D.C.
    Chairman Thompson, Ranking Member Holden, and Members of the 
Subcommittee, our nation today faces pressing challenges to increase 
our energy security, decrease our dependence on imported oil, protect 
and improve our environment, and create new jobs and new opportunities 
that will strengthen our economy. In the face of these challenges, 
renewable energy offers an enormous opportunity for all Americans but 
especially for agriculture and rural America to help build a cleaner, 
more secure, more sustainable, and domestically-produced energy sector 
for future generations. Advancing the development and deployment of 
renewable energy is a high priority for the Obama Administration, as it 
has been for bipartisan champions in Congress for many years. USDA has 
been and remains a proud partner in these efforts. We appreciate the 
opportunity to appear before you today to discuss USDA's energy 
programs which contribute to an energy policy that reduces our 
dependence on imported oil, protects our environment, and promotes jobs 
and economic growth in the United States.
    This testimony will review the Title IX (Energy Title) programs 
from the 2008 Farm Bill and will also provide additional information on 
some of the ways in which other agencies and programs contribute to the 
overall USDA energy portfolio.
Renewable Energy at USDA
    USDA has a longstanding commitment to supporting the research and 
development and commercialization of renewable energy resources. While 
there are urban and suburban sources of renewable energy, renewable 
energy is largely rural energy--produced in rural areas and moved to 
more urban areas where the majority of the energy users live.
    USDA support for biofuels and bioenergy is an important part of a 
much broader commitment to a cleaner and greener future which has 
included investment in biofuels, biomass to energy, wind, solar, 
geothermal, hydroelectric power and energy efficiency, as well as basic 
scientific research into second and third generation biofuels and 
biomass to power. USDA recognizes that environmentally responsible 
renewable energy and energy conservation provide opportunities for 
economic growth and prosperity across rural America and the nation as a 
whole. We are working to ensure that our programs meet and exceed the 
challenge of promoting sustainable economic growth and prosperity.
    USDA programs support the entire supply chain of renewable energy 
production, from feedstock research and development through to the 
consumer, drawing on the established expertise, funding, and staff from 
a dozen USDA agencies and offices as follows:


 
 
 
   Rural Development            Office of the Chief
                                      Economist
   Farm Service Agency          Departmental Management
   National Institute of        Natural Resources
 Food and Agri-                       Conservation
    culture                              Service
   Agricultural Research        Forest Service
 Service
   National Agricultural        Foreign Agricultural
 Statistics                           Service
    Service                             Agricultural Marketing
                                      Service
   Economic Research
 Service
 


    USDA is working within the Department and with other Federal 
departments and organizations on furthering renewable energy and energy 
efficiency; efforts include but are not limited to, the following 
intra/intergovernmental agreements, councils, working groups, and 
boards. USDA organizes all energy-related efforts internally through 
the USDA Energy Council to lead the Department in policy development, 
and the USDA Energy Council Coordinating Committee to coordinate 
activities and perform duties assigned by the Secretary and the Energy 
Council. USDA along with the Department of Energy (DOE) co-chairs the 
Biomass Research and Development Board (BR&D Board) which coordinates 
the government-wide research initiative and activities for the purpose 
of promoting the use of biobased products, power and biofuels. Members 
of the board also include the National Science Foundation, 
Environmental Protection Agency (EPA), Department of the Interior, 
Department of Defense, Department of Transportation and the Office of 
Science and Technology Policy. The BR&D Technical Advisory Committee is 
a group of approximately 30 individuals from industry, academia, and 
state government, and is responsible for providing guidance to the BR&D 
Board on the technical focus of the Biomass Research and Development 
Imitative. Additionally, President Obama established the Biofuels 
Interagency Working Group (BIWG) co-chaired by the Secretaries of 
Agriculture and Energy, and the Administrator of the EPA, which works 
closely with the BR&D Board in undertaking its work. The BIWG will 
develop the nation's first comprehensive biofuel market development 
program.
Farm Bill Energy Programs
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
provided over $1 billion of mandatory funding during a 5 year period to 
support a comprehensive approach to energy efficiency and renewable 
energy development in rural America. The 2008 Farm Bill reauthorized, 
expanded, and/or modified existing programs, and created new programs 
and initiatives to promote advanced biofuels production. The bill 
supports farm, small rural business, and community renewable energy 
systems; promotes production, marketing, and processing of biofuel 
feedstocks other than those using corn starch; and expands research, 
education, and demonstration programs for advanced biofuels. It also 
expanded programs for Federal procurement of biofuels and bio-refinery 
repowering projects and established USDA as the lead agency for 
coordination of Federal biobased energy efforts. The Title IX (Energy 
Title) programs were designed to increase America's energy security, 
improve the environment, and strengthen rural economies through 
development and production of renewable energy and the creation of 
sustainable green jobs. The Obama Administration and USDA are committed 
to these objectives.
Additional USDA Energy Programs and Efforts
    Outside of the Energy Title programs, USDA has made significant 
progress in assisting farmers, forest landowners, rural businesses and 
communities, rural residents, agricultural producers and the nation 
responding to energy related issues and opportunities. These range from 
fundamental scientific research to the development and 
commercialization of new technologies. They include outreach and 
education, technical assistance programs, financial support for 
infrastructure, and the adoption of biobased and energy-saving products 
and volunteer biobased product labeling by USDA itself. We support more 
energy efficient farming and sustainable feedstock production and 
management techniques; geothermal facilities; solar and wind farms; 
current and advanced bioenergy production supply chains; and 
biochemical and genomics research crucial to furthering the advancement 
of these technologies in the future. USDA also supports modernization 
of the rural electric grid through smart grid technologies, renewable 
energy development, as well as renewable energy transmission to move 
renewable electricity to markets.
Rural Development
    Rural Development consists of three agencies, the Rural Business 
Service (RBS), the Rural Utility Service (RUS), and the Rural Housing 
Service, with RBS and the RUS managing renewable energy programs. 
Within Rural Development, only RBS operates programs created under the 
Energy Title of the farm bill.
    The mission of Rural Development's Rural Business Service (RBS) 
programs is to enhance the quality of life for rural Americans by 
providing leadership in building competitive businesses including 
sustainable cooperatives that can prosper in the global marketplace. We 
meet these goals by investing financial resources and providing 
technical assistance to businesses and cooperatives located in rural 
communities and establishing strategic alliances and partnerships that 
leverage public, private, and cooperative resources to create jobs and 
stimulate rural economic activity.
    The RBS mission is unique in the Federal Government. There is no 
other Federal agency that focuses only on promoting rural communities 
and businesses. Our field offices reach out to the poorest, most rural 
counties in America, providing Federal support to businesses who might 
otherwise not receive financial aid from any other source.
Energy Programs
    RBS implements four Energy Title programs to assist the agriculture 
and energy sectors in finding energy solutions and helping rural 
residents, rural small businesses, and communities to access renewable 
energy systems and to use energy more efficiently. We provide funding 
opportunities in the form of payments, grants, and loan guarantees for 
the development and commercialization of renewable energy sources 
including wind, solar, geothermal, hydrogen, ocean waves, 
hydroelectric, biomass, and advanced biofuel (ethanol, biodiesel, 
methane gas, etc.) to change the way people power their homes, 
businesses, and industries. By making renewable energy sources 
commercially viable, we are also helping to create sustainable 
opportunities for wealth, new jobs, and increased economic activity in 
rural America.
    RBS has been a leader in promoting the creation and expansion of 
renewable energy in rural areas. Since the enactment of the 2008 Farm 
Bill, the renewable energy programs authorized under the Energy Title 
have invested over $460 million in biorefineries and renewable energy 
and energy efficiency systems through mandatory funding for grants, 
loan guarantees, and assistance payments. Through 2010, over 6,100 
awards were made, saving/generating close to 28 billion kWh of energy 
or supporting approximately 2.3 million households for a year. These 
programs provide an immediate impact and affect all walks of life. Take 
for example, Gary and Connie Menard, a dairy farming couple in Mooers, 
New York. They received a $31,162 grant from USDA which covered 25 
percent of the cost of a 12.6 kilowatt solar electric generating system 
that featured a system to track the sun for maximum output. The system 
has generated over 85,000 kilowatt-hours of electricity to date and has 
already saved the farm over $11,000 in electric costs.
    The three Energy Title programs that RBS administers for the sole 
purpose of promoting biofuels are distinct and unique in the Federal 
Government. There are no other programs that's sole purpose is to 
support the processing of advanced biofuel production, as is the case 
for the Biorefinery Assistance program and the Advanced Biofuel Payment 
Program respectively. The Repowering Assistance Program is the only 
program of its kind, providing support to biorefineries to convert 
their power systems to renewable energy.
Rural Energy for America Program (REAP)
    REAP is the longest running renewable energy program that RBS 
operates. Initially authorized under the 2002 Farm Bill, the program 
was reauthorized and expanded in the 2008 Farm Bill. REAP provides 
grants and loan guarantees for renewable energy and energy efficiency 
to support a multitude of methods to support the energy sector in rural 
America. The President's Budget for Fiscal Year (FY) 2012 requested $37 
million to support a program level of $45 million in 2012 in addition 
to the $165 million in mandatory program level funding to support $210 
million in program activity. In FY 2011 RBS has $75 million in 
mandatory and discretionary funding to support a program level of $113 
million in funds which will be awarded to many of the over 3,000 
applications that were received. In FY 2010, the program provided 2,400 
grants and loan guarantees totaling $159 million in support for energy 
audit projects, and energy efficiency and renewable energy projects 
that ranged from biofuels to wind, solar, geothermal, anaerobic 
digesters, hydroelectric, and biomass projects.
    Four categories of program assistance are available through the 
REAP:

    (1) The REAP Renewable Energy Systems/Energy Efficiency Improvement 
        Grants Program is designed to assist farmers, ranchers and 
        rural small businesses that are able to demonstrate financial 
        need. All agricultural producers, including farmers and 
        ranchers, who gain 50 percent or more of their gross income 
        from the agricultural operations are eligible. Small businesses 
        that are located in a rural area can also apply. Rural electric 
        cooperatives may also be eligible to apply.

    (2) The REAP Energy Audit and Renewable Energy Development Assist 
        Grants Program is available to eligible entities which include 
        a unit of state, tribal, or local government; institutions of 
        higher education; rural electric cooperatives; or a public 
        power entity. The program is designed to assist farmers, 
        ranchers, and rural small businesses.

    (3) The REAP Feasibility Study Grants Program is designed to assist 
        agriculture producers (including farmers and ranchers) and 
        rural small businesses. All agricultural producers who gain 50 
        percent or more of their gross income from the agricultural 
        operations are eligible. Small businesses that are located in a 
        rural area can also apply. Rural electric cooperatives may also 
        be eligible to apply.

    (4) The REAP Guaranteed Loan Program has recently established a new 
        definition for eligible applicants. All agricultural producers 
        or rural small businesses are eligible to apply. Agricultural 
        producers must gain 50 percent or more of their gross income 
        from their agricultural operations. An entity is considered a 
        small business in accordance with the Small Business 
        Administration (SBA) small business size standards NAICS code. 
        Most lenders are eligible, including national and state-
        chartered banks, Farm Credit System banks and savings and loan 
        associations. Other lenders may be eligible if approved by 
        USDA.

    This program supports a wide range of small businesses, and 
technologies can range from wind turbines, to methane digesters, to 
geothermal systems. For example, in Altura Minnesota, Pork and Plants 
of Altura was awarded a $16,250 grant to build a renewable energy 
system. The grant provided sufficient incentive to motivate Pork and 
Plants to utilize corn and pellets to provide the heat needed for their 
greenhouses eliminating the need for approximately 40,000 gallons of 
liquid propane gas per year.
Biorefinery Assistance Program
    The Biorefinery Assistance Program (Section 9003) provides loan 
guarantees to assist in the development of new and emerging 
technologies to develop advanced biofuels. An Interim Rule was 
published on February 14, 2011, the Notice of Funds Available (NOFA) 
was published March 11, 2011, and the application window closed July 6, 
2011. RBS received thirteen applications, requesting over $1.3 billion 
in requested funding. We are currently reviewing the applications and 
identifying loans that may range up to $250 million.
    The Biorefinery Assistance program is the only Federal program that 
provides support exclusively to advanced biofuel biorefineries. 
Eligible applicants include individuals, entities, Indian tribes, units 
of state or local government, farm cooperatives, farmer coop 
organizations, associations of agricultural producers, National Labs, 
Institutions of higher education, rural electric cooperatives, public 
power entities, or various consortia of any of those entities.
Repowering Assistance Program
    The Repowering Assistance Program (Section 9004) provides payments 
to biorefineries who switch from using fossil fuels to produce heat or 
power from renewable biomass. These biorefineries must have been in 
existence at the time the 2008 Farm Bill was passed. An Interim Rule 
was published on February 11, 2011 and a NOFA was published on March 
11, 2011, and the application window closed on June 9, 2011.
    This program can provide payments to a biorefinery existing before 
June 2008 based on the quantity of fossil fuel the biorefinery is 
replacing, the percentage reduction in fossil fuel used by the 
biorefinery, and the cost effectiveness of the renewable biomass 
system, economic benefit to the community, and the potential to improve 
the quality of life in rural America.
Bioenergy Program for Advanced Biofuels
    The Advanced Biofuel Payment Program, formerly the Bioenergy 
Program for Advanced Biofuels (Section 9005) provides payments to 
eligible producers to support and expand the production of advanced 
biofuels. Only one producer per refinery is eligible to apply. To date, 
almost $30 million in assistance payments have been provided to 141 
advanced biofuel producers. On February 11, 2011, an Interim Rule was 
published and incorporated a notice of contract proposals (NOCP) for 
the 2010 funding in the amount of $80 million. A second NOCP for $85 
million was published on March 11, 2011 for the FY 2011 funding; 
applications for funding were required to be submitted to RBS by May 
10, 2011. This program is vital in supporting existing biofuel 
infrastructure and a crucial support to help us meet the mandated 
Renewable Fuel Standard (RFS2) which calls for 22 billion gallons of 
advanced biofuels by 2022.
    An example is Indiana Flex Fuels which received $3,600 in FY 2010. 
Though relatively small in capacity--a 5 million gallon a year plant--
the FY 2010 payment and future payments in FY2011 will provide a 
financial incentive to biorefineries such as this, which will provide 
them with a necessary step towards meeting the nation's renewable 
energy needs.
Performance
    In 2009 and 2010, USDA assisted nearly 4,000 rural small 
businesses, farmers, and ranchers save energy and improve their bottom 
line by installing renewable energy systems and energy efficiency 
solutions that have the potential of producing or saving a projected 
4.67 billion in kilowatt hours--enough energy to power 390,000 American 
homes for a year. USDA is the among the largest supporters of biofuels 
in the nation and our programs are essential in ensuring a stable 
market structure that creates jobs and meets our nation's energy needs 
and goals.
Farm Service Agency
Biomass Crop Assistance Program (BCAP)
    The Energy Title of the 2008 Farm Bill also authorized BCAP which 
is implemented by the Farm Service Agency (FSA). BCAP provides 
financial assistance to owners and operators of agricultural and 
nonindustrial private forestland who volunteer to establish, produce 
and deliver eligible crops for conversion to bioenergy or bio-based 
products. Such Commodity Credit Corporation (CCC) funds as necessary 
were authorized for BCAP. However, subsequent appropriations bills have 
limited the availability of funding.
    There are two types of assistance available under BCAP. First, 
establishment and annual payments may be available to producers who 
enter into contracts to produce eligible crops on lands within approved 
BCAP project areas. Generally, crops that receive payment under the 
Commodity Title (e.g., corn, wheat, rice, soybeans) and noxious weeds 
or invasive species are not eligible for payments. Producers may 
receive up to 75 percent of the establishment costs of a perennial crop 
and annual payments for up to 5 years for non-woody crops or up to 15 
years for woody crops.
    Second, matching payments may be available to producers for the 
collection, harvest, storage and transport of eligible biomass to 
qualified facilities that produce heat, power, bio-based products, or 
advanced biofuels from that biomass. To qualify for payment, the 
biomass must be an eligible material that also is collected or 
harvested directly from the land before transport to the facility, in 
accordance with an approved conservation or forest stewardship plan. 
Woody biomass must not have a previously existing market and must also 
be removed to reduce forest fire threats, disease or insect 
infestation, or to restore ecosystem health.
    In July 2009, FSA issued a NOFA for the matching payments portion 
of the BCAP program and issued the first payment in August 2009. In 
February 2010, the authority for payments under the NOFA ended and FSA 
published a proposed rule to implement the full BCAP program. The final 
rule for BCAP was published in October 2010 and FSA began accepting 
applications for BCAP Project Areas.
    Early this year, FSA began the sign-up period for farmers seeking 
matching payments for the delivery of crop residues to qualified 
biomass conversion facilities located in Iowa and South Dakota. Also 
this spring, FSA announced the first BCAP Project Area comprised of 39 
contiguous counties in Missouri and Kansas for the enrollment of up to 
50,000 acres of native grasses, including switchgrass, for 
manufacturing into pellet fuels. Just last month, FSA announced four 
more BCAP project areas in Arkansas, Missouri, Ohio, and Pennsylvania 
to grow giant Miscanthus which is a sterile hybrid warm-season grass to 
be converted into bioenergy. Any project area, as part of the project 
proposal package, must be compliant with the National Environmental 
Policy Act (NEPA), compliance includes environmental screening, 
reviews, and may include an environmental assessment or impact 
statement at cost to the project sponsor(s).
    The 2011 Full Year Continuing Resolution limited funding for BCAP 
to $112 million. On April 20, 2011, FSA announced that BCAP Project 
Area proposals must be submitted no later than May 27, 2011, to be 
considered for FY 2011 funding. Demand for BCAP funding is significant: 
FSA received 41 project area proposals from 21 states requesting an 
estimated $1 billion to enroll more than 1.5 million acres in dedicated 
energy crops. FSA soon will announce the final project area selection 
for FY 2011.
Feedstock Flexibility Program (FFP)
    The 2008 Farm Bill also established the FFP. Typically, the CCC 
nonrecourse loan program offers sugarcane and sugar beet growers the 
opportunity to forfeit their sugar loan collateral to CCC as full 
satisfaction of the loan with growers keeping the loan proceeds. CCC 
later dispenses the forfeited sugar into the marketplace by sale or 
donation. FFP was authorized to prevent the accumulation of government-
held sugar stocks that otherwise can impede price recovery by instead 
allowing CCC to sell the surplus sugar to bioenergy producers as a fuel 
feedstock. Compared to expectations during the 2008 Farm Bill, however, 
domestic sugar demand has increased significantly and is expected to 
remain strong relative to supplies in FY 2011 and FY 2012. While FSA 
does not anticipate an immediate need for FFP during this period, the 
proposed rule to implement this program has been drafted and will be 
published soon.
National Institute of Food and Agriculture (NIFA)
    As the USDA's extramural research and education arm, NIFA has a 
number of programs that support fundamental and applied research into 
renewable energy and contribute to the USDA role in pursuing our 
nation's energy security.
Biomass Research and Development Initiative (BRDI)
    The Energy Title of the 2008 Farm Bill reauthorized the BRDI 
competitive grants program which is a joint effort between USDA and the 
Department of Energy (DOE) to support the development of a biomass-
based industry in the United States. The objectives of the program are 
to promote the development of: (a) technologies and processes necessary 
for abundant commercial production of biofuels at prices competitive 
with fossil fuels; (b) high-value bio-based products to enhance the 
economic viability of biofuels and biopower, to serve as substitutes 
for petroleum-based feedstocks and products, and to enhance the value 
of coproducts produced using the technologies and processes; (c) a 
diversity of economically sustainable domestic sources of renewable 
biomass for conversion to biofuels, bioenergy, and bio-based products. 
Projects supported through this program must take into account a life 
cycle perspective that takes into account the environmental, economic 
and social implications of the proposed technologies. The program has 
been effective in developing multi-institutional and multi-disciplinary 
consortia to increase technology transfer and commercialization.
Biodiesel Fuel Education Program
    The Biodiesel Education program (Section 9006) was created to help 
the biodiesel industry grow by providing technical information about 
this new fuel to a broad spectrum of U.S. consumers and producers. This 
program is operated through cooperation between the Office of the Chief 
Economist (OCE) and NIFA. Education materials and outreach activities 
deliver information on the environmental benefits of biodiesel, and 
expert guidance is provided on producing biodiesel, maintaining fuel 
quality, and insuring fuel safety. Since the Program began in 2003, the 
U.S. biodiesel industry has grown from just a few firms to over 150 
firms today. Awareness of biodiesel among Americans has increased 
markedly over the past 10 years--consumer awareness of biodiesel has 
grown from 27 percent in 2003 to 86 percent today. At the onset of the 
Program, many engine manufacturers were apprehensive about using 
biodiesel, but now nearly 60% of U.S. manufacturers support the use of 
biodiesel blends in at least some of their equipment. While the Program 
has been a major success, education is needed more than ever, with the 
biodiesel industry ramping-up to meet record production levels, set by 
the RFS2 mandates.
Agriculture and Food Research Initiative (AFRI)
    AFRI is NIFA's flagship extramural competitive grants program and 
has a Sustainable Bioenergy Challenge Area which seeks to facilitate 
the establishment of regional systems for the sustainable production of 
bioenergy and biobased products. This challenge area funds projects 
that contribute significantly to reducing the national dependence on 
foreign oil; have net positive social, environmental, and rural 
economic impacts; and are integrated with existing agricultural 
systems. The development of regional bioenergy systems will result in 
viable commercial options that can be rapidly deployed to produce 
advanced biofuels as well as value-added co-products to diversify 
product options, reduce risks, and bridge to full scale advanced 
biofuel production. A priority of this challenge area is to foster 
coordinated plans for developing regional systems for the sustainable 
production and distribution of bioenergy and biobased products with net 
positive social, environmental, and economic effects. It is expected 
that the Regional Bioenergy Coordinated Agricultural Projects (CAPS) 
will network with and leverage existing efforts within USDA, university 
research, education, and extension, other Federal agencies, and the 
private sector, and take multidisciplinary and transdisciplinary 
approaches.
    Another priority in the Sustainable Bioenergy Challenge Area is to 
develop the bioenergy workforce. The field of bioenergy and biobased 
products holds potential for new technologies and entrepreneurial 
opportunities that may substantially change regional rural economies. 
This emerging bio economy will demand a new workforce and will 
challenge institutions to produce graduates who have the 
multidisciplinary and problem solving framework to meet this demand. 
This new economy will require a trained and competent skill set that 
meets workforce needs all along the bio-energy value chain encompassing 
a wide range of technical, educational, socioeconomic, and scientific 
competencies. Projects supported through this program are stimulating 
the K-12 and baccalaureate and master's level education system to 
produce students who are science and math based independent thinkers 
and investigators, steeped in interdisciplinary coursework who can 
identify solutions to problems and opportunities, work creatively in 
teams and present solutions in a clear and concise manner, and who have 
an interest in America's bio-energy and bio-based products future.
Sun Grant Initiative Program (SGI)
    Authorized under the Research Title of the farm bill, SGI began 10 
years ago with support from USDA to harness the capacities of the land-
grant universities to develop bioenergy and biobased products through 
regional collaboration, coordinated through five regional Sun Grant 
Centers. With support from USDA/NIFA, DOE and the Department of 
Transportation (DOT) the SGI has over 130 field studies on biomass 
feedstocks currently underway with locations in more than 75 percent of 
the states in the nation. SGI research has been a catalyst for 
attracting industry investments that have resulted in formation of new 
businesses and creation of new jobs in the bioenergy sector. For 
example, in the South East SGI Region, SGI supported projects that led 
to the DuPont-Danisco joint venture partnership with the University of 
Tennessee and Genera Energy to open a demonstration scale facility 
producing lignocellulosic ethanol. Over 7,000 acres of switchgrass are 
in production and under contract to support this demonstration 
conversion facility, which is being utilized to develop a commercial 
scale facility by 2013 that has a production capacity of 25-50 million 
gallons of ethanol. In the North Central Region, Sun Grant-supported 
research led to DuPont-Danisco deciding to locate a cellulosic ethanol 
production facility in Iowa. Similar collaborations are underway in 
each SGI Region with Sun Grant-supported research leading to 
commercialization of new feedstock varieties for production of advanced 
biofuels.
Plant Feedstock Genomics Program
    DOE's Office of Biological and Environmental Research has teamed up 
with NIFA's Agriculture and Food Research Initiative to fund projects 
that accelerate plant breeding programs and improve biomass feedstocks 
by characterizing the genes, proteins, and molecular interactions that 
influence biomass production. DOE and USDA initiated this competitive 
grant program in 2006 to support fundamental research in biomass 
genomics. Ultimately, the research seeks to develop and demonstrate 
environmentally acceptable crops and cropping systems for producing 
large quantities of low-cost, high-quality biomass feedstocks. Specific 
focus areas include: elucidating the regulation of genes, proteins, and 
metabolites to for improved productivity, processing, or growth 
characteristics in marginal environmental conditions, such as drought 
or salt tolerance; developing novel technologies to facilitate the 
analysis and manipulation of cell wall structure and composition for 
both breeding and basic research; using genomic approaches that lead to 
the identification of genetic markers enabling more efficient plant 
breeding or manipulation; and enhancing fundamental knowledge of the 
structure, function, and organization of plant genomes leading to 
improved biomass characterization.
Agricultural Research Service (ARS)
    ARS is USDA's principal intramural research arm and conducts basic 
research to support the commercial production of dedicated feedstocks 
for the making of advanced biofuels and bioenergy. The research is 
focused on four primary objectives: increase biomass production 
efficiency to improve grower profits and reduce biorefinery transaction 
costs; optimally incorporate biomass and other dedicated feedstocks 
into existing agriculture-based systems; address the uncertainties of 
expanded feedstock production up-front to avoid negative impacts on 
existing markets and ecosystem services; and develop and find new ways 
to utilize value-added coproducts to economically enable commercially 
preferred biorefining technologies. Region-based production systems are 
being developed for dedicated energy crops including perennial grasses, 
oil crops, energy cane, and biomass sorghum.
    ARS bioenergy research is conducted through the regional USDA 
Biomass Research Centers, which include the Forest Service, and is 
coordinated with NIFA's AFRI Sustainable Bioenergy Coordinated 
Agricultural Projects (CAP) grant program, and the USDA-DOE jointly-
funded BRDI grants. ARS also partners with the DOE Plant Feedstock 
Genomics for Bioenergy competitive grant programs. These combined 
efforts are done in partnerships with universities, other Federal 
agencies, states, and private companies and are designed to help 
accelerate the commercial development of biofuels, biopower, and other 
bio-based products from dedicated feedstocks produced on our nation's 
farms.
Economic Research Service
    The Economic Research Service (ERS) conducts rigorous and objective 
research on the economic and environmental implications of agriculture-
based bioenergy production. ERS research on bioenergy focuses on how 
policy and market developments affect commodity markets, land use, the 
environment, rural development, and consumers. Core objectives include: 
examining the relationships between bioenergy production and farm and 
retail food prices; developing long-term projections of domestic and 
international agricultural markets, taking account of changing 
policies, and macroeconomic events that affect markets for biofuels; 
examining the effect of biofuel production on rural employment and 
wealth creation; and analyzing the effect of increased biofuel 
production on environmental quality and use of scarce natural 
resources.
    ERS research on bioenergy is being enhanced by expanding the 
capabilities of in-house economic models, geo-spatial analysis tools, 
budget generators for dedicated energy crops, and by establishing 
partnerships with universities and other Federal agencies. ERS works in 
conjunction with the National Agricultural Statistics Service (NASS) to 
collect and analyze unique data on farm characteristics and production 
practices from the Agricultural Resource Management Survey. NASS data 
on agriculture is essential at every stage of infrastructure 
development, from the initial policies that drive basic research, to 
the establishment of markets and feedstock production needed to sustain 
this new industry.
Departmental Management
Biobased Markets Program
    The Energy Title of the 2008 Farm Bill established the Biobased 
Markets Program, known as the BioPreferred' Program, and 
USDA is the lead agency responsible for its implementation. This 
biobased products program helps to create green jobs in rural 
communities, adds value to agricultural commodities, decreases 
environmental impacts, and reduces our dependence on imported oil. 
USDA's goal is to increase Federal procurement of biobased products 
government-wide and develop government and public markets through a 
voluntary labeling program.
    USDA has promulgated BioPreferred' program guidelines 
and six rounds of regulations designating categories of biobased 
products for preferred Federal procurement. As a result, there are now 
50 designated product categories. A seventh designation rule with 14 
product categories should be promulgated later this month. When Round 
seven is published, 64 categories and almost 9,000 products will be 
approved for preferred Federal procurement. USDA initiated a voluntary 
labeling program earlier this year; over 430 products from 150 
companies have been certified to carry the USDA Certified Biobased 
label to date. In FY 2010, 88 percent of all applicable USDA contracts 
included biobased clauses or purchases, up from 80 percent in FY 2008 
and 84 percent in FY 2009. In addition, there are over 20,000 biobased 
products and the number and types of products continue to grow.
Natural Resources Conservation Service (NRCS)
    NRCS formally identified energy as a resource concern in 2010 and 
substantial efforts are being made to enhance the Agency's capacity to 
work with producers in conserving energy. All of the Agency's 
conservation practice standards were evaluated for their potential 
contribution to address energy resource concerns and many were revised 
to incorporate energy as a purpose for performing the conservation 
practice. Training efforts are underway to ensure that agency employees 
are prepared to assist customers with energy conservation efforts. A 
series of agriculture-focused energy fact sheets have been issued and 
more are under development. In addition, the suite of producer-focused 
web-based Energy Estimators for animal housing, irrigation, nitrogen, 
and tillage are being updated to reflect recent information and 
technologies. These tools provide a simple way for producers to 
evaluate potential savings from implementing energy conservation 
practices.
Environmental Quality Incentives Program (EQIP)
    The Environmental Quality Incentives Program (EQIP), administered 
by NRCS, has been helping producers in addressing natural resource 
concerns since 1996. Conservation practices and systems implemented 
under EQIP have helped producers to achieve environmental objectives, 
and in some cases to have a beneficial effect on energy resources. For 
example, producers have reduced energy use through conservation 
tillage, which requires fewer passes over a field; irrigation water 
management that conserves water and saves energy; and improved nutrient 
management, which can include adoption of anaerobic digesters. Manure 
from the anaerobic digesters provides a reliable level of nitrogen 
fertilization and can be used to replace commercial fertilizer. When 
stored and handled properly, animal manure loses less nitrogen and can 
be applied with confidence. NRCS can provide information and 
considerations for designing and constructing appropriate manure 
handling facilities. Methane produced by the manure can allow biogas 
generators to produce electricity and heat that producers can use 
onsite. Also, the potential exists to sell the excess electricity to a 
local electric grid.
    The Conservation Title of the 2008 Farm Bill added energy 
conservation as a purpose of EQIP and authorized the NRCS administered 
program to be used for conservation plans that further energy 
conservation and other purposes of the program. The conservation 
practice associated with plan development under this authority is known 
as a ``conservation activity plan'' (CAP). Two Agricultural Energy 
Management Plan (AgEMP) CAPs have been developed for energy 
conservation, one focusing on operation headquarters and one focusing 
on farm landscape energy conservation.
    These AgEMPs for the farm headquarters and farm landscape contain 
the on-farm energy audit that establishes a baseline of total energy 
consumption of the farm or ranch operation and also provides 
recommendations of energy conservation and efficiency measures that the 
producer can prioritize and implement on their agricultural working 
lands. For FY 2011 and as of June 15, 2011, NRCS has planned 364 AgEMPs 
for headquarters and landscape energy audits, obligating $715,761 in 
financial assistance funds. Another 133 AgEMP headquarters audits have 
been completed, with producers receiving $237,489 in financial 
assistance payments.
    The actual benefits from an on-farm energy audit (AgEMP) to the 
producer and the environment are achieved fully when the on-farm energy 
audit recommended measures are implemented. Four states are already 
using conservation practice standard 374 for On-Farm Equipment 
Efficiency Improvements to accelerate implementation. As of June 3, 
2011 there were 20 planned and four completed contracts that included 
this conservation practice standard, totaling nearly $580,000.
Conservation Stewardship Program (CSP)
    NRCS offers financial assistance to producers to enhance their 
conservation activities, through the CSP including energy conservation. 
In FY 2011, there are seven CSP enhancements for energy, ranging from 
fuel use reduction and renewable energy use to on-farm landscape energy 
audits and variable frequency drive motors. In FY 2010, program 
participants applied fuel use reduction on over 206,000 acres and added 
more than 6,500 systems or units using renewable energy, such as solar 
powered electric fence charging systems and renewable energy powered 
pumping plants.
Conservation Innovation Grants (CIG)
    NRCS also encourages energy technology innovation and conservation 
through Conservation Innovation Grants (CIG). Through this competitive 
process, NRCS awards grants to demonstrate innovative technologies for 
more effectively managing natural resources while leveraging Federal 
resources. CIG enables NRCS to work with other public and private 
entities to accelerate technology transfer and adoption of promising 
technologies and approaches to address some of the nation's most 
pressing natural resource concerns.
    In FY 2010, over $5.5 million was awarded for 12 projects working 
in 29 states to demonstrate innovative energy technologies or programs 
that range from on-farm energy audits to anaerobic digester 
technologies and sustainable biomass production. Of this, nearly $\1/2\ 
million was awarded in two grants for innovative energy conservation 
projects. By comparison, between FY 2004 and FY 2009, there were four 
national CIG grants for innovative energy conservation projects 
totaling $1,361,109.
Conclusion
    As these USDA programs and efforts show, in addition to its 
environmental, energy security, and national security implications, 
renewable energy is an important source of jobs, economic growth, and 
tax revenue in rural communities across the country. USDA recognizes 
that environmentally responsible renewable energy and energy 
conservation provide opportunities for economic growth and prosperity 
across rural America and the nation as a whole. We are working to 
ensure that our programs meet and exceed the challenge of promoting 
economic growth and prosperity.
    Thank you, again Mr. Chairman and Members of the Subcommittee. With 
your help, we look forward to continuing to create jobs and build a 
cleaner, more secure, more sustainable, and domestically-produced 
energy sector.

    The Chairman. Thank you, Mr. Garcia.
    The chair would like to remind Members that they will be 
recognized for questioning in the order of seniority of Members 
who were here at the start of the hearing, and after that, 
Members will be recognized in order of arrival. I appreciate 
the Members' understanding.
    I am going to proceed with my 5 minutes of questions.
    Now, my first question is directed to Chief Tidwell.
    Chief, the 2008 Farm Bill required each state to conduct a 
state-wide assessment of forest resource conditions, threats, 
trends, priorities to receive Federal forestry assistance 
funds. What is the status of this assessment?
    Mr. Tidwell. Thank you. All of the states and the 
territories have completed their assessments and developed 
their forest action plans.
    The Chairman. And the Forest Service, where are you in 
terms of analysis of that?
    Mr. Tidwell. Well, we are looking at that for a couple of 
opportunities to help establish the priorities about where is 
the best place in this country to be using the funds. And it 
really helps the states that they can identify their priorities 
and where is the best place for us to use our limited funds.
    We are also seeing that we have--we are seeing states 
starting to work together with their neighboring states to be 
able to put together their proposals as to their requests for 
funding.
    The other key part of this, too, is it is going to be, it 
is going to be very beneficial, as we move forward with doing 
the forest planning on our National Forests and grasslands, 
these assessments, these action plans, are going to be a key 
part of the information that we are going to use as we move 
forward with revising our forest plans.
    The Chairman. All right. In your testimony, you have 
identified, obviously, a very important issue, invasive 
species. And one much your predecessors, Chief Bosworth, once 
suggested that invasive species are one of the main threats to 
healthy forests.
    What are your suggestions on altering the structure and 
financing programs related to invasive species in our 
forestlands?
    Mr. Tidwell. Well, with our Forest Health Program, I 
believe it is essential for us to be able to deal with the 
invasives that we have currently and the invasives that are 
going to be coming into this country.
    That program provides the ability for our states to be able 
to conduct the surveys, be able to monitor the infestations so 
we can do the best job that we can to either stop, eradicate 
these infestations or at least be able to deal with them. 
Without this program, I think it would be very difficult for us 
to be able to track and monitor this, especially on a national 
scale. This program allows us to be able to look beyond the 
borders, beyond the private land borders, beyond state borders, 
and I believe provides an efficiency that could not be 
duplicated if, say, each state was having to do this on their 
own.
    The Chairman. I appreciate that.
    Administrator Canales, thanks for your overview on the 
energy titles--and the energy title. Specifically I want to 
look at Section 9003, the Biorefinery Assistance Program. How 
many awards have been made through the Biorefinery Assistance 
Program for the construction of new biofuel facilities and how 
many of these were for commercial cellulosic facilities?
    Ms. Canales. Thank you, Mr. Chairman.
    Our first award was made in 2010, and that project is in 
Georgia. Our second award was made for three separate projects 
during this fiscal year, in January of this year. Those were 
all conditional commitments, and those are involving projects 
to occur in Florida, Mississippi and Alabama. So, those 
projects are not under way at this point in time.
    The Chairman. Just for clarification, because I think that 
is helpful for all of us here as we prepare to look at this 
title within the next farm bill, how does the Biorefinery 
Assistance Program differ from the programs administered by the 
Department of Energy that fund the construction of renewable 
fuel facilities?
    Ms. Canales. They defer--or they differentiate because 
these technologies are all first of a kind. They are not off-
the-shelf technologies and, most importantly, in regard to 
USDA, there is some element usually of a relationship to 
agriculture. What we are trying to drive at is gaining the 
opportunity to get this loan guarantee to try and drive 
private-sector dollars into the rural communities 
predominantly.
    Each one of those projects all have some sort of feedstock 
that has some agriculture tie, and also, frankly, our 
experience has been in operating a loan guarantee program that 
is different from Department of Energy.
    The Chairman. Okay. Thank you.
    Now I recognize Mr. Holden for 5 minutes.
    Mr. Holden. Thank you, Mr. Chairman.
    Mr. Garcia, as you know, there has been a lot of and 
anxiety regarding the implementation of this BCAP program. Can 
you tell me now that it has been implemented what the process 
was like, how did you approve projects and did you work with 
other agencies during that process?
    Mr. Garcia. Thank you, Mr. Holden.
    I would start off by saying that the BCAP program has been 
a challenge to administer. It is a very new program. It is a 
pioneering program that FSA is charting new territory that we 
had never explored before. FSA historically has been working 
with the conventional crop production, and this new energy 
program we were just not very familiar with. So we did take the 
time to consult with other agencies.
    Mr. Holden. What agencies did you consult with?
    Mr. Garcia. With other USDA agencies, such as Agricultural 
Research Service, Animal and Plant Health Inspection Service, 
that were involved already with some research on these energy 
crops. And, therefore, we started establishing the program 
provisions for this program.
    We have set a structure here a few months ago since we were 
approved for the $112 million that I mentioned earlier. We have 
set a structure, and we have involved expertise from other USDA 
agencies in order to come up with a process to review the 
project proposals at hand. We received over 40 proposals, and 
we expect to make a decision on those proposals within the 
month.
    Mr. Holden. And you have mentioned four projects that have 
recently been approved, and you mentioned one in Pennsylvania. 
What crop is that plant using, and where in Pennsylvania?
    Mr. Garcia. That particular project involves Miscanthus, 
which is a new energy crop. It is planted through rhizomes, and 
it involves over 250,000 acres of establishment in 
Pennsylvania, Ohio, Arkansas and Missouri.
    Mr. Holden. So it is in western Pennsylvania.
    Mr. Garcia. I am sorry?
    Mr. Holden. The location.
    Mr. Garcia. Excuse me, may I confer?
    Mr. Holden. Just curious. That is okay.
    Mr. Garcia. It is in western Pennsylvania.
    Mr. Holden. Thank you.
    Ms. Canales, the Georgia facility, that is operational now; 
correct?
    Ms. Canales. It has been, sir.
    Mr. Holden. And how long was it in operation?
    Ms. Canales. About 3 months.
    Mr. Holden. And what is its feedstock?
    Ms. Canales. Biomass, woody biomass.
    Mr. Holden. And the other projects, I think you said, 
Florida, Mississippi and Alabama, is that correct?
    Ms. Canales. Yes, sir.
    Mr. Holden. You said that was conditional, conditional on 
financing.
    Ms. Canales. Well, conditional commitment is a part of our 
due diligence process and that is the review. And so the part 
about finance is to ensure that their bank, because the 
applicant is actually the bank. The applicant is the bank for 
the loan guarantee, and so, yes, it is the formalization of 
financing.
    Mr. Holden. And what was the exposure on the Georgia 
project for the loan guarantee?
    Ms. Canales. I apologize, I am sorry?
    Mr. Holden. The Georgia project, how much was that project?
    Ms. Canales. Well, $80 million was going to be total, but 
we sent $50 million. It was two phases, $50 million and then 
$30 million would have been the second phase.
    Mr. Holden. Okay.
    Mr. Tidwell, you know from the Energy Independence and 
Security Act, this Committee is very concerned about the 
definition of biomass.
    What types of challenges are you facing on forestlands with 
that definition and several other definitions that are not 
consistent in trying to manage the forestlands?
    Mr. Tidwell. The challenge that we are having in America 
now is to be able to get the restoration work done on our 
National Forests, which includes the removal of not only saw 
logs but also the removal of a lot of smaller diameter material 
to reduce the biomass.
    We need to look for every opportunity we have to be able to 
encourage the use of that material for beneficial use, whether 
it is any type of biomass utilization or for wood energy.
    So, as far as we think about definitions, we want to make 
sure that they are flexible and that they will encourage the 
restoration work that needs to be done on these lands. And so 
that is the thing that we are interested in. It is just having 
a flexibility in there so that this small-diameter material 
that doesn't really have any use, that we can be able to find 
ways to encourage that to be used for beneficial use instead of 
having to pay someone to just pile it up in the woods and then 
burn it and put smoke in the air.
    Mr. Holden. My time has expired, Mr. Chairman.
    The Chairman. I thank the gentleman.
    I now recognize the gentleman from Wisconsin, Mr. Ribble, 
for 5 minutes.
    Mr. Ribble. Thank you, Mr. Chairman.
    And thank you to the panel for spending some time with us 
this morning.
    Chief Tidwell, I am from Wisconsin, and the Chequamegon 
Nicolet National Forest is in my district. But the forest plan 
is not being fully implemented, and it is hurting our local 
communities, particularly small rural communities, particularly 
in northeast Wisconsin, and, quite frankly, our state as a 
whole.
    I am also concerned very much about how it is affecting 
what once was a very vibrant timber industry in Wisconsin.
    What are the barriers to fully implementing your plan?
    Mr. Tidwell. A forest plan lays out the desired conditions 
and lays out the expectation of what can be produced off these 
lands.
    A forest plan itself doesn't establish any targets along 
those lines, so it more is a document that allows. There is no 
question that we need to do more work, not only in your state 
but across the country, to be able to do more restoration work. 
The things that we are focused on to be able to build some 
efficiencies is to be able to look at much larger landscapes.
    We used to look at projects that were sometimes 500 acres, 
maybe 1,000 acre projects. What we are now doing is moving 
forward to be able to look at much larger landscapes, things 
like 50,000 acres, 100,000 acres at a time. Do the analysis on 
that so that we can move forward with the restoration work.
    The other key component of this is to be able to have a 
long-term contract in place so that purchaser knows that not 
only do they have work this year but they are going to have 
work next year and the year after, and that is through our 
Stewardship Contracting Program that I am hopeful we will be 
able to continue to be able to have that program.
    That is going to be a key element, to be able to encourage 
folks to make additional investments and for us to be able to 
actually increase the amount of work that we need to do in our 
forests.
    Mr. Ribble. Okay, thank you. I would encourage you to move 
with as much haste as you possibly can. I mean, it is a 
constant problem for us, and the problem has lasted a long 
time. And at some point, we have to stop saying we are working 
it, we are studying it, we are analyzing it and finally get 
something moving. There is just a lot of frustration back home.
    Along a similar line and staying with our forests here, 
recently the Ninth Circuit Court overturned an EPA regulation 
and ruled for the first time that forest roads are point 
sources and that using them for timber harvesting requires 
Federal permitting.
    Earlier this year, I joined many of my colleagues, 
including my friend, Mr. Schrader, in sending a letter to the 
EPA raising some concerns in response to this decision. Given 
your experience, can you tell us whether or not best management 
practices work or whether or not they are affecting--or whether 
or not they are effective at maintaining water quality?
    Mr. Tidwell. Well, I am definitely aware of the court 
decision that you are referring to.
    You know, our experience with our best management practice 
is that when we followed those, that they do provide the right 
restrictions in place to ensure clean water. There is no 
question that--in fact, I have never met anyone that wasn't 
supportive of providing clean water.
    So I think it is--that is very important.
    You know, the best management practices that we use on our 
National Forest System lands along, with the environmental 
assessments that have to be completed before we do any of our 
work, I do believe that we are doing a good job to be able to 
minimize any impact to clean water.
    It is essential that, as we move forward, that we be able 
to find a way to, of course, provide for clean water, and best 
management practices has been one tool that we have been using 
in the past. It is also my experience that at least every state 
that I have worked in does also have best management practices. 
There is a difference between the states, but it has been a 
very good approach in the past.
    Mr. Ribble. But what is the permitting requirement--what 
type of impact is it going to have on the Department's ability 
to conduct restoration work?
    Mr. Tidwell. Well, we would have to see what process was 
put into place.
    You could design a permitting process that would not 
necessarily have any impact, it would be another step. Until 
that decision is made and we actually see what process would be 
put into place, I probably can't answer that. But I tell you I 
am confident that the work that we are currently doing, 
following the best management practices, will provide for clean 
water.
    And so if there is a permit process in place that we will 
be able to meet that requirement.
    Mr. Ribble. Okay. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    The chair now recognizes the gentleman from Minnesota, Mr. 
Walz, for 5 minutes.
    Mr. Walz. Thank you, Mr. Chairman, and the Ranking Member 
for holding this audit and this hearing, and thank you all for 
being here with us.
    I would like to talk just a little bit, Ms. Canales, on the 
REAP program, it is obviously very important in Minnesota. I am 
deeply concerned with the zeroing out of this program at a time 
when America's security is dependent on us becoming energy 
independent. I have seen what that program does in Minnesota, 
creating literally thousands of jobs, dozens of large and 
smaller projects, creating energy independence at home.
    And it strikes me that we are caught in a false dichotomy 
here that we are going to figure out how to grow our economy 
either by cuts or by spending increases. And I think the 
problem is we continue to try and divide up that pie as we are 
missing the most obvious answer here is grow the pie. And 
growing the pie on energy is what is happening in southern 
Minnesota.
    So I wanted to ask you just a couple of questions about 
this.
    The critics of REAP claim--and as it was zeroed out--I 
wanted to thank my colleague from Nebraska, Mr. Fortenberry, 
who is also on this Committee, for getting a little bit of 
money back in this program--that it is duplicative, that it, 
once again, we are trying to squeeze efficiencies, which all of 
us agree on.
    Can you explain the unique nature of the REAP program and 
why, at least my constituents, I would argue, consider it to be 
highly effective and a great return on our dollar? If you could 
help me understand that a little bit.
    Ms. Canales. Thank you, sir, and, yes, there has been a 
considerable amount of activity in your State of Minnesota and 
the Rural Energy for America Program, REAP, is a program that I 
believe is the closest to the consumer, that is something that 
I have always put forward because of the fact the that it goes 
back to the fundamentals.
    For us, it is businesses in rural America, and it is also 
producers. They are business owners, farmers are business 
owners. Therefore, it is an opportunity for them to become 
energy efficient. It is an opportunity for them to also 
generate fuel energy. I have seen it myself, a methane 
digester, where a group of dairy farmer operations can come 
together--you have that on the East Coast; you have that 
certainly in your area in middle America, and you have it in 
the West Coast--in which the livestock produces waste, and that 
waste can go towards energy production.
    So this program has also been a growing program because it 
is a business opportunity, and we do not finance the entire 
project. There is a contribution; this is all leveraging.
    So it is a Federal incentive for that private business 
owner to determine whether this makes good business sense for 
me. It has just become something that has gained a lot of 
attraction that has people trying to reduce their energy costs 
for their business purposes.
    Mr. Walz. Well, I would mention that, too. I know that 
looking at the statistics here with Minnesota, trailing only 
Iowa in this, that it is about $5.8 million in grant amounts, 
but that the amount we leverage is over $16 million, 
contributing to $24 million in growth, job creation and all of 
that.
    My question is, if we are trying to go save money in the 
budget, is defunding REAP in your opinion the best way to try 
to figure out how to save money?
    Ms. Canales. Sir, what we have found is that this is a 
program that brings in, draws in, additional funding. So with 
that Federal seed dollar, be it a grant dollar or, also a loan 
guarantee, what we do is try and engage more banks to do 
lending in rural America. So that becomes a very important 
product for that bank.
    Farm Credit Administration and numerous banks throughout 
the United States are seeing that this loan guarantee is an 
attractive product for them. Then they can take on that 
particular loan so that brings in its private financing 
mechanism using that government incentive.
    Mr. Walz. Well, I appreciate that. As my time is winding 
down, I would just, on BCAP and things, as we move to the next 
generation, I am a strong supporter that we are getting there. 
I have a small company called Easy Energy Systems in our 
district that is working on what I think is the future on 
biofuels, not the large 100 million gallon static plants, but a 
mobile 1 million gallon plant that has already been sold to 
India, that we are able to plop down and fuel small villages on 
tapioca remains or whatever the product might be as the 
biomass. And I am just fearful now we are on the cusp of that, 
that this absolute zeroing out and decimating energy, energy 
products, is going to end those types of things.
    Mr. Garcia, I will wait till my time comes back around to 
hear a little on BCAP, so thank you.
    The Chairman. I thank the gentleman. I recognize the 
gentleman from Florida, Mr. Southerland, for 5 minutes.
    Mr. Southerland. Thank you, Mr. Chairman.
    Mr. Tidwell--well, first of all, thank you to all of you 
for appearing before us today.
    My question is regarding, I would like to ask you, Mr. 
Tidwell, tell me, I think I heard just a few moments ago you 
make the statement that a forest plan doesn't establish harvest 
targets; is that correct?
    Mr. Tidwell. That is correct.
    Mr. Southerland. So and I think in your written testimony, 
the Forest Service manages 190 million acres of National 
Forest; is that correct?
    Mr. Tidwell. That is correct.
    Mr. Southerland. And you have no established targets 
established for the National Forest?
    Mr. Tidwell. We have targets every year based on the budget 
that we receive, and that produces--and then we are--we do have 
a target every year.
    Mr. Southerland. Okay. Well, in one particular National 
Forest in my district, we have a six percent mortality rate and 
a 3.5 percent harvest rate. Is that acceptable?
    Mr. Tidwell. No, I believe we need to be doing more work on 
that forest and almost every forest in this country.
    Mr. Southerland. And what kind of work?
    Mr. Tidwell. We need to be able to get in there and do work 
to restore the health of these forests.
    Mr. Southerland. No, wait a second. Restoration, okay if 
you have a mortality rate of six percent and you have wood that 
is rotting----
    Mr. Tidwell. Right.
    Mr. Southerland. Do you need to study that a little more?
    Mr. Tidwell. No, no. We need to do--when I talk about 
restoration, it is actually to go out there and remove the 
biomass from the landscape, whether it is the disease, infected 
trees, to thin out the stands so that they are more resilient 
to be able to deal with the stresses, whether it is insect and 
disease, whether it is an invasive, whether it is fire. Those 
are the things, why we need to be able to do more work on the 
landscape to make sure these forests--we maintain the forest 
health, that these forests are resilient to the stressors that 
we are dealing with today.
    Mr. Southerland. But, sir, what you are telling me is not, 
in reality, happening.
    What you are saying that you need to do, you have forests--
I mean, you have companies that are dying on a vine that want 
to get in these National Forests that the Services have 
basically turned into national parks now. This Administration 
speaks a lot about helping rural communities. Well, the rural 
communities in my district, they just want to work. They want 
to work.
    And so I hear a lot about restoration. I hear a lot about 
studies. I hear a lot about planning. Just let the people go in 
and do what you just said, under testimony, needs to happen. 
Why is that not happening?
    Mr. Tidwell. Well, actually, over the last year, we treated 
over 3 million acres.
    Mr. Southerland. Three million of 193 million acres that 
you, really, that is like throwing an ice cube at the sun.
    Mr. Tidwell. Well, it is the most that we have treated in 
many years.
    Mr. Southerland. The most, so we have been incompetent for 
many, many, many years.
    Mr. Tidwell. No, I disagree. I respectfully disagree with 
that. I do acknowledge that we need to be doing more work on 
the landscape. We need to be able to find ways so that that we 
can do larger projects, that we can have more long-term 
contracts in place that encourage the infrastructure, to be 
able to do this work.
    So I agree with you we need to be doing more work. That is 
one of the things that we are looking for.
    Mr. Southerland. And that is all the American people, Mr. 
Tidwell, are wanting to do, more work. But I think, and I 
respectfully disagree with you, because I know people that are 
losing everything they have, everything, sir, everything, and 
they don't want to hear about the studying, the analysis, the 
restoration plans; they want to restore.
    Because I also know that if you want to restore a healthy 
forest, you have to go in and you have to thin it. And down in 
the South, we invented controlled burning. We understand fire. 
You talk about burn it and just put smoke in the air; that has 
a good purpose for a healthy forest. And it just bothers me 
that there is stonewalling, I believe, because if you have 193 
million acres and you do not have a harvest plan and a harvest 
target, that tells me that you are not, you are not managing 
properly.
    And the statistics, the data, the raw data supports what I 
just stated.
    Mr. Tidwell. I agree with you we need to be doing more 
work. Every National Forest has a, basically, we do set a cap 
of what is sustainable, about how much biomass can be removed 
off of that National Forest over a 10 year period, that is kind 
of the cap based on the planning. The amount of work----
    Mr. Southerland. For the American people, when you say 
biomass, just for the American people, are you talking about 
wood?
    Mr. Tidwell. Yes.
    Mr. Southerland. Okay, let's just say wood, timber. Okay. 
You don't have to make it go into biomass?
    Mr. Tidwell. No, when I am talking about biomass, it 
includes the saw logs, the material that is used for pulp and 
paper. It is also the smaller residual material that also needs 
to be removed.
    In addition to the prescribed burning that we have to do, 
especially in our southern forests, where we actually do more 
burning there than any parts of the country.
    Mr. Southerland. Well, you can tell I am passionate about 
this, okay, because there is a sense of urgency. Because when I 
go home, okay, and people are losing their jobs and they are 
losing everything they own, I don't see that when I come to 
Washington, D.C., and I represent them, sir. And I just think 
we should be doing better. We do agree on that.
    Mr. Tidwell. I do agree with you.
    Mr. Southerland. I yield back.
    The Chairman. I thank the gentleman.
    I now recognize the gentlelady from Maine, Ms. Pingree, for 
5 minutes.
    Ms. Pingree. Thank you, Mr. Chairman.
    Thank you for your testimony this morning. It has been very 
interesting, and I appreciate the work that you have been doing 
for us and briefing us on all of this.
    Ms. Pingree. Ms. Canales, thank you for your background and 
interesting information.
    I just have a couple of questions from my own district in 
Maine. One is, there seems to be considerable opportunity to 
support development of small-scale, cellulosic-based biofuel 
systems. Such systems could take advantage of waste biomass at 
smaller scales, avoiding the economic dilemma posed by hauling 
low-grade materials long distances and providing a mechanism to 
address local energy needs. The idea is it is just more 
efficient and it could solve some of the problems of areas. How 
might the existing USDA programs be tailored to pursue this 
opportunity?
    Ms. Canales. Thank you, and I have visited your state as 
well, Representative. And indeed between the beauty, you have 
the natural resources that could be utilized for some of these 
programs.
    Of course, your office works very closely with our state 
office and State Director Virginia Manuel, who is there in 
Maine--what I would advise is that for prospective businesses 
who want to engage in these programs is to work very closely 
with our state offices. That is part of our delivery system.
    In regards to what you are describing, you do not have to 
be a large-scale business. In fact, predominantly and certainly 
regarding the Rural Energy for America Program, it is small 
business ownership. And those projects can be $100,000, 
$500,000, a million dollars, just depending on what the needs 
are for that particular business. So I would just offer to you 
that that is part of how we would proceed with what you just 
described.
    The other part to it is that I would advise strongly in 
working with local leadership, we can work with them to do an 
energy assessment. People need to know what do we have 
available? Every community has potential feedstock. That is how 
we also pursue this.
    We have an energy coordinator that is designated in every 
state for rural development; and that energy coordinator is 
also dedicated to working specifically on these programs. The 
next step would be working with you to provide information to 
these business owners to see what best suits their needs.
    Ms. Pingree. Great. Thank you.
    We do enjoy working with Virginia Manuel, and she does a 
great job for our state. And I do think she is very open to 
thinking of ways to help some of our small producers and do 
things that allow people to use the Program in ways that allow 
for less transportation and a variety of things. So I would be 
happy to work with you more on that.
    Mr. Garcia, I just want to talk briefly about the pellet 
industry, which is something that is of interest in our state. 
We have the most oil dependent state in the nation and a lot of 
seniors and a lot of people in rural areas who are very 
interested in renewable energy and who deal every year with our 
cold temperatures and expensive fuel costs, and so we are 
always looking for ways to do more with that. And I have a 
question around that.
    Given that our pellet industry plays a major role in 
reducing heating oil consumption, is the production of wood 
pellets from the removal of excess low-value woody biomass 
being provided adequate support under programs like BCAP for 
the purposes of incentivizing these types of best forest 
management purposes?
    Mr. Garcia. Thank you for your question.
    I may have to get back to you with that to the 
Subcommittee. That will probably take some research on our 
part, but we will be more than happy to provide you with that 
information. I apologize for not having that information 
readily available to answer your question.
    But as far as the Farm Service Agency, we are working 
closely--under the BCAP Program through matching payments--
through the matching payment portion of the BCAP Program and 
also looking at the particular project proposals that could 
result in the development of fuel pellets to help our energy 
situation out there.
    Ms. Pingree. Great, and I am happy to get together with you 
on that. It is a growing industry in our state; and, obviously, 
wood and wood products and the management of our forests is a 
big issue for us. But this is also a growing fuel product, and 
we want to do everything we can to help our industry and also 
help our residents afford the cost of fuel.
    Thank you for your work.
    I yield back.
    The Chairman. Thank you.
    I recognize the gentlelady from Alabama, Mrs. Roby, for 5 
minutes.
    Mrs. Roby. Thank you, Mr. Chairman, and I apologize for 
jumping up and down.
    Mr. Tidwell, for just a minute, your testimony highlights a 
number of programs that are important to private forest owners, 
like the almost 400,000 family forest owners in my home State 
of Alabama. And while I understand the value of these programs, 
another key program that is incredibly important for both the 
conservation and forest products industry in Alabama is the 
Forest Inventory and Analysis Program; and it helps us 
understand the conditions and the trends in our forests, where 
we have insect and disease threats, how much fiber we have in 
our forest products. Are you making progress with FIA? Have you 
fully implemented this program as directed by the previous farm 
bill?
    Mr. Tidwell. We are making progress. And our FIA Program is 
just essential, especially to the private landowners, to be 
able to understand what is occurring not only on their land but 
throughout their state. It helps industry to be able to make 
decisions about where to make investments. It is really 
essential for us as we, when folks are asking us about is this 
a place for maybe an opportunity for a pellet facility, we have 
that data. We can actually show how much material that needs to 
be removed off of both the private land and also our public 
land. So we are making progress.
    A few years ago, we expanded the frequency--increased the 
frequency of reading the plots here in the eastern part of the 
state because of the level of change that we are seeing. So we 
have made some shifts in the program, and we are close to 
having it fully implemented.
    I expect in the future, though, that there will be more and 
more of a request for us to increase the frequency of reading 
our plots across the entire United States. So that is one of 
the things we are looking at, is how to build more efficiencies 
into this program with an anticipation that is going to be 
probably a need for more current data than we currently 
provide.
    Mrs. Roby. Thank you so much.
    Mr. Chairman, I yield back.
    The Chairman. I thank the gentlelady.
    Now I recognize the gentleman from Oregon, Mr. Schrader, 
for 5 minutes.
    Mr. Schrader. Thank you, Mr. Chairman.
    Mr. Tidwell, how is the Forest Service responding to some 
of the attacks from EPA on the use of woody biomass, the boiler 
MACT fiasco that went down and this Ninth Circuit Court 
decision that Congressman Ribble referred to? How are we 
responding to talk about the good things biomass should and 
could be doing for a healthy forest?
    Mr. Tidwell. We are working with the EPA and all the 
Federal agencies to make sure that everyone understands the 
importance of being able to restore these forests and whether 
it is the saw log material or the small diameter, the residual 
material that needs to be removed. And we want to make sure 
that if there are any procedures or policies that are put into 
place that they actually encourage and allow for that 
restoration work. So whether it is with air quality----
    Mr. Schrader. But EPA is going the opposite way, obviously. 
How aggressive are you in talking to Ms. Jackson and company 
over there?
    Mr. Tidwell. Well, we meet with that staff on a variety of 
issues and--whether it is air quality or clean water concerns--
to be able to offer options about how we can move forward to 
ensure that--of course, we want clean air and clean water but 
to be able to do it in a way that we can do the restoration 
work that needs to occur to prevent some of the long-term 
impacts to either clean air or clean water.
    For instance, the amount of emissions that occur off of 
these large wildfires. We have so many examples now where when 
we go into a forest and we do the restoration work around our 
communities, to do the thinning, to remove a significant amount 
of the large trees and some of the smaller trees, so that when 
a fire burns through an area--and fires will continue to 
occur--that the severity of the wildfire is much less.
    Mr. Schrader. So if I may--I have a limited amount of 
time--I appreciate that. I just ask you to be more aggressive 
and more public in some of your pronouncements to make sure 
that there is a level playing field here within the 
Administration on what is going on.
    My other point: It would seem to me that AFRI and 
Agricultural Research Service are not getting the same play in 
the President's budget. He talks about innovation, excellence, 
education, out-competing the rest of the world, out-innovating 
the rest of the world. During the Recovery Act, there were lot 
of increases that I approved of and research and development 
projects, but ag seemed to fall short. Why is that?
    Mr. Tidwell. I can respond to what we did though the 
Recovery Act, and we had a significant amount of funds that 
went to doing--restoring the forests, both our National Forests 
and on our private lands through our states.
    Mr. Schrader. I am talking about research. I am talking 
about active research, actually.
    Mr. Tidwell. And even within----
    Mr. Schrader. They didn't see the increase the rest of the 
research budgets did.
    Mr. Tidwell. Yes, well, with our research budget, what we 
are focused on is continuing to do the work, whether it is in 
our wood products lab to develop new products that we can use 
to encourage more utilization of wood, to deal with the 
invasives. We currently have the largest research department, 
when it comes to conservation, in the world. So we are just 
continuing that work.
    And we feel that the budget request that we have submitted 
reflects the work that needs to be done to be able for us to 
continue all of our research programs that are essential to be 
able to deal with the threat, whether it is invasives or to 
develop new use of wood products in this country.
    Mr. Schrader. Thank you. I just, again, urge you to be a 
little more aggressive for your share of the pie, if you will.
    I am a little concerned with the Healthy Forest Reserve 
Program. You referred to Oregon's northern spotted owl habitat 
set-asides as a success. It has been, actually, quite the 
opposite, not just on private land but on our public lands. We 
found that the large set-asides of public lands have not 
improved the sustainability or viability of the northern 
spotted owl; and, in fact, they continue to decline. The 
remarks in the audit that this is a success alarmed me greatly.
    Some of the more recent proposals are to actually set aside 
more land. In other words, it did not work the first time; we 
will just double down on failure and see if we can get the same 
result. There has been a lot of documentation that competition 
with other owls is really the main problem. So I would ask you 
to look at that a little bit.
    And, frankly, on the stewardship program, I would urge you 
to look at that as something you can use within the Forest 
Service itself, on Forest Service land, not just private lands 
but national Forest Service lands. Set-aside trusts, programs 
that you talked about, I think that can actually do a great 
deal to break down the barriers between the environmental 
community and the timber community and have healthy forests at 
the end of the day.
    Mr. Tidwell. Thank you.
    Mr. Schrader. Thank you, sir.
    I yield back.
    The Chairman. I thank the gentleman.
    I just want to make Members aware that we have done so well 
taking the 5 minutes I think we will be able to get, with the 
few folks who are here, another round of questions in, if you 
have such.
    At this point, I recognize the gentleman from New York for 
5 minutes.
    Mr. Owens. Thank you, Mr. Chairman. I will be brief. I have 
a cold, and I am having some trouble speaking.
    I don't have a National Forest in my district, but I have 
the Adirondack Park. And we have a number of businesses that 
are developing biofuels and are attempting to move in that 
direction. What I would like to know is, when you look across 
the spectrum of the programs that the Federal Government 
provides, what would be the three programs that you would 
emphasize and like to see funded to enhance the growth of 
biofuels? And is there anyway in which we can direct biofuels 
growth to local delivery? That is allowing this funding to 
deliver that energy to the local communities. Anybody can take 
a shot at this.
    Ms. Canales. Congressman, indeed, the goal and what the 
President and Secretary Vilsack have put forward is that the 
development of these biorefineries would occur throughout the 
United States. Our goal right now is to do four in the next 2 
years, and we are on our way.
    Again, this is new. You know, I describe it as it has not 
been a silver bullet yet in the sense of where these businesses 
and what is going on in our country. But what you have just 
described is exactly the case in the sense of taking advantage 
of what the feedstock would be.
    For example, the one that I mentioned in Florida, is 
relying on agriculture waste. The one in Georgia is relying 
on--he did not want us to use ``woody'' biomass, but it is 
wood. And that would be something that would be in your area as 
well, too. The notion is that these biorefineries can be 
developed and dispersed throughout the United States and can 
benefit and utilize whatever is derived from that region.
    But, also, the important thing about this is that it brings 
in financing that in the past may not have previously existed. 
Because when you do put these projects together it does 
require, not only this loan guarantee but private equity--
private investment; and that is an important draw for our rural 
areas.
    Mr. Owens. Thank you.
    Mr. Tidwell. If I could add to that, our Community Wood 
Energy Program provides the assistance and the technology to 
communities so that they understand the benefits and the 
options that they may have to be able to develop a proposal so 
they can pursue. And what we are finding is so essential when 
it comes to utilization of biomass or bioenergy is that it is 
the transportation costs that are often the limiting factor. 
And so that the more of these facilities that we can build 
across the country and scale them for what is needed either for 
that community or for that facility, that is where I think 
where we will really start to see the expansion of this 
infrastructure.
    The other key program that we have is our Forest Biomass 
for Energy Program that directs a competitive process for 
research and development to be able to continue to expand the 
knowledge that we currently have with what is working but also 
to be able to continue to provide more efficiencies and how to 
really convert biomass into energy.
    Those are two key programs that I feel that are very 
beneficial, not only the direct benefits to the community but 
also when it comes to the research. It is just essential that 
we continue to move forward to be able to understand how we can 
make these operations more efficient.
    Mr. Owens. Thank you.
    Ms. Canales. If I may add, on the Rural Energy for America 
Program, section 9007, there is an opportunity for a grant for 
feasibility studies so that the first steps can be taken to 
determine is there that viability for that particular type of a 
business, this biorefinery. So there are initial steps. And 
those are first, important investments so that you can get all 
of your information together, including the financing that I 
mentioned that, of course, is critical.
    Mr. Owens. Thank you.
    Mr. Chairman, may I have one additional question?
    The Chairman. Yes.
    Mr. Owens. I also have Fort Drum in my district. I am 
wondering, are you working with DOD at all to see how biomass 
can be utilized to take military installations off the grid and 
enhance national security in that way?
    Ms. Canales. We have entered--the U.S. Department of 
Agriculture has entered into a Memorandum of Understanding with 
the Department of Navy so that there can be what you have just 
described, an opportunity to put together projects. This one 
happens to be related to Hawaii, but it is not limited only to 
that state. We are seeing the sort of initial steps in that 
direction, but it is geared towards trying to get a project 
that would be able to develop new biorefineries so that it can 
go towards aviation fuel and other types of fuel that are being 
used by the military.
    So there is a definite interest, and there has been 
communication to that effect.
    Mr. Owens. Thank you very much.
    I yield back.
    The Chairman. I thank the gentleman.
    With the witnesses' indulgence--we have been pretty 
efficient with everybody's time--I would like to see if there 
is an opportunity for one more questioning round for the 
Members that remain here. I will take the liberty of starting 
that.
    Chief Tidwell--or any of the witnesses can comment--
recently, Secretary Vilsack announced a new green building 
initiative responding to several Members of this Committee's 
request whether the USDA was going to start using more wood--
frankly, the original green building material--in its 
buildings, recognize all credible green building rating 
systems, other than just LEED, and invest in research into the 
better use of wood products.
    Real quick, can you give us some idea of where is this 
initiative and what steps you have taken to date following this 
announcement?
    Mr. Tidwell. Following that announcement, I sent a 
directive out to all of our units that, as we move forward with 
any new building construction, renovating facilities, that we 
look first to using wood. It has always been something that we 
always wanted in our facilities.
    In addition to that, we are making sure that everyone is 
aware of the latest developments that are coming out of our 
forest products lab. For instance, they are working on 
developing more of a laminated beam system that can be used 
with some of the smaller diameter wood so that we can encourage 
construction besides single-family homes using wood. In Europe, 
often, they go four, five stories high with wood construction. 
We want to be able to show folks that that is a good 
construction, it is solid, and to be able to actually move 
forward and develop some mills that can actually produce these 
laminated beams.
    And the other thing is just, to move forward, that we want 
our buildings to be, of course, certified, be energy efficient, 
but to be able to work with the certification programs out 
there so that they fully recognize the benefits of wood. I 
agree with you. It is the original green building material.
    The Chairman. Thank you.
    As I prepare myself for the farm bill, one of the things 
that was created in the 2008 Farm Bill--and I haven't really 
seen anything on it--the Forest Service, as part of the farm 
bill there was a branch created, International Forestry, and I 
really know nothing about that. Can you give us a quick 
snapshot of what that is, what it has become, what it does?
    Mr. Tidwell. Our international program is a relatively 
small staff. But what they do, they work with other countries. 
We are currently working with 88 other countries to help 
countries understand the benefits of sustainable forestry, to 
deal with the illegal logging so that there is less impact on 
our markets, to be able to deal with invasives, to be able to 
make sure that other countries understand the problems with the 
wood material they are shipping to this country or any country, 
about the issue with invasives, to be able to work together.
    The other key program they have is dealing with migratory 
birds, to make sure that countries are providing habitat for 
birds that migrate out of this country, that, no matter what 
habitat we provide here, if the birds head south, for instance, 
and there is no habitat there, we are going to loose those 
populations, and then we will have to continue to deal with 
those issues in this country.
    Those are kind of three of the main programs that we are 
working on right now. The majority of the funding for our 
international programs comes from USAID and through the State 
Department. But it is really just essential work that we are 
doing that really has direct benefits not only to the markets 
but direct benefits to sustainable forestry worldwide.
    The Chairman. That was helpful. Thank you.
    Staying on the international perspective, as part of the 
last farm bill there was a soft wood lumber imports provision 
within the farm bill that looked at establishing an agreement 
implementation that required declaration of lumber imports and 
fees paid. Do you know the status of that initiative?
    Mr. Tidwell. Mr. Chairman, I am not. I will have to get 
back to you on that one.
    The Chairman. That is fine. I would appreciate it if you 
would do that.
    I wanted to--I can't hardly go through a farm bill hearing 
without at least touching on the Allegheny National Forest at 
least once. That is where I am from. I just love the place.
    This one has to do--as you know, the ANF is in the 
district, and oil and gas production was certainly critically 
important to my constituents in the communities well before it 
was a National Forest in 1923. And despite attempts by some to 
block this production over the years, the bottom line is that 
the mineral rights in the forest--I believe it is over 93 
percent, 92 percent--are privately held.
    In recent weeks, I have been hearing a lot of concern from 
my constituents about the unreasonably long periods of time 
before the Forest Service issues notices to proceed. These 
notices should be generated within 60 days, but they have 
grown--and I have actually a quote from an article I will 
submit for the record by a county commissioner--from 4 to 7 
months as one of the county commissioners said.
    [The information referred to is located on p. 529.]
    The Chairman. In addition to the delays, the Forest Service 
has also issued a letter to Shell Western Exploration and 
Production which prohibits any ANF groundwater for the 
company's natural gas drilling and production operations.
    Can you explain the delays of notices to proceed and why 
the Forest Service has taken this change after a pretty good 
partnership since 1923? All of a sudden, in 2011, we have this 
turnaround prohibiting the use of groundwater.
    Mr. Tidwell. With the processing of the permits, we are 
actually making progress. We are not to where we would like to 
be as far as the length of time. But I think even a year or 2 
years ago it was taking more like 5 to 5\1/2\ months. We are 
now down to an average of 4 months. We processed 690 permit 
applications last year.
    One of the things that is occurring is the number of 
applications is significantly increasing. So it is one of the 
things we are going to have to look at to be able to find a way 
to add some more capacity to that force to be able to deal with 
this influx of additional applications.
    The issue with groundwater is not part of the process 
application. It is more of a concern about the groundwater and 
the quality of that groundwater. And so it is one of the things 
we need to continue to move forward with and look at some other 
options, or to make sure that we are providing that there won't 
be impacts to the quality of that groundwater.
    This is a new issue that has recently come forward that we 
weren't dealing with with the previous permits. It is one where 
we are going to have to work with the industry and work with 
the applicants to be able to find a way to be able to move 
forward with those.
    The Chairman. I also encourage you to work with other 
partners and stakeholders, the Department of Environmental 
Protection in Pennsylvania, agencies like the Susquehanna River 
Basin Commission, who I think really have their arms wrapped 
around the water issue and have a lot of confidence in it.
    And, finally, I will close with just a request. This is a 
joint request. My colleague from Florida was going to try to 
make it back, so a joint request from Mr. Southerland and 
myself.
    If you could have some folks at the Forest Service take a 
look at the Apalachicola National Forest and, frankly, report 
back on why that Florida National Forest is only really at what 
appears to be 15 percent of production of the actual forest 
plan for millions of board feet harvesting. I think that would 
be very helpful. I know the gentleman from Florida would 
appreciate it; and, obviously, it is something I would be 
interested in looking at myself.
    And, with that, I recognize the gentleman from Oregon for 
the final line of questioning here.
    Mr. Schrader. I appreciate that, and I will try not to keep 
everyone.
    You mentioned--Chief Tidwell, you mentioned at one point 
the need to do restoration work on a landscape scale to really 
be effective and deal with it, I assume, on a watershed-type 
basis, that sort of thing. And you also mentioned dealing with 
it in terms of long-term contracts to provide, I assume, some 
certainty; and your comments were probably more geared toward 
private landowners.
    Why couldn't we do the same thing on public forestland? Why 
couldn't we have that? Are we pursuing that at all? I would be 
interested in who in your agency deals with that.
    Mr. Tidwell. Yes, we actually are doing that on the 
National Forest to take these--it is more of a landscape scale 
approach. And, ideally, when we even do our assessment, it also 
factors in the work that is being done on adjacent private 
forested lands, to be able to look at it together. But there is 
just no question, we have to look at much larger areas than we 
ever have in the past, and we can have some opportunities 
there.
    You know, in your state--I will use an example down in 
areas of Arizona we have an initiative to look at four forests, 
and we are doing the analysis on 750,000 acres with one 
environmental impact statement. That would allow us to be able 
to go forward and do work over at least the next 10 years. That 
is an example of what we need to do in all of our states and 
across the country.
    And I will tell you today we have the support to do this 
work. A lot of these initiatives are being strongly supported 
by the environmental community. Our conservation groups are 
there with the industry. They recognize that we need to be 
doing more of this work on the landscape.
    That is why I remain optimistic that we are going to be 
able to move forward and do significantly more work on the 
landscape, produce more jobs, produce more wood, not only for 
our mills but also for other biomass uses.
    Mr. Schrader. I appreciate that, and if there is an 
opportunity I would love to get a visit from somebody in your 
office on what you are doing and how we might work with you 
more closely in Oregon on that.
    The last comment, regards outcomes. I am a big outcome 
measure fan. We are spending a lot of money in these budgets. I 
appreciate the level of contacts you are making with different 
private landowners and acres treated and this and that, but I 
would like to see, if it is at all possible, that the Forest 
Service set some targets. Given the amount of money we have, I 
think it is an important criteria. Given the amount of money we 
have or don't have, here is how much land we can effectively 
treat or not treat at any given time.
    And here are our goals: This much reduction in pest 
infestation in an acreage given this amount of money, talking 
about wildfire suppression, doing better in terms of acres 
burned or what have you, given the type of fire severity year 
it might be. For water quality, if we are investing in all of 
these things to reduce runoff, what sort of improvements are we 
getting in these local areas?
    A lot of times I think we concentrate on lots of inputs and 
lots of outputs, but we don't get down to what outcomes we are 
actually trying to get at. And I would be very interested in a 
discussion with your agency about that.
    Mr. Tidwell. We will be glad to come up and visit with you 
and provide not only the scale of the issues we are dealing 
with but also what we expect we can accomplish in Fiscal Year 
2011, what we expect to accomplish in Fiscal Year 2012, and 
also be able to show what we actually accomplished. Because we 
do have targets that we set with all of our programs every 
year. Those are tracked throughout the year, and at the end of 
the year that is how we basically determine our level of 
performance. And we would be glad to show that information to 
you.
    Mr. Schrader. Thank you very much. I appreciate you all 
coming here.
    I yield back.
    The Chairman. I thank the gentleman.
    I want to thank our witnesses for being here, joining us 
today, your preparation and your testimony and, frankly, your 
leadership within the agencies that you lead and your level of 
collaboration and teamwork with this group. We have a lot of 
work ahead of us as we look at the 2012 Farm Bill and the 
specific titles within that farm bill that are within the 
responsibility of this Subcommittee. So thank you so much for 
all of that.
    Under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Conservation, Energy 
and Forestry is adjourned.
    [Whereupon, at 11:29 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
Submitted Article by Hon. Glenn Thompson, a Representative in Congress 
                           from Pennsylvania
The Times Observer
Driller says USFS not living up to ruling
County commissioners discuss court filing
July 19, 2011
By Brian Ferry
    According to oil and gas developers, the U.S. Forest Service is 
taking too long to process proposals for development on the Allegheny 
National Forest.
    In a document filed Friday with the U.S. District Court of Western 
Pennsylvania, the Pennsylvania Independent Oil and Gas Association 
(PIOGA) asked why the Forest Service should not be held in contempt of 
court.
    ``USFS is in violation of this court's Dec. 15, 2009, order 
requiring USFS to process oil and gas development proposals in the ANF 
in accordance with procedures established in United States v. Minard 
Run Oil Co.,'' according to the document. ``USFS has failed to comply 
with the Minard Run procedures and has instead engaged in a pattern of 
interference with the lawful efforts of PIOGA members to develop their 
ANF oil and gas estates.''
    Warren County Commissioner John Bortz offered testimony in the 
hearings that led to Judge Sean McLaughlin's December preliminary 
injunction against a settlement that had the effect of dramatically 
decreasing new drilling on the forest.
    Bortz brought up the new development at the commissioners' work 
session on Monday.
    ``There are already rules on the books as to how this works,'' 
Bortz said.
    In the past, the Forest Service set a period of 60 days as a 
reasonable time for addressing areas of concern and issuing notice to 
proceed.
    ``That 60 day period has grown from 4 months to 7 months,'' Bortz 
said Monday. The delay ``impacts the developers' ability to create and 
sustain jobs'' as well as to access the property they have rights to.
    The length of time isn't the only problem PIOGA members are 
claiming.
    ``There has been a long-standing history that oil and gas producers 
would have access to surface water'' necessary for development 
operations, Bortz said.
    ``In addition to the increasingly lengthy delays in USFS's 
processing of drilling proposals, USFS has issued a letter prohibiting 
SWEPI LP (Shell Western Exploration and Production), a PIOGA member, 
from using any ANF groundwater for SWEPI's natural gas drilling and 
production operations,'' according to the document. ``USFS has refused 
to negotiate with SWEPI at all . . . when such water use by oil and gas 
developers has been commonplace for decades in the ANF.''
    The right to ``drill for and use water'' from the property ``for 
the purpose of operating the said premises for oil and gas . . .'' was 
reserved when the title to the mineral estate changed hands, according 
to the document.
    The wells in question are Marcellus Shale natural gas wells, 
according to the document.
    Such wells generally require millions of gallons of water for 
hydraulic fracturing.
    The amount of water is not an issue, according to the document, 
because the ``Kane water-flood operation in the ANF uses, and has used 
for the past 4 decades, 10,000 barrels of water a day, year round, from 
ANF groundwater wells. Such longstanding, large-scale operations 
undermine any USFS assertion that the use of ANF groundwater by mineral 
estate owners is `unprecedented.' ''
    ``Minard Run forbids USFS, the owner of the subordinate surface 
estate, from imposing such a burdensome condition on SWEPI, the owner 
of the dominant mineral estate,'' according to the document. ``Recent 
actions and inactions by USFS have become so egregious that PIOGA is 
compelled to seek further relief from this court.''
    ``USFS has violated this court's order . . . and should be found in 
contempt,'' according to the document.
    ``It's going to be interesting to see how that plays out,'' 
Commissioner Terry Hawk said.
    ``The outcome of this does hold in the balance jobs in Warren 
County,'' Bortz said.
                                 ______
                                 
                          Submitted Questions
Response from U.S. Department of Agriculture
Questions Submitted By Hon. Glenn Thompson, a Representative in 
        Congress from Pennsylvania
    Question 1. Rural Energy for America Program (REAP): The Rural 
Energy for America Program (REAP) assists small rural businesses and 
producers with renewable energy and energy efficiency projects. 
Recently, USDA included ethanol blender pumps as an eligible project? 
How do blender pumps fit in with the goals of the program? Can blender 
pumps be financed through other USDA programs?
    Answer. The agency clarified that flex-fuel delivery systems, 
including blender pumps, are one of many eligible purposes under REAP. 
The statute makes it the program's responsibility to promote biofuel 
infrastructure. Blender pumps are a critical part of that 
infrastructure as the final step necessary to reach the consumer. No 
separate funds are designated for flex-fuel projects. REAP is a 
competitive grant and loan guarantee program in which renewable energy 
systems and energy-efficiency improvement projects must compete on 
their own merits against eligible projects for available funds. REAP is 
not the only RBS program that can fund blender pumps; the Business and 
Industry Guaranteed Loan program also has blender pumps as an eligible 
activity.

    Question 2. Rural Energy for America Program (REAP): Most Rural 
Energy for America (REAP) projects seem to be located in the Midwest. 
What challenges are preventing the REAP program from being implemented 
nationally?
    Answer. While the REAP program has been largely utilized by 
applicants in Midwest states, it is a national program. Changes made in 
the NOFAs for 2008, 2009, and 2010 and subsequent REAP Interim Rule 
have modified scoring and project criteria. These changes, as well as 
the implementation of State allocations, were made to increase the 
diversity and geography of the projects selected, and we have already 
seen a positive change in the geographic distribution of REAP awards. 
In the first 3 years of the program, 24 states received awards for 
2003, 27 for 2004, and 32 for 2005. In the most recent 3 years (not 
counting 2011, which is still being processed), 41 states received 
awards for 2008; 49 states as well as Puerto Rico and the Western 
Pacific received awards for 2009; and 48 states and Puerto Rico 
received awards for 2010.

    Question 3. Bioenergy Program for Advanced Biofuels (Section 9005): 
Could you identify what types of feedstocks are being used in the 
biofuels facilities that are receiving payments in the Bioenergy 
Program for Advanced Biofuels?
    Answer. The types of feedstocks used by facilities receiving 
payments for FY 2010 include:

   Agricultural waste seed

   Agricultural crops (sorghum, wheat starch)

   Animal fat

   Dairy waste/manure

   Ethanol (from other than corn kernel starch)

   Fatty acids

   Food processing waste

   Grasses

   Greases (white, yellow)

   Mixed substrates waste

   Municipal waste

   Oils (canola, crude corn, cottonseed, glycerin, palm, 
        soybean, sunflower seed, waste or used vegetable, other)

   Poultry fat

   Tress (pine, other)

   Wood waste (sawdust, chips, pallets)

    Question 4. Duplication: During the conservation title audit we 
learned that several conservation programs can fund energy efficiency 
projects. What programs outside of the energy title does USDA 
administer that may fund renewable fuel projects or renewable energy 
and energy efficiency projects?
    For example, can the Business and Industry (B&I) loan program or 
Value-Added Grant program accomplish some of the same goals as many of 
the energy title programs? If not, what changes could be made to 
existing programs outside of the energy title to accomplish the same 
goals?
    Answer. There are four other programs within USDA under which 
certain types of energy projects may be financed. These are the Value-
Added Producer Grant (VAPG) program, Community Facilities, Business and 
Industry Program, and the Environmental Quality Incentives Program 
(EQIP). FSA farm loans could also be used for some of the projects, and 
Forest Service also has some authorities for energy related projects.
    The project eligibility category related to renewable energy under 
the VAPG program was set by the 2008 Farm Bill and states that a Value-
Added Agricultural Product is ``a source of farm- or ranch-based 
renewable energy, including E85 fuel.'' Thus, the VAPG program can 
provide funds to a limited set of energy-related projects where an 
agricultural commodity is used to generate renewable energy on a farm 
or ranch owned or leased by the independent producer that produces the 
agricultural commodity. On-farm generation of energy from wind, solar, 
geothermal, or hydro sources are not eligible for VAPG.
    Because of the differences in eligible entities and eligible 
projects, there is little overlap with the Community Facility (CF) 
program. Eligible entities under the CF program are: public bodies 
(e.g., municipalities, counties, districts), nonprofit corporations and 
associations, and Federally recognized Indian tribes in a rural area. 
Eligible projects are generally activities associated with the 
construction, enlargement, extension, or improvement to ``essential 
community facilities providing essential services.'' Essential 
community facilities are ``those public improvements requisite to the 
beneficial and orderly development of a community operated on a 
nonprofit basis.''
    While some entities eligible for the CF program would also be 
eligible under the Section 9003 program, the type of projects funded 
under the Section 9003 program would not likely qualify as an eligible 
CF project. Further, Community Facilities is a grant program, while the 
Section 9003 is a guaranteed loan program, and grants would be an 
insufficient source of funds for the construction of biorefineries. 
Thus, there is little likelihood of overlap between these two programs.
    For the Section 9004 program, the eligible entity must be a 
biorefinery. Further, the types of projects that qualify for the 
Section 9004 program would likely not qualify for the CF program. Thus, 
there is no overlap with the CF program.
    While some entities might be eligible for both the CF program and 
the Section 9005 program, there would be no overlap because the CF 
program would not make any payments for the production of advanced 
biofuels.
    For the Section 9007 Program, for the renewable energy system and 
energy efficiency improvement portion, the eligible entities are 
agricultural producers and rural small businesses. These entities are 
also eligible for renewable energy system feasibility studies. Given 
the difference in eligible entities, there is little, if any, overlap 
with the CF program. For energy audits and renewable energy development 
assistance under Section 9007, eligible entities include units of 
state, tribal, and local governments, land grant colleges and 
universities, rural electric cooperatives, public power entities, and 
instrumentalities of state, tribal, and local governments. Thus, there 
is some overlap in eligible entities. However, it is unlikely that 
energy audits or Renewable Energy Development Assistance (REDA) would 
meet the project eligibility requirements for CF.
    The Business and Industry (B&I) Program provides guaranteed loans 
to a wide range of projects, including energy projects. There have been 
a number of projects financed under the B&I Program that may have been 
able to have been financed under REAP if the assistance requested did 
not exceed 75 percent of eligible project costs.
    The NRCS has traditionally offered financial assistance for a 
variety of conservation practices that also promote energy conservation 
as a secondary benefit, such as reduced tillage. NRCS initially 
expanded these energy efforts offering assistance for on-farm energy 
audits. Currently, NRCS is retooling its conservation practice 
standards and adding new standards with an increased emphasis on energy 
conservation implementation. In 2012, NRCS will offer financial 
assistance for many items identified in the on-farm energy audits such 
as lighting, ventilation, airflow and milk harvesting.
    Beyond these few programs, REAP does not overlap or duplicate of 
any other USDA program.

    Question 5. Biomass Crop Assistance Program: The intent of the 
Biomass Crop Assistance Program (BCAP) is to help producers establish 
dedicated energy crops. To date, how many acres of dedicated energy 
crops have been created from the program? How much has been spent 
through BCAP to date to get these acres?
    Answer. As of August 22, 2011, nine project areas have been 
designated, spanning across 168 counties in 10 states (AR, CA, KS, MO, 
MT, OK, OH, OR, PA, and WA).
    These nine project areas target the sign up of 117,184 acres in FY 
2011 alone. Overall the project sponsors requested that these nine 
project areas target a full-enrollment of 834,000 acres.
    Approximately, 17,000 acres have been signed up since the sign ups 
began on:

   May 9, 2011 (Project Area 1);

   June 20, 2011 (Project Areas 2 through 5); and

   August 8, 2011 (Project Areas 6 though 9).

    In addition, approximately 14,000 acres have been offered and are 
in the phase of having conservation plans developed before approval 
occurs.
    Approximately $82 million has been allocated for the sign up of 
acres in these nine project areas. The $82 million supports production 
over a period of five year for herbaceous crops and nine years for the 
woody crop. The allocations are as follows:

                   Project Area Allocation Break Down
 
 
 
Project Area 1 (sponsor Show Me Energy Cooperative)          $18 million
Project Area 2 to 5 (sponsor MFA Oil Biomass &            $18.25 million
 Aloterra Energy)
Project Area 6 (sponsor Beaver Biodiesel)                   $.37 million
Project Area 7 (sponsor Abengoa Bioenergy)                  $6.2 million
Project Area 8 (sponsor AltAir Fuels)                        $20 million
Project Area 9 (sponsor ZeaChem Inc.)                     $18.82 million
                                                       -----------------
  Total                                                   $ 81.6 million
 

    The nine project areas target the establishment of four different 
energy crops: native grasses, miscanthus, camelina, and hybrid poplar.
    The intended conversion products are as follows: jet fuel drop-in; 
biobased products; bio-ethanol; biodiesel; and fuel pellets.

    Question 6. Biomass Crop Assistance Program: When creating the BCAP 
program in the 2008 Farm Bill, Congress set two primary components. The 
first was establishment of a new supply of energy crops and annual 
payments to farmers to grow these perennial biomass crops. The second 
allows matching payments to producers and forest landowners to offset 
the costs of collecting, harvesting, storing and transporting of 
eligible biomass materials. From a fiscal standpoint, the program was 
initially scored at $70 million over 4 years, yet the actual spending 
in FY 2010 was over $240 million. Can you talk more on the differences 
in the way the program was initially administered to the way it is 
currently? Has USDA followed the purposes of BCAP that Congress 
initially set forth?
    Answer. USDA's administration of BCAP is in accordance with the 
statutory requirements set forth by Congress. The intent of BCAP is to 
provide a financial incentive to farmers and forest landowners to 
produce new supplies of biomass or to collect existing supplies of 
biomass for the purpose of heat, power, bio-based products or liquid 
biofuels. For new biomass, BCAP provides establishment and annual 
payments to producers. For the collection and delivery of existing 
biomass, BCAP provides matching payments to producers.
    Initial funding for the matching payment component of BCAP began 
with a Notice of Funding Availability (NOFA) operating from June 11, 
2009 to February 3, 2010, which, as directed by statute, provided that:

   ``The Secretary shall make a payment for the delivery of 
        eligible material to a biomass conversion facility to a person 
        with the right to collect or harvest eligible material . . . at 
        a rate of $1 for each $1 per ton provided by the biomass 
        conversion facility in an amount equal to not more than $45 per 
        ton.'';

   ``The Secretary shall use the funds, facilities and 
        authorities of the Commodity Credit Corporation, including the 
        use of such sums as are necessary, to carry out this 
        section.'';

   ``The term `biomass conversion facility' means a facility 
        that converts or proposes to convert renewable biomass into 
        heat, power, biobased products or advanced biofuels'';

   ``The term `eligible material' means renewable biomass'';

   ``The term `renewable biomass' means . . . any organic 
        matter that is available on a renewable or recurring basis from 
        non-Federal land . . . including . . . trees and . . . wood 
        waste and wood residues.''

    The NOFA generated important information from stakeholders on 
issues not fully addressed in statute, including when BCAP incentives 
are successful, when they may not be, or when incentives require 
additional policy clarifications. In light of funding limitations 
enacted in July 2010, USDA set tougher restrictions by which materials 
qualify for matching payments. These conditions, outlined in the final 
BCAP regulation on October 27, 2010, are that eligible materials 
qualify for payment based on the sequence of collection, harvest, 
storage, transportation and delivery; meaning the eligible material 
must be collected or harvested directly from the land, before transport 
and delivery (not ``collected or harvested'' after transport and 
delivery by separating from a higher value material); must be collected 
or harvested in accordance with an approved conservation, forest 
stewardship or equivalent plan; and if a woody eligible material 
outside of BCAP project areas it must also be a byproduct of preventive 
treatments removed to reduce forest fire threats, reduce disease or 
insect infestation, or to restore ecosystem health, and cannot have a 
pre-existing market. Of course even if the material is eligible, 
matching payments may not be available if other program needs exhaust 
the available funding.
    As reflected in the cost-benefit analysis conducted by Farm Service 
Agency (FSA) and issued with the publication of the final BCAP 
regulation, these conditions substantially reduce future outlays on 
matching payments compared to the expenditure baseline of FY 2010.

    Question 7. Forest Resource Coordinating Committee: The 2008 Farm 
Bill established the Forest Resource Coordinating Committee (FRCC) to 
coordinate nonindustrial private forestry activities within the 
Department of Agriculture and with the private sector in order to 
effectively address national priorities for private forest 
conservation, clarify individual agency responsibilities and provide 
advice on the allocation of Cooperative Forestry Assistance Act funds. 
Discussions on and off the Hill are underway regarding the next farm 
bill; yet, the FRCC has not yet been established. When does USDA intend 
to stand up the FRCC?
    Answer. To be clear, the 1990 Farm Bill created the FRCC, it has 
been operational in the past, and it was amended by the 2008 Farm Bill. 
Applications have been received to fill vacant positions on the 
committee. Upon completion of background checks, members will be 
appointed to the committee by the end of the calendar year.

    Question 8. Partnering with NRCS on Conservation Programs: Clearly, 
while the USFS and state forestry agencies don't directly implement the 
farm bill's conservation programs, you play an important role in 
providing basic landowner education, outreach, and technical assistance 
that helps landowners implement conservation practices. In your 
opinion, do you think there are areas for improvement, where NRCS could 
work better with the USFS and state forestry agencies to implement 
these programs, especially in light of the fact that forestry is still 
only a small component of many of the conservation programs?
    Answer. Since enactment of the 2008 Farm Bill, with the 
coordination of the Joint Forestry Team, the Forest Service, NRCS, 
State Foresters and Conservation Districts have successfully worked 
together to better assure that landowner assistance program efforts and 
investments are coordinated and complementary. Several states have 
entered into agreements that clearly define complimentary partner 
agency roles and this has resulted in more efficient use of resources, 
better customer service and more impact on the ground. It has become 
especially clear that much more can be accomplished where NRCS 
conservation program cost-share dollars are focused on forest 
management practice implementation, and complemented with Forest 
Stewardship Program forestry expertise and planning assistance 
delivered through state forest agencies and their already existing 
network of partners and cooperators. Through the Forest Stewardship 
Program, state forestry agencies can continue to function as the 
technical experts with respect to forestry, enabling more landowners to 
qualify for and participate in NRCS cost-share programs such as the 
Environmental Quality Incentives Program (EQIP) and assuring quality 
forest management projects are being funded.

    Question 9. Delivery of Technical Assistance: In the last farm 
bill, some changes were made to streamline the delivery of technical 
assistance under the conservation programs, and I believe the intent 
was to allow third-parties, like state forestry agencies and consulting 
foresters, to help with the delivery of technical assistance. Do you 
see progress on this issue? Do you think we are using these foresters 
as much as possible in efforts to improve efficiencies and streamline 
the programs?
    Answer. Much progress has been made on this issue. The 2008 Farm 
Bill recognizes Forest Stewardship Plans as meeting applicant 
management plan requirements for EQIP. By operating under the Forest 
Stewardship Program, state service foresters and private consultants 
are not required to become NRCS Technical Service Providers (TSPs) in 
order to provide forestry planning expertise. In 2011, the Forest 
Service, National Association of State Foresters, NRCS and the American 
Tree Farm System adopted a national Forest Stewardship Plan template 
that is recognized by all parties as fulfilling the management plan 
requirement for forest landowner access to a variety of assistance and 
incentive programs, including internationally recognized third party 
certification. In this way, the network of forestry expertise that is 
supported by the Forest Stewardship Program is more fully leveraged. 
The Forest Stewardship Program is serving increasingly as a ``gateway'' 
through which landowners can gain access to a variety of forestry 
assistance and programs including USDA cost-share, state tax abatement, 
forest certification and emerging ecosystem service and renewable 
energy markets.

    Question 10. Beginning Forest Owners: In the last farm bill, 
several programs were included to address the education and assistance 
needs of beginning farmers and ranchers, helping them understand good 
farming practices, how to set up their businesses, etc. Do you see a 
similar need for forest owners? Are there a lot of beginning forest 
owners as well?
    Answer. Of the 11 million forest owners in the U.S., 1.5 million 
are over 75 years of age and control 46.9 million acres of forest. In 
the next 10-15 years, we can expect these 46.9 million acres (20% of 
all the private forest land in the U.S.) to be passed on to heirs, be 
sold to developers, or change hands in some other way. This means that 
beginning landowners will likely increase in number and will continue 
to need help with forest management through programs like Forest 
Stewardship.
    This also means that succession planning is very important. 
However, we still see families struggling to understand tax laws and 
estate planning and it is clear that more continued assistance is 
necessary for this essential planning process. There are a number of 
educational programs that help landowners with potentially difficult 
discussions with their families about passing land to heirs.

    Question 11. Forest Legacy Program: There are several programs that 
have not been funded within the Forest Legacy Program. Given the period 
in which these programs have not been funded, do you see the necessity 
in keeping them or does this give us some leeway in order to 
consolidate programs without interrupting program delivery?
    Answer. The Forest Legacy Program (FLP) is substantially different 
from the other farm bill land easement programs, and consolidation of 
programs, if it included FLP, would substantially alter FLP program 
delivery. FLP has different primary partners, uses different land 
protection tools, uses different financial assistance mechanisms, 
selects projects through a different and nationally consistent process, 
and has different program requirements. In addition, the Forest Service 
has substantial oversight of FLP and it fits very well within the 
mission of the agency.
    FLP is implemented through state agencies, with only governmental 
units holding title to the land or conservation easements. This 
relationship allows the Forest Service to have substantial oversight of 
not just completing projects, but ensuring the forests are conserved 
and well managed.
    Through FLP, land is protected by both fee-simple land acquisition 
and permanent conservation easements. In the other farm bill land 
protection programs, land is protected through short-term contracts or 
permanent conservation easements, and not fee-simple land acquisition.
    FLP projects are selected through a two-step competitive process 
resulting in high quality projects that are supported locally and are 
nationally significant. First, states identify and rank projects 
working with the State Forest Stewardship Coordinating Committees. 
Second, a national panel evaluates and ranks each project based on 
national criteria--importance, threatened, and strategic. The result is 
a list of ranked projects included in the President's budget request. 
Consolidating FLP with other farm bill programs would eliminate this 
well supported, transparent process.
    In the 2008 Farm Bill, states were required to complete state-wide 
forest assessments and resource strategies to identify the important 
forests within the state, and threats to those forests. These forest 
assessments are critical for integrating Cooperative Forestry 
Assistance Act programs as well as focusing the State and Private 
Forestry funding resources into well defined priority areas. Through 
these state assessments, FLP is integrated with the other Cooperative 
Forestry Assistance Act programs. Consolidating FLP with other farm 
bill programs would most likely remove the integration between FLP and 
these forest assessments and the other Cooperative Forestry Assistance 
Act programs.

    Question 12. Mr. Tidwell, as you may be aware, 35 years ago the EPA 
adopted a regulation which defined forest management, including forest 
roads as ``nonpoint'' sources to be managed through state best 
management practices. For 35 years states have worked with stakeholders 
on all sides to develop programs that meet local needs The 9th Circuit 
recently overturned this regulation and ruled for the first time that 
forest roads are point sources and using them for timber harvest 
requires a Federal permit.
    What are the challenges that could arise from a Federal permitting 
program?
    Describe any potential negative environmental effects associated 
with these challenges.
    Answer. There are many unknowns related to the character and 
requirements of a potential ``Federal permitting program ''for forestry 
roads. Depending upon the actual requirements of the permit program, 
obtaining permits could be a substantial burden for the Forest Service 
and other public or private forest landowners. On private working 
lands, new regulatory requirements could increase the cost of forest 
ownership. On National Forest System lands, permitting requirements 
could result in only marginal increases in water quality-related 
benefits due to the current use of Best Management Practices (BMPs) on 
such lands.
    If the regulatory requirements of a new permitting process were 
substantial, increased costs could serve as a disincentive for private 
forest landowners to maintain forest cover and result in loss of 
forests to non-forest uses (e.g., commercial or residential 
development) which have potentially far greater impacts to water 
quality. Additionally, depending on the nature of the regulatory 
system, permitting requirements would require the Forest Service to 
devote personnel time, resources and funds to satisfying permitting 
requirements. This could divert limited resources away from the Forest 
Service's management activities on National Forest System lands. 
Finally, there could be large variations among the permits developed by 
the various permitting authorities, which could mean different 
requirements for both permitting and road management in different 
states. This variability amongst permits would further increase the 
costs and personnel time to the Forest Service of managing forest roads 
and complying with a permit program.
    On public lands, the Forest Service currently implements BMPs and 
associated monitoring to limit the environmental impacts associated 
with logging road utilization, in particular those impacts related to 
water quality. The BMP approach has been successful in addressing water 
quality concerns and controlling the dispersed and relatively low 
impact sources of non-point source pollution associated with forestry 
activities. Any permits developed for forestry roads would likely 
require the implementation of the same BMPs which are already being 
implemented by the Forest Service on National Forest Systems lands. 
Thus, depending on the regulatory regime, permit requirements may not 
provide any additional benefits to water quality nor improve the 
environmental outcomes.
Questions Submitted By Hon. Tim Holden, a Representative in Congress 
        from Pennsylvania
    Question 1. Tidwell: I understand that the programs contained in 
the forestry title of the farm bill have permanent authorizations. Can 
you tell me if there is anything that would need to be done, any 
authority, that would need to be considered for inclusion in the next 
farm bill debate? Or is it your opinion that we would not need to 
include a forestry title in the next farm bill given the permanent 
authorizations?
    Answer. A Forestry Title in the next farm bill could further define 
and strengthen the complementary relationship between the Forest 
Service and NRCS to support successful participation of private forest 
landowners in NRCS and other USDA conservation cost-share programs, 
particularly by reaffirming the important role the Forest Stewardship 
Program plays in facilitating technical assistance for private 
landowners not only in managing their forest lands, but also in 
implementing farm bill conservation programs.

    Question 2. Tidwell: As most of us here know, the Energy 
Independence and Security Act contained a definition of biomass that 
caused many of us here in Congress some concern. That definition does 
not, among other things, allow the removal of woody biomass on Federal 
lands. Are there any studies or reports on how much woody biomass is on 
Federal lands? Do you currently remove woody biomass from Federal 
lands? If so, how much do you remove and how do you do it? Is it an 
invasive process?
    Are there any studies or reports on how much woody biomass is on 
Federal lands?
    Answer. There are several key studies and reports on how much woody 
biomass is on Federal lands as well as other forest lands.

    1. The Forest Inventory and Analysis Program (FIA) of the USDA 
        Forest Service (Smith and others 2004). The plot data indicate 
        current stand conditions on all timberland, including all 
        Federal lands in the U.S. These analyses are based on the 
        interim updated FIA inventory of the 2000 Resources Planning 
        Act (RPA) projections (USDA Forest Service 2007). The website 
        link is: http://fia.fs.fed.us/.

    2. The Department of Energy/USDA Billion-Ton Report examines the 
        nation's capacity to produce a billion dry tons of biomass 
        resources annually for energy uses without impacting other 
        vital U.S. farm and forest products, such as food, feed, and 
        fiber crops. The study provides industry, policymakers, and 
        agricultural community with county-level data and includes 
        analyses of current U.S. feedstock capacity and the potential 
        for growth in crops and agricultural products for clean energy 
        applications. The biomass resources identified in the report 
        could be used to produce clean, renewable biofuels, biopower, 
        or bioproducts. USDA Forest Service lands are included in the 
        analysis except for biofuel production since it is disallowed 
        under EISA, 2007. The website link is: 
        http://energy.gov/articles/department-energy-releases-new-
        billion-ton-study-highlighting-opportunities-growth.

    3. The USDA Forest Service has completed 20 coordinated resource 
        offering protocol (CROP) studies across the agency. CROP was 
        developed by Oregon-based Mater Engineering for the U.S. Forest 
        Service to increase investment in Federal forest landscapes in 
        bio-based projects through inter-agency coordination and 
        levelization of sustainable annual biomass offering. The CROP 
        protocol requires Federal resource managers within a defined 
        landscape to (a) specifically identify biomass removal they 
        believe they can perform each year for the next five years (not 
        what's inventoried); (b) coordinate their 5 year resource 
        offering with other Federal agencies included in the same CROP 
        landscape; and (c) levelize the supply offering within the CROP 
        landscape to provide higher risk reduction to both land 
        managers and investors. The website is: www.crop-usa.com.

    Do you currently remove woody biomass from Federal lands? If so, 
how much do you remove and how do you do it?
    Answer. Yes, we remove woody biomass from Federal lands. USDA 
Forest Service utilizes the residual woody biomass from forest health 
restoration, hazardous fuels reduction, insect and disease infected 
areas, wildfires, wildlife habitat improvement and watershed 
restoration activities.
    The annual target is 2.7 million green tons, which we have exceeded 
each year. The removal of woody biomass is a mechanical method 
utilizing small to medium sized specialized harvesting equipment 
adapted for small diameter trees. The low to no value of woody biomass 
dictates this type of mechanical treatment for economic efficiency. 
This generally occurs after a timber sale, salvage, stewardship 
contract or pre-commercial thinning operation. (See following table).

                       Table for Annual Woody Biomass Utilization Million Green Ton Target
----------------------------------------------------------------------------------------------------------------
                   FY 2004      FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
----------------------------------------------------------------------------------------------------------------
       Target           1.7         1.7         1.7         2.7         2.7         2.7         2.7         2.7
         WB-E           1.7         1.7         1.7        2.91        2.34        3.12        3.31
        WB-SC                                                                                  0.74
----------------------------------------------------------------------------------------------------------------
Target--Is the annual national green ton target.
WB-E--Woody Biomass for Energy Purposes.
WB-SC--Woody Biomass from Stewardship Contracting.

Green Tons Accomplishment

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The mechanical treatment of the residual is not an invasive 
process. In general, it actually helps the future of the existing trees 
to have better growing conditions in the form of increased sunlight, 
higher soil moisture, and greater nutrient allowance. Of course, there 
are variations due to local environmental, spatial and temporal 
conditions.

    Question 3. Tidwell: Pest infestation is a common problem for our 
forests. What are you doing to battle pest infestation? Where are the 
biggest problems now? How much, on average, does it cost to treat a 
forest?
    Answer. Battling forest insect and disease infestations involves a 
multi-agency coordinated approach that, depending on the particular 
pest, its status, and resources available, may include one or more of 
the following actions: prevention, monitoring and detection, 
eradication, and control and management. To respond effectively to 
infestations, the Forest Service works in close cooperation with APHIS, 
the agency with overall regulatory responsibility for invasive pests, 
as well as state departments of forestry and agriculture.
    Currently, the Forest Service has activities focused on significant 
pest problems across the country including: western bark beetle 
prevention and safety in the West, gypsy moth--slow the spread and 
eradication in the East, southern pine beetle prevention in the South, 
and invasive plants nationwide. Aerial surveys conducted by the Forest 
Service and state partners indicated that tree mortality occurred on 
over 9.2 million acres in 2010. Most of this mortality was caused by 
bark beetles attacking conifer trees in the western U.S. Other emerging 
pest and disease problems that the Forest Service is addressing 
include: emerald ash borer, thousand cankers disease, Asian longhorned 
beetle, hemlock woolly adelgid, and white pine blister rust.
    The cost to treat a given forest varies greatly depending upon many 
factors including: the size of the infested forest, the response 
approaches employed (listed above), the effective tools and methods 
available, and the biology of the pest.

    Question 4. Tidwell: What programs and authorities do you rely on 
to battle pest infestation and invasive species? How do you fund 
activities related to the removal of pest infestation and invasive 
species?
    Answer. The program and authority that the USDA Forest Service 
relies on to respond to insect and disease infestations is the 
Cooperative Forestry Assistance Act of 1978 (as amended), SEC. 8. [16 
U.S.C. 2104]. Some pests have a specific program to address the issue, 
like the Slow-The-Spread Program for Gypsy Moth. USDA Forest Service 
insect and disease activities are funded through annual appropriations. 
Funds are used to support insect and disease activities on all forested 
lands in the U.S., including National Forest System, other Federal, and 
state and private lands. Activities on state and private lands are 
commonly funded on a cost-share basis with partners to address a 
prioritized response to a particular insect or disease.

    Question 5. Tidwell: Has the FS conducted any analysis on the topic 
of markets for carbon sequestration? If so, what do you think is the 
potential for forest landowners to sell carbon sequestered by their 
forests and forestry projects?
    Answer. Individual Forest Service scientists have participated in 
the development of the FASOM economic model which was used by the EPA 
to model the impacts of the proposed cap-and-trade legislation in 2009 
and 2010 which projected opportunities for carbon offsets. The Forest 
Service will also be projecting future forest carbon changes under 
various scenarios as part of the forthcoming 2010 Resource Planning Act 
assessment. In addition, the forest inventory data collection and 
scientific studies done by Forest Service Research & Development 
program provides the foundational basis for many of the assessments 
done by other agencies and external groups on forest carbon and 
bioenergy opportunities, including the EPA's annual National Greenhouse 
Gas Inventory, and DOE's recently released ``Billion Ton Study 
Update.'' The Forest Service also developed the CVAL tool to evaluate 
the costs and benefits of carbon sequestration contracts for managed 
forests on the Chicago Climate Exchange.
    The potential for forest landowners to sell carbon will be highly 
dependent on the price of carbon, as well as the requirements, rules 
and methodologies used for implementing and reporting forest carbon 
projects. The potential for forest landowners to benefit from a carbon 
market could be minimal or large depending on the program design.
    At this point there are more opportunities for private landowners 
to sell carbon sequestered by their forests and forestry projects in 
the voluntary carbon market than within a regulatory market, although 
the California cap-and-trade program, now scheduled to begin compliance 
obligations in 2013, may create new opportunities.
    Small acreage forest landowners face challenges to participating in 
the voluntary carbon market. While there is no minimum acreage to 
qualify/enroll, start-up and ongoing costs are generally too 
substantial, and revenues too slight, on small parcels to produce an 
economically viable project. The Climate Action Reserve has developed 
``Guidelines for Aggregating Forest Projects'' with the understanding 
that individual transaction costs on small parcels can make market 
participation untenable, and aggregating projects on smaller 
landholdings can reduce barriers to entry. However, some aggregation 
companies may have their own minimum parcel size requirements.

    Question 6. Tidwell: Currently there are several voluntary markets 
for forest carbon projects. Do you know what forestry practices are 
eligible for market participation and what the carbon price is?
    Answer. All carbon credits purchased outside of an existing 
regulatory compliance obligation are considered part of the voluntary 
carbon market. Within the voluntary carbon market, carbon credits may 
be purchased in an exchange or purchased ``Over-The-Counter'' (OTC) 
through direct buyer and seller exchanges, a broker or retail 
storefront. Voluntary forest carbon projects are governed by a variety 
of carbon offset standards or protocols.
    Eligible forestry practices vary between protocols. Three commonly 
used protocols for voluntary forest carbon projects in the U.S. are the 
Climate Action Reserve (CAR), Verified Carbon Standard (VCS), and the 
American Carbon Registry (ACR).
    Climate Action Reserve (CAR)--
    Eligible Forestry practices:

   Reforestation--A Reforestation Project involves restoring 
        tree cover on land that is not at optimal stocking levels and 
        has minimal short-term (30 years) commercial opportunities.

   Improved Forest Management--An Improved Forest Management 
        Project involves management activities that maintain or 
        increase carbon stocks on forested land relative to baseline 
        levels of carbon.

   Avoided Conversion--An Avoided Conversion Project involves 
        preventing the conversion of forestland to a non-forest land 
        use by dedicating the land to continuous forest cover through a 
        conservation easement or transfer to public ownership.

    Verified Carbon Standard (VCS)--
    Eligible Forestry practices:

   Afforestation, Reforestation and Revegetation (ARR)--
        Eligible ARR activities are those that increase carbon 
        sequestration and/or reduce GHG emissions by establishing, 
        increasing or restoring vegetative cover (forest or non-forest) 
        through the planting, sowing or human-assisted natural 
        regeneration of woody vegetation.

   Improved Forest Management (IFM)--Eligible IFM activities 
        are those that increase carbon sequestration and/or reduce GHG 
        emissions on forest lands managed for wood products such as 
        sawtimber, pulpwood and fuelwood by increasing biomass carbon 
        stocks through improving forest management practices.

   Reducing Emissions from Deforestation and Degradation 
        (REDD)--Eligible REDD activities are those that reduce net GHG 
        emissions by reducing deforestation and/or degradation of 
        forests. Deforestation is the direct, human-induced conversion 
        of forest land to non-forest land. Degradation is the 
        persistent reduction of canopy cover and/or carbon stocks in a 
        forest due to human activities such as animal grazing, fuelwood 
        extraction, timber removal or other such activities, but which 
        does not result in the conversion of forest to non-forest land 
        (which would be classified as deforestation).

    American Carbon Registry (ACR)--
    Eligible Forestry practices:

   Afforestation/Reforestation (AR)--defined as activities to 
        increase carbon stocks by establishing, increasing and 
        restoring vegetative cover through the planting, sowing or 
        human-assisted natural regeneration of woody vegetation.

   Improved Forest Management (IFM)--defined as activities to 
        reduce GHG emissions and/or enhance GHG removals, implemented 
        on lands designated, sanctioned or approved for forest 
        management (i.e., production of sawtimber, pulpwood, and 
        fuelwood).

   Reducing Emissions from Deforestation and Degradation 
        (REDD)--defined as the reduction in GHG emissions from the 
        avoided conversion of forest to non-forest use (e.g., to 
        cropland, grassland, settlement, or development) or avoided 
        degradation of forests remaining as forests.

   Forest Carbon Projects with a Biomass Energy Component--
        Forest carbon activities may include a biomass energy component 
        if they provide biomass fuel for electricity generation, 
        heating, or transportation fuels.

   Note: Urban forestry activities that meet the forest 
        definition could qualify as AR, IFM or REDD depending on the 
        specific activity.

    Prices vary between protocol standards and within the standards 
depending on project types. Within the voluntary carbon market in 2010, 
the average price was $6 per metric ton of CO2 equivalent 
(tCO2e).

    Question 7. Tidwell: Funding is a concern for us all these days. 
The Forestry title does not have any mandatory spending, but it is 
mostly all appropriated funds. Is the appropriated money mainly used 
for wildfire management? What percentage of your total appropriated 
dollars is for wildfire? How much does that leave for other forestry 
programs like the Forest Legacy or other important programs? Do you 
think there is a good balance between money spent on wildfire and other 
programs?
    Answer. In FY11, approximately 40% of all appropriated funds for 
the Forest Service support wildland fire programs to include the 
Hazardous Fuels Treatment Program, Preparedness, and Suppression. All 
of the wildland fire programs support the objective of the Forest 
Service to sustain the health, diversity, and productivity of the 
nation's forests and grasslands to meet the needs of present and future 
generations. Fires in recent years have become larger and more 
difficult to control due to a variety of factors, including climate 
change, persistent drought, increasingly hazardous fuels conditions, 
and the increased development in the Wildland Urban Interface. Current 
budget levels for the wildland fire programs are essential to ensure 
adequate resources are available to conduct emergency suppression 
operations while allowing for other critical Forest Service activities 
to continue.

    Question 8. Tidwell: In the 2008 Farm Bill, we made sure that 
forestry was explicitly mentioned in some of the conservation programs 
to ensure forest landowner participation. What is the extent of your 
involvement with these types of programs and do you communicate with 
NRCS on these types of programs?
    Answer. The 2008 Farm Bill has resulted in a much more effective 
working partnership between the Forest Service and NRCS, particularly 
with regards to getting more private forest landowners enrolled in 
conservation programs. Leaders from our agencies and other partners, 
including the National Association of State Foresters and the National 
Association of Conservation Districts, have developed and implemented 
creative strategies to make these programs much more accessible to 
private forest landowners.

    Question 9. Tidwell: In the last farm bill, as you mention, 
Congress set a number of priorities for private forest conservation--
conserving working lands, protecting forests from threats, and 
enhancing public benefits. In your opinion, how are we doing with each 
of those priorities, are we accomplishing the needed work through the 
programs that the USFS administers?
    Answer. The Forest Service is accomplishing needed work through its 
State and Private Programs in these three priority areas. As of FY 
2011, the agency is in its fourth year of implementing a progressive 
strategy (known as ``Redesign'') to focus and prioritize funds and 
resources to better shape and influence forest land use on a scale, and 
in a way, that optimizes public benefits from trees and forests for 
current and future generations. The Redesign competitive effort focuses 
almost $20 million each year on novel, landscape-scale projects that 
are selected competitively. These projects have accomplished outcomes 
in all three of these priorities--and in FY 2010 leveraged almost $24 
million in partner dollars and in-kind contributions.
    In addition to the competitive projects funded as part of 
``Redesign'', each State and Private Forestry program area contributes 
to conserving working lands, protecting forests from threats, and 
enhancing public benefits. Since the 2008 Farm Bill was passed, over $2 
billion has been invested by the U.S. Forest Service to address the 
three national priorities (including funding from State and Private 
Forestry; Research; Wildland Fire Management; and funding resulting 
from the American Recovery and Reinvestment Act).
    Since 2008, over 62 million acres were under management plans, 
treated, or protected through FS programs and over two million 
landowners were assisted or educated through FS programs. The work 
accomplished by State Forestry Agencies in developing the Statewide 
Forest Resource Assessments (Forest Action Plans) to identify and 
prioritize national, regional and state forest management goals across 
all ownerships, has become the foundation for agencies and partners to 
work together.

    Question 10. Tidwell: The Southern Forests Futures Project offers 
some long-term, science-based analysis about the future of timber 
production in the Southeast. Using this data, please elaborate on the 
study's conclusion that timber demand is the primary limiting factor in 
expansion of timber markets.
    Answer. The Southern Forest Futures Project (Futures Project) 
examines the history and potential future of timber markets in the 
Southeast using forest inventory and timber market data along with 
projection models. The South is the woodbasket of the United States, 
providing nearly 60 percent of the nation's timber products--the South 
alone produces more timber than any other country in the world. Private 
landowners, who manage nearly 90 percent of the South's timberlands and 
have invested heavily in their forest lands, produce more than 90 
percent of the harvested timber. Strong timber markets bring income and 
jobs to rural areas. Strong markets also provide strong incentive to 
keep working forests intact, thereby protecting other resource values 
including water and wildlife.
    The Futures Project highlights the strong growth in timber 
production that occurred in the region from the 1960s to the late 1990s 
and examines the potential for future growth as well as decline. Timber 
production peaked in the late 1990s and has since declined, signaling 
structural changes in timber markets. These production declines are 
most clearly related to changes in demand. Beginning in 1998, pulpwood 
harvesting for the paper industry declined as paper production capacity 
fell in the South. Beginning in 2007, demand for softwood solid wood 
products fell precipitously due to the housing recession. Solid wood 
products such as plywood and lumber are strongly linked to housing 
markets, and housing starts in 2010 were only 25 percent of their 2005 
values.
    In spite of these declines in demands since 1998, private 
landowners have continued to invest in forest establishment and 
management. Declines in harvests, coupled with this ongoing investment, 
have expanded the potential supply in the region, especially for 
softwood pulpwood. In sum, supply potential has grown while demands for 
timber have declined. The Futures Project's projections of timber 
supply indicate that the region has the capacity to produce as much as 
70 percent more timber than was produced in 2005, in effect, supporting 
a return to market growth rates observed in the 1990s. The key 
uncertainty and the limiting factor in determining the extent of future 
timber markets will be recovery and growth in demand for these 
products. In the near term, demand growth will depend on the recovery 
of the housing market. Long term projections hinge on future demands 
from paper industries and the potential emergence of demands for wood 
in the production of bioenergy.
    While housing has traditionally been a cyclical industry and would 
be expected to recover in the next few years, demands for paper-based 
products are tied to processing capacity and general economic growth. 
Declines in the capacity of the paper industry through mill closures 
may limit the growth potential from this sector. The Futures Project 
concludes that the greatest potential for expansion in timber demand 
would come in the form of new demands for wood in the production of 
bioenergy. These new demands would, in turn depend on the development 
of new technologies and on Federal and state energy policies aimed at 
expanding bioenergy production.
Roundwood Production in the U.S. South, All Products, 1953 to 2008 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: Southern Forest Futures Project.

        The ``other'' category includes hardwood sawtimber and 
        fuelwood.
Real Stumpage Prices in the U.S. South By Product, 1977 to 2008 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: Southern Forest Futures Project.

    Question 11. Tidwell: You mention in your testimony the essential 
assistance to private forest owners that is delivered through the 
Forest Stewardship Program--you're only program focused on private 
forestland management. You talk about the accomplishments in FY 2010 
with the program--how does this compare with previous years? Are you 
and your state forestry agency partners reaching more landowners with 
these programs, if so, how many? And are we reaching the same 
landowners or new landowners with this program, since the number of 
family forest owners in the U.S. continues to grow--from 9 million in 
2000 to 11 million owners in 2011.
    Answer. The Forest Stewardship Program has for several years been 
transitioning from a first-come first served approach to a much more 
strategic and place-based approach to delivering technical assistance 
to private forest landowners. This approach began with the Forest 
Stewardship Program Spatial Analysis Project that assisted all states 
in identifying forest resource management priority areas and 
implementing innovative tactics for engaging landowners and communities 
in those places. Tactics include social marketing campaigns targeted at 
landowners that are less inclined to seek assistance.
    More recently, Forest Stewardship Program managers from across the 
country have developed a ``Landscape Stewardship Approach'' that 
includes the development of landscape-scale Forest Stewardship Plans 
for multiple landowners. All of these actions are attempts to have a 
greater cumulative impact on pressing resource management concerns 
while involving more landowners with the same level of investment.
    In 2010, there were 19.7 million acres under current Forest 
Stewardship Plans, of which 89% is being actively managed based on 
monitoring. Approximately 15,000 new Forest Stewardship Plans, covering 
about 1.9 million acres were created that same year. While this level 
of accomplishment has been fairly consistent the past few years, the 
total number of landowners benefitting from a variety of technical and 
educational assistance activities supported by the program has declined 
sharply because of state forestry agency budget constraints.
    All Forest Stewardship accomplishments are tracked spatially with 
respect to priority landscapes and underlying resource management 
concerns.

    Question 12. Canales: There is no more funding for any of the 
energy title programs after the expiration for the 2008 Farm Bill. 
Would you be able to handle some energy title project activity under 
any of the other rural development programs? For example, would the 
Rural Development B&I program be able to fund some types of activities 
currently covered by the REAP program? Please provide a comprehensive 
answer covering each energy title program and whether or not it could 
be covered by another USDA program.
    Answer. None of RBS's energy programs could be fully encompassed by 
currently existing, funded programs. Please see the following 
programmatic breakouts on the 9003, 9004, 9005, and 9007 programs.
    Sec. 9003, Biorefinery Assistance Program: The Biorefinery 
Assistance Program is not a duplicate of any other USDA program. There 
are no other programs that have the sole purpose of funding 
biorefineries involved in advanced biofuel production, and that involve 
the private sector on each transaction. While the eligibility criteria 
for the Business and Industry (B&I) Guaranteed Loan program would allow 
the funding of biorefineries, the maximum loan that can be guaranteed 
under the B&I guaranteed loan program is $25 million, which is 
essentially too small for these types of projects, and thus it is 
unlikely that anyone would seek to utilize the B&I program. The 
Biorefinery Assistance Program can guarantee loans up to $250 million.
    Sec. 9004, Repowering Assistance Program: The Repowering Assistance 
Program is not a duplicate of any other USDA program. There are no 
other USDA programs that could support these types of projects.
    Sec. 9005, Advanced Biofuel Payment Program: The Advanced Biofuel 
Payment Program is not a duplicate of any other USDA program. There are 
no other programs that provide payments to biofuel producers to promote 
advanced biofuels.
    Sec. 9007, Rural Energy for America Program: There are four other 
programs within USDA under which certain types of energy projects may 
be financed. These are the Value-Added Producer Grant (VAPG) program, 
Community Facilities, Business and Industry Program, and the 
Environmental Quality Incentives Program (EQIP).

    Question 13. Canales: In preparation for this hearing we attempted 
to find project information for several programs and we were not 
entirely successful. It appears USDA announces project information to 
the public via press releases, but there is not an online database that 
allows the public to easily access what has been funded and for what 
amount. How does USDA make this available to the public? Can you please 
provide the Committee with a breakdown of what projects have been 
funded under each program, and for how much?
    Answer. At this time, there is no public database. USDA uses press 
releases as the mechanism for making this information available to the 
public, however USDA is working on such a mechanism in the form of an 
energy map which we expect to release in the near future.

           Section 9003--Guaranteed Loan Awards and Obligations
             (FY 2009 through 2011) (program level amounts)
------------------------------------------------------------------------
                                          Fiscal Year
  State      Project  --------------------------------------------------
                            2009 a            2010             2011
------------------------------------------------------------------------
Alabama    Coskata                                         b $87,850,000
Florida    Ineos                                             $75,000,000
Georgia    Range           $80,000,000
            Fuels
Michigan   Freemont                                          $12,750,000
Mississip  Enerkem                                         b $80,000,000
 pi
New        Sapphire                         $54,500,000
 Mexico
                      --------------------------------------------------
  Totals                   $80,000,000      $54,500,000     $255,600,000
------------------------------------------------------------------------
a A loan guarantee application for $25 million was approved for SoyMor
  Biodiesel, LLC, Minnesota, on June 10, 2009. However, the $25 million
  was deobligated because SoyMor's lender no longer qualified as an
  eligible lender and SoyMor was unable to obtain a new lender.
b The agency is working to close the loan.


    Section 9004--Repowering Assistance

    Of the nine applications, seven were selected to participate. These 
seven projects were eligible for approximately $18 million. As of 
August 25, 2011, only one awardee, Lincolnway Energy, LLC, has accepted 
the offer for $1.9 million.

    Section 9005--Advanced Biofuel Payment Program

    All of the projects funded under this program produce an eligible 
advanced biofuel. The following table presents the companies that 
received payments for FY 2009 production, the amount of payment 
received, and the type of advanced biofuel produced. For FY 2009 
production, a total of $30 million was paid. For FY 2010, a total of 
$80 million will be paid within the next several weeks. While some of 
the companies that received payments for FY 2009 production will also 
receive payments for FY 2010 production, there are a number of 
companies that will be receiving payments for FY 2010 that did not 
participate in the program for FY 2009 production.

              Section 9005 Payments for FY 2009 Production
------------------------------------------------------------------------
                                         Amount of
      State             Company           Payment         Biofuel Type
------------------------------------------------------------------------
AL                Athens Biodiesel,         $2,261.11  Biodiesel
                   LLC                                  Mechanical
AR                Arkansas Soyenergy          $538.63  Biodiesel Trans
                   Group                                Esterification
AR                Futurefuel              $929,013.18  Biodiesel Trans
                   Chemical Company                     Esterification
AR                Pinnacle Biofuels        $34,250.89  Biodiesel Trans
                   Inc.                                 Esterification
AZ                Pinal Energy, LLC     $2,280,865.06  Ethanol
                                                        Production
CA                American                  $6,753.89  Biodiesel Trans
                   Biodiesel, Inc.                      Esterification
CA                Energy Alternative        $7,280.20  Biodiesel Trans
                   Solutions, Inc.                      Esterification
CA                Imperial Valley           $3,409.83  Biodiesel Trans
                   Biodiesel                            Esterification
CA                Imperial Western         $93,971.09  Biodiesel Trans
                   Products, Inc.                       Esterification
CA                New Leaf Biofuel,         $4,432.73  Biodiesel Trans
                   LLC                                  Esterification
CA                Yokayo Biofuels,         $14,168.45  Biodiesel Trans
                   Inc.                                 Esterification
FL                Agri-Source Fuels,        $12,11347  Biofuel From
                   LLC                                  Waste Products
FL                Bio Fuel                  $3,418.69  Biofuel From
                   Consultants Of NA                    Waste Products
FL                G2 Energy                 $3,670.67  Landfill Gas
FL                Suwannee Farms LLC          $530.94  Anaerobic
                                                        Digester
GA                Alterra Bioenergy           $905.47  Biodiesel Trans
                   Of Middle Georgia                    Esterification
                   LLC
GA                American Proteins,       $32,935.57  Anaerobic
                   Inc.                                 Digester
GA                Down To Earth             $1,062.62  Biodiesel Trans
                   Energy LLC                           Esterification
GA                Middle Georgie              $159.47  Biodiesel Trans
                   Biofuels                             Esterification
GA                Nittany Biodiesel       $335,855.02  Biodiesel Trans
                                                        Esterification
GA                The Edge Group            $8,167.17  Biofuel From
                   Inc.                                 Waste Products
GA                U.S. Biofuels Inc.      $181,114.96  Biodiesel Trans
                                                        Esterification
HI                Pacific Biodiesel,       $14,760.78  Biofuel From
                   Inc.                                 Waste Products
IA                Blackhawk Biofuels      $258,309.90  Biodiesel Trans
                   LLC                                  Esterification
IA                Central Iowa            $194,810.82  Biodiesel Trans
                   Energy LLC                           Esterification
IA                Iowa Renewable          $369,351.71  Biodiesel Trans
                   Energy, LLC                          Esterification
IA                Maple River Energy       $16,613.40  Biodiesel Trans
                   LLC                                  Esterification
IA                Renewable Energy      $1,422,147.46  Biodiesel Trans
                   Group, Inc.                          Esterification
IA                Riksch Biofuels          $10,401.22  Biodiesel Trans
                   LLC                                  Esterification
IA                Sioux Biochemical,       $23,808.92  Biodiesel Trans
                   Inc.                                 Esterification
IA                Western Dubuque         $432,622.85  Biodiesel Trans
                   Biodiesel, LLC                       Esterification
IA                Western Iowa            $508,985.44  Biodiesel Trans
                   Energy                               Esterification
ID                Coeur D'alene           $347,484.17  Pellets
                   Fiber Fuels
IL                Archer Daniels          $656,639.35  Biodiesel Trans
                   Midland Company                      Esterification
IL                CNF Holdings Inc.           $466.17  Biodiesel Trans
                                                        Esterification
IL                Hunter Haven Farms          $633.83  Anaerobic
                   Inc.                                 Digester
IL                Incobrasa                $205,444.3  Biodiesel Trans
                   Industries, Ltd.                     Esterification
IL                Nova Biosource          $408,824.32  Biodiesel Trans
                   Fules Inc.                           Esterification
IL                Valley Energy Inc.           $4,717  Biodiesel Trans
                                                        Esterification
IN                E Biofuels LLC          $283,043.86  Biofuel From
                                                        Waste Products
IN                Indiana Flex              $8,806.07  Biofuel From
                   Fuels, LLC                           Waste Products
IN                Kingsbury Energy            $17,861  Biofuel From
                   Group                                Waste Products
IN                Louis Dreyfus         $1,431,051.17  Biofuel From
                   Agricultural                         Waste Products
                   Industries LL
IN                T and M Limited          $52,355.96  Anaerobic
                   Pasrtnership                         Digester
KS                Arkalon Ethanol,      $1,131,062.87  Ethanol
                   LLC                                  Production
KS                Bonanza Bioenergy,      $454,050.13  Ethanol
                   LLC                                  Production
KS                East Kansas Agri-        $58,833.32  Ethanol
                   Energy LLC                           Production
KS                Emergent Green            $2,900.33  Biofuel From
                   Energy, Inc.                         Waste Products
KS                ESE Alcohol              $30,163.97  Biofuel From
                                                        Waste Products
KS                Healy Biodiesel,          $9,005.83  Biofuel From
                   Inc.                                 Waste Products
KS                Kansas Ethanol,       $1,176,781.75  Ethanol
                   LLC                                  Production
KS                Nesika Energy LLC       $177,527.30  Ethanol
                                                        Production
KS                Prairie Horizon       $1,406,332.35  Ethanol
                   Agri-Energy, LLC                     Production
KS                R-3 Energy, LLC              $19.42  Biofuel From
                                                        Waste Products
KS                Reeve Agri Energy       $256.471.36  Ethanol
                   Inc.                                 Production
KS                Trenton Agri            $223,165.92  Ethanol
                   Products LLC                         Production
KS                Western Plains        $1,447,782.85  Ethanol
                   Energy LLC                           Production
KY                Griffin                  $29,464.47  Biofuel From
                   Industries, Inc.                     Waste Products
KY                Owensboro Grain         $401,187.10  Biodiesel
                   Company LLC                          Mechanical
ME                Corinth Wood            $301,588.30  Pellets
                   Pellets, LLC
ME                Maine Woods Pellet      $394,417.68  Pellets
                   Company, LLC
MI                Hillside Farms,           $1,353.14  Anaerobic
                   LLC                                  Digester
MI                Michigan Biodiesel        $2,340.02  Glycerin
                   LLC
MI                Scenic View Dairy,       $17,427.01  Anaerobic
                   LLC                                  Digester
MN                Cargill Inc.            $459,245.09  Biodiesel Trans
                                                        Esterification/
                                                        Anaerobic
                                                        Digester
MN                Chippewa Valley         $14, 597.35  Ethanol
                   Ethanol Coop LLP                     Production
MN                Corn Plus, LP           $311,080.39  Ethanol
                                                        Production
MN                FUMPA Biofuels           $43,985.30  Biodiesel Trans
                                                        Esterification
MN                MN Soybean              $964,669.83  Biodiesel Trans
                   Processo                             Esterification
MN                Riverview LLP             $6,810.11  Anaerobic
                                                        Digester
MN                West River Dairy          $8,312.80  Anaerobic Digeste
                   LLP
MO                Abengoa Bioenergy       $213,891.03  Ethanol
                   Corporation                          Production
MO                Global Fuels LLC         $23,444.64  Biodiesel Trans
                                                        Esterification
MO                Mid-America             $917,614.99  Biodiesel Trans
                   Biofuels, LLC                        Esterification
MO                Natural Biodiesel        $45,888.35  Biodiesel Trans
                   Plant LLC                            Esterification
MO                Paseo Cargill           $406,424.07  Biodiesel Trans
                   Energy LLC                           Esterification
MO                Prairie Pride,          $228,017.78  Biodiesel Trans
                   Inc.                                 Esterification
MO                Show Me Energy           $75,863.50  Pellets
                   Cooperative
MS                Greenlight               $31,943.50  Biofuel From
                   Biofuels LLC                         Waste Products
MS                Scott Petroleum         $181,084.93  Biofuel From
                   Corporation                          Waste Products
MT                Earl Fisher Bio             $586.66  Biodiesel
                   Fuels LLP                            Mechanical
MT                Huls Dairy Inc.           $1,041.68  Anaerobic
                                                        Digester
NC                Blue Ridge                $3,992.71  Biofuel From
                   Biofuels, LLC                        Waste Products
NC                North American Bio-       $7,076.24  Biodiesel
                   Energies                             Mechanical
NC                Piedmont Biofuels        $13,148.21  Biodiesel
                   Industrial, LLC                      Mechanical
NC                Triangle Biofuels        $15,601.05  Biodiesel
                   Industries, Inc.                     Mechanical
NE                Ag Processing Inc.      $612,434.67  Biodiesel Trans
                                                        Esterification
NE                Chief Ethanol Fuel    $2,294,606.51  Ethanol
                   Inc.                                 Production
NE                Kluthe, Daniel W.           $295.10  Anaerobic
                                                        Digester
NE                Northeast Nebraska        $9,264.65  Biodiesel Trans
                   Biodiesel LLC                        Esterification
NV                Bently Biofuels          $14,207.54  Biofuel From
                   Company                              Waste Products
NY                Aurora Ridge                $215.36  Anaerobic
                   Dairy, LLC                           Digester
NY                MST Production Ltd      $140,533.52  Anaerobic
                                                        Digester
NY                Sunnyside Farms             $491.81  Anaerobic
                   Inc.                                 Digester
NY                TMT Biofuels LLC          $2,946.83  Biofuel From
                                                        Waste Products
OH                American Ag Fuels,          $923.99  Biodiesel Trans
                   LLC                                  Esterification
OH                Arlington Energy          $2,898.58  Biodiesel Trans
                   LLC                                  Esterification
OH                Bridgewater Dairy         $3,458.97  Anaerobic
                   LLC                                  Digester
OK                ECOGY Biofuels LLC       $85,057.55  Biodiesel Trans
                                                        Esterification
OK                High Plains             $561,818.35  Biodiesel Trans
                   Bioenergy, LLC                       Esterification
OR                Beaver Biodiesel            $600.36  Biodiesel Trans
                   LLC                                  Esterification
OR                Green Fuels Of            $1,097.06  Biodiesel Trans
                   Oregon                               Esterification
OR                Sequential-Pacific       $17,127.18  Biodiesel Trans
                   Biodiesel                            Esterification
OR                Stahlbush Island          $1,254.23  Anaerobic
                   Farms, Inc.                          Digester
PA                Lake Erie               $275,742.88  Biodiesel
                   Biofuels, LLC dba                    Mechanical
                   Hero BX
PA                Middletown               $29,861.04  Biodiesel
                   Biofuels LLC                         Mechanical
PA                Soyenergy Inc. dba        $5,767.93  Biodiesel
                   Custom Fuels Inc.                    Mechanical
TN                Sunsoil, LLC               4,794.46  Biodiesel Trans
                                                        Esterification
TX                Beacon Energy           $118,437.54  Biofuel From
                   (Texas)                              Waste Products
                   Corporation
TX                Double Diamond           $14,856.36  Biofuel From
                   Energy, Inc.                         Waste Products
TX                Green Earth Fuels       $509,386.90  Biodiesel Trans
                   Of Houston, LLC                      Esterification
TX                Levelland/Hockley       $737,202.90  Ethanol
                   County Ethanol,                      Production
                   LLC
TX                New Energy Fuels,         $9,250.30  Biofuels From
                   LLC                                  Waste Products
TX                RBF Port Neches,         $99,993.77  Biodiesel Trans
                   LLC                                  Esterification
TX                Texas Green                 $951.79  Biofuels From
                   Manufacturing LLC                    Waste Products
TX                White Energy, Inc.    $1,022,026.02  Ethanol
                                                        Production
VA                Chesapeake Custom        $21,211.41  Biofuel From
                   Chemical                             Waste Products
                   Corporation
VA                Red Birch Energy         $11,227.32  Biofuel From
                                                        Waste Products
VA                Virginia Biodiesel       $39,803.87  Biofuel From
                   Refinery LLC                         Waste Products
VT                Audet's Cow Power         $1,247.45  Anaerobic
                                                        Digester
VT                Berkshire Cow             $3,594.20  Anaerobic
                   Power LLC                            Digester
VT                David and Cathy             $999.79  Anaerobic
                   Montagne                             Digester
VT                Gervais Family              $284.36  Anaerobic
                   Farms                                Digester
VT                Green Mountain            $1,565.74  Anaerobic
                   Dairy LLC                            Digester
VT                Neighborhood                $416.51  Anaerobic
                   Energy LLC                           Digester
VT                Westminster Energy          $445.78  Anaerobic
                   Group LLC                            Digester
WA                Farm Power                $1,902.09  Anaerobic
                   Rexville LLC                         Digester
WA                FPE Renewables,          $11,915.35  Anaerobic
                   LLC                                  Digester
WA                GDR Power LLC            $27,562.43  Anaerobic
                                                        Digester
WA                Gen-X Energy Group      $363,356.61  Biodiesel Trans
                   Inc.                                 Esterification
WA                Imperium Grays          $333,674.58  Biodiesel Trans
                   Harbor LLC                           Esterification
WA                Inland Empire            $13,664.11  Biodiesel Trans
                   Oilseeds LLC                         Esterification
WA                Qualco Energy             $2,658.18  Anaerobic
                                                        Digester
WA                Standard Biodiesel        $5,490.93  Biofuel From
                   USA Inc.                             Waste Products
WA                Whole Energy Fuels       $18,181.28  Biodiesel Trans
                   Corporation                          Esterification
WI                Badger Biodiesel,       $329,523.89  Biodiesel Trans
                   Inc.                                 Esterification
WI                Best Biodiesel           $10,486.83  Biodiesel Trans
                   Cashton LLC                          Esterification
WI                Bio Blend Fuels           $3,369.82  Biodiesel Trans
                                                        Esterification
WI                Buckeye Ridge            $17,937.12  Anaerobic
                   Renewable Power                      Digester
                   LLC
WI                Clover Hill Dairy,        $2,338.79  Anaerobic
                   LLC                                  Digester
WI                Double S Dairy              $759.05  Anaerobic
                                                        Digester
WI                Gordondale Farms            $581.18  Anaerobic
                                                        Digester
WI                Green Valley Dairy        $9,777.25  Anaerobic
                   LLC                                  Digester
WI                Grotegut Dairy            $1,819.40  Anaerobic
                   Farm, Inc.                           Digester
WI                Holsum Dairies,          $11,752.76  Anaerobic
                   LLC                                  Digester
WI                Lake Breeze Dairy           $653.16  Anaerobic
                   LLC                                  Digester
WI                Norm E. Lane, Inc.        $3,862.16  Anaerobic
                                                        Digester
WI                NORSWISS Digester,       $19,671.00  Anaerobic
                   LLC                                  Digester
WI                Pagel's Ponderosa         $3,488.53  Anaerobic
                   Dairy, LLC                           Digester
WI                Quantum Dairy, LLC        $2,931.02  Anaerobic
                                                        Digester
WI                Stargest Power,          $19,843.11  Anaerobic
                   LLC                                  Digester
WI                Statz Brothers,           $2,497.90  Anaerobic
                   Inc.                                 Digester
WI                Sun Power                $15,433.46  Biodiesel Trans
                   Biodiesel, LLC                       Esterification
WI                Walsh Bio Fuels,         $11,351.95  Biodiesel Trans
                   LLC                                  Esterification
                                     ------------------
                                       $29,999,999.34
------------------------------------------------------------------------


    Section 9007--Rural Energy For America Program

    The following tables provide summaries of the funds provided by 
type of project for FY 2009 and FY 2010. The agency is currently in the 
process of making awards for FY 2011, but those have not yet been 
finalized.

                                         Section 9007 Awards for FY 2009
----------------------------------------------------------------------------------------------------------------
                                                                  Number of
          Technology              Biomass Type  Description        Projects       Grant Amount     Loan Amount
----------------------------------------------------------------------------------------------------------------
Biomass                                                                     49       $7,431,859      $17,372,569
 
                               Anaerobic Digester                           14       $4,117,368       $6,619,198
                               Biodiesel Production                          7         $674,096       $1,341,692
                               Solid Fuel Production                         5         $843,936         $754,679
                               Thermal Conversion                           23       $1,796,459       $8,657,000
 
Energy Efficiency                                                        1,099      $27,857,621      $18,252,122
Geothermal                                                                  47         $881,279         $229,599
Hybrid                                                                       4         $180,916         $133,996
Hydropower                                                                   4         $464,432         $600,000
Solar                                                                      166       $5,994,685       $3,399,253
Wind                                                                       116       $8,171,188      $17,471,490
                                                              --------------------------------------------------
  Total                                                                  1,485      $50,981,980      $57,459,029
----------------------------------------------------------------------------------------------------------------


                                         Section 9007 Awards for FY 2010
----------------------------------------------------------------------------------------------------------------
                                                                  Number of
          Technology              Biomass Type  Description        Projects       Grant Amount     Loan Amount
----------------------------------------------------------------------------------------------------------------
Biomass                                                                     56      $11,006,140      $20,751,392
 
                               Anaerobic Digester                           19       $6,042,676      $14,010,621
                               Biodiesel Production                          6         $830,708       $3,485,000
                               Ethanol Production                            1         $500,000              $--
                               Solid Fuel Production                        16       $3,185,031       $2,110,771
                               Thermal Conversion                           14         $447,725       $1,145,000
 
Energy Efficiency                                                        1,830      $47,692,866      $22,280,851
Geothermal                                                                  40       $1,094,551         $292,000
Hybrid                                                                       4          $58,817              $--
Hydropower                                                                   4         $684,849           $5,000
Solar                                                                      294      $13,296,957       $8,356,177
Wind                                                                       147      $10,092,796      $21,313,084
                                                              --------------------------------------------------
  Total                                                                  2,375      $83,926,976      $72,998,504
----------------------------------------------------------------------------------------------------------------


    Question 14. Canales: Have you consulted with the DOE in the 
operation of the USDA loan guarantees? How would you say that the USDA 
program differs from the DOE program? Do they overlap?
    Answer. We coordinate with the Department of Energy (DOE) using 
their environmental reviews when available for Biorefinery Assistance 
projects, and we work with DOE grant recipients where we provide 
guarantee loans to build biorefineries that will help to end our 
dependence on foreign sources of petroleum. The USDA works closely with 
DOE to provide the best energy expertise to our field staff and ensure 
that all of our project loans and grants are placed in accordance with 
the highest professional standards.
    There is overlap with DOE's Title 17 program. Title 17 can fund 
biorefineries just like the Section 9003 Program. However, Title 17 can 
be used for any type of energy production, including biorefineries 
producing any type of biofuel, while the Section 9003 Program is solely 
for the purpose of providing support for the creation and expansion of 
advanced biorefinery facilities producing advanced biofuels.

    Question 15. Canales: Can you please give us a breakdown of all the 
projects that have received assistance under this program? Have there 
been any losses to the government associated with this program to date? 
If so, why and for how much?
    Answer. The following table presents all of the advanced biofuel 
biorefineries for which funds have been obligated as of August 22, 
2011. Of these projects, loan note guarantees have been issued for 
Range Fuels, Freemont Community Digester, and Ineos; for the other 
projects, RBS has obligated the funds, but has not yet issued the loan 
note guarantees.

          Section 9003--Guaranteed Loan Awards and Obligations
             (FY 2009 through 2011) (program level amounts)
------------------------------------------------------------------------
                                          Fiscal Year
  State      Project  --------------------------------------------------
                            2009 a            2010             2011
------------------------------------------------------------------------
Alabama    Coskata                                         b $87,850,000
Florida    Ineos                                             $75,000,000
Georgia    Range           $80,000,000
            Fuels
Michigan   Freemont                                          $12,750,000
Mississip  Enerkem                                         b $80,000,000
 pi
New        Sapphire                         $54,500,000
 Mexico
                      --------------------------------------------------
  Totals                   $80,000,000      $54,500,000     $255,600,000
------------------------------------------------------------------------
a A loan guarantee application for $25 million was approved for SoyMor
  Biodiesel, LLC, Minnesota, on June 10, 2009. However, the $25 million
  was deobligated because SoyMor's lender no longer qualified as an
  eligible lender and SoyMor was unable to obtain a new lender.
b The agency is working to close the loan.

    As of August 22, 2011, the agency has not paid a loss, although 
Range Fuels ceased operation in January.

    Question 16. Canales: This was a new program for RD to implement. 
What have been the biggest hurdles to clear during implementation? Do 
you have any recommendations for changes to the program to make it more 
attractive?
    Answer. USDA's Rural Business Service has many different loan and 
grant programs and has had extensive experience creating and 
implementing new programs. Implementing individual programs did not 
pose significant challenges. RBS's largest hurdle was the large number 
of new programs that had to be created in a timely manner utilizing our 
scarce staff resources.
    We do not have any statutory recommendations at this time.

    Question 17. Canales: Did interest in the Repowering program pick 
up after you made changes to the way it operates by recognizing that 
plants weren't able to get credit as easily as when the program and the 
rules were written?
    Answer. Yes, the Repowering Assistance Program received additional 
applications through the most recent NOFA.

    Question 18. Canales: There was a solicitation sent out for 
applications for this program during the spring. When do you think you 
expect to make an announcement or reward?
    Answer. The Rural Business Service is currently in the process of 
reviewing applications. Any announcements will be made in the coming 
months.

    Question 19. Canales: Why was the decision made to use REAP for 
your blender pump initiative when REAP is already oversubscribed? Could 
you have done blender pumps under other RD programs? Or could DOE have 
done them under the Clean Cities Program?
    Answer. The agency made flex-fuel delivery systems one of many 
eligible purposes under REAP. No separate funds are committed 
(designated) for flex-fuel projects. REAP is a competitive grant and 
loan guarantee program in which renewable energy systems and energy-
efficiency improvement projects must compete on their own merits 
against all others for available funds. As stated in the preamble to 
the Interim Rule for REAP:

        ``The inclusion of flexible fuel pumps that dispense blended 
        liquid transportation fuel as an important new component of the 
        Federal government's strategy for encouraging the use of 
        renewable fuels. Section 9007(a)(2) authorizes the agency to 
        fund parts of renewable energy systems as well as renewable 
        energy systems in whole. The agency has determined that a 
        flexible fuel pump is a uniquely critical aspect of a biofuel 
        renewable energy system defined as the conversion of the 
        biomass through the dispensing of the biofuel to a vehicle. The 
        policy rationale for the agency to include flexible fuel pumps 
        in REAP is to address a barrier that the agency has determined 
        impedes the broader use of biofuels as a liquid transportation 
        fuel in the United States. For example, one major aspect of 
        this barrier derives from two scenarios. The first is one of an 
        insufficient availability of higher ethanol-blend fuels in the 
        market place that discourages Americans from purchasing 
        flexible fuel vehicles that can burn such higher ethanol-blend 
        fuels and does not provide a sufficient level of higher 
        ethanol-blend fuel to supply the existing flexible fuel vehicle 
        fleet to fully take advantage of the fleet's ability to consume 
        additional biofuel. The second is one of an insufficient number 
        of flexible fuel vehicles on the road to encourage fuel station 
        owners to expend the capital necessary to install flexible fuel 
        pumps in response to market forces. By allowing REAP to provide 
        financing through grants and loan guarantees to encourage the 
        installation of flexible fuel pumps in rural areas, the agency 
        believes it can help overcome this barrier. The agency 
        acknowledges that there are other similar biofuel examples, 
        including barriers to biodiesel. The agency recognizes that 
        REAP is designed to address a variety of renewable energy and 
        energy efficiency goals. With the inclusion of flexible fuel 
        pumps for REAP funding, the agency will ensure that it will not 
        ignore the other important goals and purposes of the program.''

    To create a viable biofuel system, many Federal partners are 
necessary. RBS's efforts do not duplicate the Business and Industry 
Guaranteed loan program or DOE's Clean Cities program, rather it 
compliments them by providing additional support in rural communities 
to expand biofuel infrastructure.

    Question 20. Canales: Can you please give us a breakdown of REAP 
project funding? Please breakdown by state allocations and the kinds of 
projects being funded (i.e., wind, solar, digesters).
    Answer. The following table presents REAP funding for grants and 
guaranteed loans for FY 2010 by state:

------------------------------------------------------------------------
        State             Grant Amt.       Loan Amt.          Number
------------------------------------------------------------------------
             Alabama        $1,096,161         $593,791               13
              Alaska          $254,123              $--               17
             Arizona          $502,333              $--                7
            Arkansas          $999,604          $44,813               44
          California        $1,417,328         $406,000               28
            Colorado          $474,562          $95,000               12
         Connecticut           $71,745          $63,500                3
            Delaware           $70,293              $--                4
             Florida          $125,000              $--                2
             Georgia        $3,319,908       $1,567,179               78
              Hawaii          $427,891         $232,200                8
               Idaho          $976,692       $1,500,000               34
            Illinois        $4,266,170       $2,434,970              141
             Indiana        $3,786,132       $1,531,118              114
                Iowa       $20,126,175      $24,055,933              559
              Kansas          $818,573         $148,345               37
            Kentucky        $1,440,948       $1,355,629               46
                    Louisiana $679,276       $1,000,000                6
               Maine          $534,569       $1,667,781                5
            Maryland          $747,994              $--               13
       Massachusetts          $425,725       $1,588,613               17
            Michigan        $2,194,168         $391,131               60
           Minnesota        $5,799,265       $2,237,408              226
         Mississippi          $666,153              $--               30
            Missouri        $1,986,417       $5,810,917               56
             Montana          $603,367          $10,200                6
            Nebraska        $2,834,914       $3,031,260              157
              Nevada          $213,748              $--                5
       New Hampshire          $218,683         $409,997                5
          New Jersey        $1,234,253         $783,887               17
          New Mexico          $340,883         $600,000                2
            New York        $1,780,633       $1,219,487               76
      North Carolina        $2,705,082         $926,000              101
        North Dakota          $718,526         $530,684               22
                Ohio        $5,461,997       $7,029,505               85
            Oklahoma          $268,938         $136,152               15
              Oregon        $1,256,736          $81,093               38
        Pennsylvania        $1,647,086         $867,065               25
         Puerto Rico          $159,773              $--                3
      South Carolina          $823,532         $923,521               11
        South Dakota        $1,768,333       $1,629,277               40
           Tennessee        $1,694,612       $1,658,691               43
               Texas        $1,114,006              $--               24
                Utah          $172,091              $--                8
             Vermont        $1,806,685       $3,710,252               41
            Virginia          $759,922              $--                8
          Washington          $676,887       $1,386,500                6
       West Virginia          $355,860         $254,000                8
           Wisconsin        $2,103,224       $1,086,605               69
                      --------------------------------------------------
  Total..............      $83,926,976      $72,998,504            2,375
------------------------------------------------------------------------

    The following table provides a summary of the funds provided by 
type of project for FY 2010.

----------------------------------------------------------------------------------------------------------------
                              Biomass Type         Number of                                          Amount
      Technology              Description          Projects      Grant Amount     Loan Amount       Leveraged
----------------------------------------------------------------------------------------------------------------
Biomass                                                    56      $11,006,140      $20,751,392      $78,783,920
 
                        Anaerobic Digester                 19       $6,042,676      $14,010,621      $34,730,610
                        Biodiesel Production                6         $830,708       $3,485,000      $11,923,618
                        Ethanol Production                  1         $500,000              $--       $4,254,000
                        Solid Fuel Production              16       $3,185,031       $2,110,771      $24,434,653
                        Thermal Conversion                 14         $447,725       $1,145,000       $3,441,040
 
Energy Efficiency                                       1,830      $47,692,866      $22,280,851     $131,286,333
Geothermal                                                 40       $1,094,551         $292,000      $10,729,094
Hybrid                                                      4          $58,817              $--         $201,106
Hydropower                                                  4         $684,849           $5,000      $11,956,530
Solar                                                     294      $13,296,957       $8,356,177      $46,462,233
Wind                                                      147      $10,092,796      $21,313,084      $25,935,674
                                                ----------------------------------------------------------------
  Total                                                 2,375      $83,926,976      $72,998,504     $305,354,890
----------------------------------------------------------------------------------------------------------------


    Question 21. Canales: An integral part of helping ag producers and 
rural small businesses determine whether there are energy efficiency 
gains to be made in their operations is an energy audit. Can you share 
with the Committee what your agency is doing to ensure that there are 
enough folks available across the country to help carry out energy 
audits in rural areas and on ag operations?
    Answer. REAP provides grants to fund energy audits. The REAP Energy 
Audit and Renewable Energy Development Assistance Grant provides grant 
assistance to entities that will assist agriculture producers and small 
rural businesses by conducting energy audits and providing information 
on renewable energy development assistance. Eligible entities include: 
state, tribal, local government or their instrumentalities, land grant 
colleges, universities and other institutions of higher learning, rural 
electric cooperatives and public power. A Notice of Funds Available for 
$2.4 million in funding to conduct Energy Audits and Renewable Energy 
Development Assistance was published in the Federal Register on May 27, 
2010. To date, REAP has provided approximately $5.3 million in grants 
that have enabled approximately 4,900 energy audits.

    Question 22. Canales: The Appropriations Committee sent you a 
strong message by zeroing out the mandatory farm bill funding as well 
as not providing any discretionary funding for REAP, and the House 
passed bill ended up with $2.3 million as a result of two amendments. 
What do you attribute to the cuts?
    Answer. RBS understands that Congress works to appropriate funding 
based on their priorities and constraints.

    Question 23. Canales: Can REAP continue to be all things to all 
people in terms of doing both energy efficiency as well as renewable 
energy production? Is it better at doing some types of projects than 
others and are there some projects that can't be done anywhere else? 
Bottom line, as we're discussing which energy title programs to 
continue or not, what would you say REAP's role should be, keeping in 
mind the criticisms that have come about how the program has been 
operated?
    Answer. REAP serves both of the important purposes you outline. In 
2010 alone, the REAP program provided $84 million in grants and $73 
million in loans for 2,375 projects. We do not have any recommendations 
to statutory eligibility at this time.

    Question 24. Garcia: Can you explain how FSA works with other 
agencies on program implementation? For example, who else does FSA 
consult in selecting the project areas and making sure the selection is 
in compliance with other regulations? Does FSA work with NRCS or ARS? 
If so, what are the responsibilities of these other agencies?
    Answer. Contributing agencies within USDA include the Natural 
Resources Conservation Service (NRCS), U.S. Forest Service (USFS) and 
State Foresters, Rural Development (RD) Rural Business Services (RBS), 
Agricultural Research Service (ARS), Agricultural Marketing Service 
(AMS), Office of Energy Policy and New Uses, Animal and Plant Health 
Inspection Service (APHIS), Foreign Agricultural Service (FAS), 
National Agricultural Statistics Service (NASS), National Institute of 
Food and Agriculture (NIFA).
    These collaborations allowed FSA to assemble a national review team 
for project area proposals analysis of all aspects related to bioenergy 
production. For example, APHIS and NRCS provide information on crop 
invasiveness and management policy and implementation; NASS provides 
soil survey data for the basis of land rental rates; ARS and USFS 
provides expertise on crops and current USDA energy and measurement 
analysis tools and research; and RD and RBS provides input on 
conversion facility processes and business models.
    Cooperation also was provided by the Department of Interior Bureau 
of Land Management; Department of Energy and its National Laboratories, 
such as the National Renewable Energy Laboratory (NREL), Idaho National 
Laboratory, and Oak Ridge National Laboratory.
Questions Submitted By Hon. Martha Roby, a Representative in Congress 
        from Alabama
    Question 1. Garcia: Alabama Forestry Commission's (AFC) forest 
damage assessment due to the April 2011 tornadoes shows forested acres 
damaged at 204,590, stumpage value for damaged timber at over $266 
million on timber volumes in excess of 12 million tons of wood. To put 
this in perspective, the volume of timber destroyed would provide fiber 
to six medium size pulp and paper mills for one year. Much of this 
volume will not be salvaged resulting in significant reforestation 
costs and extreme risk of catastrophic fires. The AFC requested $66 
million through Farm Service Agency's (FSA) Emergency Forest 
Restoration Program (EFRP) but they will receive 5% or roughly $3.3 
million of what was requested. Mississippi received less storm damage 
but received 11.8% of their original request.
    Alabama's share of EFRP funding needs to be increased, what is 
FSA's plan to make this happen? Can other FSA funds be found and 
shifted to help this state.
    Answer. EFRP requests are processed in the order that they are 
received and allocations are made based on a standard formula. 
Additional funds may be requested; however, no EFRP funds are currently 
available to provide additional EFRP financial or technical assistance 
to states and counties. At this time, FSA does not have any other 
funding sources that can be used to address unfunded EFRP requests, 
which total over $49 million in the following states: Alabama, 
Arkansas, Georgia, Massachusetts, Mississippi, North Carolina, Ohio, 
Tennessee, Texas, and Virginia. The only funding provided thus far for 
EFRP was $18 million under the Supplemental Appropriations Act of 2010.

    Question 2. Garcia: United States Forest Service funding for 
Cooperative State and Private Forestry has steadily declined over the 
past few years. Other State Forestry agency funding sources have seen 
similar declines. As states prioritize focus areas in their Forest 
Action Plans they need enhanced flexibility to shift Federal funding 
between programs?
    What is the USFS's position on this need and what changes could be 
made to provide states with this increased flexibility?
    Answer. The agency understands the key role that Forest Action 
Plans play in providing states the ability to prioritize their use of 
Federal funds. A continued effort to assist states in meeting this need 
can give flexibility. FS has worked with the State Foresters to 
implement State and Private Redesign, in which 15% of the net available 
funds (not including earmarks and national commitments) in the Forest 
Health Management--Cooperative Lands, State Fire Assistance, Forest 
Stewardship, and Urban and Community Forestry programs are distributed 
to states for cross-cutting, high-priority projects.
Questions Submitted By Hon. Gregorio Kilili Camacho Sablan, a Delegate 
        in Congress from Northern Mariana Islands
    Question 1. Canales: I understand it took awhile to implement the 
Rural Energy programs. As a delegate of one of the territories, I am 
concerned that USDA has not been proactive in extending its programs to 
the territories despite its broad authority given by Congress under 
P.L. 96-597. When making energy program allocations for the states, did 
you consider the territories in your allocation plan?
    Answer. Yes. The REAP program allocates funds to the territories, 
as it does every state in the United States. The other three RBS energy 
programs (i.e., Biorefinery Assistance Program, Repowering Payment 
Program, and the Advanced Biofuel Payment Program) do not have state 
allocations. All eligible entities, including those in the territories, 
either compete for funds (Biorefinery Assistance Program, Repowering 
Program) or are eligible for payments (Advanced Biofuel Payment 
Program) if eligible.

    Question 2. Canales: An integral part of helping agricultural 
producers and rural small businesses determine whether there are energy 
efficiency gains to be made in their operations is an energy audit. I 
understand that energy audits are done for mainland producers, can you 
share with the Committee what your agency is doing to ensure that there 
are folks to help carry out energy audits for producers in the 
territories?
    Answer. RBS has an assigned Energy Coordinator who works with the 
western pacific area. REAP provides grants to fund energy audits The 
REAP Energy Audit and Renewable Energy Development Assistance Grant 
provides grant assistance to entities that will assist agriculture 
producers and small rural businesses by conducting energy audits and 
providing information on renewable energy development assistance. 
Eligible entities include: state, tribal, local government or their 
instrumentalities, land grant colleges, universities and other 
institutions of higher learning, rural electric cooperatives and public 
power. A Notice of Funds Available for $2.4 million in funding to 
conduct Energy Audits and Renewable Energy Development Assistance was 
published in the Federal Register on May 27, 2010. To date, REAP has 
provided approximately $5.3 million in grants that enables 
approximately 4,900 energy audits. No applications have been received 
and, thus, no awards for energy audits have been made to Western 
Pacific territories.
Question Submitted By Hon. Chellie Pingree, a Representative in 
        Congress from Maine
    Question 1. Canales: Can REAP be modified to enable more support 
for small scale biomass combined heat and power (CHP) unit 
demonstration projects?
    As you know, the Community Wood Energy Program (CWEP) authorized a 
new program to provide state and local governments with matching grants 
of up to $50,000 to develop community wood energy plans and to fund a 
program of competitive grants to acquire community wood energy systems 
(that use woody biomass as the primary fuel) for public facilities. In 
the 2008 Farm Bill, this program was authorized appropriations of $5 
million annually for FY 2009-12. Do you support CWEP and do you believe 
that the USDA has an important role to play in getting pilot projects 
deployed in heating schools, hospitals, and municipal/county buildings?
    Answer. To the extent that a CHP unit demonstration project meets 
the definition a pre-commercial technology, REAP can assist such 
project. Such projects must compete for available program funds with 
other eligible projects.
    Regarding CWEP, RBS supports this Forest Service program as 
authorized under the 2008 Farm Bill. RBS defers to the Forest Service 
in answering the question concerning the importance of this program 
with regard to pilot projects. Also, the Forest Service supports this 
program, and has requested full funding ($5 million) for this program 
in both FY 2011 and FY 2012. However, no money has been appropriated to 
date.

    Question 2. Garcia/Tidwell: There appears to be considerable 
opportunity to support the development of small scale cellulosic based 
biofuel systems, such as combined heat and power (CHP) units, in homes 
and businesses. Such systems could take advantage of waste biomass at 
smaller scales, avoiding the economic dilemma posed by hauling low 
grade materials long distances and provide a mechanism to address local 
situations. How might existing USDA programs be tailored to pursue this 
opportunity?
    Answer. A lot depends on the availability of funds and competing 
program needs. BCAP matching payments are designed to assist with 
transportation costs of existing biomass that otherwise may be 
uneconomically retrievable. Examples of such biomass include crop 
residues remaining on the field after harvest, or forest residues where 
removal is cost-prohibitive outside of a certain geographic range. 
Collecting these types of biomass may provide additional public policy 
benefits beyond energy purposes alone, such as the removal of invasive, 
diseased, or forest fire fuel materials, providing an alternative 
disposal method to the burning of discarded orchard and forest 
materials, or allowing further improvements to forest ecosystem health. 
In 2009, qualified facilities for BCAP matching payments included more 
than 30 schools and universities that consumed biomass for their CHP 
operations.
    By comparison, BCAP project areas are designed for the development 
of new supplies of biomass. The selection of BCAP project areas 
considers the average distance of a facility from its biomass supply. 
For example, five BCAP project areas support herbaceous materials that 
can be densified through conversion methods such as torrefaction, 
pelletizing, compression or dehydration. The resulting product may be 
either a fuel pellet or briquette that cost-effectively can be 
transported and marketed to smaller scale combined heat and power (CHP) 
operations.
    BCAP project areas also are selected in consideration of certain 
criteria provided by the 2008 Farm Bill, which include the ability of 
the local producer to take ownership in the biomass-to-bioenergy 
operations and the commitment a biomass conversion facility makes to 
the producers in a project area. Several selected BCAP project areas 
involve the cooperation of farmer cooperatives, and facility ownership 
is locally based.
    BCAP complements other Federal and state programs that are aimed at 
increasing renewable sources for heat and power, such as the USFS Fuel 
for Schools Program or State Renewable Portfolio Standards (RPS). BCAP 
allows a diversity of feedstocks to support these programs.
    USDA is very supportive of developing appropriately scaled biomass 
projects to meet the needs of regional and local situations to make 
them economically viable; reducing haul distances is one important 
variable to address. The Secretary's office initiated an effort across 
the multiple agencies in USDA focused on Wood to Energy as part of 
``Building a Forest Restoration Economy''. Four categories of work 
items have been identified to achieve this goal:

    (a) Supply--Reliability, predictability are crucial; Stewardship 
        Contracting is a critical tool for Federal land managers to 
        address supply, this authority expires in 2013. Most forestland 
        in the USA is owned by ``families'' and there is a critical 
        need to be able to coordinated sources across ownerships in a 
        geographic area. Support for developing business arrangements 
        to assure supply from these diverse landowners is needed.

    (b) Social Infrastructure--this includes having expertise in 
        technical, financial, business, workforce and social 
        acceptability to implement projects. Integrated program 
        delivery needs to recognize the importance and support of all 
        of these elements and requires close working relationships with 
        private businesses and nongovernmental organizations.

    (c) Agency Culture--Agencies have traditional modes of operation, 
        legislative and regulatory direction. Sometimes these create 
        barriers to implementing biomass energy systems holistically. 
        The Secretary's office is working through these barriers to 
        expand wood to energy. Cross training between agencies is being 
        carried out as part of this initiative.

    (d) Opportunities--Through the Secretary's focus several areas for 
        project development have surfaced and are being developed. 
        Examples include the focus on rural businesses, agricultural 
        operations dependent upon expensive fuel oil, propane and 
        electric energy for heat. Rural Development has programs (RUS, 
        REAP, etc.) that are being leveraged against National Forest 
        wood supply from stewardship contracting and we are working to 
        expand those efforts. Projects that take advantage of economies 
        of scale, such as supplying heat and power to food processing 
        plants, wood manufacturing, cement and other high energy using 
        businesses offer significant opportunities.

    Question 3. Garcia/Canales: How have BCAP and other energy programs 
helped to promote small scale Thermoelectric or thermal energy systems 
that use woody or other biomass? And, are there ways that BCAP, other 
sections of the Energy title, or partnerships with agencies like DOE 
could help promote Thermal energy systems that use woody biomass?
    Answer. BCAP is designed to encourage the production of dedicated 
bioenergy feedstocks to help us meet the goals of the Federal Renewable 
Fuels Standard and state-level renewable electricity standards. Because 
facilities that convert biomass into energy also must demonstrate long 
term feedstock supply commitments to attract private capital 
investment, the risk mitigation provided by BCAP can help bioenergy 
entrepreneurs seeking to leverage public or private financial 
assistance.
    Many of the thermal production units often are retrofits. The 
facility is retrofitted by the installation of a turbine alongside a 
boiler to capture lost heat. The capture of the lost heat enables a 
closed loop system allowing a facility to produce heat and power, often 
in the form of steam. The RD programs can support these retrofits and 
the facilities can apply for BCAP matching payments for their eligible 
waste materials consumed for conversion to thermal power.

    Question 4. Garcia/Tidwell: Given that the pellet industry plays a 
major role in reducing heating oil consumption, is the production of 
wood pellets from the removal of excess low value woody biomass being 
provided adequate support under programs like BCAP for the purposes of 
incentivizing these types of best forest management practices?
    Answer. BCAP matching payments may provide opportunities for the 
manufacture of wood pellets from so-called ``excess low value woody 
biomass,'' but insufficient funds are available for matching payments 
in FY 2011. Also, conditions vary by region and may require further 
review to ensure that incentives are provided to feedstocks not 
otherwise used for existing markets; removed directly from the land in 
accordance to a forest stewardship or equivalent plan; are by-products 
of preventative treatments that are removed to reduce hazardous fuels, 
to reduce or contain disease or insect infestation, or to restore 
ecosystem health; and if harvested or collected on Federal lands, are 
done in accordance with the requirements for old-growth maintenance, 
restoration, and management direction provided by 16 U.S.C. 6512 for 
Federal lands.
    Achieving good forest management practices by providing an economic 
use for the low value material is an important goal, therefore it is 
important to put the use of wood for energy into that broader context. 
Wood pellets are one form of fuel, along with chipped or ground wood; 
they each have an important niche within the energy market place. In 
parts of the country where an integrated wood products industry exists, 
higher value products such as lumber, paper, and wood composites can 
help cover the cost of the forest treatment. The pellet and chip wood 
fuel producers are a component of an integrated industry that can 
effectively use the low value material. They are lacking adequate 
markets/demand for their product more so than enough incentives for 
more production of their product. Therefore the expansion of demand for 
their products is the more important factor. Thus, providing incentives 
to replace heating oil, propane and electric resistance heat would help 
increase the demand.
    In parts of the country without an integrated industry, the need 
for incentives to transport biomass is much higher, along with the 
increased demand for the products. A longer term solution for these 
regions is the need to develop a woody biomass based energy production 
sector. The net result will be better forest management results on the 
land as the wood being removed has an economic value. As an example, 
there are many USDA facilities in remote areas of the U.S. utilizing 
either propane or oil for thermal energy. Some of these facilities are 
leased from General Services Administration (GSA) that develop and 
construct the leased buildings for USDA and other Federal agencies. 
Creating the demand for high efficiency thermal energy could be 
developed at the inception of the leased building. The end result could 
be a constructed building using renewable energy such as pellets or 
chips thus increasing the demand for these products. In addition, this 
would assist the USDA and GSA in meeting Executive Order 13514 
increasing the use of renewable energy.

    Question 5. Canales: Conservation programs are vitally important, 
but if forest owners don't also have markets for their products--
whether they are traditional wood markets, energy markets, or markets 
for services like water or hunting and fishing--they will have a hard 
time staying on the land and keeping their land forested. What is USDA 
doing on this front to help forest owners participate in existing 
markets and open up new markets? For example, is USDA's biobased 
labeling program adequately supporting the need for creating new 
markets for wood products? And, is there adequate funding to help 
develop, maintain and improve long-term domestic markets for the broad 
range of potential wood-based products?
    Answer. USDA appreciates the opportunity to discuss the role of the 
BioPreferred' program in creating new markets for wood 
products. The legislative history of the BioPreferred program 
authorized under section 9002 of the Farm Security and Rural Investment 
Act of 2002 (FSRIA), as amended by the Food, Conservation, and Energy 
Act of 2008 suggests Congress intended to use this program to speed the 
development of new markets for biobased products, rather than to 
support mature markets for products. As described in the conference 
report accompanying FSRIA, the purpose of the biobased markets program 
``. . . is to stimulate the production of new biobased products and to 
energize emerging markets for those products.''
    USDA believes that the widespread labeling of mature market 
products could negatively affect the entry of new biobased products 
into market segments in which mature products already have significant 
market shares. The exclusion of mature market products from the 
voluntary labeling program is consistent with the exclusion of such 
products from the Federal procurement preference program. As Senator 
Harkin stated in comments on USDA's proposed labeling rule:

        Clearly, the objectives of the BioPreferred labeling program 
        are not served by granting the label to every product that is 
        made of biobased materials. For example, paper or wood 
        products, such as wood furniture, do not fall within the 
        intent, purpose, and goals of the statute creating the 
        BioPreferred labeling program because the market for paper and 
        wood products is established and functioning, and consumers 
        have sufficient information to make buying decisions regarding 
        paper and wood products without their being included in the 
        BioPreferred labeling scheme.

    However, USDA's BioPreferred program makes every attempt to include 
new wood products (employing technologies coming into existence after 
1972) in this USDA program. The BioPreferred program works in 
cooperation with the U.S. Forest Products Research Lab in Madison, 
Wisconsin to identify and certify new industrial products made from 
wood for both the federally procurement preference and label parts of 
the program. One of the recent products receiving the USDA certified 
biobased product label is a new wood product.

    Question 6. Tidwell/Garcia: Since the major predisposing factor for 
the beetle infestations of the West has been the lack of management and 
resultant overstocked stands, what steps are being taken to address 
this situation and prevent its reoccurrence? And, what is being done to 
develop sustainable markets and delivery infrastructure to prevent such 
problems from occurring elsewhere in the U.S.?
    Answer. BCAP matching payments may provide opportunities for the 
removal of beetle-infected biomass, but insufficient funds are 
available for this programmatic assistance in FY 2011.
    The bark beetle epidemic has affected over 41 million acres from 
1997-2009 in the western U.S. This is a function of several converging 
factors--a multi-year severe drought that weakened trees; years of fire 
suppression which evolved over time as more people moved into remote 
areas, which necessitated protecting property and lives; large expanses 
of relatively homogenous stands of older, mature lodgepole pine, 
created from the intensive harvesting of the 1880s and 1890s for 
railroads and the mining industry providing extensive suitable beetle 
habitat; and warming winters which have allowed beetles to survive 
winters that in the past, reduced population sizes.
    In response to this record outbreak the Forest Service has 
developed a ``Western Bark Beetle Strategy'' focusing on three goals: 
safety (mitigating risk to people and property from falling trees along 
roads and trails), recovery (helping affected forests recover their 
proper ecological function) and resilience (thinning forest stands so 
they are more resilient in the future). The plan was put together to 
outline the importance of the issue. Currently the FS treats about 
250,000 acres per year in beetle country and has the capacity to 
increase this by 2.5 fold. As the epidemic dies down the agency will 
focus on creating more resilient forests and heterogeneous landscapes 
that can sustain bark beetle attacks better in the future.

    Question 7. Tidwell: On Limited Owners with Management Plans: Less 
than 5% of forest owners nationwide have some sort of management plan. 
This is troubling since we know that almost \2/3\ of the nation's 
forests are privately owned, so we rely on these forests to be healthy 
and supply every Americans with clean water, air, wildlife habitat, 
forest products we use every day, and recreational opportunities.
    Do you see this as a problem and if so how are you addressing this 
problem?
    Answer. Yes, this is a major challenge for us. We cannot 
effectively address landscape-scale resource management concerns, 
without getting private forest landowners. We continue, through the 
Forest Stewardship Program, to develop and implement innovative tools 
for reaching and involving more landowners in active forest management. 
Through our Landscape Stewardship Approach, we have begun to develop 
multi-landowner landscape-scale Forest Stewardship Plans that will 
foster landowner communities of interest and create economies of scale 
for traditional forest products and emerging ecosystem service markets. 
We continue to work with states as they implement their State Forest 
Action Plans, to leverage new place and community based partnerships.
    We are also developing SMART--a web-based Stewardship Mapping and 
Reporting Tool. Using this tool, landscape concerns and strategies for 
addressing them are inherited by individual Forest Stewardship Plans. 
In this way, not only will efficiencies be gained in assisting more 
landowners, but these landowners will then, in aggregate, have a more 
significant and lasting impact on some of our most pressing resource 
management concerns including insect pest and disease infestations and 
the threat of wildfire.

    Question 8. Tidwell: Communities in Maine and across New England--
indeed in places across the country such as Montana and California--
have embraced acquisition of threatened forestland by local governments 
as a conservation strategy. The 2008 Farm Bill authorized a new 50-50 
matching grant program, the Community Forest and Open Space 
Conservation Program, to help local governments, tribes, and local 
nonprofits to create more of these locally-owned and managed community 
forests. This would seem to fit well into your vision of forest 
protection across all boundaries--Federal, state, local and private.
    But, it seems like the program has been slow to emerge from 
rulemaking and move into actual grant making since passage of the last 
farm bill. Can you provide an update on where this program stands in 
terms of establishment through rulemaking, and how you envision it 
contributing to the agency's forest conservation objectives?
    Answer. I am pleased to report that the final regulation is in its 
last stages of review, and we hope to publish the final regulation this 
Fall. Once published, we will move forward with soliciting 
applications, and grant the available funds (through FY10 and FY11, we 
have $1.5 million of available funds).
    This new program fits well within our nation's forest conservation 
objectives. Through this program, communities and Indian tribes can 
sustainably manage forests community forests for many public benefits, 
including recreation, income, wildlife habitat, stewardship 
demonstration sites for forest landowners, and environmental education.

    Question 9. Tidwell: How could the Healthy Forests Reserve Program 
(HFRP) be structured to achieve the goals of maintaining working 
forests, protecting important public benefits, and compensating private 
landowners for maintaining these public benefits on their land?
    Answer. As currently authorized, the Healthy Forest Reserve Program 
(HFRP) as administered by the NRCS, targets the protection and 
restoration of forests to assist in the recovery of threatened and 
endangered species. If HFRP was broadened to maintain working forests, 
protect important public benefits, and compensate landowners for those 
public benefits, then the program would largely look like the existing 
Forest Service's Forest Legacy Program. Currently, these programs have 
complementary purposes, with limited overlap.
                                 ______
                                 
 House Committee on Agriculture Farm Bill Audit Questionnaire--Forestry
1. Program Name
    Volunteer Fire Assistance Program.
2. Subprograms/Department Initiatives
    The VFA program is split into two subprograms, VFA-SPVF and VFA-
SPS3.
    VFA-SPVF funds are focused to address critical preparedness needs 
for firefighter safety, increased initial attack capability, and 
training. An emphasis is placed on funding areas that have developed or 
are developing Community Wildfire Protection Plans, FEMA hazard 
mitigation plans, or other collaboratively developed hazard mitigation 
plans.
    The program allocates funding based on acres of forestland to be 
protected and the number of fire departments serving communities with 
populations under 10,000 in each state. This part of the program is 
funded through State and Private Forestry appropriations.
    VFA-SPS3 funds provide financial assistance, technical assistance, 
training, and equipment to ensure that Federal, state, and local fire 
agencies can deliver a coordinated response to wildfire. The emphasis 
is on improving fire planning, initial attack capabilities, adopting 
the National Incident Management System (NIMS) and wildland fire 
techniques training for local fire agencies
    Funds are allocated on the basis of risk from catastrophic fires to 
communities in the Wildland Urban Interface, the number of acres to be 
protected, and the number of volunteer fire departments serving 
communities of less than 10,000 inhabitants. Forest Service Regions, 
the Northeastern Area, and the International Institute of Tropical 
Forestry receive a fixed percent which they allocate to states and 
Territories. This part of the program is funded through Wildland Fire 
Management appropriations.
3. Brief History
    VFA (formerly Rural Community Fire Protection) was first authorized 
in 1972 as an amendment to the Rural Development Act and was first 
funded in 1975.
4. Purpose/Goals
    The VFA program provides Federal financial, technical, and other 
assistance to State Foresters and other appropriate officials to 
organize, train and equip fire departments in rural areas and rural 
communities to suppress fires. A rural community is defined as having 
10,000 or less population. A department may buy fire equipment, pay for 
training or training materials, or cover the cost of department 
incorporation, as long as the funds are matched. VFA funds are granted 
on a 50/50 matching basis.
    Volunteer fire departments also play a major role in suppressing 
wildfires on Federal lands. The Forest Service and the Department of 
the Interior land management agencies have entered into cooperative 
agreements with many rural volunteer fire departments for the purpose 
of protection of both communities and natural resources.
5. Success in Meeting Programmatic Purpose/Goals
    The VFA program has been highly successful in assisting volunteer 
fire departments in rural areas with training, purchasing equipment and 
building capacity. The assistance provided to these volunteer fire 
departments greatly benefits state and Federal land management agencies 
through their increased capacity and capabilities to assist with 
suppression of wildland fires. Detailed information on the number of 
departments assisted, training provided, and departments created or 
expanded is provided in Question 10.

                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Volunteer Fire            5,105    5,478    5,056    5,987    6,409    6,112    6,229    6,404    7,003    6,758
 Assistance
National Fire Plan--      8,342    8,186    8,222   11,959    9,288    9,285    9,306    9,059    9,026    9,357
 Volunteer Fire
 Assistance
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Volunteer Fire            4,117    3,900    5,120    4,400    8,069    6,776    6,002    5,550    6,248    4,901
 Assistance
National Fire Plan--      4,619    6,468    7,818    7,471    7,899    6,652    7,498    7,759    8,431    5,953
 Volunteer Fire
 Assistance
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.


                       8. Annual Delivery Cost (FY 2002-FY 2011) Direct and Indirect Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
Volunteer Fire Assistance                                                  0        0        0        0        0
National Fire Plan--Volunteer Fire Assistance                              0        0        0        0        0
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    The program is limited to volunteer fire departments in rural areas 
with a population of 10,000 or less. Applicants must be able to provide 
a cost-share match of 50 percent of the grant amount.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
                                          FY 2008    FY 2009    FY 2010
------------------------------------------------------------------------
Volunteer fire departments assisted         13,977     10,637     13,235
Volunteer firefighters trained              23,000     24,000     22,700
Volunteer fire departments created or          240        500         44
 expanded
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    VFA works in concert with the State Fire Assistance program. The 
Volunteer Fire Assistance program is duplicative of the Department of 
the Interior's Rural Fire Assistance Program. However, the Rural Fire 
Assistance Program has been proposed for termination due to the 
duplication. The Department of Homeland Security also administers 
programs that partially overlap with some VFA activities, including 
training and the purchase of equipment, though DHS programs are 
provided nationwide and not focused on rural communities.
12. Waste, Fraud and Abuse
    There have been no documented cases of waste, fraud or abuse in 
this program.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Woody Biomass Utilization.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    This grant program started in 2005 to treat hazardous fuels near 
communities threatened by wildland fire. It is not part of the farm 
bill. From 2005-2010 the grants have focused on assisting businesses 
and communities with the production, delivery and utilization of wood 
residues. Projects have ranged from equipment such as grinders, 
harvesters and new trucking methods to energy production facilities, to 
roundwood manufacturing and production of wood shavings for animal 
bedding markets. In 2011 the emphasis was changed to focus on 
engineering design, permitting and other preconstruction work for wood 
energy facilities.
4. Purpose/Goals
    It has focused on utilization of wood residues from forest 
treatments designed to reduce wildfire hazard.

                                5. Success in Meeting Programmatic Purpose/Goals
                    Six Year Summary of the Woody Biomass Utilization Grant Program--Table 1
----------------------------------------------------------------------------------------------------------------
                                                      Full
            Year              Pre-Applications    Application     Number Funded    States Funded   Tribes Funded
----------------------------------------------------------------------------------------------------------------
                     2005                159               44               19               12               1
                     2006                 87               37               16                9               1
                     2007                 93               36               26               13               1
                     2008                 92               35               17                9               1
                     2009                109               43               28               12               1
                     2010                192               34               13                5               1
                             -----------------------------------------------------------------------------------
  Total.....................             732              229              119               --               5
----------------------------------------------------------------------------------------------------------------


                      Total Woody Biomass Utilization Grants Awarded by FS Region--Table 2
----------------------------------------------------------------------------------------------------------------
     Region          1          2          3          4          5          6          8        9/NA       10
----------------------------------------------------------------------------------------------------------------
Total 2005-10          13         18         31          9         17         20          5         6         0
----------------------------------------------------------------------------------------------------------------
The Forest Service provided $30.3 million towards the projects.


                         Total Woody Biomass Utilization Grants Accomplishments--Table 3
----------------------------------------------------------------------------------------------------------------
                                                                              % of grants
              Year                  Dollar Amount      Leveraged Funding      awarded to      Green tons removed
                                      (millions)          (millions)         priority NFs        and utilized
----------------------------------------------------------------------------------------------------------------
                         2005                  $4.3                  $16          15/19= 79%              93,856
                         2006                  $4.2                   $9           14/16=88%             120,900
                         2007                  $6.2                   $5           15/26=58%             438,877
                         2008                  $4.2                  $11           12/17=71%             535,017
                         2009                  $7.2                  $10           25/28=89%             283,076
                         2010                  $4.2                   $9          13/13=100%             516,215
----------------------------------------------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    $5 million/yr 2005-2011. Authorization was through the Healthy 
Forest Restoration Act for FY 2005-FY 2008. Since 2008, the program has 
been funded by annual appropriations.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    Outlays have been consistent with the authority.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    The program has been delivered through technical assistance 
provided by Forest Service regional program managers and partners 
generally with nonprofit economic development organizations or state 
extension personnel.
9. Eligibility Criteria
    Businesses, state, tribal and local governments with an emphasis on 
use of woody biomass from National Forest system lands.
10. Utilization (Participation) Data
    See Table 1 above. To date, 119 grants have been provided to 
approximately 115 grantees.
11. Duplication or Overlap with Other Programs
    There are other Federal programs that support woody biomass 
development; however, this is the only program focused specifically on 
reducing hazardous fuels and utilizing that biomass material as a 
higher value product. Rural Development's Rural Energy for America 
Program is focused on multiple kinds of renewable energy; it is not 
specific to woody biomass. Rural Development also has the Community 
Facilitates Program. That program provides small grants and guaranteed 
loans for multiple different kinds of community facilities. In limited 
cases, it has been used for community biomass heating systems. FSA's 
Biomass Crop Assistance Program is focused on assisting with the costs 
of transporting materials.
12. Waste, Fraud and Abuse
    To date, only one ARRA grantee has been identified as problematic 
by an OIG audit. There were some accounting procedures and record 
keeping that was suspect. These issues have been resolved since the 
accounting issues were not accepted as allowable expenses.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Community Forest and Open Space Conservation Program (Community 
Forest Program--CFP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The CFP is authorized by Section 8003 of the Food, Conservation, 
and Energy Act of 2008, which authorizes the Forest Service to provide 
financial assistance grants to Tribal governments, local governments, 
and qualified nonprofit entities to acquire and establish community 
forests that provide public benefits to communities. The CFP program is 
the first funded Forest Service program for which tribes are eligible 
to compete.
    The Forest Service engaged tribes in the regulation making process 
through a 145 day tribal consultation period, which concluded at the 
end of a 60 day public comment period on March 7, 2011. The Forest 
Service analyzed comments received during both processes and prepared 
final regulations for the program. The final regulation is undergoing 
departmental clearance to be published in the Federal Register this 
year.
4. Purpose/Goals
    The purpose of the program is to assist communities and tribes in 
acquiring forestland that would provide public recreation, 
environmental and economic benefits, and forest-based education 
programs. The program also protects forestland that has been identified 
as national, regional, or local priority for protection.
5. Success in Meeting Programmatic Purpose/Goals
    Since the program was enacted, the Forest Service has received 
strong support from conservation nonprofit organizations, local and 
state governments, Indian tribes, and private citizens to implement 
this program. The Forest Service believes once the regulations are 
published, the program will be successful in meeting the programmatic 
purposes and goals for this program.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    This program received $500,000 in appropriations in FY 2010 and 
$1,000,000 in FY 2011.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    This program has not had any outlays because the agency is still in 
the rulemaking phase. Once the final rule is complete, the agency will 
implement a competitive grant program. When projects are selected to 
receive funding as part of this process, outlays will begin.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    None.
9. Eligibility Criteria
    A request for applications (RFA) has not yet been issued, but 
according to the statue, grants under this program will be awarded to 
eligible entities to acquire private forestland, to be owned in fee 
simple, that--

    (A) are threatened by conversion to non-forest uses; and

    (B) provide public benefits to communities, including--

      (i) economic benefits through sustainable forest management;

      (ii) clean water and wildlife habitat;

      (iii) benefits from forest-based educational programs, including 
            vocational education programs in forestry;

      (iv) benefits from serving as models of effective forest 
            stewardship for private landowners; and

      (v) recreational benefits, including hunting and fishing
10. Utilization (Participation) Data
    Not applicable at this time.
11. Duplication or Overlap with Other Programs
    This program complements the Forest Legacy Program and the Urban 
and Community Forestry Program. CFP and FLP each engage unique partners 
and utilize different tools for land protection. While a few projects 
may align with the intent of both programs, most projects will qualify 
for only one. Unlike U&CF, CFP is a land protection program, which 
provides another tool to those entities that have demonstrated a 
sustained commitment to community forestry.
12. Waste, Fraud and Abuse
    There are no examples or occurrences of waste, fraud, and abuse in 
Community Forest Program.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Forest Health Management--Forest Health Protection.
2. Subprograms/Department Initiatives
    Forest Health--Federal Lands.
    Forest Health--Cooperative Lands.
    Forest Health--National Fire Plan Federal Lands.
    Forest Health--National Fire Plan State Lands.
3. Brief History
    The Forest Health Management (FHM) program provides insect, 
disease, and invasive plant survey and monitoring information and 
technical and financial assistance to prevent, suppress, and control 
outbreaks threatening forest resources. FHM utilizes science, active 
land management, and technology transfer expertise to restore and 
sustain forest landscapes--across urban, private, state, Tribal, and 
Federal forests. Recently completed State Forest Resource Assessments 
have, in many cases, identified forest health as a key state priority. 
These Assessments are being used to help guide priorities at the 
national and regional levels.
    Prevention, detection, and suppression of native and non-native 
insects, disease, and invasive plant outbreaks make forest landscapes--
and the communities that depend on them--more resilient to climate 
change and other abiotic factors. The technical and financial 
assistance FHM provides helps ensure that forests remain healthy and 
resilient by minimizing impacts of native and nonnative invasive 
insects and diseases, and invasive plants. Healthy forests which 
maintain their tree cover contribute to carbon sequestration processes. 
They also are a major force in the moderation of local and regional 
climates, as well as the conservation of high quality water and other 
resources. In addition, FHM works on facilitating assisted tree 
migration efforts and gene conservation that involve reforestation and 
afforestation in those areas where species have been identified as 
vulnerable to climate change.
4. Purpose/Goals
    Protect trees, forests, wood products, and grasslands on Federal 
and state lands from invasive pests, diseases, and plants in 
cooperation with National Forest System, other Federal departments on 
other Federal lands, and with state foresters, or equivalent state 
officials, subdivisions of states, agencies, institutions, 
organizations, or individuals on non-Federal Lands.
5. Success in Meeting Programmatic Purpose/Goals
    Acres protected on all lands:

 
 
 
                    FY 2008                            1,303,420
                    FY 2009                            1,383,804
                    FY 2010                            1,258,512
 


                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Health--Federal   50,504   54,632   57,776   54,236   57,940   56,279   58,968   59,399   57,282   64,650
 Lands
National Fire Plan--      9,144    8,783   16,014   14,892   19,249   17,974   16,596   19,899   20,752   23,182
 Forest Health--
 Federal Lands
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Health--          28,499   33,601   52,496   48,428   53,241   51,217   48,567   50,866   48,573   50,142
 Cooperative Lands
National Fire Plan--      5,100    9,914   10,347   12,007   10,755   10,647   10,586   10,685   11,428   13,003
 Forest Health--
 Cooperative Lands
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Health--Federal   46,009   45,449   54,554   54,085   47,631   52,112   51,473   48,668   52,328   38,119
 Lands
National Fire Plan--      5,531    5,083   10,303   14,476   13,248   15,520   14,138   13,176   20,755   11,133
 Forest Health--
 Federal Lands
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Health--          11,683   18,296   31,407   36,665   46,427   49,748   43,998   46,934   46,377   30,084
 Cooperative Lands
National Fire Plan--      3,164    2,738    4,788    8,327   12,399    9,414   10,998   11,011    9,630    6,895
 Forest Health--
 Cooperative Lands
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.


                         8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
Forest Health--Federal Lands (Indirect)                                6,943    5,090    4,901    4,985    4,985
Forest Health--Federal Lands (Direct)                                  6,774    5,850   6,5450    6,592    5,074
National Fire Plan--Forest Health--Federal Lands (Indirect)            1,075    1,155    1,112    1,229    1,229
National Fire Plan--Forest Health--Federal Lands (Direct)              3,602    2,896    1,486    1,626    2,770
Forest Health--Cooperative Lands (Indirect)                              775      723      696      797      797
Forest Health--Cooperative Lands (Direct)                                756      596      930    1,053    1,192
National Fire Plan--Forest Health--Cooperative Lands (Indirect)          249      229      221      399      399
National Fire Plan--Forest Health--Cooperative Lands (Direct)            244      327      295      527      585
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Cooperative Lands and National Fire Plan State Lands funding is 
sent to State Foresters; landowner eligibility is determined by state 
partners.
10. Utilization (Participation) Data
    The Forest Service does not collect this data.
11. Duplication or Overlap with Other Programs
    No.
12. Waste, Fraud and Abuse
    There are no documented cases of waste, fraud or abuse in this 
program. The USDA OIG did complete an audit on the Invasive Species 
program in 2010. The agency is working to implement the OIG's 
Recommendations.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Forest Legacy Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Forest Legacy Program (FLP) was authorized in the Food, 
Agriculture, Conservation, and Trade Act of 1990. Initially only the 
four Northern Forest states (Maine, New Hampshire, Vermont, and New 
York) and Washington were eligible to participate. Congress 
appropriated funds for the program in Fiscal Year 1992.
    Initially, only the Federal Government was authorized to hold title 
to lands or interests in lands. This changed with the 1996 Farm Bill. 
The 1996 Farm Bill amended the Forest Legacy Program, to include the 
State Grant Option. This allowed states as well as the Federal 
Government to acquire FLP tracts and conservation easements. In the 20 
years since authorization, participation in the FLP has expanded to 49 
states and four U.S. territories.
    The Federal Government may fund up to 75% of project costs, with at 
least 25% coming from private, state, or local sources.
4. Purpose/Goals
    The purpose of the FLP is to protect environmentally important 
private forest areas that are threatened by conversion to non-forest 
uses. In partnership with participating states and the Forest Service, 
FLP works to identify important forestlands and protect them for future 
generations. The FLP provides the opportunity for the continuation of 
traditional forest uses, including forest management activities and 
outdoor recreation. Using conservation easements and fee-simple 
purchases, FLP gives priority to lands that have important scenic or 
recreational values, riparian areas, fish and wildlife values, and 
other ecological values.
5. Success in Meeting Programmatic Purpose/Goals
    More than 2.2 million acres have been conserved by the FLP.

                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Legacy            65,000   69,941   70,813   65,240   70,870   63,746   61,984   60,903   75,960   56,363
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Legacy            29,604   25,730   51,684   54,018   61,989   53,041   53,966   54,252   60,714   47,422
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.
Also, it often takes multiple years for real estate transactions to close.


                         8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
Forest Legacy (Indirect)                                                 304      297      286      384      384
Forest Legacy (Direct)                                                   363      372      382      504      363
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    All states and territories of the United States are eligible to 
participate in the Program. To enter the Program states must first 
conduct an analysis and identify areas, known as Forest Legacy Areas 
(FLAs) where the state will target their efforts. Only lands within 
these FLAs are eligible to enter the FLP. In the past, this analysis 
was referred to as the Assessment of Need and was only tied to the FLP. 
Now this analysis is part of the Statewide Forest Resource Assessment 
and Strategy. This document identifies priority areas for all State and 
Private Forestry Programs.
    Each year participating states submit projects to the Forest 
Service for consideration for funding. A panel of six Forest Service 
representatives and four participating state representatives score all 
projects submitted according to National Scoring Guidance. This scoring 
guidance is provided to the states to assist them in developing their 
project applications. The national panel meets in January to finalize a 
prioritized project list. This prioritized project list is then 
submitted to the Office of Management and Budget and is released as 
part of the President's Budget.
10. Utilization (Participation) Data
    2.2 million acres are now part of the FLP. Not all funds are 
expended in the same year that those funds are appropriated. This is 
because land acquisition is often a lengthy and complicated process. 
Projects are funded through grants to states. These grants have an 
initial 2 year period. This can be extended up to 5 years.
11. Duplication or Overlap with Other Programs
    There are no other programs with the sole purpose of identifying 
and permanently protecting environmentally important forestlands. The 
FLP differs from the agency's and Department of the Interior's Land 
Acquisition program in that it does not provide for acquisition of 
lands within the National Forest System or on Department of Interior 
lands. It differs from other easement programs, like conservation 
programs funded by the Natural Resources Conservation Service, because 
those are focused on protecting wetlands, wildlife habitat, and highly 
erodible cropland, not forests.
12. Waste, Fraud and Abuse
    We are not aware of any instances of waste, fraud or abuse. USDA 
OIG did complete a report on the Forest Legacy Program in 2011. The 
agency is working to implement the OIG's Recommendations.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Forest Stewardship Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Forest Stewardship Program was authorized with the 1990 Farm 
Bill to encourage the long-term stewardship of ``nonindustrial'' 
private forestland, by assisting landowners to more actively manage 
their forest and related resources. During the program's early years, 
the Forest Service worked through state agency partners to build 
technical assistance delivery capacity and establish related programs. 
In recent years, the Program has employed new geospatial technologies 
and innovative planning tools, to become more focused and strategic, 
enabling the Forest Service to work more effectively on private forests 
and to better coordinate with state as well as National Forest lands. 
These coordinated efforts address pressing landscape-scale resource 
management concerns such as fire, water quality, forest products and 
renewable energy supply.
4. Purpose/Goals
    The Forest Stewardship Program is the only Forest Service program 
focused on private forestland management. The program delivers 
assistance by leveraging an effective national network of forestry 
technical assistance providers and programs. Because of this unique 
role--and since most of America's forests are privately owned--the 
Forest Stewardship Program is essential to addressing any important 
forest resource management issue. Individual forest landowners are 
assisted within the context of forest resource management issues that 
cross boundaries and encompass multiple ownerships and jurisdictions. 
The Forest Stewardship Program plays a fundamental role in keeping 
forests as forests, preparing forest landowners for forest products and 
ecosystem services markets, qualifying them for incentive programs, and 
maintaining jobs and diverse forest products markets in rural 
communities.
5. Success in Meeting Programmatic Purpose/Goals
    Since being authorized by the 1990 Farm Bill, the Forest 
Stewardship Program has:

   Served as the primary, most extensive (in reach and scope) 
        private forest owner assistance program in the U.S.

   Successfully created and helped sustain a vast, effective 
        network of forestry technical assistance providers and 
        programs.

   Provided more that 330,000 comprehensive forest management 
        plans covering more than 38 million acres nationwide.

   Reached more than five million forest landowners through a 
        variety of technical and educational assistance programs.

   Established strong and effective partnerships with State 
        Foresters, Conservation Districts and many other partners to 
        provide for broader forest landowner participation in USDA 
        conservation programs.

                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Stewardship       34,128   35,630   34,119   52,988   36,978   42,517   31,667   30,522   29,369   35,941
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Forest Stewardship       33,024   32,398   33,328   35,313   43,604   40,873   38,345   30,103   29,502   20,720
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.


                         8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
Forest Stewardship (Indirect)                                            870    1,066    1,027      914      914
Forest Stewardship (Direct)                                            1,907    1,230    1,371    1,209    1,123
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Essentially any private forest landowner is eligible to participate 
in the Forest Stewardship Program. However, the program strives, 
through its delivery partners, to reach landowners who might not 
otherwise have access to forest management information and assistance. 
Program outreach and extension activities are also focused on priority 
landscapes, such as those identified in State Forest Action Plans, 
where management is most likely to address pressing resource management 
concerns--or support the growth of local forest dependent markets and 
economies.
10. Utilization (Participation) Data
    The following table details program utilization and participation 
for the past 3 years:

------------------------------------------------------------------------
                                       2008         2009         2010
------------------------------------------------------------------------
Number of landowners receiving         149,260      145,976      132,348
 assistance
Number of landowner education          723,155      569,968      229,959
 programs conducted
New or revised Forest Stewardship    1,747,812    2,076,278    1,840,255
 Plans (acres covered)
New or revised Forest Stewardship       14,231       15,949       14,764
 Plans (number of plans)
Base NIPF acres in Important       315,309,885  315,220,112  438,202,042
 Forest Resource Areas
Acres covered by current Forest     18,823,374   18,627,113   19,721,990
 Stewardship Plans (cumulative)
Acres in Important Forest            8,088,291    8,559,798    9,180,010
 Resource Areas covered by
 current Forest Stewardship Plans
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    This program is not duplicative with others. It is the only Forest 
Service program focused on private forestland management and it often 
works in concert with the USDA Conservation Title programs.
12. Waste, Fraud and Abuse
    There are no documented cases of waste, fraud or abuse in this 
program.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Urban and Community Forestry.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    For over 30 years, U&CF has provided assistance to cities, suburbs 
and towns, where more than 80% of Americans live, to improve the health 
of our urban and community forests for the benefit of all. The Urban 
and Community Forestry Program (U&CF) has some of the broadest 
authorities and mandates in the Agency to improve trees and forests 
across public and private lands where people live. All Americans 
benefit from the multitude of services that the urban tree canopy 
provides: improved human health and wellbeing, green jobs, energy 
conservation, improved air and water quality, carbon sequestration, 
recreation, and wildlife habitat. Urban and Community Forestry also 
provides support and funding for cutting-edge technologies and 
information, such as the ``i-Tree'' suite of local decision support 
tools that include urban forest benefits assessment, pest detection and 
storm response protocols.
4. Purpose/Goals
    The Urban and Community Forestry Program promotes the benefits of 
tree cover in urban areas and communities; encourages maintenance of 
trees and community forests; and expands research and education efforts 
intended to improve the understanding of trees' economic, 
environmental, social and psychological, and energy conservation 
benefits. Technology advancements, such as i-Tree, educate communities 
about the local, tangible ecosystem services that trees provide and 
encourage the linkage of urban forest management activities with 
environmental quality and community livability.
5. Success in Meeting Programmatic Purpose/Goals
    The Urban and Community Forestry Program uses the Community 
Accomplishments Reporting System (CARS) as a database to track state 
performance accomplishments and financial assistance provided to 
communities.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people

                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Urban                    37,908   39,726   39,955   49,607   32,023   31,404   29,063   33,505   30,377   35,225
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
Urban                    33,363   31,504   34,106   35,727   38,208   34,562   39,576   27,529   29,513   22,188
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.


                         8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
Urban (Indirect)                                                         804      677      652      705      705
Urban (Direct)                                                           958      924      871      931      844
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    The Urban and Community Forestry Program is available to State 
Foresters or equivalent state agencies, interested members of the 
public, private nonprofit organizations and others. All states as well 
as the District of Columbia, Puerto Rico, the United States Virgin 
Islands, the Commonwealth of the Northern Mariana Islands, American 
Samoa and Guam, and other territories and possessions of the United 
States are eligible. To fully qualify for support from the U&CF 
Program, states (including Washington D.C. and the U.S. affiliated 
islands) are required to maintain the following elements: Urban and 
Community Forestry Program Coordinator, Volunteer/Partnership 
coordination, an Urban and Community Forest Council, and state program 
strategic plan (5 year).
    The Program is delivered through a continually expanding 
partnership network of state forestry agencies, local governments, 
nonprofit groups, the private sector, community organizations, 
volunteers, other Federal agencies, and other Forest Service programs. 
State forestry agencies are the primary partner in program delivery of 
financial, technical and educational assistance to communities. Their 
efforts include assisting communities to establish vital, sustainable 
urban forestry programs.
10. Utilization (Participation) Data
    The Urban and Community Forestry Program uses the Community 
Accomplishments Reporting System (CARS) as a database to track state 
performance accomplishments and financial assistance provided to 
communities. UCF Program performance is measured on an annual basis by 
tracking the percentage of U.S. population living in communities that 
are ``Managing'' or ``Developing'' programs to plant, protect, and 
maintain their urban and community forestry trees and forests (as 
compared to total U.S. population living in communities). Communities 
``managing'' programs have received state assistance to achieve all the 
following national performance measures: management plans, professional 
staff, ordinances/policies, and a local advisory group. Communities 
with ``developing'' programs have received state assistance to achieve 
at least one, but less than four of the national performance measures.

FY 2008 7,139 communities assisted, 177 million people

FY 2009 6,853 communities assisted, 173 million people

FY 2010 7,102 communities assisted, 177 million people
11. Duplication or Overlap with Other Programs
    This program is not duplicative with other programs.
12. Waste, Fraud and Abuse
    There are no documented cases of waste, fraud or abuse in this 
program.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    State Fire Assistance (SFA).
2. Subprograms/Department Initiatives
    The SFA program is split into two subprograms, SFA-SPCF and SFA-
SPS2.
    SFA-SPCF funds are used to address critical preparedness needs for 
firefighter safety, increased initial attack capability, and training. 
An emphasis should be placed on funding areas that have developed or 
are developing Community Wildfire Protection Plans (CWPPs), FEMA hazard 
mitigation plans, or other collaboratively developed hazard mitigation 
plans. This is funded in the State and Private Forestry appropriation.
    SFA-SPS2 funds designated for community protection on priority 
landscapes shall only be used on priority landscapes identified in 
state assessments. The funds shall only be used for hazardous fuel 
reduction projects adjacent to communities at risk with an emphasis on 
biomass utilization in locations with existing biomass utilization 
infrastructure. The funds will be allocated 60 percent to the Western 
States, 25 percent to the Southern States, and 15 percent to the 
Northeastern States. This is funded in the Wildland Fire Management 
appropriation.
3. Brief History
    SFA (formerly Rural Fire Prevention and Control) has been funded 
annually since 1911 to provide technical and financial assistance to 
states to improve wildfire protection capabilities.
4. Purpose/Goals
    The SFA program provides matching financial assistance through 
partnership agreements to State Foresters for all fire management 
activities including preparedness activities, planning, training, 
hazardous fuel treatments, and the purchase and maintenance of 
equipment. Funding enables state and local fire protection 
organizations to be effective first responders for initial attack on 
wildland fires and to respond effectively to all types of disasters.
5. Success in Meeting Programmatic Purpose/Goals
    The SFA program has been very successful in meeting its purposes 
and goals. Additional communities at risk have been able to develop 
Community Wildfire Management Plans (CWPPs) and to complete hazardous 
fuels reduction projects. Detailed information on the number of 
communities assisted, acres treated and CWPPs developed in provided in 
the response to Question 10.

                       6. Annual Budget Authority (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
State Fire Assistance    27,106   27,566   36,089   36,077   63,108   34,751   33,846   37,211   39,147   35,891
National Fire Plan--     57,056   66,252   76,176   57,587   50,007   50,802   50,535   58,452   77,611   69,239
 State Fire Assistance
----------------------------------------------------------------------------------------------------------------
* Excludes Transfers and Recoveries; includes carryover and supplementals.


                            7. Annual Outlays (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
State Fire Assistance    23,581   50,194   17,477   36,490   47,860   41,543   35,213   31,723   33,438   25,621
National Fire Plan--     19,492   34,632   41,477   45,455   44,416   37,061   43,813   47,403   37,924   39,885
 State Fire Assistance
----------------------------------------------------------------------------------------------------------------
Outlays are actual disbursements.
Funds that are obligated in one fiscal year may not be disbursed (for example, drawn down by a grantee) until a
  succeeding fiscal year or fiscal years. As such, the Outlays shown above are comprised of funds that were
  appropriated in that fiscal year and fiscal years prior. This is a standard practice for grants programs
  because grants generally cover a 5 year period and grantees may draw down that grant over that entire period.


                         8. Annual Delivery Cost (FY 2002-FY 2011): dollars in thousands
----------------------------------------------------------------------------------------------------------------
                                                                                                           BFY
                                                                       BFY      BFY      BFY      BFY      2011
                                                                       2007     2008     2009     2010     Est.
----------------------------------------------------------------------------------------------------------------
State Fire Assistance (Indirect)                                         736      648      761      805      805
State Fire Assistance (Direct)                                           877      839    1,016    1,064      845
National Fire Plan--State Fire Assistance (Indirect)                      62       45       30       22       22
National Fire Plan--State Fire Assistance (Direct)                        73       58       40       29       86
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    State Forestry Agencies.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
                                     FY 2008      FY 2009      FY 2010
------------------------------------------------------------------------
Communities directly assisted            5,960        5,565        1,524
 with management plans, risk
 assessments, etc.
Hazardous fuels reduction or             8,149        6,743        3,499
 mitigation projects conducted
Acres treated to reduce hazardous      292,804      179,544      156,804
 fuels (direct Federal grant
 only)
Acres treated to reduce hazardous      165,028      335,055      290,504
 fuels (leveraged through Federal
 funding)
Communities at Risk covered by           4,629        5,567        5,757
 CWPP or equivalent
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    State Fire Assistance works in concert with the Volunteer Fire 
Assistance Program, which is limited to rural communities of 10,000 
people or less. The State Fire Assistance program is duplicative of the 
Department of the Interior's Rural Fire Assistance Program. However, 
that program has been proposed for termination due to duplication. The 
Department of Homeland Security also administers programs that 
partially overlap with some SFA activities, including training and the 
purchase of equipment, though DHS programs are provided nationwide and 
not focused on rural communities.
12. Waste, Fraud and Abuse
    There have been no documented cases of waste, fraud or abuse in 
this program.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Healthy Forests Reserve Program (HFRP), prepared by USDA's Natural 
Resources Conservation Service (NRCS).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Title V of the Healthy Forests Restoration Act of 2003 (Public Law 
108-148) authorized the establishment of the Healthy Forests Reserve 
Program (HFRP) which was reauthorized by the 2008 Farm Bill.
    HFRP provides financial assistance for specific conservation 
actions completed by the landowner. As funds are made available, the 
NRCS Chief solicits project proposals State Conservationists have 
developed in cooperation with partnering organizations. States selected 
for funding provide public notice of the availability of funding within 
the selected area. HFRP offers four enrollment options:

   10 year restoration agreement for which the landowner may 
        receive 50 percent of the average cost of the approved 
        conservation practices;

   30 year contract (equivalent to the value of a 30 year 
        easement) for which the landowner may receive 75 percent of the 
        easement value of the enrolled land plus 75 percent of the 
        average cost of the approved conservation restoration 
        practices. This option is available to Indian Tribes only;

   30 year easement for which the landowner may receive 75 
        percent of the easement value of the enrolled land plus 75 
        percent of the average cost of the approved conservation 
        practices; or

   Permanent easement for which landowners may receive 100 
        percent of the easement value of the enrolled land plus 100 
        percent of the average cost of the approved conservation 
        practices.
4. Purpose/Goals
    HFRP assists landowners in restoring, enhancing, and protecting 
forest ecosystems to: (1) promote the recovery of threatened and 
endangered species; (2) improve biodiversity; and (3) enhance carbon 
sequestration. HFRP supports the NRCS Mission Goal of Healthy Plant and 
Animal Communities.
5. Success in Meeting Programmatic Purpose/Goals
    The following provides examples of HFRP results:
    Oregon: Partnership Protects Working Forest and Enhances Habitat. 
In FY 2010, NRCS partnered with the USFWS and the Oregon Department of 
Forestry (ODF) to provide private landowners the opportunity to create 
a northern spotted owl (NSO) habitat while maintaining a working 
forest. NSO habitat in the Pacific Northwest is an important criterion 
for defining healthy forests, making HFRP an excellent vehicle for this 
effort. NRCS developed HFRP long term management requirements and 
sideboards as a supplement to the ODF Forest Stewardship Plan on 11 
properties being offered for permanent easements.
    The supplements specify the long term management requirements and 
sideboards of each individual property; some properties opted for even-
age stand management and others for the uneven-age stand management 
regime. The FSP-HFRP supplement recognizes the requirements of a State 
of Oregon Stewardship Agreement and will require that the landowner 
intends to meet or exceed all Oregon Forest Practices Act standards 
current at the time of approval including provisions for Riparian 
Management Areas. The information contained in the supplement provides 
guidance and requirements to reach landowner and program goals and 
objectives. The supplements include area regulation timelines and 
overall forest management practices for thinning, patch cuts, planting, 
canopy cover requirements and specific management regimes for each 
property.
    NRCS worked closely with USFWS and ODF to ensure consistency among 
agencies' requirements while developing the supplements. The 
supplements use forest management to enhance future NSO habitat and 
maintain existing habitat. NRCS, USFWS, and ODF entered into a 
programmatic Safe Harbor Agreement to provide assurances to the 
landowner if they manage the property according to the Forest 
Stewardship Plan supplement. NRCS develops conservation plans and 
landowner conservation program contracts to implement the conservation 
practices necessary for restoration, enhancement, and management for 
NSO as planned in the Forest Stewardship Plan supplement. NRCS has 
completed the supplement plans for 11 properties in western Oregon 
totaling 1,852 acres of valuable habitat for the endangered NSO on 
these potential permanent easements. The HFRP work has been an 
excellent demonstration of one-on-one conservation planning resulting 
in detailed landowner decisions while allowing management flexibility 
for plans that will stretch into perpetuity. This has been an excellent 
model for all nonindustrial forest planning.

              6. Annual Budget Authority (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                     Funding (dollars in thousands)
------------------------------------------------------------------------
                       2002                                   --
                       2003                                   --
                       2004                                   --
                       2005                                   --
                       2006                                   --
                       2007                                   --
                       2008                                   --
                       2009                               $9,750
                       2010                               $9,750
                       2011                               $9,750
------------------------------------------------------------------------
Note: Healthy Forests Reserve Program began Mandatory funding in 2009.


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
                 FY                         Outlays ($ in millions)
------------------------------------------------------------------------
                       2002                                   --
                       2003                                   --
                       2004                                   --
                       2005                                   --
                       2006                                   --
                       2007                                   --
                       2008                                   --
                       2009                                   $1
                       2010                                   $3
                       2011                                   $6
------------------------------------------------------------------------
Note: Healthy Forests Reserve Program began Mandatory funding in 2009.

    HFRP FA funds support easement acquisition and restoration. Funds 
are expended when the easement is perfected or the practices necessary 
for restoration are installed and verified by NRCS personnel, both 
processes which may take over a year to complete. TA funds obligated in 
a given year are used for workload generated by the enrollment of new 
easements and workload generated by easements enrolled in prior years. 
The vast majority of TA funding tends to be expended in the year of 
obligation. FA funding represents the majority of program budget 
authority.

                                                        8. Annual Delivery Cost (FY 2007-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:
 



 
                                      FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 
Program
             Program Items
 
Healthy Forests Reserve Program
 
      Conservation Planning and               19              12             180             187             301
       Technical Consultation
      Conservation                            21              15             382             398             641
       Implementation
      Financial Assistance--                   9              58             459             478             770
       Program Administration
      Indirect Costs                          78              66             314             328             529
                                 -------------------------------------------------------------------------------
        Sub-total Technical                  127             151           1,335           1,391           2,241
         Assistance
                                 -------------------------------------------------------------------------------
      Financial Assistance--Cost           2,349           1,835           1,191           6,226           7,509
       Share & Monetary
       Incentive
                                 ===============================================================================
        Total Costs                        2,476           1,986           2,526           7,617           9,750
        FTEs                                   1               2               5               6              23
 
Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year
  2012 President's Budget submission. A copy of this section is an addendum to the Questionnaire.
Financial assistance funding is identified on the line titled, ``Financial Assistance--Cost Share and Monetary
  Incentives.'' Funds associated with technical assistance are on the remaining four lines.

9. Eligibility Criteria
    Only privately held land, including acreage owned by an Indian 
Tribe, is eligible for enrollment in HFRP. In addition, to be eligible, 
the landowner must commit to restoring, enhancing, or measurably 
increasing the likelihood of recovery of a threatened or endangered 
species or candidates for the Federal or state threatened or endangered 
species list, and must improve biological diversity or increase carbon 
sequestration. Land enrolled in HFRP must have a restoration plan that 
includes practices necessary to restore and enhance habitat for species 
listed as threatened or endangered or species that are candidates for 
the threatened or endangered species list. NRCS provides technical 
assistance to help owners comply with the terms of their HFRP 
restoration plans.
    Landowners may receive safe harbor assurance for land enrolled in 
the HFRP who agree, for a specified period, to protect, restore, or 
enhance their land for threatened or endangered species habitat. In 
exchange, landowners avoid future regulatory restrictions on the use of 
that land under the Endangered Species Act.
10. Utilization (Participation) Data

                        Contract Fiscal Year 2010
------------------------------------------------------------------------
                         10 Year
                       Restoration         30 Year          Permanent
                       Agreements         Easements         Easements
------------------------------------------------------------------------
      Number 1                   1                 2                 9
       Acres 1               2,747             1,416             1,472
Dollars Obligated         $599,988          $882,139        $4,994,249
------------------------------------------------------------------------
1 Numbers currently reported in NEST are undergoing an intense quality
  assurance review.

11. Duplication or Overlap with Other Programs
    To the extent that these programs each allow for 10 year 
restoration agreements to improve wildlife habitat, there is 
duplication and overlap with the WHIP program and the 10 year 
restoration agreement portion of HFRP.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Emergency Forest Restoration Program (EFRP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Food, Conservation, and Energy Act of 2008 added EFRP which is 
intended to provide emergency disaster assistance for nonindustrial 
private forestland similarly to assistance provided for farm land by 
the Emergency Conservation Program.
4. Purpose/Goals
    EFRP was authorized by the 2008 Farm Bill to provide financial 
assistance to owners of nonindustrial private forestland to carry out 
emergency measures to restore land that has been damaged by a natural 
disaster.
5. Success in Meeting Programmatic Purpose/Goals
    A 2010 supplemental appropriation provided $18 million to be 
available until expended. Over $15 million has been allocated which 
reserves funding for errors, omissions, and appeals and technical 
assistance. There are unfunded requests of approximately $23.6 million.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
 
 
 
    Funding was appropriated by the 2010 Supplemental Appropriations Act. Funding for this program was obligated starting in FY 2011.
 


             FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs
                                             (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
                         Actual   Actual   Actual   Actual   Actual   Actual   Actual   Actual   Actual    Est.
----------------------------------------------------------------------------------------------------------------
Emergency Forest              0        0        0        0        0        0        0        0   18,000        0
 Restoration Program
----------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
 
 
 
    The EFRP is a discretionary program account.
 


             FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs
                                             (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
                          BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY      BFY
                          2002     2003     2004     2005     2006     2007     2008     2009     2010     2011
                         Actual   Actual   Actual   Actual   Actual   Actual   Actual   Actual   Actual    Est.
----------------------------------------------------------------------------------------------------------------
Emergency Forest              0        0        0        0        0        0        0        0   18,000        0
 Restoration Program
----------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2007-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:
 
    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving.
 



 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
 
      Emergency Forest                                         0               0               0          18,000
       Restoration Program
 



                                                                                     9. Eligibility Criteria
 
 
 
    Land that is eligible under EFRP includes NIPF land or which all of the following are true:
 
       is physically located in a county or portion of a county that has been approved for EFRP
 
       has existing tree cover (or had tree cover immediately before the natural disaster and is suitable for growing trees)
 
       has damage to natural resources caused by a natural disaster that, if not treated, would impair or endanger the natural resources on
        the land and would materially affect future use of the land.
 

10. Utilization (Participation) Data
    Over $15 million in requests have been funded since the November 
2010 publication of the EFRP rule in the Federal Register.

                            EFRP Allocations
------------------------------------------------------------------------
     State       Other--Winds     Wildfire       Tornado        Total
------------------------------------------------------------------------
           AL                                   $3,310,000    $3,310,000
          AR                                    $2,000,000    $2,000,000
          GA                                      $844,000      $844,000
          ID         $726,000                                   $726,000
          MN                                      $620,000      $620,000
          MS                                    $6,631,900    $6,631,900
          NH         $551,900                                   $551,900
          OH          $80,000                      $84,000      $164,000
          VT         $140,000                      $34,000      $174,000
               ---------------------------------------------------------
  Total.......     $1,497,900             $0   $13,523,900   $15,021,800
------------------------------------------------------------------------

    There are 33 requests for which funds are not available totaling 
$23.6 million for EFRP as of July 12, 2011. Requests are from Alabama, 
Georgia, Mississippi, North Carolina, Tennessee, and Virginia due to 
April southeastern tornados, and Massachusetts and Ohio for June 
tornados.

               EFRP Unfunded Requests as of July 12, 2011
------------------------------------------------------------------------
                                                              Amount
    State                      Counties                      Requested
------------------------------------------------------------------------
         MS   Attala, Clarke, Monroe, Neshoba, Newton         $1,750,000
         NC   Bertie                                            $500,000
         MS   Choctaw, Noxubee, Webster, Winston              $3,255,741
         NC   Person                                             $15,000
          AL  Elmore, Fayette, Lawrence, Tallapoosa           $1,600,000
         GA   Jasper, Morgan                                    $176,100
         NC   Johnston                                           $10,000
          AL  Limestone                                         $100,000
         MS   Lafayette                                          $50,000
         GA   Bartow, Cherokee, Gordon, Harris, Pickens         $740,000
         GA   Floyd, Polk                                       $600,000
         GA   Catoosa, Dade, Walker                           $1,830,000
         NC   Harnett                                            $50,000
         NC   Cumberland                                        $350,000
         GA   Spalding                                          $500,000
         MS   Alcorn, Tishomingo                                 $55,000
         OH   Fulton                                              $8,250
         TN   Bledsoe                                           $100,000
         NC   Lee                                                $50,000
         AR   Hot Springs                                        $60,000
         NC   Jackson                                            $10,000
          AL  Colbert                                            $75,000
         TN   Marion, Sequatchie                                $600,000
         TN   Greene, Washington                                $125,000
         TN   Johnson                                           $150,000
          AL  Washington                                          $5,000
         TN   Bradley, Hamilton, Rhea                         $5,000,000
         MA   Hampden, Worcester                              $4,400,000
         VA   Smyth, Washington                                 $600,000
         AR   Johnson                                           $250,000
         MS   Lafayette                                         $463,812
         NC   Caldwell                                           $18,500
         TN   McMinn                                             $65,000
                                                         ---------------
  Total.....                                                 $23,562,403
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    There are no other current programs that duplicate or overlap the 
EFRP. The Conservation Reserve Program implemented the Emergency 
Forestry Conservation Reserve Program to restore land impacted by the 
2005 hurricanes. The Emergency Conservation Program restores farmland 
impacted by Natural disaster but does not address nonindustrial 
forestland
12. Waste, Fraud and Abuse
    No waste fraud or abuse has been documented at this time.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--Energy
1. Program Name
    Biobased Markets Program (BioPreferred' program--Section 
9002).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 9002 of the Farm Security and Rural Investment Act (2002 
Farm Bill) and Section 9002 of the Food, Conservation, and Energy Act 
(2008 Farm Bill) established a Federal procurement preference and 
voluntary label for biobased products. As defined in the 2008 Farm 
Bill, a biobased product is ``. . . determined by the Secretary to be a 
commercial or industrial product (other than food or feed) that is 
composed, in whole or in significant part, of biological products, 
including renewable domestic agricultural materials and forestry 
materials, or an intermediate ingredient or feedstock.'' Biobased 
products include such industrial products as cleaners, lubricants, 
biopolymers, building materials, insulation, roof coatings, fuel 
additives, and other sustainable industrial materials made from 
agricultural commodities.
4. Purpose/Goals
    The mission of the BioPreferred' program is to develop 
and expand markets for biobased products through (1) preferred Federal 
procurement of biobased products government-wide and (2) a voluntary 
labeling program to raise consumer awareness and stimulate biobased 
product acquisition in the commercial sector.
5. Success in Meeting Programmatic Purpose/Goals
    To date, USDA has promulgated BioPreferred' program 
guidelines and six rounds of regulations designating categories of 
biobased products for preferred Federal procurement. As a result, there 
are now 50 designated product categories. A seventh designation rule 
with 14 product categories should be promulgated later this month. When 
Round 7 is published, 64 categories and almost 9,000 products will be 
approved for preferred Federal procurement. USDA promulgated the 
voluntary labeling rule earlier this year; and over 430 products from 
150 companies have been certified to carry the USDA Certified Biobased 
label to date. In FY 2010, 88 percent of all applicable USDA contracts 
included biobased clauses or purchases, up from 80 percent in FY 2008 
and 84 percent in FY 2009. In addition, there are over 20,000 biobased 
products and the number and types of products continue to grow.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
CCC Transfer              1,000,000    1,000,000    1,000,000    1,000,000    1,000,000    1,000,000    1,000,000    2,000,000    2,000,000    2,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: $2,000,000 was transferred from CCC annually to Departmental Management beginning in FY 2009 when Departmental Management took over the program
  from the Office of the Chief Economist.


                                                           7. Annual Outlays (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays                 (1,000,000)  (1,000,000)  (1,000,000)  (1,000,000)  (1,000,000)  (1,000,000)  (1,000,000)  (2,000,000)  (2,000,000)  (1,626,015)
Balance                          --           --           --           --           --           --           --           --           --      373,985
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays as of July 12, 2011


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
OCE BA Transfer             420,000      890,000      900,000      992,000      883,000      850,000      650,000      810,000      657,000      657,000
Outlays                   (420,000)    (890,000)    (900,000)    (992,000)    (883,000)    (850,000)    (650,000)    (810,000)    (657,000)    (629,563)
                       ---------------------------------------------------------------------------------------------------------------------------------
  Balance                        --           --           --           --           --           --           --           --           --       27,437
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: A one-time transfer of $810,000 in BA was made from the Office of the Chief Economist in FY 2009. Outlays as of July 12, 2011.

9. Eligibility Criteria
    Private companies ranging from very small businesses to very large 
businesses, which make and/or distribute biobased products, are 
eligible to participate in the BioPreferred' voluntary 
labeling program. Federal agencies are required to participate in the 
Federal procurement preference program.
10. Utilization (Participation) Data
    Over 1,600 companies currently participate in the 
BioPreferred' program. Approximately 150 companies have 
products certified for the USDA Certified Biobased label.
11. Duplication or Overlap with Other Programs
    There are no other programs that share the mission of the 
BioPreferred' program.
12. Waste, Fraud and Abuse
    There have been no Office of Inspector General or Government 
Accountability Office audits of the program conducted on the 
BioPreferred' program in the last 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Biorefinery Assistance Program (Section 9003).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Biorefinery Assistance Program is authorized under Section 9003 
of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 
as amended by Section 9001 of the Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary of 
Agriculture is directed to make available:

   Grants to assist in paying the costs of the development and 
        construction of demonstration-scale biorefineries to 
        demonstrate the commercial viability of one or more processes 
        for converting renewable biomass to advanced biofuels; and

   Guarantees for loans made to fund the development, 
        construction, and retrofitting of commercial-scale 
        biorefineries using eligible technology.

    Because the 2008 Farm Bill and subsequent appropriations bills do 
not provide any funds for the grant portion of the program, only the 
guaranteed loan portion has been implemented to date.
    As described below, the Biorefinery Assistance Program was 
initially implemented through a series of notices published in the 
Federal Register while a rule was being developed.
    The Agency initiated that Biorefinery Assistance Program with the 
issuance of a Notice of Funds Availability (NOFA) on November 20, 2008. 
This NOFA announced the acceptance of applications for loan guarantees 
and the availability of $75 million of mandatory budget authority in 
Fiscal Year 2009 to support loan guarantees. In response to this 
November 20, 2008, NOFA, a loan guarantee was approved for Sapphire 
Energy for $54.5 million, in conjunction with a $50 million grant from 
the Department of Energy (DOE). In addition, a Loan Note Guarantee was 
issued on July 19, 2011, for a $12.8 million loan guarantee to Fremont 
Community Digester.
    On May 6, 2010, the Agency issued another NOFA requesting 
applications for Fiscal Year 2010 funds of up to $150 million in budget 
authority. In response to this NOFA, the Agency issued three 
conditional commitments to INEOS New Plant Bioenergy, LLC, for $75 
million, Enerkem Corporation for $80 million, and Coskata, Inc., for 
$87.85 million.
    On April 16, 2010, USDA published a proposed rule on which the 
public was afforded the opportunity to comment. Comments were received 
from 42 commenters, yielding 352 individual comments on the proposed 
rule, which were grouped into categories based on similarity. 
Commenters included biorefinery owner/operators, community development 
groups, industry and trade associations, investment banking 
institutions, Rural Development personnel, and individuals. The Agency 
reviewed the comments and based, in part, on those comments developed 
an Interim Rule, which was published on February 14, 2011.
    Following the publication of the Interim Rule, the Agency issued a 
NOFA on March 11, 2011, announcing the availability of approximately 
$129 million in mandatory budget authority for Fiscal Year 2011. This 
level of funding supports $463 million in available program level.
    A NOFA of Application Deadline was published on June 6, 2011, 
extending the period of time for acceptance of applications for Fiscal 
Year 2011 program funds until July 6, 2011. The Agency is reviewing 11 
applications requesting almost $1 billion in loan guarantee support.

    Farm to Fly Project

    In an effort to reach the Renewable Fuel Standard (RFS2) annual 
renewable fuel volume targets, culminating in an overall level of 36 
billion gallons in 2022, USDA is examining air transportation fuel as a 
key component in achieving the mandate. Twenty-one (21) million gallons 
of the RFS2 mandate will come from advance biofuels other than corn 
kernel starch ethanol, which has nearly reached the 15 billion gallons 
allowed under RFS2.
    The purpose of this effort is to support the Administration's plan 
to meet the RFS2 by identifying barriers associated with availability 
of aviation biofuel commercialization and provide recommendations on 
how to best overcome these barriers. The project seeks to develop a 
program to fund and install commercial-scale biofuel production that 
will provide aviation grade fuel.

    USDA/Department of Navy Hawaii Project

    The Department of the Navy (DON) plans to reduce its reliance on 
foreign oil to meet its energy needs and views the use of advanced 
biofuels as an important pathway to reach its energy security goals. 
The USDA and the DON have signed a Memorandum of Understanding (MOU) 
outlining the mutual effort to support the use of advanced biofuels and 
other forms of renewable energy. The State of Hawaii has been selected 
as a pilot for the development of a model for future mutual support for 
accomplishing the DON's energy goals.
4. Purpose/Goals
    The 2008 Farm Bill identifies the purpose of this program as: ``the 
development of advanced biofuels, so as to--

    (1) Increase the energy independence of the United States;

    (2) Promote resource conservation, public health, and the 
        environment;

    (3) Diversify markets for agricultural and forestry products and 
        agriculture waste material; and

    (4) Create jobs and enhance the economic development of the rural 
        economy.''

    The program also supports Presidential Energy Independence and 
Security Goals:

   To Develop and Secure America's Energy Supplies

   To Provide Consumers with Choices to Reduce Costs and 
        Save Energy, and

   To Innovate Our Way to a Clean Energy Future.
5. Success in Meeting Programmatic Purpose/Goals
    To date, a total of $415.1 million has been obligated in loan 
guarantee authorities to leverage an estimated $1.5 billion in total 
project costs toward the construction and retrofitting of commercial 
scale advanced biofuel facilities.
    When operational, these facilities are expected to produce 113 
million gallons of advanced biofuels, generate 24.6 million kilowatts 
hours of renewable electricity, and reduce green house gas emissions by 
an estimated 0.6 million metric tons of carbon dioxide.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    Funding Levels:
    The 2008 Farm Bill provided $75 million (budget authority) in FY 
2009 and $245 million in FY 2010 for commercial-scale biorefinery loan 
guarantees. The farm bill also authorized discretionary funding of up 
to $150 million per year starting in FY 2009 and continuing through FY 
2012 for both demonstration and commercial scale biorefineries.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    The Biorefinery Assistance Program was enacted under the 2008 Farm 
Bill. Thus, there were no annual outlays in Fiscal Years 2002 through 
2008. Annual outlays for Fiscal Years 2009 through 2011 are shown 
below.

------------------------------------------------------------------------
     FY 2009 Actual           FY 2010 Actual           FY 2011 Est.
------------------------------------------------------------------------
                    0              $27,000,000             $23,000,000
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    As noted above, the Biorefinery Assistance Program was enacted 
under the 2008 Farm Bill. Thus, there were no annual delivery costs in 
Fiscal Years 2002 through 2008. Annual delivery costs for Fiscal Years 
2009 through 2011 are shown below.

------------------------------------------------------------------------
                          FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                               (000)           (000)           (000)
------------------------------------------------------------------------
Direct administrative               $474            $261            $261
 costs
Indirect administrative             $233            $671            $671
 costs
------------------------------------------------------------------------

9. Eligibility Criteria
    Being a guaranteed loan program, the Biorefinery Assistance Program 
has eligibility requirements for both borrower and lenders; it also 
identifies when an otherwise eligible borrower would be considered 
ineligible. Of these requirements, only those for eligible borrowers 
are specified in the 2008 Farm Bill.

    A. Borrower Eligibility

          Eligible borrowers. To be eligible, a borrower must meet the 
        requirements the following requirements:

                  (1) The borrower must be one of the following:

                          (i) An individual;
                          (ii) An entity;
                          (iii) An Indian tribe;
                          (iv) A unit of State or local government;
                          (v) A corporation;
                          (vi) A farm cooperative;
                          (vii) A farmer cooperative organization;
                          (viii) An association of agricultural 
                        producers;
                          (ix) A National Laboratory;
                          (x) An institution of higher education;
                          (xi) A rural electric cooperative;
                          (xii) A public power entity; or
                          (xiii) A consortium of any of the above 
                        entities.

                  (2) Each borrower must have, or obtain before loan 
                closing, the legal authority necessary to construct, 
                operate, and maintain the proposed facility and 
                services and to obtain, give security for, and repay 
                the proposed loan.

          The Biorefinery Assistance Program also identifies certain 
        conditions under which a borrower will be considered ineligible 
        for a guarantee. These are if the borrower, any owner with more 
        than 20 percent ownership interest in the borrower, or any 
        owner with more than three percent ownership interest in the 
        borrower if there is no owner with more than 20 percent 
        ownership interest in the borrower:

                  (1) Has an outstanding judgment obtained by the U.S. 
                in a Federal Court (other than U.S. Tax Court),
                  (2) Is delinquent on the payment of Federal income 
                taxes,
                  (3) Is delinquent on a Federal debt, or
                  (4) Is debarred or suspended from receiving Federal 
                assistance.

    B. Lender Eligibility

                  (1) An eligible lender is any Federal or state 
                chartered bank, Farm Credit Bank, other Farm Credit 
                System institution with direct lending authority, and 
                Bank for Cooperatives. These entities must be subject 
                to credit examination and supervision by either an 
                agency of the United States or a state. Credit unions 
                subject to credit examination and supervision by either 
                the National Credit Union Administration or a state 
                agency, and insurance companies regulated by a state or 
                national insurance regulatory agency are also eligible 
                lenders. The National Rural Utilities Cooperative 
                Finance Corporation is also an eligible lender. Savings 
                and loan associations, mortgage companies, and other 
                lenders as identified in 7 CFR 4279.29(b) are not 
                eligible.
                  (2) The lender must demonstrate the minimum 
                acceptable levels of capital specified in paragraphs 
                (c)(2)(i) through (c)(2)(iii) of this section at the 
                time of application and at time of issuance of the loan 
                note guarantee. This information may be identified in 
                Call Reports and Thrift Financial Reports. If the 
                information is not identified in the Call Reports or 
                Thrift Financial Reports, the lender will be required 
                to calculate its levels and provide them to the Agency.

                          (i) Total Risk-Based Capital ratio of ten 
                        percent or higher;
                          (ii) Tier 1 Risk-Based Capital ratio of six 
                        percent or higher; and
                          (iii) Tier 1 Leverage Capital ratio of five 
                        percent or higher.

                          (NOTE: These three terms have the meaning 
                        given them under applicable Federal Deposit 
                        Insurance Corporation regulations.)

                  (3) The lender must not be debarred or suspended by 
                the Federal Government.
                  (4) If the lender is under a cease and desist order 
                from a Federal agency, the lender must inform the 
                Agency. The Agency will evaluate the lender's 
                eligibility on a case-by-case basis given the risk of 
                loss posed by the cease and desist order.
                  (5) The Agency, in its sole determination, will 
                approve applications for loan guarantees only from 
                lenders with adequate experience and expertise, from 
                similar projects, to make, secure, service, and collect 
                loans approved under this subpart.
10. Utilization (Participation) Data
    To date, seven projects have been approved for Biorefinery 
Assistance guaranteed loans. Of the seven approved projects, one 
project entered into servicing and one project was de-obligated:

   Range Fuels, Inc. (cellulosic ethanol)--$80 million 
        guaranteed loan approved 1/16/09. Loan closed on 2/10/10. On 
        January 3, 2011, Range Fuels failed to make the scheduled 
        payment for principal and interest on the Bonds. Range Fuels is 
        current on deferred principal/interest only payments and 
        working to find additional partners with capabilities of 
        financial support. The Agency is reviewing a plan from the 
        Lender outlining the potential transfer/sale.

   SoyMor Biodiesel, LLC (waste corn oil/distillers syrup 
        from ethanol facilities)--$25 million application approved on 
        6/10/09. On September 1, 2010, RD received letter from 
        (American Bank) stating the lender no longer qualifies as an 
        eligible lender, having fallen below the minimum acceptable 
        levels of capital. SoyMor was unable to obtain a new lender. 
        The $25 million was de-obligated on 3/2/10.

   Sapphire Energy (algae to advanced aviation fuel)--$54.5 
        million guaranteed loan approved 12/03/2009. Agency continues 
        to work with Lender to close the loan.

   Freemont Community Digester (anaerobic digester/will 
        process community waste, mostly food and beverage; has a 
        contractual arrangement to sell waste CO2)--$12.75 
        million loan guarantee approved 10/15/2010. Loan closed; Agency 
        issued a loan note guarantee on July 19, 2011.

   Enerkem Corporation (Cellulosic Ethanol)--$80 million 
        guaranteed loan approved 1/4/2011.

   INEOS New Planet BioEnergy, LLC (Cellulosic Ethanol)--
        $75 million guaranteed loan approved 1/4/2011. Agency continues 
        to work with Lender to close the loan.

   Coskata, Inc. (Cellulosic Ethanol)--$87.85 million 
        guaranteed loan approved 6/3/2011. Agency continues to work 
        with Lender to close the loan.
11. Duplication or Overlap with Other Programs
    The Biorefinery Assistance Program is not a duplicate of any other 
USDA program. There are no other programs that have the sole purpose of 
funding biorefineries involved in advanced biofuel production, and that 
involve the private sector on each transaction.
12. Waste, Fraud and Abuse
    The Biorefinery Assistance Program is a new program enacted with 
the 2008 Farm Bill. No Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of the program was conducted in the 
past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Repowering Assistance Program (Section 9004).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Repowering Assistance Program is authorized under Section 9004 
of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 
as amended by Section 9001 of the Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary of 
Agriculture is directed to ``make payments to any biorefinery that 
meets the requirements of this section for a period determined by the 
Secretary.'' The 2008 Farm Bill provided $35 million over the life of 
the 2008 Farm Bill.
    As described below, the Repowering Assistance Program was initially 
implemented through a series of notices published in the Federal 
Register while a rule was being developed.
    The Agency initiated that Repowering Assistance Program with the 
issuance of a Notice of Funds Availability (NOFA) on June 12, 2009. 
This NOFA announced the acceptance of applications and the availability 
of $20 million to make payments for the conversion of biorefinery 
heating and power systems to renewable biomass. On May 6, 2010, the 
Agency issued a NOFA releasing another $8 million in budget authority 
for FY 2010.
    On April 16, 2010, USDA published a proposed rule on which the 
public was afforded the opportunity to comment. Comments were received 
from eight commenters, yielding 30 individual comments, which were 
grouped into similar categories. Commenters included biorefinery owner/
operators, Rural Development personnel, trade associations, and 
individuals. The Agency reviewed the comments and based, in part, on 
those comments developed an Interim Rule, which was published on 
February 11, 2011.
    Following the publication of the Interim Rule, a NOFA was published 
on March 11, 2011, to announce the availability of approximately $25 
million in assistance payments.
4. Purpose/Goals
    The purpose of the program as encouraging eligible biorefineries 
that use fossil fuels to produce heat or power to operate the 
biorefinery to replace such fossil fuels with renewable biomass.
    The program also supports Presidential Energy Independence and 
Security Goals:

   To Develop and Secure America's Energy Supplies;

   To Provide Consumers with Choices to Reduce Costs and 
        Save Energy; and

   To Innovate Our Way to a Clean Energy Future.
5. Success in Meeting Programmatic Purpose/Goals
    One applicant, Lincolnway Energy, LLC, received an award of $1.9 
million in response to the FY 2009 funding notice. Two applications, 
which were recently received, are pending with the Agency and total 
$5.5 million. Thus, to date, approximately $7.5 million of the 
available $35 million for the program may be expended. The amount of 
energy that would be replaced at these three projects is: 983,436 
dekatherms; 1,696,678 dekatherms; and 2,050 kilowatt hours per day.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    Funding Levels:
    The 2008 Farm Bill provided $35 million to remain available until 
expended. The 2008 Farm Bill also authorizes additional discretionary 
funding of up to $15 million per year, from FY 2009 through 2012. To 
date, no discretionary funds have been appropriated.

------------------------------------------------------------------------
                                            FY 2009 through FY 2011
------------------------------------------------------------------------
Repowering Assistance Payments                        35,000,000
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    The Repowering Assistance Program was enacted under the 2008 Farm 
Bill. Thus, there were no annual outlays in Fiscal Years 2002 through 
2008. In addition, although the Agency has approved one application for 
payment, no outlays in Fiscal Years 2009 through 2011 have yet to be 
made.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    Because they are both Energy Assistance Payments, the Agency tracks 
the Repowering Assistance Program and the Advanced Biofuel Payment 
Program together. Thus, the Agency does not have information on Annual 
Delivery Cost per program. The following table presents the Annual 
Delivery Cost for both program combined. Please note that because these 
two programs were initiated with the 2008 Farm Bill, there are no 
delivery costs from Fiscal Years 2002 through 2008.

                       Energy Assistant Payments:
Repowering Assistance Payments & Bioenergy Program for Advanced Biofuels
                                Payments
------------------------------------------------------------------------
                               2009            2010            2011
------------------------------------------------------------------------
Program Level                         $0         $20,503         $85,000
Budget Authority                       0          20,503          85,000
Administrative Costs                 418             261             248
 (Direct)
Administrative Costs                 196             671             639
 (Indirect)
                         -----------------------------------------------
  Total Costs                        614          21,435          85,887
------------------------------------------------------------------------
Note: These numbers are consistent with the published ``Full Cost by
  Secretary's Strategic Priorities'' section of the Explanatory Notes
  for Fiscal Years 2009 through 2012 President's Budget submissions. In
  the table above, Fiscal Years 2007 through 2010 amounts are actual;
  Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President's
  Budget submission.

9. Eligibility Criteria
    As stated in the authorizing statute: ``To be eligible to receive a 
payment under this section, a biorefinery shall demonstrate to the 
Secretary that the renewable biomass system of the biorefinery is 
feasible based on an independent feasibility study that takes into 
account the economic, technical and environmental aspects of the 
system.'' The Interim Rule requires the applicant to submit a such 
feasibility study that has been conducted by an independent qualified 
consultant, who has no financial interest in the biorefinery.
    The authorizing statute also requires that the biorefinery at which 
the repowering project is to be implemented must have been in existence 
on or before June 18, 2008 (the date of the 2008 Farm Bill).
    The Interim Rule also includes additional criteria for an applicant 
to be eligible for this program, as described below.

      (1) Timely complete application submission. To be eligible for 
        this program, the applicant must submit a complete application 
        within the application period.
      (2) Multiple biorefineries. Corporations and entities with more 
        than one biorefinery can submit an application for only one of 
        their biorefineries. However, if a corporation or entity has 
        multiple biorefineries located at the same location, the entity 
        may submit an application that covers such biorefineries 
        provided the heat and power used in the multiple biorefineries 
        are centrally produced. For example, a corporation or entity 
        may make one application, that application may include multiple 
        projects, so long as they are served by one repowering project. 
        Example of an acceptable application: Three plants use process 
        heat from a single Repowering Project located on the plant 
        site. Example of an unacceptable application: Two plants owned 
        by the same entity are located 10 miles apart and each is 
        powered by a different system in which the applicant proposes 
        two separate Repowering Projects to replace the two existing 
        systems.
      (3) Cost-effectiveness. The application must be awarded at least 
        minimum points (at least five points) for cost-effectiveness.
      (4) Percentage of reduction of fossil fuel use. The application 
        must be awarded at least minimum points (at least five points) 
        for percentage of reduction of fossil fuel use.
      (5) Full project financing. The applicant must demonstrate that 
        it has sufficient funds or has obtained commitments for 
        sufficient funds to complete the repowering project taking into 
        account the amount of the payment request in the application.

    In addition, a project is not eligible for this program if it is 
using feedstocks for repowering that are feed grain commodities that 
received benefits under Title I of the Food, Conservation, and Energy 
Act of 2008. This ineligibility provision is included to prevent 
payment to a feedstock that is an underlying commodity that received a 
payment under Title I.
10. Utilization (Participation) Data
    Since the program's inception, the Agency received ten applications 
for repowering assistance. The current disposition of these 
applications is as follows:

   1 applicant has accepted the conditional commitment

   2 applicants are currently under review

   4 applicants were issued conditional commitments, but 
        elected to withdraw their applications

   1 applicant accepted, but did not proceed with project 
        implementation

   2 applicants were determined to be ineligible
11. Duplication or Overlap with Other Programs
    The Repowering Assistance Program is not a duplicate of any other 
USDA program. In addition, the Repowering Assistance Program does not 
duplicate any other Federal program, based on our understanding of 
those programs.
12. Waste, Fraud and Abuse
    The Repowering Assistance Program is a new program enacted with the 
2008 Farm Bill. No Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of the program was conducted in the 
past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Advanced Biofuel Payment Program (Section 9005).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Advanced Biofuel Payment Program is authorized under Section 
9005 of the Farm Security and Rural Investment Act of 2002 (2002 Farm 
Bill) as amended by Section 9001 of the Food, Conservation, and Energy 
Act of 2008 (2008 Farm Bill). Through the 2008 Farm Bill, the Secretary 
of Agriculture is directed to ``make payments to eligible producers to 
support and ensure an expanding production of advanced biofuels.''
    As described below, the Advanced Biofuel Payment Program was 
initially implemented through a series of notices published in the 
Federal Register while a rule was being developed.
    The 2008 Farm Bill provided $55 million in funding for 2009. A 
Notice of Contract Proposals (NOCP) for $30 million to make payments to 
biorefineries for the production of advanced biofuels (other than corn 
kernel starch) was published in the Federal Register on June 12, 2009. 
In December 2009, the Agency made payments to 141 producers totaling 
$14.7 million for FY 2009 awards. A NOCP was published on March 12, 
2010, making the remaining funding from the 2009 NOCP of $15.2 million 
available; the application window closed on June 15, 2010. On August 
18, 2010, the Agency issued another notice in the Federal Register that 
rescinded the March 12, 2010, notice to allow previously excluded 
advanced biofuel producers (i.e., those that did not meet the rural 
area and citizenship requirements) to apply for and receive Fiscal Year 
2009 program funds. Payments for Fiscal Year 2009 were made in August 
and December, 2010.
    On April 16, 2010, USDA published a proposed rule on which the 
public was afforded the opportunity to comment. Comments were received 
from 1,090 commenters yielding over 165 individual comments, which were 
grouped into similar categories. Commenters included Members of 
Congress, Rural Development personnel, trade associations, state 
agencies, universities, environmental organizations, and individuals. 
The Agency reviewed the comments and based, in part, on those comments 
developed an Interim Rule, which was published on February 11, 2011.
    A NOFA was published simultaneously with the interim rule to 
announce $80 million in payment assistance to eligible producers for FY 
2010 production. A second notice was published to extend the 
application deadline until May 6, 2011. A NOFA to announce $85 million 
in payment assistance for FY 2011 was published on March 11, 2011. The 
Agency is currently reviewing the payment requests.
4. Purpose/Goals
    The 2008 Farm Bill identifies the purpose of the program as 
providing payments to producers to support and expand production of 
advanced biofuels (refined from sources other than corn kernel starch.)
    The program also supports Presidential Energy Independence and 
Security Goals:

   To Develop and Secure America's Energy Supplies

   To Provide Consumers with Choices to Reduce Costs and 
        Save Energy, and

   To Innovate Our Way to a Clean Energy Future
5. Success in Meeting Programmatic Purpose/Goals
    To date, all funds made available under this program have been 
either distributed or are to be distributed once final payment 
calculations have been made.
6. Annual Budget Authority (FY 2002-FY 2011)
    Funding Levels:
    The 2008 Farm Bill provides mandatory funding of $55 million in FYs 
2009 and 2010, $85 million in FY 2011, and $105 million in FY 2012. 
Additionally, the 2008 Farm Bill authorizes discretionary funds of up 
to $25 million per year, from FY 2009 to 2012.

 
------------------------------------------------------------------------
                                       2009         2010         2011
------------------------------------------------------------------------
Advanced Biofuel Payment Program   $55 million  $55 million  $85 million
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
    The Advanced Biofuel Payment Program was enacted under the 2008 
Farm Bill. Thus, there were no annual outlays in Fiscal Years 2002 
through 2008.

 
------------------------------------------------------------------------
                                  2009          2010           2011
------------------------------------------------------------------------
Advanced Biofuel Payment                $0   $18,547,000    $136,000,000
 Program
------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority.
  Some programs disburse over numerous years. Undisbursed balances are
  carried forward for future year outlays.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    Because they are both Energy Assistance Payments, the Agency tracks 
the Repowering Assistance Program and the Advanced Biofuel Payment 
Program together. Thus, the Agency does not have information on Annual 
Delivery Cost per program. The following table presents the Annual 
Delivery Cost for both programs combined. Please note that because 
these two programs were initiated with the 2008 Farm Bill, there are no 
delivery costs from Fiscal Years 2002 through 2008.

                       Energy Assistant Payments:
Repowering Assistance Payments & Bioenergy Program for Advanced Biofuels
                                Payments
------------------------------------------------------------------------
                               2009            2010            2011
------------------------------------------------------------------------
Program Level                         $0         $20,503         $85,000
Budget Authority                       0          20,503          85,000
Administrative Costs                 418             261             248
 (Direct)
Administrative Costs                 196             671             639
 (Indirect)
                         -----------------------------------------------
  Total Costs                        614          21,435          85,887
------------------------------------------------------------------------
Note: These numbers are consistent with the published ``Full Cost by
  Secretary's Strategic Priorities'' section of the Explanatory Notes
  for Fiscal Years 2009 through 2012 President's Budget submissions. In
  the table above, Fiscal Years 2007 through 2010 amounts are actual;
  Fiscal Year 2011 is an estimate from the Fiscal Year 2012 President's
  Budget submission.

9. Eligibility Criteria
    As provided in the authorizing statute, to receive a payment under 
this program, the applicant must be an ``eligible producer,'' which 
means a producer of advanced biofuels. In addition, to receive a 
payment under this program, an eligible producer must meet any other 
requirements of Federal and state law (including regulations) 
applicable to the production of advanced biofuels. In addition, the 
Interim Rule states that public bodies and educational institutions are 
not eligible for this program.
    The Interim Rule also has eligibility requirements specific to the 
biofuel. For an advanced biofuel to be eligible, each of the following 
conditions must be met, as applicable. Notwithstanding the provisions 
for biofuel eligibility, flared gases are not eligible.

   The advanced biofuel must meet the definition of advanced 
        biofuel and be produced in a state;

   The advanced biofuel must be a solid, liquid, or gaseous 
        advanced biofuel;

   The advanced biofuel must be a final product; and

   The advanced biofuel must be sold as an advanced biofuel 
        through an arm's length transaction to a third party.

    The Interim Rule also identifies conditions under which an 
otherwise eligible producer will be determined to be ineligible. These 
conditions are, if the producer:

   Refuses to allow the Agency to verify any information 
        provided by the advanced biofuel producer under this subpart, 
        including information for determining applicant eligibility, 
        advanced biofuel eligibility, and application payments;

   Fails to meet any of the conditions set out in this subpart, 
        in the contract, or in other Program documents; or

   Fails to comply with all applicable Federal, state, or local 
        laws.

    The Agency will determine an applicant's eligibility for 
participation in this Program.
10. Utilization (Participation) Data
    In FY 2010, 141 payments were disbursed providing $18.5 million in 
advanced biofuel assistance. In FY 2011, 122 payments have been 
disbursed to provide $11.5 million in advanced biofuel assistance. A 
total of $30 million in advanced biofuels payment assistance has been 
disbursed to date.
11. Duplication or Overlap with Other Programs
    The Advanced Biofuel Payment Program is not a duplicate of any 
other USDA program. In addition, the Advanced Biofuel Payment Program 
does not duplicate any other Federal program, based on our 
understanding of those programs.
12. Waste, Fraud and Abuse
    The Advanced Biofuel Payment Program is a new program enacted with 
the 2008 Farm Bill. No Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of the program was conducted in the 
past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Biodiesel Fuel Education Program (Section 9006).
2. Subprograms/Department Initiatives
    Section 9004 of the Farm Security and Rural Investment Act of 2002 
authorized competitive grants to educate governmental and private 
vehicle operators, and the public about the benefits of biodiesel fuel 
use. Section 9001 of the 2008 Farm Bill reauthorized the program and 
renumbered its authorization statute as section 9006 of the 2002 Act.
    The Secretary of Agriculture delegated this authority to the 
Department's Chief Economist, who in turn formed the Biodiesel 
Education Oversight Committee to direct the program. The Committee 
includes members from USDA's Foreign Agricultural Service, Rural 
Development, Office of Energy Policy and New Uses, National Institute 
of Food and Agriculture (NIFA), and the Department of Energy. The 
Committee established the initial guidelines and goals of the Program, 
manages the grant selection process, and monitors the progress of the 
Program.
3. Brief History
    The 2002 Farm Bill authorized funding of $1 million per year from 
FY 2003 through FY 2007 for competitively awarded education grants. 
With guidance from NIFA, which has extensive experience in implementing 
grant programs and rule making, the oversight committee drafted a 
request for proposals, which was submitted to the Office of General 
Counsel for clearance in January 2003. A notice of request for 
applications and the proposed rule were issued in the Federal Register 
July, 2003. The final rule was issued September, 2003. The oversight 
committee selected a panel of experts from within and outside 
government to review the proposals, identify eligible applicants, and 
make recommendations to awarding officials. Two continuation grants 
were awarded; one to the National Biodiesel Board (NBB) and the other 
to the University of Idaho to implement the Program through FY 2007.
    Funding was reauthorized by Section 9006 of the 2008 Farm Bill for 
each fiscal year from 2008 through 2012. Once again with the help of 
NIFA, the oversight committee drafted a request for applications that 
was posted in August 2008. A panel of expert reviewers was selected by 
the committee to review the applications that were submitted. Two 
continuation grants were awarded; one to the National Biodiesel Board 
(NBB) and the other to the University of Idaho to implement the Program 
through FY 2012.
4. Purpose/Goals
    The purpose of the Program is to provide education to the public, 
government, and private entities on the benefits of biodiesel use. 
Education raises the awareness of the benefits of using biodiesel, 
resulting in a rise in consumer demand. Increasing the use of biodiesel 
will help the U.S. diversify its transportation fuel supply and develop 
new domestic sources of energy. The program includes the following 
goals:

   Identify and document the benefits of biodiesel, including 
        environmental and economic benefits

   Enhance current efforts to collect and disseminate 
        information

   Coordinate with other biodiesel programs to avoid redundancy 
        and leverage resources

   Create a nationwide networking system that delivers 
        consistent information

   Help insure fuel quality, fuel safety, and consumer 
        confidence
5. Success in Meeting Programmatic Purpose/Goals
    Biodiesel production was minimal in the United States when this 
program began in 2003, but thanks to Federal and state policy 
initiatives, including the Biodiesel Education Program, the industry 
has grown rapidly. Awareness of biodiesel among Americans has increased 
markedly since the Biodiesel Education Program began in 2003--consumer 
awareness of biodiesel has grown from 27 percent to 86 percent. Much 
progress has been made over the past several years in garnering auto, 
engine and equipment manufacturers support for the use of biodiesel. At 
the onset of the Biodiesel Education Program, most engine manufacturers 
were apprehensive about using biodiesel, but now nearly 60% of U.S. 
manufacturers support the use of biodiesel blends in at least some of 
their equipment.
    The Program helped the biodiesel industry grow by providing 
information to a broad spectrum of consumers and producers, including 
government fleet managers, truckers, petroleum marketers, automobile 
companies, and health groups. Education materials have been developed, 
including biodiesel technical reports to help users better understand 
the fuel properties of biodiesel, e.g., lower greenhouse gas emissions 
compared to petroleum diesel. In addition, public radio and television 
programs demonstrating the benefits of biodiesel have been broadcasted 
nationally. The current grantees (the National Biodiesel Board and the 
University of Idaho) have become information clearing houses for 
biodiesel and have national reputations in providing expert guidance on 
producing biodiesel, maintaining fuel quality, and insuring fuel 
safety. Program funds have been used for organizing national 
conferences, conducting technical workshops, and developing 
partnerships with stakeholders, such as, biodiesel producers, engine 
manufacturers, health organizations, environmental groups, and State 
Department of Transportation Offices.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biodiesel Education Program                0  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biodiesel Education Program                0  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000  $1,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
    The cost to NIFA for administering the program is $40,000 per year.
9. Eligibility Criteria
    Eligible entities are nonprofit organizations, institutions of 
higher learning that have demonstrated knowledge of biodiesel 
production, use, and distribution. Qualified entities have demonstrated 
the ability to conduct educational and technical support programs.
10. Utilization (Participation) Data
    Two continuation grants were awarded in 2003 to conduct the program 
through 2007; and two continuation grants were awarded in 2008 to 
conduct the program through 2012.
11. Duplication or Overlap with Other Programs
    The Biodiesel Education Program is not a duplicate of other USDA 
programs.
12. Waste, Fraud and Abuse
    There have been no Office of Inspector General or Government 
Accountability Office audits of the program conducted on the Biodiesel 
Fuel Education Program in the past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Rural Energy for America Program (Section 9007).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 9006, Title IX, of the Farm Security and Rural Investment 
Act of 2002 (2002 Farm Bill) established the Renewable Energy Systems 
(RES) and Energy Efficiency Improvements (EEI) Program. On October 5, 
2004, the Agency proposed a loan and grant program for renewable energy 
systems and energy efficiency improvements under Section 9006 of the 
2002 Farm Bill. Based on comments received, the Agency developed a 
final rule, which was promulgated on July 18, 2005. This rule 
established the RES and EEI program for making grants, loan guarantees, 
and direct loans to farmers and ranchers (agricultural producers) and 
to rural small businesses to purchase renewable energy systems and make 
energy efficiency improvements. Funds were never authorized for the 
direct loan program, such that the Agency never implemented the direct 
loan portion of the program.
    Subsequent to the 2002 Farm Bill, Congress passed the Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill), which amended 
Title IX of the 2002 Farm Bill. Under the 2008 Farm Bill and Section 
9007 of the amended 2002 Farm Bill, the Agency was authorized to 
continue providing to agricultural producers and rural small businesses 
loan guarantees and grants for the development and construction of RES 
and EEI projects. In addition to the current set of renewable energy 
projects eligible for funding (i.e., bioenergy, anaerobic digesters, 
electric geothermal, direct geothermal, solar, hydrogen, and wind), the 
2008 Farm Bill expanded the program to include two new renewable energy 
technologies: hydroelectric and ocean energy. Further, the 2008 Farm 
Bill authorized the Agency to provide grants specifically for energy 
audits, renewable energy development assistance, and RES feasibility 
studies.
    As provided in the 2008 Farm Bill, the expanded program is referred 
to as the Rural Energy for America Program (REAP), which continues the 
Agency's assistance to the adoption of both renewable energy systems 
and energy efficiency improvements through Federal Government loan 
guarantees and grants.
    REAP has been operating since 2005 under 7 CFR part 4280, subpart 
B, and, since the 2008 Farm Bill, through a series of Federal Register 
notices implementing the provisions in the 2008 Farm Bill for RES 
feasibility studies, energy audits, and renewable energy development 
assistance. For the RES feasibility studies, these notices were 
published on May 26, 2009 (74 FR 24769) and August 6, 2010 (75 FR 
47525).
    A Notice of Solicitation of Applications (NOSA) soliciting 
applications for about $2.2 million in grants for Energy Audits and 
Renewable Energy Development Assistance was published in the Federal 
Register on March 11, 2009. A NOSA for the remaining portion of the $60 
million available for FY 2009 was published in the Federal Register on 
May 26, 2009. This funding was used for guaranteed loans and grants for 
a wide range of energy efficiency improvements and renewable energy 
systems and feasibility studies.
    The Agency published a NOSA to solicit applications for the 
purchase of renewable energy systems and to make energy efficiency 
improvements in the Federal Register on April 26, 2010. A separate 
Notice of Funding Availability (NOFA) for $2.4 million in funding to 
conduct Energy Audits and Renewable Energy Development Assistance was 
published in the Federal Register on May 27, 2010.
    An Interim Rule was published on April 14, 2011. The Interim Rule 
established a consolidated REAP program by including each part of the 
program in a single subpart. The Agency also published on April 14, 
2011, a NOFA announcing the availability of $70 million in mandatory 
budget authority for FY2011 grants and guaranteed loans for renewable 
energy systems (including flexible fuel pumps) and energy efficiency 
improvements. A NOFA announced an additional $5 million in REAP 
discretionary budget authority is pending.

    Flex Fuel Infrastructure Project

    The Rural Business and Cooperative Service (RBS) launched the FY11 
REAP program making Flexible Fuel Pumps Eligible for funding through an 
annual notice of funding availability (NOFA). Dispensers, tanks, 
components and labor are eligible project costs. The application window 
closed for energy programs on June 15th and for feasibility support on 
June 30th.
    The purpose of this effort is to support the investment, and 
infrastructure necessary to implement a nationwide biofuels industry. 
The scope of the project is to establish the necessary infrastructure 
for ethanol fuel by supporting the development and deployment of flex 
fuel pumps to meet increasing demand.

    Anaerobic Digesters/Dairy Innovation Center Initiative

    The Anaerobic Digesters Project Team has, with the help of EPA's 
AgStar, developed a complete list of USDA programs that can be used to 
support the Dairy MOU Agreement.
    The Anaerobic Digester team is currently reviewing Renewable Energy 
System applications and Feasibility grant applications under REAP and 
awards should be delivered in the coming months. The purpose of this 
project is to embark on a campaign to promote the development of 
anaerobic digesters on dairy farms. The scope of the project is to 
focus on applying REAP funding for anaerobic digesters and digester 
feasibility studies to fulfill the 2009 Memorandum of Understanding 
(MOU) between Dairy Innovation Center and USDA.
4. Purpose/Goals
    The purpose of the renewable energy system and energy efficiency 
improvements portion of the program is to provide financial assistance, 
in the form of loan guarantees and grants, to agricultural producers 
and rural small businesses to purchase and install renewable energy 
systems and make energy-efficiency improvements. REAP funds can be used 
for renewable energy systems including wind, solar, biomass, geothermal 
sources, or that produce hydrogen from biomass or water using renewable 
energy, and ocean and hydroelectric source technologies. Energy-
efficiency projects typically involve installing or upgrading equipment 
to significantly reduce energy use.
    The purpose of the Energy Audits, and Renewable Energy Development 
Assistance portion of REAP is to provide financial assistance to such 
entities as units of state, tribal, and local governments and land-
grant colleges and universities, among others, in the form of grants, 
to assist agricultural producers and rural small businesses to become 
more energy efficient; and to use renewable energy technologies and 
resources.
    The purpose of the Feasibility Studies portion of REAP is to 
provide assistance, in the form of grants, to an agricultural producer 
or rural small business to conduct a feasibility study for a project 
for which assistance may be provided under REAP.The program also 
supports Presidential Energy Independence and Security Goals:

   To Develop and Secure America's Energy Supplies

   To Provide Consumers with Choices to Reduce Costs and 
        Save Energy, and

   To Innovate Our Way to a Clean Energy Future

                                5. Success in Meeting Programmatic Purpose/Goals
              Energy Division, Energy Investments, Fiscal Years 2003-10, with Performance Measures
                                                    7/14/2011
----------------------------------------------------------------------------------------------------------------
                               Combination                                     Energy                     GHG
                   Guaranteed   Guaranteed                Jobs                 Saved/        Btu      Reduced **
 Fiscal  Projects  Loans Only   Loans and   Grant Only   Saved-  Businesses  Generated  Equivalent *    (metric
  Year             (millions)     Grants    (millions)  Created   Assisted     (1,000    (1,000 Btu)    tons of
                                (millions)                                      kWh)                     CO2)
----------------------------------------------------------------------------------------------------------------
  2003       114                               $21.2        736        108     974,320   3,324,517     979,408
  2004       163                               $22.7        411        186     503,645   1,718,507     642,599
  2005       158       $10.1                   $22.2        289        103     589,771   2,012,381     611,455
  2006       412       $24.2                   $21.2      1,357        285     997,133   3,402,359    1,303,951
  2007       436       $47.5        $18.1      $10.8      2,122        331   1,956,390   6,675,479    1,968,525
  2008       764          $0        $30.2      $19.6      1,797        537   2,438,378   8,320,092    2,642,665
  2009     1,557        $8.5        $76.8      $26.6      5,894      2,922   1,407,832   4,803,523    1,589,570
  2010     2,400        $9.7        $98.4      $51.1      2,311      5,107   2,958,404   9,508,310    3,255,490
        --------------------------------------------------------------------------------------------------------
  Total    6,004       $99.9       $223.5     $196.0     14,917      9,579   11,825,87  39,765,167    12,993,664
   s...                                                                              2
----------------------------------------------------------------------------------------------------------------
* 1 kWh = 3,412.1416 Btu.
** No CO2 was sequestered with these activities.


                                              6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
 
 
 
    Funding Levels:
    The 2008 Farm Bill provides mandatory allocations of $55 million for FY 2009, $60 million for FY 2010, and $70 million for FYs 2011 and 2012. The
 2008 Farm Bill also authorizes additional discretionary funds of up to $25 million per year, from FY 2009 through 2012. The 2010 Appropriation Act
 provided $39 million in funding for grants and loan guarantees in addition to the $60 million of farm bill mandatory funding.
 


 
 
 
    Funds Available in FY 2011:                                              $70 million in mandatory authority
                                                                             $5 million in discretionary authority
 


                                                   7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
          2007 Actual                    2008 Actual                    2009 Actual                    2010 Actual                   2011 Target
--------------------------------------------------------------------------------------------------------------------------------------------------------
               $16,416,000                     $16,821,000                    $26,685,000                    $59,578,000                   $76,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Actual disbursements percentages based on obligation.


                                                                            8. Annual Delivery Cost (FY 2002-FY 2011)
                                                                                Business and Cooperative Programs
                                                                             Full Cost by Department Strategic Goal
 
 
 
    Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving.
 


 
                                    2007 Amount     2008 Amount     2009 Amount     2010 Amount     2011 Amount
          Program Items               ($000)          ($000)          ($000)          ($000)          ($000)
 
Rural Energy for America Loans
 and Grants
 
  Program Level 2                        $49,806        $333,644        $524,664         $66,238          $7,877
  Budget Authority                        35,748          60,000         128,130          39,325           4,990
  Administrative Costs (Direct)                                                            1,127           1,172
  Administrative Costs                                                                     2,897           3,014
   (Indirect)
    S&E                                    6,931           8,999           9,782
                                 -------------------------------------------------------------------------------
      Total Costs                         42,679          68,999         137,912          43,349           9,176
      FTEs                                    62              80              84              34              34
                                 -------------------------------------------------------------------------------
  Performance measure:
    mKWH produced (in Millions)
      Target:                                680           1,725           3,029           1,183             148
      Cost per Measure (unit               62.76           40.00           45.53           36.64           62.00
       cost)
Rural Energy for America Loans
 and Grants--Mandatory
  Program Level 2                                                                        $93,088        $109,200
  Budget Authority                                                                        56,959          70,000
  Administrative Costs (Direct)                                                            1,690           1,758
  Administrative Costs                                                                     4,346           4,521
   (Indirect)
                                 ===============================================================================
    Total Costs                                                                           62,995          76,279
 
2 Guaranteed Renewable Energy Loans and Grants funding contingent on farm bill for FY 2009.
Notes: These numbers are consistent with the published ``Full Cost by Secretary's Strategic Priorities'' section
  of the Explanatory Notes for Fiscal Years 2009 through 2012 President's Budget submissions. In the table
  above, Fiscal Years 2007 through 2010 amounts are actual; Fiscal Year 2011 is an estimate from the Fiscal Year
  2012 President's Budget submission.

9. Eligibility Criteria
    Under REAP, there are applicant eligibility and project eligibility 
criteria for each of the grant programs, while there are borrower 
eligibility, lender eligibility, and project eligibility for the 
guaranteed loan program.

    Renewable Energy System or Energy Efficiency Improvement Grant

    Applicant Eligibility. As required by the authorizing statute, to 
receive a Renewable Energy System or Energy Efficiency Improvement 
Grant under this subpart, an applicant must be an agricultural producer 
or rural small business.
    Project Eligibility. For a renewable energy system or energy 
efficiency improvement project to be eligible to receive a RES or EEI 
grant under this subpart, the proposed project must meet the following 
criteria, as applicable:

   The project must be for the purchase of a renewable energy 
        system or to make energy efficiency improvements. Energy 
        efficiency improvements to existing renewable energy systems 
        are eligible energy efficiency improvement projects.

   The project must be for a pre-commercial or commercially 
        available, and replicable technology.

   The project must have technical merit.

   The facility for which the project is being proposed must be 
        located in a rural area in a state if the type of applicant is 
        a rural small business, or in a rural or non-rural area in a 
        state if the type of applicant is an agricultural producer. If 
        the agricultural producer's facility is in a non-rural area, 
        then the application can only be for renewable energy systems 
        or energy efficiency improvements on integral components of or 
        that are directly related to the facility, such as vertically 
        integrated operations, and are part of and co-located with the 
        agriculture production operation.

   The applicant must have a place of business in a state.

   The applicant must be the owner of the project and control 
        the revenues and expenses of the project, including operation 
        and maintenance. A third-party under contract to the owner may 
        be used to control revenues and expenses and manage the 
        operation and/or maintenance of the project.

   Sites must be controlled by the agricultural producer or 
        rural small business for the financing term of any associated 
        Federal loans or loan guarantees.

   Satisfactory sources of revenue in an amount sufficient to 
        provide for the operation, management, maintenance, and debt 
        service of the project must be available for the life of the 
        project.

   For the purposes of this subpart, only hydropower projects 
        with a rated power of 30 megawatts or less are eligible. The 
        Agency refers to these hydropower sources as ``small 
        hydropower,'' which includes hydropower projects commonly 
        referred to as ``micro-hydropower'' and ``mini-hydropower.''

   The project has demonstrated technical feasibility.

    In addition to these requirements, no renewable energy system or 
energy efficiency improvement, or portion thereof, can be used for any 
residential purpose, including any residential portion of a farm, 
ranch, agricultural facility, or rural small business. However, an 
applicant may apply for funding for the installation of a second meter 
or provide certification in the application that any excess power 
generated by the renewable energy system will be sold to the grid and 
will not be used by the applicant for residential purposes.

    Renewable Energy System or Energy Efficiency Improvement Guaranteed 
Loan 

    Borrower Eligibility. To receive a Renewable Energy System or 
Energy Efficiency Improvement Guaranteed Loan, a borrower must meet the 
same requirements as for the RES/EEI grant program.
    Project Eligibility. The requirements are the same as for RES/EEI 
grants except that guaranteed loan funds may be used for necessary 
capital improvements to an existing renewable energy system. In 
addition, the grant provision concerning residential purposes does not 
apply.
    Lender Eligibility. An eligible lender is any Federal or state 
chartered bank, Farm Credit Bank, other Farm Credit System institution 
with direct lending authority, Bank for Cooperatives, or Savings and 
Loan Association. These entities must be subject to credit examination 
and supervision by either an agency of the United States or a state. 
Eligible lenders may also include credit unions provided, they are 
subject to credit examination and supervision by either the National 
Credit Union Administration or a state agency, and insurance companies 
provided they are regulated by a state or national insurance regulatory 
agency. Eligible lenders include the National Rural Utilities 
Cooperative Finance Corporation.

    Renewable Energy System Feasibility Study Grants

    Applicant Eligibility. As required by the authorizing statute, to 
be eligible for a renewable energy system feasibility study grant, the 
applicant must be an agricultural producer or a rural small business. 
In addition, the Interim Rule requires the applicant to be the 
prospective owner of the renewable energy system for which the 
feasibility study grant is sought.
    Project Eligibility. Only renewable energy system projects that 
meet the requirements specified in this section are eligible for 
feasibility study grants under this subpart. The project for which the 
feasibility study grant is sought shall:

   Be for the purchase, installation, expansion, or other 
        energy-related improvement of a renewable energy system located 
        in a state;

   Be for a facility located in a rural area if the applicant 
        is a rural small business, or in a rural or non-rural area if 
        the applicant is an agricultural producer. If the agricultural 
        producer's facility is in a non-rural area, then the 
        feasibility study can only be for a renewable energy system on 
        integral components of or directly related to the facility, 
        such as vertically integrated operations, and are part of and 
        co-located with the agriculture production operation;

   Be for technology that is pre-commercial or commercially 
        available, and that is replicable;

   Not have had a feasibility study already completed for it 
        with Federal and/or state assistance; and

   The applicant has a place of business in a state.

    Energy Audit and Renewable Energy Development Assistance Grants

    Applicant Eligibility. To be eligible for an energy audit grant or 
a renewable energy development assistance grant, the applicant must 
meet each of the following criteria:

   The applicant must be, as required by the authorizing 
        statute, one of the following:

     A unit of state, tribal, or local government;

     A land-grant college or university, or other 
            institution of higher education;

     A rural electric cooperative;

     A public power entity; or

     An instrumentality of a state, tribal, or local 
            government.

   The applicant must have sufficient capacity to perform the 
        energy audit or renewable energy development assistance 
        activities proposed in the application to ensure success. The 
        Agency will make this assessment based on the information 
        provided in the application.

   Each applicant must have, or obtain, the legal authority 
        necessary to carry out the purpose of the grant.

    Project Eligibility. To be eligible for an energy audit or a 
renewable energy development assistance grant, the grant funds for a 
project must be used by the grant recipient to assist agricultural 
producers or rural small businesses located in a state in one or both 
of the purposes specified in paragraphs (a) and (b), and must also 
comply with paragraphs (c) through (e), and, if applicable, paragraph 
(f).

    (a) Grant funds may be used to conduct and promote energy audits 
        that meet the requirements of the energy audit as defined in 
        this subpart.

    (b) Grant funds may be used to conduct and promote renewable energy 
        development assistance by providing to agricultural producers 
        and rural small businesses recommendations and information on 
        how to improve the energy efficiency of their operations and to 
        use renewable energy technologies and resources in their 
        operations.

    (c) Energy audit and renewable energy development assistance can be 
        provided only to a facility located in a rural area unless the 
        owner of such facility is an agricultural producer. If the 
        facility is owned by an agricultural producer, the facility for 
        which such services are being provided may be located in either 
        a rural or non-rural area. If the agricultural producer's 
        facility is in a non-rural area, then the energy audit or 
        renewable energy development assistance can only be for a 
        renewable energy system or energy efficiency improvement on 
        integral components of or directly related to the facility, 
        such as vertically integrated operations, and are part of and 
        co-located with the agriculture production operation.

    (d) The energy audit or renewable energy development assistance 
        must be provided to a recipient in a state.

    (e) The applicant must have a place of business in a state.

    (f) For the purposes of this subpart, only small hydropower 
        projects are eligible for energy audits and renewable energy 
        development assistance. Per consultation with the U.S. 
        Department of Energy, the Agency is defining small hydropower 
        as having a rated power of 30 megawatts or less, which includes 
        hydropower projects commonly referred to as ``micro-
        hydropower'' and ``mini-hydropower.''
10. Utilization (Participation) Data
    Since its inception, utilization of REAP has grown each year, 
except in 2008 when fewer funds were made available to the program. 
Program utilization and growth are illustrated in the following figures 
and table.

                REAP Utilization--Fiscal Years 2003-2010
------------------------------------------------------------------------
                                       Combinations
  Fiscal                 Guaranteed     Grants and      Grant     Grant
   Year      Projects    Loans Only     Guaranteed      Only     Totals
                                           Loans
------------------------------------------------------------------------
  2003           114                                  $21,707,  $21,707,
                                                          233       347
  2004           163                                  $22,692,  $22,692,
                                                          325       488
  2005           158    $10,100,000                   $22,237,  $32,337,
                                                          267       425
  2006           412    $24,158,882                   $21,209,  $45,368,
                                                          435       729
  2007           436    $47,500,000   $18,114,430     $10,782,  $76,397,
                                                          434       300
  2008           764            $0    $30,172,387     $19,633,  $49,806,
                                                          418       569
  2009         1,557    $8,451,638    $76,782,101     $26,625,  $111,860
                                                          502      ,797
  2010         2,400    $9,675,613    $98,395,192     $51,117,  $159,190
                                                          265      ,470
          --------------------------------------------------------------
 Total         6,004    $99,886,133   $223,464,110    $196,004  $519,361
                                                         ,879      ,125
------------------------------------------------------------------------
Note: All numbers in this table represent Program Level.

11. Duplication or Overlap with Other Programs
    There are four other programs within USDA under which certain types 
of energy projects may be financed. These are the Value-Added Producer 
Grant (VAPG) program, Community Facilities, Business and Industry 
Program, and the Environmental Quality Incentives Program (EQIP).
    The project eligibility category related to renewable energy under 
the VAPG program was set by the 2008 Farm Bill and states that a Value-
Added Agricultural Product is ``a source of farm- or ranch-based 
renewable energy, including E85 fuel.'' Thus, the VAPG can provide 
funds to a limited set of energy-related projects--where an 
agricultural commodity is used to generate renewable energy on a farm 
or ranch owned or leased by the independent producer applicant that 
produces the agricultural commodity. On-farm generation of energy from 
wind, solar, geothermal, or hydro sources are not eligible for VAPG. 
Because of the differences in eligible entities, there is little 
overlap with the Community Facility program.
    The Business and Industry (B&I) Program provides guaranteed loans 
to a wide range of projects, including energy projects. There have been 
a number of projects financed under the B&I Program that could have 
been financed under REAP.
    While NRCS also offers energy audits through the EQIP, the agencies 
have entered into an agreement to avoid duplication by cross-checking 
the locations and recipients of energy audits.
    Beyond these few programs, REAP does not overlap or duplicate of 
any other USDA program. The Department of Energy's Energy Efficiency 
and Renewable Energy program offers financial assistance for 
biorefineries, geothermal technologies, hydrogen technologies, solar, 
wind, and hydropower. The focus of these programs is mainly on research 
and development for these technologies (e.g., to improve the efficiency 
of power generated through wind). With regard to biorefineries, USDA/
RBS through its guaranteed loan program has co-funded several 
biorefinery projects that use DOE grant funds, however these programs 
work in a complementary manner to provide support for this nascent 
industry.
12. Waste, Fraud and Abuse
    No Office of Inspector (OIG) or Government Accountability Office 
(GAO) audit of the program was conducted in the past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Biomass Research and Development Initiative Program (BRDI).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 9001(a) of the Food, Conservation, and Energy Act of 2008 
(FCEA) (Pub. L. 110-246), re-authorized the Biomass Research and 
Development Initiative (BRDI) competitive grants program by amending 
section 9008 of the Farm Security, and Rural Investment Act of 2002 
(2002 Farm Bill), as amended, (Pub. L. 107-171) (7 U.S.C. 8108). 
Collaboration between DOE and USDA on BRDI is directed under section 
9008(e)(1) of the 2002 Farm Bill, as amended.
4. Purpose/Goals
    Both DOE and USDA have been given responsibility to support the 
development of a biomass-based industry in the United States. The 
objectives of this responsibility are specified in section 9008(e) of 
FSRIA, as amended, which requires the development of: (a) technologies 
and processes necessary for abundant commercial production of biofuels 
at prices competitive with fossil fuels; (b) high-value bio-based 
products to enhance the economic viability of biofuels and biopower, to 
serve as substitutes for petroleum-based feedstocks and products, and 
to enhance the value of coproducts produced using the technologies and 
processes; (c) a diversity of economically sustainable domestic sources 
of renewable biomass for conversion to biofuels, bioenergy, and bio-
based products; and (d) use of waste streams to reduce environmental 
footprint or impact, niche, opportunity to improve economics of 
conversion processes and enhance the economic viability of the 
production facility. The 2002 Farm Bill then stipulates several 
programmatic requirements that are intended to help ensure that goals 
(a)-(d) above are accomplished. These requirements include:

   Distribution of funding among three technical areas (minimum 
        15% of funds per area):

     Feedstock Development

     Biofuels and Biobased Product Development

     Biofuels Development Analysis

   Cost Share: 20% of total project costs for Research and 
        Development and 50% for Demonstration projects

   Multi-institution and multi-disciplinary consortia awards

   Geographic distribution of awards
5. Success in Meeting Programmatic Purpose/Goals
    USDA has executed the BRDI Program as prescribed by 2002 Farm Bill 
and subsequently the Program is meeting the research, development, and 
demonstration needs of the emerging market. The BRDI Program has always 
maintained the minimum 15% distribution of program funds across the 
three legislated technical areas as shown in Table 1.

      Table 1. Funding Distribution by Technical Area FY 2003-2010
------------------------------------------------------------------------
   Technical Area Distribution       Distribution       % Distribution
------------------------------------------------------------------------
Feedstock Development                    $35,625,430                 27%
Biofuels and Bioproduct                  $73,646,642                 56%
 Development
Biofuels Development Analysis            $23,241,965                 18%
------------------------------------------------------------------------

    The trend in funding distribution, as shown in Figure 1 is toward a 
convergence of emphasis on both feedstock development and appropriate 
conversion technologies. BRDI has the flexibility to allow the balance 
of investment to shift toward technical challenges of increasing 
importance in the market. The availability and densification of biomass 
is key to the growing bioeconomy.
Figure 1. Trends in Technical Area Investment

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The BRDI Program has also been effective in developing multi-
institutional and multi-disciplinary consortia awards, as required in 
the legislation, as a means of increasing technology transfer and 
commercialization. Over its 8 year history, BRDI awards have averaged 
over four collaborating organizations per award. In FY 2010, BRDI 
awards averaged over six collaborating organizations as the Program now 
allows larger and more comprehensive grant opportunities. The Program 
also supports a diversity of types of organizations in terms of project 
leaders and project collaborators. Table 2 demonstrates that while BRDI 
project leadership is dominated by Academia and Small Business, the 
Program fosters balanced collaboration among different types of 
organizations, indicating a high level of interdisciplinary work.

  Table 2. Project Lead and Collaborator Type Distribution (2002-2010)
------------------------------------------------------------------------
                                   Project Lead Type   Collaborator Type
                                           *                   
------------------------------------------------------------------------
NGO                                              12%                 17%
Academia                                         43%                 28%
Small Business                                   29%                 27%
Industry                                          9%                 11%
Federal                                           7%                 13%
State                                             1%                  4%
------------------------------------------------------------------------
* distribution based on funding amount.
 distribution based on the count of collaborator types.

    BRDI awardees have contributed 32% of total program funding as 
cost-share since the program's inception in 2002. BRDI program funds 
have been used to leverage over $61 M over the life of the Program.
    Program awards have also been geographically diverse. Each year the 
Program touches more than 18 states and in FY 2010 there were three 
states per award. The Program is beginning to be effective in creating 
extremely dynamic regional and national consortia to address our 
nation's energy demand. Figure 2 illustrates the geographic 
distribution of BRDI awards.
Figure 2. BRDI Geographic Distribution FY 2002-2010
Biomass Research and Development Initiative
Geographical Distribution of Grant Awards FY 2002-2010

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Map created by Gregory Sixt, USDA-NIFA.

    Since FY 2009, USDA has placed increased emphasis on technology 
commercialization by offering larger and more comprehensive grants that 
are intended to allow awardees to address challenges throughout the 
life-cycle of their technologies. In the early years of the BRDI 
Program, grants were more focused and intended to address specific 
technical challenges and new product development issues.
    The Program now requires awardees to develop new products and 
technologies in the context of the supply chain and target markets; 
therefore, projects must address all three technical areas. 
Additionally, the program has adopted an overarching theme of 
sustainability, requiring awardees to address the environmental, 
economic and social implications of the technology throughout its life 
cycle. The intent of larger, comprehensive projects is to move 
technologies to commercialization more quickly, and to ensure the 
technologies have a positive impact on markets, the environment, and 
rural development.

    Examples of successful projects:

    Adding Value to Commercial Polymers through the Incorporation of 
Biomass Derived Chemistries (Iowa Corn Promotion Board)

   The BRDI Program supported projects to develop isosorbide-
        based polymers in FY 2002 and again in FY 2006.

   The Iowa Corn Promotion Board has been developing this 
        technology not only in collaboration with USDA, but also with 
        DOE, General Electric, and others.

   Several major end-users and customers are working to 
        commercialize the technology and have had success in developing 
        isosorbide as a replacement for bisphenol A, in the epoxy 
        market, and as an additive for PET hot fill bottles.

    Biomass Gasification: A Comprehensive Demonstration of a Community-
Scale Biomass Energy System (University of Minnesota--Morris)

   The project team constructed the Morris Gasification Plant 
        to generate combined heat and power for the University and the 
        Morris community using locally sourced biomass.

   The project overcame significant technological barriers in 
        testing and selecting the appropriate feedstocks to power the 
        community. The project tested corn stover, corn cobs, prairie 
        grass, soybean residue, wheat straw, and wood each with 
        appropriate densification techniques. Corn cobs were determined 
        to be the most viable and sustainable feedstock for the Morris 
        community.

   Emissions permits and appropriate densification technology 
        will be secured by the Fall of 2011 to initiate ongoing 
        gasification plant operation.

   The University and its partners developed an extensive 
        outreach and education component to the project, which includes 
        a web-portal that reports real-time facility performance 
        monitoring so that students and the community can access 
        information and understand their energy usage on a daily basis. 
        The project also generated an undergraduate Renewable Energy 
        curriculum, three K-12 modules, 14 student research projects, 
        32 conference presentations, and over 200 community and 
        regional presentations.

    Evaluation of the feasibility of sustainably achieving President's 
Biofuel production goals (University of California--Santa Barbara)

   University of California-Santa Barbara is designing a 
        dynamic tool to evaluate the feasibility of meeting renewable 
        fuel production goals in a sustainable manner.

   Tool embodies an innovative combination of scenario 
        development, system dynamics modeling, Geographic Information 
        System (GIS), Life Cycle Costing (LCC) and Life Cycle 
        Assessment (LCA).

   Results have been used to inform the United Nations 
        Environmental Program (UNEP), International Panel for 
        Sustainable Resources, Biofuel Working Group report, ``Towards 
        Sustainable Production and Use of Resources: Assessing 
        Biofuels.''

     http://www.unep.fr/scp/rpanel/pdf/
            assessing_biofuels_full_report.pdf

     http://www.unep.org/Documents.Multilingual/
            Default.asp?
            DocumentID=599&ArticleID=6347&l=en&t=long

 
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                FY02      FY03      FY04      FY05      FY06      FY07      FY08      FY09      FY10      FY11
----------------------------------------------------------------------------------------------------------------
                6. Annual Budget Authority *                                          20,000    28,000    30,000
 
                           7. Annual Outlays
 
                     8. Annual Delivery Cost
----------------------------------------------------------------------------------------------------------------
* In addition to mandatory funding, $35M/yr is authorized for appropriation FY 2008-2012

    Note: This program has only been operated in its current form 
starting in FY 2009.
9. Eligibility Criteria
    Eligible entities per section 9008(e)(5) of the 2008 Farm Bill, as 
amended (7 U.S.C. 8108(e)(5)) include: (A) an institution of higher 
education; (B) a National Laboratory; (C) a Federal research agency; 
(D) a state research agency; (E) a private sector entity; (F) a 
nonprofit organization; or (G) a consortium of two or more entities 
described in subparagraphs (A) through (F).
10. Utilization (Participation) Data
    Since 2003 the BRDI Program has been one of the most competitive 
Federal grant programs. The annual success rate (of applications 
funded) has always been less than 5%, In fact, in FY 2009 USDA and DOE 
received over 800 pre-applications and made nine awards; a success rate 
of 1%. In FY 2010, the Program success rate remained low at 1.6%. While 
the low success rate indicates that there is tremendous demand for 
Biomass energy research, development, and demonstration, the 
competition through NIFA's rigorous peer-review process has ensured 
projects of extraordinary quality.
11. Duplication or Overlap with Other Programs
    There is no duplication or overlap with other programs. BRDI 
supports projects in the applied/developmental and demonstration phases 
of development.
12. Waste, Fraud and Abuse
    There have been no Office of Inspector General or Government 
Accountability Office audits of the program conducted on the Biomass 
Research and Development Initiative Program in the past 5 years.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Feedstock Flexibility Program (FFP--Section 9010).
2. Subprograms/Department Initiatives
    The Feedstock Flexibility (or ``sugar-to-ethanol'') Program (FFP) 
was first authorized under the 2008 Farm Bill. USDA has not implemented 
this program because the sugar market conditions required for its 
operation have not yet occurred. FFP requires the Commodity Credit 
Corporation (CCC) to purchase domestic sugar when U.S. supplies are 
large and forfeitures are threatened under the sugar price support loan 
program. Under the FFP, CCC will sell the surplus sugar to bioenergy 
producers for use as a fuel feedstock. However, the U.S. sugar market 
has been under-supplied since the program was authorized. Domestic 
sugar prices have been significantly above the program support level 
and there has been no threat of price support loan forfeitures, 
preempting program operation. The FFP language also includes a 
prohibition on the sale of CCC sugar for human consumption.
3. Brief History
    CCC operated a sugar for ethanol program in the early 2000s as one 
of many outlets for the million-ton CCC sugar inventory acquired when 
the sugar market crashed in 2000. FSA sold 10,000 tons of sugar to the 
highest-bidding ethanol producers in multiple auctions. All of the 
purchasers mixed sugar into corn prior to fermentation. Ethanol 
producers only bid an average of 4 cents per pound for the sugar, which 
the CCC had acquired at an average of 22 cents per pound. These ethanol 
producers bid less than the energy value of the sugar, citing the 
experimental nature of the process, the lack of a guaranteed future 
supply, the requirement of a material handling investment and other 
factors. In addition, the CCC sold over a hundred thousand tons for 
human consumption in 2003, when prices were at higher levels, at almost 
no loss to the CCC. (Sales for human consumption are no longer an 
option under the FFP language, as noted above.)
4. Purpose/Goals
    The purpose of the FFP is to prevent the accumulation of 
government-held stocks of sugar that impede price recovery. This was 
the situation after the sugar market crash of 2000, when ending stocks 
were over 20 percent of annual use, with CCC owning more than half of 
that total. Normal carryover is 14-15 percent of annual use.
5. Success in Meeting Programmatic Purpose/Goals
    Not applicable, as there has been no need to activate the program.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    Not applicable.
7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    Outlays are zero over the FY 2002-FY 2011 time horizon, for the 
reasons discussed above.
8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    Delivery costs are zero over the FY 2002-FY 2011 time horizon, for 
the reasons discussed above.
9. Eligibility Criteria
    The FFP regulation is under development.
10. Utilization (Participation) Data
    The FFP has not been implemented.
11. Duplication or Overlap with Other Programs
    No overlap anticipated.
12. Waste, Fraud and Abuse
    The FFP has not been implemented.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Biomass Crop Assistance Program (BCAP--Section 9011).
2. Subprograms/Department Initiatives
    BCAP has two components:

   Establishment and annual payments for production of new 
        biomass crops (Project Areas); and

   Matching payments for the collection, harvest, storage and 
        transportation (CHST) of existing biomass.
3. Brief History
    BCAP was authorized by the 2008 Farm Bill. On June 11, 2009, a 
Notice of Funds Availability (NOFA) was published to make available 
matching payments for the collection, harvest, storage, and 
transportation of eligible material for conversion to bioenergy at 
biomass conversion facilities. The 2008 Farm Bill provides ``such sums 
as necessary'' for BCAP. However, subsequent appropriation acts have 
capped the amount of funding available. The Department of Defense and 
Full-Year Continuing Appropriations Act of 2011, enacted on April 14, 
2011, limits funding for BCAP to $112 million in FY 2011.
    In February 2010, a proposed rule was published in the Federal 
Register which also terminated the NOFA. Over 24,000 comments were 
received.
    On October 27, 2010, a final rule was published and by January 
2011, three qualified biomass conversion facilities were approved and 
matching payments for herbaceous materials were authorized.
    For the project area component of BCAP, proposals could be 
submitted beginning October 27, 2011. With the enactment of funding 
limitations on April 14, 2011, FSA announced on April 20, 2011 that 
project proposals could be submitted no later than May 27, 2011, to be 
considered for FY 2011 funding. Over 40 project area proposals were 
received by the deadline. The proposals outlined projects that would 
support the establishment and production of 1.5 million acres of 
dedicated energy crops requesting more than $1 billion. The range of 
feedstock proposed included camelina, algae, short rotation woody 
crops, grasses, energy cane, kenaf, and sweet sorghum.
    The first approved project area is located in a thirty-nine county 
area in central and western Missouri and eastern Kansas and supports 
the establishment of mixtures of perennial native grasses and forbs, 
such as Switchgrass, Big Bluestem, Illinois Bundleflower and Purple 
Prairie Clover. Additionally, the project allows enrollment of existing 
suitable stands of native grasses, legumes and forbs; existing native 
grass stands can be located on expired Conservation Reserve Program 
(CRP) fields. The target enrollment for 2011 is 20,000 acres of 
cropland and other agricultural land with targeted crops within the 
approved area surrounding the biomass conversion facility. When fully 
enrolled, this project area may have up to 50,000 acres, producing 
roughly 3 tons of biomass per acre per year, or a total of 150,000 tons 
per year from land enrolled in BCAP contracts. FSA has allocated about 
$15 million for implementation of this project area in FY 2011.
    Other project areas will support production of the perennial 
Miscanthus giganteus (Giant Miscanthus) for energy biomass. Only the 
planting of rhizomes of the ``Illinois Clone,'' a sterile cultivar of 
Giant Miscanthus, is authorized for these project areas.
    One of the projects is located within Clay, Craighead, Greene, 
Jackson, Lawrence, Mississippi, Poinsett, and Randolph counties in the 
State of Arkansas. FSA has allocated about $5.2 million for 
implementation of this project area in FY 2011. The target for 
enrollment in FY 2011 is 5,588 acres. This biomass may be used to 
produce pellets that may be co-fired.
    Another project area is located within Audrain, Boone, Callaway, 
Cole, Cooper, Howard, Moniteau, Monroe, and Randolph counties in the 
State of Missouri. FSA has allocated about $3.5 million for 
implementation of this project area in FY 2011. The target for 
enrollment in FY 2011 is 3,000 acres.
    Another project area is located within Barry, Christian, Dade, 
Jasper, Lawrence, Newton, and Stone counties in the State of Missouri. 
FSA has allocated about $5.9 million for implementation of this project 
area in FY 2011. The target for enrollment in FY 2011 is 5,250 acres.
    The remaining project area is located within Ashtabula, Geauga, 
Lake, and Trumbull counties in the State of Ohio, and Crawford, Erie, 
and Mercer counties in the State of Pennsylvania. FSA has allocated 
about $5.7 million for implementation of this project area in FY 2011. 
The target for enrollment in FY 2011 is 5,344 acres.
4. Purpose/Goals
    BCAP provides financial assistance to owners and operators of 
agricultural and nonindustrial private forestland to establish, 
produce, and deliver biomass feedstocks under two types of assistance:

   Establishment and annual payments to produce eligible 
        biomass crops on contract acres within approved BCAP project 
        areas, and

   Matching payments for the delivery of eligible material to 
        qualified biomass conversion facilities by eligible material 
        owners. Qualified biomass conversion facilities produce heat, 
        power, biobased products, or advanced biofuels from biomass 
        feedstocks.
5. Success in Meeting Programmatic Purpose/Goals
    BCAP is the only energy program that is dedicated to the expansion 
of the diversity of cellulosic feedstock for commercial conversion. The 
program has demonstrated, through project area proposal submission and 
designations and matching payment distribution, that the demand for 
such diversity and feedstock support exists.
    BCAP made over $250 million in matching payments to eligible 
material owners in FY 2009 and FY 2010 for the supply of biomass to 
over 400 biomass conversion facilities for the generation of heat, 
power, biobased products and advanced biofuels under the NOFA. The 
biomass supply was predominantly woody materials.
    During FY 2011, about $2.65 million has been allocated to help 
support producers who supply herbaceous materials (corn crop residues) 
to three qualified biomass conversion facilities. Additionally, the 
allocation of $35 million for the designated five project areas, will 
support the establishment and production of up to 250,000 acres 
dedicated energy crops for conversion to an advanced biofuel. The 
remaining funding of about $75 million is expected to be allocated by 
September 30, 2011.
    BCAP has generated support and incentives for numerous biomass 
conversion facilities to enhance their bioenergy output, much of which 
has been accomplished through facility retrofits and entrepreneurial 
startups. Project area designations have strengthened numerous 
cooperatives and bioenergy startups and expanded the diversity of 
available long term feedstocks.
    The expansion of project area designations in FY 2011 may assist 
many states in meeting Renewable Electricity mandates. BCAP incentives 
for conversion to liquid biofuels have encouraged the submission of 
proposals for drop-in fuel production and various advanced biofuels.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                 FY 2002 Through FY 2011 Budget Authority for Farm Service Agency Conservation Programs
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                      Actual     Actual     Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biomass Crop Assistance Program             0          0           0           0           0           0           0      25,015     244,075     112,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                            7. Annual Outlays (FY 2002-2011)
 
 
 
    Budget authority for CCC programs is based on obligations. Funds that are obligated in one fiscal year may not be disbursed until a succeeding
 fiscal year or fiscal years.
 


                                      FY 2002 Through FY 2011 Outlays for Farm Service Agency Conservation Programs
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                      Actual     Actual     Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biomass Crop Assistance Program             0          0           0           0           0           0           0       2,147     248,202     112,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:
 
    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
 
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202       1 199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 
1 BCAP funding for Fiscal Year 2011 was subsequently capped at $112 million by the Department of Defense and
  Full-Year Continuing Appropriations Act of 2011, Public Law 112-10.


 
 
 
9. Eligibility Criteria
 
    Project Areas and Producers
 
    Project areas are established based on proposals submitted to FSA by either a group of producers or an entity that converts biomass to heat, power,
 a biobased product or an advanced biofuel.
    Producers within a designated BCAP project area may apply to enroll land into the program and receive assistance to grow eligible biomass crops.
 Biomass must be established, produced and harvested or collected according to an approved conservation, forest stewardship, or equivalent plan to
 ensure that soil, water and other resource concerns are adequately addressed on the enrolled land.
 
    Matching Payments
 
    Matching payments provide payments to eligible material owners at a rate of $1 for each $1 per dry ton paid by a qualified biomass conversion
 facility (BCF), in an amount up to $45 per dry ton. An eligible material owner may be a producer of an eligible crop or a person or entity with the
 legal right to collect or harvest eligible material. Matching payments may be made to eligible material owners for a maximum of 2 years.
    To qualify for a matching payment, the biomass must be an eligible material that also is collected or harvested directly from the land before
 transport to the facility, in accordance to an approved conservation or forest stewardship plan, and if woody biomass, must not have a previously
 existing market, and must also be a removal to reduce forest fire threats, disease or insect infestation, or to restore ecosystem health.
 
10. Utilization (Participation) Data
 
    To date, three BCF's have been qualified from the 141 BCF applications submitted for qualification. These three qualified BCF's convert herbaceous
 materials.
    Approximately 105 eligible material owner applications for matching payments have been approved and more than $1.5 million in matching payments have
 been disbursed. FSA has allocated $2.65 million to the states where these eligible material suppliers are located.
    Of the 138 pending BCF applications to become qualified for matching payment purposes, a sample of 47 BCF applications provides evidence of an
 estimated quarterly supply rate of more than 1 million dry tons of woody biomass. The matching payment estimates for the approximate 1 million dry tons
 is over $45 million.
    As of May 27, 2011, project area sponsors have submitted 46 project area proposals:
 
     Five of the project proposals have been reviewed and approved (see table below); and
 
     Forty-one project proposals were forwarded from state FSA offices on June 24, 2011, and are under review at the National FSA office.
 

    Five project areas have been designated as follows:

----------------------------------------------------------------------------------------------------------------
                                                              Targeted FY    Targeted    Currently     Acreage
 Project Area      Location      Number of    Eligible Crop   2011 Acreage    Acreage     Enrolled      Offers
     Name                         Counties                    Enrollments      Total      Acreage      Pending
----------------------------------------------------------------------------------------------------------------
Project Area 1       Kansas,           39     Warm season        20,000        50,000     1 7,500      7,000 to
                    Missouri                      grasses                                                 8,000
Project Area 2      Arkansas            8           Giant         5,588        50,000         (2)           * 0
                                               Miscanthus
Project Area 3      Missouri            9           Giant         3,000        50,000         (2)         * 619
                  (Columbia)                   Miscanthus
Project Area 4      Missouri            7           Giant         5,250        50,000         (2)       * 1,707
                    (Aurora)                   Miscanthus
Project Area 5         Ohio,            7           Giant         5,344        50,000         (2)         * 219
                Pennsylvania                   Miscanthus
               -------------------------------------------------------------------------------------------------
  Totals......                       3 66                        39,182       250,000       7,500        10,545
----------------------------------------------------------------------------------------------------------------
1 Sign up for Project Area 1 began on May 9, 2011 and acreage offers pending are undergoing the development of
  required conservation plans.
2 Sign up for Project Areas 2 through 5 began on June 20, 2011 and acreage offers pending are undergoing the
  development of required conservation plans.
3 Four counties in Project Areas 1 and 3 overlap: Boone, Callaway, Cooper, and Howard.

    The total number of acreage targeted for producer signup in the 
five Project Areas:

   39,182 acres for FY 2011.

   250,000 acres at full-production-sign up.

    The estimated yield of biomass, at full project performance:

   Project Area 1 is 3 tons per acre, 150,000 tons annually; 
        and

   Project Areas 2 through 5 is 10 to 12 tons per acre, 2.4 
        million tons annually.
11. Duplication or Overlap with Other Programs
    BCAP complements other state and Federal programs that support 
biomass conversion facility infrastructure by supporting the production 
of crops and materials that these facilities convert. In addition, the 
program's achievements help support the Renewable Fuel Standards 
Program by providing states with output to meet state renewable 
mandates and encourage renewable registrations.
12. Waste, Fraud and Abuse
    Occasional cases of producer misconduct may have been identified 
and addressed through investigations; no current systemic waste, fraud, 
or abuse has been identified related to this program.
    The Office of Inspector General (OIG) in December 2010 provided the 
following recommendations in a Fast Report pursuant to the review of 
BCAP matching payments administered in FY 2009 and FY 2010 in the 
States of California, Maine, Alabama, and Missouri:

   Develop a program handbook setting forth policies and 
        procedures governing program administration;

   Develop forms specifically tailored to facilitate day-to-day 
        administration and capture relevant program data; and

   Develop a data system with applied edit checks and a 
        designed structure to facilitate data validation, management 
        reporting, and data analysis.

    BCAP responded to these recommendations and provided the following 
adjustments to the program for FY 2011:

   Release of the 1-BCAP Handbook with a second amendment in 
        May 2011;

   Development of the forms BCAP-10 and BCAP-11 which track the 
        tracts and fields where harvest and collection occurs and 
        conservation, forest stewardship or equivalent plans are 
        required via technical service agreements with NRCS and a 
        developing agreement with USFS and State Foresters; and

   A web based system was designed to automate the new forms, 
        moving away from the previously used System 36 or Conservation, 
        Reporting, and Evaluation System (CRES).
13. Effect of Administrative PAYGO
    None.


                       AGRICULTURAL PROGRAM AUDIT

              (EXAMINATION OF TITLE IV NUTRITION PROGRAMS)

                              ----------                              


                        THURSDAY, JULY 21, 2011

Subcommittee on Nutrition and Horticulture,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10 a.m., in Room 
1300, Longworth House Office Building, Hon. Jean Schmidt 
[Chairwoman of the Subcommittee] presiding.
    Members present: Representatives Schmidt, King, 
Southerland, Lucas (ex officio), Baca, Pingree, Sablan, 
Peterson (ex officio), and McGovern.
    Staff present: Tamara Hinton, Brandon Lipps, Pam Miller, 
Mary Nowak, Matt Perin, Heather Vaughan, Liz Friedlander, Keith 
Jones, Lisa Shelton, John Konya, and Jamie Mitchell.

  OPENING STATEMENT OF HON. JEAN SCHMIDT, A REPRESENTATIVE IN 
                       CONGRESS FROM OHIO

    The Chairwoman. Good morning. Thank you all for being here 
today.
    I especially want to thank Ms. Audrey Rowe, the 
Administrator of the USDA's Food and Nutrition Service, for 
joining us and enlightening me, and I look forward to a great 
working relationship.
    I also want to thank my good friend Ranking Member Baca in 
joining me in holding this hearing today. It is well known that 
a certain degree of comity and bipartisanship exists here on 
the Agriculture Committee, and I look forward to working with 
my friend as we go through this farm bill process.
    This hearing on nutrition programs in Title IV of the farm 
bill is part of a series of audits of farm programs. We are 
holding these audits to gather information and data on each of 
the programs we operate, and to give all the Committee Members 
a chance to learn more about how each program fits into the 
broader picture of farm policy. We will be looking at how 
programs use their funds, how effectively they serve their 
stakeholders, and whether there is duplication or waste that 
can be eliminated.
    These audits are very critical for every farm bill program, 
but perhaps nowhere more so than the nutrition title. The 
USDA's Food and Nutrition Service is the agency charged with 
administering Title IV nutrition programs. Major programs they 
administer are the Supplemental Nutrition Assistance Program, 
commonly referred to as SNAP; the Emergency Food Assistance 
Program, commonly referred to as TEFAP; the Commodity 
Supplemental Food Program, CSFP; the Fresh Fruit and Vegetable 
Program, FFVP; the Senior Farmers Market Nutrition Program, 
SFMNP; and the Food Distribution Program on Indian 
Reservations, FDPIR. FDPIR, if you want to call it that.
    Two weeks ago this Subcommittee heard from AMS and APHIS 
about how they operate Title X Specialty Crop Programs. I 
enjoyed the review of how the programs are being administered 
and operated today. Likewise, I look forward to hearing from 
FNS with a general snapshot of the spending of each program 
that they administer. We will study the financial aspects of 
these programs and consider whether or not the programs' goals 
are being met and whether the programs are financially prudent.
    More than 75 percent of the Agriculture Committee's budget 
goes to nutrition programs, which serve a broad range of people 
throughout our country. The largest of our nutrition programs 
is the SNAP Program. SNAP provides assistance to low-income 
households to supplement food budgets. Although it is 
administered by the USDA's Food and Nutrition Service, each 
state has a great deal of flexibility in how the program is 
implemented. SNAP has become an integral part of our country's 
overall social support system for families in need. It is, in 
fact, the fourth largest needs-tested program in our country.
    The size and scope of SNAP has dramatically increased over 
time. Participation in SNAP has risen by nearly 70 percent, 
from 26 million in 2007 to more than 44 million as of April 
2011, and I think there is a direct correlation with our 
economic recession and this dramatic growth, although there 
might be some other reasons. This increase is due to the 
economy, the stimulus bill, and less strict eligibility 
requirements.
    The SNAP Program is designed to adjust to the needs of our 
population, increasing when more people need food assistance 
and decreasing when the economy improves. However, this 
dramatic growth has strained our resources. The average monthly 
benefit was $226 in 2008. Today it is $289. That is a 27 
percent increase. In total, we spent $33 billion on SNAP in 
2007, but we are on pace to more than double that to more than 
$69 billion in Fiscal Year 2011. Sixty-nine billion dollars is 
a substantial sum, and given our current budget situation, we 
have a responsibility to examine whether we can reduce the 
amount without compromising the integrity of the SNAP Program.
    I look forward to hearing Administrator Rowe's testimony on 
the quality control system that FNS has in place to ensure 
accuracy in payments and target fraud. The program is there to 
help those truly in need, and it is unfortunate when abuses 
like this occur. I plan to look into the program more to see 
how we can stop abuse and fraud in the program. Of particular 
interest to me is how FNS works with other agencies in the 
Federal Government to monitor, investigate, conduct, and 
prosecute those traffickers.
    As I listen to our witness today, I encourage my fellow 
Members to consider how we can find savings in these programs 
while continuing to provide nutrition assistance to our 
families in need.
    Ms. Rowe, I look forward to your testimony, and I hope to 
learn how we can make our nutrition assistance program more 
effective and efficient.
    [The prepared statement of Mrs. Schmidt follows:]

 Prepared Statement of Hon. Jean Schmidt, a Representative in Congress 
                               from Ohio
    Good morning, and thank you all for being here today. I especially 
want to thank Ms. Audrey Rowe, the Administrator of USDA's Food and 
Nutrition Service, for joining us.
    I also want to thank my friend, Ranking Member Baca, for joining me 
in holding this hearing today. It is well known that a certain degree 
of comity or bipartisanship exists here on the Agriculture Committee 
and I look forward to working with my friend as we go through this farm 
bill process.
    This hearing on nutrition programs in Title IV of the farm bill is 
part of a series of audits of farm programs.
    We're holding these audits to gather information and data on each 
of the programs we authorize, and to give all of the Committee Members 
a chance to learn more about how each program fits into the broader 
picture of farm policy.
    We will be looking at how programs use their funds, how effectively 
they serve their stakeholders, and whether there is duplication or 
waste that can be eliminated.
    These audits are critical for every farm bill program, but perhaps 
nowhere more so than the nutrition title.
    USDA's Food and Nutrition Services is the agency charged with 
administering Title IV nutrition programs.
    The major programs they administer are the Supplemental Nutrition 
Assistance Program (SNAP), the Emergency Food Assistance Program 
(TEFAP), the Commodity Supplemental Food Program (CSFP) the Fresh Fruit 
and Vegetable Program (FFVP), the Senior Farmers Market Nutrition 
Program (SFMNP), and the Food Distribution Program on Indian 
Reservations (FDPIR).
    Two weeks ago this Subcommittee heard from AMS and APHIS about how 
they operate title X specialty crop programs. I enjoyed the review of 
how the programs are being administered and operated today.
    Likewise, I look forward to hearing from FNS with a general 
snapshot of the spending of each program that they administer. We will 
study the financial aspects of these programs and consider whether or 
not the programs' goals are being met and whether the programs are 
financially prudent.
    More than 75 percent of the Agriculture Committee's budget goes to 
nutrition programs, which serve a broad range of people throughout the 
country.
    The largest of our nutrition programs is the Supplemental Nutrition 
Assistance Program, or SNAP for short.
    SNAP provides assistance to low-income households to supplement 
food budgets. Although it is administered by USDA's Food and Nutrition 
Service, each state has a great deal of flexibility in how the program 
is implemented.
    SNAP has become an integral part of our country's overall social 
support system for families in need. It is, in fact, the fourth-largest 
needs-tested program in the country.
    The size and scope of SNAP has dramatically increased over time. 
Participation in SNAP has risen by nearly 70 percent--from 26 million 
in 2007 to more than 44 million in April of 20 11.
    This increase is largely due to the economy, the stimulus bill, and 
less strict eligibility requirements. The SNAP program is designed to 
adjust to the needs of our population; increasing when more people need 
food assistance and decreasing when the economy improves.
    However, this dramatic growth has strained our resources. The 
average monthly benefit was $226 in FY 2008. Today it is $289. That's a 
27% increase. In total, we spent $33 billion on SNAP in FY 2007, but 
are on pace to more than double that to nearly $69 billion in FY 2011: 
$69 billion is a substantial sum, and given our current budget 
situation, we have a responsibility to examine whether we can reduce 
that amount without compromising the integrity of the SNAP program.
    I look forward to hearing Administrator Rowe's testimony on the 
Quality Control system that FNS has in place to ensure accuracy in 
payments and target fraud. The program is there to help those truly in 
need, and it's unfortunate when abuses like this occur.
    I plan to look into the program more to see how we can stop abuse 
and fraud of the program. Of particular interest to me is how FNS works 
with other agencies in the Federal Government to monitor, investigate, 
combat, and prosecute traffickers.
    As we listen to our witness today, I encourage my fellow Members to 
consider how we can find savings in these programs while continuing to 
provide nutrition assistance to families in need.
    Ms. Rowe, I look forward to your testimony, and I hope to learn how 
we can make our nutrition assistance more effective and efficient.

    The Chairwoman. And with that, I will now turn to the 
Ranking Member, Mr. Baca, for opening remarks.

    OPENING STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Baca. Thank you very much, and good morning to all of 
you. And thank you, Chairwoman Schmidt, for holding this 
hearing. And thank you, Audrey Rowe, for being here this 
morning. I would also like to welcome our Chairman from the 
Agriculture Committee for being here this morning, Frank Lucas.
    As a legislator, a husband, a father, and a grandfather, 
the effectiveness of Federal nutrition programs is of the 
utmost importance to me. Throughout my years serving on the 
Agriculture Committee, I have worked to build a bipartisan 
record that links the importance of nutrition and health.
    In 2007, we held a hearing that demonstrated the importance 
of food stamp benefits to the overall health and long-term 
success of children. Then in the 2008 Farm Bill, we provided 
record funding for safety net programs like SNAP and TEFAP for 
food banks. We also worked to promote healthy eating by funding 
new pilot programs and expanding the Fresh Fruit and Vegetable 
Snack Program to all 50 states.
    In July of 2008, the Subcommittee heard testimony on the 
economic costs of poor nutrition in the United States. We 
learned that hunger costs our country $90 billion a year in 
lost work productivity. So we have to look at the balance of 
costs and benefits.
    We also learned that poor participation in nutrition 
programs means lost revenues for our local communities and 
counties. When people use the SNAP Program, money and sales tax 
goes right back to the community. With a record number of 
participants-- up from 26 million to 44 million people--it is 
clear that this is a result of the economic situation that we 
are in right now.
    I know many of the individuals who are on the program don't 
want to be on it. They want to be sustaining themselves. I know 
because I personally was on food stamps myself at one point. I 
know there are times when we have no choice; when you have to 
feed your family, and put food on the table.
    So we have established a clear body of evidence linking the 
ties between the Federal nutrition programs, health, and the 
economic well-being of our communities. Make no mistake, in 
these tough times, the Federal nutrition programs are the 
safety net between hunger and health for millions of Americans.
    In my home of San Bernardino County, California, we face an 
unemployment rate of 17 percent countywide. Programs like SNAP, 
WIC, and TEFAP are putting food on the table for many of my 
neighbors.
    Despite economic stress, nutrition programs continue to 
meet the needs of our constituents. This speaks to the basic 
strength of these programs. But nothing is perfect, and 
especially in these difficult times, we must to work to make 
these programs as effective and efficient as possible. And 
there must be accountability so we can stop fraud.
    As we prepare for the 2012 bill, I am committed to working 
with all of my colleagues to strengthen and improve Federal 
nutrition programs.
    I want to thank, again, our witness, Audrey Rowe, for being 
here this morning. I look forward to hearing your testimony.
    I yield back the balance of my time.
    The Chairwoman. Thank you.
    The Chairwoman. And before I ask our Chairman of our 
Agriculture Committee if he would like to have some opening 
remarks, I would like to ask for unanimous consent to have the 
gentleman from Massachusetts, Mr. McGovern, who is not a Member 
of this Subcommittee but has joined us today, to allow him to 
sit here and take part in this process. Do I have unanimous 
consent? Thank you.
    Mr. Lucas.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Thank you, Madam Chairman, and I would like to 
thank both you, Chairwoman Schmidt, and Ranking Member Baca for 
holding this hearing, and I would also like to welcome 
Administrator Rowe to the Subcommittee today.
    I believe that we would be holding these audits regardless 
of the time period in which we will be writing the next farm 
bill. With 14 separate titles covering a variety of programs 
ranging from nutrition to forestry, it is important for all of 
us to understand why our current policies are structured as 
they are. We also need to know how our separate programs work 
together to form a comprehensive framework to support America's 
farmers, ranchers, and consumers. These audits are meant to 
develop a deeper knowledge of agricultural policy so our 
Committee Members are better able to develop the next farm 
bill.
    But in our current fiscal climate, the audits have taken on 
greater significance. There are proposals for billions and even 
trillions of dollars' worth of cuts to get our fiscal house in 
order. The farm bill programs will not be spared the chopping 
block.
    Considering that farm and nutrition programs together make 
up less than three percent of the national budget--yes, less 
than three percent of the national budget--large cuts will be 
challenging. This Committee is charged with supporting our 
country's agricultural industry and ensuring that our consumers 
have a safe, high-quality, and affordable food supply. To meet 
that responsibility, we must ensure we have well-designed farm 
programs that can function efficiently in the face of budget 
cuts.
    As Chairman Schmidt mentioned, nutrition programs make up 
more than 75 percent of farm bill spending. The SNAP Program is 
the largest of these programs. In 2008, we worked to improve 
the integrity of the nutrition assistance under SNAP, but there 
is still room for improvement. For instance, many states are 
using broad-based categorical eligibility which makes most, if 
not all, households categorically eligible for SNAP if they 
receive any noncash Temporary Assistance for Needy Families 
benefit. And of the 42 states that have adopted broad-based 
categorical eligibility, only one state has imposed an asset 
limit. That means there is no limit on the amount of assets a 
household can hold while still receiving nutrition assistance. 
Categorical eligibility is meant to simplify program 
administration, but I know that it also raises some questions 
about whether we are really targeting the families most in 
need.
    Certainly, we shouldn't be sacrificing the integrity of 
this program for the ease of administration. We all need to 
eat, and when families fall on hard times, SNAP is a valuable 
resource that helps ensure that no one goes hungry. In the 
current economic environment, we need to ensure that SNAP 
benefits are going to those families that truly need support.
    I am concerned that the broad-based categorical eligibility 
increases opportunities for waste, fraud, and abuse. We are 
spending more than twice the amount of SNAP now than we were in 
2007. Program participation has nearly doubled in that time. We 
have a responsibility to ensure that the $69 billion we are 
spending on nutrition assistance is being properly used and is 
helping the people it is meant to help. That is exactly the 
type of information we need to gather in these audits.
    Are the Title IV programs being targeted effectively? Are 
the taxpayers dollars being spent properly? Are there areas 
that we can streamline or eliminate? It won't be easy, but we 
need to find savings throughout all the farm bill programs.
    I look forward to learning more about the Food and 
Nutrition Service's perspective on these challenges, 
Administrator Rowe, and again, I thank you for your testimony 
here today, and yield back the balance of my time, Madam 
Chairwoman.
    The Chairwoman. Thank you, Mr. Chairman.
    And I would ask other Members to submit their opening 
statements for the record so that our witness may begin her 
testimony and that there is great time, ample time for 
questions.
    So, with that, I would like to introduce Ms. Audrey Rowe, 
who is the head of this program. And you come from Connecticut 
via Washington, D.C., so you have great experience. And having 
said that, I want to give you the microphone.

  STATEMENT OF AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION 
   SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Ms. Rowe. Good morning, and thank you, Madam Chairwoman, 
Ranking Member Baca, other Members of the Committee. It is 
indeed an honor and an opportunity to appear here before you 
today to discuss the progress we have made since enactment of 
the Food, Conservation, and Energy Act of 2008, also known as 
the farm bill.
    I want to begin by commending the Committee on the last 
farm bill. This strong legislation, passed by wide margins in 
the House and the Senate, reflects the Committee's long-
standing bipartisanship. No matter who holds the gavel, you 
have consistently worked across the aisle and with the 
Administration to make nutrition programs successful. USDA 
appreciates this commitment and is committed to administering 
the bill in accordance with the intent and the vision of the 
Congress.
    Achieving ongoing success in the program under your 
jurisdiction is at the heart of reauthorization, an opportunity 
for Congress and the Administration to take stock of the last 
farm bill and find potential improvements to pursue and enact.
    As Administrator of the Food and Nutrition Service, I bring 
20 years of state government and private-sector experience in 
human service policy, fiscal management and accountability, 
program design, and service delivery, with a focus on 
vulnerable populations, low-income, children and youth. That 
background frames my thinking about USDA's nutrition programs 
and their mission to reduce hunger and improve diets.
    Roughly one in four Americans currently participate in 
these programs over the course of a year. The programs work 
together as a safety net to ensure that whatever challenges we 
face due to economic disruption, national disaster, disease, or 
disability, we can meet our basic nutritional needs.
    These programs are vitally important today. Even as signs 
emerge that the economy is beginning to improve, families 
continue to struggle with the aftermath of the worst economic 
downturn since the Great Depression. This dynamic fuels record 
demands for programs like SNAP, with roughly 45 million 
Americans participating as of this past April.
    You may wonder who are these 45 million people. The answer 
may surprise you. In SNAP, half of all clients are our 
children; one in six households have elderly members; one in 
five have one or more disabled people. These are hardworking 
Americans who may be facing furloughs or underemployment, and 
who need resources to put food on their table until they can 
get back on their feet. Again, that mission, the FNS mission, 
has never been more important.
    The farm bill improves access and accountability in the 
Supplemental Nutrition Assistance Program, also known as SNAP; 
the Fresh Fruit and Vegetable Program; the Food Distribution 
Program on Indian Reservations; the Commodity Supplemental Food 
Program; the Emergency Food Assistance Program; the Senior 
Farmers Market Nutrition Program. While my written statement 
addresses each one of these programs, I will focus my oral 
remarks primarily on SNAP, the largest Federal program.
    Formerly known as Food Stamps, SNAP received its new name 
as part of the 2008 Farm Bill. SNAP is our nation's front line 
of defense against hunger, providing low-income individuals and 
families an electronic benefit debit card to buy food at 
authorized stores. Its flexible, responsive structure is 
central to its success.
    When the economy takes a downturn, more families struggle, 
and more tend to become eligible for SNAP. When they apply, 
SNAP responds to make sure they do not go hungry until they get 
back on their feet. As the economy improves, fewer families are 
eligible and apply, and our investment tends to decrease, a 
hallmark of an efficient and an effective program. Congress has 
maintained this key feature throughout many previous farm 
bills.
    As SNAP provides food to participants, it also provides 
economic benefits to communities across the nation. Our 
research shows that for every $5 in new SNAP benefits, it 
generates as much as $9 in economic activity. Every time a 
family uses SNAP to put healthy food on the table, it benefits 
the store, the employees where the purchase was made, the truck 
driver who delivered the food, the warehouses that stored it, 
the plant that processed it, and, of course, the farmer who 
produced the food.
    SNAP's success also extends to integrity, which relies on a 
cooperative partnership between FNS and the states that operate 
the program. SNAP's quality control system is part of a payment 
accuracy approach which uses state bonuses and sanctions to 
achieve continuous and sustained improvement. This approach 
delivers real results for taxpayers.
    Payment accuracy in SNAP has increased to over 96 percent, 
an all-time high, even as participation has increased to record 
levels. Payment errors are less than half what they were 10 
years ago, reducing improper payments by $3.3 billion.
    FNS is also responsible for authorizing the over 200,000 
retailers that accept SNAP and monitoring them for compliance 
with program rules. The program is designed to operate through 
normal channels of trade, and the overwhelming majority of 
businesses and benefits are redeemed in responsible grocery 
businesses that play by the rules.
    That said, the agency takes any noncompliance very 
seriously. We have made major strides in reducing trafficking, 
the sale of SNAP benefits for cash, which is an illegal 
activity punishable by criminal prosecution. Over the last 15 
years, our aggressive surveillance and enforcement have helped 
to reduce the prevalence of trafficking down to about one 
percent. The 2008 Farm Bill provided new anti-trafficking 
tools, including the authority to disqualify recipients for 
such activities as selling food purchased with SNAP benefits or 
dumping contents of returned deposit bottles in order to get 
cash, as well as new sanctions for noncompliant retailers.
    We must also ensure that the program promotes healthy 
eating. The N in SNAP is for Nutrition, and it is essential 
that we make use of its great reach to reduce the risk of diet-
related disease. Almost every American's diet is in need of 
improvement, and the SNAP-specific nutrition strategies 
mandated by Congress and administered by FNS reinforce efforts 
to foster healthy diets across the general population.
    Let me turn briefly to the Emergency Food Assistance 
Program, TEFAP, which provides food and administrative funds to 
state agencies to local emergency feeding organizations such as 
food banks, soup kitchens, and food pantries. They play a 
critical part in the hunger safety net. The farm bill increased 
funds for TEFAP food to $250 million annually, indexed to 
inflation in future years.
    While USDA provided the authorized funding for SNAP, market 
conditions have limited the availability of surplus food beyond 
this amount in recent years. USDA will provide more surplus 
food to the program should it become available. USDA also 
published a farm bill rule in 2009 to streamline operations by 
making TEFAP state plans permanent.
    Let me conclude by thanking you again for this opportunity 
and reiterating that the nutrition assistance mission has never 
been more important. The Administration is committed to 
maximizing transparency, access, accountability, and integrity, 
and Secretary Vilsack has directed the Department to provide 
all Americans with the excellence they deserve from our 
government. I am personally committed to ensuring that we live 
up to those expectations as we manage these programs to meet 
the needs of eligible families and individuals who rely on them 
during challenging economic times.
    Let me mention in closing that in my career I have never 
held a job at the state level where budgets were not tight, so 
it is not a new experience for me to face an extremely tight 
Federal budget and consideration of significant program 
changes. Reauthorization allows us to carefully assess the 
impact of potential changes so we can preserve our successes 
while meeting new challenges and improving performance, and in 
that light, I am happy to review these programs and answer your 
questions.
    I have with me a number of staff people who I may call on 
from time to time. As I mentioned to some of you, I am in my 
fourth month in the position of Administrator. I want to give 
you the best information that I possibly can, so I have brought 
the resources to make sure we can do that.
    [The prepared statement of Ms. Rowe follows:]

 Prepared Statement of Audrey Rowe, Administrator, Food and Nutrition 
       Service, U.S. Department of Agriculture, Washington, D.C.
    Madam Chairwoman, Ranking Member Baca, and Members of the 
Committee, thank you for the opportunity to be here today to discuss 
the United States Department of Agriculture's (USDA) nutrition programs 
and the progress we have made since enactment of the Food, Conservation 
and Energy Act of 2008--the 2008 Farm Bill.
    I want to begin by commending the Committee for its hard work in 
crafting the 2008 Farm Bill. I understand that this Committee had to go 
through a lot of hard-fought battles and make some really tough 
decisions, and the end result was a strong, bipartisan piece of 
legislation that passed by overwhelmingly large margins in both the 
House and Senate. We understand how hard it was to accomplish that 
task, and the Food and Nutrition Service at USDA is strongly committed 
to ensuring that the legislation is administered in accordance with the 
intent and vision of Congress.
    I also want to express my appreciation for the bipartisan approach 
that this Committee has taken over the years when it comes to 
supporting USDA nutrition assistance programs. No matter which party 
holds the gavel, there has always been a shared commitment to working 
across the aisle and with the Administration to ensure that these 
programs are successful.
    The goal of ensuring success in the programs under your 
jurisdiction is at the heart of the 5 year reauthorization cycle for 
farm bill programs, which offers Congress and the Administration a 
great opportunity to take stock of where we are at today, what we did 
in the last farm bill, and what we need to do in this farm bill to get 
where we need to be. Like you all, we in the Administration appreciate 
very much the political and budgetary climate in which we find 
ourselves as the reauthorization process gears up. Federal programs are 
under heightened scrutiny right now. Members of Congress, the public, 
and this Administration all want to know that scarce resources are 
being used wisely.
    I understand that context as the Administrator of the Food and 
Nutrition Service, where I am responsible for the operations of the 
Federal nutrition assistance programs. I bring with me over 20 years of 
experience in both state government and the private sector working in 
human services policy development, fiscal management, program design, 
service delivery and marketing with a particular focus on vulnerable 
populations, low income women, children and youth. That background 
inevitably shapes and guides my thinking about administering USDA 
nutrition programs, which work both individually and in concert with 
one another to reduce and prevent hunger and improve the diets of 
children and low-income households. While about one in four Americans 
currently participate in Federal nutrition programs over the course of 
a year, these programs are a critical safety net for every American, 
designed to ensure that, whatever other challenges they face due to 
economic disruption, natural disaster, or personal challenges such as 
disease and disability, they need not experience food insecurity and 
hunger.
    We see the vital importance of these programs today. Even as signs 
emerge that the economy is beginning to recover, families across the 
country continue to struggle with the aftermath of 3 years of 
recession. The unemployment rate is down substantially from the recent 
peak of 10.1 percent in since October 2009, but remained unacceptably 
high at 9.2 percent as of June. Census Bureau figures shows that the 
poverty rate in 2009 was 14.3 percent, the highest rate since 1994. 
There were 43.6 million people in poverty in 2009--the largest number 
in the 51 years for which poverty estimates are available.
    And demand for the nutrition assistance programs remains extremely 
high. In April 2011, 44.6 million people received SNAP benefits. 
Participation in the school meals programs remains at near-record 
levels, with about 32 million children receiving a meal through the 
school lunch program on an average school day, and two out of three 
served free or at reduced price.
    Who are today's nutrition assistance clients? The answer may 
surprise you. In SNAP, about half of all clients are children, and 
about \3/4\ of benefits go to households with at least one child. 
Nearly \1/3\ of participants are in households that include elderly 
people or people with disabilities. And the SNAP clientele has 
undergone a major shift in its focus from welfare to work over time. 
Many are hardworking families who may be facing furloughs or 
underemployment in these difficult times. All need assistance with 
money for food until they can get back on their feet.
    These sobering statistics underscore the fact that the nutrition 
assistance programs have never been more important to our nation. Title 
IV of the 2008 Farm Bill resulted in changes that improved access and 
accountability in many of these programs, including the Supplemental 
Nutrition Assistance Program (SNAP), the Fresh Fruit and Vegetable 
Program (FFVP), Food Distribution Program on Indian Reservations 
(FDPIR), the Commodity Supplemental Food Program (CSFP), the Emergency 
Food Assistance Program (TEFAP), and the Senior Farmers Market 
Nutrition Program (SFMNP). In my statement I will describe our progress 
in implementing these changes as I review some of the key issues facing 
our programs today.
    I also want to underscore at the outset my strong focus on proper 
management of resources--a fundamental strategy in ensuring both 
program access and integrity. Secretary Vilsack has charged all the 
USDA mission areas to ensure our services are accessible and properly 
administered; to work collaboratively with our partners; and to seek 
opportunities for efficiency and effectiveness in all our programs. 
Additionally, Undersecretary Concannon recently testified before the 
Senate that Americans deserve excellence from their government. That is 
not just a slogan. The leadership team at USDA Food, Nutrition and 
Consumer Services takes that charge seriously when it comes to 
effective accountability in the nutrition assistance programs. We are 
committed to a long-term, sustained effort, working closely with our 
program partners, and my team and I are seeking every opportunity to 
build on our successes with new strategies to tackle the challenges 
that remain. I believe that we can improve accountability without 
compromising service to those in need, and we look forward to working 
with you in this effort.
Supplemental Nutrition Assistance Program (SNAP)
    Let me begin with SNAP--the largest and most widely used nutrition 
program authorized in the farm bill, the former Food Stamp Program, 
which received its new name as part of the 2008 Farm Bill, supplements 
the food purchasing power of low income individuals and families by 
providing an electronic debit card which is used at authorized stores. 
Benefits are 100 percent federally-financed, while administrative costs 
are shared between Federal and state governments.
    One of the most important aspects of SNAP is that it is structured 
to respond quickly to the needs of the hardest-hit households, based on 
national eligibility standards. Benefits flow into communities as 
economic conditions worsen, providing an economic boost even as they 
meet the nutrition needs of low-income people. Research shows that 
every $5 in new SNAP benefits generates as much as $9 in economic 
activity. Every time a family uses SNAP benefits to put food on the 
table, it benefits the store and the employees where the purchase was 
made, the truck driver who delivered the food, the warehouses that 
stored it, the plant that processed it, and the farmer who produced the 
food.
    I raise this in part to underscore that while this flexible, 
responsive program structure leads the program to expand when need is 
greatest, it also causes program participation, and expenditures, to 
contract as conditions improve and needs lessen. We see this dynamic at 
work in SNAP. When the economy takes a downturn, more families 
struggle, and more families look to SNAP until they can get back on 
their feet. When that happens, the program responds to make sure that 
families do not go hungry. The opposite is also true though. As the 
economy improves, and more Americans find jobs, fewer families need the 
program in the first place. When that happens, our investment tends to 
decrease. This efficient and effective aspect of SNAP is one of the 
keys to its success.
    State agencies are responsible for the administration of the 
program according to national standards set by Federal law and 
regulations. Applicants must meet certain financial, non-financial and 
citizenship or immigration status requirements, including gross and net 
income tests, and resource limits. States have the flexibility to 
modify some of these requirements to align SNAP with their Temporary 
Assistance for Needy Families (TANF) policies. Forty-two state agencies 
have implemented an optional policy called broad-based categorical 
eligibility (BBCE), which allows states to utilize their TANF income 
and resource limits for their SNAP applicants, providing administrative 
simplification for states, and allowing the same gross income and 
resource policy to apply for both programs.
    The SNAP eligibility and certification changes made in the 2008 
Farm Bill were implemented quickly after passage starting on October 1, 
2008 by all states via an implementation memorandum; a proposed rule 
which promulgates these provisions into regulation was published in the 
Federal Register in May, and the comment period closed July 5. A final 
rule is expected to be published by the end of this calendar year. 
These changes were important for program access and integrity.
    With regard to work requirements, able-bodied adults without 
dependents (ABAWDs) between 18 and 50 who do not have any dependent 
children can get SNAP benefits only for 3 months in a 36 month period 
if they do not work or participate in a workfare or employment and 
training program other than job search. This requirement is waived in 
some locations in accordance with unemployment rates and job 
availability triggers determined by the Department of Labor. With some 
exceptions, all adults participating in SNAP between 16 and 60 must 
register for work, accept suitable employment, and take part in an 
employment and training program to which they are referred by the local 
office. Failure to comply with these requirements can result in 
disqualification from the program.
    It is worth noting in this regard that a large proportion of SNAP 
households are working families. In fact, the primary source of income 
among SNAP participants has shifted from welfare to work over time. For 
these working poor households, SNAP provides an important resource to 
see them through tough economic times.
    In cooperation with FNS, each state agency is responsible for 
monitoring and improving its administration of SNAP. As a part of this 
requirement, SNAP's Quality Control System is used to measure the 
accuracy of the states' certification process. The Quality Control 
system is part of a payment accuracy approach which uses bonuses and 
sanctions to encourage states to continuously improve performance. This 
approach has helped to deliver real results, and payment accuracy in 
SNAP is at an all-time high--over the last decade participation among 
eligibles has gone from 57% to 66%, while payment errors have gone from 
8.91% to a record-low of 3.81%. Over 98 percent of those receiving SNAP 
benefits are eligible to receive benefits; the overall payment accuracy 
in FY 2010 was 96.19 percent. Payment error rates are less than half 
what they were 10 years ago, which has reduced improper payments by 
$3.3 billion. That said, any error is too much, and for that reason we 
do not intend to rest on this success. The President's November 2009 
Executive Order directed all agencies to further rein in improper 
payments while making sure that those eligible for government 
assistance continue to have access to these programs, and we are 
working with states to meet his ambitious goals for ongoing 
improvement.
SNAP Retailer Operations
    Our program responsibilities do not end once the benefits have been 
issued; SNAP must also manage the program so that benefits are used 
effectively and with integrity. FNS authorizes retailers to accept and 
redeem SNAP benefits in accordance with Federal statute and 
regulations, monitors them through ongoing systems analysis and 
undercover on-site investigations, and manages an administrative review 
of those firms that contest a disqualification or civil money penalty. 
Over 220,000 retailers are currently authorized to redeem SNAP benefits 
through electronic benefit transfer (EBT). EBT works like a debit 
transaction--SNAP participants scan their EBT card at the point of sale 
and the funds are deducted from the food account on the card. Eighty-
three percent of all SNAP transactions happen at super markets, super 
stores, and large grocery stores, while the majority of the stores 
authorized are smaller stores.
    FNS is also responsible for monitoring participating retailers for 
compliance with SNAP rules. The sale or purchase of SNAP benefits for 
cash is called trafficking, an illegal activity punishable by criminal 
prosecution. Over the last 15 years, FNS has aggressively implemented a 
number of measures to reduce the prevalence of trafficking in SNAP from 
about four percent down to its current level of about one percent. 
Despite this significant decline in trafficking USDA continues to 
implement aggressive measures to improve program integrity and to 
detect and stop fraud. SNAP uses a fraud detection system, the Anti-
Fraud Locator for Electronic Benefit Transfer Transactions (ALERT), to 
monitor electronic transaction activity and identify suspicious retail 
grocers for analysis and investigation. FNS also works closely with its 
state and Federal partners to investigate and prosecute trafficking.
    The 2008 Farm Bill provided some significant tools for SNAP in this 
area including revised definitions of trafficking that provide for 
disqualification of recipients for such activities as selling food 
purchased with SNAP benefits, and dumping contents of return deposit 
bottles in order to get cash; as well as new sanction authority for 
non-compliant retailers. These provisions are in various stages of 
implementation, but all provided strong tools to deal with misuse and 
abuse of program funds.
SNAP and Food Choices
    We are also charged with ensuring that the program does all that it 
can to promote good nutrition and reduce or prevent obesity among its 
clients. As we all know, the ``N'' in SNAP is for nutrition, and it is 
essential that we make use of its great reach to promote better 
nutrition and reduce the risk of diet-related disease.
    It is important to recognize in this context that almost every 
American's diet is in need of improvement. Virtually all of us eat too 
few whole grains, dark green and orange vegetables, and too much fat 
and added sugar. Our SNAP-specific nutrition strategies must complement 
and reinforce efforts directed to foster healthy diets across the 
general population.
    The 2008 Farm Bill codified nutrition education as a component of 
the program. Recently, the Healthy, Hunger-Free Kids Act (HHFKA) of 
2010 reformed the nutrition education component of SNAP (known as SNAP-
Ed) to provide for a focus on obesity prevention and nutrition 
education, expanding reach and providing states increased flexibility. 
FNS has spent the months since the passage of the HHFKA meeting with 
state partners, nutrition education providers, public health officials, 
universities, the Health and Human Services' Center for Disease Control 
and Prevention, the White House Task Force on Childhood Obesity, and 
others to get input into the implementation of this important 
provision. A rule is scheduled to be published in January 2012.
    As this Committee knows, some have suggested that SNAP rules should 
restrict the use of benefits so that only ``healthy'' foods can be 
purchased. USDA has long held a preference for strategies to support 
and encourage healthy choices rather than restricting access to 
particular foods. Congress has also preferred this approach, and most 
recently spoke to this issue in the 2008 Farm Bill by authorizing and 
funding a demonstration and rigorous evaluation of the impact of 
financial incentives at the point of sale on purchases of fruits and 
vegetables. We have been working carefully to design and implement this 
project--the Healthy Incentives Pilot--to maximize the chance of its 
success, and to ensure that, whatever the results, the test will 
provide clear evidence that will support policy decisions made by 
Congress and the Administration. Operations will begin in Massachusetts 
later this year.
    The Department is also working to increase the number of farmers' 
markets that accept SNAP benefits. These outlets help introduce low-
income households to a variety of fresh and nutritious foods, and 
expand opportunities for small farmers. Our goal is to authorize an 
additional 200 farmers or farmers' markets and increase redemptions by 
$750,000 each year. In addition, a number of farmers' market incentive 
projects work in coordination with SNAP by providing privately-funded 
bonus dollars to clients for purchases made with SNAP benefits.
    We think that these positive and proactive strategies are the most 
effective way for USDA and its partners to address the challenges of 
poor diets and obesity. We look forward to working with the Committee 
to advance and strengthen these strategies into the future.
    Let me turn now to the other nutrition assistance programs 
authorized under the farm bill.
Fresh Fruit and Vegetable Program (FFVP)
    The Fresh Fruit and Vegetable Program (FFVP) provides free fresh 
fruits and vegetables in elementary schools with high percentages of 
children receiving free and reduced price school meal benefits to help 
children develop positive dietary habits during their formative years. 
FFVP began as a pilot program authorized by the 2002 Farm Bill, 
operating in 25 schools in each of four states and seven schools in one 
Indian Tribal Organization (ITOs). Following nationwide expansion under 
the 2008 Appropriations Act, the 2008 Farm Bill permanently authorized 
FFVP and increased its funding from $40 million in 2008 to $150 million 
in 2011. USDA was able to get this increased funding out timely, and is 
working to publish a regulatory proposal on the program in the near 
future. The 2008 Farm Bill also mandated and funded an evaluation to 
assess the impact of the FFVP on fruit and vegetable consumption. The 
project is underway, and we expect the results to be available in 2012.
Food Distribution Program on Indian Reservations (FDPIR)
    The Food Distribution Program on Indian Reservations (FDPIR) was 
first authorized in 1977 as an alternative to SNAP for low-income 
households living on Indian reservations, and was subsequently expanded 
to include American Indians living in other approved areas near 
reservations or in Oklahoma. The program provides a monthly package of 
USDA Foods, including fresh fruits and vegetables, to participating 
households. Households may not participate in FDPIR and SNAP in the 
same month. FDPIR currently serves about 77,000 individuals each month.
    The 2008 Farm Bill directed USDA to study the nutritional quality 
of the FDPIR food package. Our review concluded that the package 
provides a nutritious variety of foods, and sufficient calories to meet 
the energy needs of most sedentary individuals and many moderately 
active children. While as for American diets in general, there is room 
for improvement in the quantities of fruits, vegetables, low-fat dairy 
products and whole grains, the nutritional content of the package is 
considerable. Individuals consuming FDPIR foods in the quantities 
provided would achieve a Healthy Eating Index score, which measures 
consistency with the Dietary Guidelines, of 81 out of 100, considerably 
better than Americans in general (58 out of 100) and SNAP participants 
(52 out of 100).
    The 2008 Farm Bill also authorized the purchase of bison and 
traditional and locally-grown foods for FDPIR participants, but 
specific appropriations have not yet been made for these items.
Commodity Supplemental Food Program (CSFP)
    CSFP was first authorized under the Agriculture and Consumer 
Protection Act of 1973 to distribute USDA-purchased food to low-income 
women, infants, and children to supplement their nutritional needs. 
Legislation permitted individuals age 60 or more to participate 
beginning in the 1980s, and with the expansion in available of WIC, the 
program's caseload transitioned so that today, almost 97 percent of the 
over 580,000 individuals that participate in CSFP each month are 
elderly.
    As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and 
the District of Columbia are participating in CSFP. CSFP monthly food 
packages are good sources of the nutrients typically lacking in the 
diets of participants. The 2008 Farm Bill removed the priority status 
for women, infants, and children in receiving CSFP service; USDA 
published a final rule to implement this provision in February 2010.
The Emergency Food Assistance Program (TEFAP)
    The Emergency Food Assistance Program (TEFAP) began in 1981 as a 
means of reducing stocks of surplus food held by the Federal Government 
by distributing it to households in need. In 1998, Congress authorized 
appropriations for USDA to purchase food specifically for TEFAP. 
Through TEFAP, USDA provides food and administrative funds to state 
agencies which distribute them to local emergency feeding organizations 
such as food banks, soup kitchens and food pantries.
    The 2008 Farm Bill increased funds for TEFAP food purchases to $250 
million annually, indexed to inflation. The 2008 Farm Bill also 
authorized up to $100 million annually for administrative costs and up 
to $15 million annually for TEFAP infrastructure grants. In addition, 
the Secretary has authority to provide food that USDA acquires through 
certain price or market support activities (i.e., bonus food) to TEFAP. 
TEFAP currently operates in all 50 states, the District of Columbia, 
Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the 
Northern Mariana Islands.
    While USDA has provided the 2008 Farm Bill's increased appropriated 
funding for TEFAP, market conditions have limited the availability of 
surplus food for TEFAP in recent months. USDA will continue to provide 
surplus food to TEFAP should more become available and the President's 
FY 2012 budget requests the authorized level for TEFAP food purchases. 
Legislation provided $6 million in 2010 for TEFAP infrastructure grants 
which USDA awarded to 39 emergency feeding organizations in rural and 
urban areas to help improve their ability to provide food to low-income 
individuals. USDA also published a final regulation in November 2009, 
to implement the 2008 Farm Bill requirement to make TEFAP state plans 
permanent; this rule has streamlined TEFAP operations.
Senior Farmers' Market Nutrition Program
    The Senior Farmers' Market Nutrition Program (SFMNP) was created as 
a pilot program in FY 2001; it was established by Congress as a 
permanent program through the 2002 Farm Bill, and has been reauthorized 
through 2012 under the 2008 Farm Bill. The program provides low-income 
seniors with coupons that can be used to purchase fresh fruits, 
vegetables, honey and herbs from farmers at authorized farmers' markets 
or roadside stands, or with shares in community supported agriculture 
(CSA) programs for regularly distributed bags or boxes of eligible 
foods. Fifty one state agencies and federally recognized Indian tribal 
governments received grants to operate the SFMNP in FY 2011. Over 
20,000 farmers at 4,600 farmers' markets as well 3,800 roadside stands 
and 163 CSAs participated in the program in FY 2010, enabling over 
844,000 seniors to receive fresh fruits and vegetables during the 2010 
market season.
Conclusion
    Let me conclude by thanking you all again for this opportunity and 
by reiterating that the mission and the work of the nutrition 
assistance programs have never been more important to our nation. The 
Administration is committed to a more responsible government that 
maximizes transparency, accountability, and integrity. I am committed 
to ensuring that we live up to those expectations as we continue to 
manage these programs to meet the needs of the eligible people who rely 
on them, especially in these times of fiscal and economic challenges.
    I should also mention that I have never come into a job at the 
state level where budgets were not tight, so I guess I should not be 
surprised that in this new Federal role I come together with you all at 
a moment where budgets are extremely tight, and when substantial and 
significant changes are being considered for many Federal programs. As 
the Committee begins its work in writing the next farm bill, it is 
important to recognize that such changes can have both intended and 
unintended consequences. That is what is so valuable about the 
reauthorization process. It allows us to carefully work through and 
consider those impacts before we move forward so that we can preserve 
our successes while moving to meet new challenges and improve 
performance. In that light, I am particularly appreciative of the 
opportunity to join you today and review these programs, and I look 
forward to any questions that you may have.

    The Chairwoman. Thank you.
    The sign of a good Administrator is when they bring their 
team so that they can look really, really smart.
    I would like to remind the Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of arrival, and I do appreciate the 
Members' understanding in this. And now I would like to begin 
my own set of questions.
    Ms. Rowe, on the questionnaire, I found it interesting that 
the Department did not offer many details in regards to how 
programs might be duplicative or have overlap. Does this mean 
the Department didn't find any duplication or overlap in the 
farm bill nutrition programs or something else?
    Ms. Rowe. Well, thank you for that question. When we looked 
at the programs, certainly they serve different vulnerable 
populations. They provide a safety net for individuals who may 
not qualify for certain programs, but still need food 
assistance. The Congress, in the past, in its wisdom, has 
undertaken various program initiatives to close some of these 
gaps so that we can have a safety net that provides benefits to 
our youngest, to our seniors, to those who are disabled, and to 
those who face employment challenges.
    The Chairwoman. Okay. It seems you did not find any 
duplication?
    Ms. Rowe. We did not find duplicates. There are individuals 
who may participate in more than one program. For example, you 
may have individuals that benefit from the FDPIR Program, but 
also benefit from the School Lunch Program. So there are 
different populations that benefit for different purposes.
    The Chairwoman. Okay. And in your testimony, you said 
payment error rates are less than half of what they were 10 
years ago, which has reduced improper payments by $3.3 billion.
    Ms. Rowe. Correct.
    The Chairwoman. Could you clarify for me if this is a 
reduction of $3.3 billion over 10 years, 1 year?
    Ms. Rowe. It is over 10 years.
    The Chairwoman. Okay. While I can appreciate the fact that 
the Department has reduced improper payments by $3.3 billion 
over 10 years, I think it is still troubling that the GAO 
reports that there was $2.2 billion in overpayments in Fiscal 
Year 2009 alone. What is FNS doing to rein in improper 
payments?
    Ms. Rowe. We have undertaken a number of strategies. For 
example, in states where there are or there have been improper 
payments, either overpayments or underpayments, to an 
individual, we have provided technical support and assistance 
to those states. We have identified best practices in other 
states that can help a state that is having some challenges in 
those areas, provide a number of additional resources to the 
state so that they can look at how they are administering their 
program, and can target and be strategic in where they need to 
devote their resources to reduce the improper payments. We have 
been very aggressive in working with states to help them 
understand both how to reduce improper payments and the 
importance of continuing to reduce improper payments.
    The Chairwoman. And along that same line, what is the 
process in recovering overpayments made to SNAP participants?
    Ms. Rowe. It is a state function. States can--as a former 
administrator, a state does have the ability to either take an 
action to reduce, if the person is continuing to be on the SNAP 
Program--to reduce their benefits to recoup. There are other 
recoup options that states have before them, and different 
states administer it in different ways.
    The Chairwoman. Following up on that a little bit more, we 
are giving all this money to states to create the program, and 
there might be some problems. Do you think we need to have more 
oversight at the Federal level to make sure that when there are 
bad actors, that the states are doing due diligence to, A, go 
after the bad actors, and, B, get whatever resources they can 
get back from those bad actors?
    Ms. Rowe. Well, when I was on the state side, I would have 
had a different answer, but on the Federal side, I can honestly 
say that we have been very focused in reminding states--Under 
Secretary Concannon, not only in visiting states and meeting 
with Governors and state commissioners and administrators--has 
reiterated again and again the importance of maintaining 
integrity in the various programs. He has sent letters to all 
the states. We have worked with the states to remind them--at a 
time when caseloads are increasing, states are facing fiscal 
challenges--it is not time to take your eye off the mark. We 
have to stay focused.
    And I think states have been very responsive. They have 
sought consultation. They have asked us to send in staff to 
help them manage some of the challenges they have. We do 
management reviews. Our regional office staff go out to the 
states, pull records. We look at information that states have 
available to help us determine how well they are doing.
    The Chairwoman. Thank you.
    And I see that my time has expired, so I am going to ask 
Mr. Baca if he has any questions for this witness.
    Mr. Baca. Yes, I do. Thank you very much, Madam Chair.
    Thank you again, Ms. Rowe, for testifying this morning, and 
I appreciate your efforts to ensure the integrity of SNAP and 
other programs at FNS.
    I will start with a statement. Nutrition education and 
access to healthy food are two key components necessary for 
improving the health of all Americans, especially those who 
rely on SNAP benefits to feed their families. In my district 
there is a huge problem with obesity amongst the Latino 
population, particularly children. The First Lady has done a 
great job in highlighting these problems, but I am also 
encouraged that new data from the Journal of Nutrition 
Education and Behavior showed that California has seen a 37 
percent increase in fruits and vegetable consumption among low-
income adults. This is the kind of information that helps us 
make good policy decisions. So, with this and other data out 
there, can you tell me about FNS's evaluation of nutrition 
educational efforts?
    Ms. Rowe. Well, yes, certainly, Congressman. As you know, 
the Healthy, Hunger-Free Kids legislation required us to 
rethink and relook at our SNAP Education Program, to engage in 
much more collaboration, to provide additional opportunities 
for states to learn what is going on in another state and how 
effective it has been. The kind of research that you are 
talking about we would disseminate to states so that they can 
see the importance of staying very focused on nutrition.
    We have created within FNS a Latino outreach plan which is 
going to focus not only on California, but on Latino 
communities around the country, making sure that they 
understand the program, what is available to them, the 
importance of nutritious eating, healthy lifestyles, and 
healthy habits.
    We continue to share information. When I was in California 
and had an opportunity to see some of the outreach and SNAP 
education programs there, I immediately grabbed the information 
and brought it back to our other states. We have talked to 
states about what California is doing and encouraged them to 
adopt similar strategies and similar activities.
    Mr. Baca. Okay. As part of a follow-up, how would the 
changes made to SNAP nutrition and in the child nutrition bill 
passed in December 2010 affect these numbers?
    Ms. Rowe. That I am not really sure, Congressman. I would 
like to get back to you on that. I think what we are hoping is 
that it would allow us to do nutrition education in a more 
strategic way, in a more collaborative manner, but the impact 
on numbers, I really can't answer that.
    Mr. Baca. Okay. Thank you.
    And I know you elaborated a little bit on this. Does FNS 
have any specific outreach plans to include nutrition education 
in minority communities?
    Ms. Rowe. Yes. As I had mentioned, we have designed the 
Latino outreach plan. We have been working with a number of 
national organizations, such as the National Urban League and 
others, to have them focus and provide information through 
their networks on nutrition education. We are developing new 
messages, messages that we have developed with focus groups, 
that help to focus individuals and remind individuals of 
nutritious feeding; not only nutritious feeding, but how to 
prepare food. It is one thing to buy the food and bring it into 
your home, but if you don't have the tools and skills to 
prepare the food, so we are doing a number of things to help 
educate individuals.
    Mr. Baca. Thank you.
    I understand that the SNAP national enrollments are at an 
all-time high of 45 million people. Do you have any of the 
latest enrollment numbers for California?
    Ms. Rowe. We do have those, and I certainly can get those 
to you, sir.
    Mr. Baca. Okay. And how has the recession affected the 
sign-ups in states with traditionally low enrollments?
    Ms. Rowe. I beg your pardon, I am sorry?
    Mr. Baca. How has the recession affected sign-ups in states 
with traditionally low enrollments in the SNAP Program?
    Ms. Rowe. Well, we have encouraged states to reach out to 
populations that previously have not participated in these 
programs. We are doing--we have just talked to the Labor 
Department and other Federal agencies to look for ways in which 
we can get information out to individuals who participate in 
their programs about the availability of SNAP. One of the 
things that we find quite often is individuals don't realize 
that they are eligible for a SNAP benefit even while they are 
receiving some level of unemployment compensation.
    Mr. Baca. Okay. I know that my time has run out, but you 
mentioned earlier that trafficking has gone down to about one 
percent.
    Ms. Rowe. Correct.
    Mr. Baca. What else, then, can we do to limit abuse and 
fraud? Is there anything else that we might need to implement 
both at the Federal or state level that would stop abuse and 
fraud that still occurs?
    Ms. Rowe. Well, one of the areas that we are looking at is 
the definition of retailers who can participate in the program. 
We have been able to develop profiles, if you will, on the 
types of businesses that may be prone to have trafficking 
activity, but we also want to make sure that we don't limit 
access. And so that is one of the areas that we may want to 
come back and talk to you about.
    Mr. Baca. I know my time has run out.
    The Chairwoman. Thank you, and I am sure we will have more 
questions on that, so you will get a better clarification, sir.
    I am now going to give 5 minutes to my good friend from 
Iowa, Mr. King.
    Mr. King. Thank you, Madam Chair.
    Administrator Rowe, thank you for your testimony and for 
coming prepared. I would just like to back us up historically a 
little bit and ask you if you could inform us as to what the 
original reason for the nutrition program at its inception?
    Ms. Rowe. For the SNAP Program?
    Mr. King. Well, for the nutrition program all together. I 
could call it food stamps. I think that might be historically 
more accurate.
    Ms. Rowe. Well, the original statutory purpose was to 
alleviate such hunger and malnutrition, which will permit low-
income households to obtain a more nutritious diet through 
normal channels of trade by increasing purchasing power for all 
eligible households who apply for participation.
    Mr. King. And what year was that policy established?
    Ms. Rowe. 1977.
    Mr. King. And prior to that, we didn't have any Nutrition 
or Food Stamp Program?
    Ms. Rowe. No, and I am leaning back--no, we did have a Food 
Stamp Program, but the policy cited was from 1972.
    Mr. King. Fair enough. I guess I grew up in an environment 
that didn't have this program, and I wasn't aware that it 
didn't exist prior to 1977. So thanks for that information on 
it, and the basis of it would be to alleviate hunger and 
malnutrition.
    Now, then, in the current environment, can you 
statistically identify children that are suffering from 
malnutrition?
    Ms. Rowe. I would like to get you that. We do have that 
information. I did not come with that information available 
today, but I can get you that information in terms of food 
insecurity.
    Mr. King. What about malnutrition? That is two different 
things, isn't it?
    Ms. Rowe. Right, right. And in terms of malnutrition, we 
can certainly talk with our sister agency, the Center for 
Nutrition Policy and Promotion, to see if they have statistics.
    Mr. King. Okay. I would ask you formally to produce that 
data for the Committee to statistically identify children that 
are suffering from malnutrition.
    Mr. King. I think it is important that we anchor ourselves 
on the basis for this program originally, and hunger is another 
statistic that can be measured. I would expect everybody has 
been hungry at one time or another. I don't know how you 
quantify that. If there is a means, I would like to know what 
that data is.
    Ms. Rowe. Well, there is--we do have a study that was 
released last year. I know the Food Research Action Council has 
released studies. We have looked at the food insecurity, and 
that is a data set that we have not only by state, but we can 
give it to you by Congressional districts. We can break down 
the food insecurity population for children and families.
    Mr. King. Okay. And I would just--let us expand this if we 
can, as I focused on children, but as we look at this data, I 
presume it will be also equally available for adults and then 
perhaps seniors separated from that as a group as well. I would 
like to know in percentages of children that are suffering from 
malnutrition, adults, and then senior adults, and maybe perhaps 
three separate categories. And if it gives me some information 
by region, even by Congressional district, that would be 
useful.
    And I say this because I am concerned that we might have 
gotten away from our original mission. In fact, we have gotten 
away from our original mission, because I have heard you say a 
couple of times the words food insecurity, and that is a 
different definition. And I remember the testimony that we had 
here in 2007 about food insecurity, and I happen to have saved 
it in my BlackBerry.
    This is a witness before this Committee March 13, 2007, who 
said, ``There is also mounting evidence that the overweight and 
obesity trends in the United States are due in part to high 
levels of food insecurity.'' That is a bit of a concept that is 
difficult for a lot of my constituents to get their mind 
around, that people are overweight because of food insecurity, 
and presumably if we can resolve the insecurity, we can resolve 
some of the obesity. Do you adhere to that position statement?
    Ms. Rowe. Sir, when people have limited resources, and they 
need to put food on their table, the prevalence is for them to 
buy those foods that are high in starch, that will fill the 
need for hunger, which then increases their tendency to be 
overweight, to have obesity issues, as well as diabetes and 
other health-related issues.
    Mr. King. Thank you. I do know these arguments, and they 
are the ones that I had anticipated. But I just make the point 
that it is hard for taxpayers to understand that more food 
stamps solves obesity. That is a messaging problem; however, 
there might be a basis in it in fact, and I could take issue 
with that.
    I would ask also are illegals--are they eligible for the 
SNAP Program?
    Ms. Rowe. No, they are not.
    Mr. King. And do you have a verification program?
    I would ask unanimous consent for an additional minute.
    The Chairwoman. No, I will give you a chance later, because 
I want everybody to have a good 5 minutes.
    Mr. King. Noting the objection, then I yield back the 
balance of my time.
    The Chairwoman. I hate to be hard about that, but I do want 
to be fair to everybody on the Committee, and I will now give 5 
minutes to Mr. Sablan.
    Mr. Sablan. Thank you, Madam Chair, and to you and the 
Ranking Member for holding this hearing.
    Good morning, Ms. Rowe. My name is Kilili. I am from the 
most remote part of the United States. It takes you a day to 
get there, so you can just imagine how much it costs to ship 
things there, whether it is the chicken from Arkansas or the 
rice from California. Or we should actually ship more apples 
from Washington maybe and less SPAM from Minnesota.
    But I have several questions. Unlike all the other United 
States Territories, the Northern Mariana Islands has no 
statutory mandate to receive nutrition assistance other than 
the Secretary's authority to extend USDA programs at his 
discretion under Public Law 96-597. The Secretary has decided 
it would be in a block grant, and you just testified earlier 
the difficulties of block grants at the time when people are 
having the most difficult time.
    I come from a place where one of the islands I represent, 
it costs $4 a pound for frozen chicken, $4. You can buy a 
chicken at less than a dollar a pound in many of the places 
here in the United States.
    I need to work with you, Ms. Rowe, on this issue, because, 
again, besides the high cost of those products, my government 
in the past 3 years has lost almost 50 percent of its GDP. Many 
people are either laid off--if you are not laid off and lucky, 
you get furloughed, your hours are reduced, and the world 
economic conditions, everything is going up.
    I look at myself and I say, when I go home and I see the 
difficulties, the way for me to console myself is I thank God I 
am not in Haiti, because I can't compare it to any part in the 
United States.
    You said the fundamental mission of FNS is to ensure that 
people have food. Now, we have--they reduced the program, the 
Block Grant Program you have afforded the Northern Mariana 
Islands where an individual gets an average of $111 a month. 
Fifty miles away in Guam, an individual gets $281 a month. We 
have just a couple of months ago reduced by 36 percent the 
benefits to everyone in the program and see an increase of 500 
on the wait list now.
    I need to work with you before I go into my questions, 
really, because you, FNS, review and approve the integrity of 
the programs for the Northern Mariana Islands, and you know all 
of these things that violates what the fundamental mission is, 
and you won't lift a finger to fix it. You should.
    I really need to work--I need your commitment right now, 
Ms. Rowe, that you will work with me on this. We have reached 
out to the Secretary. Mr. McGovern was kind enough to sign the 
letter for us to send to Secretary Vilsack, and I have not even 
received a response, and maybe it is because I don't have a 
vote here.
    I hope that when you look at me, you see an American here, 
because those Americans out there that I live with are going 
hungry, seriously, and I know because I go to their homes. And 
I need your commitment, Ms. Rowe, please, to work with me on 
this. And I will move on to my questions, and hopefully there 
is enough--thank you, thank you. May I have your commitment?
    Ms. Rowe. I was going to say you have my commitment, sir. I 
would----
    Mr. Sablan. Because we have in the past--I will be very 
honest. Under Secretary Concannon has really been gracious to 
us, and we need to address this, get into the food program, 
because I think that is where Americans need the most help. I 
am just trying--there are more details. If you want more 
details, I can share it to you. I am just a little embarrassed 
that I am telling the whole world that Americans in my district 
are not getting enough to eat, because the Americans are 
supposed to carry out the program, fulfill the number one 
reason it exists, approves plans that they know doesn't serve 
the program. That is where I need your commitment. I appreciate 
it, and I yield back.
    The Chairwoman. Now, I would like to give Mr. Southerland 
from Florida, another Member of the Committee, a full 5 
minutes.
    Mr. Southerland. Thank you, Madam Chair. I would like to 
yield as much time as my friend from the Northern Mariana 
Islands needs to finish his point.
    Mr. Sablan. Thank you, Mr. Southerland. I have Ms. Rowe's 
commitment. She will work with me. I shouldn't be airing any 
more of this. I am really grateful that you consider that. 
Thank you. I yield back.
    Ms. Rowe. You have my commitment on the record.
    Mr. Sablan. Thank you very much.
    Mr. Southerland. Ms. Rowe, thank you for appearing today. I 
am going to ask just some basic fundamental questions.
    I am one of the newest Members of the Committee, so I am 
trying to get my arms around all of this. Tell me if you would, 
what is the average length of time SNAP recipients participate 
in the program?
    Ms. Rowe. The average length of time that new recipients 
are participating in the program is about 8 months, 8 or 9 
months.
    Mr. Southerland. Is there a--is there a maximum amount of 
time? Are there any limits on that?
    Ms. Rowe. There are no time limits on participating for 
most eligible people.
    Mr. Southerland. Okay. And tell me about in calculating 
benefits, can you tell me what is excluded from household 
income and what deductions are allowed?
    Ms. Rowe. I am going to need some assistance from----
    Mr. Southerland. That is fine, and I understand.
    Ms. Rowe. Let me just confer with the staff.
    Mr. Southerland. Sure.
    The Chairwoman. Ms. Rowe, if you would like to have one of 
your assistants answer for you, that might be better.
    If you could state your name for the record, and I will 
give you an extra 20 seconds.
    Ms. Shahin. My name is Jessica Shahin, and I am the 
Associate Administrator for SNAP at the Food and Nutrition 
Service.
    I believe your question was around the eligibility 
requirement.
    Mr. Southerland. Yes, it was. In calculating benefits, what 
is excluded from household income, and what deductions are 
allowed?
    Ms. Shahin. Oh, okay. If I could start with the household 
income in the regular program, it is 130 percent of poverty, 
and then to receive benefits you need to get to a net of 100 
percent of poverty. The deductions are around things like if a 
state uses a standard deduction that looks at shelter, 
utilities, those kinds of things. So the deductions are related 
to their household expenses.
    Mr. Southerland. Okay. So those are all deducted. Tell me 
those again. Housing, utilities?
    Ms. Shahin. Shelter deduction, utilities.
    Mr. Southerland. Okay. All right. And what is--I heard--
what is the average? I see on here that the budget for Fiscal 
Year 2010 was $68 billion. What is the average benefit at any 
given time of the people that are recipients of the program? 
What is the average benefit?
    Ms. Shahin. I think the average benefit for a family of 
four is around--for an individual person, it is around $130. 
You don't multiply that by four people, because you get less 
and less as the family grows.
    Mr. Southerland. Sure. So that would be $100----
    Ms. Shahin. Thiry dollars more per person average.
    Mr. Southerland. Okay. And then finally, I noticed, Ms. 
Rowe, we were talking or discussions earlier about the states. 
What is the incentive for the states to track and prosecute, in 
your term, bad actors? Where is--well, what is the incentive? 
What is the penalty if they don't?
    Ms. Rowe. Well, first of all, states will face a fiscal 
penalty for failing to achieve an error rate at a certain level 
based on the national error rate. You must maintain your error 
rate at or below the national error rate. States receive 
penalties. That is not something that any state wants to have 
to explain to the legislature or to their Governor, that they 
are going to receive a fiscal penalty for failure to perform. 
States also receive bonuses, and it is the bonuses that 
encourage states and--encourage states to not only stay focused 
in this area, but to have additional resources to apply, 
whether it is for additional investigators, additional staff, 
outreach.
    I will tell you, when I was a state administrator both in 
the District of Columbia and for the State of Connecticut, we 
were competitive among our colleagues. We wanted to have as low 
an error rate as possible. We wanted to be able to go to our 
Governors and our legislatures and talk about the efficiency in 
which we were operating the programs. Not only are you here in 
Congress concerned, but legislatures are concerned, and members 
of state legislatures and Governors, about the error rate and 
ensuring that the program is operated efficiently.
    So it is the efficient operation of the program, as well as 
staying very focused on what you need to do to maintain your 
error rate and to continue to have it drop.
    Mr. Southerland. Okay. Thank you, Madam Chair, and I yield 
back.
    The Chairwoman. Thank you.
    And, Mr. McGovern, you are recognized for 5 minutes. And I 
would like to--before the clock begins--to recognize that the 
Ranking Member of the full Committee, Mr. Peterson, is here, 
and because I am a tough nut, you are going to be number 5 on 
the list, but we will give you a chance to make a statement as 
well as a chance to ask questions, sir.
    Mr. McGovern. Well, thank you very much, and thank you, 
Madam Chair, for letting me participate in this hearing. Thank 
you, Administrator Rowe, for being here.
    You know, I just want to say a couple of things. First of 
all, when the Chairman of the full Committee opened up, he 
talked about the fact that we are in tough economic times, we 
all have to make difficult choices, but I would like to state 
for the record that I don't think all programs are equal, and 
certainly programs that provide nutrition and food to people in 
this country to ensure that they don't go hungry I think need 
to be prioritized.
    And the problem we have here, quite frankly, is we still 
have a hunger problem in America. There is not a community in 
this country that is hunger free. What we need is a holistic 
plan that involves, quite frankly, more than just the programs 
in your Department and in USDA, but we need a holistic approach 
to try to eradicate this problem once and for all.
    It was mentioned that we are spending more on the SNAP 
Program than ever before. That is because more people are 
falling into poverty, more people are out of work, more people 
are eligible. If the economy gets better, the amount we spend 
goes down.
    The Chairman of the full Committee also talked about the 
Categorical Eligibility Program, or Cat El, I guess, is what 
they call it, which I think helps make SNAP a more efficient 
program, and I think repealing Cat El would decrease 
participation and make it more difficult and costly for states 
to administer the SNAP Program, and I think would result in 
increased error rates, exactly the opposite of what our goal 
should be. So I guess I don't want to--I hope this Committee 
doesn't go down that road.
    I would appreciate your comments on that. You mentioned how 
the SNAP Program is now more efficient than at any other time 
in its history, and when you compare it to a lot of other 
government programs, it looks really, really efficient. And 
amongst the error rate, is included in that number the number 
of cases of underpayments; in other words, where people who are 
eligible for a benefit don't get the entire benefit?
    Ms. Rowe. Correct.
    Mr. McGovern. I appreciate your comment on that.
    And then finally, there are a lot of people still who are 
eligible who are not in this program, and I would be--I would 
like you to answer the question of how many people are eligible 
but are not participating, and are they senior citizens, or are 
they children, or where does that--you know, where do those 
numbers fall?
    But look, these are really vital programs. I am sorry my 
colleague from Iowa left. I have to tell you, I think all of us 
when we go into our districts, we see people who are in really 
tough situations, who--quite frankly, these are the programs 
that actually put food on the table to allow their kids to have 
enough to eat. So in any event, I will yield to you to answer 
the questions.
    Ms. Rowe. Well, you are absolutely right, the problem is 
hunger. People need to be able to put food on their table, and 
this program allows them to be able to do that; not only to put 
food, but to put healthy food on their table.
    With regard to broad-based categorical eligibility, it just 
allows states the ability to simplify their SNAP administration 
by aligning the income and the resource limits with their TANF 
Program, something I wish I would have had when I was 
administering programs. It is a simplified way of making the 
application process easier for both clients and states.
    I also should mention that the household must still have a 
net income low enough to receive SNAP benefits, so even though 
they are categorically eligible, they still have to have a 
household net income low enough to receive benefits.
    In looking at some of the data, almost 98 percent of those 
receiving SNAP benefits have an income at or below the regular 
SNAP income limit of 130 percent, even in states with broad-
based categorical eligibility. So it hasn't opened up. What it 
has done is made it easier for people who want to participate 
to understand what is necessary for them to participate, and 
also to support the staff in terms of the administration and 
the application of the program.
    Underpayments and overpayments are all part of that payment 
error. We continuously work to ensure that we have neither 
underpayments nor overpayments, again, something that states 
are very focused on. And there are those who think that we are 
more focused on the overpayments, but my experience is we are 
focused on both. We want the right amount of money to go to the 
family and individual who is participating in the program. So 
we focus a great deal on underpayments and overpayments.
    Those who are eligible who are not in the SNAP Program--and 
I was hoping somebody was pulling that data together and was 
going to hand me a note--but I will make sure, but it is a 
large percentage, and we can give it to you by the percentage 
of elderly and other individuals who are eligible but not 
participating.
    Mr. McGovern. Thank you.
    The Chairwoman. Thank you.
    I would like to now recognize my friend from Maine, Ms. 
Pingree, for 5 minutes.
    Ms. Pingree. Thank you, Madam Chair. I appreciate that, and 
I appreciate both of you holding this hearing today. Thank you 
very much for the work that you do and the way that you help 
some of our most vulnerable citizens. Welcome to your job after 
4 months. I am also new on this job. I am a new Member of the 
Committee and am very pleased to be here.
    This is a tough economy, as many of my colleagues have 
stated, and I appreciate the thinking that my other colleagues 
are putting in on helping you think about how to make sure we 
reduce fraud and abuse in this program. And in tough times I 
think we do have to make sure that all the states are spending 
their money wisely and there is sufficient oversight. So I 
appreciate that discussion.
    I also know in my State of Maine, where we are 38th in per 
capita income, we have lost a tremendous number of 
manufacturing and other natural resource jobs, about 250,000 
residents of our state take advantage of the SNAP Program, and 
that is a lot of people in a state of 1,300,000 people. I also 
know that we do have many vulnerable citizens who do still not 
receive access to the program, so I do appreciate the 
importance of outreach, I think particularly to seniors who 
often don't take sufficient advantage of the program.
    I have a lot of concerns about this, and I will try to get 
a couple of questions out. One of my issues in Maine that you 
have helped us deal with--and we are very appreciative of the 
work that Secretary Concannon did. As you may know, he spent 
some time in Maine, and we think highly of him, and I hope that 
doesn't ruin his reputation in the Department. We really 
struggle with high heating costs and other excessive expenses. 
As I am sure you know, as one of 17 states to obtain a standard 
utility assistance waiver offered by the USDA in 2009, I really 
appreciate the 40,000--on behalf of the 40,000 Mainers who 
benefited from the Administration's decision to extend that 
waiver twice so Mainers could get through the winter, but the 
final adjustment came down to many people losing $20 a week in 
benefits. I know to many people that doesn't sound like a lot 
of money, but I know too many seniors and other very vulnerable 
citizens who are out of work, who have been out of work for a 
long time, have depleted their benefits, they are at the end of 
the line, and that was very difficult.
    I guess one of my questions, which goes counter to some of 
the concerns that people have, is when was the last time we 
updated the SNAP formula, and how does the Department plan to 
deal with assuring adequate nutrition for those people who I 
think in a state like mine where we are the most oil-dependent 
state in the country, we pay high heating oil costs, tough 
winter like the last one, a lot of people just couldn't make 
ends meet, and we didn't feel the cost adjustment was 
sufficient or representative for us?
    Ms. Rowe. Again, I am going to ask Jessica if she would 
join me with regard to the last time that we looked at the 
standard utility allowance and made any updates.
    Ms. Shahin. Actually, yes, ma'am. The standard utility 
allowance is adjusted by states on an annual basis in 
accordance with what their rates are, so it is updated every 
year. Each state does their own methodology, but it does have 
to be approved by FNS as a methodology for determining that 
year's standard utility allowance, and its basis is the cost 
that the state has incurred in the previous year.
    Ms. Pingree. I am sure we will end up having more 
conversation on that over time, but I thank you for that. And I 
just wanted to reiterate that it is a continuing challenge for 
my state, and I am sure in other places as well.
    I want to switch gears here a little in the time I have 
available. One of the things that I am particularly interested 
in is this convergence, particularly being on the Agriculture 
Committee where we think about the interests of farmers. And I 
represent a lot of small farmers in my state, and I know how 
important it is to work as efficiently as possible in your 
Department, but we are very interested and excited about the 
idea that there are many programs in Maine and other states 
that are utilizing the SNAP Program for participants at local 
farmers markets.
    I may have to discuss some of this in my second round, but 
let me just sort of put it out there, and we can follow up on 
it later. It all seems like a win-win idea. To me, it gets into 
this issue of adequate nutrition, how do we make sure that 
people have access to healthy foods. It is good for our 
farmers. They sell more at the markets, and, frankly, many of 
them are excited to see seniors and other people in vulnerable 
populations coming in, buying fresh food, learning how to cook 
them, and a whole variety of other things.
    I do sense that there are some challenges in working with 
the program. There is some overlap in the departments, there is 
some difficulty in getting EBT readers in many of our farmers 
markets, and some of that has to do with what we see as a 
little bit of overlap between FNS and AMS, not to get into too 
many initials.
    I am about to run out of time, so I may just put this out 
there when I get back to my second round, which I assume we are 
going to have a second round probably. I would like to talk 
more about that because that seems like a solvable problem and 
deals with a lot of the things that we are talking about today.
    The Chairwoman. Thank you.
    Now I would like to recognize the Ranking Member of the 
full Committee, Mr. Peterson.
    You may give an opening statement and ask follow-up 
questions if you choose.
    Mr. Peterson. No, Madam Chair. I just have a couple 
questions.
    Ms. Rowe, you proposed regulations for school nutrition 
standards that are supposed to keep the standards current 
within Dietary Guidelines and consider the recent IOM report, 
yet your proposed rule would significantly change the way 
tomato sauce and tomato paste is counted, which would 
substantially increase the cost of serving school lunches and 
generally make pizza uneconomical for schools to serve. As I 
understand it, you are miscounting tomatoes. Apparently there 
is nothing about crediting tomato products in the Dietary 
Guidelines, and there is nothing about it in this IOM report. 
We don't think there is any scientific justification for the 
proposal, so could you explain to me why you proposed a change 
in accrediting tomato products?
    Ms. Rowe. Well, what I can say is that it was--as we looked 
at the standards of the Dietary Guidelines, as well as the 
standards within the IOM recommendations, it was a 
determination by our staff that that was a necessary change to 
make, which is why we included it in our proposal. Now, we did 
receive over 130,000 comments on those proposed rules. Just 
yesterday I received an executive summary of the comments, 
which was about 150 pages. We will be looking very closely at 
that issue as well as other issues that have been raised and 
make some determinations as to how to move forward.
    Mr. Peterson. I don't see what justification there is, and 
if you are going to go ahead with this, then maybe what I will 
propose is we will reduce the funding for this program by 
whatever the increased cost of this is, if that is how people 
want to operate.
    The second thing on the categorical eligibility issue, can 
you tell me how many more people became qualified for this 
program through categorical eligibility?
    Ms. Rowe. As I understand, based on looking at some 
preliminary data, it is about 2 to 2\1/2\ percent.
    Mr. Peterson. So that is--what is it, 44 million people?
    Ms. Rowe. So it is about 2 or 2\1/2\ percent of that 
number.
    Mr. Peterson. But do you have any idea how much cost that 
added to the system, these 2, 2\1/2\ percent? I guess they have 
to go through this benefit formula calculation to figure out 
what they are going to get, like everybody else does, but----
    Ms. Rowe. The comment that my staff is sharing with me is 
it is about one percent of the benefits, so it would be about 
$100 million.
    Mr. Peterson. And we----
    Ms. Rowe. About $600 million, I am sorry.
    Mr. Peterson. We had the IG in here talking about the fraud 
issue. From what I could tell, a lot of the problem are these 
small mom-and-pop operations that only have a cash register and 
a tape. We have had the problem before where they were selling 
these food stamps outside the door for half price. Now 
apparently they are ringing this up and giving whoever has the 
card half of the money, and they keep half the money. Is that, 
in fact, the case? And what are you doing about this? I am not 
even sure we should let people buy food in some of these places 
because it is two or three times as expensive as it is in a 
grocery store.
    Ms. Rowe. Well, in response to your question, we have--that 
is trafficking. We have been looking very carefully, very 
closely at that issue. We do have identification through our 
ALERT system. We identify the stores where we see trafficking 
patterns that may exist. We are looking at our retailer 
definitions, who participates in the SNAP Program. We are 
working with the IG on some investigations. Many of the things, 
investigations and notoriety, that has arrived in the newspaper 
are stores that we already have been looking at. So 
trafficking, understanding what the profile is of stores who 
are trafficking, that are possibly trafficking, who are in the 
program, but also having some understanding of those--sorry, 
applying that knowledge to stores who are interested in 
participating in the program will also address some of the 
challenges that we face in not having stores come into the 
program who we think may very well be coming in, and the end 
result is they would participate in trafficking.
    We are also increasing the penalties for stores who are 
found to be conducting these unethical business practices. We 
have increased our working relationship and our coordination 
with the OIG's office, as I have said. We are looking at 
specialized investigators. We have investigators who are very 
adept at looking at the data that we have, the data mining that 
we are doing. To profile a store, we can go in, we can 
determine through our own undercover investigation whether or 
not this activity is going on. So there is a lot going on.
    Even though we are at one percent, we do not find that 
satisfactory. So we are doing a number of things within the 
agency to continue to take that number down and to target those 
stores who are participating in these unethical practices.
    Mr. Peterson. Could I just follow up?
    The Chairwoman. Since you are the Ranking Member of the 
full Committee, absolutely.
    Mr. Peterson. What percentage of these stores that don't 
have the current technology, are a problem? Is it one percent 
of them or ten percent of them? Do you have any idea?
    Ms. Rowe. I am not quite clear what you mean by the current 
technology.
    Mr. Peterson. Well, I mean they don't have electronic 
scanners.
    Ms. Rowe. The electronic scan card.
    Mr. Peterson. So they just have a tape. And so they don't 
have to ring anything up.
    I was talking to the IG about whether you could set this 
system up so that as they ring up the groceries, the items 
actually are put on the card so you could have an audit trail, 
and one of the answers I received is that some of them don't 
have the technology, so you can't do that.
    I understand all these things that you are doing, but 
errors and fraud are still hard to catch. So the question is, 
are we getting at 95 percent of the problem, or is this much 
bigger? Should we actually look at limiting the ability of some 
retailers to be in the program if you haven't got a way to 
control it? That is the question I have.
    Ms. Rowe. As I understand it, there are very few stores 
that don't have the EBT electronic devices, the point-of-sale 
devices. And those stores that don't have the point-of-sale 
devices would be stores--as I said, we have stores that we set 
up.
    Mr. Peterson. How many are there out of the total? I mean, 
do you have any idea what percentage of the total food stamp 
retailers are that kind of a store?
    Ms. Rowe. We can certainly get back to you on the 
percentage and the number of stores that do not have the point-
of-sale devices. But I will say that as we look at 
strategically how do you think about managing this program, 
those would be stores that may be a store that is on a high-
profile alert that we watch more carefully than stores that do 
have the electronic benefit device.
    Mr. Peterson. I would like to have that information if you 
could get it.
    Ms. Rowe. Certainly.
    Mr. Peterson. Thank you.
    Thank you, Madam Chair.
    The Chairwoman. And thank you, sir.
    Now we will go to the second round of questions.
    Ms. Rowe, Administrator Rowe, the 2010 Dietary Guidelines 
for Americans published by the USDA in January of this year 
specifically list four new trains of concern: potassium, 
dietary fiber, calcium, and vitamins. Unfortunately, Americans 
young and old are not getting enough of these important 
nutrients. One medium-sized potato has 18 percent of the daily 
recommendation of potassium and eight percent of dietary fiber. 
For potassium, potatoes are considered to be an excellent 
source, and for dietary fiber they are considered to be a good 
source. Knowing this, do you think potatoes are unhealthy? Yes 
or no.
    Ms. Rowe. Within our program for children who participate, 
no, I don't think potatoes are unhealthy.
    The Chairwoman. Okay. If so, if they are not unhealthy, do 
you think Americans, and kids in particular, should reduce 
their consumption of potatoes as proposed by the USDA's meal 
plan, also issued in January?
    Ms. Rowe. What we have said in that plan in looking at it 
is that children have meals outside of the school meals; that 
they would have access and the opportunity to have sufficient 
potato consumption and consumption of other vegetables that are 
limited under our guidelines. So we do not think that it is 
necessary to have unlimited white potatoes, within our dietary 
guidelines, in our meal pattern guidelines.
    The Chairwoman. Well, I am kind of surprised at that 
assumption, ma'am, because in my city of Cincinnati that I 
represent, there are some kids that the only food they get all 
day long is the School Lunch Program and maybe the School 
Breakfast Program. So to think that they are going to get these 
things outside of going to school is just not going to happen.
    And I really work to try to eradicate poverty in my 
district, and in some cases the only meals they get are when 
they are at school. In fact, I just read a book by Jeannette 
Walls about her issue with poverty, and she now works for 
MSNBC, and she talked about the fact that the only time she 
ever got a hot meal was when she was in school, and she is now 
into her 40s. So it is the school, whether we have had a SNAP 
Program or another nutrition program, that has really been the 
baseline for our children.
    But having said that, some proponents of the current USDA 
proposed meal plan rule believe that other revenue sources 
authorized in the child nutrition reauthorization will offset 
the cost increase contained in the proposed rule. USDA's 
analysis indicates that schools will have to develop innovative 
solutions to the funding gap created by the proposed rule. In 
other words, they are talking about $5 billion over 10 years, 
of which 80 percent of the schools that have to bear that cost 
are the ones in my district that can least afford to do it.
    Does the USDA continue to stand by their estimates of the 
impact of the proposed rule, or do you now believe that 
revenues from paid meals and other administrative changes will 
be sufficient to make schools whole as they attempt to 
implement the proposed rule? And if you continue to believe 
that schools will face a revenue shortfall as they implement 
the proposed rule, do you have any suggestions that I might 
pass on to the schools in my district? And by the way, I have a 
district that has got a lot of poverty.
    Ms. Rowe. Well, let me answer the end of your question 
first. We continue to work with schools to help them identify 
strategies that they can use to meet the meal pattern 
guidelines. There are many schools who, at the time the IOM 
issued their recommendations, started changing their School 
Meal Program to try and meet those guidelines, identifying ways 
in which they could use more farm-to-school products that would 
maybe reduce their food costs. It may have an initial increase 
in their prep costs and their personnel costs, but eventually 
they were able to see some savings and be cost-efficient.
    In addition, by allowing schools to now charge the adequate 
amount for both the paid meals as well as their a la carte, it 
is an additional revenue source that is coming into schools.
    We are prepared to work with schools to ensure that they 
are able to manage the new meal patterns within the budget 
constraints that they face within their schools, and we are 
doing that now. We are working with the National Food Service 
Management Institute. We have been working with a number of 
other organizations, School Nutrition Association, et cetera, 
to help schools think about how they can meet these guidelines 
and still be within their budget constraints.
    The Chairwoman. Okay. And because I am a strict timekeeper, 
I am going to now yield to my good friend Mr. Baca.
    Mr. Baca. Thank you.
    Again, Ms. Rowe, thank you very much for providing us with 
a lot of information. I am intrigued with the statistic 
mentioned, that one percent of the total fraud is trafficking. 
That is quite low, particularly now that there are record 
enrollments. And it seems like we are focusing a lot on this 
number. But, when we stop to look at one percent, consider that 
is less than the rate of fraud in Federal contracts. There is a 
lot more fraud and abuse in contracts. And it seems like we are 
not concentrating on the need to feed people here in the United 
States. We have a lot of people that are abusing our defense 
contracts and monies that are being wasted. If all we care 
about is fraud, we should be focusing a lot more in that area 
than on SNAP.
    But getting back to one of the questions I want to ask, 
what are your thoughts about the recent movement by some 
localities, most notably in the City of New York, to limit the 
choice of food available with SNAP benefits?
    Ms. Rowe. Well, as I said, we are looking at the New York 
waiver that they have submitted. We have it under careful 
review, and we will be making a determination. I would be happy 
to share the outcome of that decision with all of you.
    With regard to the other--your question in terms of the 
dietary behavior of most Americans, most Americans, I know 
myself, do not have a good diet, and we are constantly looking 
for ways to increase information to Americans so that they can 
improve their dietary habits and lifestyles. So I think what we 
see happening in state after state, the states are becoming 
more and more concerned about the diets of their citizens, 
states are taking actions. We are looking for ways to 
incentivize activities within states to reinforce, provide 
incentives that reinforce positive food--positive habits around 
healthy nutrition and healthy lifestyles. That is an approach 
that we have been taking.
    Mr. Baca. Okay. Do you feel that these initiatives will 
either improve health or save money?
    Ms. Rowe. Well, I think the initiatives--and the final 
information is still not available to us, but as we look at 
incentives, we certainly see greater participation in 
individuals who are purchasing fresh fruits and vegetables. As 
we look at availability, farmers markets, et cetera, 
particularly farmers markets where we do have--where they are 
able to use SNAP benefits, or use the Senior Farmers Market 
vouchers, or the WIC vouchers, or any of those programs, we are 
seeing greater consumption and participation in fresh fruits 
and vegetables. We think that does carry over into people's 
buying habits as well.
    Mr. Baca. Thank you.
    One of the programs that I am very much concerned about is 
the Food Distribution Program on Indian Reservations, FDPIR. 
Too many times we ignore that many of these tribes are very 
poor and don't have adequate access to food. What role does 
USDA play in helping tribes reach out to promote FDPIR?
    Ms. Rowe. We work very closely with tribes. One of my first 
visits when I came onboard was to one of the major meetings of 
tribal leaders. We work very closely with them. We have an 
overview work group that looks at the types of foods that are 
distributed. We keep trying to make sure that the foods are 
healthy, but also meet tribal needs and tribal guidelines. We 
have continued to expand, work with the tribes members to 
explain to them the importance of the food package that we have 
available and how healthy that food package can be for 
themselves and for their families.
    Mr. Baca. Okay. I am also curious to know how FDPIR and 
SNAP work side by side, since, as I understand it, no one can 
be enrolled in both programs at the same time. Is FDPIR only 
used in areas that are remote and have little or no access to 
stores? Also, do you know the percentage of reservations that 
contain food stores that accept SNAP benefits?
    I had to throw in both questions because I am running out 
of time.
    Ms. Rowe. With regard to the participation in SNAP and 
FDPIR, it is operating in locations where there is not easy 
access to any other food stores and members who live on Indian 
reservations can participate in. So, yes, it is that 
individuals can participate in SNAP, or they can participate in 
FDPIR. They are not able to participate in both.
    With regard to the second part of your question, the 
availability of stores. That information we can get back to you 
on. I am sorry. The availability of stores. We can get that.
    The Chairwoman. Thank you so much.
    And before I turn it over to Mr. Southerland, I would just 
like to recognize that we have students in the audience from 
the Future Farmers of America in my district at Fayetteville-
Perry, and they are seeing democracy in action. And I think it 
is very timely that they are here while we are discussing the 
merits of the food safety program--or I mean the food nutrition 
program in the farm bill.
    And so with that I will give 5 minutes to my friend from 
Florida.
    Mr. Southerland. Thank you, Madam Chair.
    I would like to recognize the efforts of Florida 
Partnership to End Childhood Hunger and Florida Impact. Both 
organizations are based in my Congressional district in 
Florida, and I am proud of their efforts to work with over 50 
organizations committed to work collaboratively to address 
childhood hunger and those in need. The partnership leverages 
public and private partnerships and Federal nutrition dollars 
to reach low-income families.
    What is your--and I know you are new in your post here. 
What is, in your opinion, the role between these public and 
private partnerships and what they--how they should work 
together to really address hunger?
    Ms. Rowe. The role of these partnerships is critical, 
particularly as they work together in a state leveraging both 
their resources and their knowledge, being able to target their 
resources, being able to be strategic in thinking through how 
do we reduce, how we move the dial, as I often call it, from 
where it is today to where we want it to be to reduce hunger, 
to improve nutrition.
    We support these partnerships. Many of them, our regional 
offices work closely with them. We provide staff support to 
them. They are an integral part of the work that we do at the 
regional level and at the national level. It is very important 
to have these public-private partnerships.
    Mr. Southerland. I am assuming you have similar 
partnerships around the country in states everywhere and 
communities everywhere?
    Ms. Rowe. We have them around the country, and just for 
summer feeding alone, the partnerships, the work that goes on 
in a state with these major partnerships to get information 
out, to recruit families, to get them involved, but also to 
provide information and data, those partnerships are extremely 
important.
    Mr. Southerland. Very good.
    I also want to mention, I know that our Florida Agriculture 
Commissioner Adam Putnam, a colleague of many of those on this 
panel this past year, I know he has a current pending 
application before USDA Food and Nutrition Service, and it is 
basically the Healthy Schools for Healthy Lives Act, and so I 
just would like on behalf of my state to just ask for your 
consideration in that application.
    Ms. Rowe. Absolutely.
    Mr. Southerland. And I know that we are eager to work to 
make a difference not just in my district, but in the State of 
Florida.
    Madam Chair, I know I have 2\1/2\ minutes, but we want to 
be good stewards of our time, so I don't want to just ramble, 
so I am going to yield back.
    The Chairwoman. Let me now give 5 minutes to my good friend 
who may not feel that he has a vote, but he always has a voice, 
from the farthest part of our Americas, Mr. Sablan for 5 
minutes.
    Mr. Sablan. Thank you very much, Madam Chairman. Thank you 
for your kind words. I say I have a voice right now, but I 
prefer to vote actually eventually.
    Ms. Rowe, again, 4 months on the job, and I am asking you 
so many details about this place that you probably never have 
heard of maybe 4 months ago unless you have been there, right?
    Ms. Rowe. I will tell you that I have heard a lot about it 
since I have been in this position.
    Mr. Sablan. I am sure.
    Anyway, I want to compliment you. WIC is one of the best 
programs that has happened to the Northern Mariana Islands, and 
on behalf of the babies and women and children, it is just a 
wonderful program.
    I have--the School Lunch Program, you see, because we are 
again from the territories, like I said earlier, almost \1/2\, 
a decrease of almost \1/2\, 50 percent of our GDP, increase in 
layoffs, increase in furloughs, but our Census count won't come 
up until the summer of 2012. That is a year away from now. But 
all of these economic conditions have seen an increase of 
students eligible for the School Lunch Program, and I have my 
education people on my back all the time asking for the release 
of the Census because they know, they know that there is an 
increase of eligible students for the school lunch. They also 
know that without that increase in numbers, they can't justify 
to you an increase in the need for increased funding for the 
program. So, again, I would like to ask you to join me again in 
looking into that, and I am just associating this new issue in 
food commitment we have to work together earlier.
    I am also going to ask, if possible, to ask for a response 
to the letter that Mr. Jim McGovern, Mr. Sam Farr, and I wrote 
on June 24th to Secretary Vilsack, and I appreciate that.
    And let me just--let me give you a little information on 
how much attention--and this is not specific to your 
Department, this is to many Federal offices--how much attention 
they have for the Northern Mariana Islands. Yesterday I went to 
your website. I wanted to find out in your public affairs, 
government affairs, who I should talk to. And did you know that 
in your website as of yesterday, I don't know if they made 
changes today, that under Region 9 they are still listed as 
covering the Trust Territory of the Pacific Islands. The Trust 
Territory of the Pacific Islands ceased to exist 25 years ago, 
but it doesn't cover the Northern Mariana Islands, which became 
a part of this nation in 1978, over 30 years ago.
    This, Miss Rowe, with all due respect, and in all 
sincerity, is what I am saying when I say--and you are not the 
only one. Don't think you are exclusive in this. The absence of 
the necessary attention that Federal agencies need to give to 
the territories, and in particular to America's newest 
territory, the Northern Mariana Islands, and those are 
Americans out there. Thirty percent of our high school 
graduates put on a uniform. I don't know if that happens 
anywhere else in America. Thirty percent of our high school 
graduates. And we are talking about a very small population. 
They deserve the attention from Federal Government employees, 
and it breaks my heart.
    And I am the most grateful person from the Northern Mariana 
Islands to all Americans. My gratitude and appreciation for the 
American people has grown exponentially in the little over 2 
years that I have been here. Grateful. I tell my people back 
home, if you see an American taxpayer, by God say thank you, 
and I mean that from the bottom of my heart.
    But Federal offices, I know we are all busy, going through 
this 175 page report and all these statistics that I don't read 
basically. But those are Americans, and they are entitled to no 
less than the attention that we give Americans, we give Members 
of Congress. No less; not more, but no less.
    For that, I yield back, and I thank you for your presence 
here today.
    The Chairwoman. Thank you. And isn't this a powerful voice?
    Ms. Rowe. I was going to say, you have my attention, and 
you have my commitment.
    Mr. Sablan. And you know I love you, Ms. Rowe.
    The Chairwoman. Mr. McGovern, do you have any more 
questions?
    Mr. McGovern. Yes, I do.
    The Chairwoman. Five minutes, sir.
    Mr. McGovern. Thank you.
    Let me first say with regard to a couple things that were 
brought up, this New York waiver, and the suggestion by my 
colleague Mr. Peterson about limiting where SNAP beneficiaries 
can shop, I would urge you to proceed with extreme caution on 
both of those things.
    I was at the press conference with the First Lady yesterday 
dealing with food deserts. There are some people who do not 
have access to supermarkets and stores that provide the kind of 
nutritious food that we all define as nutritious, and while it 
sounds nice to say we are going to make sure people can only 
spend money on good food, we should be thinking about how to 
give people more access as well as the issue of affordability. 
So it sounds good, the New York waiver, but I would urge you to 
proceed with caution.
    I have a few questions, and then--let me get through them 
all, and then you can answer them.
    Following up with the categorical eligibility issue, isn't 
it true that if we cut Cat El, that that would result in 
increasing--it would result in an increase in error rates and 
fewer people receiving SNAP?
    And then on the benefit level, does the SNAP last a full 
month? What happens when someone runs out of their SNAP 
benefit? Where do they turn to for food?
    And then finally, going back to a point I brought from my 
original statement, I do not believe that we have a 
comprehensive or holistic plan to deal with hunger in America, 
and I have been suggesting to the White House and the Secretary 
of Agriculture, and I am going to suggest to you, we should 
have a White House conference on food and nutrition. We need to 
connect the dots because ending hunger is not just about SNAP, 
it is not just about WIC, it is about a whole bunch of other 
things. We need to connect these dots.
    And the President made a pledge that we would end childhood 
hunger in America by 2015. We are not, at the rate we are 
going. And I want to be able to keep that pledge, and I would--
my follow-up question would be would you agree with me that we 
should do a White House conference on food and nutrition so 
that we can come up with a holistic plan so we all know what 
our assignments are? Again, it falls under the jurisdiction of 
not just what happens in this Committee and not just what 
happens in government, it is the private sector, it is the NGO 
community, it is the faith-based communities. But we don't have 
a plan. We do not have a plan. I would urge you to help me 
convince the President to go ahead with that conference.
    So with that, I will let you answer my questions.
    Ms. Rowe. Well, let me answer the question in terms of any 
reduction in the food stamp program, any changes in categorical 
eligibility or any reductions would result in people having to 
leave the program and not being able to meet their basic needs.
    I think the other part of your question, you and I see it 
all the time, and I am sure others as well, individuals run out 
of benefits sometime toward the--after the middle of the month. 
They spend--and when that happens, they have to turn to food 
pantries. They have to turn to the food pantries in their 
churches, they turn to the food pantries and the food banks 
that are in their communities, so they turn and look for 
resources very quickly.
    Benefits are usually spent in the first 3 weeks. So, the 
last week of the month, that is also in response to the 
question about the obesity issues, because when those benefits 
are spent, that is when individuals turn to foods that will 
fill the stomachs of their children and themselves, which may 
not be the healthy foods, and they may be the foods that lead 
to obesity and other health-related illnesses.
    The broad-based categorical eligibility simplifies and thus 
reduces error rates when you think about how, as a state, we 
apply that program or that rule. So I think if we eliminate it, 
we would find ourselves talking about a different number or 
additional resources being spent to try and maintain the error 
rate that we currently have in place.
    With regard to a comprehensive process for planning, I 
agree with you that we need to have a comprehensive process for 
planning. To the extent that that would be a White House 
conference or some other vehicle, we would--I would certainly 
be prepared to support it.
    Mr. McGovern. I appreciate it. I do have a request in to 
the President calling for a White House conference. I just feel 
it needs to be--this issue needs to be brought up to that 
level, if we are going to be serious about it. I think 
everybody, Republican and Democratic, are all committed to 
trying to end hunger in America, but we don't have a plan. We 
don't have a comprehensive plan, and I don't know any other way 
to get to one where we can hold people accountable other than 
bringing it up to the Presidential level. The First Lady's 
press conference was really good yesterday, but she didn't talk 
a lot about hunger or poverty, and, as you have mentioned, 
hunger is a contributing--food insecurity is a contributing 
factor to obesity. But, anyway, I would appreciate any support 
I can get on this idea. Thank you.
    Ms. Rowe. You are welcome.
    The Chairwoman. Thank you.
    In our final set of questions before we go to two closing 
statements, one by Mr. Baca that will be delivered by Ms. 
Pingree and the final one by myself, and any closing remarks 
that you may have, so I am going to turn it over to Ms. Pingree 
in her role as Ranking Democratic Member for 5 minutes of 
questions.
    Ms. Pingree. Thank you.
    Thank you for persevering here and again for your good 
work, and to our Chairwoman for holding this hearing. I will 
try to be brief here because some of these things I think I 
will just submit to you in writing.
    But just to go back to if you recall 100 questions ago, I 
am very interested around the things in EBTs and farmers 
markets, and one of the things I have heard, we talked to a lot 
of our farmers markets, I know many of them struggle. Some 
don't have Internet access, but sometimes it is just other 
parts of the bureaucracy. I have been told that there is some 
argument that if they were able to combine the work that went 
on at FNS and AMS, and this may be way in the weeds for you at 
this moment, but it could streamline some of the processes, the 
application processes they have to go through. Our only 
interest in the end goal is making sure that more people who 
participate in the SNAP Program are able to buy food from the 
local farmers market. So I am not sure if you have an answer to 
that question, but one of our issues is around that and how to 
make this work better, and I think we could work with the 
Department on that.
    Ms. Rowe. We have started to have meetings with AMS earlier 
year this year before the season opened for farmers markets to 
find ways in which we could be more collaborative in--both in 
financing farmers markets, but also in approving them, 
authorizing them, and getting point-of-sale devices in. I think 
we were a bit better this year. We will continue to work toward 
it. I would be happy to have further conversations with you 
about it as well and members of your staff.
    I became interested in the nutrition area because of my 
involvement in my church's farmers market, and so I saw the 
benefits on the south side of Chicago when people came out and 
had a farmers market where they could make purchases.
    Ms. Pingree. Great. Well, I am glad we are on the same page 
on this. I would be happy to work with you and talk more about 
it. I do think it is one of those things, a few bureaucratic 
hurdles we get out of the way, and we can make this work.
    I just want to bring up one other topic, and I know there 
are many this morning. It is my understanding there are more 
applications from eligible schools for the Fresh Fruit and 
Vegetable Program than there are funds available. Again, this 
is one of the interests in my district. We have seen the huge 
change in schools that are able to provide more fresh foods, 
buy from local farmers. It spurs on the interests of young kids 
in what they are eating. Sometimes they take the information 
home to their families. I have sat next to kids in elementary 
school who are happily gobbling up their kale and Swiss chard. 
I think we deny them the opportunity to eat some very health 
foods when we don't do that.
    So can you give me some background on the number of schools 
or percentage of schools that apply but are denied? And if you 
can't provide that now, that is okay.
    Ms. Rowe. We don't have the breakdown, but I agree with 
you. When I started going out, that was the one thing I heard 
from schools: We would like to be able to participate in this 
program.
    Ms. Pingree. Great. I just want to put it out there again. 
We have seen the changes in our state. Again, it is great for 
local farmers, it creates new markets, but it also allows our 
kids to eat more foods.
    And I will just--in my own end of this, I appreciate the 
work the Chairwoman is doing on behalf of the lowly potato. As 
a potato-raising state, I understand the issues around too many 
carbohydrates and starches in kids' diets, but the benefits of 
an actual potato, the nutritional value, and the importance of 
that is critical, and so I am glad that that is being much 
discussed.
    And I will yield back the balance of my time.
    The Chairwoman. Thank you.
    And now on behalf of Mr. Baca, would you care to give the 
closing statement?
    Ms. Pingree. Thank you, Madam Chair, and as I mentioned to 
you, this makes me a far better pitcher in life. I feel I can 
play baseball again.
    So his closing statement, on behalf of Ranking Member Baca, 
I would like to thank you, Ms. Rowe, for your participation in 
today's hearing and your thoughtful testimony. Your knowledge, 
ideas, and experiences will, I hope, be used by Congress to 
ensure adequate nutrition continues to be available to the 
neediest Americans in the most efficient manner.
    Again, thank you to Chairwoman Schmidt for holding this 
hearing. I know we share an interest in the health and wellness 
of our constituents, and I look forward to working with you 
during this next farm bill to put those interests into 
practice.
    The Chairwoman. Thank you.
    Now for my closing statement. There was so much that I 
could have--I wish I had the opportunity to ask, but I am going 
to combine it in a closing statement.
    I think that most Americans recognize we have an obesity 
problem in the United States, and that we have to find ways to 
tackle it, but I think sometimes we reach wrong conclusions 
when we look at current trends and make a decision that is not 
going to make folks eat more healthy or have trimmer bodies. 
And I look at your agency and others involved in food marketing 
guidelines, and there is--people think, well, the kids are 
getting heavy because they are watching too much TV, and I 
agree. I think the sedentary lifestyle that we have today with 
our children, the fact that they lack as much playground 
activity as I had as a child tends to build a broader 
waistline. But, I think that while we both might believe that 
the TV is the root cause, I think we are reaching the wrong 
conclusions as to why.
    I think that sometimes people say, well, it is the 
advertisement that is going on on the television that is 
helping to broaden those waistlines, and I am just not sure 
that is true, because I had those same advertisements when I 
was a kid, but my mother made me go outside and kick the can.
    Much of the products banned by the Interagency Working 
Group's proposals are the same ones the USDA has recently 
determined to be important in the Special Supplemental 
Nutrition Program for Women, Infants and Children to promote 
healthy children under Title V. I assume that the reason the 
four agencies created a working group on this issue was for 
consistency of the Federal food nutrition recommendations, yet 
looking at the HealthierUS School Challenge criteria, the 
National School Lunch Program proposed rule, the WIC food 
package criteria, and the IOM Competitive Foods Report, 
inconsistencies abound. If the point is to encourage healthy 
food, isn't it important that the Federal Government speak with 
one voice and a consistent voice?
    And I would like to add that it is not always about the 
food, it is about how in many cases the food is prepared. 
Cereal in the morning isn't a bad product if you make sure that 
you are only having \3/4\ of a cup, or \1/2\ cup, or a cup, 
whatever is recommended, and that you are using either a low-
fat or a skim milk with it and not adding sugar. That is not a 
bad actor. In fact, sometimes healthy cereals with a lot of 
granola and grain can have twice as many calories as, say, Tony 
the Tiger's great cereal. So it is not about the advertising, 
it is about how we prepare the food.
    The war on potatoes, which I am so glad I have a fellow 
lady helping me with this, the potato is one of the best foods 
a person can eat, especially folks that have a modest income, 
because of all the nutrients that are in it. But, if you deep 
fry it, and you put a lot of cheese on it, and you put a lot of 
salt, then maybe it becomes a less attractive animal. But when 
you just eat it as a potato, whether it is mashed and with a 
little skim milk and a little pepper, that is not a bad thing 
to eat. And so I caution arbitrary conclusions based on 
unhealthy ways that we prepare products rather than the food 
group itself.
    I am concerned about recent findings in the Global Insight 
suggesting that the proposal could cause the loss of 
significant number of American jobs. I am concerned that it 
would cost our schools more money for the proposed rules that 
are there when it is not going to make our children thinner, it 
is not going to make them have more healthy foods. And most 
importantly, I am concerned at what will happen to those 
children, especially the at-risk children, when they leave 
school. To think that they are going to get those kinds of 
foods outside the school, that just may not be the case.
    And I am just throwing that out there because I think you 
and I are on the same page. We want to attack obesity, we want 
to make sure our children and our adults are healthy folks, and 
I really think that it is education. It is educating the food 
preparer, whether it is the mother or the father or the aunt or 
the grandmother, on how to prepare the foods in an appropriate 
way. And I know most schools are doing this now.
    So the problem is really not so much inside the school, but 
inside the home, but to arbitrarily think that seeing Toucan 
Sam or Honey Nut Cheerios or Tony the Tiger is making our kids 
fat, I just don't think that is the case.
    So those are my thoughts, and I really thank you, and if 
you have any closing thoughts, I will give you the microphone.
    Ms. Rowe. Thank you so much. And I really do agree, and I 
appreciate your perspective and your passion on this subject. 
It is one that I am equally passionate about, and I am looking 
forward to working with you and Members of the Committee so 
that we can ensure that our future generations are healthy and 
have healthy lifestyles.
    I do want to make two clarifications. I did indicate that 
there was not a Food Stamp Program prior to 1977. I was not 
correct. Food Stamp Act of 1964 did exist, it established the 
program, and then there have been subsequent changes. So I 
wanted to put that clarification out there.
    The other was on time limits. There is a small category of 
individuals, able-bodied, working adults, who participate in 
the program who have a limit of 3 months and 36 months to 
participate in our SNAP Program. So I did want to make those 
two clarifications.
    I want to thank you for giving me and our staff an 
opportunity for being here. As my first foray out before a 
Congressional Committee, I can say that this experience has 
been both learning for me, and I hope I have been able to 
contribute to your thinking as you go forward.
    The Chairwoman. Thank you. And I think it is great, 4 
months on the job, you really have a great deal of information 
and history lessons. That is okay. I make mistakes as well.
    In closing, I would just ask if I can impose on you to 
introduce you to my FFA children, young adults actually, 
because this is their first foray into Washington, and to meet 
the Administrator of the Food and Nutrition Service Program I 
think would really help them with their educational experience. 
So thank you very much.
    Ms. Rowe. My honor.
    The Chairwoman. With that, this meeting is adjourned.
    Ms. Rowe. Thank you.
    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Submitted Statement by Lisa Davis, Vice President of Public Policy, 
                            Feeding America
    Chairwoman Schmidt, Ranking Member Baca, and Members of the House 
Committee on Agriculture, Subcommittee on Nutrition and Horticulture, 
thank you for the opportunity to submit this statement for the record 
on behalf of Feeding America and for holding this hearing.
    Feeding America is the nation's leading domestic hunger-relief 
charity with a network of more than 200 food banks serving all 50 
states through over 61,000 local food assistance agencies, 55% of which 
are faith-based. Feeding America food banks, as well as food pantries, 
soup kitchens and other assistance agencies, rely on a variety of 
public and private funding streams to feed 37 million Americans a year, 
including 14 million children and nearly 3 million seniors.
    During the worst economic downturn since the Great Depression, the 
number of American families struggling to make ends meet has increased 
significantly. With unemployment currently at 9.2 percent, the need for 
food assistance continues to remain high and food banks continue to be 
pressed to meet the need in their communities. Last year, one in eight 
Americans, received emergency food assistance through the Feeding 
America network. This represents an increase of 46 percent since 2006. 
As a result, approximately 5.7 million people per week are now 
receiving emergency food assistance through Feeding America food banks.
    For those individuals facing food insecurity, the nation's Federal 
food assistance programs and emergency food providers provide a 
critical safety net. In April 2011, the last month for which data is 
available, nearly 45 million Americans were participating in the 
Supplemental Nutrition Assistance Program (SNAP), formerly known as 
food stamps. In addition, in FY 2011, the Commodity Supplemental Food 
Program (CSFP) is providing nutritious monthly food boxes to a caseload 
of more than 604,000 people, more than 96 percent of them low-income 
seniors. Moreover, in FY 2011, the Emergency Food Assistance Program 
(TEFAP) is providing more than $350 million worth of nutritious, 
American-grown commodities to help food banks supplement their food 
supplies and feed those in need.
    As the Committee hears testimony from the United States Department 
of Agriculture (USDA) regarding the Title IV Nutrition Program 
contained within the farm bill and the beneficial impact of these 
programs, Feeding America respectfully offers several policy 
recommendations that would further strengthen these programs and could 
provide a more stable and reliable stream of food to the food 
assistance network and to the millions of Americans we serve who are at 
risk of hunger.
Policy Recommendations
    The Emergency Food Assistance Program (TEFAP) Commodities: TEFAP is 
a means-tested Federal program that provides food commodities at no 
cost to Americans in need of short-term hunger relief through 
organizations like food banks, pantries, soup kitchens, and emergency 
shelters. Healthy and nutritious food commodities provided through 
TEFAP are an essential resource that enables Feeding America food banks 
to meet the need in their communities.
    TEFAP commodities currently account for approximately 25 percent of 
the food moving through Feeding America food banks nationwide. In most 
instances, local food banks supplement TEFAP commodities with privately 
donated foods to extend TEFAP program benefits beyond the budgeted 
amount for the program. As the unprecedented demand for food continues 
at food banks across the country, TEFAP commodities are essential for 
the provision of a steady emergency food supply. However, the level of 
commodities USDA provides is projected to drop off significantly in FY 
2011 and FY 2012.
    In FY 2010, TEFAP provided approximately $655 million worth of 
nutritious foods to low-income Americans. This figure includes 
commodity purchases mandated by the 2008 Farm Bill as well as bonus 
commodity purchases that were appropriated in FY 2010 Agriculture 
Appropriations and those bonus purchases made by USDA when necessitated 
by market conditions.
    Unfortunately, in FY 2011, even as the need remains at 
unprecedented levels, USDA has made no indication that there are plans 
to make any additional bonus commodity purchases beyond those already 
made this fiscal year. Without additional bonus purchases in FY 2011, 
TEFAP spending levels will fall by nearly 44 percent to approximately 
$370 million. This $285 million decrease in TEFAP commodity spending 
for FY 2011 will significantly impact efforts to address the growing 
need for emergency food assistance throughout the country. Without 
additional r commodity purchases, too many Americans may go without 
adequate access to the food they need and food banks face the prospect 
of empty shelves.
    With agriculture commodity markets projected to remain strong in 
the coming years thereby driving a marked decline in the availability 
of bonus TEFAP commodities, Feeding America recommends that the amount 
of annual funding for mandatory TEFAP purchases be increased in the 
2012 Farm Bill. Further, with respect to bonus commodity purchases, 
Feeding America recommends that the committee explore the development 
of an economic, need-based trigger that would prompt Section 32 bonus 
commodity purchases not only when agriculture markets are weak, but 
also when unemployment or other economic factors are driving up the 
demand for emergency food assistance. Last, with respect to the 
inflationary index already attached to mandatory TEFAP purchases, we 
recommend that a floor be placed on this program so that spending 
levels are precluded from being reduced below prior year levels.
    TEFAP Administrative Funding and TEFAP Infrastructure Grants: 
Federal administrative funding helps defray the costs of storing, 
transporting, and distributing TEFAP commodities, helping ensure food 
banks and partner agencies can get emergency food assistance to those 
in need. Recognizing the critical importance of these funds, the 2008 
Farm Bill increased the authorization level to $100 million per year. 
However, despite that recognition, Congress has never provided more 
than $50 million per year in annual Agriculture Appropriations 
legislation.
    Food banks are struggling to respond to a significant increase in 
demand that is likely to continue for some time. Without adequate 
Federal assistance, they will be unable to afford the rising costs 
associated with storing and distributing emergency food commodities. 
While the increase in TEFAP products that require refrigeration or 
freezer capacity has been a welcome addition for clients, these 
products are more costly to store and deliver across large service 
areas. Compounding these challenges are rising fuel costs that in some 
cases have nearly doubled transportation and delivery costs. To help 
address these challenges and ensure that states and emergency food 
providers have the resources needed to store and distribute TEFAP 
commodities, Feeding America recommends that the Committee provide 
mandatory TEFAP Administrative funding of $100 million per year in the 
2012 Farm Bill.
    Similarly, TEFAP Infrastructure Grants are essential to helping 
emergency food providers meet a variety of infrastructure needs and 
ensure the effective and efficient delivery of TEFAP foods to those in 
need. Funding provided through this competitive grant program may be 
used to help emergency food providers implement, improve, and expand 
their infrastructure activities and projects. Specific items that may 
be funded include: developing computerized systems for tracking time-
sensitive food products; improving the distribution of perishable foods 
(such as fresh fruits and vegetables); rescuing prepared, unserved 
food; identifying donors and eligible recipients; and improving 
facilities and equipment.
    In FY 2010, USDA awarded $6 million in TEFAP Infrastructure Grants 
to 39 emergency food providers, 19 of whom primarily served rural 
areas. However, USDA had at least 4 times as many applicants for these 
grants as they had funding to award, demonstrating there is a great 
demand for these grants. In recognition of the need and demand for this 
funding, Feeding America recommends that this program be reauthorized 
at a level of $15 million per year in the 2012 Farm Bill so that even 
more emergency food providers can benefit from this valuable program.
    Commodity Supplemental Food Program (CSFP): Administered by USDA, 
the Commodity Supplemental Food Program leverages government buying 
power to provide monthly, nutritionally-balanced food packages to more 
than 604,000 low-income participants in 39 states, two tribal 
organizations, and the District of Columbia. More than 96 percent of 
those benefiting from this program are seniors with incomes of less 
than 130 percent of the Federal poverty line (approximately $14,000 for 
a senior living alone). For many of these seniors, CSFP may be the only 
nutrition assistance program readily accessible to them.
    CSFP is an efficient and effective program. While the cost to USDA 
to provide this package of food is, on average, $20 per month, the 
average retail value of the foods in the package is $50. For the 
seniors participating in this program, CSFP provides more than just 
food and nourishment, it also helps to combat the poor health 
conditions often found in seniors who are experiencing food insecurity 
and at risk of hunger.
    According to analysis of data from the 1999-2002 National Health 
and Nutrition Examination Survey, seniors over the age of 60 who are 
experiencing some form of food insecurity are significantly more likely 
to have lower intakes of major vitamins, significantly more likely to 
be in poor or fair health, and more likely to have limitations in 
activities of daily living. CSFP food packages, specifically designed 
to supplement needed sources of nutrients typically lacking in 
participants' diets like protein, iron, zinc, and vitamins 
B6 and B12, can play an important role in 
addressing the nutrition needs of low-income seniors.
    Recognizing the role that this program plays in the lives of our 
nation's most vulnerable seniors, Feeding America recommends that this 
program be reauthorized in the 2012 Farm Bill and expanded to all 50 
states. Additionally, Feeding America recommends that the income 
threshold for seniors wishing to participate in CSFP be raised to 185 
percent of the Federal Poverty Line, bringing it in line with the 
threshold already applied to women and children participating in this 
program.
    Supplemental Nutrition Assistance Program (SNAP): While Feeding 
America food banks and the 61,000 local agencies we support are often 
the first place families turn to for emergency food assistance when 
they fall on hard times, the Supplemental Nutrition Assistance Program 
(SNAP) is the cornerstone of the nutrition safety net, ensuring 
families have adequate resources for food until their household 
economic conditions stabilize and improve. Many of our food banks 
conduct SNAP outreach to inform clients about their potential 
eligibility for SNAP and connect them with the long-term benefits they 
need.
    SNAP is the nation's largest Federal nutrition program, providing 
nearly 45 million participants with monthly benefits in the form of an 
electronic benefit (EBT) card that they can use like cash at most 
grocery stores to ensure access to an adequate diet. Nearly 80 percent 
of SNAP households include either a child or an elderly or disabled 
person.
    One of the most attractive features of SNAP is that benefits can be 
redeemed at any of the more than 200,000 retail stores nationwide that 
are authorized to participate in the program. Almost 80 percent of SNAP 
benefits are redeemed within 2 weeks of receipt, and 97 percent are 
spent within a month. Because the benefits can be quickly and 
efficiently delivered to recipients via EBT cards, and recipients are 
likely to spend the benefits quickly, many economists view SNAP as one 
of the most effective forms of economic stimulus during an economic 
downturn. The United States Department of Agriculture (USDA) estimates 
that every $1.00 spent on SNAP benefits generates $1.79 in local 
economic activity.
    Another critical feature of the SNAP program is its ability to 
respond with additional assistance amidst economic downturns or 
emergencies. SNAP responds quickly to changing economic circumstances, 
whether they occur locally, such as a plant closing, or nationally, 
like a recession. Enrollment increases during such times and then falls 
as need declines. SNAP demonstrated this responsiveness during the 
recent recession by providing millions of newly unemployed families 
with a stable source of money for food, proving it to be one of the 
most effective safety net programs available to families hardest hit by 
the recession. SNAP responds just as effectively to natural disasters. 
During the aftermath of disasters like Hurricanes Katrina and Rita in 
2005, victims of the hurricane were able to have their immediate need 
for food addressed quickly because of SNAP. Similarly, the program is 
responding to immediate need in areas hit by recent flooding or 
tornados.
    Congress made many significant improvements to SNAP in the last 
farm bill. As we move toward consideration of the 2012 Farm Bill, it is 
essential that Congress build upon those improvements and protect the 
integrity of SNAP so that the program can continue to respond quickly 
and effectively as the foundation of the nutrition safety net. As such, 
we offer the following initial recommendations for consideration:
    Benefit Adequacy: Current SNAP benefit levels are often 
insufficient to last a family throughout the month. Over 90 percent of 
SNAP benefits are used up by the third week of the month, leaving many 
SNAP families food insecure for portions of the month. Adequate 
benefits would also provide families with opportunities to access more 
nutritious food.
    Congress approved a temporary boost in SNAP benefit levels in ARRA 
to help families make ends meet during the recession. Congress 
rescinded some of the boost in 2010 by using $2.5 billion of the 
increased benefits to fund the Healthy, Hunger-Free Kids Act and $11.9 
billion to fund the Education jobs and Medicaid funding bill. As a 
result, the remaining increase in benefits is now expected to sunset in 
November 2013.
    Just as concerning as the cut to the ARRA boost itself is how the 
cut would be implemented. Congress carefully crafted the ARRA increase 
to protect families from a ``cliff effect.'' By designing the increase 
to phase out incrementally as food prices rise to catch up with the 
higher benefit, Congress made a promise not to pull the rug out from 
underneath our nation's most vulnerable families. Under the recent 
cuts, this is exactly what would happen. A typical family of four would 
see their monthly benefits abruptly drop by some $54 per month, as 
estimated at the time the cuts were enacted.
    While the ARRA SNAP boost was intended to be temporary, it was also 
desperately needed, and Congress must take steps to permanently improve 
the adequacy of the SNAP benefit. Feeding America strongly urges the 
House Agriculture Committee to restore the ARRA SNAP funds and protect 
the remaining boost to SNAP benefit levels from being used to fund 
other priorities. We also recommend that the Committee look at long-
term ways to improve benefit adequacy, such as reviewing the Thrifty 
Food Plan as the basis for benefit levels, increasing the standard 
deduction to bring benefit levels in line with where they would be now 
had the inflationary peg not been removed for the period 1996 to 2008, 
and strengthening nutrition and other education to help participants 
maximize nutrition on a limited food budget.
    Improve Access and Participation: The Committee should continue to 
strengthen the SNAP's ability to meet need by breaking down access and 
participation barriers. Not all who are eligible for SNAP participate 
in the program, whether because of stigma, misinformation about 
eligibility and potential benefits, or cumbersome enrollment 
procedures. While SNAP has made steady improvement in participation 
rates over the last several years, still only about \2/3\ of those 
eligible are served. Participation is especially low among certain 
subpopulations, like Latinos and seniors. Continued outreach is needed 
to make sure all who are eligible and in need of assistance are 
informed of and enrolled in the program, especially among under-served 
and vulnerable populations. Congress should take steps to improve 
program education and outreach, streamline the application and 
eligibility-determination process, and increase coordination with SNAP 
across other programs. For example, categorical eligibility has been 
shown to both improve program access while at the same time allowing 
states to reduce administrative costs and simplify administration. 
Congress should strengthen categorical eligibility and encourage states 
to take advantage of the expanded option.
    Congress can also improve access to SNAP among vulnerable 
populations by eliminating or easing specific restrictions on 
subpopulations, including the harsh time limits on jobless adults, the 
5 year waiting period for legal permanent residents, and the permanent 
ineligibility of drug felons:

   Able-bodied adults without dependents (ABAWDs) who are not 
        working a minimum number of hours are limited to only 3 months 
        of SNAP benefits out of every 3 years, although states with 
        unemployment rates above ten percent may request a waiver. The 
        time-limit for ABAWDs is too restrictive even when unemployment 
        is low, but with unemployment at 9.2 percent nationally and 
        many people returning to work forced to accept reduced hours, 
        ABAWDs should be allowed to re-apply more frequently and for 
        longer durations.

   Adult legal permanent residents are subject to a 5 year 
        waiting period before they may participate in SNAP. 
        Furthermore, the confusion about eligibility created by this 
        policy decreases participation among eligible children of 
        ineligible parents. Eligible adult immigrants who are here 
        legally, many of whom are on a path to citizenship, should not 
        have to wait five years to receive nutrition assistance.

   Federal policy permanently prohibits drug felons from 
        participating in SNAP, presenting an additional challenge to 
        self-sufficiency for formerly institutionalized persons who 
        already face difficulties in re-entering the labor force. 
        Recognizing this, 40 states have either lifted the Federal ban 
        or modified the ban to make it less punitive. Congress should 
        repeal the lifetime prohibition on drug felons participating in 
        SNAP.

    Program Integrity: In addition to making further progress to 
strengthen SNAP, Feeding America urges the Committee to protect the 
program from harmful policy changes that have been recently proposed, 
such as converting the program to a block grant, subjecting it to a 
global spending cap, imposing additional work or citizenship 
requirements, or restricting the kinds of groceries participants may 
purchase. Imposing an arbitrary cap on funding would fundamentally 
change the structure of the program and would undermine SNAP's ability 
to respond quickly to changing economic circumstances, whether a 
natural disaster or a recession. SNAP already has strict time 
limitations for unemployed adults and legal immigrants. Adding further 
work or citizenship requirements will eliminate this important source 
of nutrition assistance for vulnerable families, increasing food 
insecurity and shifting more low-income households to the emergency 
food system. Ensuring food choice within the SNAP program allows 
families to make decisions that balance cost, nutrition, and time for 
preparation of meals.
Reviewing Programs for Duplication and Efficiency
    In light of Congressional attention to the budget deficit, we 
recognize that the next farm bill will be written with limited 
opportunities for new program investments and a commitment to making 
sure existing dollars are being well-spent. While we support the goal 
of eliminating duplication and inefficiencies in Federal nutrition 
programs, we urge you to ensure that any changes are made carefully and 
with the goal of improving service delivery, increasing program access, 
and strengthening benefit levels.
    Our food banks and the clients they serve know all too well the 
importance of stretching a tight budget. Given the extent of hunger and 
food insecurity in our country, it is important that we maximize the 
impact of each dollar spent through our network of emergency food 
providers. Likewise, we believe that Federal tax dollars should be 
spent effectively and efficiently to ensure a strong and responsive 
nutritional safety net.
    We support efforts to eliminate duplication in program delivery. 
However, it is important to keep in mind that programs with overlapping 
eligibility are not per se indicative of duplication. Nutrition 
programs work together to weave a comprehensive safety net and no one 
program is intended to meet the needs of all populations. Federal 
nutrition programs have been developed to respond to identified 
nutritional needs of specific populations or to reach eligible people 
in settings not addressed by other existing programs.
    We also support efforts to eliminate inefficiencies and streamline 
program administration. In many cases, the same changes that would 
result in administrative savings would also reduce barriers to 
enrollment, such as streamlining the application and eligibility-
determination process.
    As the Committee works to identify opportunities to streamline 
programs and eliminate redundancy, members must ensure that such 
efforts are undertaken with thoughtfulness and careful deliberation. 
Our ultimate goal must be to better deliver benefits more effectively 
to all eligible people. As such, we offer the following principles to 
guide your work:
    Benefit Adequacy: Programs must provide resources sufficient to 
meet the nutritional needs of participants and any savings from greater 
efficiencies should be reinvested in improving benefit adequacy.
    Participation: Programs should be designed and implemented in ways 
that promote participation by all people in need of food assistance and 
savings should not be achieved by reducing eligibility or imposing 
access barriers.
    Coordination: Enrollment in nutrition assistance programs should be 
streamlined and integrated where possible with enrollment in other 
Federal programs serving low-income people, and eligibility rules 
should be consistent across programs.
    Data-Driven: Any changes to nutrition assistance programs, 
including those intended to eliminate duplication and inefficiency, 
must be data-driven and undertaken only after careful study and 
analysis of the potential impact on benefit levels, eligibility, and 
participation.
    Stakeholder Input: Recommendations should be developed in 
collaboration with stakeholder input from the public, private, and 
nonprofit sectors, including those responsible for administering 
programs at the Federal and state level and those providing delivery of 
services and benefits to low-income families at the local level.
Conclusion
    We greatly appreciate the opportunity to submit testimony today on 
behalf of Feeding America, our over 200 member food banks, and the 37 
million Americans our network fed last year. For these growing numbers 
of Americans, food banks are truly the first line of defense, and many 
times the only resource standing between them being able to put food on 
the family dinner table or going to bed with an empty stomach. However, 
our food banks and the charitable food assistance network cannot meet 
the needs of these families alone. It is only through our public-
private partnership with Federal government through programs like TEFAP 
and CSFP and sustained support for SNAP and other programs in the 
nutrition safety net that we can make real strides in the fight against 
hunger.
    We are continuing to explore opportunities to enhance support for 
Federal nutrition programs through programmatic or policy innovations, 
and look forward to working with you as you review the Title IV 
Nutrition Programs and begin the work of crafting the next farm bill.

Lisa Davis,
Vice President of Public Policy,
Feeding America.
                                 ______
                                 
Submitted Letter and Statement by Sam Stone, Vice President, Government 
               Relations, Dairy Farmers of America, Inc.
August 2, 2011

Hon. Jean Schmidt,
Chairwoman,
Subcommittee on Nutrition and Horticulture, House Committee on 
    Agriculture,
Washington, D.C.;

Hon. Joe Baca,
Ranking Minority Member,
Subcommittee on Nutrition and Horticulture, House Committee on 
    Agriculture,
Washington, D.C.

    Dear Chairwoman Schmidt and Ranking Member Baca,

    On behalf of the nearly 16,000 producer-members of Dairy Farmers of 
America, Inc. (DFA), I respectfully submit the attached testimony in 
regards to nutrition programs and the 2012 Farm Bill. We believe that 
milk and other dairy products, provided through Title IV of the farm 
bill, serves an important role in addressing hunger issues for many 
Americans.
    Please do not hesitate to contact me at [Redacted] should you have 
any further questions or need more information.
            Sincerely,

            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Sam Stone,
Vice President, Government Relations,
Dairy Farmers of America, Inc.

CC:

Hon. Frank D. Lucas, Chairman, House Agriculture Committee;
Hon. Collin C. Peterson, Ranking Minority Member, House Agriculture 
    Committee.
                               attachment
    Dairy Farmers of America, Inc. (DFA) respectfully submits comments 
in response to the House Agriculture Subcommittee on Nutrition and 
Horticulture's hearing titled ``Agricultural Program Audit: Examination 
of Title IV Nutrition Programs.''
    DFA is a milk marketing cooperative that is owned and governed by 
nearly 16,000 dairy farmers nationwide. Our cooperative's success is 
built on the success of our farmer-owners who raise their dairy herds 
and their families on family farms across the nation. As the House 
Agriculture Committee begins the process of examining Title IV of the 
2012 Farm Bill, DFA encourages the Committee to consider cost-effective 
ideas that can further expose needy families and individuals to milk 
and other nutritious dairy products.
    Historically, nutrition programs authorized under Title IV of the 
farm bill such as the Commodity Supplemental Food Program (CSFP), the 
Supplemental Nutrition Assistance Program (SNAP) and The Emergency Food 
Assistance Program (TEFAP) have played an important role in providing 
millions of Americans with the nutritional assistance needed to lead 
active and healthy lives. DFA strongly supports these programs because 
dairy products have continued to serve as an important component to 
meet the nutritional needs for many individuals.
    We also recognize the budget challenges Members of the House 
Agriculture Committee will face when writing the 2012 Farm Bill. Due to 
growing concerns related to the Federal deficit, we understand that 
drafting the next Farm Bill will be a difficult task due to the current 
budgetary constraints. As Congress continues efforts to address the 
Federal deficit, we have also witnessed attempts to reduce funding for 
several programs administered under Title IV of the farm bill.
    At the same time, the economic outlook for millions of Americans 
across the country remains dire as conditions have not improved since 
the most recent recession. For the month of June, the Department of 
Labor reported that 9.2 percent of America's labor force was 
unemployed. Also, food banks have reported a record number of 
individuals and needy families seeking help through various hunger 
channels including soup kitchens and food pantries.
    Additionally, the U.S. Department of Agriculture (USDA) has 
witnessed a record number of individuals participating in hunger and 
feeding programs like CSFP, SNAP and TEFAP. Based on the latest 
statistics, approximately 45 million Americans are currently seeking 
help through SNAP and other hunger assistance programs. Clearly, people 
are in need during these challenging times.
    With this in mind, DFA has been identifying cost-efficient methods 
that could expand and increase the consumption of milk without 
expanding the size and scope of current nutrition programs. One merited 
idea to consider would be the creation of a milk voucher program to 
provide fluid milk to those who access food banks and food pantries and 
that would be administered under TEFAP.
    Through this program, USDA would issue vouchers similar to those 
currently used in the Women, Infants and Children program to be 
distributed through local food banks and entities food banks support. 
Milk vouchers could be provided to food bank recipients and they could 
be redeemed at local participating grocery stores and be specified to 
fluid milk. It is our understanding that Congress could authorize such 
a program and appropriate funds through TEFAP. As you know, TEFAP 
provides food to food banks around the country, which they distribute 
to shelters, pantries and soup kitchens in their region.
    The use of milk vouchers would enhance the food banks' ability to 
offer additional food and nutrition to their participants without 
requiring any new capital expenditures for refrigeration units or extra 
personnel to handle cases of milk. While we have learned that many food 
banks have upgraded their facilities to include refrigeration units, 
many others have not, do not have enough capacity or are serving 
shelters, pantries and soup kitchens with little to no refrigeration 
capacity.
    In closing, DFA is committed to identifying future programs that 
can address the need for nutritious and wholesome foods, including 
dairy products. It is our hope that implementing the milk voucher 
program through TEFAP will help many Americans currently suffering from 
financial hardship due to today's economic conditions. Please consider 
including this merited program when drafting the 2012 Farm Bill.
                                 ______
                                 
                          Submitted Questions
Response from Audrey Rowe, Administrator, Food and Nutrition Service, 
        U.S. Department of Agriculture
Questions Submitted By Hon. Chellie Pingree, a Representative in 
        Congress from Maine
    Question 1. A 2002 USDA report found that $5 in Federal benefits 
generates almost double, $9.20, in economic activity. In Maine we have 
a very innovative and effective program, called the Maine Senior Share 
Program. The state uses the dollars they receive from the Senior 
Farmers' Market Nutrition program to pay farmers at the beginning if 
the season for shares allotted to low-income seniors. This increases 
nutrition to a vulnerable population and supports our struggling local 
agriculture community. Do you see benefit in these programs and if so, 
does the department hope to incorporate similar ideas on a national 
level?
    Answer. The Senior Farmers' Market Nutrition Program (SFMNP) is 
designed to improve the diets of America's low-income seniors by 
providing them with coupons that can be used to purchase fresh, 
nutritious, unprepared, locally-grown fruits and vegetables at farmers' 
markets, roadside stands, and community supported agriculture (CSA) 
programs. The SFMNP also serves to increase the awareness and use of 
farmers' markets, roadside stands, and CSA programs throughout the 
country. The FMNP and the SFMNP are administered through cash grants 
provided to states, United States Territories, federally-recognized 
Indian Tribal Organizations, and the District of Columbia. Federal 
SFMNP regulations give state agencies considerable flexibility in the 
design of the Program's operation, thus enabling them to provide a 
program that best serves the needs of its senior participants as well 
as the farmers who benefit from SFMNP sales. Thus, some state agencies, 
including the Maine Department of Agriculture, have found that 
operating the SFMNP through the use of a CSA program model works best, 
while other state agencies have found it more effective and economical 
to deliver SFMNP benefits through the more traditional check or coupon 
distribution system. The Food and Nutrition Service (FNS) believes that 
each state agency is best qualified to choose the benefit delivery 
model that is appropriate for its individual circumstances. However, 
examples of successful program models are frequently shared among state 
agencies interested in innovative enhancements to their existing SFMNP 
operations, as well as prospective SFMNP state agencies that are in the 
process of choosing the best way to make fresh fruits and vegetables 
more accessible to their low-income seniors.

    Question 2. During the pilot phase of the Fresh Fruit and Vegetable 
Program, around 12% of participating schools sourced their fresh 
produce from local growers. This is a great way to support local 
economies. Are there ways you would recommend that we can support the 
program to expand the percentage of produce that is sourced locally?
    Answer. FNS has undertaken a number of initiatives with the goal of 
increasing local sourcing in all the Child Nutrition programs, 
including the Fresh Fruit and Vegetable Programs (FFVP). On April 22, 
2011, the agency issued the final rule titled Geographic Preference 
Option for the Procurement of Unprocessed Agricultural Products in 
Child Nutrition Programs. This rule allows school districts to apply an 
optional geographic preference in procurement of unprocessed locally 
grown or locally raised agricultural products.
    FNS has taken a number of steps to assist FFVP operators in 
utilizing the geographic preference and other strategies for successful 
local sourcing. The agency has established a Farm to School website to 
provide an online resource to assist schools in expanding Farm to 
School activities; assist in the communication between local producers 
and schools; share information about Farm to School activities across 
the Nation and keep schools informed of the legislative and regulatory 
changes that influence the procurement of local produce. FNS also 
recently issued Q&As for program operators which further explain the 
geographic preference procurement option. Additionally, in the past 
months the agency has conducted webinars on geographic preference for 
state and local program operators.
    FNS plans to continue providing guidance and technical assistance 
such as webinars on geographic preference in order to better inform 
FFVP operators of the program regulations and how to best procure local 
produce within the contours of the program.

    Question 3. Would you update the Committee on efforts within the 
agency to enable further access at farmers markets and CSA's to the 
expanding WIC Cash Value Fruits and Vegetable Voucher Program? There is 
now over $500 million in this key program. I understand the current 
guidance issued by FNS to the states is cumbersome. Simplifying the 
regulations would make it easier for several million WIC mothers and 
their children to shop at farmers market, many now year round, with 
direct benefits to both farmers and WIC families.
    Answer. Under the interim rule governing the food packages offered 
in the Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC), WIC state agencies have the option of authorizing 
individual farmers to accept Cash Value Vouchers (CVVs) issued to WIC 
participants for the purchase of fresh fruits and vegetables at 
farmers' markets. Each woman and child participating in the WIC Program 
receives a voucher in the amount of $10 or $6, respectively, as part of 
the monthly package of supplemental foods issued to all WIC 
participants. At present, 17 WIC state agencies have elected to allow 
CVVs to be used at farmers' markets, although not all state agencies 
have implemented such authorization on a statewide basis; two more 
state agencies will authorize farmers to accept CVVs during Fiscal Year 
(FY) 2012.
    FNS received comments related to authorization of CVVs at farmers 
markets during the public comment period for the interim rule that 
closed February 1, 2010. FNS will address these comments in a final 
rule.

    Question 4. One of the areas that most concerns me in SNAP is that 
there are many needy eligible people who do not participate. This 
problem is most prevalent amongst low-income senior citizens. By USDA's 
own measurement about \2/3\ of eligible seniors do not participate in 
the program. Can you tell me what steps USDA is taking to increase 
participation amongst our nation's greatest generation? And, I'd also 
like to hear from you on how efforts to increase senior participation 
would be affected under a capped spending regime or a block grant? 
Would states have an incentive or a disincentive to connect poor 
seniors who aren't participating to the program under a block grant?
    Answer. The Food and Nutrition Service (FNS) strives to ensure that 
all eligible people, including low income people over 60, have barrier-
free access to the nutrition benefits of the Supplemental Nutrition 
Assistance Program (SNAP). Elderly individuals who are eligible for 
benefits participate at a rate substantially lower than other eligible 
groups. In 2009, the participation rate for elderly individuals was 34 
percent, compared to 72 among all eligible people.
    SNAP eligibility policies take into account the special 
circumstances faced by seniors. They provide for deduction of medical 
expenses, no gross income limits, a higher asset limit and special 
eligibility status for seniors who receive Supplemental Security Income 
(SSI) because of their age and low income. Seniors may also designate 
authorized representatives to represent their interests during the 
application process to purchase food with SNAP benefits on their 
behalf.
    Special procedural requirements include certification periods up to 
2 years; interviews over the telephone, instead of at the local office; 
the ability to apply for SNAP through the Social Security 
Administration when applying for SSI. A total of 42 states have 
implemented broad based categorical eligibility which can ease the 
asset test. In addition, Combined Application Projects make it easier 
for the elderly and disabled SSI recipients to receive SNAP benefits by 
reengineering the SNAP application process and eliminating the need for 
this population to visit the SNAP local office.
    FNS has also awarded a number of grants to test approaches to 
increasing participation among persons over age 60. SNAP awarded $3.1 
million to three states to increase access and participation in the 
SNAP among low-income seniors, those who receive Medicare's Extra Help, 
also known as the Low Income Subsidy, which helps low-income 
individuals or couples with limited resources pay for their Medicare 
prescriptions. SNAP also awards $5 million annually for projects aimed 
at developing and implementing simplified applications and eligibility 
determination systems and measures to improve access to SNAP benefits 
by eligible households. Over the last 3 years, FNS has awarded six 
grants totaling almost $3.5 million for projects that focus on elderly 
persons or involve entities whose missions are to assist the elderly.
    In addition, FNS engages in numerous outreach efforts to educate 
eligible people over 60 about the nutrition benefits of SNAP and how to 
enroll. For example, SNAP develops and airs radio advertisements that 
target elderly audiences. Radio buys each year include spots 
specifically designed to address myths held by the elderly and air on 
stations with high rating among the elderly. SNAP offers a toll free 
information line in English and Spanish to provide information about 
the program and connect callers to their states for further details.
    Finally, FNS has fostered numerous partnerships with stakeholders 
trusted by the senior population, including the AARP Foundation, 
Catholic Charities, Feeding America, and with fellow Federal agencies 
including the Administration on Aging.
    This country has a long-standing national commitment to food 
security--and SNAP is well designed to respond quickly to economic 
conditions and meet food security needs until clients can get back on 
their feet. A block grant would undermine the program's responsiveness 
to changing economic conditions. States currently have a great deal of 
flexibility provided through state options and waivers that further the 
purpose of the Program without degrading access to food for those in 
need. Block grants tied to past spending levels leave no room to 
address low participation rates among specific populations or ability 
to respond to changes in local economic conditions. A block grant would 
hinder the ability of states to support increased participation unless 
they cut benefits to accommodate increased caseload growth.

    Question 5. While many CSFP participants are also eligible for 
SNAP, there are many components to CSFP that make it more suitable for 
some low-income seniors. CSFP provides a monthly food package with 
commodities that are chosen because they provide nutrients found to be 
lacking in the diets of low-income seniors. The cost of providing the 
same nourishment using SNAP's retail-based structure rather than CSFP's 
commodity-based structure would cost more than twice as much. CSFP 
relies on USDA commodities, which are a great value. It costs the USDA 
$20 to fill the monthly food package but the retail value is about $50 
to the participant, providing a great return on investment to the 
Federal Government. Despite this value however, some have suggested 
that SNAP and CSFP are duplicative programs. Do you see the two 
programs as interchangeable? Or do you see value in continuing to have 
two separate programs.
    Answer. The Commodity Supplemental Food Program (CSFP) was 
authorized by Congress to supplement the diets of low-income women, 
infants, children, and seniors age 60 years and over; today, almost all 
participants are seniors. Both CSFP and the Supplemental Nutrition 
Assistance Program (SNAP) provide valuable supplemental nutrition 
assistance to the clients they serve. Each has aspects of its structure 
and services that may better serve the needs of some clients than 
others. These and other USDA nutrition assistance programs work 
together to create a strong nutrition safety net for those Americans in 
need.
                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    Commodity Supplemental Food Program (CSFP).
2. Subprograms/Department Initiatives
    CSFP provides supplemental USDA Foods to low-income elderly people 
at least 60 years of age, as well as some pregnant and breastfeeding 
women, other new mothers up to one year postpartum, infants, children 
up to age 6.
3. Brief History
    CSFP was first authorized under the Agriculture and Consumer 
Protection Act of 1973 to distribute foods to low-income women, 
infants, and children to supplement their nutritional needs. The 1985 
Farm Bill expanded CSFP to include low-income elderly participants, but 
gave priority to eligible women, infants, and children for service. The 
2008 Farm Bill removed the priority status for women, infants, and 
children. Despite beginning as a program for women, infants, and 
children, CSFP now serves mostly elderly individuals, who make up over 
95 percent of current participants.
4. Purpose/Goals
    CSFP works to improve the health of participants by supplementing 
their diets with nutritious USDA Foods. CSFP monthly food packages are 
good sources of the nutrients typically lacking in the diets of women, 
infants, children, and the elderly. CSFP also supports domestic 
agricultural markets by providing an outlet for products that USDA 
acquires through its agricultural market and price support activities.
5. Success in Meeting Programmatic Purpose/Goals
    As of 2011, 39 states, two Indian Tribal Organizations (ITOs), and 
the District of Columbia are participating in CSFP.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                       Commodity Supplemental Food Program (CSFP)
                                                               Budget Authority 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
CSFP                                  $92,813   $113,756     $98,335    $106,854    $111,202    $107,202    $139,715    $160,430    $171,409    $175,697
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                       Commodity Supplemental Food Program (CSFP)
                                                                    Outlays 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
CSFP                                              $89,006    $94,812     $87,927    $100,871    $100,667     $99,868    $133,226    $153,192    $152,768
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
 
    Commodity
   Assistance         FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 Program Account
 
Commodity                112,445         107,828         140,807         164,579         181,892         192,624
 Supplemental
 Food Program
 (CSFP)
The Emergency             55,655          50,310          49,823          49,500          49,834          49,500
 Food Assistance
 Program (TEFAP)
 Administrative
 Cost
ARRA TEFAP                                                                25,000          54,609
 Administrative
 Funds
ARRA TEFAP                                                               100,000
 Commodity Funds
TEFAP                                                                                      5,956              44
 Infrastructure
 Grants
Farmers' Market
 Programs:
  Farmers'                23,814          22,109          21,838          20,658          22,089          20,003
   Market
   Nutrition
   Program
  Seniors'                15,844          16,203          21,402          19,865          22,459          20,606
   Farmers'
   Market
   Program
Commodity                  3,882           2,756           3,736           4,224           5,114           3,883
 Assistance
 (Nuc. Affected
 Isld, Disaster
 Asst., NSIP
 Comm.)
Nutrition                 15,523          15,561          15,553          15,616          15,923          15,828
 Programs
 Administration
 (Allocation to
 this program)
Other Program            103,412          90,066         195,628         195,397         366,987         366,987
 Costs 1
                 -----------------------------------------------------------------------------------------------
    Total Cost          $330,575        $304,833        $448,787        $594,839        $724,863        $669,475
    FTEs                      97              95              95             100             112             112
                 -----------------------------------------------------------------------------------------------
Unit Costs
  CSFP (Total            $361.64         $349.43         $344.72         $394.27         $385.11         $348.09
   Annual Cost
   per
   Participant)
Performance                463.1           466.1           475.3           473.5           518.9           604.9
 Measure:
 Average monthly
 CSFP
 participation
 (thousands)
 
1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity
  assistance.

9. Eligibility Criteria
    States establish an income limit for elderly participants that is 
at or below 130 percent of the Federal Poverty Income Guidelines. 
States also establish income limits for women, infants, and children 
that are at or below 185 percent of the poverty guidelines, but not 
below 100 percent of these guidelines. Women, infants, and children who 
receive Supplemental Nutrition Assistance Program (SNAP) benefits, 
Temporary Assistance for Needy Families (TANF), Medicaid, or certain 
other public assistance programs, as determined by the state, are 
considered automatically eligible for CSFP.
    Clients must reside in one of the states or on one of the Indian 
reservations that participate in CSFP. States may establish local 
residency requirements based on designated service areas (but may not 
require a minimum period of residency). States may also require that 
participants be at nutritional risk, as determined by a physician or by 
local agency staff.

                                      10. Utilization (Participation) Data
                                   Commodity Supplemental Food Program (CSFP)
                                     National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
                           FY 2005        FY 2006        FY 2007        FY 2008        FY 2009        FY 2010
----------------------------------------------------------------------------------------------------------------
         U.S. Total         512,433        462,349        466,075        475,307        466,615        518,838
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    While CSFP was initially designed to serve low-income pregnant 
women, new mothers up to one year postpartum, infants, and children up 
to age 6, such clients now represent less than five percent of total 
caseload. Most CSFP clients are elderly people 60 and over. While some 
CSFP participants receive SNAP, many of them would be eligible for the 
minimum or no benefit due to differences in the program's eligibility 
criteria. Participants may not simultaneously receive WIC and CSFP.
12. Waste, Fraud and Abuse
    In FNS's FY 2011 improper payment risk assessment conducted and 
forwarded to the Department, the CSFP was determined to have a low risk 
of significant improper payments or fraud. Federal management 
evaluations conducted on this program have not identified significant 
incidents of improper payments.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Fresh Fruit and Vegetable Program (FFVP).
2. Subprograms/Department Initiatives
3. Brief History
    Farm Security and Rural Investment Act of 2002 (P.L. 107-171)--
authorized $6 million for a pilot program to promote children's 
consumption of fresh fruits and vegetables. The pilot was limited to 25 
schools in each of four states and seven schools in one Indian Tribal 
Organization (ITOs).
    Child Nutrition and WIC Reauthorization Act of 2004 (P.L. 108-
265)--amended the National School Lunch Act making the FFVP a permanent 
program in 11 states and three ITOs and providing $9 million in 
permanent annual funding. The program was authorized in 25 schools in 
each state and 25 schools among three ITOs.
    Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2006 (P.L. 109-97)--One time 
appropriation of $6 million, added six states, 25 schools in each 
state.
    Consolidated Appropriations Act 2008 (P.L. 110-161)--expanded the 
program nationwide, and included the District of Columbia. One time 
funding of $9.9 million provided.
    Food, Conservation, and Energy Act of 2008 (P.L. 110-234)--added 
section 19, the FFVP, to the National School Lunch Act which 
establishes a nationwide program with a new structure that increases 
FFVP funding gradually over 4 years, from $40 million in 2008 to $150 
million in 2011. Funding adjusts each July 1 thereafter to reflect 
changes in Consumer Price Index for All Urban Consumers.
4. Purpose/Goals
    To introduce and provide free fresh fruits and vegetables in 
elementary schools representing the highest percent of children 
receiving free and reduced price school meal benefits and to help 
combat childhood obesity by helping children develop positive dietary 
habits during their formative years.
5. Success in Meeting Programmatic Purpose/Goals
    The FFVP operates in all 50 states and is highly regarded by 
Members of Congress, nutrition advocates, the health care community, 
parents and students; over 5,000 schools participate in the FFVP.

              6. Annual Budget Authority (FY 2002-FY 2011)
              The Fresh Fruit and Vegetable Program (FFVP)
                       Budget Authority 2009-2011
                         (dollars in thousands)
------------------------------------------------------------------------
                                FY 2009        FY 2010        FY 2011
------------------------------------------------------------------------
Fresh Fruit and Vegetable      $56,000         $74,000       $109,000
               Program
------------------------------------------------------------------------
* Amounts displayed for budget authority reflect transfers authorized on
  July 1st of each fiscal year as modified by the annual appropriations
  bills by a delay of a portion of the transfer from July 1 to the
  following October 1; the total transfers authorized for each FY are as
  follows: FY 2009--$105 million; FY 2010--$101 million; FY 2011--$150
  million.


                   7. Annual Outlays (FY 2002-FY 2011)
     The Fresh Fruit and Vegetable Program (FFVP) Outlays 2009-2011
                         (dollars in thousands)
------------------------------------------------------------------------
                                FY 2009        FY 2010        FY 2011
------------------------------------------------------------------------
Fresh Fruit and Vegetable      $28,910         $56,125       $152,424
               Program
------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    The FFVP is administered as part of the Child Nutrition Programs (CNP) and the administrative costs associated with running this program are not
 specifically allocated within the CNP account. The table below provides the costs associated with the CNP account as a whole.
 


 
 Child Nutrition
     Program          FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 
Child Nutrition
 Programs
  School Lunch        $7,569,757      $7,836,174      $8,365,115      $9,071,783      $9,932,814      10,451,023
   Program
  School               2,086,098       2,228,842       2,393,028       2,633,048       2,895,356       3,115,300
   Breakfast
   Program
  Child and            2,141,088       2,303,732       2,245,195       2,513,852       2,583,232       2,693,384
   Adult Care
   Food Program
  Summer Food            284,224         297,933         312,203         357,984         374,203         375,518
   Service
   Program
  Special Milk            15,155          14,225          15,120          14,941          12,064          12,563
   Program
  State                  156,061         162,844         174,134         178,994         195,532         206,943
   Administrativ
   e Expense
                 -----------------------------------------------------------------------------------------------
    Total, Cash       12,252,383      12,843,750      13,504,795      14,770,602      15,993,201      16,854,731
     Grants to
     States
Commodities (Sec         480,684         537,057         631,849         741,209         735,782         907,919
 6e Entitlement)
Child Nutrition           25,619          25,378          30,550          39,128          75,472          59,916
 Program
 Discretionary
 Activities
ARRA NSLP                                                                100,000
 Equipment
 Grants
Child Nutrition           36,452          91,069          32,457         172,327
 Program
 Permanent
 Activities (not
 including the
 FFVP)
Fresh Fruit and           42,993          79,902         134,000
 Vegetable
 Program
Nutrition                 30,215          30,422          30,383          30,724          36,189          35,972
 Programs
 Administration
 (Allocation to
 this program)
Other Program            560,965         681,800         575,997         667,645         527,325         527,325
 Costs
                 -----------------------------------------------------------------------------------------------
    Total Cost       $13,349,866     $14,118,407     $14,810,026     $16,483,370     $17,480,328       #########
    FTEs                     392             368             379             393             414             437
                 -----------------------------------------------------------------------------------------------
Unit Costs
  Child                    $1.57           $1.59           $1.70           $1.82           $1.86
   Nutrition
   Total Cost
   per Meal
   Served ($/
   service)
Performance                 30.0            30.6            30.9            31.6            31.6            32.1
 Measure: Avg.
 daily NSLP
 participation
 (millions)
Performance                  9.8            10.1            10.6            11.0            11.6            12.4
 Measure: Avg.
 daily SBP
 participation
 (millions)
 


 
 
 
9. Eligibility Criteria
 
    --Elementary schools with 50 percent or more students certified eligible for free or reduced price meals.
 
    --Elementary schools with the highest percent of students eligible have priority for selection.
 
    --All children participating in eligible schools receive free fresh fruits and vegetables outside of school meals.
 
    --Number of participating elementary school limited by funding.
 
10. Utilization (Participation) Data
 
    Approximately 5,000 schools participated in the FFVP during the 2010-2011 School Year. Although we have no information on the number of children
 served, the level of funding provided would support between approximately 1.5 million and 4.4 million students.
 
11. Duplication or Overlap with Other Programs
 
    FFVP is authorized by section 19 of the Richard B. Russell National School Lunch Act. The Program provides fresh fruits and vegetables to elementary
 schools, targeted to schools with a high percentage of children certified for free and reduced-price school meals. Schools are reimbursed for the cost
 of making fresh fruits and vegetables available to students during the school day outside of the school meals.
 
12. Waste, Fraud and Abuse
 
    The size and nature of this program puts it at a very low risk for improper payments and fraud. FNS is not aware of any issues regarding fraud,
 waste and abuse in the FFVP.
 
13. Effect of Administrative PAYGO
 
    None.
 

                                 ______
                                 
1. Program Name
    The Emergency Food Assistance Program (TEFAP).
2. Subprograms/Department Initiatives
    TEFAP provides USDA Foods and administrative support to states, 
which in turn provide these resources to emergency feeding 
organizations such as food banks, soup kitchens and food pantries. 
TEFAP administrative costs help state and local agencies defray costs 
associated with distributing USDA and privately-donated foods. Key 
program components include:
    Food Funds--USDA purchases food for distribution to TEFAP state and 
local agencies.
    Administrative Funds--USDA provides administrative funds to defray 
costs associated with processing, repackaging, storage, and 
distribution of Federal and privately donated food.
    Infrastructure Grants--Provides local emergency feeding 
organizations, such as food banks, food pantries, and soup kitchens, 
with funds to expand and improve their infrastructure, including their 
storage and distribution facilities.
3. Brief History
    TEFAP was first authorized as the Temporary Emergency Food 
Assistance Program in 1981 to distribute surplus foods to households. 
The name was changed to The Emergency Food Assistance Program under the 
1990 Farm Bill. The program was designed to help reduce Federal food 
inventories and storage costs while assisting the needy. Stocks of some 
foods held in surplus had been depleted by 1988. Therefore, the Hunger 
Prevention Act of 1988 authorized funds to be appropriated for the 
purchase of USDA foods specifically for TEFAP.
    The 2008 Farm Bill increased funds for TEFAP food purchases to $250 
million annually, indexed to inflation. The 2008 Farm Bill also 
authorized up to $100 million annually for administrative costs and up 
to $15 million annually for TEFAP infrastructure grants. In addition, 
the Secretary has authority to provide food that USDA acquires through 
certain price or market support activities (i.e., bonus food) to TEFAP.
4. Purpose/Goals
    TEFAP helps supplement the diets of low-income Americans by 
providing them with emergency food assistance at no cost. TEFAP also 
supports domestic agricultural markets by providing an outlet for 
products that USDA acquires through its agricultural market and price 
support activities.
5. Success in Meeting Programmatic Purpose/Goals
    TEFAP currently operates in all 50 states, the District of 
Columbia, Puerto Rico, the Virgin Islands, Guam, and the Commonwealth 
of the Northern Mariana Islands. The allocation of food and 
administrative funds to states is based on a formula that considers the 
states' unemployment levels and the number of persons with income below 
the poverty level.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                      The Emergency Food Assistance Program (TEFAP)
                                                               Budget Authority 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             FY 2002    FY 2003    FY 2004    FY 2005    FY 2006    FY 2007    FY 2008    FY 2009    FY 2010    FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
TEFAP Commodities                            $140,000   $140,000   $140,000   $140,000   $140,000   $140,000   $190,000   $250,000   $248,000   $247,500
TEFAP Admin. Costs                             50,000     49,675     49,705     49,600     55,500     49,500     49,650     49,500     49,500     49,401
TEFAP Commodities--ARRA                                                                                                    100,000
TEFAP Admin. Costs--ARRA                                                                                                    50,000     28,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                      The Emergency Food Assistance Program (TEFAP)
                                                                    Outlays 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
TEFAP Commodities                                $139,293   $137,106    $137,458    $135,428    $135,422    $137,462    $186,822    $245,466    $242,225
TEFAP Administrative Costs                         39,467     37,646      36,116      40,916      37,494      37,001      36,352      37,389      38,804
TEFAP Commodities--ARRA                                                                                                               99,984
TEFAP Admin. Costs--ARRA                                                                                                              13,629      35,654
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
  The Emergency
 Food Assistance
 Program (TEFAP)      FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
        1
----------------------------------------------------------------------------------------------------------------
The Emergency            $55,655         $50,310         $49,823         $49,500         $49,834         $49,500
 Food Assistance
 Program (TEFAP)
 Administrative
 Cost
ARRA TEFAP                                                                25,000          54,609
 Administrative
 Funds
ARRA TEFAP                                                               100,000
 Commodity Funds
TEFAP                                                                                      5,956              44
 Infrastructure
 Grants
TEFAP                    139,832         140,000         189,936         250,000         247,994         247,500
 Entitlement
 Foods
TEFAP Bonus               67,000          58,200         178,100         373,700         346,639               0
 Foods
                 -----------------------------------------------------------------------------------------------
  TEFAP Total            262,487         248,510         417,858         798,200         705,032         297,044
----------------------------------------------------------------------------------------------------------------
1 Federal cost to administer this program included in the Commodity Assistance Program account.

9. Eligibility Criteria
    Households receiving food for consumption at home must meet 
eligibility criteria set by the state, including, but not limited to, 
an income standard and state residency. Households receiving prepared 
meals through a soup kitchen or other onsite feeding program are 
presumed to be needy and are not subject to a means test.
10. Utilization (Participation) Data
    USDA does not collect data on the number of individuals served by 
TEFAP. A recent analysis by Feeding America, a national network of food 
banks, found that 54 percent of affiliated food pantries reported 
receiving TEFAP food.
11. Duplication or Overlap with Other Programs
    TEFAP targets low-income individuals that seek food through local 
feeding organizations such as food pantries and soup kitchens. These 
individuals are sometimes but not always eligible for SNAP, and an 
individual may receive SNAP and TEFAP concurrently. However, TEFAP's 
more limited eligibility criteria and flexible structure supports its 
specific purpose in getting needed food directly into the hands of low-
income Americans during times of emergency and natural disasters.
12. Waste, Fraud and Abuse
    In FNS's FY 2011 improper payment risk assessment conducted and 
forwarded to the Department, TEFAP was determined to have a low risk of 
significant improper payments or fraud. Management evaluations 
conducted by FNS Regional offices have not identified significant 
incidents of improper payments to state agencies, local organizations, 
or individuals. In addition, a comprehensive, ongoing audit conducted 
by OIG has identified no problems with waste, fraud and abuse in the 
Program. In addition, the benefit provided to individuals participating 
in the program is relatively low, so any errors in certification will 
not result in large improper payments program participants.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Food Distribution Program on Indian Reservations (FDPIR).
2. Subprograms/Department Initiatives
    FDPIR provides a monthly package of USDA Foods, including fresh 
fruits and vegetables, to low-income households living on Indian 
reservations, and to American Indian households residing in approved 
areas near reservations or in Oklahoma. Many households participate in 
FDPIR as an alternative to the SNAP, because they do not have easy 
access to SNAP offices or authorized food stores. Key components 
include:
    Food: USDA purchases food for distribution to Indian Tribal 
Organizations and state agencies administering FDPIR.
    Administrative Funds: FDPIR Indian Tribal Organizations (ITOs) and 
state agencies receive funds for program administrative costs.
    Nutrition Education Grants: Funds projects developed by ITOs and 
state agencies administering FDPIR to enhance the nutrition knowledge 
of FDPIR participants and to foster positive lifestyle changes for 
eligible household members.
    Department initiatives on FDPIR include:
    Food Package Improvements: FNS continuously reviews the FDPIR food 
package, in consultation with program customers, to improve its 
nutritional profile and acceptability. On a regular basis, a work group 
consisting of tribally appointed FDPIR directors, procurement 
specialists from FSA and AMS, nutrition and health experts from the 
Indian Health Service and the Centers for Disease Control and 
Prevention (CDC), and FNS nutritionists and program staff considers 
changes to the food package and makes recommendations to FNS. The work 
group is continuing to focus on ways to reduce saturated fat, sugar, 
and sodium and is also exploring ways to improve the desirability and 
convenience of products in the food package.
    Improved Access to Fresh Fruits and Vegetables: In FDPIR, the Fresh 
Produce Program began as a pilot program in FY 1996 at two sites. This 
initiative, a joint venture with the Department of Defense, provides 
fresh fruits and vegetables that program participants may select in 
lieu of canned goods. In FY 2009, about 91 percent of the FDPIR 
programs were enrolled in the Fresh Produce Program, allowing most 
FDPIR participants to receive a variety of fresh fruits and vegetables 
that would otherwise be very difficult for them to obtain
3. Brief History
    FDPIR was authorized under the Food Stamp Act of 1977 as an 
alternative to the Food Stamp Program, now the Supplemental Nutrition 
Assistance Program (SNAP), for households living on Indian 
reservations. In 1981, legislation allowed Tribes in Oklahoma that did 
not have traditional reservation boundaries to also participate in 
FDPIR. The program is currently authorized through 2012 under Section 
4(b) of the Food and Nutrition Act of 2008, and Section 4(a) of the 
Agriculture and Consumer Protection Act of 1973.
4. Purpose/Goals
    FDPIR serves as an alternative to the SNAP for areas that do not 
have easy access to SNAP offices or authorized food stores, and for 
households in designated areas who prefer USDA foods to regular SNAP 
benefits.
5. Success in Meeting Programmatic Purpose/Goals
    Currently, there are approximately 276 Tribes receiving benefits 
under FDPIR through 100 ITOs and five state agencies.
    Pursuant to the 2008 Farm Bill, USDA conducted a review of the 
nutritional quality of the FDPIR food package, comparing its content to 
scientific standards including the Dietary Guidelines for Americans, 
the Dietary Reference Intakes (DRIs), the Thrifty Food Plan nutrient 
standards and the Healthy Eating Index--2005. It found that:

   The package provides a nutritious variety of foods, and 
        sufficient calories to meet the energy needs of most sedentary 
        individuals and many moderately active children.

   While as for American diets in general, there is room for 
        improvement in the quantities of fruits, vegetables, low-fat 
        dairy products and whole grains, the nutritional content of the 
        package is considerable.

   Individuals consuming FDPIR foods in the quantities provided 
        would achieve a HEI-2005 score of 81 out of 100, considerably 
        better than Americans in general (58 out of 100) and SNAP 
        participants (52 out of 100).

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                Food Distribution Program on Indian Reservations (FDPIR)
                                                               Budget Authority 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             FY 2002    FY 2003    FY 2004    FY 2005    FY 2006    FY 2007    FY 2008    FY 2009    FY 2010    FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDPIR                                         $75,800    $82,165    $86,237    $82,200    $79,500    $77,557    $88,477   $114,914   $112,797    $96,958
Recovery Act:
  FDPIR Equipment                                                                                                            5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                Food Distribution Program on Indian Reservations (FDPIR)
                                                                    Outlays 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDPIR                                             $69,810    $68,782     $75,195     $72,469     $78,553     $61,535     $79,116    $111,060    $105,012
Recovery Act:
  FDPIR Equipment                                                                                                                      5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
 
  Supplemental
    Nutrition
   Assistance         FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 Program Account
 
Supplemental         $32,984,909     $33,198,354     $37,557,661     $49,324,256     $57,820,329     $65,340,734
 Nutrition
 Assistance
 Program (SNAP)
ARRA SNAP                                                              4,478,246      10,763,853      10,486,716
 Benefits and
 Admin. Funds
Nutrition              1,517,752       1,551,167       1,622,521       1,760,435       1,746,351       1,744,605
 Assistance for
 Puerto Rico
 (NAP)
ARRA NAP Funds                                                           240,133         254,217         255,963
Food                      78,760          77,554          88,339         114,866         112,756          96,958
 Distribution
 Program on
 Indian
 Reservation
 (FDPIR)
ARRA FDPIR                                                                 3,712           1,367               0
 Equipment Funds
The Emergency            139,832         140,000         189,936         250,000         247,994         247,500
 Food Assistance
 Program (TEFAP)
 Commodities
American Samoa                                             4,795           5,219           5,204           7,006
ARRA American                                                                964           1,021           1,028
 Samoa Benefits
Program Access/           24,026          23,816          14,852          27,009          38,368          25,792
 Community Food
 Project/CNMI/
 Pilot Projects
Nutrition                 72,013          72,508          72,416          70,934          69,482          69,066
 Programs
 Administration
 (Allocation to
 this program)
Other Program                895           2,726           3,918             703             377             377
 Costs
                 -----------------------------------------------------------------------------------------------
    Total Cost       $34,818,187     $35,066,125     $39,554,437     $56,276,477     $71,061,319     $78,275,745
    FTEs                     683             631             613             612             591             618
                 -----------------------------------------------------------------------------------------------
Unit Costs
  SNAP (Total          $1,236.28       $1,256.97       $1,324.50       $1,597.48       $1,703.50       $1,686.54
   Annual Cost
   per
   Participant)
  FDPIR (Total           $887.65         $928.48       $1,024.98       $1,123.26       $1,077.93         $966.65
   Annual Cost
   per
   Participant)
  Performance             26.736          26.466          28.408            33.7            40.3            45.0
   Measure:
   Average
   monthly SNAP
   participation
   (millions)
 

9. Eligibility Criteria
    Low-income American Indian and non-Indian households that reside on 
a reservation and households living in approved areas near a 
reservation or in Oklahoma that contain at least one person who is a 
member of a federally-recognized Tribe, are eligible to participate in 
FDPIR. Households are certified based on Federal income and resource 
standards which are largely the same as those for SNAP. Households may 
not participate in FDPIR and SNAP in the same month.

                                      10. Utilization (Participation) Data
                            Food Distribution Program on Indian Reservations (FDPIR)
                                     National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
                           FY 2005        FY 2006        FY 2007        FY 2008        FY 2009        FY 2010
----------------------------------------------------------------------------------------------------------------
         U.S. Total          98,905         89,867         86,629         90,153         95,369         84,577
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    Funds are appropriated by Congress to carry out the FDPIR under 
section 4(b) of the Food and Nutrition Act of 2008. The Program is 
administered locally by either Indian Tribal Organizations (ITOs) or 
other state agencies. USDA purchases and ships FDPIR foods to ITOs 
based on orders from a list of available foods. Many households 
participate in FDPIR as an alternative to SNAP due to availability. 
Households are not allowed to participate in both programs at the same 
time.
12. Waste, Fraud and Abuse
    The last improper payment risk assessment conducted for FDPIR was 
in FY 2009. It was determined that the Program is at a low risk for 
improper payments or fraud. The benefit level for FDPIR is 
approximately $78 per person per month in FY 2009. Additionally, FDPIR 
benefits from simplified program requirements, regulatory controls and 
a continuous process for reviewing certification actions and taking 
appropriate corrective action to resolve problems with internal 
controls place FDPIR at a low level of risk.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Senior Farmers' Market Nutrition Program (SFMNP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The program was created as a pilot program in FY 2001; it was 
established by Congress as a permanent program in FY 2002, and has been 
reauthorized through 2012 under the 2008 Farm Bill (Public Law 110-
234).
4. Purpose/Goals
    The SFMNP provides low-income seniors with coupons that can be used 
to purchase fresh fruits, vegetables, honey and herbs from farmers at 
authorized farmers' markets or roadside stands, or with shares in 
Community Supported Agriculture (CSA) programs for regularly 
distributed bags or boxes of eligible foods. SFMNP seeks to increase 
the consumption of agricultural commodities by expanding, developing, 
or aiding in the development and expansion of domestic farmers' 
markets, roadside stands, and community supported agriculture (CSA) 
programs.
5. Success in Meeting Programmatic Purpose/Goals
   51 state agencies and federally recognized Indian tribal 
        governments received grants to operate the SFMNP in FY 2010.

   20,106 farmers at 4,601 farmers' markets as well 3,861 
        roadside stands and 163 community supported agriculture 
        programs participated in the program in FY 2010.

   844,999 people received SFMNP coupons in FY 2010.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                    Senior Farmers' Market Nutrition Program (SFMNP)
                                                               Budget Authority 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             FY 2002    FY 2003    FY 2004    FY 2005    FY 2006    FY 2007    FY 2008    FY 2009    FY 2010    FY 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
SFMNP                                         $10,000    $15,000    $15,000    $15,000    $15,000    $15,000    $20,600    $20,600    $20,600    $20,600
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                    Senior Farmers' Market Nutrition Program (SFMNP)
                                                                    Outlays 2002-2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
SFMNP                                              $6,533     $8,599      $8,343     $10,542      $9,979      $9,346     $11,872     $13,264     $12,314
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
    Commodity
   Assistance         FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 Program Account
----------------------------------------------------------------------------------------------------------------
Commodity               $112,445        $107,828        $140,807        $164,579        $181,892        $192,624
 Supplemental
 Food Program
 (CSFP)
The Emergency             55,655          50,310          49,823          49,500          49,834          49,500
 Food Assistance
 Program (TEFAP)
 Administrative
 Cost
ARRA TEFAP                                                                25,000          54,609
 Administrative
 Funds
ARRA TEFAP                                                               100,000
 Commodity Funds
TEFAP                                                                                      5,956              44
 Infrastructure
 Grants
Farmers' Market
 Programs:
  Farmers'                23,814          22,109          21,838          20,658          22,089          20,003
   Market
   Nutrition
   Program
  Seniors'                15,844          16,203          21,402          19,865          22,459          20,606
   Farmers'
   Market
   Program
Commodity                  3,882           2,756           3,736           4,224           5,114           3,883
 Assistance
 (Nuc. Affected
 Isld, Disaster
 Asst., NSIP
 Comm.)
Nutrition                 15,523          15,561          15,553          15,616          15,923          15,828
 Programs
 Administration
 (Allocation to
 this program)
Other Program            103,412          90,066         195,628         195,397         366,987         366,987
 Costs 1
                 -----------------------------------------------------------------------------------------------
    Total Cost          $330,575        $304,833        $448,787        $594,839        $724,863        $669,475
    FTEs                      97              95              95             100             112             112
                 -----------------------------------------------------------------------------------------------
Unit Costs:
  CSFP (Total            $361.64         $349.43         $344.72         $394.27         $385.11         $348.09
   Annual Cost
   per
   Participant)
  Performance              463.1           466.1           475.3           473.5           518.9           604.9
   Measure:
   Average
   monthly CSFP
   participation
   (thousands)
----------------------------------------------------------------------------------------------------------------
1 Includes bonus commodities for TEFAP, CSFP, Disaster Assistance, Nuclear Affected Island, and other commodity
  assistance.

9. Eligibility Criteria
    Low-income seniors, generally defined as individuals who are at 
least 60 years old and who have household incomes of not more than 185% 
of the Federal poverty income guidelines, are the targeted recipients 
of SFMNP benefits.

                                      10. Utilization (Participation) Data
                                Senior Farmers' Market Nutrition Program (SFMNP)
                                     National Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
                           FY 2005        FY 2006        FY 2007        FY 2008        FY 2009        FY 2010
----------------------------------------------------------------------------------------------------------------
         U.S. Total         771,285        825,691        803,985        833,026        809,711        844,999
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    The SFMNP was established by the Farm Security and Rural Investment 
Act of 2002. Program grants are awarded to states to provide low-income 
seniors with coupons that can be exchanged for eligible foods at 
farmers' markets, roadside stands, and community supported agriculture 
(CSA) programs. The goals of the SFMNP are to provide resources in the 
form of fresh, nutritious, unprepared, locally grown fruits, 
vegetables, honey and herbs from farmers' markets, roadside stands and 
CSA programs to low-income seniors; increase the domestic consumption 
of agricultural commodities by developing new or expanding existing 
domestic farmers' markets, roadside stands, and CSA programs. The 
Program is similar in design and function to the Farmers' Market 
Nutrition Program, but serves senior citizens rather than WIC 
recipients.
12. Waste, Fraud and Abuse
    The last improper payment risk assessment for this program, 
conducted for FY 2010, concluded that SFMNP presents a very low risk 
for erroneous payments. Guidelines provided in the SFMNP State Plan 
Guidance consistently require state agencies to provide FNS with 
detailed descriptions of their systems for ensuring that SFMNP benefits 
are issued to and used only by eligible recipients, and that SFMNP 
checks, coupons or vouchers are submitted for payment by authorized 
farmers through appropriate farmers' markets, roadside stands, and/or 
community supported agriculture programs. FNS further requires that all 
SFMNP vouchers be matched to an authorized farmer and recipient before 
payment is made, either by the contracted banking facility or by the 
State Treasurer's office. These controls are more than adequate to 
avoid significant improper payments. There have been no audits or 
management reviews which have identified significant fraud, waste and 
abuse issues.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Supplemental Nutrition Assistance Program (SNAP).
2. Subprograms/Department Initiatives
    The subcomponents of SNAP include:
    Nutrition Education (SNAP-Ed): The goal of SNAP-Ed is to improve 
the likelihood that persons eligible for SNAP will make healthy food 
choices with in a limited budget and choose physically active 
lifestyles consistent with the current Dietary Guidelines for 
Americans.
    Employment and Training (E&T): States are required to establish an 
E&T program to help able-bodied SNAP recipients find work or gain the 
skills, training, and experience that lead to employment.
    Quality Control (QC): Each state agency is responsible for 
monitoring and improving its administration of SNAP. As a part of this 
requirement, the SNAP QC System is used to determine the accuracy of 
the benefits authorized. The data collected is also used to determine 
areas for program improvement.
    Disaster Supplemental Nutrition Assistance Program (D-SNAP): 
Through D-SNAP, households affected by a disaster receive streamlined 
certification and benefit issuance, speeding assistance to these 
vulnerable disaster victims and reducing the administrative burden on 
state agencies operating in post-disaster conditions. D-SNAP recipients 
usually receive 1 month of benefits. Generally, states may request to 
operate a D-SNAP when the area has received a Presidential disaster 
declaration of Individual Assistance from the Federal Emergency 
Management Agency. Benefits are issued on an EBT card, similar to SNAP 
benefits.
    Retailer Authorization, Reauthorization, and Investigation: FNS is 
responsible for policy and oversight of authorization and 
reauthorization of applicant and licensed retailers; the monitoring of 
retail firms through ongoing systems analysis and undercover on-site 
investigations; and the administrative review of those firms which 
contest a disqualification or civil money penalty.
    Farmers' Markets: USDA is committed to increasing participation by 
farmers' markets in SNAP. At the end of FY 2010, 1,611 direct marketing 
farmers and farmers' markets participated in SNAP which is a 263 
percent increase in the number of authorized farmers and markets over 
the previous 5 fiscal years. Over that same period, SNAP redemptions at 
farmers' markets increased 49 percent.
    Nutrition Assistance for Puerto Rico (NAP): Each year, Puerto Rico 
submits and gains approval for the program plan for its nutrition 
assistance block grant. The plan must assess the food and nutrition 
needs of the island's most needy residents; describe the assistance 
needed; describe how it would be provided to the neediest residents; 
describe the amount of administrative expense needed and meet other 
such requirements as the provided by regulation. In the NAP, 75 percent 
of the nutrition benefits are targeted to the purchase of food while 25 
percent are in cash. During an average month in FY2010, an average of 
1.3 million people were served monthly by the NAP.
    Nutrition Assistance for American Samoa: Each year, American Samoa 
submits a Memorandum of Understanding specifying how the block grant 
will be operated, including the eligibility requirements to stay within 
the capped block grant amount. FNS reviews and approves the annual 
Memorandum of Understanding and monitors program operations to ensure 
program integrity. An average of 3,388 people were served monthly by 
the program in Fiscal Year 2010.
    Nutrition Assistance for the Commonwealth of the Northern Mariana 
Islands (CNMI): CNMI submits a Memorandum of Understanding each fiscal 
year, specifying how the program will be operated, including the 
eligibility requirements to stay within the capped block grant amount. 
FNS reviews and approves the annual Memorandum of Understanding and 
monitors program operations to ensure program integrity. A monthly 
average of 8,922 people were served monthly by the program in Fiscal 
Year 2010.
3. Brief History
    SNAP has a long history of meeting the nutrition needs of low 
income people. The very first SNAP, then known as the Food Stamp 
Program (FSP), operated from May 16, 1939 to the spring of 1943. It 
included a purchase requirement.
    The FSP began again on May 29, 1961 when President Kennedy's first 
Executive Order called for expanded food distribution. The FSP became 
permanent with the Food Stamp Act of 1964. The Food Stamp Act of 1977 
eliminated the purchase requirement and included a number of important 
access and integrity provisions.
    The late 1980s and 1990s were the dawn of Electronic Benefit 
Transfer (EBT). With EBT pilots spreading across the nation, EBT was 
made mandatory in 1996. At this time, welfare reform also affected the 
policies of the FSP, including establishment of time limits for able-
bodied adults without dependents and eligibility restrictions for legal 
immigrants.
    Major changes arrived once again with the Farm Bill of 2002. This 
legislation restored benefits for certain legal immigrants, emphasized 
program access, simplified program rules, and offered states a large 
number of options to improve administration of the program. The quality 
control system was also reformed, enhanced funding for performance was 
eliminated, and performance bonuses were established and set at $48 
million total.
    In June 2008, Congress ratified the Food, Conservation, and Energy 
Act of 2008 which reauthorized the program as the Supplemental 
Nutrition Assistance Program (SNAP) under the newly named Food and 
Nutrition Act. This farm bill strengthened integrity, simplified 
administration, maintained state flexibility, and improved access.
4. Purpose/Goals
    The Food and Nutrition Act statutorily defines the purpose of the 
program as ``to alleviate such hunger and malnutrition, a supplemental 
nutrition assistance program is herein authorized which will permit 
low-income households to obtain a more nutritious diet through normal 
channels of trade by increasing food purchasing power for all eligible 
households who apply for participation.''
    As such, SNAP is the cornerstone of the Federal food assistance 
programs. SNAP supplements the income of low income individuals and 
families by providing an electronic debit card which is used to 
purchase food at authorized stores. SNAP provides crucial support to 
needy households and helps those making the transition from welfare to 
work.
    State agencies are responsible for the administration of the 
program according to national eligibility and benefit standards set by 
Federal law and regulations. Benefits are 100 percent federally-
financed, while administrative costs are shared between the Federal and 
state governments.
    SNAP is a countercyclical program that expands in tough economic 
times and contracts when the economy improves. SNAP has an economic 
multiplier effect. Every $5 in new SNAP benefits generates as much as 
$9.00 in total economic activity. SNAP uses multiple strategies to 
encourage participants to make healthy food choices and engage in 
active lifestyles. These include nutrition education, encouraging more 
farmers' markets to participate in the program and a demonstration 
project to examine the impact of incentives on participant purchases of 
fruits and vegetables.
    While Americans support helping struggling families put food on the 
table they want to know that taxpayer dollars are being spent wisely. 
USDA actively works on behalf of American taxpayers to protect the 
Federal investment in SNAP and make sure the program is targeted 
towards those families who need it the most. To further this effort, 
FNS focuses on three key areas of oversight: reducing improper payments 
and errors; pursuing recipient fraud; and combating abuse and misuse of 
benefits.
5. Success in Meeting Programmatic Purpose/Goals
    SNAP helped put food on the table for an average of 40.3 million 
people (or 18.6 million households) per month during Fiscal Year 2010. 
In that year, the average monthly benefit per person was $133.79 and 
the average monthly benefit per household was $289.61. Five years ago, 
in Fiscal Year 2006, SNAP helped put food on the table for a monthly 
average of 26.5 million people (or 11.7 million households). In that 
year, the average monthly benefit per person was $94.75 and the average 
monthly benefit per household was $214.41. SNAP families and 
individuals spend benefits promptly, rather than save them. About 80 
percent of SNAP benefits are used within 2 weeks of receipt and 97 
percent are spent within a month.
    Most SNAP recipients are children or elderly. The most recent 
administrative data (for Fiscal Year 2009) show that nearly half (48 
percent) of recipients were children and another eight percent were age 
60 or older. Working-age women represented 28 percent of the caseload, 
while working-age men represented 16 percent. These figures have not 
changed greatly in the last 5 years. In Fiscal Year 2004, 50 percent of 
participants were children and eight percent were age 60 or older. At 
that time, working age women represented 28 percent of the caseload and 
working age men represented 13 percent.
    Notably, the primary source of income among SNAP participants has 
shifted from welfare to work over time. In 1989, 42 percent of all SNAP 
households received cash welfare benefits and only 20 percent had 
earnings. In 2009, less than ten percent received cash welfare, while 
29 percent had earnings. In Fiscal Year 2009, 40 percent of all SNAP 
participants lived in a household with earnings. For these households, 
earnings were the primary source of income.
    In Fiscal Year 2008, among those eligible for SNAP, the 
participation rate was 66 percent at the national level. In Fiscal Year 
2004, the participation rate among those eligible was 61 percent. Rates 
are consistently lower for some subgroups like the elderly, Latinos and 
working poor. FNS and the states continue to direct outreach efforts to 
these underserved populations to raise their awareness of the nutrition 
benefits of SNAP and how to apply.
    Recent historic growth in the number of households receiving SNAP 
benefits has had a tangible impact on the number of authorized 
retailers. As of September 30, 2010, there were 216,738 firms 
authorized to accept SNAP benefits. The number of SNAP authorized firms 
increased 12 percent within the past year, and 49 percent since 2003 
when just over 145,000 firms were in the Program.
    FNS is committed to working with our state and Federal partners on 
strategies to improve accuracy, as well as to identify and address 
fraud, while ensuring access and customer service. Over 98 percent of 
those receiving SNAP benefits are eligible. Payment accuracy was 96.19 
percent in Fiscal Year 2010, a historic high. The FY10 rate reflects 
the fourth continuous year of improvement and a decade long trend. 
Payment errors are less than half what they were 10 years ago, which 
has reduced improper payments by $3.3 billion in 2010.

 
 
 
    The prevalence of trafficking dropped from approximately four percent in the late 1990s to one percent in the mid 2000s. Over the last 10 years,
 8045 retail stores were permanently disqualified due to trafficking, reflecting our work to root out and eliminate bad actors from the program.
 


                                  6. Annual Budget Authority (FY 2002-FY 2011)
                                   Supplemental Nutrition Assistance Program 1
                                             Annual Budget Authority
                                                  (in millions)
----------------------------------------------------------------------------------------------------------------
                2002      2003      2004      2005      2006      2007      2008      2009      2010      2011
----------------------------------------------------------------------------------------------------------------
Regular
 Appropriati
 ons:
  SNAP         $21,390   $24,598   $29,190   $33,422   $38,959   $36,377   $37,705   $51,805   $56,152   $66,782
  Puerto         1,356     1,401     1,419     1,501     1,524     1,557     1,629     1,768     1,753     1,752
   Rico and
   American
   Samoa
  Commonweal         6         8        11         8         8         9        10        12        12        12
   th
   Northern
   Mariana
             ---------------------------------------------------------------------------------------------------
    Subtotal    22,752    26,006    30,620    34,932    40,492    37,944    39,344    53,584    57,917    68,546
     ,
     Regular
     Appropr
     iations
             ---------------------------------------------------------------------------------------------------
Supplemental
 Appropriati
 ons:
  DOD SAE            0         0         0         0         0         0         0         0       400         0
Recovery
 Act:
  Benefits           0         0         0         0         0         0         0     4,804    10,376    10,487
  Administra         0         0         0         0         0         0         0       145       150         0
   tive
   Costs
  ARRA               0         0         0         0         0         0         0       240       254       256
   Benefits-
   -Puerto
   Rico NAP
  American           0         0         0         0         0         0         0         1         1         1
   Samoa
   Benefits
             ---------------------------------------------------------------------------------------------------
    Subtotal         0         0         0         0         0         0         0     5,190    10,782    10,744
     ,
     Recover
     y Act
             ===================================================================================================
      Total     22,752    26,006    30,620    34,932    40,492    37,944    39,344    58,774    69,099    79,290
       Appro
       priat
       ions
----------------------------------------------------------------------------------------------------------------
1 Note: Does not include appropriations for TEFAP or FDPIR.


                                       7. Annual Outlays (FY 2002-FY 2011)
                                   Supplemental Nutrition Assistance Program 1
                                                 Annual Outlays
                                                  (in millions)
----------------------------------------------------------------------------------------------------------------
                         FY 2002   FY 2003   FY 2004   FY 2005   FY 2006   FY 2007   FY 2008   FY 2009   FY 2010
----------------------------------------------------------------------------------------------------------------
Regular Program
 Outlays:
  SNAP                   $19,862   $23,072   $26,234   $30,909   $32,820   $33,040   $37,364   $48,883   $58,901
  Puerto Rico and          1,274     1,307     1,329     1,480     1,519     1,587     1,634     1,734     1,750
   American Samoa
  Commonwealth                 5         7         6        11         9        10         9        10        12
   Northern Mariana
                       -----------------------------------------------------------------------------------------
    Subtotal, Regular     21,141    24,386    27,570    32,400    34,348    34,637    39,007    50,626    60,662
     Appropriations
                       -----------------------------------------------------------------------------------------
Supplemental Outlays:
  DOD SAE                      0         0         0         0         0         0         0         0       126
Recovery Act Outlays:
  Total Recovery Act           0         0         0         0         0         0         0     4,568    10,968
                       =========================================================================================
    Total Outlays         21,141    24,386    27,570    32,400    34,348    34,637    39,007    55,194    71,756
----------------------------------------------------------------------------------------------------------------
1 Note: Does not include outlays for TEFAP or FDPIR.
 
The difference between budget authority and outlays for the SNAP program is usually related to either use or non-
  use of the contingency fund. In 2010, for example, budget authority is shown as $69 billion, whereas outlays
  were $71.8 billion. In that year, over $2 billion in contingency funds carried forward from the previous
  fiscal year were used to fund participation.


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
 
  Supplemental
    Nutrition
   Assistance         FY 2006         FY 2007         FY 2008         FY 2009         FY 2010         FY 2011
 Program Account
 
Supplemental         $32,984,909     $33,198,354     $37,557,661     $49,324,256     $57,820,329     $65,340,734
 Nutrition
 Assistance
 Program (SNAP)
ARRA SNAP                                                              4,478,246      10,763,853      10,486,716
 Benefits and
 Admin. Funds
Nutrition              1,517,752       1,551,167       1,622,521       1,760,435       1,746,351       1,744,605
 Assistance for
 Puerto Rico
 (NAP)
ARRA NAP Funds                                                           240,133         254,217         255,963
Food                      78,760          77,554          88,339         114,866         112,756          96,958
 Distribution
 Program on
 Indian
 Reservation
 (FDPIR)
ARRA FDPIR                                                                 3,712           1,367               0
 Equipment Funds
The Emergency            139,832         140,000         189,936         250,000         247,994         247,500
 Food Assistance
 Program (TEFAP)
 Commodities
American Samoa                                             4,795           5,219           5,204           7,006
ARRA American                                                                964           1,021           1,028
 Samoa Benefits
Program Access/           24,026          23,816          14,852          27,009          38,368          25,792
 Community Food
 Project/CNMI/
 Pilot Projects
Nutrition                 72,013          72,508          72,416          70,934          69,482          69,066
 Programs
 Administration
 (Allocation to
 this program)
Other Program                895           2,726           3,918             703             377             377
 Costs
                 -----------------------------------------------------------------------------------------------
    Total Cost       $34,818,187     $35,066,125     $39,554,437     $56,276,477     $71,061,319     $78,275,745
    FTEs                     683             631             613             612             591             618
                 -----------------------------------------------------------------------------------------------
Unit Costs:
  SNAP (Total          $1,236.28       $1,256.97       $1,324.50       $1,597.48       $1,703.50       $1,686.54
   Annual Cost
   per
   Participant)
  FDPIR (Total           $887.65         $928.48       $1,024.98       $1,123.26       $1,077.93         $966.65
   Annual Cost
   per
   Participant)
Performance               26.736          26.466          28.408            33.7            40.3            45.0
 Measure:
 Average monthly
 SNAP
 participation
 (millions)
 

9. Eligibility Criteria
    To qualify for SNAP, applicants must fill out an application and 
submit it to the local office. Applicants must meet certain financial, 
non-financial and citizenship requirements. Illegal immigrants are not 
eligible for SNAP benefits.
    To qualify, there is a gross income test of 130 percent of the 
Federal poverty guidelines and a net income test of 100 percent of the 
Federal poverty guidelines. SNAP allows for certain deductions from 
gross income like housing and utility costs, child support, medical 
expenses, or child-care costs to calculate net income. Households with 
an elderly person or a person receiving certain types of disability 
payments only have to meet the net income test.
    There is also a resource test. Households may have $2,000 in 
countable resources or $3,000 if at least one person is age 60 or older 
or disabled. In SNAP, examples of countable resources would include 
bank accounts. Certain resources are not counted, such as a home and 
lot, the resources of people who receive Supplemental Security Income 
(SSI), the resources of people who receive Temporary Assistance for 
Needy Families (TANF), certain education savings accounts, and most 
retirement and pension plans.
    Households are also eligible for SNAP through categorical 
eligibility in SSI, General Assistance, and TANF: 42 states have 
adopted TANF broad-based categorical eligibility, a program 
simplification measure allowing states to adjust the gross income test 
up to 200 percent of poverty test and raise or eliminates the resource 
test. States can change the TANF program that confers broad-based 
categorical eligibility to exclude households that receive a large lump 
sum payment or to create a resource limit of some amount.
    In addition, applicants must also meet some non-financial 
requirements, such as citizen/legal immigrant status and work 
requirements in some cases. Generally, Able-Bodied Adults without 
Dependents (ABAWDs) between 18 and 50 who do not have any dependent 
children can get SNAP benefits only for 3 months in a 36 month period 
if they do not work or participate in a workfare or employment and 
training program other than job search. This requirement is waived in 
some locations in accordance with unemployment rates and job 
availability triggers determined by the Department of Labor. With some 
exceptions, all adults participating in SNAP between 16 and 60 must 
register for work, accept suitable employment, and take part in an 
employment and training program to which they are referred by the local 
office. Failure to comply with these requirements can result in 
disqualification from the program.
    Applicants must also provide verification such as pay stubs and 
bank statements, along with their application. In addition, the 
eligibility worker will conduct automated data matches with the Social 
Security Administration and other organizations to verify information.
    Benefits are provided at the household level. In SNAP, a household 
is defined as either an individual living alone or a group of people 
who live together and purchase and prepare meals together. The amount 
of benefits, called an allotment, is based on the Thrifty Food Plan, a 
low-cost model food plan that reflects current nutrition standards, the 
nutrient content and cost of food and consumption patterns of low-
income families and varies with household size and net income. While 
SNAP has uniform national benefit levels with cost-of-living 
adjustments for outlying states and territories, allotment s vary with 
household size and net income.

                                      10. Utilization (Participation) Data
                                Supplemental Nutrition Assistance Program (SNAP)
                                  National Level Average Monthly Participation
----------------------------------------------------------------------------------------------------------------
                       FY 2005         FY 2006         FY 2007         FY 2008         FY 2009        FY 2010
----------------------------------------------------------------------------------------------------------------
          U.S.       25,602,975      26,524,597      26,293,437      28,200,022      33,463,212     40,266,867
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    SNAP is one of 15 nutrition assistance programs administered by 
USDA's Food and Nutrition Service. Programs target the diverse needs of 
different subgroups of low-income persons by providing supplemental 
assistance through a variety of forms and settings.
    The programs are designed to work together to form a nutrition 
safety net to ensure that no American in need goes hungry. For example, 
children from households receiving SNAP benefits or, alternatively, the 
Food Distribution Program on Indian Reservations (FDPIR) are 
categorically eligible to receive free meals at school through the 
National School Lunch and School Breakfast programs without a separate 
household application. This is done through direct certification, which 
typically involves matching SNAP or FDPIR records against student 
enrollment lists, either at the state or school district level.
12. Waste, Fraud and Abuse
    SNAP has a demonstrated Quality Control system that has been in 
effect since the 1970s. The system includes provisions for state 
liabilities for sustained poor performance and bonuses for states that 
excel. FNS takes seriously its responsibility to make sure that only 
those families who are actually eligible for the program participate, 
and that the correct amount of benefits is provided to them. Over the 
past decade, FNS has made major strides to improve the accuracy of 
SNAP's eligibility determination and benefit payment systems. In Fiscal 
Year 2000, the error rate was 8.91 percent. The Fiscal Year 2010 error 
rate was an all-time low of 3.81 percent, which is 57 percent less than 
the Fiscal Year 2000 error rate. Similarly Payment errors are less than 
half what they were 10 years ago, which has reduced improper payments 
by $3.3 billion in 2010.
    While recipient fraud undermines public confidence and jeopardizes 
the ability of SNAP to serve the tens of millions of struggling 
families who need it, the most recent data suggests that it is 
relatively rare. FNS works through our state partners to investigate 
recipient fraud and hold bad actors accountable, and recipients who 
purposely commit fraud to get benefits are subject to disqualification. 
In Fiscal Year 2010, states conducted 781,000 fraud investigations, 
disqualified 44,408 individuals, and collected $287 million in 
recipient claims. An additional $1.3 billion in delinquent SNAP 
recipient claims has been collected since 1992 via the Treasury Offset 
Program.
    FNS recently sent a letter to all states to encourage them to be 
more active and vigilant in the area of recipient trafficking. FNS is 
in process of contacting each state to engage in a discussion about 
doing more to promote integrity and remove bad actors from the program. 
FNS will work with each state to develop new approaches to fraud 
detection and prevention such as providing additional data to track and 
investigate fraud by recipients and by looking at sensible procedural 
changes and policy options.
    The sale/purchase of SNAP benefits for cash is called trafficking, 
an illegal activity punishable by criminal prosecution. Over the last 
15 years, FNS has aggressively implemented a number of measures to 
reduce the prevalence of trafficking in SNAP from about four percent 
down to its current level of about one percent. FNS also continues to 
work closely with its state and Federal partners to investigate and 
prosecute trafficking.
    Retailers found guilty of trafficking are referred to OIG for 
consideration for criminal prosecution. If OIG accepts the case and the 
store is criminally prosecuted, it may be subject to asset forfeiture 
in addition to administrative penalties levied by FNS. If OIG declines 
a case against a retailer found guilty of trafficking, FNS initiates 
administrative action to permanently disqualify the retailer from 
further SNAP participation. The retailer is barred from future SNAP 
participation, including opening a new store in a different location. 
If a retailer convicted of trafficking sells the store, they are 
assessed a transfer of ownership civil money penalty. If they 
participate in the Special Supplemental Nutrition Program for Women, 
Infants, and Children, they are disqualified from that program as well.
13. Effect of Administrative PAYGO
    See attached under ``Costs--Title XIX Treatment Facilities.''


                       AGRICULTURAL PROGRAM AUDIT

             (EXAMINATION OF TITLE I AND THE SURE PROGRAM)

                              ----------                              


                        WEDNESDAY, JULY 27, 2011

  Subcommittee on General Farm Commodities 
                       and Risk Management,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 1300, Longworth House Office Building, Hon. K. Michael 
Conaway [Chairman of the Subcommittee] presiding.
    Members present: Representatives Conaway, Schmidt, Austin 
Scott of Georgia, Crawford, Huelskamp, Ellmers, Gibson, 
Hultgren, Hartzler, Schilling, Lucas (ex officio), Ribble, 
Boswell, McIntyre, Walz, Kissell, McGovern, David Scott of 
Georgia, Sewell, and Peterson (ex officio).
    Staff present: Matt Schertz, Brandon Lipps, Bart Fischer, 
Heather Vaughan, Tamara Hinton, Debbie Smith, Clark Ogilvie, 
Anne Simmons, Liz Friedlander, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. This hearing of the Subcommittee on General 
Farm Commodities and Risk Management entitled, Agricultural 
Program Audit: Examination of Title I and the SURE Program, 
will come to order.
    We have two witnesses here this morning, both relatively 
new to the FSA top leadership, both of them bring long, long 
credentials to their jobs. We have Bruce Nelson, who is now the 
Administrator of the Farm Service Agency, U.S. Department of 
Agriculture. We have the favorite son from Texas, Juan Garcia, 
the Acting Deputy Administrator for Farm Programs at the Farm 
Service Agency.
    So gentlemen, welcome. Rather than making any kind of long 
winded statement, I am going to recognize our Chairman of the 
full Committee for his opening statement and then the Ranking 
Member for his.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    As you know, we are performing an extensive audit of all policies 
under the jurisdiction of the House Agriculture Committee. Today, we 
examine Title I of the farm bill, known as the Commodity Title, and 
standing disaster assistance, commonly known as SURE.
    Not long ago, this Subcommittee reviewed Federal Crop Insurance. We 
know that without this public-private partnership, something as basic 
as multiple peril crop insurance would be out of reach for U.S. 
producers. That's something everybody can get their arms around and 
appreciate.
    Less obvious are the reasons behind a commodity title to the farm 
bill and to standing disaster. People understand the production risks 
producers face. But folks are inclined to ask, what is so unique about 
the price risk and market volatility that producers face? Don't all of 
us face this sort of thing?
    Texas Tech University did a good job during the last farm bill of 
helping people understand the market conditions U.S. producers face. I 
would encourage each of my colleagues to get a copy of the ``Foreign 
Subsidies and Tariffs Handbook'' to gain a better sense of the 
distorted global markets in which our producers must compete. I can 
assure you, the kind of dollars we are talking about here today pale by 
comparison to what foreign countries, both developed and developing, 
are providing their producers. In fact, U.S. producers receive only a 
very basic level of support, and our markets are among the most open in 
the world.
    As an accountant, I never faced these distorted global markets. I 
have never woken up one morning to learn that the U.S. has imposed an 
embargo on American accountants doing work for clients living in the 
former Soviet Union, causing a collapse in my prices. I never 
encountered China turning on and off my access to clients in that 
country. I've never had to fight for access to clients in countries 
where the government has a single desk where it buys and sells all 
accounting work. I never had a situation where the government was 
buying my competitors their equipment for them. I never experienced a 
price volatility where what I could charge a client one year was $100, 
and the next year it was $20. And, I never had clients walk into my 
office and tell me the prices I could charge. Are there risks in all 
businesses? Absolutely. Businesses open and close every day. But few 
are dealing with the incredible risks our producers face.
    The question for me, then, is not whether we need a farm policy but 
what it should look like, and how to make it the most effective not 
only for the producers but also for the taxpayer. Agriculture and farm 
policy are too important to our economy and jobs to short shrift. 
President Reagan recognized this in the mid 1980s when he initiated the 
largest ad hoc effort in U.S. history to stop the farm financial 
crisis. A decade later, Congress stepped in to address another farm 
crisis. These ad hoc efforts were very expensive. So, having policies 
in place to not only deal with a crisis but hopefully prevent one is 
the key to being cost-effective for taxpayers and producers.
    There are a few guiding principles that I will apply when working 
with colleagues to develop the farm policy provisions of the 2012 Farm 
Bill and I offer them here to help facilitate a good conversation in 
this audit.

    (1) Does the policy undermine Federal Crop Insurance?

    (2) Is the policy bankable to the producer? In other words, does 
        the policy mean anything to the lender?

    (3) Is the policy tailored to producer risk?

    (4) Are the crops covered under Title I treated equitably under the 
        policy?

    (5) Can producers--and their lenders--understand the policy?

    With finite resources, we need to be wise in how we invest in U.S. 
farm policy. These are some basic principles we can apply to make sure 
this happens.
    With that, I yield to my friend, the Ranking Member, Mr. Boswell, 
for any opening statement he may have.

    The Chairman. Mr. Lucas.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Good morning and thank you, Chairman Conaway and 
Ranking Member Boswell, for holding this hearing. I would like 
to thank Bruce Nelson and Juan Garcia for joining us from the 
Farm Service Agency.
    Today's hearing is the eighth audit of farm programs 
conducted by the Agriculture Committee's Subcommittees. We have 
evaluated everything from conservation to nutrition assistance 
so far. We gathered information about which programs are most 
effective and which can be streamlined. Having these facts on 
hand will help us make difficult decisions when we begin 
developing the next farm bill. Each of those audits was 
important in their own right, but I believe today's audit of 
Title I's programs and disaster assistance is particular 
significant.
    Along with crop insurance, Title I programs form the very 
fabric of our farm safety net. They ensure that dramatic swings 
in commodities prices and volatile weather don't put our 
farmers and ranchers out of business. As a rancher I understand 
how difficult it is for producers to invest in a crop and see 
any hope of profit vanish because of factors beyond their 
control.
    Not only are producers engaging in a risky industry, but 
they have to significantly leverage their assets to do so. 
Farmers and ranchers borrow more money each year than most 
Americans will borrow in a lifetime. And in addition to the 
high personal risk and questionable returns farmers accept as 
part of doing business, they also put in the hard labor every 
day.
    I can tell you in these temperatures every chore is that 
much harder. And while we can avoid the heat here in Washington 
by crossing between our offices in the Capitol in air 
conditioned tunnels, our farmers and ranchers have no such 
luxury. There are no tunnels out to the pasture.
    That is why I am so grateful to the men and women who 
choose farming as a career. They work hard every day, braving 
the uncertainties of weather and commodity markets to produce 
high quality food for Americans and consumers around the world.
    While they do the hard work of producing our food, we have 
to do our part to support them. Without a safety net, a few bad 
seasons can put a farm out of business. When we lose that 
source of production, we don't usually get it back. So maybe 
instead of speaking about this as a farm safety net, we need to 
start calling it a food safety net. Perhaps that will get the 
message out that commodity support keeps farmers in business, 
which keeps food on our plates. And that is the message that 
seems to be getting lost.
    When I talk to farmers and ranchers I hear a constant 
refrain, we are not asking for a handout, we just need a floor 
in place when the bottom drops out. That is what crop insurance 
and Title I programs provide, a floor, a safety net for food 
production.
    So when opponents of farm policy start talking about the 
enormous amount of money that can be saved by eliminating this 
safety net, and they truly believe it is an enormous amount of 
money, I wonder what numbers they are using. The cost of losing 
food production surely outweighs the cost of a safety net, 
especially when you consider that many Title I programs don't 
kick in until prices fall below a set trigger.
    I would like to get one thing straight right off the bat. 
There aren't enormous savings to be found from cutting farm 
programs. They comprise less than \1/2\ of 1 percent of the 
Federal budget. That is only 50 cents out of every $100.
    Now these are difficult times and the agriculture community 
is going to have to accept budget cuts. We don't believe that 
we should take a disproportionate hit. We are prepared to 
reduce our spending, however, and these audits help us 
determine the best places to trim our budget and streamline 
programs. We are here to take an honest look at the Title I 
programs to see how they are working in the countryside. Are 
they the helping one group of producers over another? Are they 
more effective in certain regions? Is there duplication?
    We need to evaluate the new programs from the 2008 Farm 
Bill. For instance, are there ways to improve the ACRE program. 
I don't believe the SURE Program has worked the way most of us 
hoped it would. And it does not have a budgetary baseline once 
the 2008 Farm Bill expires. So we need to consider how that 
fits in with both our budget and our safety net.
    We have to look at our legacy programs, too. Should the 
three-legged stool of direct payments, and the countercyclical 
programs and marketing loan assistance be updated to reflect 
the new trends in prices? I think we also need to look at the 
repercussions of eliminating programs. Do we eliminate all 
incentives for producers to participate? And then in turn when 
they do opt out do we lose the conservation compliance that 
comes with program participation? We need to consider the 
potential consequences of any program changes.
    I am pleased that Mr. Nelson and Mr. Garcia are here to 
answer all of these questions. Understanding the true cost and 
benefits of our Title I programs will help us develop a better 
farm bill moving forward.
    I look forward to your testimony, gentlemen, and I thank 
you once again for being here, and yield back the balance of my 
time, Mr. Chairman.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Good morning. I'd like to thank Chairman Conaway and Ranking Member 
Boswell for holding this hearing. And I'd like to thank Bruce Nelson 
and Juan Garcia for joining us from the Farm Service Agency.
    Today's hearing is the eight audit of farm programs conducted by 
the Agriculture Committee's Subcommittees.
    We've evaluated everything from conservation to nutrition 
assistance so far. We gathered information about which programs are 
most effective and which can be streamlined. Having these facts on hand 
will help us make difficult decisions when we begin developing the next 
farm bill.
    Each of those audits was important in their own right, but I 
believe today's audit of Title I programs and disaster assistance is 
particularly significant.
    Along with crop insurance, Title I programs form the very fabric of 
our farm safety net. They ensure that dramatic swings in commodity 
prices and volatile weather don't put our farmers and ranchers out of 
business.
    As a rancher, I understand how difficult it is for producers to 
invest in a crop and see any hope of profit vanish because of factors 
beyond their control.
    Not only are producers engaging in a risky industry, but they have 
to significantly leverage their assets to do so. Farmers and ranchers 
borrow more money each year than most Americans will borrow in a 
lifetime.
    In addition to the high personal risk and questionable returns 
farmers accept as part of doing business, they also put in hard labor 
every day.
    I can tell you--in these temperatures every chore is that much 
harder. And while we can avoid the heat here in Washington by crossing 
between our offices and the Capitol in air conditioned tunnels, our 
farmers and ranchers have no such luxury. There are no tunnels out to 
the pasture.
    That's why I'm so grateful to the men and women who choose farming 
as a career. They work hard every day, braving the uncertainties of 
weather and commodity markets to produce high quality food for 
Americans and consumers around the world.
    While they do the hard work of producing our food, we have to do 
our part to support them. Without a safety net, a few bad seasons can 
put a farm out of business. When we lose that source of production, we 
don't usually get it back.
    So maybe instead of speaking about this as a farm safety net, we 
need to start calling it a food safety net. Perhaps that will get the 
message out that commodity support keeps farmers in business, which 
keeps food on our plates.
    That message seems to be getting lost.
    When I talk to farmers and ranchers, I hear a constant refrain: 
we're not asking for a handout; we just need a floor in place for when 
the bottom drops out.
    That's what crop insurance and Title I programs provide: a floor. A 
safety net for food production.
    So when opponents of farm policy start talking about the 
``enormous'' amount of money that could be saved by eliminating this 
safety net, I wonder what numbers they're using.
    The costs of losing food production surely outweigh the costs of a 
safety net. Especially when you consider that many Title I programs 
don't kick in until prices fall below a set trigger.
    I'd also like to get one thing straight right off the bat: there 
aren't enormous savings to be found from cutting farm programs. They 
comprise less than \1/2\ of 1 percent of the Federal budget. That's 
only 50 cents out of every $100.
    Now, these are difficult times, and the agricultural community is 
going to have to accept budget cuts. But we don't believe that we 
should take a disproportional hit.
    We are prepared to reduce our spending, however, and these audits 
help us determine the best places to trim our budget and streamline 
programs.
    We are here to take an honest look at the Title I programs to see 
how they are working in the countryside. Are they helping one group of 
producers over another? Are they more effective in certain regions? Is 
there duplication?
    We need to evaluate the new programs from the 2008 Farm Bill. For 
instance, are there ways to improve the ACRE program?
    I don't believe the SURE program has worked the way most of us 
hoped it would. And it does not have a budgetary baseline once the 2008 
Farm Bill expires. So we need to consider how that fits in to both our 
budget and our safety net.
    And we have to look at our legacy programs too. Should the three-
legged stool of direct payments, the countercyclical program, and 
marketing loan assistance be updated to reflect the new trends in 
prices?
    I think we also need to look at the repercussions of eliminating 
programs. Do we eliminate all incentives for producers to participate 
and in turn when they do opt out, do we lose the conservation 
compliance that comes with program participation. We need to consider 
the potential consequences of any program changes.
    I'm pleased that we have Mr. Nelson and Mr. Garcia here to help 
answer all of these questions.
    Understanding the true costs and benefits of our Title I programs 
will help us develop a better farm bill moving forward.
    I look forward to your testimony, and I thank you once again for 
being here.

    The Chairman. Thank you, Mr. Chairman. I now recognize the 
Ranking Member for an opening statement.

OPENING STATEMENT OF HON. LEONARD L. BOSWELL, A REPRESENTATIVE 
                     IN CONGRESS FROM IOWA

    Mr. Boswell. Thank you, Mr. Chairman, and I appreciate you 
having this hearing today. I want to thank everyone for joining 
us as we review our farm safety net system. I would especially 
like to thank our witnesses, Mr. Nelson and Mr. Garcia.
    I am one of those around this place who knows my way 
through the FSA office. There have been times when we went 
through what we refer to in the farm business, and I think the 
Chairman has been there too, where we have had to remember the 
farm crisis of the late 1970s, early 1980s. And wow, I 
personally know our director in Iowa, John Whitaker and I thank 
you for his service and for selecting him. He is doing an 
outstanding job and has a great crew.
    As a farmer, as I said I have always considered myself an 
eternal optimist, I used that word once or twice. You kind of 
have to be that way to do what Frank Lucas and Leonard Boswell 
do because you have to believe. No matter how hot it gets or 
how hard it rains or how dry it gets, we hope as much as we can 
that it will get better and our crop will grow and our 
livestock will survive and remain healthy.
    Unfortunately, this is not always the case. Every now and 
then because of Mother Nature, the farmers and ranchers who 
feed our nation feel painful consequences to their operation, 
whether a storm tears down a grain bin or the sun wears down 
our livestock and even in some cases not only stops the 
efficiency of the feeding but causes death. I had farmers 
yesterday come into my office; turkey people as you know, have 
lost thousands of birds and it is not because they did 
something wrong. So if they are not protected, it has the 
impact to dramatically increase the cost of food.
    The heat risks our producers face are happening before us 
across the nation. The news from the past week has shown 
livestock losses in Virginia all the way to Minnesota as well 
as my home State of Iowa and many other places. While those 
losses attribute to the need for a safety net, the ongoing farm 
income is also affected with this kind of weather. Unable to 
cool down, cattle feed less and gain less and in many cases 
die. As well, poor conditions cause a dairy cow to produce 
less, and after years of investment these issues skim profits 
and production off of each and every animal every day.
    A big reason our producers succeed in an industry that 
relies on uncontrollable forces of rain, the sun, the soil, the 
market is because we provide a support system. And in return, 
and I think Chairman Lucas just pointed it out, and I know that 
Chairman Conaway has many times, we give the Americans the most 
abundant, safe and affordable food on this Earth, because we 
all invest in it. Whether you live in downtown New York or LA 
or Miami, we invest in it and that is what we get. And we are 
constantly from the Agriculture Committee telling our 
colleagues that are in these positions that you have an 
investment, you have a vital concern. This is not something you 
are just handing out to the farmers and ranchers. It is to 
protect the safe, affordable, abundant food supply better than 
any place in the world. I am constantly sharing that because we 
have a vested interest in this.
    Programs in Title I, the farm bill, like ACRE, Livestock 
Indemnity, and this is what the turkey farmers were talking 
about yesterday, as you already know, and other disaster 
assistance programs are critical to maintaining our food supply 
and its affordability.
    This Committee under the leadership of Chairman Lucas and 
Chairman Conaway is dedicated to working to ensure that policy 
in D.C. is practical for farmers and ranchers across America.
    So thank you for your being here. And your testimony will 
be essential for us to move forward on the next farm bill I am 
sure. Thank you very much. I yield back.
    [The prepared statement of Mr. Boswell follows:]

  Prepared Statement of Hon. Leonard L. Boswell, a Representative in 
                           Congress from Iowa
    Thank you Chairman Conaway. I would like to thank everyone for 
joining us here today as we review our farm safety net system. I would 
especially like to thank our witnesses. Mr. Nelson and Mr. Garcia, my 
colleagues and I look forward to hearing from you and to having the 
opportunity to review these programs with you.
    As a farmer, I have always considered myself an eternal optimist. 
No matter how hot it gets or how hard it rains, I hope as much as I can 
that it will get better--that my crop will keep, and that my livestock 
will survive and remain healthy.
    Unfortunately, that is not always the case. Every now and then, 
because of Mother Nature, the farmers and ranchers who feed our nation 
face painful ramifications to their operation. Whether a storm tears 
down a grain bin or the sun wears down our livestock the inputs and 
investments, if not protected, have the ability to dramatically 
increase the cost of food.
    The heat risks our producers face are happening before us across 
our nation. News from the past week has shown livestock losses in 
Virginia all the way to Minnesota, as well as my home State of Iowa. 
While these losses attribute to the need for a safety net, the ongoing 
farm income is also affected by this kind of weather. Unable to cool 
down, cattle feed less and gain less. As well, poor conditions cause a 
dairy cow to produce less. After years of investments these issues skim 
profit and production off of each animal every day.
    A big reason our producers succeed in an industry that relies on 
uncontrollable forces--the rain, sun, and soil--is because we provide a 
support system. In return, they have given Americans the most abundant, 
safe, and affordable food on the planet. Programs in Title I of the 
farm bill, like ACRE, Livestock Indemnity, and other disaster 
assistance programs are critical to maintaining our food supply and its 
affordability.
    Our Committee is dedicated to working to ensure that policy in D.C. 
is practical for the farmers and ranchers across America. Thank you 
again, your testimony will be essential for us as we continue to move 
towards the next farm bill.

    The Chairman. I thank the gentleman. I will make a couple 
of comments here. Not long ago this Subcommittee reviewed the 
Federal Crop Insurance Program. We know that without this 
public-private partnership something as basic as multi-peril 
crop insurance will be out of reach for most U.S. producers. 
That is something that everybody can get their arms around and 
appreciate.
    Less obvious, however, are the reasons behind a commodity 
title to the farm bill and to standing disaster. People 
understand the production risks producers face, but folks are 
inclined to ask what is so unique about price risk and market 
volatility that producers face? Don't all of our small business 
owners face these sorts of things?
    Texas Tech did a good job during the last farm bill of 
helping people understand the market conditions U.S. producers 
face. I would encourage each of my colleagues to get a copy of 
the Foreign Crop Subsidies and Tariffs handbook to gain a 
better understanding and sense of the distorted global markets 
in which our producers must compete. I can assure you the kind 
of dollars we are talking about here today pale by comparison 
to what foreign countries, both developed and developing, are 
providing their producers. In fact U.S. producers receive only 
a very basic level of support and our markets are among the 
most open in the world. As an accountant, I never faced these 
distorted global markets.
    I never woke up one morning to learn that the U.S. has 
imposed an embargo on American accountants doing work for 
clients living in the former Soviet Union causing a collapse in 
my prices. I never encountered China turning off or on my 
access to clients in that country. I have never had to fight 
for access to clients in countries where the government has a 
single desk where it buys and sells all accounting work. I 
never had a situation where the government was buying my 
competitors their equipment for them. And I never experienced a 
price volatility where I could charge a client one year $100 
and the next $20. I rarely had a client that big. You boys are 
a tough audience. I never had a client walk into my office and 
tell me the prices they would charge.
    Are there risks in all businesses? Absolutely. Businesses 
open and close every day, but few are dealing with the 
incredible risks our producers face. The question for me is not 
whether to have a farm policy but what it should look like and 
how to make it the most effective, not only for producers but 
also for our taxpayers.
    Agriculture and farm policy are too important to our 
economy and jobs to short shrift. President Reagan recognized 
this in the mid-eighties when he initiated the largest ad hoc 
effort in U.S. history to stop the farm financial crisis. A 
decade later Congress stepped in to address another farm 
crisis. These ad hoc efforts are very expensive, so having 
policies in place to not only deal with the crisis, but 
hopefully prevent one is the key to being cost effective for 
taxpayers and producers.
    There are few guiding principles that I would like to apply 
when our colleagues and I develop the farm policy provisions 
for the 2012 Farm Bill. One, does the policy undermine crop 
insurance? Two, is the policy bankable to the banker--to the 
producer? In other words, does the policy mean anything to a 
lender? Is the policy tailored to producer risks? Are crops 
covered under Title I treated equitably under the policy? Can 
producers and their lenders understand the policy? With finite 
resources we need to make wise decisions as we invest in U.S. 
farm policy. These will be some of the guiding principles that 
I hope we can use.
    The Chairman. The chair would request that other Members 
submit their opening statements for the record so that the 
witnesses may begin their testimony and to ensure there is 
ample time for questions.
    [The prepared statements of Mr. Peterson and Mr. McGovern 
follow:]

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota
    Thank you Chairman Conaway and Ranking Member Boswell for holding 
today's hearing and continuing this Committee's agricultural program 
audits in preparation for the next farm bill. This is the eighth audit 
hearing, focusing on Title I and the SURE program.
    I have said this many times, but the budget is going to be our 
biggest challenge when we sit down to write a new farm bill. There is 
no doubt that we need to get our fiscal house in order. I have said 
repeatedly that agriculture can, and will, do its part. My concern is 
that we are being asked to cut agriculture spending three to four times 
more than other areas of the budget.
    While only a small portion of farm bill spending comes from Title 
I, folks outside of agriculture have repeatedly targeted these programs 
for cuts, arguing that high commodity prices mean we can dismantle the 
farm safety net. We've been down this road before. In 1995 and 1996, we 
had high prices and a new Congressional majority who didn't like farm 
programs and wanted to cut the deficit. We passed a farm bill, Freedom 
to Farm, which saved a little money right away but we ended up spending 
a lot more when prices collapsed. The environment looks much similar 
now. These prices are not going to last forever and if we don't have an 
adequate safety net in place when prices fall we could screw up the one 
part of the economy that's actually working.
    One Title I program that is of particular concern to my 
constituents in Minnesota is the sugar program. With so much focus on 
the budget, it is important to note that this is a no cost program. The 
sugar program is working as it is supposed to, it is administered well 
and it is something we should not mess with.
    Of course, today's hearing is happening in a very uncertain budget 
climate. At this point, there is a lot of speculation about what will 
ultimately happen. I am hopeful that any cuts to agriculture are 
reasonable and fair compared to other parts of the budget.
    Again, I thank the Chairman for holding today's hearing and look 
forward to hearing from our witnesses.
                                 ______
                                 
   Prepared Statement of Hon. James P. McGovern, a Representative in 
                      Congress from Massachusetts
    Mr. Nelson, I regret not being able to stay longer at the July 27th 
Subcommittee hearing but I had to leave early due to a scheduling 
conflict. I would like to make a few points that I feel are important 
to keep in mind as we move forward with our work on the next farm bill. 
I have several questions for you and I respectfully request a written 
response.
    On July 21st, I participated in the Subcommittee on Nutrition and 
Horticulture's audit hearing on Title IV Nutrition Programs. One area 
of discussion was eligibility requirements for receiving SNAP benefits, 
including income and asset limits. While I understand SNAP and other 
nutrition programs are administered by the Food and Nutrition Service, 
I am concerned that there is more focus on SNAP benefits and not enough 
on who is receiving farm subsidies.

   Can you tell me how much the average farmer earns per year?

   What is the maximum amount that a farmer can make and still 
        be eligible for a Title I programs?

   Can you tell me what share of the annual taxable income does 
        a direct payment constitute for the average farmer?

   Is it accurate to say that larger, wealthier farmers tend to 
        receive larger benefits from Title I?

    Just for the sake of comparison, the most a family of four can make 
to be eligible to receive benefits under the SNAP program is $28,668. 
The average SNAP benefit is $2,724 per household per year.
    Next, I'd like to get a better sense of how your agency measures 
the accuracy of the benefits that you are paying.
    Over the course of the last few months, many of my colleagues who 
serve on this Committee continue to falsely claim that fraud, waste and 
abuse is rampant in the SNAP program. In fact, many of my colleagues 
continue to misstate the level of overpayments to SNAP recipients. It's 
important to correct the false statements and to state for the record 
that SNAP is not only one of the most efficiently run programs at USDA, 
is one of the most efficiently run programs in the federal government. 
In fact, SNAP error rates are at historic lows and are at levels unseen 
in both the public and private sectors.
    For example, in terms of SNAP oversight and measuring the accuracy 
of benefits paid, my understanding is that the states and federal 
government sample approximately 50,000 SNAP cases each year in order to 
develop a nationally and state-level representative sample of the 
caseload. Each case is reviewed by a state staffer who reviews every 
document in the case record, independent information about clients and 
re-interviews the SNAP client. The Federal Government then re-reviews a 
sample of the state sample in order to verify its accuracy. All states 
are measured against the same standard making it possible to compare 
states to each other and longitudinally. Errors are sorted into 
different categories: client caused and household caused. FNS also 
knows which aspect of the program was the source of the error, such as 
inaccurately calculating income or a certain deduction. Of course, this 
is just the quality control check at the end of a lengthy application 
and eligibility review process that thoroughly scrutinizes each 
household's eligibility.

   Would you please provide more information about how FSA 
        measures the accuracy of Title I payments? I'd like to know how 
        many cases are sampled, what level of review they undergo, 
        whether there is a statistical audit of the accuracy, and where 
        that information is published.

   What are the error rates in farm payments/subsides--i.e., 
        how many payments go to deceased farmers?

   What is the level of overpayments going to farmers?

    As we continue moving towards a reauthorization of the farm bill, 
it's important for Members and the public to know that there is a vast 
monetary difference in the amount of money going to wealthy farmers 
versus a poor family of four. It's critical that we not demagogue SNAP 
simply because it's doing the job it was designed to do and, at the 
same time, turn a blind eye to the way our farm payment system is 
structured.
    Thank you for taking the time to review my questions and I look 
forward to working with you and the FSA over the next several months.

    The Chairman. And with that, I now turn to our witness for 
his opening statement. Bruce Nelson, Administrator for Farm 
Service Agency, the floor is yours, sir.

STATEMENT OF BRUCE NELSON, ADMINISTRATOR, FARM SERVICE AGENCY, 
 U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED 
    BY JUAN M. GARCIA, ACTING DEPUTY ADMINISTRATOR FOR FARM 
                      PROGRAMS, FSA, USDA

    Mr. Nelson. Mr. Chairman, Ranking Member Boswell, and 
Members of the Subcommittee, thank you for the opportunity to 
discuss Title I and disaster assistance provisions associated 
with the 2008 Farm Bill. My name is Bruce Nelson. I am the 
Administrator of the Farm Service Agency. And I am joined here 
today by FSA Acting Deputy Administrator for Farm Programs, 
Juan Garcia. I would like to briefly address our efforts toward 
efficient and accurate implementation of these important 
programs.
    America's farmers and ranchers are the best in the world, 
providing food, fiber and fuel we depend on to grow our nation. 
Farmers drive our national economy and they are the nation's 
leading stewards of the environment. No matter where we live in 
this country all of us have a stake in the livelihoods of 
farmers.
    A farmer faces many risks inherent to this work. Prices can 
plummet or a natural disaster can destroy a farm. The farm 
safety net exists to help offset this uncertainty and when 
misfortune strikes to help a farmer get back on their feet.
    The Title I and disaster programs authorized under the farm 
bill, along with the farm loan programs I discussed in a recent 
hearing before your colleagues, are the primary tools that we 
use to help at FSA. FSA implements a wide variety of price 
support programs authorized under the 2008 Farm Bill. I 
included an update on these programs in my written testimony.
    One program of note is the Average Crop Revenue Election 
Program. We have worked hard to educate producers regarding 
ACRE, which is not only new but requires producers to do a good 
deal of background research. Those who have participated in a 
direct payment program for many years had to make a complex 
choice on ACRE, which was a major reason we saw modest sign-up 
numbers.
    These price support programs affect a very large number of 
producers. Last year FSA made seven million separate payments 
on Title I. That means one of our biggest responsibilities is 
to be sure we make payments quickly and accurately, and I take 
that responsibility very seriously.
    FSA has a variety of mechanisms in place to prevent 
improper or inaccurate payments. Even one improper payment is 
one too many and when we identify a potential error we address 
it.
    The disaster programs have also proven to be a very 
significant part of the safety net laid out in the 2008 Farm 
Bill. I am pleased to report that over the past 2 years FSA has 
fully implemented these disaster programs and delivered them in 
the field largely due to the commitment of our field staff and 
explaining and calculating complex new programs. Together with 
the 2008 Recovery Act, these programs have delivered more than 
$3 billion in assistance to more than 200,000 farmers and 
ranchers.
    Unlike the Title I programs and most other farm bill 
provisions FSA has implemented, authorization for these five 
major disaster programs is set to expire at the end of this 
fiscal year.
    Our biggest challenge in implementing both disaster and 
price support programs has been our aging IT infrastructure. We 
are very focused on the modernization and innovation of the 
delivery of agricultural systems program, our effort to 
streamline farm program delivery. We are complementing this 
work with an initiative to reduce crop reporting for farmers.
    Recently when I testified regarding farm loan programs I 
had the opportunity to point out the successes we have had with 
modernizing our farm loan delivery. Modernization of our farm 
programs as you know is just as important; it gives us the 
opportunity to serve farmers better and faster using new tools 
to create a more efficient government agency. I am committed to 
seeing these successes carried through on-farm perhaps as they 
have been with farm loans.
    Mr. Chairman, as we move forward toward development of the 
next farm bill I believe it is important that we approach this 
new legislation with an eye toward making a difference across 
rural America, for letting the needs of the American farmer 
drive our priorities.
    I would like to echo Secretary Vilsack's sentiments 
regarding our needs for the next farm bill. We stand ready to 
innovate and adapt in implementing a farm bill that best 
addresses current challenges in rural America and needs faced 
by our agricultural producers. I would ask you and your 
colleagues to identify priorities and let us know what those 
priorities are in the next farm bill. And I would ask that you 
give the USDA the flexibility and the resources to generate 
results.
    Finally, I ask that you work closely with FSA and with USDA 
to make sure we are accountable for getting the job done. My 
team and I at FSA look forward to working with you as this 
process takes hold.
    Mr. Chairman, this concludes my statement, and I would be 
happy to try to provide answers to your questions now or any 
time in the future. Thank you very much.
    [The prepared statement of Mr. Nelson follows:]

Prepared Statement of Bruce Nelson, Administrator, Farm Service Agency, 
            U.S. Department of Agriculture, Washington, D.C.
    Mr. Chairman, Ranking Member, and Members of the Subcommittee, 
thank you for the opportunity to discuss Title I and disaster 
assistance provisions associated with the Food, Conservation, and 
Energy Act of 2008 (2008 Farm Bill). These programs, together with the 
Federal crop insurance program, form the backbone of the farm safety 
net. This hearing provides an opportunity to reflect on the performance 
of these programs under the 2008 Farm Bill, while thinking ahead to the 
upcoming 2012 debate.
    Title I is very broad and covers not only our ``traditional'' 
commodity programs, but also the new Average Crop Revenue Election 
(ACRE) program, as well as dairy, sugar, and many other provisions. 
Disaster assistance programs are covered in Titles XII and XV and 
complement the Title I provisions. After discussing our experience with 
these programs, I would like to address our efforts to modernize and 
ensure high-quality, cost-effective program delivery, which is 
benefiting producers and streamlining our internal operations.
Direct and Counter-Cyclical Payment Program
    The Farm Service Agency (FSA) operates the direct and 
countercyclical payment program, which was first authorized by the 2002 
Farm Bill. Direct payments are made to producers with program crop base 
acres, and do not depend on the crop that is currently planted or on 
current yields or prices. A producer's payment is based on the farm's 
base acres associated with the crop, the farm's (fixed) program yield, 
and a fixed national payment rate established in statute. In total, FSA 
makes approximately $4.9 billion in direct payments annually, 
accounting for about 80 percent of Title I outlays in Fiscal Year (FY) 
2011.
    Like direct payments, countercyclical payments depend on base 
acres, but are made when market prices drop to levels that trigger 
payments. With grain and oilseed market prices at record, or near-
record levels, countercyclical payments have been modest, and for FY 
2010 and 2011, only producers with cotton and peanut base acres have 
received benefit. FSA will issue about $131.8 million in 
countercyclical payments in FY 2011. In comparison, countercyclical 
payments totaled $4.4 billion in FY 2006 and $3.2 billion in FY 2007, 
when market prices averaged significantly lower.
Average Crop Revenue Election (ACRE) Program
    ACRE was first authorized by the 2008 Farm Bill, and is based on 
revenue risk rather than price risk. It provides an alternative to 
traditional farm programs and depends on both state- and farm-level 
triggers. Both the state-level and farm-level triggers--which are in 
turn based on historical average yields and national average market 
prices--must be met before a producer receives a payment. Because it is 
an alternative to traditional programs, an ACRE participant forgoes 
countercyclical payments and incurs a 20 percent reduction in direct 
payments and a 30 percent reduction in marketing assistance loan rates 
for all commodities on the ACRE-enrolled farm. Once a farm is enrolled 
in ACRE, that farm is required to stay enrolled in ACRE throughout the 
duration of the 2008 Farm Bill (through 2012).
    Overall, ACRE participation has been strongest for corn, soybeans 
and wheat. In 2009, about 33 million acres of base acres were enrolled, 
including 13 million acres (16 percent) of corn base (over half of that 
total is in Illinois, Iowa, and Nebraska), and about 8 million acres 
(15 percent) of soybean base (Illinois and Iowa were again top states). 
Nearly 10 million acres of wheat base were enrolled in ACRE, about 13 
percent of the total enrolled wheat base. For wheat, expected net 
returns, combined with strong educational efforts, improved ACRE 
participation for the crop, particularly in Oklahoma (2.5 million acres 
enrolled) and North Dakota (1.6 million acres).
    The bulk of enrollment occurred in 2009, the first year of the 
program. An additional 1.2 million acres of base and 6,000 farms (not 
in the program in 2009) were enrolled in ACRE in 2010. In 2011, about 
2,600 more farms have enrolled in ACRE.
    Several reasons likely explain the relatively modest interest in 
this new program. ACRE requires producers to do a significant amount of 
``homework'' to understand how it would work for their farms. Many 
producers have been participating in some form of direct payment since 
1996 with Production Flexibility Contract payments, and later the 
direct payment program. This is further complicated by operators' 
having to explain to landlords and, at times, bankers, how expected 
ACRE net returns compare to net returns under the traditional programs. 
According to statute, ACRE participation is locked in for a farm 
throughout the remainder of the 2008 Farm Bill once that farm is 
enrolled in ACRE. Because of market uncertainties and without a clear 
understanding of this new program, most producers hesitated to commit 
their farms to a multi-year ACRE agreement. Basically, producers found 
themselves trading off the certainty of existing direct payments with 
the uncertainty of ACRE payouts.
    For the 2009 crop year, about $446.6 million in ACRE payments were 
made. Wheat producers (who experienced both low prices and yield 
losses) accounted for about $310 million of that total, with an 
estimated $100 million paid for corn, $20 million for barley, $10 
million for sunflower seed, and small amounts for several other crops. 
Oklahoma, Washington, Illinois, South Dakota, North Dakota, and Idaho 
received about 80 percent of the payments.
    Because the magnitude of ACRE payments are determined by season 
average prices in any given year, there is a significant time lag 
between the start of a crop year and the issuance of payments. Further, 
the 2008 Farm Bill mandates that payments cannot be made until after 
October 1 of the calendar year following the calendar year of the 
harvest. We expect 2010 crop year payments to total about $24 million 
in FY 2012.
Marketing Assistance Loans
    Marketing assistance loans provide producers with interim financing 
at harvest time to meet cash flow needs without having to sell their 
commodities. The harvested commodity is used as collateral for the 
loan. The value of marketing assistance loans made totaled about $7 
billion in FY 2011. Market loan repayment provisions specify, under 
certain circumstances, that producers may repay loans at less than 
principal plus accrued interest and other charges.
    Alternatively, producers can apply for a loan deficiency payment in 
lieu of securing a loan. Similar to the situation for countercyclical 
payments, high market prices have greatly reduced marketing loan 
benefits, which are expected to total less than $50 million in FY 2011.
Ensuring Compliance with Eligibility Requirements
    Each year, FSA makes about seven million separate payments to 
farmers and ranchers. The vast majority of payments are made quickly 
and accurately. Over the past 2 years, FSA has taken a variety of 
actions to help identify and further limit the occurrence of improper 
payments.
    The 2008 Farm Bill redefined eligibility requirements for DCP, 
ACRE, and certain other programs by lowering the average gross income 
(AGI) limit to $750,000 for on-farm income and to $500,000 for non-farm 
income from the previous cap of $2.5 million for all income. To ensure 
that only those participants who comply with AGI requirements receive 
specified farm program benefits, FSA entered into an agreement with the 
Internal Revenue Service (IRS). With the written consent of the program 
participant, the IRS performs a series of calculations using tax return 
data to determine a producer's average AGI values and compares those 
values with the AGI limits. IRS then provides to FSA a report that 
indicates whether or not the participant appears to meet or exceed each 
of the average AGI limitations. AGI compliance reviews for FY 2009 and 
2010 are still underway and we look forward to being able to soon 
verify that producers are fully compliant with the law.
    The 2008 Farm Bill also requires that FSA reconcile data with the 
Social Security Administration (SSA) to address concerns regarding 
payments to deceased persons. Before the 2008 Farm Bill was enacted, 
FSA started a data-matching process that compares program payment 
information to the SSA ``death master file,'' starting with payments 
issued in FY 2007. Review of the data-match report and information on 
file in FSA offices revealed that 121,527 payments in FY 2007, totaling 
$108 million, were disbursed on behalf of deceased persons. However, 
relatively few of these payments warranted further action. The vast 
majority of the payments identified as issued to deceased producers 
were in fact earned or requested prior to death. If a producer is 
enrolled in a program and is due a payment and the producer passes away 
during that year, the payment will be issued to the estate of the 
deceased person. USDA issued a regulation in late 2010 making explicit 
that payments will not be made on behalf of a deceased person unless 
the payment was earned by that person while alive and was requested by 
that person or their authorized representative before or after their 
death.
Planting Flexibility, 10-Acre Base Provisions
    We recently delivered two reports to Congress mandated by the 2008 
Farm Bill--one on the impacts of the Planting Transferability Pilot 
Program (PTPP) and the other on the effects of provisions eliminating 
payments to FSA farms with 10 or fewer base acres. The Economic 
Research Service provided substantial assistance with these reports, 
which we greatly appreciate.
    PTPP, first authorized in the 2008 Farm Bill, relaxes the planting 
restrictions, in certain FSA programs, placed on vegetables destined 
for processing, and is available in seven upper Midwestern States. PTPP 
emerged in response to claims by Midwestern vegetable processors that 
access to vegetables used for producing pickles, tomato paste, and 
canned beans, among other foods, has been constrained by statutory 
planting restrictions. These statutory fruit and vegetable planting 
restrictions date back to 1990, and were put in place to address 
concerns expressed by the produce sector that payments to farms with 
base acres planted to fruits and vegetables could lead to a significant 
decline in prices, which would be unfair to a sector that received 
relatively modest government support. Prior to PTPP, fruit and 
vegetables could be grown on base acreage if the farm has a history of 
planting fruit and vegetables. In these cases, payments are reduced 
acre-for-acre for each acre of fruit and vegetables planted. PTPP 
places farms with no history of planting fruit and vegetables on the 
same footing as those with a planting history for the select processing 
vegetables. Without PTPP, participating farms with no planting history 
would receive a far greater penalty.
    FSA data for 2009 indicate that 10,215 acres were planted under 
PTPP, about 14 percent of the 75,000 allowable acres in the statute and 
a small share of total processing vegetable acreage. One hundred and 
fifty-five farms participated, with Illinois, Indiana, and Minnesota 
accounting for approximately 85 percent of the farms and acres. Several 
reasons explain the relatively low participation. Stagnant market 
demand and producers' flexibility to expand processing vegetable 
production without PTPP are major reasons. For growers to expand 
acreage, processors must offer attractive contract prices. Growers and 
processors, though, are very well aware that long-run demand for 
processing vegetables is stagnant or declining, and that net returns to 
other crops are often more attractive. Even if markets were more 
favorable, availability of non-base acres and a producer's prior 
vegetable planting history on base acres often provide sufficient 
acreage for expanded plantings.
    Regarding the 10-acre base (base-10) analysis, the 2008 Farm Bill 
eliminates DCP and ACRE payments to FSA farms with 10 or fewer base 
acres. Farms classified as ``limited resource'' and ``socially 
disadvantaged'' are exempt from this provision. About 371,000 FSA 
farms, out of 2.2 million farms with base acres, became ineligible for 
payments as a result of the provision. The dollar amount of payments 
prohibited was $29.1 million, compared to approximately $5.9 billion 
total DCP and ACRE payments in 2009, since the affected farms control 
only 1.6 million, or 0.6 percent, of total base acres. However, the 
actual savings was likely smaller, since not all operators of FSA farms 
enroll in commodity programs in a given year. In 2008, prior to 
implementation of the provision, just 40 percent of base-10 FSA farms 
enrolled in the DCP program. Operators affected by the provision would 
forgo an average of $79 per farm in 2009, compared with the average 
DCP/ACRE payment across all FSA farms of $2,620. For farmers choosing 
not to enroll, the transaction cost of enrolling may outweigh the 
benefits.
    Applying a 40 percent enrollment rate to 2009 data, there are an 
estimated 148,400 farms who no longer receive $11.7 million in 
payments. The administrative cost savings are another estimated $1.5 
million, for a total savings of $13.2 million per year.
    The base-10 provision had little impact in the Corn Belt and Great 
Plains, where FSA farm sizes are relatively large. In contrast, regions 
along or near the East Coast tend to have a high proportion of farms 
with small base acre holdings and have been more affected. For example, 
in the Eastern Upland and Southern Seaboard regions, 35 and 28 percent 
of FSA farms, respectively, became ineligible under the base-10 
provision in 2009.
Supplemental Revenue Assistance Payments (SURE) Program
    Title XII of the 2008 Farm Bill contains the SURE program, which 
provides assistance to crop producers for eligible losses in times of 
natural disasters. To be eligible for SURE (or any other 2008 Farm Bill 
disaster program except for the Livestock Indemnity Program), producers 
must have Federal crop insurance or Noninsured Crop Disaster Assistance 
Program (NAP) coverage on all their crops and be located in a county 
included in the geographic area covered by a natural disaster 
declaration issued by the USDA Secretary. The Secretarial disaster 
designation is not required if a farmer can prove a whole farm loss of 
more than 50 percent of normal, including farming operations across 
county or state lines.
    As of July 12, 2011, payments for 2008 and 2009 crop losses to date 
total more than $2.6 billion. (Of this amount, about $0.8 billion can 
be attributed to an increase in benefits mandated under the American 
Recovery and Reinvestment Act.) Major recipient states include North 
Dakota ($358 million), Texas ($349 million), and Iowa ($289 million), 
which account for 40 percent of the total. Although these states have 
been key beneficiaries, SURE payments have been critical to helping 
producers in many other states. Twenty-seven states have received over 
$10 million since the inception of SURE.
    SURE differs from previous disaster programs in that SURE losses 
and revenues are calculated based on all of a producer's land, 
including multiple farms combined, compared to ad hoc disaster program 
calculations made on a crop-by-crop basis. As a result of the whole-
farm focus, a county may receive a Secretarial disaster designation, 
but few producers may be eligible for SURE payments. SURE's whole-farm 
nature and the number of variables used in the calculations make the 
program quite complex.
    A significant lag exists between the timing of crop loss and 
receipt of SURE payment to allow for the calculation of actual farm 
revenue. Farm revenue depends on season average prices reported by 
USDA's National Agricultural Statistics Service, which are usually 
released 13 months after the start of the crop year. Actual farm 
revenue also depends on other data which are not available until well 
after a crop loss occurs, including marketing loan benefits, ACRE 
payments, crop insurance indemnities, and other payments. Producers 
have until July 29, 2011, to apply for assistance for 2009 crop losses 
under SURE. To date, payments for 2009 losses are approximately $465 
million; however, producers have until July 29, 2011, to apply for 
assistance for 2009 crop losses under SURE.
Other Disaster Programs
    The 2008 Farm Bill also authorizes disaster assistance programs for 
livestock and trees. These programs include the Livestock Indemnity 
Program (LIP), the Livestock Forage Disaster Program (LFP), the 
Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish 
Program (ELAP), and the Tree Assistance Program (TAP).
    The Livestock Indemnity Program (LIP) provides assistance to 
producers who lose livestock due to natural disaster. For 2008-10 
losses, about $110 million has been paid out under LIP as of July 12, 
2011. LIP payments are made for livestock losses (death) above normal 
mortality rates at fixed payment rates per animal. Accordingly, LIP 
payments can be issued soon after a qualifying loss occurs to help 
producers rebuild herds and undertake other activities. These payments 
were particularly helpful to ranchers whose livestock were lost during 
major blizzards in the Northern Plains, as well as during extended heat 
in many Midwestern states during the summer of 2009. Major LIP 
recipient states include South Dakota ($30 million to date) and North 
Dakota ($20 million to date).
    The Livestock Forage Disaster Program (LFP) compensates livestock 
producers for grazing losses due to drought. LFP has provided $380 
million as of July 12, 2011 to ranchers affected by drought. LFP 
payments can typically be made within a few weeks of a county 
qualifying for assistance, which has been particularly helpful to 
ranchers during severe drought events. The major LFP recipient states 
are those that have suffered significant drought losses such as Texas 
($155 million), North Dakota ($28 million), California ($26 million), 
and Georgia ($18 million).
    The Emergency Assistance for Livestock, Honeybees, and Farm-Raised 
Fish Program (ELAP) provides funds for losses that are not covered by 
other disaster programs. ELAP provides assistance for those livestock 
losses that are not covered by LIP or LFP. Funding is limited by 
statute to $50 million per calendar year. Of the $29 million disbursed 
to date for 2008-10 losses, primary recipient states include South 
Dakota (more than $4 million), Florida ($4 million), and California ($3 
million). ELAP has provided substantial assistance to beekeepers whose 
bees have suffered from Colony Collapse Disorder.
    The Tree Assistance Program (TAP) provides assistance to replace or 
rehabilitate trees, bushes and vines lost or damaged due to natural 
disasters. To date, TAP payments for 2008-10 losses have totaled nearly 
$9 million.
    In addition, the Noninsured Crop Disaster Assistance Program (NAP) 
provides financial assistance to producers of crops where crop 
insurance is not available and when low yields, loss of inventory, or 
prevented planting occur due to natural disasters. NAP payments for 
2008-10 losses have totaled $210 million.
    Per the 2008 Farm Bill, losses incurred under SURE, LIP, LFP, ELAP, 
and TAP are not covered beyond September 30, 2011. Among the disaster 
assistance programs, only NAP losses will be covered beyond September 
30, 2011. In contrast, authority for Title I programs discussed in this 
testimony extend through the 2012 crop year.
Sugar
    The sugar program has supported grower returns from raising 
sugarcane and sugarbeets at minimal Federal cost since it was 
established in 1981. The sugar program has been a no cost program 
during the tenure of the 2008 Farm bill due to program operation and a 
tight sugar market in the United States and throughout the world. Cane 
and beet growers are supported by several programs that first establish 
a level of support, then provide USDA with supply controls tools to 
maintain the support level. The Sugar Price Support Loan Program 
establishes the support level by providing nonrecourse loans to 
processors of domestically grown sugarcane and sugarbeets based on loan 
rates mandated in farm bills. If market returns are lower than loan 
proceeds at the time of loan maturity, sugarbeet and sugarcane 
processors can fully satisfy their loan obligations by forfeiting sugar 
loan collateral to the Commodity Credit Corporation (CCC). Since sugar 
producers can always receive at least the loan proceeds from their 
crop, the loan rate acts as a floor on the market price of domestic 
sugar. The Price Support Loan Program also provides the beet and cane 
mills the financing to pay beet and cane growers for their crops long 
before they receive the revenue from the sale of their sugar.
    To avoid Federal costs, the farm bill includes tools that permit 
USDA to manage domestic supply so that domestic sugar prices are higher 
than the support price, hence, eliminating forfeiture costs. Domestic 
supply is limited through (1) the Flexible Marketing Allotments for 
Sugar Program, which provides limits for the quantity of sugar that 
domestic sugarbeet and sugarcane processors can market; (2) the 
administration of Tariff Rate Quotas (TRQ) that limit foreign sugar 
imports at the low tier tariff; and (3) a new program, the Feedstock 
Flexibility Program for Bioenergy Producers (authorized under Title IX 
of the 2008 Farm Bill), which requires USDA to purchase expected 
surplus sugar in the marketplace and sell it to producers of bioenergy 
to prevent loan forfeitures under the Price Support Loan Program.
    The enactment of the 2008 Farm Bill coincided with full 
implementation of the North American Free Trade Agreement (NAFTA), 
which allows sweetener trade between the U.S. and Mexico without a 
tariff. Before the 2008 Farm Bill, analysts expected that the U.S. 
would increase shipments of High Fructose Corn Syrup (HFCS), a cheaper 
sweetener than sugar, to Mexico. This situation was expected to 
displace Mexican sugar, production of which was expected to expand in 
response to U.S. sugar support prices that were raised in the 2008 Farm 
Bill. Mexican sugar was expected to flow into the U.S., resulting in 
U.S. prices falling below the Federal price support level, threatening 
sugar forfeitures to the CCC and thereby requiring activation of CCC 
purchases of surplus sugar for sale to bioenergy producers under the 
Feedstock Flexibility Program.
    Compared to these expectations, U.S. sugar demand has increased 
significantly. In fact, greater Mexican imports did not saturate the 
U.S. market, but instead helped maintain adequate U.S. sugar supplies 
in response to the loss of refining capacity due to an explosion at the 
Savannah sugar refinery and a temporary reduction in beet sugar 
production. Even with increased Mexican imports, growing U.S. demand 
prompted USDA to increase the sugar import tariff-rate quota twice in 
both FY 2010 and FY 2011. Despite the almost doubling of sugar prices 
since 2008, sugar is increasingly used in the U.S. to replace other 
sweeteners in food products.
    The sugar market outlook in the near term remains tighter than 
expected in 2008 and USDA does not anticipate forfeitures of sugar to 
the CCC and the activation of the Feedstock Flexibility Program under 
the current Farm bill.
Farm Storage Facility Loan (FSFL) Program
    The Farm Storage Facility Loan (FSFL) program ensures that eligible 
producers have adequate capacity to store their harvested production 
through low-interest financing that can be used to build a new storage 
facility, upgrade existing storage, or purchase handling equipment. The 
maximum amount that may be borrowed is $500,000 per structure under the 
2008 Farm Bill (increased from $100,000 under the re-establishment of 
FSFL in 2000 as authorized by the CCC Charter Act, and the repayment 
terms are for 7, 10, or 12 years (depending on the size of the loan). 
The 2008 Farm Bill also expanded eligibility for the FSFL program and, 
in addition to grains, low-interest loans are now available for biomass 
and hay facilities as well as cold storage for fruits and vegetables.
    Interest in the FSFL program has increased in recent years; 
applications have increased from 1,717 in FY 2005 to 3,961 in Fiscal 
Year 2010. In FY 2006, the CCC made nearly $100 million in loans, while 
in FY 2010, loans exceeded $296 million. Much of the increased interest 
is on the part of corn producers who store the commodity for delivery 
at a later date to a nearby ethanol plant. Fruit and vegetable growers' 
interest in FSFLs for cold storage is relatively low at this time, and 
moderate interest exists for hay FSFLs.
Reimbursement Transportation Cost Payment for Geographically 
        Disadvantaged Farmers and Ranchers (RTCP) Program
    The RTCP program provides assistance to geographically 
disadvantaged farmers and ranchers in Hawaii, Alaska, and insular areas 
(Guam, American Samoa, Commonwealth of Puerto Rico, Commonwealth of the 
Northern Mariana Islands, Federated States of Micronesia, Republic of 
the Marshall Islands, Republic of Palau, and the Virgin Islands of the 
United States). The program reimburses producers for a portion of the 
transportation cost of their agricultural commodity, or of inputs used 
to produce an agricultural commodity during a fiscal year. Under RTCP 
transportation costs of inputs used to produce an agricultural 
commodity include, but are not limited to, air freight, ocean freight, 
and land freight of chemicals, feed, fertilizer, fuel, seeds, plants, 
supplies, equipment parts, and other inputs as determined.
    This program benefits farms and ranches in geographically 
disadvantaged areas of the U.S. Signup for 2010 RTCP program began Aug. 
2, 2010 and ended on Sept. 10, 2010. Distribution of payments for 2010 
RTCP began on July 20, 2011. In FY 2010, 1,545 geographically 
disadvantaged farmers and ranchers applied to participate in the 
program, and more are expected with the FY 2011 RTCP signup beginning 
July 25, 2011.
Acreage Crop Reporting Streamlining Initiative (ACRSI)
    FSA requires that producers participating in any Title I program 
report all the cropland acreage on their farm each year to their local 
office. In field hearings, we repeatedly heard from producers that they 
were dismayed by the necessity to report acreage and production data to 
multiple agencies (not only FSA, but also the Risk Management Agency 
and the National Agricultural Statistics Service). To address these 
concerns, we have initiated the Acreage Crop Reporting Streamlining 
Initiative (ACRSI), a system which allows producers to report their 
acreage data only once to USDA.
    We anticipate piloting this effort in four counties in Kansas in 
fall 2011 for 2012 crop wheat plantings. Feedback from this pilot will 
help us move this project forward to a nationwide scale. Over time, our 
ACRSI project will be leveraged to support our ``Modernize and Innovate 
the Delivery of Agricultural Systems'' (MIDAS) effort, which I will 
turn to next.
MIDAS
    FSA has relied on aging technology which was installed in the mid-
1980's, as well as segmented web-based IT systems that have created 
inefficiencies and threatened the delivery of Title I benefits. To 
address these issues, FSA has invested in the Modernize and Innovate 
the Delivery of Agricultural Systems (MIDAS) program. MIDAS is an 
integrated business solution based on enterprise resource planning 
(ERP) technology. MIDAS will modernize Farm Programs delivery and will 
provide comprehensive and robust processes and tools to simplify Title 
I, Title II, and disaster program service delivery and improve customer 
service for both agency employees and producers.
    Currently, MIDAS is developing the ``to-be'' global requirements, 
processes, and solution design. Over the longer term, MIDAS will be 
integrated with other initiatives, such as Geospatial Information 
Systems (GIS), the Department's Financial Management Modernization 
Initiative (FMMI), and the Enterprise Data Management (EDM) program. 
MIDAS has already improved service delivery by implementing 
recommendations from the USDA ``Listening Sessions'' and the FSA MIDAS 
Lean Six Sigma field office visits to improve processes. These efforts 
focused on modifying program forms and addressing web time out issues 
for web applications in high usage by field office employees, such as 
reconstitutions. As a result service delivery has been improved and 
opportunities for errors have been reduced.
    Full implementation of MIDAS, which would occur in FY 2014 assuming 
the program is fully funded, will result in improved business processes 
and service delivery to our producers, ranchers and farmers, and USDA 
employees that provide day-to-day service to our customers. Through 
MIDAS, we will be able to adapt to and implement new programs more 
rapidly, with the time between passage of new legislation and program 
delivery to producers substantially reduced. Producer information will 
be collected once, not multiple times for multiple programs or multiple 
times for multiple agencies (through integration of MIDAS with ACRSI). 
Benefits will also be realized internally within FSA. Systems 
integration will result in improved performance and more reliable 
reporting. In addition, the need for manual processes (such as data 
entry) will be greatly reduced. This work is very similar in scope to 
the modernization and streamlining of FSA's farm loan programs--through 
which the agency has realized significantly shorter processing times 
and more efficient service through online business processes.
    The MIDAS Project Office recently conducted a series of 
demonstrations for USDA management, FSA state and county offices, and 
others on the functionality of the ERP software solution. Based on 
initial feedback, the MIDAS demonstration was well received and state 
and county offices have re-confirmed that the software will meet the 
requirements of farm program delivery.
Working Toward the Next Farm Bill
    Mr. Chairman, as we move forward toward development of the next 
farm bill, it is important that we approach this new legislation with 
an eye toward truly making a difference in the future of the lives of 
millions of rural Americans, while at the same time using scarce 
resources wisely. In the coming months, I look forward to providing 
answers to your questions and helping better frame and move the debate 
toward the topics and issues that are most important to our 
constituents.
    I am happy to respond to any questions. Thank you.

    The Chairman. Thank you, Mr. Nelson. Mr. Garcia, do you 
have an opening statement?
    Mr. Garcia. Good morning, Mr. Chairman. I do not have an 
additional statement at this time, just to thank you and the 
Committee Members for having us here today.
    The Chairman. All right, thank you very much, I appreciate 
that. The chair would remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that Members 
will be recognized in order of arrival. I appreciate my 
colleagues' understanding in that regard.
    Also we have been joined by Mr. Ribble from Wisconsin. I 
ask unanimous consent that even though he is not a Member of 
the Subcommittee that he be permitted to join in the 
questioning of the witnesses. Without objection.
    Mr. Nelson, we made some changes in the 2008 Farm Bill with 
respect to AGI and how that impacts eligibility. You also have 
some agreements with the IRS as to how that gets tracked. There 
were some initial concerns about producers having to share too 
much information with FSA locally and that there are some work-
arounds for that. Can you walk us through that? And also kind 
of answer that question that gets distorted in the paper, in 
the media a lot is that the bulk of these farm program support 
payments go to large corporations that don't really need it. 
And so if you could walk us through the AGI efforts and how you 
have seen that play out.
    Mr. Nelson. Well, I appreciate that question because as you 
are suggesting, there is a lot of information out there that 
isn't quite as accurate as it could be on this subject. The AGI 
limits that were established under the 2008 Farm Bill are that 
an individual producer can have up to $750,000 of on-farm 
adjusted gross income and $500,000 of off-farm adjusted gross 
income. USDA and FSA were tasked in the farm bill with deciding 
how best to try to ensure compliance with those AGI provisions, 
and basically it was a choice between having farmers bring 
their tax returns into our county offices around the country 
and have them do reviews, or the Department could work as we 
did and as we have now been implementing with the Internal 
Revenue Service on a data sharing process where producers 
authorize the Internal Revenue Service to data match against 
our USDA database. We basically get back an indication with a 
red flag or green flag whether the individual producer is in 
compliance or not. And I actually believe as a farmer, and my 
family has been on our place for about 100 years since my 
grandparents homesteaded, that it is a much preferable way to 
utilizing the Internal Revenue Service's capacity to assist us 
with this than to have farms and ranchers bring their tax 
returns down to local offices. And talking to our folks at 
least in Montana about this who work there, I think they are 
glad that it is being done this way as well.
    Now, I understand there are some things that--some glitches 
along the way. For example, one of the things that I ran into 
out in Montana is that producers had to put the address that 
was on their tax return on the form that was sent into the IRS 
or it might come back to them. And so it took some time and it 
is still taking some time to make sure that producers 
understand what it is that is required for the IRS to accept 
those forms.
    The Chairman. Mr. Nelson, does the IRS communicate directly 
with you or do they send the clearance to the producer and the 
producer brings in something from the IRS that says they are 
good to go?
    Mr. Nelson. As I understand it, Mr. Chairman, we get the 
indication back from the Internal Revenue Service. The good 
news is that after October 1 we are going to eliminate that 
form that producers have had to send in to the Internal Revenue 
Service and we are going to do that authorization as a part of 
their other sign-up papers. We think will be a lot better for 
the producers and ultimately a lot easier on our employees out 
there too. Some offices had had to deal with producers coming 
in saying, ``I don't know why the IRS didn't accept this.'' So 
moving to one form we think will be much better for everybody 
involved.
    The Chairman. Is the turn-around time with the IRS quick 
enough to be able to not delay payments to producers?
    Mr. Nelson. Mr. Garcia, I am going to let you talk about 
payments.
    The Chairman. Mr. Garcia, what is your experience in Texas 
on this style of doing it?
    Mr. Garcia. Well, of course, Mr. Chairman, the individual 
producers that certified to their AGI we will not delay 
payments because it is a certification. After that we will 
review that with the IRS, we will get information on those 
producers that appear questionable. It is very important to 
note that we do not receive any particular income tax 
information from any producer. If a producer that we obtain on 
that list does appear questionable, we will notify the producer 
and ask him to provide to the national office any particular 
information that he has, either IRS records or his statement 
from his Certified Public Accountant, to clear that.
    We want to provide the producer the best opportunity to 
prove to us that he is eligible based on those AGI provisions.
    The Chairman. All right. Thank you.
    Mr. Boswell, for 5 minutes, you are now recognized.
    Mr. Boswell. Thank you, Mr. Chairman. I would be happy to 
defer to Chairman Lucas if he would like to, at this time.
    Mr. Lucas. I appreciate that courtesy, Ranking Member 
Boswell. Thank you very much.
    Mr. Boswell. I will follow behind you.
    Mr. Lucas. Absolutely. Gentlemen, I have several questions. 
As the Chairman alluded to discussing the AGI issues, how many 
farmers have been flagged by the IRS as part of this process as 
having too high of an AGI to qualify?
    Mr. Garcia. Mr. Chairman, at the present time we do have a 
list in producers that we are looking at right now. We have 
sent some initial letters here a couple of months ago. We are 
in the process of sending some additional letters to producers 
to submit their information to us. We have quite a few 
producers that have not yet filed that form--I should not say 
that--they may have filed a form and there could have been some 
errors in filling out the form that are still questionable. We 
just obtained another report this month that we have forwarded 
to our county offices to check with those producers to ensure 
that they did receive a payment. Of course we also obtained 
those AGI forms producers that are getting payment with NRCS to 
the EQIP Program. So we are checking with NRCS to ensure that 
those producers did actually receive a payment. We are working 
on that particular listing and trying to resolve it as soon as 
possible.
    Mr. Lucas. So it is still a while before you can say how 
many farmers have been flagged by this procedure.
    Mr. Garcia. That is right.
    Mr. Lucas. Let's turn to the SURE Program for a moment, one 
of those things that does not have a baseline in the existing 
farm bill, and in a very tight budget as we all looked at these 
things. There have been comments out in the countryside about 
the complexities of signing up and, once you sign up, the 
length of time to receive a benefit when you qualify.
    Gentlemen, would you care to comment on the complexities of 
implementing SURE and what the time or period between 
qualifying and actual payments have been issued, those kind of 
underlying issues?
    Mr. Nelson. Yes, Mr. Chairman, that is a good question 
because I have heard from a lot of folks out in Montana about 
this over the last couple of years. The principal concern is 
with the timeliness of the payments, but it is also a matter of 
the complexity of the calculations that are hard for the folks 
in our county offices. As you know, there are factors within 
the SURE Program that basically dictate that we are not going 
to be able to make the payments until at least a year after the 
disaster occurred. And so this is something that we really look 
forward to working with you on because if we are going to have 
a good food safety net as you suggest out there, I think that 
we need to work on streamlining these provisions and we look 
forward to working with you on those.
    Again, I also think the complexity of the calculations are 
part of the factor here that we need to look at as well to try 
to make it not only easier for folks in our county offices but 
for producers to understand. I talked to farmers in Montana who 
have no idea that they might be eligible for a SURE payment, 
but we got them to go in and apply and sure enough they got a 
SURE payment.
    Mr. Lucas. This is particularly important in Mr. Garcia and 
my part of the world because we are in the most wicked of 
droughts in the Southwest. And literally while there was some 
wheat cut in the northern part of the southern plains there 
will be no row crops this summer. If the weather patterns don't 
change it will be extremely difficult to think that you can put 
a wheat crop in the ground this fall. So this issue is going to 
receive incredible attention in our home region. So if there 
are ways to address that and accelerate it, certainly the 
Committee wants to know. And as we--whether it is a late farm 
bill this year or under regular order my preference is next 
summer in writing the next farm bill, we are going to be left 
working so hard for every penny of baseline money that we have 
to maximize it. So I just ask you to focus on that and I would 
look forward to comments later on in the coming weeks and 
months on this topic.
    With that, I yield back my time and thank the Ranking 
Member for his courtesy.
    The Chairman. Mr. Boswell now for 5 minutes.
    Mr. Boswell. Thank you. I appreciate that discussion, even 
though my operation in southern Iowa we get some of those 
Chinook winds up there and I know something about droughts, 
Chairman Lucas, and I realize you are facing a real tough 
situation. So it will be interesting how this works.
    I would like for you, if you could, just give us some 
update on--you have the personnel to do what you need to do. We 
went through different cycles of that and software, your IT 
staff, where are you at in that part of it in trying to run an 
efficient operation in all the different areas across the 
country. Could you comment on that a little bit?
    Mr. Nelson. Well, thank you for that question because it 
gives me an opportunity to give a pat on the back, especially 
to the people out in our county offices who work very hard 
around the country doing the real work of this agency with 
farmers and ranchers every day, and they do a great job. And in 
2011 with the budget that we have for this fiscal year we are 
able to sustain our staffing levels, as well as our field 
operations. But with the Congressional appropriations process 
for the next fiscal year still incomplete, one thing is pretty 
clear and that is that we will likely have fewer dollars for 
operations in Fiscal Year 2012 than we did this year.
    Again, thanks to the belt tightening folks around the 
country in FSA, we have been able to continue to provide 
quality service to farmers and ranchers within this year's 
constrained overall funding level. In anticipation of what we 
might be facing for next year, I formed a state executive 
director workforce planning task force. And they are looking at 
ideas about how we tackle next year's budget. Our planning is 
also considering the potential for further offering of 
voluntary early retirements within the agency. The Department 
has authorized those for this fiscal year for all agencies, 
including the Farm Service Agency, and we did have a number of 
employees take us up on that offer when it was put out in the 
last month. And I believe the fact that a lot of folks in our 
county offices signed up for the early out is a sign of the 
stress out there in the county offices due to, among other 
things, the budget situation that we are facing in the future.
    So I give our folks terrific high marks for what they have 
been doing. We are looking ahead to the budget for next year, 
trying to plan ahead. And when we get the final numbers we will 
cross that bridge when we get there.
    Mr. Boswell. Just a little follow-up there. I know we had a 
lot of concern in days past about modernizing your computer 
system, the ACRSI we are operating while trying to move 
forward. How is that going? And where do we stand on the 
Modernize and Innovate the Delivery of Agriculture--the MIDAS 
program I guess we call it. Where do we stand on that?
    Mr. Nelson. Congressman, I appreciate the chance to talk 
about this. I will turn it over to my colleague, Mr. Garcia, in 
a minute here. I sat across the desk from virtually every 
county office employee in Montana, and I have seen how hard 
this transition from 1985 computer technology to the modern era 
is. I was privileged several weeks ago to be part of a 
demonstration of this MIDAS project up here. It is important to 
remember that the MIDAS project isn't just about hardware and 
software, that is a big part of it. But a big part of it as 
well is that we are looking at how we do business with FSA in 
order to try to figure out a way to streamline and operate more 
efficiency. We have a Lean Six Sigma business re-engineering 
process that is a key part of MIDAS.
    So look, this is really important for us to get done, as I 
said in my opening statement, because we need to have the same 
kind of efficiencies in our IT systems on the farm program side 
that we have in the farm loan program side. I take the GAO 
report that just came out very seriously, and I am working hard 
and I have already brought the FSA and USDA management teams 
together on this to make sure that we get this project done on 
time and on budget. It is too important for our employees and 
our county employees and farmers and ranchers.
    Mr. Boswell. So you think you are kind of on track?
    Mr. Nelson. We are on track and I am going to push hard if 
we are not on track to get on track.
    Mr. Boswell. Okay, my time is up. Thank you very much, 
thank you.
    The Chairman. I thank the gentleman. Austin Scott, for 5 
minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. 
Gentlemen, I want to commend the people who worked at the local 
county offices in my State of Georgia, especially those in 
Turner County and Tift County that I know well. They are 
excellent people from the standpoint of their caliber of 
character and they are excellent employees for you and doing 
their job.
    I don't have a specific question as much as a comment that 
I would kind of like to get your input on. For any business and 
as we work to get this economy to recover it is access to 
capital and regulatory certainty that those businesses need to 
have the comfort to go out and invest and grow those 
businesses. When you add in commodity prices and the volatility 
that we see with commodity prices and the input prices for 
farming, where do you see us today with regard to the risk 
spectrum of investing in agriculture from the farmer's 
standpoint over the years?
    Mr. Nelson. Well, I think that you have brought up a great 
point because historically the principal risks in agriculture 
have been natural disasters and low prices. But you have 
brought up great points here that I think added substantially 
to that risk and put our producers in an increasingly 
vulnerable position out there. And that is the high cost of 
production. In 1975, you could plant and raise an acre of corn 
for $81. That cost today is $286 an acre. And those costs of 
production or trends of corn have been the same for wheat and 
soybeans and the other commodities. The capital investment 
required to get involved in agriculture just between 2002 and 
2008 for the crop production sector went up 77 percent. And in 
the first 9 months of this fiscal year alone the capital 
requirements in the crop production sector have gone up 9.5 
percent. So we created this safety net back in the thirties to 
try to make sure that we didn't ever jeopardize our food 
security in this country. It has been updated in every farm 
bill since. And we look forward to working with you to update 
it this time within what we know are going to be some pretty 
severe budget restraints.
    Mr. Austin Scott of Georgia. Any other comments, Mr. 
Garcia?
    Mr. Garcia. If I can add, Congressman, farm bill programs 
do provide risk management for our producers out there. If the 
prices fluctuate we do have a commodity loan program where they 
can place their commodity into the loan for a period of 9 
months. As prices go up they can repay the loan. Of course 
through crop insurance provisions, and then we have the SURE 
Program that complements crop insurance. The ACRE Program is 
another program where there is some risk management involved 
for those fluctuating prices. We do have those programs 
available that have helped our producers manage that risk.
    Mr. Austin Scott of Georgia. You have ongoing dialogue with 
the Environmental Protection Agency about the uncertainty that 
they create for the farmer and the agricultural community?
    Mr. Nelson. Well, I just would like to say that when I was 
here a few weeks ago talking along with my colleague Dave White 
from NRCS, we both emphasized that achieving environmental 
benefits, environmental protection through voluntary 
conservation programs at USDA is in our minds much preferable 
to the regulatory approach of other government agencies. And so 
I think that is an important thing to keep in mind as you 
approach the farm bill, that those investments in those 
conservation practices that help farmers comply with 
regulations from other government agencies, that they do so 
voluntarily and in a partnership with the government is a great 
way to go.
    Mr. Austin Scott of Georgia. I thank the gentleman. I 
apologize that I will be leaving before the end of the hearing, 
but I appreciate your time and your testimony.
    The Chairman. I thank the gentleman. Mr. Scott from 
Georgia.
    Mr. David Scott of Georgia. Thank you very much, Chairman 
Conaway. And I appreciate the hearing and welcome Mr. Nelson 
and Mr. Garcia to the Committee.
    I think it is no secret that farm incomes are historically 
volatile, they fluctuate widely and often unpredictable and 
quite frankly are as fickle as the weather. And yes, farm 
incomes are relatively high now, but they may not be tomorrow. 
It is the role of the farm bill's Title I programs to provide a 
buffer against these lean times.
    I mention that, Mr. Chairman, because cuts or drastic 
changes to eligibility requirements for these programs are not 
felt equally across all commodities. Different commodities have 
different economies of scale and input or operating costs. And 
so slapping a stringent one-size-fits-all income tax or 
slashing commodity support across the board just makes very 
little economic sense to me.
    We have to remember income does not always equal profit and 
this distinction is especially vital when your income has to be 
reinvested in your operations to keep it up and running.
    So Mr. Nelson, I want to ask you just a simple question 
here and I will forgive you in advance if you say you don't 
know the answer, but I want to get this out here. Mr. Nelson, 
do you know what is the average cost of a new cotton harvester?
    Mr. Nelson. One of the things that I am looking forward to 
in this position is learning about cotton and crops from other 
parts of the country, Congressman. And my friend Juan Garcia is 
going to take me down to Texas in a couple weeks and teach me. 
So I don't know. I am looking forward to finding out. I know 
what a combine costs for our farm back in Montana, about 
$350,000, as much as a really, really, really nice house in 
Montana.
    Mr. David Scott of Georgia. Well, last night in 
anticipation of this hearing I looked up the nearest I could 
find as to what a cotton harvester would cost a farmer. And it 
would cost roughly $600,000 to buy a new cotton harvester from 
John Deere. Not to toot my own horn or anything, but I have an 
MBA from the Wharton School of Finance, I have studied 
economics, I love economics, I try to get into it, but what I 
am not is a banker. So I may be missing something here, but let 
me ask you how on Earth is a farmer going to be able to 
convince a bank to finance the purchase of a machine like the 
cotton harvester which costs over a half million dollars so 
that they can sustain or expand their business when they cannot 
demonstrate a significant stable source of income? Can you 
explain that to me, Mr. Nelson? Do you have any thoughts on 
that?
    Mr. Nelson. What I can say is from my own experience with 
the bankers is that the first question that I always got asked 
when I went in to get our line of credit for our farm of the 
year is have you been to FSA and signed up for the programs? 
And do you have a crop insurance policy? So I think part of the 
answer is that it is the safety net that is created by 
Congress, working together with USDA, that can help give the 
bankers some confidence in making those loans. It is part of 
the answer, it is not the whole answer, because you have a cash 
flow, I found that out, but that is part of the answer. If 
there is a strong safety net there, then the lending 
institutions out there, whether it is commercial private 
lenders or FSA itself, have some basis for thinking farmers are 
going to make it when the tough years that inevitably will come 
along come along.
    Mr. Garcia?
    Mr. David Scott of Georgia. Very good answer.
    Mr. Garcia. Congressman, of course it is very difficult for 
a farmer to purchase a $600,000 cotton harvester out there and 
be able to cash flow. They have to farm quite a few acres in 
order to make that work. I tell the story often with cotton 
prices the way they have been that if you go to the department 
store and pay $50 or $60 for a part of blue jeans, the farmers 
is only getting $0.90 out those $50 or $60 for that pair of 
blue jeans. So what we are seeing and what we have seen in the 
past because of the high cost of equipment, as you mentioned, 
is that many of our producers do not have the harvesting 
equipment and they rely on custom services in order to harvest 
their cotton. So it is very difficult with commercial lending 
the way it is right now. Thank you.
    Mr. David Scott of Georgia. I appreciate that, Mr. 
Chairman. I just wanted to conclude if I may in 10 seconds, and 
I know that America's farmers know we are having a hard time in 
Washington. I do want to make the statement we need to be 
sensitive as we look at these cuts we are engaged in a 
monumental debate how to straighten out our own economy and our 
spending, and I agree and the farmers agree with us that it 
must be done.
    I just want to make this concluding statement. If we as a 
nation want to remain the leader of the world in producing high 
quality, high volume food and fiber at stable prices, then we 
must not balance the budget on the backs of those farmers and 
producers who are engaged in that enterprise. The world's 
population is growing rapidly and soon we will have to feed and 
clothe billions more people, and so we need to be very 
sensitive to the needs of our farmers and cutting these Title I 
programs is just something we have to be careful with.
    Thank you for the time, Mr. Chairman.
    The Chairman. Yes, the gentleman's time has expired. Mr. 
Ribble, from Wisconsin for 5 minutes.
    Mr. Ribble. Thank you very much, Mr. Chairman. And I 
appreciate you allowing me to come this morning to this 
Subcommittee. I do have a couple comments I wanted to make, and 
Mr. Nelson and Mr. Garcia, thank you very much for being here. 
Mr. Nelson, it is good to see you.
    As you know, Title I of the farm bill has a general 
prohibition of growing fruits and vegetables on program acres. 
I understand that this is to ensure that the fresh produce 
industry is not hurt by produce production on subsidized farm 
program acres.
    The 2008 Farm Bill included a Planting Flexibility Pilot 
Program to allow crop producers in Midwestern states like 
Wisconsin to grow fruits and vegetables for processing on some 
of their acres. The USDA Economic Research Service report on 
the pilot concluded that it did not harm the fresh fruit, fresh 
produce industry.
    In your view, is this due to the requirement that fruits 
and vegetables could only be grown for processing?
    Mr. Nelson. Congressman, I don't know that I have an answer 
to your question as to the why, and so that is something that I 
would like a chance to look into.
    Mr. Ribble. Certainly.
    Mr. Nelson.----and get back to you on. I can report that 
there were a little over, as I recall, about--Mr. Garcia, how 
many acres, up to 75,000 acres that was allotted under that 
pilot.
    Mr. Garcia. Yes, we had the--Planting Flexibility Pilot 
Program that was initiated with the farm bill for seven 
Midwestern states, including Illinois, Iowa, Illinois and 
Minnesota, in which we offered that program to assist producers 
that did not have a planting history of fruits and vegetables. 
The way the farm bill program works is that in order for a 
producer to be able to plant fruits and vegetables on what we 
call base acres of a commodity they must either have a planting 
history or be able to double crop that vegetable with that 
other regular commodity.
    So we have had some success in that program, Congressman. 
We had around 150 farms that had participated on that. There is 
some consideration there as far as participation because of the 
demands in the prices of vegetables, but it is a program that 
is available and has produced some participation and we will 
look into it further to see if we can increase that.
    Mr. Ribble. I would appreciate that. I am curious if you 
think that additional planting flexibility allowed for fruits 
and vegetables under contract for processing, would you expect 
that to have an adverse affect on the fresh produce industry?
    Mr. Nelson. We would be happy to look into that. One other 
point that I want to make on that is that it appears that there 
were a number of producers who were able to use non-base acres 
to expand their vegetables production. So that in addition to 
the low demand out there for those particular vegetables are 
what we attributed to the relatively low participation rates at 
this point.
    But again, we will look into your question and get back to 
you.
    Mr. Ribble. I appreciate that.
    And just another kind of different direction here, we are 
expecting it is possible direct payments could be reduced from 
some of the budget pressures that the country is facing. 
Farmers who receive direct payments under current law are 
expected to comply with certain conservation practices. If 
direct payments are reduced or altogether eliminated, do you 
anticipate that producers would continue with various 
conservation practices, and would USDA recommend putting 
centers in place to ensure farmers keep their land production 
for future generations?
    Mr. Nelson. Well, we would look to work with you on 
provisions here, but I think it is important to note that all 
of the other FSA programs that producers might want to 
participate in, as well as the NRCS programs, require 
conservation compliance. So it will be up to individual 
producers whether they weigh the cost, the conservation 
compliance against the benefits. But again we would look 
forward to working with you on that issue as you discuss and 
debate that provision of the farm bill.
    Mr. Ribble. Thank you very much, and thank you, Mr. 
Chairman. I appreciate you letting me be here.
    The Chairman. The gentleman yields back. Ms. Sewell, from 
Alabama, for 5 minutes.
    Ms. Sewell. Thank you, Mr. Chairman, and I thank our 
witnesses for being here today.
    As you may all know, Alabama forest landowners suffered 
tremendous losses during the April tornados that caused such 
great devastation across my district. It has recently come to 
my attention that Alabama's nonindustrial private forest 
landowners will receive a little over $3 million from FSA's 
Emergency Forest Restoration Fund. As it currently stands, the 
funding is totally inadequate to meet our needs and the 
requirements of our state.
    What can be done to aid in the restoration of our forest, 
and in case of inadequate directed funding, and are there any 
FSA accounts that currently have a balance that those funds can 
be shifted to.
    Mr. Nelson. Congresswoman, as I recall the figures--and I 
don't have them with me today--but we are very close to the 
limit on the amount of funds that are available in that 
program, and I would be happy to have Mr. Garcia add to this to 
see if there are any other programs that can assist those 
producers. If those counties do have Secretarial natural 
disaster designations or Presidential designations, then they 
are eligible for emergency loan assistance under our farm loan 
program and there is a provision in there for physical losses 
as well that we need to look at and see whether that might 
apply in this particular situation.
    Mr. Garcia.
    Mr. Garcia. Congresswoman, as you mentioned, we have had 
several disasters throughout the United States. The Emergency 
Forest Restoration Program is a very important program that 
assists producers in rehabilitating their forests. Presently, 
the funding for that program is very challenging. We have 
obligated all our funding. We have several requests from some 
states because of all the disaster situations that have 
occurred. Presently, we do not have any other funding source to 
switch money around.
    The other program that also--that we face a challenge with 
right now is the Emergency Conservation Program, which also 
assists producers in rehabilitating conservation practices, and 
we offer cost-share and assistance for that, also.
    So with all the disasters that we had, the wildfires, the 
tornadoes, the flooding along the Mississippi and Missouri, it 
has posed a great challenge for us, and what we do as far as an 
agency, we allocate funding to certain counties, and as those 
funds are released back to us, for example, they are not used, 
then we can go ahead and approve other requests as they come 
in.
    Ms. Sewell. So right now there is not really any other 
source other than the emergency loan assistance that could aid 
farmers in restoring their forests?
    Mr. Nelson. Congresswoman, we will look into that and get 
back to you, but I believe that is unfortunately right now 
where we stand, but we will get back to you.
    Ms. Sewell. Thank you.
    Now, in these difficult budgetary times, it is very 
important that we analyze the effectiveness of our safety net 
programs, and I would really like to know your opinion as to 
what safety net programs under Title I have been the most 
effective and which ones you think could be better improved.
    Mr. Nelson. Well, I think rather than talk about individual 
programs, what I would like to talk about is an approach for 
your consideration as we look ahead to discussion about that 
title of the farm bill. Again, as I said, in every farm bill 
since the 1930s, the safety net has been updated, and we need 
to do that again. And what I would suggest is that the goal 
here and the priority ought to be that we cover both the crop 
and the livestock sector with our safety net; that we have 
effective safety net programs for all crops around the country; 
and that we treat all regions of the country equitably. Because 
as one of the Members pointed out earlier, there are a lot of 
differences in agriculture around the country, and one size 
doesn't fit all. And so we need to try to make sure when we put 
a safety net package together that it does take into 
consideration that things are very different in Mr. Garcia's 
State of Texas, in your home State of Alabama, and my home in 
Montana, and we have to have the flexibility in the 
administration of these programs to make them work every place.
    Ms. Sewell. Thank you.
    The Chairman. Thank you very much. Mrs. Schmidt for 5 
minutes.
    Mrs. Schmidt. Thank you, Mr. Chairman, and if these have 
already been asked, I apologize. I want to focus a little bit 
on the marketing assistance loans and the loan deficiency 
payments, if I might, and I understand if you don't know all 
these answers, that is okay. You can get back with us.
    But are there scenarios where producers make the use of 
marketing loans, even when the average marketing year price 
ends up exceeding those loan rates?
    Mr. Nelson. Congresswoman, from having taken marketing 
assistance loans on our farm, and my family has done it for 
years, the answer is yes. In anticipation of higher prices, if 
you need cash at harvest time and you have some grain in the 
bin and you can take a loan as that is not normally the optimal 
time in order to market your crop. The marketing assistance 
loans, the bulk of the volume of those are in December and in 
January, and that is clearly because producers are able to use 
the flexibility of that program to take income either at the 
end of a year for tax purposes or the beginning of a year for 
tax purposes.
    So the answer to your question is yes, but it is because it 
buys producers time, in particular if they believe that the 
market is trending up but they need cash at that point.
    Mrs. Schmidt. Thank you. Has the Marketing Assistance Loan 
Program created any unusual market distortions between crops or 
among various classes of a particular commodity? For example, 
USDA has issued loan rates for durum wheat at levels 
significantly higher than other wheat classes, and has that 
affected outlays?
    Mr. Nelson. We would like to look into that a little bit, 
the issue of market distortions, and get back to you, if we 
could for the record, Congresswoman.
    Mrs. Schmidt. Thank you. After the 2008 Farm Bill, the USDA 
began issuing a 30 day posted county price and an alternate 
price. Has that made a difference in the operation of the 
program, and would there be changes you might consider for the 
future or recommend to Congress?
    Now is your chance to give us some recommendations.
    Mr. Garcia. Well, I am trying to think of how to answer 
this. The 30 day posted county price is still in effect, and 
those are the prices, of course, that producers use to 
determine (if they do have their commodity in the loan) when 
they want to take it out of loan. Of course, if you have a 
producer that has a commodity loan, whether it be warehouse 
stored or farm stored, they have to have the market for it. 
They have to have a buyer. So those posted county prices are 
used both by the producer and, of course, the buyers of the 
commodity, and we do have those posted on our website so 
producers are able to look at those particular prices on a 
daily basis. If they are also dealing with their elevator, the 
elevators could look at those on a daily basis and could 
determine that, especially, when to market that commodity and 
get the best price available.
    Mrs. Schmidt. Okay. And is there anything you would like to 
change with the program or improve with the program?
    Mr. Garcia. It is probably something that we will have to 
look at.
    Mrs. Schmidt. You will get back to us?
    Mr. Garcia. I am sorry, it is something we will have to 
look at as we look at the farm bill negotiations for this 
upcoming farm bill.
    Mrs. Schmidt. All right. And ACRE was a new program that 
was brought out in the 2008 Farm Bill and the sign-up generally 
for ACRE programs was considerably lower than anticipated. To 
what do you attribute that response? And you have indicated 
there are regional disparities in the sign-up. But we have also 
heard of some of the counties being particularly well 
represented with ACRE participants due to activity from the 
FSA, and do you think that has enabled the bump-up in it, and 
do you see any changes or improvements to that?
    Mr. Nelson. Congresswoman, I had, right before I came back 
to work for FSA in the summer of 2009, a chance to go back to 
my hometown of Fort Benton, Montana, to an FSA meeting about 
the ACRE program. Chouteau County is the largest wheat 
producing county in the state. There are about 115 producers 
there, most of whom I grew up with and farmed with over the 
years. And the principal reasons that I got out of that and I 
have gotten since for the ACRE sign-up numbers being lower than 
anticipated were, first of all, it was an unknown. For about 13 
years at that point with the production flexibility payments 
and then direct contract payments, producers had been able to 
count on a fixed amount of money, and this was something where 
there was risk as to whether they would make as much as they 
had historically made or not.
    Second thing was, is summertime is a bad time for farmers 
to have to make decisions like this. I mean----
    Mrs. Schmidt. Good point.
    Mr. Nelson. Yes, it is the last thing that producers want 
to be doing is be in our offices or having to make major 
financial decisions about their farming operation when they 
know they ought to be out on a tractor or combine or swather or 
fixing fence.
    And the third thing is at that meeting is a lot of us 
remember the late nineties when prices went down precipitously 
and we all had a lot of LDP payments for the next few years, 
and so there was some concern about the 30 percent reduction in 
the market loan rate as well. I have heard those kind of 
concerns echoed from other producers since, and I would 
attribute that largely, at least in our part of the country, to 
why the sign-up wasn't higher.
    The Chairman. Thank you. The Ranking Member of the full 
Committee, Mr. Peterson, for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman. Mr. Nelson, I wanted 
to try to figure out where we are at on this permanent disaster 
program. It is like 2 years after it happened before you can 
actually figure out how much it is, right? I mean, it is--the 
way it is set up, it takes you a long time to figure out the 
actual loss. So at this point you don't even know what you have 
spent for 2010, right?
    Mr. Nelson. Congressman, that is correct because the sign-
up for the 2010 SURE program actually ends this Friday July 29, 
2010?
    Mr. Peterson. Yes.
    Mr. Nelson. I am sorry, 2009. I was wrong, and so because 
of features within the program, we are looking forward to 
working with you to addressing because the timeliness of 
payments under this program are something that really need to 
be looked at.
    Mr. Peterson. Well, we were trying to deal with CBO and so 
forth and that was part of the problem, but so what I am 
wondering about, is there a limitation of $4 billion or was 
that just the estimate of the baseline? Is there any limitation 
on the program other than it was only 4 years, so it runs out 
this September? So, these folks that have losses this year are 
going to be able to sign up at some point. Is there any kind of 
problem in terms of how much money that costs or was the only 
limitation we put on this just the 4 years and not any 
limitation on the amount that is spent?
    Mr. Nelson. Congressman, as I understand it, and I want to 
have the opportunity to clarify the answer here, it is my 
understanding that these disaster programs, SURE, LFP, TAP and 
LIP were only funded for the period 2008 through September 30 
of this year. There was an estimate on the baseline. You could 
spend whatever needed to be spent out of CCC to meet the 
obligations for the program for that period of time. The 
Emergency Livestock Assistance Program was the only one of the 
five that had a cap on it of $50 million a year.
    So I guess the upshot of my answer is that they are CCC 
funded through September 30 of this year but they are not part 
of the baseline.
    Mr. Peterson. Well, so if I understand how all this works, 
whatever it ends up costing will be the new baseline or I guess 
the baseline expires on this, that is right? This is not an 
ongoing baseline because it was only 4 years so it doesn't make 
any difference. So anyway, the money will be there for anybody 
that has losses through this September 30?
    Mr. Nelson. Correct.
    Mr. Peterson. With the exception of livestock, which may 
get capped or something?
    Mr. Nelson. The Emergency Livestock Assistance Program is 
the only one of the five that has a spending cap. We do have 
the authority to fund all approved applications for the other 
programs through September 30.
    Mr. Peterson. Right. Have you had requests or people 
talking to you about trying to do some kind of ad hoc disaster 
in addition to this?
    Mr. Nelson. I haven't had anybody talk to me about it, but 
I might not necessarily be the one that they would approach, 
Congressman.
    Mr. Peterson. You haven't heard any talk about it? Okay. 
Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. Mrs. Ellmers, from 
North Carolina, for 5 minutes.
    Mrs. Ellmers. Thank you, Mr. Chairman.
    Along the lines of getting just a baseline of where we are 
at, when you are talking with the farmers what are the programs 
that they say that they need the most? What is it that seems to 
be the biggest concern and the biggest focus?
    Mr. Nelson. Well, I can speak best from the part of the 
country that I know which may or may not represent the rest of 
the country, but the principal concern of producers back in 
Montana and our part of the Northern Great Plains are the 
safety net programs. We are a disaster prone region of the 
country. We are heavily participatory in Federal crop 
insurance, as well as FSA programs, and so I would say, again 
from the perspective of Montana and other Northern Great Plains 
States, that the safety net programs are the ones that the 
producers are the most concerned about.
    Mr. Garcia?
    Mr. Garcia. Well, Congresswoman, as far as the Southwest 
area and really throughout the nation, as Administrator Nelson 
mentioned, safety net programs are very important. We have many 
producers that do participate in the commodity loan program. As 
we talked earlier, that is an important program for them, and 
then also the permanent disaster programs, as Ranking Member 
Peterson was talking about, especially in this year where we 
have had so many disasters throughout the nation.
    The Livestock Forage Program has been very beneficial, in 
which we have been issuing payments this year for producers in 
the Sunbelt area, Texas, Oklahoma, Kansas, and now the drought 
is moving back east towards Missouri, Mississippi, Alabama, and 
that area. So those programs have been very important to our 
producers.
    Mrs. Ellmers. Along the lines of the commodity programs, 
given that most of the crops are experiencing high prices right 
now, how does that compare to previous years' prices?
    Mr. Nelson. Well, the programs that are--DCP is a fixed 
cost program, and that is our biggest program. The 
countercyclical payments have gone down substantially. We were 
making over $4 billion of payments just about 3, 4 years ago. 
Now we are down to a little over $140 million of 
countercyclical payments this year for just a couple of 
commodities. And so the high prices have helped there, but on 
the other hand, as Mr. Garcia is pointing out, we are looking 
at a big part of the country this year with tornados, floods, a 
drought that just keeps expanding, and an increasing impact on 
producers out there. And so I anticipate that we are going to 
see substantially higher participation in the safety net 
disaster programs this year than we have seen in the last 
couple of years.
    Mrs. Ellmers. And you mentioned the DCP programs as the 
biggest program that you have. Which of those programs are 
currently making payments to producers right now? I mean, is 
there one that seems to be the----
    Mr. Nelson. I think there are a couple of disaster programs 
that work particularly well. The Livestock Forage Program, for 
example, and the reason that that works well, I believe, is 
there is an automatic trigger tied to the national drought 
monitors. So when a county hits a certain ranking on the 
national drought monitor for X period of time they become 
eligible. The producers can come in and sign up, and again, 
because it is CCC funded, the producer doesn't have to wait for 
the payments like they do on other programs where there is 
limited funding like the Emergency Livestock Assistance 
Program. So that is one of the programs that I think is working 
well for producers right now.
    Livestock Indemnity Program is another one of the safety 
net programs because that is essentially triggered by a natural 
disaster that causes livestock losses. That is the trigger. 
Again, it is CCC funded, so the funds are available for 
producers.
    Mrs. Ellmers. Great. Thank you so much. I yield back the 
remainder of my time.
    The Chairman. The gentlelady yields back. Mrs. Hartzler 
from Missouri.
    Mrs. Hartzler. Thank you, Mr. Chairman. Hello.
    I just was wondering, we talked about direct payments a 
little bit. They are in the news once in a while here lately, 
and just wondered if you could give me sort of an idea of what 
percentage of farmers participate in the direct payments 
program right now.
    Mr. Garcia. Thank you for your question. If I can give you 
some figures on acres, if that might suffice, there is close to 
272 million acres of crop acreage bases in the United States 
that we have for particular commodity crops, cotton, grains, 
sorghum, soybeans, and so forth. Out of that, 222 million are 
enrolled in DCP. Now, I am giving you 2010 figures, Mrs. 
Hartzler.
    Mrs. Hartzler. Okay.
    Mr. Garcia. So and there are 35 million acres that are 
enrolled in the ACRE program in 2010. So we have around 14 
million acres of base that are not currently--that were not 
enrolled in 2010 for either DCP or the ACRE program. So a large 
percentage of the farms do participate in the direct and 
countercyclical program throughout the states.
    Mrs. Hartzler. In your opinion, what would be the impact on 
farmers if direct payments were to be done away with?
    Mr. Nelson. Congresswoman, we would like the opportunity to 
work with you on that during your discussion of the provisions 
of the farm bill.
    Mrs. Hartzler. I am not saying I am proposing it, by the 
way. I just want to clarify that. I just want some information.
    Mr. Nelson. What I would like to do is that there has been 
analysis done by USDA on who gets the payments and of different 
scenarios for the program, and we would be happy to provide 
those analyses to you for your consideration as you look at 
this program during the discussion of that provision of the 
farm bill.
    Mrs. Hartzler. I have read the FAPRI analysis of it and 
just interested in your hearing your perspective on that. Do 
you also have figures showing if cuts were made at different 
levels, the impacts of totally eliminating--I mean various cuts 
at different levels?
    Mr. Nelson. Congresswoman, I can't say for sure that all of 
that is covered in the analysis, but we will get you what we do 
have and we would be happy to follow up with you to see if we 
could get some more information for you.
    Mrs. Hartzler. Okay. Just some other sort of related 
questions. What are farmers' biggest concerns with respect to 
just program delivery right now, given your connection to 
producers in the field?
    Mr. Nelson. Well, again, I am only in a position really to 
speak for the part of the country that I come from at this 
point. Again, I think it is timeliness of payments of some of 
these programs because of the factors within the ACRE and SURE 
program, for example, that mean that it is at least a year 
later before we can begin making payments to producers under 
those provisions. I think that is especially of concern in 
disaster or emergency-related programs that we need to have a 
more timely mechanism for making payments, again, for those 
programs in particular.
    Mrs. Hartzler. Do you have some analysis of over say the 
past 10 years the impact that direct payments have had on the 
percentage of net farm income that they have had? Of course, it 
depends on the price. It depends on how your crops are doing. 
But I am just curious, some years, bad years, I would assume 
the direct payments make a large percentage of the income that 
would come in that year. Other years obviously not. So do you 
have a graph or something showing over time----
    Mr. Nelson. Congresswoman, yes, we do, and so--and again, 
we would be happy to provide that.
    Mrs. Hartzler. Okay. Great. Thank you very much. I yield 
back my time.
    The Chairman. The gentlelady yields back. Mr. Huelskamp, I 
apologize. I took you out of order but you are recognized for 5 
minutes. Sorry about that.
    Mr. Huelskamp. No problem, Mr. Chairman. Thank you. Good to 
be here. I have a few questions to follow up on Representative 
Hartzler's question about key programs in your mind.
    If Members of the Committee had to select one particular 
program as top priority, what would your recommendation be?
    Mr. Nelson. Again, Congressman, I am going to go back to my 
answer that we believe the safety net is critical and rather 
than comment on individual programs, again, I would like to 
talk about that as we work with you to craft the safety net and 
update the safety net that we look at making sure that we have 
both the livestock and the crop sectors covered, that we have 
all crops covered effectively, and that we treat all regions of 
the country equitably. If we keep those goals in mind within 
the budget constraints that we know we are all going to face, 
we look forward to again crafting a safety net that works for 
producers today.
    Mr. Huelskamp. And I appreciate that. That is difficult. 
The answer to the question for my producers is on the crop 
side. It is very clear it is about crop insurance, number one, 
without a doubt. I don't know if that varied or how much it 
varied across the country. One thing I would request is simply 
a list of the safety net programs, those you are considering 
safety net programs, and then everything else. That word gets 
thrown around a lot. I am new to Washington, and I want to know 
exactly what is in that category.
    Speaking of crop insurance, though, I was looking at farm 
prices in my home area of Dodge City this morning. Very nice if 
you had some to sell. Whole crop of wheat is selling at $1.40; 
corn, $7.25; soybeans, $13.16. My concern about a crop 
insurance program is it only deals with--it does not deal with 
the input costs, which are not on the board, and those are 
particularly higher and going higher. Is there any particular 
changes in the crop insurance program that you would suggest to 
deal with that aspect of the cost side versus the revenue?
    Mr. Nelson. Congressman, the crop insurance program is a 
little bit outside of our Farm Service Agency area, but what I 
would suggest is important on our side with respect to crop 
insurance is that we make sure that the SURE program, if it 
continues, is crafted to fit together with crop insurance to 
help fill the kind of gaps that you are talking about that crop 
insurance doesn't cover. That is what they are designed to do, 
is to work together, not be duplicative but to actually 
supplement and complement each other. I think with any 
dimension of the safety net but particularly the SURE program 
in particular, which is the biggest one relating to crops, that 
it is very important that consideration of any future version 
of it again be crafted to fit very closely together to cover 
the gaps that crop insurance doesn't cover.
    Mr. Huelskamp. And is crop insurance in your category of 
safety net programs?
    Mr. Nelson. As a farmer, it would be in my category.
    Mr. Huelskamp. Well, I am not worried about the farmer. I 
am worried about the agency.
    Mr. Nelson. I would have to say yes. It is a critical part 
of the safety net, but it is not the whole safety net.
    Mr. Huelskamp. Understood. The other question would be, 
again, on the revenue side, outside of government, do you have 
any analyses of the potential impact of the proposed free trade 
agreements and its impact on the actual cost to programs and 
the return to farmers?
    Mr. Nelson. You know, Congressman, what I would like to 
suggest on that is that we have our trade team at USDA come up 
and brief you on those issues. We would really look forward to 
that opportunity to do so for you and any other Members and 
staff that would like to get together on that. So that offer is 
on the table.
    Mr. Huelskamp. Thank you. I would love to take you up on 
that. I would also request as well, though, that certain other 
members of the Administration and Members of Congress certainly 
need to hear that briefing, and we can sit and talk about 
programs all day. But, if we can just sell more stuff and we 
got folks out there--we are losing markets every day by 
Washington, whoever's to blame, sitting around and letting 
those markets be taken over by our competitors, and we are 
losing not just today but in the future as well by our failure 
to move. And I am very frustrated by that. Whatever you can do 
and whatever the USDA can do to get that done, I mean, that 
makes this discussion a lot easier when we are able to solve 
that step.
    But I appreciate the responses and look forward to and 
would love to have you in my office to visit about that 
directly.
    Mr. Nelson. Thank you very much.
    The Chairman. The gentleman's time has expired. The 
gentleman from New York, Mr. Gibson, for 5 minutes.
    Mr. Gibson. Thank you very much, Mr. Chairman. I appreciate 
the panelists being here today.
    I represent a district in upstate New York. We have about a 
thousand farms, about half of them dairy, and this is a good 
time for the hundredweight price of milk, but there are 
challenges with input. I am curious if you have any analysis, 
if ethanol subsidies were reduced or eliminated, how would that 
impact the price per bushel?
    Mr. Nelson. Congressman, we are going to need to get back 
to you on that and I just want to make sure that I understand 
what you are talking about is whether or not ethanol subsidies 
and their effect on feed grain prices, the impact that they 
have had on the livestock sector?
    Mr. Gibson. That is correct. I am curious to know what 
analysis that you may have on the elasticity of price if 
these--if we reform the subsidies, various unspectrum 
degradation in terms of stepping them back, also an estimate on 
impact on the market if they were eliminated. And I look 
forward to a response for the record on that.
    Mr. Gibson. The other piece I just want to follow up, I am 
curious to know what your analysts or your subject matter 
experts, what ideas that you may have with regard to crop 
insurance reform. This is a topic that often comes up with my 
farmers, and I would like to be able to share with them the 
latest insight from your experts.
    Mr. Nelson. I am going to turn this over to Mr. Garcia 
because he is actually involved with a project that we are 
working on on crop reporting jointly with crop insurance, and 
let him take this one.
    Mr. Gibson. Thank you.
    Mr. Garcia. Congressman, of course, when we are talking 
about crop insurance reform, as the Administrator mentioned, 
the Farm Service Agency does collaborate with the Risk 
Management Agency, who is in charge of the crop insurance 
provision and we work with them very closely. And what we have 
been working with them on especially after this 2008 Farm Bill 
when the SURE program was approved, we have been working with 
Risk Management Agency to fully understand all the different 
types of policies that are available, whether it is a 
production policy or a revenue policy. We had to spend quite a 
bit of time learning those particular different policies to 
write our regulations for the SURE program.
    So it is very important that the Risk Management Agency and 
the producers talk to their insurance agencies. I do know that 
the crop insurance organizations do constantly have meetings 
throughout the year with their private insurance agents and ask 
for recommendations on how the particular policies should be 
changed.
    Now, the one thing that we are very excited about that we 
are working with the Risk Management Agency right now that will 
help our farmers tremendously, is that our producers will only 
file one acreage report. Right now the farmers have to file an 
acreage report with their private insurance agency and then 
another acreage report with the Farm Service Agency. So we are 
working on a project right now where producers would just file 
one time and we will use that acreage for both agencies.
    Mr. Gibson. Thank you. And I guess the last point, assess 
the EQIP program and your thoughts on perhaps the way forward 
there.
    Mr. Nelson. Well, the EQIP program is an NRCS program, and 
it is the premier conservation program in our CS office, and I 
think there has been a tremendous amount of good work done with 
that program over the years. This is more from an individual 
producer point of view than an FSA Administrator point of view. 
Originally, the program was set up so that it was only long-
term contracts, and that was beneficial for producers that 
could afford to make the financial commitment to a long-term 
cost-share agreement under EQIP. I think they greatly improved 
the program a few years ago when they started offering annual 
practices, which I believe allows a lot more producers, again 
who aren't in a position to make long-term financial 
commitments to cost-share practices, to participate in that 
program. So I think that was a substantial improvement.
    We don't jointly administer the program within NRCS, but we 
do work closely with them on any number of other programs.
    Mr. Gibson. Thank you very much, and let me just say, Mr. 
Chairman, and I will turn it back, that it is actually one of 
the more popular programs back home. There are some folks who 
have a decided point of view that FSA perhaps could play a more 
active role in it going forward. Maybe we can collaborate on 
that going forward.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. The gentleman yields 
back.
    Mr. Nelson, we want to thank you for being here today. I 
want to thank whoever your team put together the answers to our 
audit questionnaire. I am sure both of you slaved over it 
mightily, but somewhere in your system you put this together 
and thank you very much. It is very helpful to what we are 
trying to do here.
    Couple of quick this and that. In some of the responses, 
you talked about improper payment rates on the various 
programs. They appear to be really good, but what is the 
recovery experience with respect to going after those improper 
payments? Can you give us some sort of thought on how quickly 
the--or what your experience of getting money back had there 
been an improper payment?
    Mr. Nelson. Congressman, I am glad that we do have a chance 
to talk about that because it gives me the opportunity to say 
that FSA last year made seven million correct payments, and I 
think that that is important for the record, but we know with 
that many correct payments, as I said in my opening remarks, 
even one improper payment is one too many, and we find out when 
one may have been improper, we review it and we go back and 
determine whether or not it actually was improper. We have 
implemented a couple of things. We talked about the AGI checks 
with the Internal Revenue Service earlier, but in addition to 
that, four times a year, twice that required by Congress, we do 
check the death master file at the Social Security 
Administration to determine whether or not we are making 
improper payments to producers who have passed away. And again, 
that has been an important step forward, but I think it is 
important to note for the record as well that sometimes a 
payment to a producer who has passed away is a proper payment 
because we had a contract with that producer when they passed 
away and just like any other contract in this country, when 
somebody passes away, we make that payment to the estate.
    The Chairman. But you are actually experiencing 
recovering--the very few payments that are made improperly, you 
are experiencing recovery of those dollars?
    Mr. Nelson. I am sorry if I missed your point a little bit. 
We have pretty good experience with that, but it does involve 
getting in touch with the producer, and they do have appeal 
rights and so they have the opportunity to say, in front of 
first the agency and then the National Appeals Division, hey, 
that payment was proper. We also have the 90 day rule that has 
been in the statutes for quite some time that in some cases 
prevents us from going back and getting the money back from 
producers even if it is established----
    The Chairman. If you don't catch the improper payment 
within 90 days then----
    Mr. Nelson. In certain cases, sir.
    The Chairman. Let me ask you one other real quick one, Mr. 
Nelson. You talked earlier to one of the Members about capital 
cost increases from a certain period through today, 90 percent 
just in this year. What impact does land cost, and can you 
break out those increases by what land--increase in land prices 
have had in your numbers?
    Mr. Nelson. Congressman, I don't have that with me, but we 
would certainly be happy to try to provide that.
    The Chairman. Okay. All right. Mr. Scott, any final 
comments? All right.
    Well, again, gentlemen, thank you both for being here. Look 
forward to working with you in your new roles as leadership at 
FSA.
    Under the rules of the Committee, today's record of the 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on General Farm 
Commodities and Risk Management is adjourned.
    [Whereupon, at 11:36 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
                          Submitted Questions
Response from Bruce Nelson, Administrator, Farm Service Agency, U.S. 
        Department of Agriculture *
---------------------------------------------------------------------------
    * There was no response from the witness by the time this hearing 
went to press.
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Questions Submitted By Hon. Eric A. ``Rick'' Crawford, a Representative 
        in Congress from Arkansas
    Question 1. Given the current make up of farm safety net programs, 
including the marketing loan, direct and countercyclical program, and 
ACRE do you think it is important for Congress to look at streamlining 
programs in the next farm bill? What would be the impact on your 
agency, the Farm Service Agency, If you were only implementing and 
administering streamlined programs? Would this improve your service and 
support to farmers, and if so how?
    Question 2. What has been the current enrollment level in ACRE 
across all crops and for rice specifically? What is your impression of 
why such a low enrollment level?
    Question 3. Of all the current safety net programs, can you rank 
them by degree of complexity and level of cost/resources to implement 
and administer?
                                 ______
                                 
      House Committee on Agriculture Farm Bill Audit Questionnaire
1. Program Name
    Direct and Countercyclical Program (DCP).
2. Subprograms/Department Initiatives
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
reauthorizes direct and countercyclical payments, with some changes, 
that were previously authorized under the Farm Security and Rural 
Investment Act of 2002 (2002 Farm Bill). FSA enters into annual 
contracts with agricultural producers to maintain base acres on 
participating farms. During the contract period, eligible land on the 
participating farm, may be planted to any commodity except fruits, 
vegetables (other than mung beans and pulse crops), and wild rice.
    FSA is responsible for overall implementation of DCP. Producers 
enroll and payments are initiated at the FSA County Office 
administratively designated for the farm.

    DCP Direct Payments:

    Direct payments are paid annually and are not based on producers' 
current production choices, but instead are tied to base acres and 
program yields. Direct payments do not provide an incentive to increase 
production of any particular crop and the payments support farm income 
without affecting producers' current production decisions.
    The 2008 Farm Bill continues the direct payments that began under 
the 2002 Farm Bill. Direct payment rates for the eligible DCP 
commodities are statutory and as follows:

   Wheat: $0.52 per bushel

   Corn: $0.28 per bushel

   Grain sorghum: $0.35 per bushel

   Barley: $0.24 per bushel

   Oats: $0.024 per bushel

   Upland cotton: $0.0667 per pound

   Rice, long grain: $2.35 per hundredweight

   Rice, medium/short grain: $2.35 per hundredweight

   Soybeans: $0.44 per bushel

   Other oilseeds: $0.80 per hundredweight

   Peanuts; $36 per ton

    For each commodity, the total direct payment for producers on a 
farm is determined by multiplying 83.3 percent for 2009 through 2011 
and 85 percent in 2008 and 2012 of the farm's base acreage times the 
farm's direct payment yield times the direct payment rate.

    Countercyclical Payments:

    Countercyclical payments provide support counter to the cycle of 
movement of market prices as part of a ``safety net'' in the event of 
low crop prices. Countercyclical payments for a commodity are only 
issued if in a given year, the effective price for a commodity is below 
the target price for the commodity. The countercyclical payment rate is 
the amount by which the target price of each commodity exceeds its 
effective price. The effective price for each commodity equals the 
direct payment rate plus the higher of:

   the national average market price received by producers 
        during the marketing year as determined by the USDA Secretary,

   or the national loan rate for the commodity.

    Target prices, as provided by the 2008 Farm Bill, for each 
commodity are as follows:

------------------------------------------------------------------------
               Crop                    2008         2009       2010-12
------------------------------------------------------------------------
Wheat                                 $3.92/bu     $3.92/bu     $4.17/bu
Corn                                  $2.63/bu     $2.63/bu     $2.63/bu
Grain sorghum                         $2.57/bu     $2.57/bu     $2.63/bu
Barley                                $2.24/bu     $2.24/bu     $2.63/bu
Oats                                  $1.44/bu     $1.44/bu     $1.79/bu
Upland cotton                       $0.7125/lb   $0.7125/lb   $0.7125/lb
Rice, long grain                    $10.50/cwt   $10.50/cwt   $10.50/cwt
Rice, medium/short grain            $10.50/cwt   $10.50/cwt   $10.50/cwt
Soybeans                              $5.80/bu     $5.80/bu     $6.00/bu
Other oilseeds                      $10.10/cwt   $10.10/cwt   $12.68/cwt
Dry peas                                   (*)    $8.32/cwt    $8.32/cwt
Lentils                                    (*)   $12.81/cwt   $12.81/cwt
Chickpeas, small (Garbanzo bean,           (*)   $10.36/cwt   $10.36/cwt
 Desi)
Chickpeas, large (Garbanzo bean,           (*)   $12.81/cwt   $12.81/cwt
 Kabuli)
Peanuts                               $495/ton     $495/ton     $495/ton
------------------------------------------------------------------------
* Not available.

3. Brief History
    For crop years 2002 through 2007, pursuant to the 2002 Farm Bill 
(P.L. 107-171), wheat, corn, barley, grain sorghum, oats, upland cotton 
and rice, (the same crops that were previously eligible for fixed 
annual Production Flexibility Contract (PFC) payments for producers 
under the 1996 Farm Bill) oilseed crops, including soybeans, sunflower 
seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, 
sesame seed, and peanuts were crops eligible for a fixed direct 
payment. (PFC payments were based on historical yields and acreage. 
Direct payments were received whether or not a crop was planted, and 
did not depend on what crop was planted, (except for fruit and 
vegetable restrictions)). The 2008 Farm Bill further authorizes these 
types of direct payments for the 2008 through 2012 crop years, with 
some changes, and adds pulse crops beginning with the 2009 crop year.
    Countercyclical payments (countercyclical payments are similar to 
the deficiency payments authorized under the earlier Acreage Reduction 
Program (ARP), which mandated strict acreage limitations and mandatory 
acreage idling or set-aside requirements) were authorized for the 2002 
through 2007 crop years pursuant to the 2002 Farm Bill for these same 
crops.
    Under the 2008 Farm Bill, peanuts continue to be eligible for 
direct and countercyclical payments, and continue to have slightly 
different statutory requirements than for other crops.
    The 2008 Farm Bill provides that the base acres and program yields 
established by the 2002 Farm Bill that were effective September 30, 
2007, will constitute the base acres and yields for the 2008 through 
2012 crop years. The 2008 Farm Bill, however, requires adjustments to 
base acres for various reasons including, but not limited to, land no 
longer being devoted to agricultural uses.
4. Purpose/Goals
    The Direct and Counter-Cyclical Program (DCP) provides annual 
payments to eligible producers on farms enrolled for the 2008 through 
2012 crop years. Both direct and countercyclical payments are computed 
using the base acres and payment yields established for each farm.
    The intent of DCP is to provide a safety net for farmers, while 
allowing farmers planting flexibility. The program protects farmers 
from low market prices of program commodities, and helps ensure 
farmer's cash flow needs are met. Roughly 80 percent of all farms with 
base acres are enrolled in DCP.
5. Success in Meeting Programmatic Purpose/Goals
    DCP has successfully met its programmatic goals.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                     Actual     Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Payments                           $0  $4,151,272  $5,288,646  $5,234,599  $4,962,372  $3,957,175  $4,821,206  $5,222,325  $4,898,085  $4,950,510
Countercyclical Payments                   0   1,742,999     809,381   2,771,503   4,355,612   3,158,554     359,064     730,918     902,584     131,848
--------------------------------------------------------------------------------------------------------------------------------------------------------
    This program is funded by Commodity Credit Corporation (CCC). Budget authority for this CCC program is based on actual outlays.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     FY 2002    FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                     Actual     Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Payments                           $0  $4,151,272  $5,288,646  $5,234,599  $4,962,372  $3,957,175  $4,821,206  $5,222,325  $4,898,085  $4,950,510
Countercyclical Payments                   0   1,742,999     809,381   2,771,503   4,355,612   3,158,554     359,064     730,918     902,584     131,848
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    Any farm with base acres is eligible to participate in DCP. A 
producer on a farm with base acres is eligible to receive payment if 
the following criteria are met:

   Actively Engaged in Farming provisions.

   Highly Erodible Land and Wetland provisions.

   Average Adjusted Gross Income provisions.

   Conservation Compliance provisions.

   Controlled substance provisions.

   Federal Crop Insurance Corporation fraud provisions.

    Additionally, farms that contain fewer than 10 base acres do not 
earn a payment unless that farm is at least 50 percent owned by a 
socially disadvantaged or limited resource farmer or rancher.
10. Utilization (Participation) Data
    Under the 2008 DCP, 1.1 million producers enrolled 1.8 million 
farms with 260.9 million base acres. Under the 2009 DCP, 940,000 
producers' enrolled 1.5 million farms with 226.4 million base acres 
(Note that for 2009, 90,000 producers' enrolled 131,000 farms with 33.9 
million base acres in ACRE program). Preliminary 2010 DCP enrollment 
numbers show that 903,300 producers' enrolled 1.6 million farms with 
222.3 million base acres (Note that for 2010, 94,000 producers' 
enrolled 137 thousand farms with 35.1 million base acres in the ACRE 
program). Preliminary reports for the 2011 DCP indicate that the number 
of producers, farms, and base acres will decrease marginally due to a 
slight increase (about 1,000 farms) in ACRE participation.
11. Duplication or Overlap with Other Programs
    Beginning with the 2009 crop, ACRE payments provide a revenue-based 
safety net that is an alternative to price based countercyclical 
payments. To enroll a farm in ACRE, producers agree to forgo 
countercyclical payments, take a 20 percent reduction in direct 
payments, and a 30 percent reduction in the marketing assistance loan 
rates.
12. Waste, Fraud and Abuse
    Improper Payments Information Act review was conducted on DCP in 
accordance with Appendix C to OMB Circular A-123. Based on random 
sampling, a 1.77 percent error rate was recorded for 2010 DCP.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Marketing Assistance Loans (MAL) and Loan Deficiency Payments (LDP) 
Program.
2. Subprograms/Department Initiatives
    Subprograms:

    MAL and LDP:

    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
reauthorizes non-recourse marketing assistance loans (MAL) and loan 
deficiency payments (LDP) and makes them available for the 2008-2012 
crops of wheat, corn, grain sorghum, barley, oats, upland cotton, 
extra-long staple cotton, long grain rice, medium grain rice, soybeans, 
other oilseeds (including sunflower seed, rapeseed, canola, safflower, 
flaxseed, mustard seed, crambe and sesame seed), dry peas, lentils, 
small chickpeas, large chickpeas, graded wool, non-graded wool, honey 
and peanuts.
    MALs and LDPs are marketing tools available to producers beginning 
upon harvest or shearing. The MAL provides cash when market prices are 
typically at harvest-time lows, which allows the producer to delay the 
sale of the commodity until more favorable market conditions emerge. 
Allowing producers to store production at harvest or shearing provides 
for a more orderly marketing of commodities throughout the year.
    MALs for commodities are considered nonrecourse when the MAL can 
either be redeemed by the repayment of the MAL or by delivering the 
pledged collateral to the Commodity Credit Corporation (CCC) as full 
payment for the MAL at maturity. MAL repayment provisions specify, 
under certain circumstances, that producers may repay MALs at less than 
loan rate (principal) plus accrued interest and other charges. 
Alternatively, loan deficiency payment (LDP) provisions specify that, 
in lieu of securing a MAL, producers may elect to receive an LDP.
    LDPs are payments made to a producer who, although eligible to 
obtain a MAL, agrees to forgo the loan in return for a payment on the 
eligible commodity. The LDP payment is the difference between the 
county loan rate and CCC determined value for the applicable commodity 
or class of commodity multiplied by the eligible quantity. LDPs are 
only applicable when the market price or CCC determined value is less 
than the county loan rate.
    MAL repayment and LDP provisions are intended to minimize potential 
delivery of loan collateral to CCC, accumulation of CCC-owned stocks, 
storage costs, discrepancies in marketing loan benefits across state 
and county boundaries, and allow U.S. produced-commodities to be 
marketed freely and competitively. Accumulating CCC-owned stocks tends 
to make U.S.-produced commodities less competitive in world markets and 
can result in substantial storage costs to taxpayers.

    Recourse Loans:

    Recourse loans are commodity loans for which the commodity offered 
as collateral does not meet the specified quality eligibility 
requirements and may not be delivered or forfeited to CCC in 
satisfaction of the loan indebtedness. Recourse loans must be repaid in 
full on or before the loan maturity date at principal plus interest. 
The following are considered recourse loans: high moisture corn and 
grain sorghum, and seed cotton; acquired grain for high moisture corn 
or grain sorghum loans; distress loans on any commodity that is not 
stored in eligible storage; and any commodity otherwise eligible for 
nonrecourse loan but not meeting the quality eligibility requirements 
according to U.S. grading standards.

    Graze-Out Payments:

    Graze-out payments are payments made to eligible producers who 
although eligible to obtain a loan elect to use acreage planted to 
barley, oats, triticale, or wheat for livestock grazing and agree to 
forgo any other harvesting of the commodity on this acreage during the 
applicable crop year. The payment rate is determined by the amount the 
applicable commodity loan rate exceeds the CCC-determined value of the 
commodity for the county where the farm is located. Graze-out payments 
are only applicable when the market price or CCC determined value is 
less than the county loan rate.

    Department Initiatives:

    None.
3. Brief History
    The Commodity Credit Corporation (CCC) was created on October 17, 
1933, by the CCC Charter Act, and established for the purpose of 
stabilizing, supporting, and protecting farm income and prices. The CCC 
Charter Act gave CCC the authority to carry out price and income 
support activities, and initially made commodity loans available to 
cotton and corn producers.
    The Agricultural Adjustment Act of 1938 (1938 Act) is considered a 
permanent part of agricultural legislation. In the original law. 
Congress enacted the first comprehensive legislation dealing with price 
support, and provided price support loans for wheat, corn, and cotton. 
Price support for peanuts and wool were subsequently added. Currently, 
when current legislation is not renewed, the law reverts back to the 
permanent provisions of the 1938 Act, along with the Agricultural Act 
of 1949 (1949 Act).
    The 1949 Act is permanent legislation of U.S. agricultural policy 
and has been amended by every subsequent farm bill. The 1949 Act made 
commodity loans available to producers of approved commodities at a 
rate established in the legislation, or subsequent amendments. The 
commodities included wheat, corn, cotton, peanuts, rice, honey, honey, 
grain sorghum, barley, oats, rye and soybeans.
    The Food Security Act of 1985 (1985 Farm Bill) authorized producers 
to repay their commodity loans at a level that is the lesser of 
principal plus interest, or at the prevailing market price as 
determined by the Secretary, thus the applicable commodity loans became 
known as Marketing Assistance Loans (MAL). From 1985 until 1990, 
repayments at the prevailing market price were required to be made by a 
negotiable certificate issued by CCC as an in-kind payment.
    The 1985 Farm Bill also introduced the Loan Deficiency Payment 
(LDP) which enabled eligible producers of rice and cotton to forgo 
obtaining a commodity loan and instead receive a payment based on the 
difference between the county loan rate and CCC determined value for 
the applicable commodity or class of commodity times the eligible 
quantity
    The Food Agriculture, Conservation and Trade Act of 1990 (1990 Farm 
Bill) continued MAL and LDP provisions but allowed MAL repayments with 
cash. The 1990 Farm Bill added wheat, feed grains and oilseeds as 
commodities eligible for LDP and also allowed recourse loans for silage 
and high moisture feed grains.
4. Purpose/Goals
    MALs and LDPs are marketing tools available to producers of 
eligible commodities. The MAL program supports America's farmers and 
ranchers by providing producers with short term interim financing after 
harvest and during the shearing season for wool, and providing 
significant income support for eligible commodities when market prices 
are below statutory loan rates. MALs also facilitate the orderly 
marketing and distribution of all commodities throughout the year, 
giving producers flexibility on when to sell their commodities.
    Producers can settle their loan by either repaying the loan or by 
forfeiting the commodity to CCC as full payment for the MAL at 
maturity. MAL repayment provisions specify, under certain 
circumstances, that producers may repay at less than the loan rate 
(principal) plus accrued interest.
    The LDP program is an alternative to the MAL program. If a producer 
agrees to forgo receiving a MAL and provided there is a rate in effect, 
the producer may obtain an LDP on their harvested commodity. An LDP 
rate is in effect when the alternative repayment rate is below the 
applicable crop year commodity loan rate. Like MALs, LDPs support 
America's farmers by providing price income support to producers and 
giving producers flexibility on when to sell their commodities.
    The intent of MAL repayments and LDP's was to minimize the 
potential delivery of loan collateral to CCC, limit the accumulation of 
CCC-owned stocks, minimize storage costs, stabilize the discrepancies 
in marketing loan benefits across state and county boundaries, and 
allow U.S. produced commodities to be marketed freely and 
competitively. Accumulating CCC-owned stocks tends to make U.S. 
produced commodities less competitive in world markets and can result 
in substantial storage costs to taxpayers.
    When market prices are low, LDP participation tends to increase. 
Likewise when market prices are high, LDPs are not authorized which 
leaves only the MAL option open to producers for providing them the 
influx of cash at harvest.

                                                    5. Success in Meeting Programmatic Purpose/Goals
                                                       Total Number of MALs and LDPs by Crop Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Crop Years
                    Program                    ---------------------------------------------------------------------------------------------------------
                                                  2002       2003        2004        2005        2006        2007        2008        2009        2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance Loans                       193,132     132,276     209,997     185,132     158,154      99,828     101,551      74,662      66,507
Loan Deficiency Payments                         221,545     300,936   1,843,984   1,500,137     180,640      18,864      35,734      33,903      25,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
    MALs are used by producers of loan commodities who at harvest take advantage of the low interest CCC loans on the commodities they produce to pay
 their crop expenses, and market these commodities later in the year when prices are usually higher. LDPs are only applicable when the current market
 price is below the established commodity loan rate.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance    $10,130,603  $10,718,057   $9,149,591  $12,619,239  $12,013,778  $11,286,100   $9,509,047   $8,290,909   $7,189,585   $7,014,700
 Loans
Loan Deficiency           5,344,682      693,390      461,177    3,855,624    4,629,556      173,736        6,036      145,497      191,647       36,565
 Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or
 fiscal years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marketing Assistance    $10,130,603  $10,718,057   $9,149,591  $12,619,239  $12,013,778  $11,286,100   $9,509,047   $8,290,909   $7,189,585   $7,014,700
 Loans
Loan Deficiency           5,344,682      693,390      461,177    3,855,624    4,629,556      173,736        6,036      145,497      191,647       36,565
 Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible for MAL or LDP, the producer must comply with 
conservation and wetland protection requirements, submit an acreage 
report to account for all cropland on the farm, have and retain 
beneficial interest in the commodity until the MAL is repaid or CCC 
takes title to the commodity, and meet the applicable adjusted gross 
income limitations.
    Several commodities have been added to the list as eligible for MAL 
and LDP through previous farm bills. Current commodities eligible for 
MAL and LDP include wheat, barley, oats, corn, grain sorghum, soybeans, 
long and medium rice, peanuts, cotton, sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, graded 
and nongraded wool, mohair, honey, dry peas, lentils, small chickpeas, 
and beginning with the 2009 crop year, large chickpeas. Hay, silage, 
and unshorn pelts are eligible for LDP only. Mohair was recently 
removed from the list of eligible commodities for both MAL and LDP 
through the remainder of Fiscal Year 2011.
    A person or legal entity with an average adjusted gross non-farm 
income that exceeds $500,000 is not eligible for an LDP or market loan 
gain (MLG). These producers may request an MAL but must repay the MAL 
at principal plus interest. The MLG rate equals the amount by which the 
applicable loan rate exceeds the MAL repayment rate.
10. Utilization (Participation) Data
    Producer participation in the MAL or LDP program includes producers 
from all fifty states, some to a much larger extent than others. 
Depending on the predominate commodities produced in the state and the 
current market price of these commodities, some years a particular 
state has many MAL and just a few LDPs, and other years both MAL and 
LDP numbers are high.
11. Duplication or Overlap with Other Programs
    MALs and LDPs are not a duplication of other USDA programs.
12. Waste, Fraud and Abuse
    To comply with the Improper Payments Information Act of 2002, FSA 
conducts internal investigations through the County Office Review 
Program of high risk programs. MALs and LDPs have been reviewed 
numerous times in the last few years. The error rate for improper 
payments for MALs was 0.52 percent in 2011. For LDPs, the error rate 
for improper payments was 0.44 percent in 2010.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Average Crop Revenue Election (ACRE) Program.
2. Subprograms/Department Initiatives
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
authorizes annual direct and countercyclical payments, with some 
changes, similar to the direct and countercyclical payments (DCP) 
previously authorized under the Farm Security and Rural Investment Act 
of 2002 (2002 Farm Bill). In addition, the 2008 Farm Bill authorized 
the optional ACRE program as an alternative to the traditional 
countercyclical program. ACRE consists of two payment types, direct 
payments (ACRE direct) and revenue-based countercyclical payments 
(ACRE). Similar to DCP, FSA enters into annual contracts with 
agricultural producers to maintain base acres on participating farms 
and makes direct payments on these base acres (see previous response 
for DCP). In contrast, ACRE's revenue based countercyclical payments 
are made on crops planted on the farm during the current contract year 
as opposed to the historical plantings of DCP. During the contract 
period, eligible land on the participating farm, may be planted to any 
commodity except fruits, vegetables (other than mung beans and pulse 
crops), and wild rice.
    FSA is responsible for overall implementation of ACRE. Producers 
enroll and payments are initiated at the FSA County Office 
administratively designated for the farm.

    ACRE Direct Payments:

    ACRE direct payments are not based on producers' current production 
choices, but instead are tied to base acres and yields. Direct payments 
do not provide an incentive to increase production of any particular 
crop and the payments support farm income without affecting producers' 
current production decisions.
    The 2008 Farm Bill continues the direct payments that began under 
the Farm Security and Rural Investment Act of 2002. Direct payments 
under the ACRE program are identical to those available under DCP 
except that the ACRE direct payment rate is 80 percent of the DCP 
direct payment rate. ACRE direct payment rates for the eligible ACRE 
commodities are as follows:

   Wheat: $0.416 per bushel

   Corn: $0.224 per bushel

   Grain sorghum: $0.28 per bushel

   Barley: $0.192 per bushel

   Oats: $0.0192 per bushel

   Upland cotton: $0.05336 per pound

   Rice, long grain: $1.88 per hundredweight

   Rice, medium/short grain: $1.88 per hundredweight

   Soybeans: $0.352 per bushel

   Other oilseeds: $0.64 per hundredweight

   Peanuts: $28.80 per ton

    ACRE Payments:

    ACRE payments are issued when two conditions are met for a 
commodity. Actual State Revenue falls below the State ACRE Guarantee 
and Actual Farm Revenue falls below the Farm ACRE Guarantee.
    Once it has been determined that both conditions have been met for 
the farm to earn an ACRE payment, the payment is computed for a year by 
multiplying:

   83.3 percent (85 percent in 2012) of the planted and 
        considered planted acres on the farm not to exceed the total 
        base acres on the farm by

   the farm productivity index by

   the lesser of:

     state ACRE guarantee minus actual state revenue

     state ACRE guarantee times 25 percent

    Note: Similar to DCP, Federal crop insurance or NAP is not required 
for participation in ACRE.
3. Brief History
    Background:

    The optional ACRE Program is an alternative revenue-based safety 
net to the price-based safety net provided by countercyclical payments 
in DCP for crop years 2009 through 2012. Producers must elect to 
participate in ACRE rather than in the traditional DCP. Producers are 
required to sign-up for ACRE (or DCP) annually. ACRE provides producers 
an option to protect against declines in market revenue. ACRE involves 
state and farm revenue changes from guarantee revenue levels that are 
based on national prices, state planted yields, and farm planted 
yields.
    A decision to participate in ACRE may be made in any of the crop 
years 2009-2012; however, the ACRE election is irrevocable and cannot 
be changed from the time of election through the 2012 crop year. 
Producers may elect the ACRE alternative on a farm-by-farm basis.

    ACRE Tradeoffs:

    Producers who elect and enroll a farm in ACRE agree to: (1) forgo 
DCP countercyclical payments, (2) a 20 percent reduction in their 
direct payments, and (3) a 30 percent reduction in the marketing 
assistance loan rates for all commodities produced on the farm which 
are eligible for ACRE payments.
4. Purpose/Goals
    The purpose of ACRE is to offer producers an alternative approach 
to managing risk. ACRE provides, payments to producers when farm 
revenues fall below a set threshold. This contrasts with the price 
based protection offered by countercyclical payments. The ACRE program 
provides payments to eligible producers on farms enrolled for the 2009 
through 2012 crop years to partially offset annual reductions in market 
revenue.
5. Success in Meeting Programmatic Purpose/Goals
    The ACRE program has successfully met its programmatic goals to 
provide a revenue-based countercyclical safety net to producers. 
However, enrollment in ACRE has been lower than expected.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACRE Payments                     0            0            0            0            0            0            0            0            0     $446,633
--------------------------------------------------------------------------------------------------------------------------------------------------------
This program is funded by Commodity Credit Corporation (CCC). Budget authority for this CCC program is based on actual outlays.


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACRE Payments                     0            0            0            0            0            0            0            0            0     $446,633
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    Any farm with base acres is eligible to participate in ACRE; 
however, to receive an ACRE payment, producers on the farm must plant a 
covered commodity (wheat, corn, grain sorghum, barley, oats, upland 
cotton, rice, soybeans, other oilseeds, dry peas, lentils, small 
chickpeas, and large chickpeas) or peanuts.
    A producer on a farm with base acres is eligible to receive payment 
if the following criteria are met:

   Actively engaged in farming provisions

   Highly Erodible Land and Wetland provisions

   Average (3 year) Adjusted Gross Income not to exceed 
        $750,000 for farm income and $500,000 for non-farm income

   Conservation Compliance provisions

   Controlled substance provisions

   Federal Crop Insurance Corporation fraud provisions

    Additionally, farms that contain fewer than 10 base acres do not 
earn a payment unless that farm is at least 50 percent owned by a 
socially disadvantaged or limited resource farmer or rancher.
10. Utilization (Participation) Data
    Under the 2009 ACRE Program, 90,000 producers enrolled 131,000 
farms with 33.9 million base acres. Preliminary 2010 ACRE enrollment 
numbers, show that, 94,000 producers enrolled 137,000 farms with 35.1 
million base acres. Preliminary reports for the 2011 ACRE Program 
indicate that enrollment will increase by about 1,000 farms.
11. Duplication or Overlap with Other Programs
    ACRE payments provide a revenue-based safety net that is an 
alternative to price based traditional countercyclical payments. To 
enroll a farm in ACRE, producers agree to forgo traditional 
countercyclical payments, take a 20 percent reduction in direct 
payments, and a 30 percent reduction in the marketing assistance loan 
rates.
12. Waste, Fraud and Abuse
    No such instances have to date been identified. FSA minimizes the 
risk of improper ACRE payments by working in partnership with the 
Internal Revenue Service to determine whether or not the participant 
appears to meet or exceed AGI limitations.
13. Effect of Administrative PAYGO
    See Exhibit 1.*
---------------------------------------------------------------------------
    * Editor's note: Exhibit 1 is printed at the end of the 
questionnaire.
---------------------------------------------------------------------------
                                 ______
                                 
1. Program Name
    Supplemental Revenue Assistance Payments (SURE) Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    SURE is a nationwide crop disaster program authorized by the Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill) to provide 
assistance to producers suffering production, quality and/or revenue 
losses due to natural disasters. Unlike prior ad hoc disaster programs, 
the 2008 Farm Bill created a Trust Fund during FY 2008-11 to provide 
funding for assistance to producers incurring 2008 through September 
30, 2011 disaster-related losses.
    SURE is based on a producer's entire farming operation in all 
counties (and states) rather than on individual crop losses. Payments 
are calculated in an amount equal to 60 percent of the difference 
between the SURE guarantee and the calculated SURE total farm revenue. 
The SURE guarantee cannot exceed 90 percent of the expected revenue for 
the producer's farming operation.
    The American Recovery and Reinvestment Act of 2009 (ARRA) increased 
2008 SURE program benefits for participants by increasing the guarantee 
calculation for both insurable and noninsurable (NAP) crops.
    SURE is one of five complementary disaster programs authorized by 
the 2008 Farm Bill. The others are Emergency Assistance for Livestock, 
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity 
Program (LIP), the Livestock Forage Program (LFP), and the Tree 
Assistance Program (TAP).
4. Purpose/Goals
    SURE helps mitigate the impacts of natural disasters on producers 
such as prevented planting, loss of production, loss due to quality, 
and decreases in market prices received. SURE provides a revenue 
guarantee (SURE guarantee) for a producer's total farming interest. 
SURE is a supplement to Federal crop insurance and the Noninsured Crop 
Disaster Assistance Program (NAP) to reduce producers' financial losses 
and cover shallow losses not covered by crop insurance or NAP.
5. Success in Meeting Programmatic Purpose/Goals
    SURE successfully provides financial assistance to producers who 
suffer qualifying losses due to natural disasters. As of July 19, 2011, 
103,709 producers received approximately $2.1 billion for 2008 crop 
year losses, and to date, 32,273 producers have qualified for 
approximately $485 million for 2009 crop year losses. Crop year 2009 
SURE sign up is scheduled to end on July 29, 2011.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
SURE                             $0           $0           $0           $0           $0           $0           $0           $0   $1,195,517   $1,287,000
SURE Recovery Act                 0            0            0            0            0            0            0            0     $688,805     $171,393
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
SURE                             $0           $0           $0           $0           $0           $0           $0           $0     $973,434   $1,287,000
SURE Recovery Act                 0            0            0            0            0            0            0            0     $578,327     $255,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible for SURE benefits, producers and entities must:

    (1) Obtain crop insurance and/or NAP on all crops of economic 
        significance (a crop contributing at least five percent to the 
        total farm's expected revenue), unless they qualify as a 
        Limited Resource, Socially Disadvantaged, or Beginning Farmer 
        or Rancher.

    (2) Have at least one crop of economic significance suffer at least 
        a 10% production loss, adjusted for quality, due to a natural 
        disaster.

    (3) Have a risk and ownership share in a qualified crop, in a 
        Secretarial declared disaster county or contiguous county, or 
        if not located in a qualified county, have a 50 percent or 
        greater actual production loss for the farm compared with 
        normal production for the farm.

    (4) For the 2008 program year, no person as defined and determined 
        under provisions in 7 CFR Part 1400 in effect for 2008, may 
        receive more than $100,000 total in payments under SURE, ELAP, 
        LIP, and LFP combined. For 2009 and subsequent years, no person 
        or legal entity, excluding joint venture or general 
        partnership, may receive directly or indirectly, more than 
        $100,000 total in payments under SURE, ELAP, LIP, and LFP, 
        combined.

    (5) Also, in applying the limitation on average adjusted gross 
        income (AGI) for 2008, an individual or entity is ineligible 
        for payment under SURE if the individual's or entity's average 
        adjusted gross income exceeds $2.5 million for 2007, 2006, and 
        2005 under the provisions in 7 CFR Part 1400 in effect for 2008 
        unless 75 percent or more of their income was from farming, 
        ranching or forestry. For 2009 through 2011, the average AGI 
        limitation relating to limits on payments for persons or legal 
        entities, excluding joint ventures and general partnerships, 
        with certain levels of average adjusted gross income will 
        apply. Specifically, for 2009 through 2011, a person or legal 
        entity with an average adjusted gross non-farm income, as 
        defined in 7 CFR Part 1404.3 that exceeds $500,000 will not be 
        eligible to receive SURE payments. Direct attribution 
        provisions also apply to SURE for 2009 and subsequent years. 
        Under direct attribution, any payment to a legal entity--also 
        will be considered for payment limitation purposes to be a 
        payment to a persons or legal entity with an interest in the 
        legal entity or in a sub-entity.

                                      10. Utilization (Participation) Data
----------------------------------------------------------------------------------------------------------------
                               2008 Crop Year                                      2009 Crop Year (to date)
----------------------------------------------------------------------------------------------------------------
             Non-stimulus                            Stimulus
----------------------------------------------------------------------------       Total
                                             Total                              Participants      Total Dollars
Total Participants    Total Dollars      Participants *     Total Dollars
----------------------------------------------------------------------------------------------------------------
          89,831      $1,294,950,257            103,709       $815,381,190             32,273       $485,287,214
----------------------------------------------------------------------------------------------------------------

    The 2008 crop year included Stimulus funds. Not everyone qualified 
for Stimulus funds. Producers with high levels of Federal crop 
insurance coverage may not have been able to fully take advantage of 
Stimulus funds because SURE payments are capped at 90 percent of a 
producer's expected revenue.
    The last day to sign-up for 2009 benefits is July 29, 2011. A large 
percentage of 2009 data has not been reported as of this date.
    Acreage data is not available because the SURE application process 
is completed manually, therefore acreage data is not compiled in an 
automated format.
11. Duplication or Overlap with Other Programs
    SURE assists producers with crop losses and is a supplement to crop 
insurance and NAP. In many instances the producer or entity has already 
received crop insurance indemnities and/or NAP payments and these 
payments are included in determining the total farm revenue to count 
against the SURE guarantee. For the 2009 crop year, counties receiving 
a Secretarial disaster designation due to excessive moisture may have 
had producers qualify for assistance under the Crop Assistance Program 
(CAP) on some crops. However, any Federal Government assistance 
received for crop losses that are covered under SURE during a program 
year are counted as revenue for the farm, thus reducing the total SURE 
payment by the amount of payment received for that loss.
12. Waste, Fraud and Abuse
    Compliance reviews for SURE are required to ensure accuracy of the 
information provided by producers. If a producer is selected, the 
information is recorded in the National Compliance Review database. 
Additional selections may be required when County Committees, District 
Directors or State Committees have reason to believe inaccurate data or 
certifications were provided. Those found with inaccurate data may have 
to refund the SURE payment or part of the payment.
    When RMA and FSA data does not match or falls outside of acreage 
tolerance rules, FSA notifies RMA of the discrepancy and the two 
agencies work to correct inaccuracies. For instance, FSA may deny RMA 
prevented planting acreage if documented evidence exists that supports 
the lack of prevented planting conditions.
    Currently SURE is in the early stages of being audited by the 
Office of Inspector General. At this time, we do not have any 
indication of on-going systemic waste, fraud, and abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Livestock Forage Disaster Program (LFP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
authorized the Livestock Forage Disaster Program (LFP) to provide 
compensation to eligible livestock producers that have suffered grazing 
losses for covered livestock on land that is native or improved 
pastureland with permanent vegetative cover or that is planted 
specifically for grazing. The grazing losses must be due to a 
qualifying drought condition during the normal grazing period for the 
county. LFP also provides compensation to eligible livestock producers 
that have suffered grazing losses on rangeland managed by a Federal 
agency (public lands) if the eligible livestock producer is prohibited 
by the Federal agency from grazing the normal permitted livestock on 
the public lands due to a qualifying fire.
    The grazing losses must have occurred on or after January 1, 2008, 
and before October 1, 2011.
    LFP is one of five complementary disaster programs authorized by 
the 2008 Farm Bill. The others are Emergency Assistance for Livestock, 
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity 
Program (LIP), the Supplemental Revenue Assistance Payments (SURE) 
Program, and the Tree Assistance Program (TAP).
4. Purpose/Goals
    Provide compensation to livestock producers that have suffered 
grazing losses for livestock. The grazing losses must be due to a 
drought condition during the normal grazing period for the county or 
the eligible livestock producer must be prohibited by a Federal agency 
from grazing the normal permitted livestock on public lands due to a 
qualifying fire.
5. Success in Meeting Programmatic Purpose/Goals
    LFP successfully provides immediate financial assistance to 
livestock producers who suffer qualifying grazing losses due to drought 
(on private and public lands) or fire (on public lands). Livestock 
producers received compensation for grazing losses totaling 
approximately $163.9 million for 2008 calendar year losses, $98.1 
million for 2009 calendar year losses, and $32 million for 2010 
calendar year losses. As of July 12, 2011, livestock producers have 
received compensation in the amount of approximately $86.4 million for 
2011 calendar year losses.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
LFP                              $0           $0           $0           $0           $0           $0           $0           $2     $264,664     $524,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
LFP                              $0           $0           $0           $0           $0           $0           $0           $0     $263,263      $50,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    LFP provides compensation to eligible livestock producers that have 
suffered grazing losses for covered livestock on land that is native or 
improved pastureland with permanent vegetative cover or that is planted 
specifically for grazing. The grazing losses must be due to a 
qualifying drought condition during the normal grazing period for the 
county. LFP also provides compensation to eligible livestock producers 
that have suffered grazing losses on rangeland managed by a Federal 
agency if the eligible livestock producer is prohibited by the Federal 
agency from gazing the normal permitted livestock on the managed 
rangeland due to a qualifying fire.
    The grazing losses must have occurred on or after January 1, 2008, 
and before October 1, 2011.
    An eligible livestock producer that owns or leases grazing land or 
pastureland physically located in a county rated by the U.S. Drought 
Monitor as having a:

   D2 (severe drought) intensity in any area of the county for 
        at least 8 weeks during the normal grazing period is eligible 
        to receive assistance in an amount equal to one monthly 
        payment;

   D3 (extreme drought) intensity in any area of the county at 
        any time during the normal grazing period is eligible to 
        receive assistance in an amount equal to two monthly payments; 
        or

   D3 (extreme drought) intensity in any area of the county for 
        at least 4 weeks during the normal grazing period or is rated a 
        D4 (exceptional drought) at any time during the normal grazing 
        period is eligible to receive assistance in an amount equal to 
        three monthly payments.

    Eligible livestock are livestock (alpacas, beef cattle, beefalo, 
beefalo, dairy cattle, deer, elk, emus, equine, goats, llamas, poultry, 
reindeer, sheep or swine) that have been or would have been grazing the 
eligible grazing land or pastureland:

   during the normal grazing period for the specific type of 
        grazing land or pastureland for the county suffering from 
        drought, or

   when the Federal agency excluded the livestock producer from 
        grazing the normally permitted livestock on the managed 
        rangeland due to fire.

    To be eligible for LFP for the grazing land incurring losses 
because of a qualifying drought or fire for which assistance is to be 
requested, producers must:

   obtain a policy or plan of insurance for the grazed forage 
        crop under the Federal Crop Insurance Act (FICA); or

   file the required paperwork and pay the administrative fee 
        by the applicable state application closing date for the 
        Noninsured Crop Disaster Assistance Program (NAP).

    Note: Eligible farmers and ranchers who meet the definition of 
``Socially Disadvantaged,'' ``Limited Resource,'' or ``Beginning Farmer 
or Rancher'' does not have to meet this requirement.
    For the 2008 program year, no person as defined and determined 
under provisions in 7 CFR Part 1400 in effect for 2008, may receive 
more than $100,000 total in payments under LFP, the Emergency 
Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program 
(ELAP), Livestock Indemnity Program (LIP) and the Supplemental Revenue 
Assistance Payments (SURE) Program, combined. For 2009 and subsequent 
years, no person or legal entity, excluding joint venture or general 
partnership, may receive directly or indirectly, more than $100,000 
total in payments under LFP, ELAP, LIP, and SURE, combined.
    Also, in applying the limitation on average adjusted gross income 
(AGI) for 2008, an individual or entity is ineligible for payment under 
LFP if the individual's or entity's average adjusted gross income 
exceeds $2.5 million for 2007, 2006, and 2005 under the provisions in 7 
CFR Part 1400 in effect for 2008 unless 75 percent or more of their 
income was from farming, ranching or forestry. For 2009 through 2011, 
the average AGI limitation relating to limits on payments for persons 
or legal entities, excluding joint ventures and general partnerships, 
with certain levels of average adjusted gross income will apply. 
Specifically, for 2009 through 2011, a person or legal entity with an 
average adjusted gross non-farm income, as defined in 7 CFR Part 1404.3 
that exceeds $500,000 will not be eligible to receive LFP payments. 
Direct attribution provisions also apply to LFP for 2009 and subsequent 
years. Under direct attribution, any payment to a legal entity also 
will be considered for payment limitation purposes to be a payment to a 
persons or legal entity with an interest in the legal entity or in a 
sub-entity.
    Producers must provide a completed application for payment and 
supporting documentation to their administrative FSA county office 
within 30 calendar days after the end of the calendar year in which the 
grazing loss occurred.
10. Utilization (Participation) Data
    72,705 livestock producers have received compensation under LFP 
totaling $380,384,965 for grazing losses due to drought (on private and 
public lands) or fire (on public lands) due to fire that have occurred 
on or after January 1, 2008, and before October 1, 2011.

                         Livestock Forage Disaster Program Payments as of July 12, 2011
----------------------------------------------------------------------------------------------------------------
                             2008 LFP          2009 LFP          2010 LFP          2011 LFP         Total LFP
         State               Payments          Payments          Payments          Payments          Payments
                             Disbursed         Disbursed         Disbursed         Disbursed        Disbursed
----------------------------------------------------------------------------------------------------------------
                  AL        $8,970,452                          $3,436,639        $1,018,350       $13,425,441
                 AK                                                                                         $0
                 AZ           $112,019        $2,881,334        $1,924,860        $1,788,812        $6,707,025
                 AR                                               $223,938        $1,822,648        $2,046,586
                 CA        $10,465,247       $14,349,563        $1,430,587                         $26,245,397
                 CO         $4,274,245           $36,612           $20,314        $1,414,975        $5,746,146
                 CT                                                                                         $0
                 DE                                                                                         $0
                  FL        $2,653,553        $6,079,415           $23,166        $5,722,708       $14,478,842
                 GA        $13,676,692        $2,683,255                          $1,970,068       $18,330,015
                 HI         $2,770,495        $3,246,585        $4,031,805        $2,180,142       $12,229,027
                 ID                                                                                         $0
                  IL                                                                                        $0
                 IN                                               $527,276                            $527,276
                 IA                                                                                         $0
                 KS         $1,280,842                                              $318,273        $1,599,115
                 KY         $6,550,532                            $275,589                          $6,826,121
                   LA                                           $2,164,080        $2,392,366        $4,556,446
                 ME                                                                                         $0
                 MD                                                                                         $0
                 MA                                                                                         $0
                 MI                              $61,486          $265,612                            $327,098
                 MN             $1,703              $813                                                $2,516
                 MS                                             $1,134,122                          $1,134,122
                 MO                                               $803,802                            $803,802
                 MT         $6,310,926          $593,988                                            $6,904,914
                 NE                                                                                         $0
                 NV         $1,222,059          $889,741            $4,290                          $2,116,090
                 NH                                                                                         $0
                 NJ                                                                                         $0
                 NM         $6,674,520        $2,139,308            $4,606        $9,718,946       $18,537,380
                 NY                                                                                         $0
                 NC         $7,379,022                             $72,426                          $7,451,448
                 ND        $28,315,713                                                             $28,315,713
                 OH                                                                                         $0
                 OK         $2,105,355        $3,773,266                         $14,801,107       $20,679,728
                 OR           $761,349          $222,072        $1,134,019                          $2,117,440
                 PA                                                 $1,567                              $1,567
                 PR                                                                                         $0
                 RI                                                                                         $0
                 SC         $4,848,645        $1,127,386                             $24,820        $6,000,851
                 SD            $50,278                                                                 $50,278
                 TN        $12,791,638                                                             $12,791,638
                 TX        $40,073,665       $58,975,944       $12,486,955       $43,263,996      $154,800,560
                 UT           $505,429          $223,403          $288,312                          $1,017,144
                 VT                                                                                         $0
                 VA         $1,217,885                            $380,936                          $1,598,821
                 WA                             $468,451                                              $468,451
                 WV                                               $617,919                            $617,919
                 WI                             $295,234           $50,160                            $345,394
                 WY           $918,932                            $665,722                          $1,584,654
                        ----------------------------------------------------------------------------------------
  Total dollars........   $163,929,493       $98,048,746       $31,969,515       $86,437,211      $380,384,965
  Total Applica-.......         37,340            16,495             6,852            12,018            72,705
    tions..............
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    LFP provides compensation for grazing losses for covered livestock 
due to drought (on private and public lands) or fire (on public lands). 
ELAP covers eligible grazing losses due to other eligible adverse 
weather events and loss conditions not due to drought or fire on 
federally managed lands, as determined by the Secretary. The amount of 
any payment for which a livestock producer may be eligible under LFP 
may be reduced by any amount received by the livestock producer for the 
same or any similar loss from any Federal disaster assistance program.
12. Waste, Fraud and Abuse
    There has been no Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of LFP. However, FSA conducts its own 
internal investigations through its county office review process and 
through its internal review audit process. These reviews have not 
raised any significant issues of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Livestock Indemnity Program (LIP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
authorized the Livestock Indemnity Program (LIP) which provides 
disaster assistance to livestock owners and contract growers who 
suffered livestock death losses in excess of normal mortality due to 
adverse weather during the calendar year, including losses due to 
hurricanes, floods, blizzards, disease, wildfires, extreme heat, and 
extreme cold.
    Eligible LIP losses must have occurred on or after January 1, 2008, 
and before October 1, 2011.
    LIP is one of five complementary disaster programs authorized by 
the 2008 Farm Bill. The others are Emergency Assistance for Livestock, 
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Forage 
Program (LFP), the Supplemental Revenue Assistance Payments (SURE) 
Program, and the Tree Assistance Program (TAP).
4. Purpose/Goals
    Provide compensation to eligible livestock owners and contract 
growers for eligible livestock deaths in excess of normal mortality as 
a result of an eligible adverse weather event.
5. Success in Meeting Programmatic Purpose/Goals
    LIP successfully provides financial assistance to livestock 
producers who suffer livestock death losses in excess of normal 
mortality because of eligible adverse weather events. Livestock 
producers received compensation for livestock death losses totaling 
approximately $25.5 million for 2008 calendar year losses, $62.5 
million for 2009 calendar year losses, and $16.3 million for 2010 
calendar year losses. As of July 12, 2011, livestock producers have 
received compensation in the amount of approximately $6.3 million for 
2011 calendar year losses.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
LIP                              $0           $0           $0           $0           $0           $0           $0       $5,761      $89,438      $77,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
LIP                              $0           $0           $0           $0           $0           $0           $0       $2,947      $91,825      $77,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    LIP provides compensation to livestock owners and contract growers 
who suffer livestock deaths in excess of normal mortality caused by 
eligible adverse weather events during the calendar year, including 
losses because of hurricanes, floods, blizzards, disease, wildfires, 
extreme heat, and extreme cold. The livestock death losses must have 
occurred on or after January 1, 2008, and before October 1, 2011. The 
livestock death losses must have also occurred in the calendar year for 
which benefits are being requested.
    Eligible livestock owners must have legally owned the livestock on 
the day the livestock died. Eligible contract growers may receive 
payments for poultry or swine only and must have, on the day the 
livestock died:

   had possession and control of the eligible livestock; and

   a written agreement setting specific terms, conditions and 
        obligations of the parties involved regarding production of 
        livestock.

    To be eligible for LIP, the owner or contract grower's livestock 
must:

   have died as a direct result of an eligible adverse weather 
        event:

     that occurred on or after January 1, 2008, but before 
            October 1, 2011;

     no later than 60 calendar days from the ending date of 
            the applicable adverse weather event(s); and

     in the calendar year for which benefits are being 
            requested.

   have been maintained for commercial use as part of a farming 
        operation on the day they died; and

   not have been produced for reasons other than for commercial 
        use as part of a farming operation which includes wild free 
        roaming animals, pets, or animals used for recreational 
        purposes, such as hunting or show.

    For the 2008 program year, no person as defined and determined 
under provisions in 7 CFR Part 1400 in effect for 2008, may receive 
more than $100,000 total in payments under LIP, the Emergency 
Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program 
(ELAP), Livestock Forage Disaster Program (LFP) and the Supplemental 
Revenue Assistance Payments (SURE) Program, combined. For 2009 and 
subsequent years, no person or legal entity, excluding joint venture or 
general partnership, may receive directly or indirectly, more than 
$100,000 total in payments under LIP, ELAP, LFP, and SURE, combined.
    Also, in applying the limitation on average adjusted gross income 
(AGI) for 2008, an individual or entity is ineligible for payment under 
LIP if the individual's or entity's average adjusted gross income 
exceeds $2.5 million for 2007, 2006, and 2005 under the provisions in 7 
CFR Part 1400 in effect for 2008 unless 75 percent or more of their 
income was from farming, ranching or forestry. For 2009 through 2011, 
the average AGI limitation relating to limits on payments for persons 
or legal entities, excluding joint ventures and general partnerships, 
with certain levels of average adjusted gross income will apply. 
Specifically, for 2009 through 2011, a person or legal entity with an 
average adjusted gross non-farm income, as defined in 7 CFR Part 1404.3 
that exceeds $500,000 will not be eligible to receive LIP payments. 
Direct attribution provisions also apply to LIP for 2009 and subsequent 
years. Under direct attribution, any payment to a legal entity also 
will be considered for payment limitation purposes to be a payment to a 
persons or legal entity with an interest in the legal entity or in a 
sub-entity.
    Producers who suffer livestock death losses must submit a notice of 
loss and an application for payment to the local FSA service center 
that maintains their farm records within prescribed deadlines along 
with adequate proof that the eligible livestock death occurred as a 
direct result of an eligible adverse weather event.
10. Utilization (Participation) Data
    As of July 15, 2011, 15,953 livestock producers have received 
compensation under LIP totaling $110,670,892 for livestock deaths that 
have occurred on or after January 1, 2008, and before October 1, 2011, 
in excess of normal mortality due to eligible adverse weather events.

                            Livestock Indemnity Program Payments as of July 12, 2011
----------------------------------------------------------------------------------------------------------------
                             2008 LIP          2009 LIP          2010 LIP          2011 LIP         Total LIP
         State               Payments          Payments          Payments          Payments          Payments
                             Disbursed         Disbursed         Disbursed         Disbursed        Disbursed
----------------------------------------------------------------------------------------------------------------
                  AL           $37,794          $132,220          $270,584        $1,098,581        $1,539,179
                 AK                                                                                         $0
                 AZ                               $3,197                                                $3,197
                 AR           $412,372          $326,652          $441,513          $107,715        $1,288,252
                 CA            $87,965           $38,347            $2,353            $8,083          $136,748
                 CO         $1,803,635          $196,740          $359,359                          $2,359,734
                 CT                               $9,800                             $26,956           $36,756
                 DE                                                $39,956                             $39,956
                  FL           $63,514           $28,388           $48,592           $24,851          $165,345
                 GA            $41,312          $173,644           $66,297           $69,751          $351,004
                 HI           $169,000           $29,318                                              $198,318
                 ID           $286,351          $368,886          $270,613            $1,008          $926,858
                  IL           $56,063            $2,861            $3,505           $17,773           $80,202
                 IN            $30,081          $121,031           $10,283           $30,290          $191,685
                 IA           $604,067        $1,160,283          $837,663           $94,457        $2,696,470
                 KS            $74,910        $1,388,046        $1,538,042          $498,362        $3,499,360
                 KY         $2,071,058        $1,954,936        $2,771,729          $433,584        $7,231,307
                   LA       $1,297,023           $40,110           $34,287                          $1,371,420
                 ME            $16,199           $10,841                                               $27,040
                 MD                              $13,758           $90,209                            $103,967
                 MA                                                                   $3,999            $3,999
                 MI            $27,239           $29,947                              $8,879           $66,065
                 MN           $319,643          $550,448          $329,553           $92,718        $1,292,362
                 MS            $90,670           $83,258           $59,064           $39,708          $272,700
                 MO           $209,337          $471,998          $606,558          $836,328        $2,124,221
                 MT           $430,213        $3,435,950          $574,825          $298,588        $4,739,576
                 NE           $308,986        $2,856,961        $1,115,303           $12,078        $4,293,328
                 NV             $8,596          $120,063           $32,229                            $160,888
                 NH             $6,900                                                                  $6,900
                 NJ                               $4,759           $61,550                             $66,309
                 NM         $1,365,695        $1,100,770          $378,267          $579,931        $3,424,663
                 NY           $120,086           $38,405           $30,793           $59,642          $248,926
                 NC            $85,748          $153,267          $397,428           $67,256          $703,699
                 ND         $1,363,691       $17,893,403          $319,104          $293,919       $19,870,117
                 OH            $27,600           $48,167           $62,659            $6,748          $145,174
                 OK           $337,903          $835,202          $418,424          $795,186        $2,386,715
                 OR           $106,169          $122,220                             $78,630          $307,019
                 PA                               $1,202          $116,754            $3,435          $121,391
                 PR           $582,249           $16,108            $1,558                            $599,915
                 RI                                                                   $4,590            $4,590
                 SC            $33,206           $20,380            $3,950            $6,650           $64,186
                 SD         $5,102,720       $23,376,238        $1,134,243          $194,328       $29,807,529
                 TN            $66,019           $29,239          $263,840           $36,593          $395,691
                 TX         $6,359,396        $2,527,482          $152,612          $229,014        $9,268,504
                 UT           $725,779          $160,229          $928,773            $1,250        $1,816,031
                 VT                                                                  $23,407           $23,407
                 VA             $6,900           $96,007        $1,300,888          $119,435        $1,523,230
                 WA            $62,141          $118,543              $210                            $180,894
                 WV                              $14,799        $1,007,678           $17,325        $1,039,802
                 WI           $110,654          $160,289          $150,796           $24,691          $446,430
                 WY           $561,493        $2,268,998          $175,901           $13,441        $3,019,833
                        ----------------------------------------------------------------------------------------
  Total dollars........    $25,470,377       $62,533,390       $16,407,945        $6,259,180      $110,670,892
  Total Applica-.......          2,073             7,310             4,567             2,003            15,953
      tions............
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    LIP is not a duplication of other USDA disaster programs. LIP 
covers livestock death losses in excess of normal mortality due to 
eligible adverse weather events. ELAP covers eligible livestock death 
losses, as determined by the Secretary, that are not covered under LIP. 
The amount of any payment for which a livestock producer may be 
eligible under LIP may be reduced by any amount received by the 
livestock producer for the same or any similar loss from any Federal 
disaster assistance program.
12. Waste, Fraud and Abuse
    There has been no Office of Inspector General (OIG) or Government 
Accountability Office (GAO) audit of the program during the last 4 
years. However, OIG has conducted financial audits of the program which 
have not identified any significant issues. Likewise, internal audits 
conducted by FSA through its county office review process have found no 
significant instances of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Tree Assistance Program (TAP).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) 
authorized the Tree Assistance Program (TAP) to provide disaster 
assistance to eligible orchardists and nursery tree growers to replant 
or rehabilitate trees, bushes, and vines that were lost or damaged 
because of an eligible natural disaster. TAP is available to 
orchardists and nursery tree growers who commercially raise perennial 
trees for production of an annual crop and for those nursery tree 
growers who produce nursery, ornamental, fruit, nut, or Christmas trees 
for commercial sale.
    Eligible losses must have occurred on or after January 1, 2008, and 
before October 1, 2011.
    TAP is one of five complementary disaster programs authorized by 
the 2008 Farm Bill. The others are Emergency Assistance for Livestock, 
Honey Bees, and Farm-Raised Fish Program (ELAP), Livestock Indemnity 
Program (LIP), the Supplemental Revenue Assistance Payments (SURE) 
Program, and the Livestock Forage Program (LFP).
4. Purpose/Goals
    Provide compensation to eligible orchardists and nursery tree 
growers to replant or rehabilitate trees, bushes, and vines that were 
lost or damaged because of an eligible natural disaster. TAP provides 
cost-share on various replanting and rehabilitation practices to assist 
producers in reestablishing a viable orchard or nursery stand.
5. Success in Meeting Programmatic Purpose/Goals
    TAP successfully provides cost-share assistance to orchardists and 
nursery tree growers who suffer tree, bush, or vine losses or damage 
due an eligible natural disaster. Orchardists and nursery tree growers 
received cost-share amounts totaling $156,736 for 2008, approximately 
$2 million for 2009, and $2.3 million for 2010 calendar year losses.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
TAP                              $0           $0           $0           $0           $0           $0           $0           $0       $2,198       $5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
TAP                              $0           $0           $0           $0           $0           $0           $0           $0       $1,507       $5,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible for TAP payments, the eligible orchardist or nursery 
tree grower must have:

   planted, or be considered to have planted (by purchasing the 
        orchard or nursery prior to the loss of the existing stand) 
        trees, bushes, or vines for commercial purposes, or

   a production history on planted or existing trees, for 
        commercial purposes.

   suffered loss due to an eligible natural disaster in excess 
        of 15 percent mortality or damage, adjusted for normal 
        mortality.

   obtained coverage under the Federal Crop Insurance Act or 
        Noninsured Crop Disaster Assistance Program (NAP). ``Socially 
        Disadvantaged,'' ``Limited Resource,'' and ``Beginning Farmers 
        or Ranchers'' do not have to meet this requirement.

    Producers who planted, or are considered to have planted trees they 
are eligible for assistance in the form of:

   replanting and the cost of seedlings or cuttings, for tree, 
        bush, or vine replacement the lessor of either of the 
        following:

     70 percent of the actual cost of the practice

     total amount calculated using the national rates 
            established for that practice.

   rehabilitation and the cost of pruning, removal, and other 
        costs incurred for salvaging existing trees, bushes, or vines, 
        or in the case of mortality, to prepare the land to replant 
        trees, bushes, or vines, the lesser of the following:

     50 percent of the actual cost of the practice

     amount calculated using the national rates established 
            for that practice.

    Producers who had a production history on planted or existing trees 
they are eligible for assistance for the cost of pruning, removing 
debris, and other costs incurred for salvaging existing trees or, for 
tree mortality, to prepare the land to replant trees the lessor of the 
following:

   50 percent of the actual total cost of the practice

   total amount calculated using national rates established 
        for the practice.

    Eligible applicants qualify for TAP only if the tree, bush, or vine 
mortality in each stand, for each eligible natural disaster, exceeds 
the 15 percent loss threshold, plus normal mortality. The 15 percent 
mortality, adjusted for normal mortality, must be met before damaged 
trees are eligible for payment.
    Eligible losses must have occurred on or after January 1, 2008, and 
before October 1, 2011.
    The cumulative total quantity of acres planted to trees, bushes, or 
vines, where a producer may receive TAP, cannot exceed 500 acres for 
all years, 2008 through 2011.
    For the 2008 program year, no person as defined and determined 
under provisions in 7 CFR Part 1400 in effect for 2008, may receive 
more than $100,000 total in payments under TAP. For 2009 and subsequent 
years, no person or legal entity, excluding joint venture or general 
partnership, may receive directly or indirectly, more than $100,000 
total in payments.
    For the 2009 and subsequent program years, producers or legal 
entities whose average non-farm Adjusted Gross Income (AGI) exceeds 
$500,000 are not eligible. For the 2008 program year, producers are not 
eligible if their average AGI is $2.5 million or greater, unless 75 
percent or more of their AGI is from agriculture. Direct attribution 
provisions also apply to TAP for 2009 and subsequent years. Under 
direct attribution, any payment to a legal entity also will be 
considered for payment limitation purposes to be a payment to a persons 
or legal entity with an interest in the legal entity or in a sub-
entity.
    TAP applicants who suffer eligible losses must file a Tree 
Assistance Program Application within 90 calendar days from the 
occurrence of the disaster event or the date when the loss become 
apparent to the producer. Upon completion of the practices the producer 
must provide copies of all sales receipts, invoices, canceled checks or 
other documentation necessary to determine cost. Practices must be 
completed within 12 months of an approved application.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
                                         Number of producers receiving
Number of producers applying for TAP                payment
------------------------------------------------------------------------
                  2008--289                                  161
                  2009--194                                   87
                  2010--366                                   74
                  2011--110                                  * 6
------------------------------------------------------------------------
* As of July 19.

11. Duplication or Overlap with Other Programs
    TAP does not duplicate benefits delivered by other USDA disaster 
assistance programs. It is the only program that provides compensation 
to replant or rehabilitate trees, bushes, or vines that were lost or 
damaged as the result of a natural disaster. The Noninsured Crop 
Disaster Assistance Program (NAP) complements TAP by covering the 
actual loss of fruit or nut production. There is no overlap between 
those programs. Regarding nursery, again TAP pays for the cost of re-
establishing (seedling or grafts) or rehabilitating the nursery while 
NAP covers the loss of value of the crop at the time the disaster 
occurs.
12. Waste, Fraud and Abuse
    There has been no extensive Office of Inspector General (OIG) or 
Government Accountability Office (GAO) audit of the program during the 
last 4 years. Currently, we do not have a current audit that indicates 
on-going systemic waste, fraud, or abuse. FSA conducts its own internal 
investigation through its county office review process and through its 
internal review audit process.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish 
Program (ELAP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) 
established five disaster assistance programs: ELAP, Livestock Forage 
Disaster Program (LFP), Livestock Indemnity Program (LIP), Supplemental 
Revenue Assistance Payments Program (SURE) and the Tree Assistance 
Program (TAP). Sections 12033 and 15101 of the 2008 Farm Bill 
authorized the Secretary to use up to $50 million per year from the 
Agricultural Disaster Relief Trust Fund to provide emergency relief to 
eligible producers under ELAP.
4. Purpose/Goals
    ELAP provides emergency assistance to eligible producers of 
livestock, honeybees and farm-raised fish that have losses due to 
disease, adverse weather or other conditions, including losses due to 
blizzards and wildfires. ELAP covers losses occurring on or after 
January 1, 2008, and before October 1, 2011 that are not covered under 
any of the other disaster assistance programs established by the 2008 
Farm Bill.
5. Success in Meeting Programmatic Purpose/Goals
    To date, ELAP has successfully provided over $29 million in 
benefits to eligible livestock, honeybee, and farm-raised fish 
producers for 2008 through 2010 calendar year losses nationwide. The 
following table provides the total benefits disbursed nationwide to 
eligible livestock, honeybee and farm-raised fish producers for the 
calendar year in which the losses occurred.

------------------------------------------------------------------------
        Calendar Year of Loss               ELAP Payments Disbursed
------------------------------------------------------------------------
                       2008                          $10,779,914
                       2009                          $11,824,366
                       2010                           $6,572,795
                                     -----------------------------------
  Total.............................                 $29,177,076
------------------------------------------------------------------------

    ELAP has been particularly beneficial to beekeepers whose bees 
suffered from Colony Collapse Disorder (CCD). The following table 
provides approximate benefits disbursed nationwide to eligible honeybee 
producers due to CCD.

------------------------------------------------------------------------
        Calendar Year of Loss               ELAP Honeybee Payments
------------------------------------------------------------------------
                       2008                      Over $6 million
                       2009                      Over $7 million
                       2010                      Over $5 million
------------------------------------------------------------------------


                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
ELAP                             $0           $0           $0           $0           $0           $0           $0           $0      $21,460      $50,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
ELAP                             $0           $0           $0           $0           $0           $0           $0           $0      $21,413      $50,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 


 
 
 
9. Eligibility Criteria
 
    General Producer Eligibility:
 
    To be considered an eligible producer for ELAP, producers must:
 
     file a notice of loss, no later than 30 calendar days of when the loss is apparent to the producer and file an application for payment by
      the applicable signup deadline.
 
     have suffered eligible losses of livestock, honeybees, and farm-raised fish because of an eligible adverse weather event or loss condition
      that occurred on or after January 1, 2008 and before October 1, 2011 and in the calendar year for which assistance is being requested.
 
     have suffered losses that are physically located in the county where the eligible adverse weather or eligible loss condition occurred.
 
     for every commodity in which the producer has an interest for the relevant program year:
 
         in the case of an insurable commodity, obtain catastrophic coverage or better under a policy or plan of insurance administered
          under the Federal Crop Insurance Act except this obligation will not include forage crops intended for grazing.
 
         in the case of a noninsurable commodity, obtain Noninsured Crop Disaster Assistance Program coverage by filing the required pa-
          perwork and paying the administrative fee by the applicable state application closing date, except that this requirement will not in-
          clude forage on grazing land
 
    There is a $100,000 limitation per crop year that applies to payments received under ELAP, LFP, LIP or SURE. Individuals or entities are ineligible
 for a payment under ELAP for 2008 if their average Adjusted Gross Income for 2005, 2006 and 2007 exceeds $2.5 million. For 2009 through 2011, an
 average adjusted gross non-farm income limitation of $500,000 applies.
 
    Eligible Losses:
 
    An eligible loss under ELAP is a loss that an eligible producer or contract grower of livestock, honeybees, or farm-raised fish incurs because of an
 eligible adverse weather event or loss condition including, but not limited to, blizzards and wildfires. To be considered an eligible loss, the loss
 must have occurred:
 
     during the calendar year for which payment is being requested.
 
     on or after January 1, 2008, and before October 1, 2011.
 
     in the county where the eligible adverse weather event or loss condition occurred.
 
    Eligible livestock losses include livestock death losses and livestock feed and grazing losses that are not due to drought or wildfires on federally
 managed lands, caused by an eligible adverse weather event or loss condition.
    Eligible honeybee losses include the loss of honeybee colonies in excess of normal mortality, honeybee hives, and purchase or produced honeybee feed
 losses caused by an eligible adverse weather event or loss condition.
    Eligible farm-raised fish losses include death losses of eligible bait fish or game fish and purchased or produced farm-raised fish feed losses
 caused by an eligible adverse weather event or loss condition.
 
10. Utilization (Participation) Data
 
    The following table provides the number and amount of ELAP payments disbursed by state for the 2008 through 2010 calendar years.
 


----------------------------------------------------------------------------------------------------------------
                                                                                                     Total ELAP
    State       2008 No. of    2008 ELAP    2009 No. of    2009 ELAP     2010 No. of    2010 ELAP     Payments
                 Payments                    Payments                     Payments                    Disbursed
----------------------------------------------------------------------------------------------------------------
           AL            11       $80,808            17        $78,610             5       $34,515      $193,933
          AK              5        $6,084                                                                 $6,684
          AZ              1      $106,000            13       $234,123             5      $162,892      $497,015
          AR              1       $10,008             3       $157,780             4      $127,667      $295,455
          CA             54    $1,206,084            59     $1,380,580            29      $593,593    $3,180,257
          CO              2       $83,522             5        $49,261             8       $60,248      $193,031
          CT                                          1         $3,044                                    $3,044
           FL           187    $2,918,121            14       $272,028           109      $803,963    $3,994,112
          GA             15      $225,720            17       $141,021             9       $55,447      $422,188
          ID             17      $367,022            18       $360,546            15      $384,246    $1,111,814
           IL             5       $21,168             5        $15,876             1        $4,608       $41,652
          IN              2       $30,405             7        $73,409             1        $3,744      $107,558
          IA             15      $210,922            15       $376,150            11      $133,741      $720,813
          KS              8       $82,912             8        $34,801             4       $41,168      $158,881
          KY              5        $2,016             8         $2,916            11      $118,657      $123,589
            LA          136      $775,927            23        $98,768                                  $874,695
          MD                                          4        $11,196             1       $19,008       $30,204
          MA              2      $100,000             4       $102,124             4      $200,504      $402,628
          MI             12   $334,758.29            11       $153,259             6       $67,266      $555,283
          MN             12      $276,836            17    $423,641.64            11      $277,328      $977,806
          MS              3        $9,899            11        $52,258           108      $235,871      $298,028
          MO             10       $36,703             3         $9,285             4       $39,015       $85,003
          MT             21      $329,634           190     $1,132,114            10      $209,485    $1,671,233
          NE             16      $136,990             3        $43,956            23       $97,711      $278,657
          NM              4        $7,602             3        $34,735            93      $305,619      $347,956
          NY              9      $180,562            10       $178,997            15      $203,191      $562,750
          NC             22      $124,397            26        $38,302            14       $71,736      $234,435
          ND             17      $605,980            64       $895,631             8      $283,596    $1,785,207
          OH              6       $24,171            11        $49,392             5       $19,109       $92,672
          OK              1        $7,803            33       $213,427             1          $600      $221,830
          OR             11      $117,754            16       $303,612             7      $114,070      $534,836
          PA              9       $73,962            18       $158,271             9      $173,359      $405,592
          SC              2        $2,196             3         $7,363                                    $9,559
          SD             50    $1,082,515           207     $2,122,966           134    $1,170,655    $4,376,076
          TN              1        $1,584             2         $2,088             3        $5,381        $9,053
          TX             15      $658,553            17    $532,950.19             6      $121,839    $1,313,342
          UT              8      $137,903             5        $61,128            10       $74,540      $273,571
          VA              5       $18,820             7         $5,952            10       $24,946       $49,718
          WA              6      $248,123            16       $482,416             3      $164,628      $895,161
          WV                                                                       1        $1,084        $1,084
          WI             11      $102,645            10        $70,713             9       $66,727      $240,085
          WY              4       $39,805           162  $1,460,342.60            11      $101,038    $1,601,186
              --------------------------------------------------------------------------------------------------
  Totals.....           721   $10,779,914         1,066    $11,824,366           718    $6,572,795   $29,177,076
----------------------------------------------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    There is no overlap or duplication. ELAP is specifically authorized 
to provide assistance for losses not covered under any other disaster 
assistance program established by the 2008 Farm Bill.
12. Waste, Fraud and Abuse
    There has been no Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of ELAP. FSA conducts its own 
internal investigations through its county office review process and 
through its internal review audit process. These reviews have not 
raised any significant issues of waste, fraud, and abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Noninsured Crop Disaster Assistance Program (NAP).
2. Subprograms/Department Initiatives
    N/A.
3. Brief History
    NAP was initially authorized under the Federal Crop Insurance 
Reform and Department of Agriculture Reorganization Act of 1994 (P.L. 
103-354). NAP was reauthorized under Section 196 of the Federal 
Agriculture Improvement and Reform Act of 1996 (P.L. 104-127) which 
also terminated the prior authorities. NAP provides financial 
assistance to producers of noninsurable crops when natural disasters 
occur. The regulations governing NAP are found at 7 CFR Part 1437.
    NAP is a permanent program designed to reduce financial losses that 
occur when natural disasters cause a catastrophic loss of production or 
prevented planting for noninsurable crops by providing coverage 
equivalent to the catastrophic risk protection (CAT) level of crop 
insurance.
4. Purpose/Goals
    NAP provides financial assistance to producers of noninsurable 
crops when low yields, loss of inventory, or prevented planting occur 
due to natural disasters. NAP is a standing risk tool producers can use 
to mitigate noninsured crop losses similar to crop insurance.
5. Success in Meeting Programmatic Purpose/Goals
    During 2009, NAP producer enrollment increased by 19.73 percent 
over 2008, in part, because the 2008 Farm Bill requires total farm 
participation in NAP and/or purchase of crop insurance for eligibility 
for other disaster programs (specifically, SURE, TAP, and ELAP). 
Although participation increased, dollars paid out in crop year 2010 
decreased from approximately $89 million for crop year 2009 to $52 
million in 2010. It is important to note that dollars paid are directly 
related to the severity and number of disasters that occur in any given 
crop year.
    NAP continues to provide coverage equivalent to catastrophic (CAT) 
insurance for each commercial crop or agricultural commodity, except 
livestock, for which CAT is not available.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Insured Assistance     $182,199     $237,149     $124,108     $109,619      $66,268     $126,951      $73,989      $62,064      $98,745     $116,873
 Payments
NAP Fees                    ^16,319       ^8,359      ^12,550       ^9,879       ^9,155       ^7,760      ^11,529      ^23,621      ^19,396      ^29,086
                       ---------------------------------------------------------------------------------------------------------------------------------
  Net Budget Authority      165,880      228,790      111,558       99,740       57,113      119,191       62,460       38,443       79,349       87,787
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Budget authority for CCC programs is based on obligations. Funds obligated in one fiscal year may not be disbursed until a succeeding fiscal year or
 fiscal years. In the case of these two programs, obligations, budget authority and outlays are incurred at the same time period.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Insured Assistance     $182,199     $237,149     $124,108     $109,619      $66,268     $126,951      $73,989      $62,064      $98,745     $116,873
 Payments
NAP Fees                    ^16,319       ^8,359      ^12,550       ^9,879       ^9,155       ^7,760      ^11,529      ^23,621      ^19,396      ^29,086
                       ---------------------------------------------------------------------------------------------------------------------------------
Net Outlays                 165,880      228,790      111,558       99,740       57,113      119,191       62,460       38,443       79,349       87,787
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    An eligible producer is a landowner, tenant or sharecropper who has 
an ownership share and shares in the risk of producing an eligible 
crop. Crops must be noninsurable crops and agricultural commodities for 
which the CAT level of crop insurance is not available, and must be any 
of the following commercially produced crops:

   crops grown for food;

   crops planted and grown for livestock consumption, 
        including, but not limited to grain and forage crops, including 
        native forage;

   crops grown for fiber, such as cotton and flax (except for 
        trees);

   crops grown under a controlled environment such as mushrooms 
        and floriculture;

   specialty crops, such as honey and maple sap;

   value loss crops, such as aquaculture, Christmas trees, 
        ginseng, ornamental nursery and turfgrass sod;

   sea oats and sea grass; and

   seed crops where the propagation stock is produced for sale 
        as seed stock for other eligible NAP crop production.

    Producers must apply for NAP coverage and pay the applicable 
service fee at their local Farm Service Agency (FSA) office 30 calendar 
days prior to the beginning of the coverage period. The application and 
service fees must be filed by the application closing date as 
established. The service; fee is $250 per crop or $750 per producer per 
administrative county, not to exceed a total of $1,875 per producer 
with farming interests in multiple counties. Limited resource producers 
may request a waiver of the NAP service fees.
    Producers are required to provide acreage and production reports in 
a timely manner, and in the event a loss occurs, file a notice of loss 
within the earlier of 15 days of the disaster event or when the damage 
becomes apparent to the producer. To finalize a claim producers have 
until the subsequent year's acreage reporting date to submit an 
application for payment
    For 2009 and subsequent years, no person or legal entity, excluding 
joint venture or general partnership, may receive directly or 
indirectly, more than $100,000 total in payments under NAP.
    For 2009 and subsequent years, the average AGI limitation relating 
to limits on payments for persons or legal entities, excluding joint 
ventures and general partnerships, with certain levels of average 
adjusted gross income will apply. Specifically, for 2009 and subsequent 
years, a person or legal entity with an average adjusted gross non-farm 
income, as defined in 7 CFR Part 1404.3 that exceeds $500,000 will not 
be eligible to receive NAP payments. Direct attribution provisions also 
apply to NAP for 2009 and subsequent years. Under direct attribution, 
any payment to a legal entity also will be considered for payment 
limitation purposes to be a payment to a persons or legal entity with 
an interest in the legal entity or in a sub-entity.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
  Number of producers obtaining NAP      Number of producers receiving
              coverage                              payment
------------------------------------------------------------------------
             2008--53,222 *                               16,509
             2009--63,724 *                               16,958
             2010--52,572 *                                9,194
             2011--52,058 *                    Not yet available
------------------------------------------------------------------------
* If a producer is operating in two counties, the producer would be
  counted twice.

11. Duplication or Overlap with Other Programs
    By statute, NAP is prohibited from paying multiple benefits for the 
same loss. If the producer is eligible to receive NAP payments and 
benefits under any other program administered by the Secretary for the 
same crop loss, the producer must choose whether to receive NAP 
payments or benefits from any other program. Exceptions to this rule 
include past ad hoc Crop Disaster Programs and recently the 
Supplemental Revenue Assistance Payments (SURE) Program. SURE is a 
supplemental program to crop insurance and NAP coverage and only pays 
on shallow losses. NAP payments are included in total farm revenue when 
SURE payments are calculated.
    NAP works in concert with the Tree Assistance Program (TAP). TAP 
compensates eligible producers of commercial fruit, nut, and nursery 
crops to cover the cost of reestablishing or rehabilitating lost or 
damaged trees, bushes, or vines while NAP covers the actual loss of 
fruit or nut production. Similarly, for nursery losses, TAP pays for 
the cost of re-establishing (seedling or graft) or rehabilitating the 
nursery where NAP covers the loss of value of the crop at the time the 
disaster occurs.
12. Waste, Fraud and Abuse
    The Department is not aware of any national problems of fraud, 
waste, and abuse. To comply with the Improper Payments Information Act 
of 2002, FSA conducts internal investigations through the County Office 
Review Program of high risk programs. NAP overpayments have decreased 
from 22.94 percent in Fiscal Year 2006 to 11.65 percent in Fiscal Year 
2010. Many of the improper payments are due to complexities of the 
program associated to calculating an approved yield. The National 
Office has developed and enhanced corrective actions each year to 
address IPIA findings and NAP Compliance Overview findings.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Sugar Program.
2. Subprograms/Department Initiatives
    The sugar program is a collection of Federal programs designed to 
support, at minimal Federal cost, producer returns from growing 
sugarcane and sugarbeets. The programs collectively referred to as the 
Sugar Program include: the Price Support Loan Program, the Flexible 
Marketing Allotments for Sugar Program, the Tariff Rate Quota Program, 
and the Feedstock Flexibility Program for Bioenergy Producers.
    The Price Support Loan Program establishes the support level by 
providing non-recourse loans to processors of domestically grown 
sugarcane and sugarbeets based on loan rates mandated in farm bills. If 
market returns are lower than loan proceeds at the time of loan 
maturity, sugarbeet and sugarcane processors can fully satisfy their 
loan obligations by forfeiting sugar loan collateral to the Commodity 
Credit Corporation (CCC). Since sugar producers can always receive at 
least the loan proceeds from their crop, the loan rate acts as a floor 
on the market price of domestic sugar.
    The remaining programs work to limit the domestic sugar supply to 
result in higher domestic prices than the support price imposed by the 
sugar loan program, and hence, minimize or eliminate forfeiture costs. 
The Department limits domestic supply through (1) the Flexible 
Marketing Allotments for Sugar Program, which provides limits for the 
quantity of sugar that domestic sugarbeet and sugarcane processors can 
market; (2) an imported sugar supply control strategy that includes a 
prohibitively high tariff rate for unrestricted imports and adjustable 
Tariff Rate Quotas (TRQ) that limit foreign sugar imports at the low 
tier tariff; and (3) the Feedstock Flexibility Program for Bioenergy 
Producers, which authorizes USDA to purchase surplus sugar in the 
marketplace and sell it to producers of bio-energy to prevent loan 
forfeitures under the Price Support Loan Program. The Feedstock 
Flexibility Program is authorized under Title IX of the Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill). To date, the 
Feedstock Flexibility Program has not been needed due to high domestic 
sugar prices. Regulations implementing the Feedstock Flexibility 
Program are currently under development.
3. Brief History
    Domestic sugar production has been supported by tariffs on imported 
sugar since 1789. The early tariffs were established primarily to 
provide government revenue. However, since 1894, the tariffs were 
created primarily to support the domestic sugar industry. Extensive 
government regulation of the sugar industry began with the Sugar Act of 
1934, which established the domestic sugar market supply control 
strategy still used today. Market shares were assigned for domestic 
beet sugar, domestic raw cane sugar, and imported sugar. The Sugar Act 
was allowed to lapse during the 1974 sugar price spike.
    Sugar loan provisions were first included in the Food and 
Agriculture Act of 1977, and modified to the current non-recourse loan 
program under the Food and Agriculture Act of 1981. By 1984, 
overproduction in the U.S. led to forfeitures costing the U.S. Treasury 
$105 million. In response. Congress inserted the no-cost provision 
requiring program administrators to strongly avoid forfeitures in the 
1985 Farm bill. Tariff-rate quotas (TRQs), which allow a set amount of 
imports with almost no tariff and an unrestricted high tier tariff on 
additional imports, replaced strict import quotas in the late 1980s. 
TRQs are based on each country's share of the U.S. market during 1975-
81 when imports were relatively unrestricted. The 1990 Farm bill 
reinstated domestic supply controls as the marketing allotment program. 
The 2008 Farm Bill also mandated the Feedstock Flexibility Program.
4. Purpose/Goals
    The purpose of the sugar program is to support producer returns 
from raising sugarcane and sugarbeets, to the extent practicable, at no 
cost to the Federal budget.
5. Success in Meeting Programmatic Purpose/Goals
    CCC has been fairly successful in achieving the goals of the sugar 
program. The market value of production of sugarbeets and sugarcane 
increased 14 percent and 40 percent, respectively, between FY 2005 and 
FY 2010. Beet processors forfeited 40,000 tons of 2004-crop beet sugar 
with a loan value of 22.7 cents per pound. CCC sold the sugar inventory 
back to the market for 21.8 cents per pound, for a net realized loss of 
$742,000. Since 2005, the domestic market has tightened and the primary 
sugar program issue has been focused on maintaining adequate supplies.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays              $736,807     $879,856     $871,130     $824,168     $794,209   $1,051,171   $1,237,787   $1,118,371     $875,200     $891,402
Total Receipts              866,883      964,016      809,865      910,135      783,815    l,026,436    1,272,821    1,118,369      875,200      891,402
                       ---------------------------------------------------------------------------------------------------------------------------------
  Net Expenditures         ^130,076      ^84,161       61,265      ^85,966       10,394       24,735      ^35,034            2            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------
    These programs are funded by Commodity Credit Corporation (CCC). Budget authority for these CCC programs is based on actual outlays.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Outlays              $736,807     $879,856     $871,130     $824,168     $794,209   $1,051,171   $1,237,787   $1,118,371     $875,200     $891,402
Total Receipts              866,883      964,016      809,865      910,135      783,815    1,026,436    1,272,821    1,118,369      875,200      891,402
                       ---------------------------------------------------------------------------------------------------------------------------------
  Net Expenditures         ^130,076      ^S4,161       61,265      ^85,966       10,394       24,735      ^35,034            2            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible for loans, a sugarbeet or sugarcane processor must: 
agree to all the terms and conditions in the loan application, and 
execute a note, security agreement, and storage agreement with CCC. 
Sugar pledged as collateral during the crop year must be processed and 
owned by the eligible processor and stored in a CCC-approved warehouse. 
The loan collateral must have been processed in the United States.
    In order to be pledged as loan collateral, sugar and in-process 
sugar must be dry and free flowing; free of excessive sediment; and 
free of any objectionable color, flavor, odor, or other characteristic 
that would impair its merchantability or that would impair or prevent 
its use for normal commercial purposes.
10. Utilization (Participation) Data
    Since FY 2000, loan participation has been steady with, on average, 
about 21 percent of the sugarcane crop's annual production placed under 
loan with the CCC. Around 26 percent of the annual sugarbeet crop is 
normally placed under loan. Loans, which are generally placed early in 
the fiscal year once harvest begins, help the processor make advance 
payments to growers upon delivery of their beets to the processor. This 
permits growers to be paid for their beet or cane crop up to 10 months 
earlier than the processor (usually owned by the growers) receives 
revenues from the sale of the sugar made from the crop.
11. Duplication or Overlap with Other Programs
    The Sugar Program is not duplicative of other commodity programs, 
as it offers unique benefits to the sugar market and its participants. 
However, there is some beneficial overlap with other programs. For 
instance, growers of sugarcane and sugarbeets must be in compliance 
with highly erodible and wetlands regulations in order to protect 
processor eligibility. Likewise, these growers must meet all certified 
acreage reporting requirements.
12. Waste, Fraud and Abuse
    There has been no extensive Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of the program during the past 5 
years. Although on rare occasion accusations of misconduct have arisen, 
internal FSA review indicated no waste, fraud or abuse. Furthermore, 
the sugar regulation authorizes CCC to require sugarbeet processors, 
sugarcane processors, sugarcane refiners and importers of sugar, as 
selected by CCC, to submit a report prepared by an independent 
Certified Public Accountant that reviews information submitted to CCC 
during the previous crop year. These reports have yet to indicate 
waste, fraud or other abuses.
13. Effect of Administrative PAYGO
    Exhibit 1 shows the costs and savings related to USDA's 
Administrative PAYGO Scorecard.
                                 ______
                                 
1. Program Name
    Farm Storage Facility Loan (FSFL) Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The FSFL Program was originally authorized by the Commodity Credit 
Corporation (CCC) Charter Act of 1933. Specifically, the CCC Charter 
Act provides that the Corporation may make loans to grain producers 
needing storage facilities and that loans shall be made in areas in 
which the Secretary determines that there is a deficiency of such 
storage.
    The CCC had made loans for storage facilities intermittently since 
1948 and stopped issuing storage facility loans in 1982 based on 
studies that revealed that producers had sufficient storage for their 
crops. However, demand for storage has increased dramatically since 
1995 and storage shortages currently exist in some areas. The net 
decrease in storage capacity from 1996 to 1998 has been about 79.5 
million bushels, or nearly one percent of total capacity. During this 
same period, grain production increased by nearly eight percent, from 
14 billion bushels in 1996 to 15 billion bushels in 1998. As a result, 
it was determined there was insufficient capacity to allow farmers to 
store their grain, forcing farmers to sell at harvest when prices are 
usually at their lowest. Therefore, on February 2, 2000, the Secretary 
announced the availability of financing for on-farm storage and 
handling facilities.
    Section 1614 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill), authorized the Secretary to establish a storage 
facility loan program to producers of grains, oilseeds, pulse crops, 
hay, renewable biomass, and other storable commodities (other than 
sugar), as determined by the Secretary. Accordingly, regulations 
implementing the 2008 Farm Bill added fruits and vegetables as eligible 
commodities for on-farm storage. The maximum loan amount is $500,000 
per structure and depending on the loan amount, the FSFL borrower has 
the option of selecting 7, 10, or 12 year repayment terms for the FSFL.
4. Purpose/Goals
    The purpose of the FSFL Program is to assist producers with low-
interest financing for adequate capacity to store their harvested 
production until they sell it on the open market. The FSFL Program adds 
additional storage capacity in deficit areas and producers also benefit 
from the potential for higher market returns on their crops.
5. Success in Meeting Programmatic Purpose/Goals
    The FSFL Program has been very successful with meeting program 
goals to provide low interest financing for on-farm storage. Since FSFL 
was reestablished in FY 2000, over 27,900 FSFL's have been disbursed 
providing on-farm storage for over 785 million bushels of eligible 
commodities. The FSFL Program has seen increased interest in the past 
several years mainly due to the construction of ethanol plants in the 
Midwest and South. The vast majority of FSFL borrowers make their 
annual installment payments on time as the program has a delinquency 
rate of less than 0.005 percent.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Farm Storage Facility        $3,025       $1,897       $2,322       $1,157       $1,238         $475       $1,540      $12,500          $15           $0
 Loans--Subsidy
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Farm Storage Facility        $1,654         $820       $1,502         $989         $290         $502       $1,135       $4,796       $7,446           $0
 Loans--Subsidy
--------------------------------------------------------------------------------------------------------------------------------------------------------
The FSFL Program is a credit reform program. Budget Authority and outlays reflect estimated subsidy costs of disbursing the direct loans in each fiscal
  year.


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan. The administrative costs included in the
 table below are the aggregate costs for all the programs in the table. Costs for individual programs are not available.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    Producers requesting a FSFL must provide information to the FSA 
County Office to support the need for on-farm storage. Specific 
eligibility requirements for applicants are as follows:

   producer of an eligible commodity

   engaged in farming

   has a satisfactory credit rating as determined by CCC

   demonstrates the ability to pay the down payment and repay 
        the debt resulting from FSFL

   has no delinquent Federal debt as defined by the Debt 
        Collection Improvement Act of 1996

   has not been convicted under Federal or state law of a 
        controlled substance violation

   provide proof of insurance requirements, such as:

     multi-peril crop insurance

     all-peril structural insurance

     flood insurance, if applicable

   demonstrates compliance with USDA provisions for highly 
        erodible land and wetland provisions

   demonstrates compliance with National Environmental Policy 
        Act

   demonstrates compliance with any applicable local zoning, 
        land use and building codes for the applicable farm storage 
        facility structure.
10. Utilization (Participation) Data
    The FSFL Program has provided financing for on-farm storage for 
over 785 million bushels of eligible commodities since FY 2000. FSFL 
applications have increased from 1,717 in FY 2005 to 3,961 in FY 2010. 
In FY 2006, the Commodity Credit Corporation (CCC) made nearly $100 
million in FSFLs, while in FY 2010 the loan amount of FSFLs exceeded 
$296 million. To date, in FY 2010, 3,926 FSFLs have been obligated and 
disbursed totaling $291 million. Currently, in FY 2011, 2,110 FSFLs 
have been obligated and disbursed totaling $175 million. Also, in FY 
2011, applications for 93 hay storage structures were received and 55 
have been disbursed, and eight fruit and vegetable applications were 
received and one has been disbursed.
11. Duplication or Overlap with Other Programs
    The USDA's Rural Development (RD) Mission Area has grants and loans 
for certain energy efficiency improvements under the Rural Energy for 
America Program (REAP). Producers are eligible for certain grants and 
loans to purchase or replace energy efficient equipment in commodity 
storage structures.
    CCC is currently collaborating with RD to identify any cases where 
duplication or overlap of FSFL disbursements may have occurred with the 
grant and loan program offered by RD. If duplication of benefits have 
occurred, CCC is reducing the outstanding FSFL principal by the amount 
of the RD grant or loan. To prevent this from continuing, CCC 
implemented a form that producers sign before their final FSFL 
disbursement. This form provides producer certification that they have 
not applied, been approved for, or received government grants or loans 
on the same structure requested for FSFL. Having this certification 
before the FSFL disbursement will ensure that there is no duplication 
or overlap of benefits under FSFL.
12. Waste, Fraud and Abuse
    The FSFL Program has been reviewed frequently by County Office 
Reviewers and it has been determined that the program findings are 
insignificant. Additionally, because second party reviews are performed 
by FSA staff and final cost documents are submitted by producers to 
support the cost of the storage structure before all FSFL closings, 
waste, fraud, and abuse would be considered minimal.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Durum Wheat Quality Program (DWQP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 1613 of the Food, Conservation, and Energy Act of 2008 (the 
2008 Farm Bill) authorized up to $10 million to be appropriated for 
each of the 2009 through 2012 Fiscal Years (FY) to compensate producers 
of durum wheat for up to 50 percent of the actual cost of fungicide 
applied to control Fusarium head blight, a fungal disease commonly 
known as ``wheat scab.''
    The Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2010 provided $3 million for 
this program in FY 2010. No funding was appropriated for this program 
in FY 2009 or 2011. To date, no funding has been appropriated for this 
program for FY 2012.
    If applications for assistance exceed the funding availability for 
a particular crop year, payment amounts are reduced by a 'national 
payment factor' so that each applicant receives a pro-rata share of the 
available funding. In FY 2010, payments were reduced by a national 
payment factor of 0.9663.
4. Purpose/Goals
    The purpose of this program is to provide cost-share assistance to 
durum wheat producers for the purchase and application of an eligible 
fungicide used on acres planted to durum wheat to control wheat scab.
5. Success in Meeting Programmatic Purpose/Goals
    DWQP successfully provided cost-share assistance to durum wheat 
producers for their share of the purchase price of an eligible 
fungicide and the cost of applying the eligible fungicide to durum 
wheat acres. In FY 2011, over $2.8 million was allocated to durum wheat 
producers in Idaho, Minnesota, Montana, North Dakota and South Dakota.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Durum Wheat Quality              $0           $0           $0           $0           $0           $0           $0           $0       $3,000           $0
 Program
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Durum Wheat Quality              $0           $0           $0           $0           $0           $0           $0           $0           $0       $2,850
 Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Of the $3 million appropriated for this program in FY 2010, $150,000 is being held in reserve for possible future appeal cases.

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    The program has only been available during FY 2010, the portion of 
Agency overhead expenditures allocated to the program during the fiscal 
year have not been captured but are believed to be minimal.
9. Eligibility Criteria
    Producer Eligibility:

    To be considered an eligible producer, the producer must have a 
share in the treated durum wheat crop planted on eligible acres and in 
the cost of either or both of the following:

   purchasing an eligible fungicide

   applying an eligible fungicide to eligible acres.

    Eligible Fungicide:

    To be considered an eligible fungicide for DWQP, the fungicide must 
be:

   registered with the Environmental Protection Agency (EPA), 
        as required under the Federal Insecticide, Fungicide, and 
        Rodenticide Act (FIFRA), unless exempt from FIFRA requirements

   compliant with pesticide regulations in the state in which 
        benefits are being requested

   used specifically for one fungicide treatment in the 
        applicable crop year, to control Fusarium head blight on 
        eligible acres.

    Eligible Acres:

    To be considered eligible acres for DWQP, the acres must be planted 
to durum wheat and treated with an eligible fungicide to specifically 
control Fusarium head blight and applied during the flowering stage.
10. Utilization (Participation) Data
    In FY 2011, over $2.8 million was allocated to 1,020 durum wheat 
producers in Idaho, Minnesota, Montana, North Dakota and South Dakota. 
DWQP provided cost-share assistance to durum wheat producers for 
551,984 acres in the following five states.

------------------------------------------------------------------------
                State                                Acres
------------------------------------------------------------------------
                      Idaho                                  150
                  Minnesota                                4,713
                    Montana                               17,362
               North Dakota                              528,257
               South Dakota                                1,501
                                     -----------------------------------
  Total.............................                     551,984
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    DWQP does not duplicate or overlap any other USDA program.
12. Waste, Fraud and Abuse
    There has been no Office of Inspector (OIG) or Government 
Accountability Office (GAO) audit of DWQP. FSA conducts its own 
internal investigation through its county office review process and 
through its internal review audit process. The potential for fraud and 
abuse is minimal since producers are required to show proof of purchase 
and treatment with an EPA approved fungicide.
13. Effect of Administrative PAYGO
    DWQP is funded through the discretionary appropriations process; 
accordingly, it is not subject to Administrative PAYGO procedures
                                 ______
                                 
1. Program Name
    Reimbursement Transportation Cost Payment (RTCP) Program for 
Geographically Disadvantaged Farmers and Ranchers.
2. Subprograms/Department Initiatives
    Subprograms--None.

    Department Initiatives--None.
3. Brief History
    The 2008 Farm Bill authorized the RTCP program to provide 
assistance to geographically disadvantaged farmers and ranchers in 
Hawaii, Alaska, and insular areas (Guam, American Samoa, Commonwealth 
of Puerto Rico, Commonwealth of the Northern Mariana Islands, Federated 
States of Micronesia, Republic of the Marshall Islands, Republic of 
Palau, and the Virgin Islands of the United States). The program 
reimburses producers for a portion of the transportation cost of their 
agricultural commodity, or inputs used to produce an agricultural 
commodity during a fiscal year. Under RTCP transportation costs of 
inputs used to produce an agricultural commodity include, but are not 
limited to, air freight, ocean freight, and land freight of chemicals, 
feed, fertilizer, fuel, seeds, plants, supplies, equipment parts, and 
other inputs as determined. RTCP is subject to appropriated funding. 
The 2010 Agriculture Appropriations Bill authorized $2.6 million and 
the 2011 Defense and Full-Year Continuing Appropriations Act of 2011 
authorized $1.996 million to assist geographically disadvantaged 
farmers and ranchers in accordance with Section 1621 of the 2008 Farm 
Bill.
4. Purpose/Goals
    The purpose of the RTCP is to assist geographically isolated 
farmers and ranchers to access inputs needed for production (seed, 
fertilizer, pesticides, etc.) and get their product to market. The goal 
of the program is to provide payments to these targeted producers to 
offset a portion of their transportation costs.
5. Success in Meeting Programmatic Purpose/Goals
    This program benefits farms and ranches in geographically 
disadvantaged areas of the U.S. Signup for 2010 RTCP program began Aug. 
2, 2010 and ended on Sept. 10, 2010. Distribution of payments for 2010 
RTCP began on July 20, 2011. In FY 2010, 1,545 geographically 
disadvantaged farmers and ranchers applied to participate in the 
program, and more are expected with the FY 2011 RTCP signup beginning 
July 25, 2011.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reimbursement                    $0           $0           $0           $0           $0           $0           $0           $0       $2,600       $1,996
 Transportation Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Annual Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          FY 2002      FY 2003      FY 2004      FY 2005      FY 2006      FY 2007      FY 2008      FY 2009      FY 2010      FY 2011
                           Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual       Actual     Estimated
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reimbursement                    $0           $0           $0           $0           $0           $0           $0           $0           $0       $2,600
 Transportation Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011) ($ in Millions)
    The program first received funding in FY 2010, the portion of 
Agency overhead expenditures allocated to the program during the fiscal 
year have not been captured but are believed to be minimal.
9. Eligibility Criteria
    To be eligible for RTCP program benefits, producers must:

   Be a geographically disadvantaged farmer or rancher 
        producing and marketing, including the transportation of an 
        agricultural commodity in an approved area;

   Submit an application during the specified period applicable 
        for each fiscal year;

   Provide proof of the amount of costs incurred for the 
        transportation of the agricultural commodity or input used to 
        produce an agricultural commodity;

   Comply with conservation and wetland protection requirements 
        on all their land;

   Have an average non-farm income that does not exceed 
        $500,000; and

   Be a citizen or a legal resident alien of the United States 
        in accordance with 7 CFR Part 1400 for foreign persons.
10. Utilization (Participation) Data
   A total of 1,545 applicants applied to receive benefits 
        under RTCP for FY 2010.

   Signup for FY 2011 RTCP began on July 25, 2011, and will end 
        on September 9, 2011.
11. Duplication or Overlap with Other Programs
    No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
    Minimal to no waste, fraud, or abuse in the RTCP program because 
verifiable evidence of costs incurred are required to qualify for 
program benefits.
13. Effect of Administrative PAYGO
    RTCP is funded through the discretionary appropriations process; 
accordingly, it is not subject to Administrative PAYGO procedures.

                                                                        Exhibit 1
                                                             Administrative PAYGO Scorecard
                                                                (In Millions of Dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             FY 2006    FY 2007    FY 2008    FY 2009    FY 2010    FY 2011    FY 2012    FY 2013    FY 2014    FY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings
  GSM-102 implementation of risk based        (139.0)    (139.0)    (139.0)    (139.0)    (139.0)
   approach (FAS/GSM)
  RMA Terminations not previously counted                                        (4.6)     (23.0)     (23.4)     (23.7)     (24.1)
   (RMA/Crop Ins.)
  Forest Service Increase Timber and           (51.0)
   Payment to State Receipts (FS/KV)
  2008 $2 CRP Maintenance Reduction--                                            (0.1)      (0.6)     (24.6)     (28.7)     (31.6)
   present & future (FSA/CRP)
  2009 Reduction in CRP maintenance                                             (43.6)      (1.5)
   payments (FSA/CRP)
  2010 CRP Modification (Duck, Quail, SAFE/                                                   0.0        0.0        0.0        0.0        0.0      (2.9)
   Reduction in bottomland hardwood) (FSA/
   CRP)
  Crop Insurance Standard Risk Agreement                                                (2,000.0)
   (RMA/Crop Ins.)
Costs
  Title XIX Treatment Facilities (FNS/            3.0        4.0        6.0        6.0        6.0
   SNAP)
  Forest Service Change in K-V Trust Fund          51         18
   Spending (FS/KV)
  Factor Removal (RMA/Crop Ins.)                                        0.4        2.7        8.3
  RMA Crop Expansions (RMA/Crop Ins.)                                              0.6       12.8
  CCC Section 4 Limit (FSA/CCC)                   7.5       10.8        6.9        5.3
  Food Aid Commodity Swaps (FSA/CCC)                        77.0       60.0      111.0       67.0
  Federal Base Acre reinstatement (FSA/                                            5.0
   Direct and Counter-cyclical)
  Wetland Incentives (FSA/CRP)                                                     7.8       14.6       17.3       19.2       20.8
  CREP Incentives (FSA/CRP)                                                        0.7        2.3        7.3        9.5       10.8
  ACRE sign-up extension (FSA/ACRE)                                                          30.0
  2009 CRP extensions (FSA/CRP)                                                   19.0
  July 2009 Increase in minimum dairy                                              7.0
   prices (CCC/Dairy Product Price
   Support)
  RMA--PRF-RI in MT (Board Approved) (RMA/                                         4.6       23.0       23.4       23.7       24.1
   Crop Ins.)
  CRP Initiatives (FSA/CRP)                                                                 500.0
  Crop Insurance Initiatives (RMA/Crop                                                    1,500.0
   Ins.)
                                           -------------------------------------------------------------------------------------------------------------
    Available Savings                         (128.5)     (29.2)     (65.7)     (17.6)      (0.0)        0.0        0.0      (0.0)        0.0      (2.9)
--------------------------------------------------------------------------------------------------------------------------------------------------------



                       AGRICULTURAL PROGRAM AUDIT

                (EXAMINATION OF USDA RESEARCH PROGRAMS)

                              ----------                              


                        THURSDAY, JULY 28, 2011

        Subcommittee on Rural Development, 
      Research, Biotechnology, and Foreign 
                               Agriculture,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:05 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Timothy 
V. Johnson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Johnson, Thompson, Scott, 
Costa, and Kissell.
    Staff present: Mike Dunlap, John Goldberg, Tamara Hinton, 
DaNita Murray, Debbie Smith, Lauren Sturgeon, Suzanne Watson, 
Andy Baker, Nona S. Darrell, Liz Friedlander, Anne Simmons, 
John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE 
                   IN CONGRESS FROM ILLINOIS

    The Chairman. This is a hearing of the Subcommittee on 
Rural Development, Research, Biotechnology, and Foreign 
Agriculture entitled, Agriculture Program Audit: Examination of 
USDA Research Programs, will come to order.
    I have an opening statement to make and I think the Ranking 
Member will and then we will proceed.
    Good morning. This hearing is the ninth in a series of 
audits of USDA farm programs. Through these discussions we hope 
to gain a better understanding of how each program is operating 
and what we might do to improve farm policy moving forward.
    As we move forward to write the next farm bill, we have to 
be mindful of current challenges and also anticipate future 
issues. A few perennial challenges for agriculture are that 
farmers and ranchers share all the obstacles that any small 
business faces such as access to credit, market demand, and 
variable input costs. Farmers and ranchers must also rely on 
weather to grow and harvest their crops and in spite of these 
challenges, our farmers and ranchers work hard every day to 
supply our country and consumers around the world with a safe 
and affordable supply of food and fiber.
    In addition to these challenges, we will soon face the 
issues of a dramatically growing population. The United Nations 
predicts that our population will grow \1/3\ by 2050 and 
feeding over nine billion people on the planet would require a 
70 percent increase in ag products. The only way to meet that 
growing demand will be through technological advances. In fact, 
research on new crop varieties, best practices, and 
biotechnology has been one of the most successful methods of 
increasing production to keep pace with demand.
    Continued investment in research can provide the necessary 
foundation to our farmers to remain competitive. The research 
projects conducted through public and private institutions 
touch every area of our lives. From research in food science 
and biotechnology, to integrated pest management, to 
agriculture extension and services, this Committee feels it is 
important to continue finding more efficient methods of 
production. It also includes educating rural and urban 
communities through agricultural extension services and youth 
programs.
    The USDA research mission is divided among four distinct 
agencies, and this morning we will be hearing from the 
administrators of each one. One of the many ways USDA works to 
fulfill the core mission of research, education, and extension 
is through land-grant colleges and universities throughout the 
United States. I might say parenthetically, my own University 
of Illinois being one of the preeminent institutions in the 
country in a lot of regards and specifically in this regard.
    USDA also conducts research in extension through Federal 
research stations located throughout the country and around the 
world. Through the gathering of market and production data, the 
Department of Agriculture also provides statistical information 
on the rural economy and the agriculture industry at large. 
This information is extremely valuable as policy makers work to 
craft agricultural and economic policies for rural America. As 
we consider the next farm bill, we are faced with scarce 
resources, so this Subcommittee has the responsibility to 
improve the administration of research programs to make the 
most efficient and effective use of funds available.
    Some of the areas we would like to address this morning are 
the duplication of programs, research priorities, USDA 
leveraging of Federal resources and the cost of administration 
and research mission area. In each area we are looking for 
opportunities to streamline. And I thank all the witnesses for 
appearing before the Subcommittee and look forward to our 
discussion.
    [The prepared statement of Mr. Johnson follows:]

  Prepared Statement of Hon. Timothy V. Johnson, a Representative in 
                         Congress from Illinois
    Good morning. This hearing is the ninth in a series of audits of 
USDA farm programs. Through these discussions we will gain a better 
understanding of how each program is operating and what we might do to 
improve farm policy moving forward.
    As we write the next farm bill, we must not only be mindful of 
current challenges, but anticipate future issues as well.
    There are a few perennial challenges for agriculture. Our farmers 
and ranchers share all of the obstacles that any small business faces, 
such as access to credit, market demand, and variable input costs. But 
farmers and ranchers also must rely on the weather to grow and harvest 
their crops. In spite of these challenges, our farmers and ranchers 
work hard every day to supply our country and consumers around the 
world with a safe, reliable, and affordable supply of food and fiber.
    In addition to these challenges, however, our farmers and ranchers 
will soon bear the burden of supporting a dramatically larger 
population. The UN is predicting that our population will grow by \1/3\ 
by 2050. Feeding the 9.1 billion people on the planet would require a 
70% increase in agricultural production.
    The only way to meet that growing demand for food will be through 
technological advances. In fact, research on new crop varieties, best 
practices, and biotechnology has been one of the most successful 
methods of increasing food production to keep pace with demand. Since 
1862, USDA supported research has provided a critical foundation for 
increased production and yields.
    Continued investments in research can provide the necessary 
foundation for our farmers to remain competitive in the global market. 
The research projects conducted through public and private institutions 
touch every area of our lives. From research in food science and 
biotechnology, to integrated pest management, to agricultural extension 
services, this Committee feels it is important to continue finding more 
efficient methods of production.
    This effort also includes educating rural and urban communities 
through agricultural extension services and youth programs. These 
efforts can yield tremendous returns through building and maintaining 
knowledge of agricultural production systems and encouraging our next 
generation to engage in the agricultural industry.
    The USDA research mission is divided among four distinct agencies, 
and this morning we will be hearing from the administrators of each of 
those. One of the many ways USDA works to fulfill the core mission of 
research, education, and extension is through our land-grant colleges 
and universities throughout the United States. USDA also conducts 
research and extension through Federal research stations located across 
the country and around the world. Through the gathering of market and 
production data, USDA also provides statistical information on the 
rural economy and the agricultural industry at large. This information 
is invaluable as policy makers work to craft agricultural and economic 
policies for rural America.
    As we consider the next farm bill, we are faced with scarce 
resources, so this Subcommittee has a responsibility to improve the 
administration of research programs to make the most efficient and 
effective use of the funds available. Part of that process this morning 
will be to hear from USDA and take a close look at how research funding 
is currently being allocated within the agencies.
    Some of the areas we would like to focus on this morning include 
the duplication of programs, research priorities, how USDA is 
leveraging Federal resources, and the cost of administering the 
research mission area. In each area of government we are looking for 
opportunities to streamline processes and ensure that programs are 
delivered as efficiently as possible.
    I thank all of our witness for appearing before the Subcommittee 
today, and I look forward to our discussion.

    The Chairman. And with that, I recognize Mr. Costa, the 
Ranking Member, for his opening statement.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you very much, Mr. Chairman, for once 
again focusing on our efforts as it relates to the 
reauthorization of the 2008 Farm Bill and the programs that 
provide valuable support for America's agricultural efforts.
    This audit hearing is important for not only Members of the 
Subcommittee but for our new Members who will be for the first 
time looking at the reauthorization of the farm bill.
    Today, we look at the United States Department of 
Agriculture's research, education, and economics program 
authorized under Title XII of the farm bill. Research, for 
those of us who have been involved with the United States 
Department of Agriculture, the USDA, has been part and parcel 
of the Department's efforts really for over 150 years since the 
Department was created. Particularly, through our land-grant 
institutions as the Chairman noted not only at the land-grant 
university in Illinois but throughout the country have really 
been at the bedrock of so much of what is so good about our 
ability to produce food and fiber, not only for the entire 
nation but many in instances throughout the world.
    The research that takes place here is a partnership between 
the USDA and the land-grant institutions. It helps ensure safe, 
abundant, and affordable food and fiber that has allowed 
American farmers and ranchers and dairymen and women to thrive. 
I think it is really unique when you look around the world the 
relationship that we have had with the land-grant universities 
and our agricultural producers. I think it is one of the 
reasons that consumers in America have more faith and 
confidence in our ability to ensure that when we talk about 
risk management and risk assessment in food safety that we are 
doing the very best to ensure the food safety for all American 
consumers. There is this history with our land-grant 
universities, our educational institutions, the research that 
also supports the Food and Drug Administration and other 
regulatory agencies to ensure that we not only produce the 
highest quality food, the highest nutritional food, but also as 
safely as possible.
    But I must also point out that not only land-grant 
universities but other agricultural schools such as my alma 
mater, Fresno State University, and other universities 
throughout the country that have done a great deal in terms of 
agriculture research as well. So I look forward to the efforts, 
as we talked about, the reauthorization of the farm bill, and 
to hear the witnesses here today talk about how we can ensure 
that we get more bang for our buck in terms of competitive 
research dollars; how we can leverage those dollars with 
institutions as well as in the public-private partnerships with 
many of our industries that are directly focused on 
agricultural research as it relates to seed development, 
tolerance, resistance to pesticide, drought. This partnership 
ensures that we can do a better job as we look at the issues of 
risk management and risk assessment.
    The four agencies that we will be listening to this 
morning, Mr. Chairman, comprise the heart and soul of the 
USDA's Research, Education, and Economics mission. I look 
forward to hearing from our witnesses about how we can 
reauthorize the farm bill, realizing that the funding is going 
to be less next year than it was in the 2008 authorization. 
That is just the facts of the fiscal challenges we are dealing 
with here in Washington today.
    But I think that it does not make sense in my opinion as we 
look at how we are going to do more with less that we go into 
the bone marrow of what is so essential in terms of research, 
vital research that the USDA provides, particularly as we look 
at challenges ahead. The Agricultural Research Service works 
across the country to help deal with agriculture problems of 
high national priorities. The National Institute for Food and 
Agriculture was created in the 2008 Farm Bill to help drive 
basic agricultural research through breakthroughs that can 
ensure we are still the most innovative in the world.
    The National Agricultural Statistic Service provides 
valuable data to everyone who is involved at all levels of the 
agricultural community. I use it as well as the entire ag 
economy. Of course, the Economic Research Service helps inform 
decision-making both inside and outside the United States on 
food, farming, natural resources and other developmental 
issues.
    So let me close by saying that I am going to take 
particular focus during the testimony on the area of the 
Specialty Crop Research Initiative. That was something that a 
number of us worked very hard on for the 2008 Farm Bill.
    Our witnesses, I believe, are aware that the mandatory 
funding for this program expires after the year 2012. I would 
be interested to know your thoughts on how the unique needs of 
specialty crops can be addressed in the USDA's research program 
under the current budget environment. Specialty crops--and let 
me underline this--represent approximately \1/2\ the value of 
the U.S. agricultural industry and it has no support under the 
Title I programs: 2008 was the first time that we provided some 
technical assistance, which allows programs like the Market 
Access Program to compete in foreign markets, the research 
programs like the Specialty Crop Research Initiative that are 
important in this effort, as well as the EQIP Program.
    So I look forward to hearing from our witnesses in those 
areas today in how we can maintain and strengthen our vital ag 
research programs in a cost-savings environment that we are 
currently working in today, Mr. Chairman. And I thank you for 
your due diligence and your focus, and I look forward to the 
testimony of our witnesses.
    The Chairman. Thank you, Mr. Costa. And I ask that other 
Members submit opening statements, if any, so that witnesses 
can proceed.
    With that, let me introduce the panel of witnesses. We have 
one panel today, in order of your testimony: Dr. Edward B. 
Knipling, Administrator, Agricultural Research Service, U.S. 
Department of Agriculture here in D.C.; Dr. Chavonda Jacobs-
Young, Acting Director, National Institute of Food and 
Agriculture; Dr. Cynthia Clark, Administrator, National 
Agricultural Statistics Service; and Dr. Laurian Unnevehr, 
Acting Administrator, Economic Research Service, U.S. 
Department of Agriculture, Washington, D.C.
    So with that, we turn to Dr. Knipling and we are more than 
pleased to hear your comments.

      STATEMENT OF DR. EDWARD B. KNIPLING, ADMINISTRATOR, 
AGRICULTURAL RESEARCH SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Dr. Knipling. Chairman Johnson, Ranking Member Costa, and 
Members of the Subcommittee, good morning. My name is Edward 
Knipling. I serve as Administrator of the Agricultural Research 
Service. Thank you all for your opening comments this morning 
and ARS indeed appreciates the opportunity to discuss our work 
with you.
    The Agricultural Research Service is the Department of 
Agriculture's intramural research agency for the biological and 
other natural sciences. We in essence constitute USDA's Federal 
laboratory network, and as such, a majority of ARS' funding 
remains in-house, that is to employ government scientists and 
support personnel. Our research is broad-based and is 
particularly concerned with problem-solving and pre-commercial 
research of long duration.
    ARS is a multifaceted agency that is spread across the 
country at over 100 locations. We also have four research 
locations in foreign countries. We employ over 8,500 people, 
2,500 of which are Ph.D. scientists. In Fiscal Year 2011, the 
agency has a budget of $1.13 billion.
    The mission of ARS is to conduct research to develop and 
transfer solutions to agricultural problems of high national 
priority and provide information access and dissemination to 
ensure high-quality safe food and other agricultural products, 
assess the nutritional needs of Americans, sustain a 
competitive agricultural economy, enhance the natural resource 
base in the environment, and provide economic opportunities for 
rural citizens, communities, and society as a whole.
    As an organization with national reach, ARS has a broad 
spectrum of users and customers who help define the research 
priorities of the agency. The agency was established nearly 60 
years ago by our current name to, among other things, serve the 
other agencies of USDA that need science information and 
technology to carry out their programs. This remains an 
important purpose of the agency.
    Additionally, the agency is dedicated to serving producers 
of both commodity and specialty crops, as well as private-
sector entities that depend on public research. Each year, the 
agency on a continuing basis dedicates itself to an extensive 
process of listening to these stakeholders as we determine 
their needs and problems and we use this information for 
setting priorities.
    Research partnerships of all types are very important to 
ARS and a hallmark of the agency is the collaborative nature of 
our work. In addition to our sister agencies represented by my 
colleagues on this panel, of particular importance is our close 
partnership with the land-grant colleges and universities. Of 
ARS' 105 laboratory locations, 60 are located on the campuses 
of a land-grant institution and an additional seven are located 
on other institutions of higher learning.
    For 150 years, the U.S. has built a system for agricultural 
research that has led to more innovation than by any other 
nation in the world. This is a unique system emphasizing 
necessary foundational research for the public good that cannot 
and will not be done by private or commercial enterprises. As 
part of the Research, Education, and Economics mission area, 
ARS and the other three agencies represented here this morning 
conduct joint planning, stakeholder conferences, peer review of 
our projects, complementary allocation of funding, and program 
reviews.
    Like the other agencies, ARS is currently directing special 
research attention to five broad national priorities that are 
deemed of particular importance to society. These include 
adaptation to the changing climate, food safety, children's 
nutrition and health, global food security, and bioenergy, 
particularly biomass production.
    ARS organizes itself to accomplish these and all other 
research goals into four major national program areas. These 
are natural resources and sustainable agricultural systems, 
crop production and protection, animal production and 
protection, and nutrition, food safety, and quality. These 
areas, in turn, are comprised of 20 national programs across 
the country to address specific goals and priorities set out in 
5 year action plans. My full written testimony that is provided 
for the record cites some outstanding recent research 
accomplishments in these program areas.
    Once our research is complete, the agency also takes very 
seriously its responsibility to transfer our research results 
to the public. This is an important facet of our agency and we 
take great pride in being able to provide technologies that 
improve people's lives and producers' businesses. ARS' Office 
of Technology Transfer is assigned this responsibility to 
facilitate and accelerate the delivery of ARS research results 
and innovation to the public benefit to private-sector entities 
that further develop, commercialize, and market publicly 
developed and known technology and----
    The Chairman. If you want to bring your comments to a 
close, we are a minute over. So let us try to stay on track.
    Dr. Knipling. Yes. Well, this in essence completes my oral 
testimony, Mr. Chairman, and we are pleased to answer any 
questions later.
    [The prepared statement of Dr. Knipling follows:]

     Prepared Statement of Dr. Edward B. Knipling, Administrator, 
    Agricultural Research Service, U.S. Department of Agriculture, 
                            Washington, D.C.
    Chairman Johnson, Ranking Member Costa, and Members of the 
Subcommittee, I am Edward Knipling, Administrator of the Agricultural 
Research Service. Thank you for the invitation here today to discuss 
the work of the ARS and the agricultural science that we pursue on 
behalf of all Americans. I am delighted to share our work with you and 
to have a discussion regarding our programs.
    The Agricultural Research Service is the Department of 
Agriculture's primary intramural scientific research agency. We 
constitute USDA's Federal laboratory network and as such the majority 
of ARS' funding remains ``in-house'' to employ government scientists 
and technicians. Our research is broad-based covering all science 
facets of agricultural and food production and utilization and is 
particularly concerned with problem-solving and pre-commercial research 
of long duration.
    The Agricultural Research Service was officially founded in 1953 
but has precursor agencies that date back as far as 1884 to the Bureaus 
of Animal and Plant Industry. The importance of agricultural research 
performed by the government goes back even farther, to the first work 
done to stem hog cholera outbreaks in 1868. Prior to the formal 
creation of the agency, Congress recognized the need for concentrated 
centers of agricultural research focusing on issues of regional 
importance and, for example, in 1938, appropriated funding to create 
agricultural research laboratories in Peoria, Illinois; Wyndmoor, 
Pennsylvania; Albany, California; and New Orleans, Louisiana; to work 
particularly on utilization of agricultural commodities. These 
locations still exist to this day as major centers of ARS work and 
concentrations of our science. We are proud of this long history of 
government commitment to solving agricultural problems that affect 
every single American in one way or another.
    Today, ARS is a multi-faceted agency that is spread across the 
country at over 100 locations. We also have four research locations in 
foreign countries. We employ over 8,500 people, 2,500 of whom are Ph.D. 
scientists. In Fiscal Year (FY) 2011, the agency has a budget of over 
$1.13 billion. The agency's funding is allocated to two budget lines; 
the Salaries and Expense account and Buildings and Facilities. In FY 
2011, the appropriation rescinded $230 million in balances from prior 
appropriations, and there was no funding received under the Building 
and Facilities line.
    The stated mission of ARS (www.ars.usda.gov) is to conduct research 
to develop and transfer solutions to agricultural problems of high 
national priority and provide information access and dissemination to:

   Ensure high-quality, safe food, and other agricultural 
        products;

   Assess the nutritional needs of Americans;

   Sustain a competitive agricultural economy;

   Enhance the natural resource base and the environment; and

   Provide economic opportunities for rural citizens, 
        communities, and society as a whole.

    As an organization with national reach, ARS has a broad spectrum of 
users and stakeholders who drive the research priorities of the agency. 
When the agency was officially formed in 1953 it was with the intent to 
create a clearing house for research issues within USDA and to serve 
the other agencies of the Department that need science information and 
technology to carry out their programs. This remains an important 
purpose of the agency. Examples of customer agencies within USDA 
include the Animal and Plant Health Inspection Service, the Food Safety 
and Inspection Service, the Natural Resources Conservation Service, and 
the Food and Nutrition Service. Additionally, the agency is dedicated 
to serving producers of both commodity and specialty crops, as well as 
private sector entities that depend on public research. Each year, the 
agency dedicates itself to an extensive process of listening to these 
stakeholders as we determine their needs and problems and use this 
information in setting priorities.
    As mentioned, most of ARS' research takes place inside of the 
agency and is conducted by our federally employed scientists. However, 
research partnerships of all types are very important to ARS and a 
hallmark of the agency is the collaborative nature of our work. Of 
particular importance is our close partnership with the land-grant 
colleges and universities, as well as other universities. Of our 105 
locations, 60 are located on the campus of a land-grant institution and 
an additional seven are located on other institutions of higher 
learning.
    Our sister agency, the National Institute of Food and Agriculture 
(NIFA), serves to complement ARS by providing grants and other forms of 
extramural funding, largely to the land-grant institutions, which 
enhances the research partnerships at the laboratory, field, and 
scientific levels. Further, ARS scientists are often Co-Principal 
Investigators with our university partners on grants funded by NIFA and 
the National Science Foundation which serve as a source of extramural 
funding for ARS.
    Over the last 150 years the United States has built a system for 
agricultural research that has led to more innovation than any other in 
the world. This is a unique system emphasizing necessary foundational 
research for the public good that cannot and will not be done by 
private or commercial enterprises. ARS and NIFA, as well as the other 
research agencies, broadly coordinate our research programs through 
joint planning, stakeholder conferences, peer review of projects, 
complementary allocation of funding and program reviews.
    As part of the Research, Education, and Economics (REE) Mission 
Area, ARS, like its fellow REE agencies, currently is directing special 
research attention to five broad national priorities that the 
Administration has deemed of particular importance:

   Climate change/adaptation;

   Food safety;

   Children's nutrition and health;

   Global food security;

   Bioenergy.

    To give you a better understanding of the Agricultural Research 
Service and our work on these major priorities, I would like to 
describe highlights and examples of significant accomplishments of our 
work done under four major program areas: Natural Resources and 
Sustainable Agricultural Systems; Crop Production and Protection; 
Animal Production and Protection; and Nutrition, Food Safety and 
Quality.
Natural Resources and Sustainable Agricultural Systems
    Sustainable agricultural systems produce the agricultural crops and 
livestock needed by society; protect the natural resource foundation 
essential for production, processing, and other uses; and provide 
economic and social value to producers, processors, consumers, and 
communities. Our research creates profitable agricultural systems that 
capitalize on the nation's vast renewable natural resources to preserve 
the fertility and productivity of soils, provide abundant and high 
quality water supply and clean air, maintain healthy agricultural and 
rangeland ecosystems, and offer renewable energy and fuel alternatives 
that form the basis of the U.S. economy and the well being of rural 
America.
    Today, farmers have a wide array of conservation techniques to 
choose from, and the U.S. Government supports many of them through 
cooperative programs. One problem associated with these efforts is 
determining what works and what doesn't. The Conservation Effects 
Assessment Project (CEAP) of the Natural Resources Conservation Service 
answers this question, by determining the effectiveness of USDA 
conservation programs on the environment. ARS plays a significant role 
in this project by analyzing the impact of agricultural practices in 
numerous watersheds across the country. The ARS watershed research 
focuses on the effects of practices such as no till farming, terracing, 
riparian buffers, cover crops, and chemical, fertilizer, and manure 
application on soil erosion and water quality in agricultural 
watersheds. Measurements at some watersheds have been going on for 
decades, allowing tracking of changes in these areas over time and with 
varying conservation scenarios.
    These data have been used to construct models for the accurate 
prediction of the consequences of conservation technologies, allowing 
one to track conservation progress and select conservation 
interventions for the future that work best given the characteristics 
of the region. Examples of ARS contributions include an ARS study that 
found that cattle manure deposited directly into streams contributed 
12% of the phosphorus in water from the studied watershed. Improved 
fencing to limit cattle access to streams solves this problem. 
Scientists from ARS developed a weather advisory system to help farmers 
decide when to apply manure so that nutrient runoff associated with 
rain events could be avoided.
    This research and the resulting models have led to improved 
deployment of conservation practices that have significantly reduced 
soil erosion and improved water quality. Two recent reports regarding 
the Chesapeake Bay region and the Upper Mississippi River basin 
indicate significant reduction in soil loss and nitrogen, phosphorus 
and pesticide runoff. In the Chesapeake Bay region, soil losses were 
reduced by 55%, nitrogen loss was reduced by 31% and phosphorus loss 
was reduced by 41% due to conservation interventions deployed there. In 
the Upper Mississippi River basin, soil loss was reduced by 69%, 
nitrogen loss by 18%, phosphorus loss by 49%, and 51% reduction in 
pesticide loss. This type of long term, large scale agriculturally-
based conservation research needed to realize these and future 
improvements illustrates a primary strength of ARS in this research 
area.
Crop Production and Protection
    Crop Production and Protection research programs deliver science-
based information, genetic resources, and technologies for increased 
crop productivity and quality, protection from plant diseases and 
pests, and economically and environmentally sustainable methods of crop 
production that meet consumers' demands for a ready supply of high 
quality, safe, affordable and nutritious food, the public's desire to 
protect the environment, and the global community's needs for food 
security.
    The ARS response to a new strain of wheat stem rust (Uganda 99 or 
Ug99) illustrates another of the unique capabilities of ARS, its 
disease experts and genetics resources enabled it to respond quickly to 
this urgent agriculture issue. In the early 1900s, wheat stem rust 
caused extensive losses of wheat worldwide, until rust resistant 
varieties could be developed. These were extremely successful at 
reducing the incidence of wheat stem rust for decades. In 1999, a new 
strain of wheat stem rust was discovered in Uganda that had overcome 
the resistance of currently available strains, and ARS disease experts 
were the first to identify it as a new mutant strain called Ug99. Since 
its discovery, this rust has spread across Africa, Asia and parts of 
the Middle East.
    Monitoring programs in the major wheat producing areas of the U.S. 
were strengthened by ARS and others to detect Ug99 or related wheat 
stem rust entry into the country. ARS scientists are also determining 
the mechanisms by which the Ug99 strain was able to overcome the 
disease resistance of commercial varieties. Worldwide surveys of wheat, 
barley and related grasses were undertaken to discover resistance to 
Ug99, and several resistant plants have been discovered. Research is 
currently underway to transfer disease resistance from varieties where 
it was discovered to all commercial forms of wheat grown in the U.S. 
and worldwide. ARS scientists are also developing and studying the use 
of appropriate fungicides to help combat wheat stem rust. Finally, ARS 
scientists are participating in an international consortium that 
monitors the movement of Ug99 from country to country, and supporting 
efforts to provide Ug99 resistant wheat to areas of the world that have 
been stricken with this disease. These interventions are intended to 
prevent the entrance of this disease into the U.S., and mitigate or 
prevent the negative consequences of the disease should it manage to 
become established here.
    Much of the infrastructure needed for U.S. monitoring for wheat 
stem rust was already in place, maintained by ARS. This includes 
scientific expertise in the diseases of cereal grains. Because of this, 
ARS was able to rapidly mount an effective research response to this 
problem.
Animal Production and Protection
    The mission of the ARS Animal Production and Protection research 
programs is to provide the scientific information and tools to help 
support the U.S. food animal industries to continue to compete 
successfully in worldwide trade, provide the supply of nutritional 
animal products required by the nation, and contribute toward global 
food security. ARS accomplishes this mission by maximizing production 
efficiency and animal health through scientific innovation and the 
discovery and development of new technologies focused on national 
priorities. Strategic public-private partnerships have been established 
to achieve our mission, including support of government action and 
regulatory agencies responsible for trade, bio-defense, and global food 
security.
    The recent success of dairy cattle genomics illustrates a unique 
strength of ARS, the ability to commit to a research topic long enough 
to generate real solutions to complex agricultural problems. In the 
early 1990s, ARS began investing resources in cattle genomics. ARS 
cattle genomics research contributed significantly to early cattle 
genome mapping and ARS leadership organized a successful collaborative 
effort to sequence the bovine genome, which was published in 2009 in 
Science.
    Building from these accomplishments, ARS scientists in 
collaboration with scientists at George Mason University, University of 
Missouri, University of Maryland, University of Alberta and Illumina 
Inc., developed the tool needed to enable dense genotyping on 
individual cattle at a cost that allowed the analysis of enough cattle 
for successful genomic prediction of quantitative traits. Combining 
national production records for dairy cattle available and the ability 
to do dense genotyping provided the opportunity to realize the huge 
potential of genomic analysis for Dairy cattle selection. Subsequent 
analyses by ARS demonstrated that use of genomic prediction in dairy 
cattle substantially improved the accuracy of selection of young dairy 
bulls compared to that derived from trait measurements in the parents, 
and effectively shortened the generation interval. Scientists from ARS 
have further developed genotyping tools, strategies and computer 
analyses to further reduce the cost of genotyping without significantly 
reducing accuracy.
    These innovations have been extensively adopted by the U.S. dairy 
industry. It is estimated that this technology will double the rate of 
genetic progress. To put this in perspective, according to the National 
Agricultural Statistics Service, milk production per cow has increased 
at the rate of 1.6% per year over the last decade. If this rate were 
doubled, the dairy herd in this country could be reduced by 30% in the 
next decade without reducing the milk supply, significantly reducing 
both the cost of producing milk and the demand on feed and natural 
resources used. This success has been possible only through sustained 
ARS commitment and leadership in cattle genetics and genomics.
Nutrition, Food Safety and Quality
    The Nutrition, Food Safety and Quality research and information 
area exists to lead and coordinate ARS research and information 
dissemination to define the role of food and its components in 
optimizing health for all Americans. Our scientists focus on developing 
tests and processes that keep the food supply safe; reducing and 
controlling pathogens and toxins in agricultural products; and 
improving the economic viability and competitiveness of American 
agriculture by enhancing the quality and utilization of agricultural 
products for the benefit of producers and consumers.
    Unique national resources that are part of this program include the 
National Nutrient Databank and the ``USDA What We Eat in America/
NHANES'' national food consumption survey. Partnerships with other 
Federal agencies and nonprofit and industry groups allow ARS to 
leverage funds and build upon common research goals. Information 
dissemination programs operated by ARS' National Agricultural Library 
address general and specific human nutrition issues and audiences and 
include general web portals such as www.nutrition.gov for the American 
consumer as well as the targeted web sites for professionals such as 
the Food and Nutrition Information Center.
    The ARS response to E. coli contamination of a variety of foods 
illustrates several distinguishing characteristics of ARS, which 
includes the ability to rapidly respond to public health problems; the 
development of real solutions to those problems; and the ability to 
provide a long-term commitment of resources to a research topic. In 
1993, hundreds were sickened after eating undercooked Jack-in-the-Box 
hamburgers. The culprit was rapidly identified as Escherichia coli 
O157:H7. E. coli is a common bacterium that is resident in the large 
intestine of man and animals and is typically harmless. However, 
O157:H7 E. coli produces toxins, which cause severe illness and death. 
ARS scientists rapidly (within a year) developed tests for bacterial 
contamination of meat that were used by the meat processing industry to 
monitor and control contamination, followed by further tests to 
specifically detect E. coli O157:H7.
    According to the CDC, E .Coli disease has been reduced by 40% over 
the last decade. However, outbreaks continue both in the U.S. and other 
countries in meat and other foods such as fresh produce. Some outbreaks 
have been linked to E. coli O157:H7, but others are due to non-O157 E. 
coli (STEC) strains described as O26, O45, O103, O111, O121 and O145, 
also known as the ``Big Six''. ARS scientists at the request of the 
USDA-Food Safety and Inspection Service (FSIS) recently developed and 
validated tests that can specifically detect and differentiate the 
disease causing non-O157 strains for use in regulatory monitoring of 
the food supply.
    For 17 years, ARS' food safety research program has rapidly and 
uniquely responded to the challenges of pathogenic E. coli 
contamination of foods, and has successfully provided technological 
solutions that have been rapidly adopted by its various stakeholders. 
These technologies have been and will continue to be used to monitor, 
eliminate the entrance, and/or reduce the level of disease causing E. 
coli into the food supply.
International Research
    ARS operates four laboratories abroad that are dedicated to the 
biological control of invasive species and pests. These labs are 
located in Montpelier, France; Brisbane, Australia; Buenos Aires, 
Argentina; and Beijing, China. The laboratories exist primarily to 
allow ARS scientists to evaluate harmful, non-native species that have 
invaded the United States and to discover beneficial species in their 
native environments that can be used to control the invasive species.
    In addition to these laboratories, the agency's Office of 
International Research Programs serves to promote and enhance the 
research of ARS through mutually beneficial international research 
agreements. We currently have cooperative agreements with researchers 
in dozens of countries across the globe. These agreements cover the 
entire spectrum of research and allow our scientists access to 
information and conditions for their research that would otherwise be 
unattainable.
Technology Transfer
    ARS's Office of Technology Transfer (OTT) is assigned the 
responsibility to facilitate and accelerate the delivery of ARS 
research results for the public benefit to private sector entities that 
further develop, commercialize, and market publicly developed and owned 
technology and information Further responsibilities of the office 
include protecting intellectual property (IP), and developing strategic 
partnerships with outside organizations, ARS-OTT is centralized for 
patent, license, and cooperative agreement policies and approvals, but 
maintains field offices to provide one-on-one customer service to ARS 
researchers and private sector partners throughout the U.S.
    In addition to OTT activities, technology transfer is accomplished 
through many other mechanisms, such as:

   developing written information for customers and 
        stakeholders, including scientific publications, publications 
        in trade journals, and reports to stakeholders;

   releasing plant germplasm to the public;

   transferring research materials to scientists outside of 
        ARS;

   delivering specific research results to regulatory agencies 
        to support their actions;

   participating in meetings with industry organizations and 
        universities, workshops and field days; and

   distributing information to the public via the ARS 
        Information Staff, the National Agricultural Library, and other 
        sources.
Buildings and Facilities
    As the nation's science based Federal intramural agricultural 
research agency, ARS uniquely owns and manages a large infrastructure 
of modern research laboratories and other real property assets that 
support and sustain the long term USDA science capacity. Collectively, 
this network of over 100 locations spread across the country 
essentially constitutes the national laboratory for agriculture. The 
agency places the management of its physical assets as a high priority 
proactively monitors and reviews the status of those facilities. 
Currently ARS is developing a capital management strategy to take us 
into the future.
    ARS is now completing a number of repair, maintenance, and 
modernization projects that were funded with $176 million made 
available by the American Recovery and Reinvestment Act of 2009. This 
program created jobs and corrected facility deficiencies which allow 
ARS research to be effectively and efficiently conducted at suitable 
facilities. Critical deferred maintenance is work associated with 
critical systems such as HVAC, electric, roofing, exterior closure and 
plumbing and involves maintenance to systems and components beyond 
simple patch and repair tasks. Completion of this work will, in many 
cases, result in improved energy efficiency, reduction in current 
operation and maintenance costs, and arrested further deterioration of 
ARS facilities.
    At the end of FY 2010, ARS obligated approximately $171 million. 
The balance of approximately $5 million was used as a reserve for 
change orders typically expected in construction of this type. As of 
July 2011, ARS has obligated a total of $174 million.
    ARS also owns or leases over 400,000 acres of land across the 
country, on which are more than 3,000 operational buildings with a 
total gross square footage of over 13.5 million. The agency estimates 
the replacement value of all of its real property assets to be $3.64 
billion.
    Mr. Chairman, as you can see ARS is a very active and involved 
agency that is dedicated to solving the world's agricultural problems 
and to delivering the science needed to feed and clothe a growing world 
population. ARS has been focused on these issues for over half a 
century and we are very excited about the next 50 years as well. I 
appreciate this Committee's long-standing support of ARS and I would 
like to again thank you for the opportunity to testify before you 
today. I look forward to answering any questions that you may have.

    The Chairman. Thank you very much.
    Yes, ma'am.

       STATEMENT OF CHAVONDA JACOBS-YOUNG, Ph.D., ACTING
            DIRECTOR, NATIONAL INSTITUTE OF FOOD AND
          AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE,
                        WASHINGTON, D.C.

    Dr. Jacobs-Young. Good morning, Chairman Johnson, Ranking 
Member Costa, and Members of the Subcommittee. I am Chavonda 
Jacobs-Young, and I am acting Director of USDA's National 
Institute of Food and Agriculture, NIFA. I appreciate the 
opportunity to appear before you and tell you about how NIFA is 
serving the needs of the nation and addressing its challenges 
through agricultural science.
    Mr. Chairman, agricultural science is a fundamental part of 
American agriculture from field to table, and NIFA is at the 
intersection of research, education, and extension. By 
supporting extramural agricultural research across the country, 
typically at research universities and colleges, NIFA improves 
agricultural science throughout the nation.
    The 2008 Farm Bill created NIFA in order to coordinate a 
diversity of research programs across functions and funding 
methods. NIFA science institutes support the four main 
priorities aimed at enhancing the impact of food, agriculture, 
and natural resources sciences. These are the Institute of Food 
Production and Sustainability; the Institute of Bioenergy, 
Climate, and Environment; the Institute of Food Safety and 
Nutrition; and the Institute of Youth, Family, and Community.
    Through this reorganization, Congress made a bold step 
toward streamlining agricultural science for the 21st century. 
While only 1\1/2\ years old, NIFA already has a long and 
impressive list of accomplishments. My written testimony, 
submitted for the record, includes many examples of this, but I 
would like to highlight just a few for you here today.
    The Agriculture and Food Research Initiative, AFRI, is 
NIFA's flagship granting mechanism. Among numerous 
accomplishments, AFRI funding has been pivotal in mapping the 
genomes of vital agricultural commodities, including wheat, 
rice, pigs, cattle, and chickens. This science is the gateway 
to fast-tracking improved breeding that helps our agricultural 
producers meet our growing needs for domestic and global 
populations.
    NIFA's investment in AFRI is complemented by the Specialty 
Crop Research Initiative, SCRI. SCRI supports research and 
extension in plant breeding, pest and disease management, and 
production efficiency. Though SCRI is still in its initial 
stages, it promises to deliver significant benefits to growers 
and consumers.
    NIFA funds a variety of capacity-building programs that 
support a wide range of agricultural science initiatives. Some 
of these include minority-serving programs that work with 
underserved communities. NIFA is also helping build the next 
generation of producers through our Beginning Farmer and 
Rancher Development Program. These are just a few of the many 
successful programs from NIFA's first 2 years.
    Going forward, NIFA will continue to make smart 
investments, forge enduring relationships, and engage new 
partners in scientific research, education, and extension 
programs to maximize the public's investment in agricultural 
research. As well, NIFA's investment in agriculture research 
and extension helps support and sustain a highly skilled 
workforce that is critical to the 21st century U.S. economy.
    In addition, NIFA is committed to ensuring Federal dollars 
are well spent through systematic monitoring and evaluation. 
NIFA tracks scientific projects through a centralized database 
to avoid duplication. NIFA and USDA's Agricultural Research 
Service also hold joint stakeholder meetings on scientific 
research to synchronize and coordinate compatible research 
projects.
    NIFA has a promising future, and in collaboration with our 
Congressional partners, we look forward to building on our 
leadership role in national agriculture scientific research, 
education, and extension.
    I appreciate your time and would be pleased to answer any 
questions.
    [The prepared statement of Dr. Jacobs-Young follows:]

  Prepared Statement of Chavonda Jacobs-Young, Ph.D., Acting Director,
     National Institute of Food and Agriculture, U.S. Department of
                     Agriculture, Washington, D.C.
    Good morning Chairman Johnson, Ranking Member Costa, and Members of 
the Subcommittee. Thank you for inviting me here today to participate 
in this timely hearing on farm bill programs as they relate to USDA's 
National Institute of Food and Agriculture (NIFA) of which I am the 
Acting Director. I am pleased to have this opportunity to provide some 
detailed information on our achievements and challenges and look 
forward to learning about your interests.
    Agricultural science is a dynamic system that moves from farm to 
lab to dining table and back again. At USDA when we speak of 
agricultural science we mean all the activities relating to research, 
education, and extension and NIFA is a critical part of this.
    That is why I am pleased to be leading an agency team of about 350 
professionals at a time when both Congress and the Administration 
understand the inherent value of investing in scientific research in a 
smart and efficient way. One of our goals at NIFA is to elevate the 
standing and stature of research, education and extension within the 
Federal science enterprise while being effective stewards of the public 
trust. This is the real challenge that NIFA faces.
Mandate from 2008 Farm Bill
    It's against such a backdrop that the 2008 Farm Bill (FCEA Act of 
2008) created the National Institute of Food and Agriculture in support 
of extramural agricultural research across the nation. The 2008 Farm 
Bill called for the integration of programs across functions and 
funding methods within the Agency. As such, NIFA is comprised of four 
main institutes. These are the:

    1. Institute of Food Production and Sustainability;

    2. Institute of Bioenergy, Climate, and Environment;

    3. Institute of Food Safety and Nutrition; and the

    4. Institute of Youth, Family, and Community.

    These institutes coordinate a mixed portfolio of competitive and 
capacity building programs all with the aim of enhancing the impact of 
food, agricultural, and natural resource sciences. In reorganizing the 
Federal extramural research efforts in this manner, Congress took a 
21st century approach in the last farm bill in acknowledging the broad 
reach and interdisciplinary nature of agricultural science.
    But NIFA is not operating in a vacuum. NIFA scientists develop 
research partnerships with a diverse group of scientists, farmers, 
private sector investigators, and a wide array of higher learning 
institutions across the nation. In fact, these relationships are key in 
how NIFA identifies its priorities.
    Input from Congress, The National Agricultural Research, Extension, 
Education, and Economics Advisory Board (NAREEEAB), as well as our many 
university, scientific and agricultural partners and stakeholders all 
feed into a decision-making process. NIFA's leadership team takes this 
all into consideration as it establishes broad program priorities and 
goals across the Agency and ensures they are aligned with broad 
strategic goals of the department and the mission area. These goals and 
informed priorities are pursued via competitive programs and capacity 
building programs.
    While only a year and half old, NIFA has already collected a long 
and impressive list of accomplishments, some of which I would like to 
highlight in the next few minutes:
Agriculture and Food Research Initiative (AFRI)
    NIFA's flagship granting initiative is the Agriculture and Food 
Research Initiative (AFRI). AFRI's competitive grants program supports 
both fundamental science and applied research and education for the 
nation's leading scientists. In particular, AFRI is charged with making 
research, education, and extension grants that address key problems of 
national, regional, and multi-state importance in sustaining all 
components of agriculture. These include farm efficiency and 
profitability, ranching, renewable energy, forestry (both urban and 
agroforestry), aquaculture, rural communities and entrepreneurship, 
human nutrition, food safety, biotechnology, and classical breeding. In 
fact, AFRI funding was pivotal in completing the genome of 
agriculturally important plants and animals like wheat, rice, pigs, 
cattle, and chickens.
    An example of recent success includes the work by a team at the 
University of California-Davis which has used AFRI funding to identify 
genes in wheat that are responsible for the plant's tolerance to 
freezing temperatures. Wheat breeders have long recognized the need to 
produce cultivars with greater resistance to freezing temperatures and 
this discovery may lead to improved crop production.
    Another example comes from scientists in Connecticut who are 
investigating the use of natural plant products to reduce foodborne 
pathogens in broiler chickens. This work will potentially lead to 
decreased bacterial outbreaks, improving public health, and economic 
opportunity for poultry farmers.
Specialty Crop Research Initiative (SCRI)
    NIFA's investment in AFRI is complemented by another program: the 
Specialty Crop Research Initiative (SCRI). SCRI was created to help 
fund solutions to critical issues of the specialty crop industry. SCRI 
supports research in plant breeding, genetics and genomics to improve 
crop characteristics and appearance, environmental responses and 
tolerances, pest and disease management and production efficiency to 
name a few. SCRI's multi-state, multi-institutional, interdisciplinary 
funding not only requires a non-Federal one-to-one match but also 
requires project proposals to combine research and extension. This 
helps ensure that new products, processes, practices, and tools are 
made available to specialty crop stakeholders. Even though most SCRI-
funded projects have not yet reached completion, growers and consumers 
are already benefiting from this investment.
    For example, water availability is an issue affecting all 
Americans. SCRI has funded projects to reduce the amount of water 
needed to profitably raise crops. One project in California has the 
potential to reduce water use in grape production by 153 billion to 307 
billion gallons per year. This is enough water to meet the daily 
household water needs of over six million Americans for an entire year, 
or about the equivalent of the populations of Los Angeles and Chicago 
combined.
    Fruit growers must reduce the quantity of fruit on their trees so 
that the remaining fruit reaches marketable size. Until recently, U.S. 
growers did this either with chemicals or manual labor.
    One SCRI-funded project looking at mechanical thinning techniques 
demonstrated $500 to $700 per acre savings in apricots and nectarines 
and $200 to $500 per acre savings in cherries during commercial field 
trials. This led to increasing adoption of this technology across the 
entire country. This will result in local jobs to manufacture and 
service the needed equipment, increased wages for workers who move from 
manual labor to equipment operation, and savings for consumers in the 
grocery store.
    SCRI-funded work on biological control of insect pests (in 
particular, codling moth) in orchards in the Pacific Northwest 
demonstrated that sustainable pest management, which includes 
maintaining natural predators of orchard pests, can reduce annual 
orchard pest management costs of $2,300 by 25 percent.
Beginning Farmers and Rancher Development Program
    While NIFA scientists are committed to ensuring that the scientific 
pipeline for the next generation of scientists is being filled, NIFA's 
Beginning Farmer and Rancher Development Program aims to support the 
pipeline of our next generation of producers. Training for beginning 
farmers and ranchers includes: webinars, seminars, internships, 
mentorships, and on-farm field days. Other training sessions have 
included face-to-face training events, such a regular non-credit 
courses or workshop sessions at farming conferences. More than 5,300 
new and potential farmers participated in training events.
    For example, The Western Navajo Nation Beginning Farmers and 
Ranchers Project engages, prepares, and supports socially 
disadvantaged, underserved, and limited resource beginning Navajo 
farmers and ranchers in eight communities covering 8,000 square miles 
of the Navajo Nation. The overall goal of the project is to provide 
Navajo community members who wish to begin farming and ranching with 
the skills to effectively launch sustainable agricultural operations 
using traditional and contemporary agricultural techniques in 
conjunction with effective business practices. In the first year, the 
project worked with 13 chapter members through direct agricultural 
training and networking activities that included two roundtables, two 
conferences, and weekly classes in technology, business, or 
introductory farming and ranching to 1,000+ participants. Fifty percent 
of participants are women. Seventy percent have been farming or 
ranching for less than one year, or do not currently farm or ranch. The 
project staff is comprised of four traditional Navajo locals of varying 
ages and educational backgrounds. All are bilingual, fluent in Navajo, 
and culturally sensitive to the target group's history and challenges.
Serving Minority Communities
    NIFA is also working to ensure that its research and extension 
programs continue to expand its reach into non-traditional, diverse 
communities through its minority serving programs. These programs 
include: Hispanic Serving Institutions Education Grants Program, the 
Tribal Colleges Education Equity Grants Program, and the 1890 
Institution Capacity Grants Program.
    An example of a recent success is at Fort Valley State University 
(FVSU) in Georgia where the 1890 Capacity Building Grant has been 
essential in helping design and implement an Outdoor Forestry 
Classroom/Laboratory Program. One of America's challenges is to attract 
young people from all walks of life to the sciences and in particular 
the agricultural sciences to fill the pipeline for our future. This 
program provides hands-on and experiential learning to forestry course 
students, trains and prepares high school agriculture students for 
various forestry careers through development events, and allows use of 
its facilities for summer workshops for high school agriculture 
teachers throughout the state of Georgia. During Spring 2009, Area 3 of 
district number 4 of Georgia used the site to conduct forestry career 
development events. One hundred and fifty high school students were in 
attendance and had the opportunity to interact and discuss careers in 
the forestry industry with foresters from USDA, the Georgia Forestry 
Commission and Weyerhaeuser.
    Another example includes, the Teaching and Research in 
Environmental Ecology Program at the University of Texas at San Antonio 
which helped recruit, retain, and financially support underrepresented 
undergraduate and graduate students.
Capacity Building Grant Programs
    Another set of key programs are NIFA programs which build capacity 
for research and extension in cooperation with our university partners. 
These include:

    a. Hatch Act programs which support research at state agricultural 
        experiment stations;

    b. McIntire-Stennis Cooperative Forestry Research program which 
        funds research related to the use of the nation's forest 
        resources;

    c. Evans-Allen Program, created to support agricultural research at 
        1890 Colleges; and

    d. the Smith-Lever programs which support not only the national 
        Cooperative Extension System but also targeted programs within 
        the extension system on subjects like food and nutrition 
        education, pest management, and children, youth, and families 
        at risk.

    Examples of recent successes made through these capacity building 
programs run across a wide range of NIFA's activities. For instance, 
scientists in North Dakota developed three varieties of barley which 
has been recommended for malting and brewing by the American Malting 
Barley Association. These efforts resulted in an additional $23 million 
in revenue for growers in 2009.
    In another example, researchers at the University of Georgia used 
advanced genomic and proteomic approaches to identify and develop 
strategies to improve pine tree resistance to an invasive wood wasp.
Conclusion
    These are just a few examples of successes in the first 2 years of 
NIFA's existence. However, the reach and scope of future 
accomplishments are becoming increasingly challenging in a tight budget 
environment. While research outcomes can never be fixed to a certain 
timeline, NIFA is doing its best in this fiscal climate to make smart 
investments, forge enduring relationships, and engage new partners in 
scientific research, education and extension programs.
    In addition, NIFA is committed to maximizing Federal dollars by 
ensuring systematic monitoring and evaluation. While the scientific 
method requires the flexibility to replicate results, NIFA's 
leadership, program managers, and researchers rigorously track 
scientific projects through its Current Research Information System 
(CRIS) to avoid duplication. In addition NIFA and ARS hold joint 
stakeholder meetings on scientific research to pull together research 
projects that are compatible and not duplicative.
    NIFA has a promising future and in collaboration with our 
Congressional partners will continue to build on its leadership role in 
national agricultural scientific research, education, and extension.
    I appreciate your time and would be pleased to answer any 
questions.

    The Chairman. Thank you very much.
    Dr. Clark?

         STATEMENT OF DR. CYNTHIA CLARK, ADMINISTRATOR,
         NATIONAL AGRICULTURAL STATISTICS SERVICE, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Dr. Clark. Chairman Johnson, Ranking Member Costa, and 
Members of the Subcommittee, I thank you for the opportunity to 
appear before this Subcommittee. My name is Cynthia Clark, and 
I have been an Administrator at the National Agricultural 
Statistics Service, or NASS, since July of 2008. NASS 
administers the U.S. agricultural statistics program, a program 
that began at USDA in 1863 and conducts the quinquennial U.S. 
Census of Agriculture first collected by the Census Bureau in 
1840. Both programs are aligned with the basic mission of 
NASS--to provide timely, accurate, and useful statistics in 
service to U.S. agriculture.
    NASS has 1,050 employees currently located in 46 field 
offices and headquarters with the new operations center opening 
in October 2011 in Overland, Missouri. Additionally, NASS has a 
cooperative agreement with the National Association of State 
Departments of Agriculture to collect agriculture data with a 
core of 3,500 interviewers.
    NASS' annual agricultural estimates reports are critically 
important to assess the current supply and demand in 
agriculture commodities. They are extremely valuable to 
producers, agribusiness, farm organizations, commodity groups, 
economists, public officials, and others who use the data for 
decision-making. The statistics disseminated by NASS support 
fairness in markets ensuring that buyers and sellers both have 
access to the same official statistics at the same preannounced 
time. This prevents markets from being influenced by inside 
information.
    Our program supplies important economic, environmental, and 
demographic data that informs policy decisions. One example is 
the Risk Management Agency relies on NASS annual county 
estimates to administer crop insurance programs that provide 
U.S. farmers a safety net ensuring protection against 
unpredictable growing conditions. The Farm Service Agency 
relies on NASS county-level data to administer the Conservation 
Reserve Program, crop revenue support program, and emergency 
assistance payments.
    As we speak, NASS is undertaking a transformation of its 
business process for collecting processing, analyzing, and 
disseminating agricultural statistics. We are pursuing six 
operational initiatives to improve data quality, create 
business cost efficiencies, improve career opportunities for 
NASS staff, and position the agency to better serve the future 
statistical needs of USDA.
    These efforts include centralizing IT services throughout 
the agency, standardizing systems, using Apple iPads to collect 
data securely in the field and transmit the information in real 
time by a high-speed broadband into NASS systems, centralizing 
telephone data collection, and utilizing video teleconferencing 
for meetings and training.
    The lynchpin of the centralized data collection initiative 
is the new NASS National Operations Center in Missouri. NASS is 
implementing these initiatives without a request for additional 
appropriated funding. Once in place, they will result in 
substantial cost savings to U.S. taxpayers. NASS has also 
embarked on a research program to improve the quality and 
accuracy of its agriculture estimates.
    NASS is preparing now for the 2012 Census of Agriculture 
with an initial mailing to farmers and ranchers in December 
2012. The Census of Agriculture is the only source of 
comprehensive data on farm operations at the national, state, 
and county level. Detailed information at the county level 
helps agricultural organizations, suppliers, handlers, 
processers, and wholesalers and retailers better plan their 
operations. Census demographic information provides a valuable 
database for developing a public policy for rural areas. These 
data have been critical for farm bill discussions.
    The authority to conduct the Census of Agriculture was 
transferred to USDA in 1997. During the past 14 years, NASS has 
made significant strides to improve this vital data series. The 
2007 Census provided the option for electronic reporting, 
dramatically increased coverage of Native American, minority, 
and disadvantaged farm operators, and released data meeting 
newly defined needs for Congressional districts and for 
watersheds. NASS listens to Congress, industry, local and state 
governments, and stakeholders as it identifies emerging data 
needs.
    The 2012 Census will include new sections on organic 
agriculture and on-farm renewable energy. It will have 
additional questions on land-use practices and new questions on 
agroforestry, on-farm packing facilities, and farms that sell 
to intermediary outlets. Having the Census of Agriculture 
within USDA enables the Census to be more responsive to USDA 
and agriculture data needs.
    I appreciate the opportunity to testify and to share with 
your Subcommittee some of the important information that NASS 
provides for public and private decision-making relevant to 
food, agriculture, and rural America. Thank you.
    [The prepared statement of Dr. Clark follows:]

    Prepared Statement of Dr. Cynthia Clark, Administrator, National
    Agricultural Statistics Service, U.S. Department of Agriculture,
                            Washington, D.C.
    Mr. Chairman and Members of the Subcommittee, I appreciate the 
opportunity to submit a statement for this Subcommittee's 
consideration. The National Agricultural Statistics Service administers 
the U.S. agricultural statistics program, which began at the United 
States Department of Agriculture (USDA) in 1863. NASS also conducts the 
quinquennial U.S. Census of Agriculture, first collected by the 
Department of Commerce in 1840. Both programs are aligned with the 
basic mission of NASS to provide timely, accurate, and useful 
statistics in service to U.S. agriculture.
Agricultural Estimates
    NASS's annual agricultural estimates reports are critically 
important to assess the current supply and demand in agricultural 
commodities. They are extremely valuable to producers, agribusinesses, 
farm organizations, commodity groups, economists, public officials, and 
others who use the data for decision-making. The statistics 
disseminated by NASS support fairness in markets ensuring buyers and 
sellers have access to the same official statistics at the same pre-
announced time. This prevents markets from being influenced by 
``inside'' information, which might unfairly affect market prices for 
the gain of an individual market participant. The efficiency of 
commodity markets is enhanced by the free flow of information, which 
minimizes price fluctuations for U.S. producers. Statistical measures 
help the competitiveness of our nation's agricultural industry and have 
become increasingly important as producers rely more on world markets 
for their sales.
    The U.S. food and agricultural sector relies on reliable 
statistical information. The NASS statistical program serves most U.S. 
agricultural commodity data needs and supplies important economic, 
environmental, and demographic data that informs policy decisions that 
impact the livelihood and quality of life of rural residents.
    The Risk Management Agency relies on NASS annual county estimates 
to administer crop insurance programs that provide U.S. farmers a 
safety net ensuring protection against unpredictable growing 
conditions. Additionally, the Farm Service Agency relies on NASS county 
level data to administer the Conservation Reserve Program, crop revenue 
support programs, and emergency assistance payments. Having accurate 
estimates from an unbiased data source, has added fairness and 
transparency to the overall process.
    Additionally, NASS is undertaking a transformation of its business 
process for collecting, processing, analyzing, and disseminating 
agricultural statistics. NASS identified six operational initiatives 
that allow the agency with the opportunity to improve data quality, 
create business cost efficiencies, improve career opportunities to its 
staff, and position the agency to better serve the statistical needs of 
USDA and agricultural data users. These efforts include centralizing IT 
services throughout the agency; standardizing systems; collecting data 
in the field through the use of computer assisted personal interviewing 
that relays the data into the NASS systems in real-time; centralizing 
telephone data collection; and utilizing video teleconferencing in lieu 
of certain travel. As a result of the centralized data collection 
initiative, NASS has opened a National Operations Center in St. Louis, 
Missouri and will begin operations in October. This facility will 
handle questionnaire processing, telephone data collection, training of 
telephone and field enumerators and statisticians and list maintenance 
from one central location. These efforts are being implemented without 
the request for additional appropriated funding and will eventually 
result in cost savings to the U.S. taxpayers.
    NASS has also embarked on a research program to improve the quality 
and accuracy of our estimates. Projects include editing and imputation 
research to make the pre-summary analytical processes more efficient, 
model based estimation and forecasting to make NASS estimates more 
reproducible, and remote sensing measurements to increase the accuracy 
of estimates.
Census of Agriculture
    NASS is currently preparing for the 2012 Census of Agriculture. The 
initial mail out to the nation's farmers and ranchers will be in 
December 2012. The Census of Agriculture is taken every 5 years and 
provides comprehensive data at the national, state, and county level on 
the agricultural sector. The Census of Agriculture is the only source 
for this information on a local level and is extremely important to the 
agricultural community. These data were used extensively by USDA to 
help answer both internal and Congressional questions during the 2008 
Farm Bill debate and will be as critical for the next farm bill. 
Detailed information at the county level helps agricultural 
organizations, suppliers, handlers, processors, and wholesalers and 
retailers better plan their operations. Demographic information 
supplied by the Census of Agriculture also provides a very valuable 
database for developing public policy for rural areas. In addition to 
the 50 states, the Census of Agriculture programs are conducted in 
Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the 
Northern Mariana Islands. Results from all of the Censuses are made 
available on the NASS website.
    The authority to conduct the Census of Agriculture was transferred 
to USDA in 1997. During the past 14 years, NASS has made significant 
strides to continually improve this vital data series. For the first 
time in history, respondents had the option of reporting electronically 
through the Internet on the 2007 Census of Agriculture. NASS also 
targeted improved coverage for the 2007 Census of Agriculture by 
working closely with Community Based Organizations and American Indians 
tribes and reservations to increase awareness of the importance of 
being represented. NASS published a report by watershed using data from 
the 2007 Census of Agriculture. Finally, NASS continues to listen to 
Congress and industry on the ever expanding need for additional 
agricultural statistics. For example, the 2012 Census of Agriculture 
includes an entire section on organic agriculture, a new section 
covering on-farm renewable energy, an expanded list of questions on 
land use practices, and sales data collected along-side production 
questions. For the first time, NASS also plans to pick up information 
on agroforestry, on-farm packing facilities, and farms that sell to 
intermediary outlets These are just a few of the improvements and 
successes achieved over the first decade of the Census of Agriculture 
at USDA. Having the Census of Agriculture within USDA enables the 
Census to be more responsive to USDA data needs.
Major Activities of the National Agricultural Statistics Service
    The ongoing expansion of global markets for U.S. goods and services 
continues to increase the need for modern and reliable statistical 
information. The surveys and Censuses conducted by NASS contribute 
significantly to economic decisions made by policymakers, agricultural 
producers, lenders, transporters, processors, wholesalers, retailers 
and, ultimately, consumers. NASS estimates have proven to provide 
critically important principal economic indicators for the agricultural 
food and fiber industry. Lack of relevant, timely, and accurate data 
contributes to wasteful inefficiencies throughout the entire production 
and marketing system.
    An example of one of the many important surveys conducted by NASS 
is the Agricultural Resource Management Survey (ARMS). This survey is 
conducted in cooperation with the USDA's Economic Research Service and 
is the primary input in developing the nation's farm income statements 
used as one of the nation's principal economic indicators. The ARMS 
provides vitally important information on the financial health of the 
farming sector and is heavily used by program analysts to determine the 
success and future scope of farm policies and programs.
    The need for timely, accurate, and useful statistics on U.S. 
agriculture continues to be emphasized throughout the sector. A few 
examples highlight the importance these data have on the market place 
and agricultural producers ability to manage their operations. The 
importance of accurate agricultural data can be demonstrated through 
the ever expanding use of the NASS county estimates for administering 
farmer safety nets. Specifically, NASS county estimates impact billions 
of dollars insured through the Risk Management Agency's Group Risk 
Program and Group Risk Income Program. The difference of one bushel in 
an average county yield estimate may result in the incorrect decision 
on indemnity payments. Farmers trust and demand that these data be an 
accurate gauge for administering these very important safety nets.
    NASS works cooperatively with each State Department of Agriculture 
throughout the year to provide commodity, environmental, economic, and 
demographic statistics for agriculture. This cooperative program, which 
began in 1917, has served the agricultural industry well and is 
recognized as an excellent model of successful state-Federal 
cooperation. Approximately sixty percent of the NASS staff is located 
in its 46 field offices; 21 of these offices are collocated with State 
Departments of Agriculture or land-grant universities. Working together 
helps meet both state and national data needs while minimizing overall 
costs by consolidating staff and resources, eliminating duplication of 
effort, and reducing the reporting burden on the nation's farm and 
ranch operators. Covering all fifty states and Puerto Rico, NASS 
provides statistical information that serves national, state, and local 
data needs.
    NASS has been a leader among Federal agencies in providing 
electronic access to information. All reports issued by NASS' 
Agricultural Statistics Board are made available to the public at a 
previously announced release time to ensure that everyone is given 
equal access to the information. All national statistical reports and 
data products, including graphics, are available on the Internet, as 
well as in printed form, at the time they are released. Customers are 
able to electronically subscribe to NASS reports and can download any 
of these reports in an easily accessible format using standard 
software. NASS also provides free Rich Site Summary and Podcast feeds 
to interested data users. This technology sends an alert or audio clip 
directly to data users when content of interest is posted to the NASS 
Web site. A summary of NASS and other USDA statistical data are 
produced annually in USDA's Agricultural Statistics, available on the 
Internet through the NASS home page, on CD-ROM disc, or in hard copy. 
All forty-six NASS field offices have home pages on the Internet that 
provide access to special statistical reports and information on 
current local commodity conditions and production.
    The primary activity of NASS is to provide reliable data for 
decision-making based on unbiased surveys and the Census of Agriculture 
to meet the current data needs of the agricultural industry. Farmers, 
ranchers, and agribusinesses voluntarily respond to a series of 
nationwide surveys about crops, livestock, prices, chemical use and 
other agricultural activities. Surveys are conducted during the growing 
season to measure the impact of weather, pests, and other factors on 
crop production. Many crop surveys are supplemented by actual field 
observations in which various plant counts and measurements are made. 
Administrative data from other state and USDA agencies, as well as data 
on imports and exports, are thoroughly analyzed and utilized by the 
agency to supplement survey data. NASS prepares estimates for over 120 
crops and 45 livestock items which are published annually in more than 
500 separate reports.
    NASS's Statistical Research Program is conducted to improve methods 
and techniques used for collecting, processing, and disseminating 
agricultural data. This research is directed toward achieving higher 
quality Census and survey data with less burden on respondents, 
producing more accurate and timely statistics for data users, and 
increasing the efficiency of the entire process. Graphical products 
simultaneously displaying progress and condition were developed to make 
it easier for data users and analysts to see the effects of conditions 
on the crop. Research has also allowed NASS to utilize real-time 
acreage and yield indications based on remote sensing methodology to 
assist in estimating acreage and production for select major corn and 
soybean states. This adds another objective measure to aid in 
accurately forecasting current year crop production. The growing 
diversity and specialization of the nation's farm operations have 
greatly complicated procedures for producing accurate agricultural 
statistics. Developing new sampling and survey methodology, expanding 
modes of data collection, including electronic data reporting, and 
exploiting computer intensive processing technology enables NASS to 
keep pace with an increasingly complex agricultural industry.
    NASS conducts a number of special surveys, as well as provides 
consulting services for many USDA agencies, other Federal or state 
agencies, universities, and agricultural organizations on a cost-
reimbursable basis. Consulting services include assistance with survey 
methodology, questionnaire and sample design, information resource 
management, and statistical analysis. NASS has been very active in 
assisting USDA agencies in programs that monitor nutrition, food 
safety, environmental quality, and customer satisfaction. In 
cooperation with State Departments of Agriculture, land-grant 
universities, and industry groups, NASS conducts over 200 special 
surveys each year covering a wide range of issues such as farm injury, 
nursery and horticulture, farm finance, fruits and nuts, vegetables, 
and cropping practices. All results from these reimbursable efforts are 
made publicly available.
    NASS provides technical assistance and training to improve 
agricultural survey programs in other countries in cooperation with 
other government agencies on a cost-reimbursable basis. The NASS 
international program focuses on the developing and emerging market 
countries in Asia, Central and South America, and Eastern Europe. 
Accurate foreign country information is essential for the orderly 
marketing of U.S. farm products throughout the world. NASS works 
directly with countries by assisting in the application of modern 
statistical methodology, including sample survey techniques.
    NASS annually seeks input on improvements and priorities from the 
public through the Secretary of Agriculture's Advisory Committee on 
Agriculture Statistics, interaction with producers at major commodity 
meetings, data user meetings with representatives from agribusinesses 
and commodity groups, special briefings for agricultural leaders during 
the release of major reports, and numerous individual contacts. As a 
result of these activities, the agency has made adjustments to its 
statistics program, published reports, and expanded electronic access 
capabilities to better meet the statistical needs of customers and 
stakeholders.
    This concludes my statement, Mr. Chairman. Thank you for the 
opportunity to submit this statement for the record.

    The Chairman. Yes, ma'am. Proceed.

        STATEMENT OF LAURIAN J. UNNEVEHR, Ph.D., ACTING
         ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Dr. Unnevehr. Good morning. Chairman Johnson, Ranking 
Member Costa, and Members of the Subcommittee, I am Dr. Laurian 
Unnevehr, Acting Administrator of the Economic Research 
Service, or ERS. I appreciate this opportunity to discuss our 
agency's programs.
    The mission of ERS is to inform public and private 
decision-making related to agriculture, food, the environment, 
and rural development. The agency's research program is aimed 
at the information needs of USDA policymakers, but ERS 
information and analysis is also used by the media, trade 
associations, public interest groups, and the general public. 
In fact, our research findings improve the quality of the 
market information that guides farmers' production decisions 
and risk management in the agricultural sector.
    ERS is the primary source of statistical indicators that, 
among other things, gauge the health of the farm sector 
including farm income estimates, assess the performance of the 
agricultural sector, and provide measures of food and security 
at home and abroad. ERS is in the Research, Education, and 
Economics mission area within USDA, reflecting its role in 
providing high-quality objective data and analysis.
    As you have heard here this morning, the four REE agencies 
are complementary but each has a distinct mission. For example, 
the National Agricultural Statistics Service conducts surveys 
that reflect facts on the ground. That is, NASS collects 
primary data. ERS, on the other hand, uses data from a variety 
of sources to carry out its research mission. For example, data 
collected by NASS are used by ERS for its farm income 
estimates. ERS also uses other sources of primary data, such as 
the Census Bureau current population survey that provides the 
basis for our domestic food security statistics. Thus, ERS 
draws on primary data from different sources to construct 
statistical indicators that inform our research mission.
    Economic analysis is critical to making progress on 
challenges facing U.S. agriculture, and thus, ERS collaborates 
with ARS in carrying out research that supports the entire 
range of REE mission area goals. ERS also coordinates with NIFA 
regarding extramural funding priorities and in identifying 
promising new areas for research.
    The importance of public agricultural research to U.S. 
agriculture is supported in a recent ERS publication, Public 
Agriculture Research Spending and Future U.S. Agricultural 
Productivity Growth. By 2050, global agricultural demand is 
projected to grow by 70 to 100 percent due to population 
increase, energy demands, and higher incomes in developing 
countries. To meet this demand, agriculture will need to 
produce more output per unit of input--that is, increased 
productivity will be necessary.
    Public agriculture research is the primary source of 
increased productivity, including improved crop varieties and 
animal breeds. ERS simulations indicate that if support for 
U.S. public agricultural research remains constant at current 
nominal levels, then productivity growth will fall and output 
would only increase by 40 percent by 2050, falling short of 
future demand. To meet future demand growth, an increase in 
agricultural research support of 4.7 percent per year, or one 
percent in inflation-adjusted spending would be needed.
    Failing to meet future demand means that more land will be 
put into production, more food would be imported into the 
United States, and food consumers would pay higher prices. This 
ERS analysis shows the importance of investments in public 
agricultural research.
    As documented in the written testimony, ERS carried out 
research on several topics in response to requests related to 
the 2008 Farm Bill. One study in particular on food deserts 
provides the first-ever national assessment of food deserts 
defined by Congress as, ``low-income areas with low access to 
affordable and nutritious food.''
    Our 2009 study and follow-up efforts at ERS to map food 
deserts identified new opportunities for business and 
employment. Two major retail chains, Wal-Mart and SUPERVALU, 
announced last week plans to open more than 250 new stores in 
underserved neighborhoods identified by USDA. This example 
shows how ERS is able to create new information of value to the 
business community.
    We would be happy to brief the Committee Members on the 
results of these or any other research projects. Mr. Chairman, 
this concludes my statement. I will be happy to answer any 
questions you or the Subcommittee may have.
    [The prepared statement of Dr. Unnevehr follows:]

Prepared Statement of Laurian J. Unnevehr, Ph.D., Acting Administrator, 
Economic Research Service, U.S. Department of Agriculture, Washington, 
                                  D.C.
    Mr. Chairman and Members of the Subcommittee, I appreciate this 
opportunity to discuss the Economic Research Service's (ERS) research, 
market analysis, outlook, and data program. The mission of the Economic 
Research Service is to inform and enhance public and private decision 
making on economic and policy issues related to agriculture, food, the 
environment, and rural development. While the agency's research program 
is aimed at the information needs of USDA policy makers and programs, 
ERS information and analysis is also used by the media, trade 
associations, public interest groups, and the general public. Our 
research is widely recognized in the research community for its 
credibility, timeliness, and use of cutting edge data, models, and 
methods.
    Rather than make recommendations, ERS designs its research to 
demonstrate to its users the consequences of taking alternative policy 
or programmatic pathways. Reflecting the arms-length role it plays in 
this regard, ERS is in the Research, Education, and Economics (REE) 
mission area.
    The four REE agencies are complementary and have distinct missions. 
The National Agriculture Statistics Service (NASS) conducts basic 
statistically valid surveys to create a body of data that reflects on-
the-ground factual information. ERS constructs data series, using data 
from a variety of sources, to inform its program of research and market 
analysis. Data collected by NASS are used by ERS for its farm income 
estimates and research, and in the ERS program of market outlook and 
analysis. Other data and research in ERS, such as the food security 
statistics, rely on survey agreements with other Federal agencies such 
as the Census bureau. ERS provides data, research and analysis that 
support the wide range of program and policy issues of importance to 
USDA.
    ERS provides social science research and analysis to complement the 
other scientific expertise of the REE agencies in multidisciplinary 
research. ERS collaborates with ARS in carrying out research to address 
the needs of U.S. agriculture, including research and data development 
to support rural prosperity, agricultural productivity, global food 
security, food safety, and better diets. ERS coordinates with NIFA 
regarding extramural funding priorities and identifying promising new 
areas for research.
    ERS data, information and analysis meet the information needs of 
USDA policy makers and programs, and are used by the media, trade 
associations, public interest groups, and the general public. Findings 
are useful to inform policymakers and for continuously improving the 
quality of the market information that guides production decisions and 
risk management.
    ERS is also the primary source of statistical indicators that, 
among other things, gauge the health of the farm sector (including farm 
income estimates and projections), assess the current and expected 
performance of the agricultural sector (including trade), and provide 
measures of food insecurity here and abroad. ERS is one of the 14 
Office of Management and Budget (OMB) officially designated Federal 
statistical agencies.
    ERS disseminates its research findings, market information, and 
statistical indicators in a variety of outlets including our website 
(www.ers.usda.gov), our award-winning magazine, Amber Waves, outlook 
reports for specific commodity sectors, ERS research and information 
reports, Oral briefings, written staff analyses, and Congressionally 
mandated studies delivered directly to executive and legislative branch 
policymakers and program administrators, and refereed journal articles, 
which assure the professional credibility of findings.
    There were three research studies requested of ERS in the Food, 
Conservation, and Energy Act of 2008, Pub. L. No 110-246 (2008 Farm 
Bill).
    Study and Report on Grassland to Cropland in the Northern Plains. 
Native grasslands in the U.S. Northern Plains, particularly those 
located in the Prairie Pothole Region, are excellent breeding habitat 
for migratory birds. The conversion of grassland to crop production 
could damage this habitat and affect bird populations. House Report No. 
110-627 accompanying the 2008 Farm Bill, requested the Secretary of 
Agriculture to conduct a study of the conversion of native grasslands 
to crop production. The study examined three questions: (1) How fast 
are grasslands being converted to cropland in the United States and 
especially in the Northern Plains?; (2) Can a temporary (5 year) ban on 
crop insurance purchase for converted grassland slow grassland to 
cropland conversion?; and (3) What has been the role of crop insurance 
and other farm programs in grassland to cropland conversion? The study 
found that: (1) roughly 770,000 acres (one percent) of 1997 rangeland 
acreage in the Northern Plains were converted to cultivated crops by 
2007; (2) a 5 year ban on crop insurance purchase for converted 
grassland could slow but is unlikely to stop grassland to cropland 
conversion; and (3) the benefits of crop insurance, disaster 
assistance, and marketing loans increased cropland acreage by about 2.9 
percent between 1998 and 2007. It is available on the ERS website at: 
http://www.ers.usda.gov/Publications/ERR120/.
    Study and Report on Food Deserts. Concerned that some areas have 
become `food deserts'--areas with limited access to affordable and 
nutritious foods, particularly low-income communities--Congress, in 
section 7527 of the 2008 Farm Bill, requested that the Department of 
Agriculture conduct a study on the topic. ERS took the lead in 
conducting this study, with assistance from FNS and NIFA. The study 
considered the prevalence, causes, and consequences of areas with low 
access to affordable and nutritious food, as well as possible solutions 
to reducing their negative impact on diets and health. The study found 
that (1) according to the 2000 Census about 23.5 million people, or 8.4 
percent of the U.S. population, live in low-income neighborhoods that 
are more than a mile from a supermarket or large grocery store. Of 
that, 11.5 million people, or 4.1 percent of the population who live in 
these areas are also low income (below 200 percent of the Federal 
poverty level). (2) Urban core areas with limited food access have 
higher levels of racial segregation and greater income inequality. In 
small town and rural areas with limited food access, the lack of 
transportation infrastructure is the most defining characteristic. (3) 
Many studies find a correlation between limited food access and lower 
intake of nutritious foods. However, the causal links between access 
and nutritional outcomes are not well understood. (4) The degree of 
access to affordable and nutritious food depends on supply--costs that 
stores face--and on consumer demand. Understanding the market 
conditions that contribute to differences in access to food is critical 
to the design of effective policy interventions. The final report was 
delivered in June, 2009. It is available on the ERS website at: http://
www.ers.usda.gov/publications/ap/ap036/.
    Study and Report on Animal Manure Bioenergy Operations. Section 
11014 of the 2008 Farm Bill mandated a study to evaluate the role of 
animal manure as a source of fertilizer and its potential additional 
uses. The study included a determination of the extent to which animal 
manure is utilized as fertilizer in agricultural operations by type 
(including species and agronomic practices employed) and size. The 
potential impact on consumers and on agricultural operations resulting 
from limitations being placed on the utilization of animal manure as 
fertilizer was evaluated, along with an evaluation of the effects on 
agriculture production of increased competition for animal manure use 
due to bioenergy production, including as a feedstock or a replacement 
for fossil fuels. The study found that (1) About 15.8 million acres of 
cropland, equivalent to about five percent of all U.S. cropland, are 
fertilized with livestock manure. Patterns of manure use are driven by 
the agronomic needs of crops and by transport costs, which limit the 
distance that manure can be moved and create close links between types 
of livestock and certain crop commodities. (2) Higher commercial 
fertilizer prices also favor the use of manure as fertilizer. However, 
manure is not a complete substitute for commercial fertilizer, and 
farmers who use manure therefore reduce their use of commercial 
fertilizer but rarely eliminate it. (3) Livestock operations can comply 
with nutrient management plans by spreading manure on more of their own 
cropland, by removing manure to other farms for spreading, by altering 
feed mixes to reduce manure production, or by developing herds or 
flocks with reduced manure production. (4) Estimated costs of 
compliance with nutrient management plans vary sharply with the degree 
to which excess manure needs to be disposed of and the willingness of 
nearby farmers to accept manure for application to their cropland. With 
a limited willingness to accept manure, the study finds that production 
costs, including those for manure management, would likely rise by 2.5-
3.5 percent for large operations. Such increases are unlikely to alter 
the emerging structure of livestock production. (5) Manure-to-energy 
projects are not currently in widespread use; currently, the costs 
generally exceed the revenues that most farmers can receive from 
electricity production. But because such projects use existing 
resources, they could provide society with benefits if manure replaces 
newly mined fossil fuels in energy production, and if methane, a 
greenhouse gas, can be captured. (6) Currently envisioned manure-to-
energy projects are not likely to impose substantive constraints on the 
use of manure as fertilizer. The final report was delivered in June, 
2009. It is available on the ERS website at: http://www.ers.usda.gov/
publications/ap/ap037/.
    ERS also co-authored two other studies that were requested in the 
2008 Farm Bill.
    Analysis of the Planting Transferability Pilot Program. Section 
1107 of the 2008 Farm Bill requires the Secretary of Agriculture to 
periodically evaluate the effect of the 2008 Planting Transferability 
Pilot Program (PTPP) authorized in that section, which relaxes the 
planting restrictions placed on vegetables destined for processing. 
This study was produced for the Farm Service Agency (FSA). It provides 
an overview of the market for processing vegetables and uses farm-level 
data from FSA to evaluate PTPP's effect on the supply and price of 
processing vegetables. Using a simulation model representing the 
national market, the study found that the PTPP entices a very modest 
increase in processing vegetable production and a very modest decline 
in processing vegetable prices. The quantity of processing vegetables 
supplied was projected to increase between 0.1 and 0.6 percent, and 
prices decline by 0.3 to 2.8 percent. The study did not find that PTPP 
has an impact on fresh fruit and vegetable markets. It is available on 
the FSA website at http://www.fsa.usda.gov/Internet/FSA_File/
fv_plantg_rstricts_rpt_120210.pdf.
    Analysis of the Limited Base Provision of the 2008 Farm Bill. 
Section 1101 of the 2008 Farm Bill included a provision to suspend 
payments to farms with 10-base acres or less (base-10 provision). 
Congress included this provision in the 2008 Farm Bill as a cost saving 
measure. Not only would the provision eliminate the payments to farms 
with limited base acres, but also reduce the number of farm payments 
processed. The 2008 Farm Bill mandated that USDA evaluate the effects 
of suspending payments under this provision. At the request of FSA, ERS 
evaluated the impact of eliminating direct and countercyclical and ACRE 
payments to farms with 10-base acres or less as required by the 2008 
Farm Bill. The study examined the number and location of farms impacted 
by the provision, the characteristics of those farms, and the amount 
the government could save due to the suspension of program payments 
under this provision. The evaluation included information about farm 
characteristics and production as well as an assessment of the 
provision on specialty crop producers. The study found that (1) The 
base-10 provision affects a large number of farms but had little effect 
on total payments. In 2009, nearly 371,000 FSA farms became ineligible 
for payments under this provision, with prohibited payments equaling an 
upper bound of $29.1 million. (2) The East Coast is more affected by 
the base-10 provision than the Heartland and West Coast. (3) Adverse 
effects on the fruit and vegetable sector are not expected as a result 
of the base-10 provision. (4) FSA farms for which payments were 
prohibited are generally part of larger operations. (5) Budgetary 
savings would accrue from reducing administrative costs. The study 
estimated $3.5 million in personnel cost savings to FSA and $0.2 
million in mailing and paperwork savings associated with the base-l0 
provision. Combined with the reduction in payment outlays to farms of a 
maximum $29.1 million, the budgetary savings from prohibited payments 
is estimated to total as much as $32.8 million for 2009. The study is 
available on the FSA website
http://www.fsa.usda.gov/Internet/FSA_File/base_10_rpt_copy_ltrs_
6744901.pdf.
    The Economic Research Service has also conducted a number of 
studies on programs, policies, and issues raised by the 2008 Farm Bill. 
Among these include the following:

   ERS published the web-based The 2008 Farm bill Side-by-Side 
        Comparison--a comparison of the 2008 Farm Bill with previous 
        legislation. It offers a time-saving reference to farm bill 
        provisions. In addition to key provisions and details by Title, 
        the side-by-side includes links to related ERS publications and 
        to analyses of previous Farm Acts.

   Economic analyses of commodity programs, including revenue-
        based commodity support, factors influencing the Average Crop 
        Revenue Election (ACRE) program enrollment and the effect of 
        ACRE program payments on risk reduction.

   Economic analysis of conservation programs, including the 
        impacts of regional equity provisions on conservation program 
        outcomes, participation in conservation programs by beginning, 
        limited-resource, and socially disadvantaged operators, and the 
        implications for program eligibility of alternative definitions 
        of U.S. agricultures basic unit, the farm.

    We would be happy to brief the Committee Members and staff on the 
results of any of our research projects, as well as our ongoing program 
of research, market outlook, and data analysis.
    Mr. Chairman, this concludes my statement. I will be happy to 
answer any questions that the Subcommittee may have.

    The Chairman. Thank you, all four of you, for your 
testimony. I guess I will start the questions here maybe with 
one for the whole panel and you can selectively take it. I 
guess this is the category of a softball question but it is 
sincerely trying to give an overall perspective.
    Why now has the government been--and you specifically--in 
the business of collecting data? I know that is a generic 
question but maybe one of you would like to address that for 
us. Not adversarial, just inquisitive.
    Dr. Clark. Well, data is very important for public and 
private decision-making. If you don't have complete data 
provided by government, then private organizations collect 
information. It is not complete, it is not comprehensive, it is 
not available for access to all, and it often does not reflect 
reality and the current situation. So if you are basing your 
decision-making on inaccurate data, your decisions are going to 
be flawed.
    Dr. Unnevehr. I would just like to follow up and talk about 
the importance of objective data and information, especially 
for small businesses, small producers. Having a level playing 
field in terms of the market information that is available in 
agriculture means that prices are able to respond more quickly 
to changes in supply and demand. It means that producers are 
able to make informed decisions in response to those prices. 
And without a single objective and timely source of data, the 
market could be subject to manipulation from, well, subjective 
sources controlled by those who have information that is not 
available to all.
    The Chairman. Dr. Unnevehr, how does the mission of your 
agency, what you do daily, differ from what is done in the 
Office of the Chief Economist?
    Dr. Unnevehr. The Chief Economist is the advisor to the 
Secretary on economic issues. He often draws on the data and 
analysis carried out in the Economic Research Service. Because 
we are a research agency, in REE, we carry out research and 
analysis that is objective and informs policymakers of the 
consequences of alternative decisions. And that information is 
available both to the Office of the Chief Economist as well as 
to USDA program agencies for use in their program planning and 
analysis.
    The Chairman. Thank you. And Dr. Young, when Congress 
created your institute, the intent was for a ``independent, 
scientific policy-setting agency for the food and agriculture 
sciences.'' Do you believe that recent awards have been 
consistent with that direction? And specifically, has the 
construct of RFAs been determined by scientific need and merit? 
And finally, has your directorship and peer review panel been 
the sole determinates of those RFAs or have the offices of the 
Under Secretary impacted the process outside the scientific 
realm? I have particular interest in that on behalf of 
universities, but just in general.
    Dr. Jacobs-Young. Chairman Johnson, thank you for your 
question. In addition to my role as acting Director for the 
National Institute of Food and Agriculture, I am also the 
Director for the Office of the Chief Scientist at the 
Department of Agriculture and responsible for leading the 
development of a scientific integrity policy for the 
Department. And that scientific integrity not only applies to 
NIFA but applies to the entire Department preventing or seeking 
to ensure nonpolitical interference in science for the 
Department.
    In the National Institute of Food and Agriculture, our peer 
review process is world renowned. We have taken many 
painstaking efforts to ensure that we are meeting the needs of 
our stakeholders, of our land-grant universities and setting 
priorities. And so I would say that, yes, we are operating a 
program that is a pious level of integrity.
    The Chairman. I don't think we question the integrity. My 
specific question is are those decisions solely based on the 
criterion laid out in the statute, scientific-based, or has 
Secretary Vilsack and the Under Secretary been involved in the 
decision-making process outside that specific direction?
    Dr. Jacobs-Young. Chairman Johnson, my answer is yes up 
front. And second----
    The Chairman. Yes what?
    Dr. Jacobs-Young. Yes, we use a panel of experts from 
across the scientific community to make the decisions and 
recommendations for the funding for our program. So no, there 
is no political interference, and yes, it is based solely on 
science and the merit of the applications that have been 
received.
    The Chairman. I have come to the end of my own time, so I 
would recognize the distinguished Ranking Member, Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman.
    Dr. Jacobs-Young, you are obviously aware that the 
mandatory funding for Specialty Crop Research Initiative 
expires at the end of 2012. As I mentioned at the outset, I 
think it was an important breakthrough in the 2008 Farm Bill. 
What are your thoughts in terms of where we go? It is unclear 
whether or not that commitment is going to be there next year, 
and I would like you to make a case for why the research has 
been effective and plays a unique role if you can.
    Dr. Jacobs-Young. I agree that the specialty crop industry 
is a very important industry to agriculture, a $67 billion 
industry, 46.9 percent of the U.S. crop. The specialty crops 
program of the Specialty Crops Research Initiative that was----
    Mr. Costa. Healthy, nutritional food.
    Dr. Jacobs-Young.--and it is healthy and nutritional.
    The Specialty Crops Research Initiative provides an 
opportunity for us to pay particular attention to breeding and 
genetics and genomes and pest and disease management for that 
industry. Without the Specialty Crop Research Initiative, the 
applicants would need to apply to our general plant-based 
programs in AFRI, in our Hatch programs, in our SBIR programs, 
in our Integrated Pest Management programs, and in those 
programs, they all focus on national needs. And so we could not 
ensure that those projects would rank in the funding range so 
to speak, so we would not be able to pay----
    Mr. Costa. Let me make two observations, then, because I 
have some other questions I want to ask. One, I think you 
should provide the Subcommittee and therefore the full 
Committee with the information on where this research is 
valuable as it relates to providing foods that require less use 
of herbicides, pesticides, other kinds of things that provide 
values to farmers as well as consumers because of the ability 
of the research, things that are less drought-resistant. And 
then the other observation is we probably should change the 
name specialty crops. I think people think, specialty, well 
what does that mean? Specialty crops took on the name 
somewhere, but it is really fruits and vegetables and all the 
other healthy stuff we eat, staples. They are not some exotic 
pear that comes from some different part of the world.
    So anyway, I need to move on here. Dr. Knipling, I hope you 
were briefed with the Agriculture Research Service, which, as 
you stated in your testimony, does good work, but they are 
looking at closures of various facilities. I wrote a letter to 
Secretary Vilsack about the UC Shafter Research and Extension 
Center. Its efforts are important for not only other varieties 
of cotton but pima cotton as well. Are you familiar with this? 
Can you respond to what the department's outlook on this 
particular research center that is in the San Joaquin Valley?
    Dr. Knipling. Yes, I am quite familiar with that issue and 
the Shafter Research Station itself. This is a proposal in the 
President's 2012 budget yet to be acted on by the Appropriation 
Subcommittees and Congress as a whole. The Shafter proposed 
closure is one of ten ARS laboratories that are proposed for 
closure for the general purpose of contributing to deficit 
reduction but also to be able to allocate those resources, 
perhaps, to some of these other priority areas of emphasis that 
I mentioned earlier in my testimony.
    Mr. Costa. Well, to cut to the chase as we say, I know I 
will and I believe Congressman McCarthy will as well look 
toward the response back from the Secretary as to the criteria 
you are using. We are obviously all focused on cost-cutting but 
we want to make sure that the validity and the criteria that 
the Department is using justifies this. I know personally of 
the research that takes place there, and I think it is 
effective.
    Quickly, as my time is running out, Dr. Unnevehr, you 
talked about food deserts and the research that you are doing 
and I was mentioning to the Chairman how the irony is because 
we produce so much aplenty, as you know, in the San Joaquin 
Valley in terms of healthy foods and yet certain areas within 
the Valley have been designated as food deserts. And I think 
that is an irony because when you are producing half the 
nation's fruits and vegetables yet to be qualified a food 
desert, I think you might want to explain in detail how you 
came to that--if the Chairman wants to allow you to answer the 
question because my time now has expired.
    The Chairman. Proceed.
    Dr. Unnevehr. Yes.
    Mr. Costa. Briefly.
    Dr. Unnevehr. Briefly. We worked with the Healthy Food 
Financing Initiative to develop the definition of a food desert 
so we would have national criteria that would identify areas of 
greatest need for the U.S. And the criteria are as follows: 
basically low-income areas--new market tax credit zones as 
defined by Treasury--which is a certain proportion of people 
under a certain level of income--combined with a fairly large 
number of people or proportion of people more than a mile from 
a supermarket in urban areas and more than 10 miles from a 
supermarket in rural areas. So it was a combined criteria of 
low-income areas with a significant number of folks at risk for 
low access. And so that is why there may be food production in 
your district but there may not be food retail outlets.
    Mr. Costa. And so being near a fast-food outlet doesn't 
count?
    Dr. Unnevehr. That is correct.
    Mr. Costa. All right. I just think it is important for the 
Committee to understand how you arrived at that definition of a 
food desert because the irony, of course, is in the case that I 
pointed out is you have a tremendous amount of a wide variety 
of agriculture production taking place, yet the access to that 
same food because of the criteria you explained qualifies it in 
those terms, correct?
    Dr. Unnevehr. Correct.
    Mr. Costa. Okay.
    The Chairman. Thank you, Mr. Costa. I will now turn to the 
gentleman from Pennsylvania, Mr. Thompson.
    Mr. Thompson. Well, thank you to the panel for being here 
and your leadership.
    Dr. Clark, I want to start with you. You mentioned in your 
testimony that NASS will for the first time have specific 
statistics dealing with farm energy and agroforestry. What 
kinds of statistics will this entail?
    Dr. Clark. Well, these will be questions on the 2012 
Census. They will not necessarily be detailed questions. They 
will provide the opportunity to use the 2012 Census as a 
sampling frame to develop a larger questionnaire for a survey 
if that were to be desired. It also allows the opportunity of 
combining that data with the demographic and economic and 
environmental data that is on the Census form. So you get a 
better picture of how an individual question response would 
relate to an agriculture operation.
    Mr. Thompson. Okay. Thank you. Our farmers and agriculture 
in general are not getting the credit they deserve for their 
extensive efforts in restoring the Chesapeake Bay. Dr. Clark or 
Dr. Knipling, since you talked about conservation efforts and 
watershed modeling, what kinds of information do you have on 
the role of agriculture on these restoration efforts in the 
Chesapeake Bay watershed?
    Dr. Knipling. ARS has a number of our research locations 
actually focused on the Chesapeake Bay watershed, one of which 
is at University Park in Pennsylvania on the campus of Penn 
State University. That is our Pasture Research Lab. And in fact 
they have been looking at the upper reaches of the watershed of 
the Susquehanna River and all of the Chesapeake Bay watershed. 
Our Beltsville Agricultural Research Center located quite close 
by is part of that network of laboratories. And we are working 
closely with other Federal agencies, state agencies, various 
environmental groups, producer organizations, and actual 
farmers, producers on their land to monitor agricultural 
practices and to develop such practices that might minimize the 
runoff of fertilizer, nutrients, and pesticides.
    Mr. Thompson. Dr. Clark, any follow up on that particular 
question related to the Chesapeake Bay statistics gathering in 
terms of the efforts in restoring the Bay and information that 
is being collected on the outcomes or the efforts that are made 
in agriculture?
    Dr. Clark. I could speak to a project that has just been 
initiated with the Natural Resources Conservation Service and 
the National Agriculture Statistics Service. We are doing a 
pilot data collection next year in the Chesapeake Bay that 
would collect environmental and agricultural data from those 
states. And I could get you more details on that if you would 
like that.
    Mr. Thompson. That would be great. I look forward to 
visiting the Penn State Pasture Research Lab. I wasn't aware of 
that actually. That is in my backyard for the most part. You 
know, I appreciate within your testimony, Dr. Knipling, in 
particular you talked about the Chesapeake Bay region's soil 
losses reduced by 55 percent, nitrogen loss by 31 percent, 
phosphorus reduced by 41 percent. I appreciate what all of you 
do because obviously to make good decisions you need good data 
to make sound decisions. And I think the data you report really 
shows that we have made great progress within the Chesapeake 
Bay. Frankly, I think it helpful in combating other agencies 
that seem to use a hammer on agriculture such as the EPA.
    Dr. Jacobs-Young, you mentioned the Institute of Bioenergy. 
Can you talk a bit more about that and what it does?
    Dr. Jacobs-Young. Yes. Thank you for the question. So one 
of our five challenge areas is renewable energy, bioenergy. And 
in the Department of Agriculture, including the National 
Institute of Food and Agriculture, we are focusing on the 
feedstock development piece of the supply chain for bioenergy 
production. So the production of biomass in the way that is 
environmentally friendly, that is developed to grow in areas 
where there is drought or flooding or high temperatures or 
salinity. And so much of our research deals with the genomics, 
the genetics, the breeding of feedstock for bioenergy.
    Mr. Thompson. Okay. Thank you.
    Chairman, I think my time is about expired.
    The Chairman. Thank you, Mr. Thompson. And the gentleman 
from North Carolina, Mr. Kissell.
    Mr. Kissell. Thank you, Mr. Chairman, and I welcome the 
panelists today. And I want to get a little bit of a parochial 
statement out of the way but it is much more than talking about 
North Carolina. But in North Carolina we have a North Carolina 
Research Campus. A gentleman, Mr. Murdoch, David Murdoch has 
invested $\1/2\ billion of his own money along with the State 
of North Carolina and local monies into a research campus that 
is in my district. It is an incredible public-private 
investment, research equipment that is almost one-of-a-kind in 
the western hemisphere, is certainly very rare to find but made 
available to various people to come in and seven of our 
universities in North Carolina are there with a major focused 
research. Also there are private entities there and it is an 
agriculture research station there all focused upon food 
nutrition and development. If you are not familiar with it, I 
would love if you got familiar with it and came to visit us 
because it is just an incredible example of what can be done 
when we come together with all resources for research for the 
advancement of the things we are talking about today.
    Moving on to another area, we had a panel not that long ago 
and we were talking about biotech research, and the statement 
was made that it has been several years since we had a major 
advancement in biotechnology that has been approved and brought 
into the commercial arena, which I found to be of concern. When 
we consider the things we are talking about today that if we 
are going to be able to have the food that we need to have for 
the growing populations and recognizing less resources 
available, we have to continue to make these advancements in 
research and bring those ideas forward.
    Just wondering if any of you had any thoughts on why we are 
not able to bring this research forward into viable commercial 
products and what are our problems, what do we need to overcome 
to do this?
    Dr. Knipling. Congressman, I would start the commentary. Of 
course, when you refer to new products coming into the market, 
generally that implies genetically modified organisms, GMOs, 
that actually require regulatory approval.
    Mr. Kissell. And that is what I am talking about. Thank 
you.
    Dr. Knipling. Yes. And yes, there are additional products 
coming on but they are utilizing mostly the crop protectants, 
the protection against herbicides, the protection against 
insects and so forth. And it is, I guess, a significant 
regulatory burden, although I am sure my collegues here could 
cite some statistics of the rapid adoption of genetically 
modified crops throughout the country for some of the major 
agronomic crops.
    I would like to turn the discussion perhaps more to 
biotechnology in the sense of other forms of molecular biology 
that are significantly impacting crop production. That would be 
the use of genomics to understand the genetic traits and how 
those relate to phenotypic characteristics. And this is really 
going to be the future of biotechnology, the use of genomics, 
selective markers to support traditional crop and animal 
breeding with great precision. And we have tremendous examples 
of many species of crops, animals, some of the pathogens that 
affect those, and we can, with precision, start targeting 
genetic improvement through traditional means.
    I would just cite the rapid progress just made in the last 
few years with the dairy industry where using genetic markers 
from high-performing cows, high-performing breeding stock to 
make tremendous----
    Mr. Kissell. I am going to interrupt you just one second. I 
appreciate this tremendously, but my time is on caution right 
now. So the concerns that were expressed in that panel from a 
while back that we are not bringing forth these new products, 
do any of you just flat out disagree or do you share these 
concerns very quickly?
    Dr. Jacobs-Young. Congressman Kissell, we are busy 
providing the science to base the decisions on, but this is a 
very complex issue. In the Department of Agriculture, we are 
producing the data to support three different areas--and we 
talk about coexistence--GE, non-GE, and organics. So we have 
three alternative methods. And so what we are doing at REE is 
providing the data for decision-making. And so we do believe 
that all the regulatory actions should be based on science.
    Mr. Kissell. Okay. And my time is out, but it is very much 
a concern that all the research that takes place at all our 
universities and other places, if we can't bring that forward 
in a timely manner because of, yes, we should have concerns 
about the regulations. But, if that becomes an obstacle in 
itself which was indicated last time, it is something that we 
just need to really work on.
    Thank you, Mr. Chairman.
    The Chairman. I have no other questions. I would turn to 
the Ranking Member to see if you have another round of 
questions? And Mr. Thompson or Mr. Kissell, I would be more 
than happy if you would like. Mr. Thompson?
    Mr. Costa. I have a couple questions. I don't think they 
will take 5 minutes unless the answers are long.
    Dr. Clark, you talked about the important role that you 
play in terms of surveys and information. How good do you 
believe is the information that you are reporting on, whether 
it is on prices, specialty crop surveys, on civil rights, on 
your focus on the organic program surveys? I am always 
wondering when I see this information as how much you attest to 
the validity of it.
    Dr. Clark. I can tell you it is very good information. It 
is probably better than any other information that is out 
there, but it is collected from respondents, and so there is 
always some variability in the data that you collect. It is 
collected through sample surveys primarily. There is 
variability in a sampling estimate. In most cases, you know 
what the variability is and so you can factor that into your 
decision-making. Some of the efforts that we are undertaking at 
NASS will make our data even better than it is right now. Our 
efforts to put in a national operations center will remove a 
lot of the data collection processing efforts from 46 offices 
to one center where we can put in quality-control procedures, 
which are not feasible now in 46 different places.
    So we are working to put more control on our processes, 
which will improve the quality of our data. We are also working 
on more sophisticated estimation procedures, which will also 
improve the quality of our data. We have just begun publishing 
measures on the quality of our data, so that should help you in 
using the data.
    Mr. Costa. So do you ever attempt to provide third-party 
verification if a survey is--I don't know how--let us say a 
typical survey may be on a crop survey. I suspect it is in the 
hundreds if not larger. Do you determine that the information 
that was sent back to the Department was accurately reported?
    Dr. Clark. We don't generally do audits. Occasionally, we 
do re-interview surveys and we measure the discrepancy between 
the initial reported data and a second interview. Those are 
ways to measure different types of error. There are many 
different kinds of error that you could have in a data-
collection process and we design our processes to minimize 
those errors and to measure them so that we have some 
information on the quality of what we are producing.
    Mr. Costa. Let me ask all of you if you want to comment 
just quickly. When we look at the totality of the ag research 
taking place, and I know that it varies regionally and in terms 
of the tremendous diversity that reflects U.S. agriculture, but 
are we really focusing where we ought to be? I mean can you 
make that judgment within the four different agencies that are 
represented here? Quickly.
    Dr. Knipling. Just quickly, ARS is frequently asked why do 
we have 100 laboratories across the country and that does 
reflect the site specificity of agriculture, the diversity of 
climates, the diversity of customers, users, the diversity of 
our partnerships. And there is a historical previous priority-
setting basis for why we have all of these activities in the 
places we do.
    Mr. Costa. Would anyone else care to comment?
    Dr. Unnevehr. Well, I will just offer the comment that we 
all set our priorities in consultation with stakeholders, and 
certainly in the case of ERS, our research programs are driven 
by the needs of USDA policies and programs.
    Mr. Costa. But you think the agriculture producers have a 
large say in it in terms of the stakeholders you are speaking 
of?
    Dr. Unnevehr. Absolutely. Although I will say that there 
are food programs for food consumers in USDA, and thus we also 
have research on those issues.
    Mr. Costa. But those are part of the stakeholders as well, 
yes.
    Dr. Unnevehr. Exactly.
    Mr. Costa. But I mean you think that on a regular basis 
they are letting their priorities be known and it is assessed 
within the Department and people feel that the focus is being 
spread throughout the diversity of America's food production 
and its consumption?
    Dr. Unnevehr. We hear from a wide variety of stakeholders 
in all four of the agencies.
    Dr. Jacobs-Young. Yes. And I would just like to add in NIFA 
we have a strong partnership with the land-grant universities, 
as next year we will celebrate our 150th year. And we work very 
closely with the land-grant universities in addition to all of 
the stakeholder groups that support the Department and the work 
that we are doing. And thus far, we have had a very good 
relationship. We are receiving feedback from our stakeholders. 
And each one of our solicitations for applications provides an 
opportunity for our stakeholders to give us feedback on what is 
presented.
    Mr. Costa. Thank you, Mr. Chairman. I have no further 
questions.
    The Chairman. Mr. Thompson?
    Mr. Thompson. Thank you, Mr. Chairman. Thanks for the 
opportunity for a second round.
    An emerging issue in my area--I represent a very rural 
district, 22 percent of the land mass of Pennsylvania, and in 
some of the most rural areas of my district interestingly 
enough is an issue of affordable housing. And it is a direct 
result of the new and certainly booming natural gas industry in 
Pennsylvania. Normally, we had no shortage of affordable 
housing. That has certainly changed. And this is for all the 
panelists. Are there any kinds of work that you are doing 
regarding looking at rural housing? Is that anything that data 
is collected on that you are aware of? I will take that as a no 
at this point. Okay. Like I said, this is new for us as well in 
the past few years. So I will probably be in contact with you.
    Dr. Jacobs-Young. Secretary Vilsack is a part of a rural 
council that was recently announced a couple of weeks ago, and 
that rural council will be looking at those issues. How do we 
improve the vitality of rural communities including providing 
housing for the folks who live there and providing jobs and 
opportunities and creating places where young people want to 
return to and create lives?
    Mr. Thompson. And I will reach out to the Secretary. I am 
proud to say that many parts of my district, the young people 
are finding great opportunities. They are not leaving now, and 
frankly, we have a lot of folks moving into the area. So that 
is more of a blessing than a problem.
    And my final question, Dr. Jacobs-Young, you mentioned 
NIFA's effort in Georgia to attract more students into the 
forestry-related careers, which I think is great. Is NIFA 
working on any similar forestry projects in other states and 
obviously specifically I was interested if there was anything 
going on in Pennsylvania?
    Dr. Jacobs-Young. Congressman Thompson, NIFA participates 
in many different education and training opportunities. Some of 
you may have even been involved in 4-H during your primary 
school years; Ag in the Classroom is a nationwide program. We 
are now offering NIFA fellowships. We heard from our 
stakeholders that they wanted us to do more in support of the 
pipeline for agriculture. And so we are now offering NIFA 
fellowships. We have the Veterinary Loan Repayment Program 
where we want to place those veterinarians in areas where there 
may be a shortage. And the Beginning Farmers and Ranchers 
Program, I believe, supports the Georgia-based program, and 
that is offered nationally. So we have similar programs 
throughout the nation. And in our Youth, Family, and Community 
Institute, we are looking at many different areas for education 
and training, including looking at youth at risk. So, yes, we 
have many programs across the nation. I would be more than 
happy to find out what we have going on in Pennsylvania and 
provide that in a written response.
    Mr. Thompson. I appreciate that. Thank you to all the 
panelists. Thank you, Mr. Chairman, for this hearing.
    The Chairman. Thank you. Before we adjourn, I would ask if 
the Ranking Member, Mr. Costa, has any closing remarks to make?
    Mr. Costa. Just to say thank you again, Mr. Chairman, for 
your due diligence, and we will continue to work together as we 
try to fashion the most responsible 2012 Farm Bill we can put 
together working with all these agencies, including those we 
heard from this morning.
    The Chairman. Well, I thank you, Mr. Costa, and Members of 
the Committee and members of the panel. I appreciate your input 
and your ongoing service to American agriculture and to 
American consumers as represented by your testimony and by your 
jobs.
    Under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material and supplementary responses from the 
witnesses, with respect to any question posed by a Member.
    So then with that, this hearing of the Subcommittee on 
Rural Development, Research, Biotechnology, and Foreign 
Agriculture is adjourned.
    [Whereupon, at 11:11 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Submitted Statement by R. Thomas Van Arsdall, Executive Director, 
         National Coalition for Food and Agricultural Research
July 27, 2011--via e-mail

Hon. Timothy V. Johnson,
Chairman,
Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
    Agriculture, House Committee on Agriculture,
Washington, D.C.;

Hon. Jim Costa,
Ranking Minority Member,
Subcommittee on Rural Development, Research, Biotechnology, and Foreign 
    Agriculture, House Committee on Agriculture,
Washington, D.C.

RE: Comments on USDA Research Programs

    Dear Chairman Johnson and Ranking Member Costa:

    On behalf of the National Coalition for Food and Agricultural 
Research (National C-FAR), I am pleased to submit these comments for 
the July 28 hearing record, ``Agricultural Program Audit: Examination 
of USDA Research Programs.'' National C-FAR is pleased that the 
Subcommittee is holding this hearing learn how the 2008 Farm Bill 
research title provisions are being implemented, while looking ahead to 
the 2012 Farm Bill reauthorization.
    National C-FAR is a nonprofit, nonpartisan, consensus-based and 
customer-led coalition that brings food, agriculture, nutrition, 
conservation and natural resource stakeholders together with the food 
and agriculture research and extension community, serving as a forum 
and a unified voice in support of sustaining and increasing public 
investment at the national level in food and agricultural research, 
extension and education.
    Entire Farm Bill Dependent on Successful Research Title--The 
Research Title of the farm bill represents the nation's signature 
Federal investment in the future of the food and agricultural sector. 
Other farm bill titles depend heavily upon the Research Title for tools 
to help achieve their stated objectives. Public investment in food and 
agricultural research, extension and education today and in the future 
must simultaneously satisfy multiple needs, including food quality and 
quantity, nutrition, food safety, resource preservation and producer 
profitability.
    Scientific outcomes and tools realized through USDA's research, 
extension and education (REE) mission are needed to help achieve safer, 
more nutritious, convenient and affordable foods delivered to sustain a 
well nourished, healthy population; more efficient and environmentally 
friendly food, fiber and forest production; improved water quality, 
land conservation, wildlife and other environmental conditions; less 
dependence on non-renewable sources of energy; expanded global markets 
and improved balance of trade; and more jobs and sustainable rural 
economic development.
    Societal demands and expectations placed upon the food and 
agricultural system are ever-changing and growing. Examples of current 
and future needs include--strengthened bio-security; food-linked health 
costs; environment and conservation; farm income and rural 
revitalization; biofuels and climate change; the world demand for food 
and natural fiber and improved diets; and biotechnology and genetic 
resources research and public oversight.
    Unsustainable Research Funding Deficit Threatens Future of U.S. 
Agriculture--At the risk of oversimplification, funding is the fuel 
that will fuel the USDA research mission engine and determine how 
effectively the action plan will be implemented. National C-FAR 
believes the nation has a serious food and agricultural science 
deficit, just as the nation has a budget deficit. This food and 
agricultural science funding deficit is serious, long running and 
unsustainable. Failure to address this research deficit will have real 
negative consequences, not just to the agriculture and food system but 
to the entire nation and U.S. economy. If USDA's research mission 
continues to be starved for funds, any action plan is destined to fall 
short of not only its potential but of leading to the outcomes this 
nation needs from the food and agricultural system.
    National C-FAR's support for funding encompasses the entire REE 
mission--both inter- and intra-mural programs--including the National 
Institute of Food and Agriculture (NIFA), the Agricultural Research 
Service (ARS), the Economic Research Service (ERS) and the National 
Agricultural Statistics Service (NASS).
    National C-FAR's strong support for a NIFA and other reforms in the 
Research Title of the 2008 Farm Bill was motivated by the belief that 
such reforms would result in increased funding for food and ag 
research. Unfortunately, that has not been the case.
    By any measure, Federal funding for food and agricultural research, 
extension and education has failed to keep pace with identified 
priority needs. Federal investment in research and development at the 
USDA has declined by about \1/4\ since FY 2003. A continuing deficit in 
terms of a commitment to Federal funding for agricultural research will 
have detrimental effects on human and animal health and the nation's 
economy.
    Recent fundamental changes in the budget process have exacerbated 
the deficit. Agricultural research has historically been more heavily 
`earmarked' than other spending accounts. With the elimination of 
congressionally directed spending from the budget process and failure 
to recapture the funds involved, the critical USDA REE mission has been 
disproportionately impacted.
    Unless sufficient funding is achieved, the best concepts about how 
to organize and conduct research won't be able to deliver the results 
needed by the nation. With the nation and world seeking solutions for 
climate change, sustainable fuel production, ecosystem health, food 
security and nutrition challenges, now is the time to grow investment 
in our nation's agricultural research enterprise.
    Research Business Plan Needed--This quest starts with articulating 
a compelling case to fund unmet needs. National C-FAR recommends that 
this Subcommittee and USDA make it a priority to identify current and 
future challenges to the food and agricultural sector and the REE needs 
and resource requirements to respond to those challenges in the coming 
years in a timely and effective manner.
    USDA has involved stakeholders in the development of a new REE 
Action Plan. Consistent with our stated mission, National C-FAR's input 
focused on how the plan articulates the case for addressing the 
longstanding REE funding deficit and helps lay the groundwork for 
necessary increases in Federal investment.
    National C-FAR recommended that the REE Action Plan include a 
thoughtful and credible ``Research Business Plan,'' either as part of 
the Action Plan, or as a necessary complement. The REE Action Plan is a 
hollow shell unless the resources needed to accomplish stated goals are 
identified and articulated, with a business/action plan to secure the 
necessary resources.
    Such a ``Research Business Plan'' should make the best case 
possible for how much funding is needed to achieve the goals and REE 
programs intended to meet those goals, as well as the likely 
consequences of not providing sufficient funding. For example, an 
evaluation of performance and needs should address the following--

   What is the best estimate of funding needed to accomplish 
        stated desired outcomes?

   What is the appropriate food and agricultural science role 
        of the public sector versus the private sector? Publicly 
        financed REE is a necessary complement to private sector 
        research, focusing in areas where the private sector does not 
        have an incentive to invest, when (1) the pay-off is over a 
        long term; (2) the potential market is more speculative; (3) 
        the effort is during the pre-technology stage; and (4) where 
        the benefits are widely diffused.

   How will the Action Plan (and outcomes) be impacted by 
        different funding levels--for example, current funding, 2X 
        funding, funding at a level identified as needed to accomplish 
        all stated goals, 0.5X funding?

   How will priorities change based on different funding 
        levels? How will outcomes be affected? What priority needs will 
        not be addressed due to insufficient funding? Will outcomes 
        still be timely to meet identified challenges, like closing the 
        productivity gap in time to feed nine billion people?

    Those responsible for making difficult decisions about shaping the 
2012 Farm Bill and future budgets in Congress and the Administration 
arguably don't have even the basic information needed to make informed 
decisions about REE funding levels with the information currently 
available. Those who read the USDA Action Plan should also come away 
with an appreciation of what will and won't be addressed at different 
resource levels.

   While studies touting the high returns on public investment 
        are helpful, that doesn't appear to be compelling enough to 
        attract additional funding, especially when the trend is to 
        during these challenging budget times is to cut spending, not 
        increase it.

   National C-FAR recommends that USDA's REE Action Plan--and 
        its implementation--should emphasize the current leadership's 
        commitment to focusing resources to make a difference rather 
        than spreading limited funds a mile wide and an inch deep.

   The Action Plan should articulate choices on what will and 
        will not be done [and done well] at different resource scenario 
        levels.

    Invest in Research Business Plan--USDA and the Administration 
should base annual budget requests for the REE mission on such a needs 
assessment. The crafting of the research component of the 2012 Farm 
Bill should be shaped around meeting future challenges and needs.
    If ``Research Business Plan'' answers aren't available, then it is 
time to invest additional resources in developing defensible answers--
even if just through a building block approach, improving the quality 
of information provided to budget decision makers a step at a time so 
they can better understand the rationale of budget requests and likely 
consequences of funding decisions. This is a shared responsibility--of 
USDA, Congress and REE stakeholders--those who authorize and fund the 
programs, those who manage the programs and those who need the 
outcomes.
    For example, a ``productivity gap'' has been identified in tracking 
what will be needed to produce enough food to feed nine billion people.

   What is the commensurate ``research gap'' in developing the 
        science and tools to close the productivity gap?

   What are defensible estimates of how much will be needed--
        and when (lead times)?

   What is the appropriate and/or necessary portion/role of 
        public sector REE investment?

   How much can leveraging contribute to closing the ``research 
        gap?''

   What are the consequences of not committing to adequate 
        public investment?

    To the credit of the USDA Economic Research Service, a peer-
reviewed, new report, ``Public Agriculture Research Spending and Future 
U.S. Agricultural Productivity Growth: Scenarios for 2010-2050,'' 
(Heisey, Wang and Fuglie, Economic Report No. EB-17, July 2011, http://
www.ers.usda.gov/publications/eb17) has just been released that 
provides timely analysis and perspective on the vital linkage between 
investments in research and productivity. In brief:

        ``By 2050, global agricultural demand is projected to grow by 
        70-100 percent due to population growth, energy demands, and 
        higher incomes in developing countries. Meeting this demand 
        from existing agricultural resources will require raising 
        global agricultural total factor productivity (TFP) by a 
        similar level. The rate of TFP growth of U.S. agriculture has 
        averaged about 1.5 percent annually over the past 50 years, but 
        stagnant (inflation-adjusted) funding for public agricultural 
        research since the 1980s may be causing agricultural TFP growth 
        to slow down. ERS simulations indicate that if U.S. public 
        agricultural R&D spending remains constant (in nominal terms) 
        until 2050, the annual rate of agricultural TFP growth will 
        fall to under 0.75 percent and U.S. agricultural output will 
        increase by only 40 percent by 2050. Under this scenario, 
        raising output beyond this level would require bringing more 
        land, labor, capital, materials, and other resources into 
        production.''

    National C-FAR recommends utilizing this analysis and related new 
information as a reference point in evaluating USDA's research program 
and moving forward.
    In ``Investing in a Better Future through Public Agricultural 
Research,'' a Commentary released on March 14, 2011 by the Council for 
Agricultural Science and Technology (CAST Commentary QTA2011-1), the 
authors make a number of salient observations that National C-FAR 
believes are germane to the funding debate and the future viability of 
USDA's research program--

   The benefits of past public investments in ag research are 
        measurable on multiple fronts. For example, farm productivity 
        has increased, and the share of U.S. household income spent on 
        food has declined to less than 10%.

   Numerous studies find rates of return on public ag research 
        investments of 20 to 80%. Huffman and Evenson (2006) estimate a 
        marginal rate of return of approximately 50%. This level is 
        approached by few other public sector investments.

   Publicly funded food and ag research in the U.S. has been 
        essentially flat over the past 2 decades, while funding of 
        other research fields has increased significantly. Public 
        funding of agricultural research in the rest of the world 
        during the same time period has outpaced investment in the U.S.

   Advances in new science and technologies involve long 
        gestation periods, with later advances built on earlier 
        successes. Time lags between publicly funded ag research and 
        benefits are long, with a delay before any benefits are 
        realized.

   There is an important and necessary role for public research 
        because the private sector faces weak incentives to undertake 
        research in numerous areas of national interest. Most research 
        in general, basic and pre-invention sciences occurs in public 
        and private universities. Applied research is shared among 
        universities, government institutions and private firms.

   Funding for both inter- and intra-mural research is 
        important, as is formula funding, given the ``placed-based'' 
        nature of agricultural science.

   World population continues to grow. Demand for food will be 
        much greater, and limited new land is available.

   Agricultural research is a low-cost source of future 
        agricultural productivity and output increases, but advances in 
        the frontiers of science are difficult and uncertain, 
        translating into long lags, typically 15-20 years. Productivity 
        cannot be easily jump-started after a long period of stagnant 
        investment in public agricultural research.

   With agricultural research funding delays, productivity 
        increases are expected to slow, and world food prices will rise 
        more rapidly than otherwise projected during the next 40 years.

    Other touchstone issues in evaluating USDA's research program 
include:

   The role of the private versus public sector in committing 
        to investments.

   How does our nation invest in the science needed to do our 
        part in helping feed a global population that is projected to 
        grow to nine billion people in the not too distant future?

   How do we develop the science needed to achieve other goals 
        expected and demanded of the food and agriculture sector, like 
        biofuels, conservation, nutrition, food safety and 
        environmental protection?

   How do we develop the science needed to sustain the natural 
        resource base upon which agriculture depends while achieving 
        all the other goals?

   What are the top priorities of USDA's research program? 
        While USDA's research Action Plan presents a list, it is not 
        clear what is most important and how resources are being 
        allocated.

    National C-FAR believes it is imperative to lay the groundwork now 
to respond to the many challenges and promising opportunities ahead 
through Federal policies and programs needed to promote the long-term 
health and vitality of food and agriculture for the benefit of both 
consumers and producers. Stronger public investment in food and 
agricultural REE is essential in producing research outcomes needed to 
help deliver beneficial and timely solutions on a sustainable basis. 
The potential payoff is enormous for Americans' health, rural America 
and agriculture and the nation's economy, and world food security. It 
is equally sobering to reflect on the likely negative consequences of 
not making the necessary investments.
    National C-FAR and others in the stakeholder community bear a 
commensurate responsibility in articulating needs and making the case 
for increased funding. It is incumbent on USDA, stakeholders in the REE 
and ``customer'' communities, and the Congress to find the will and a 
way to increase investments in this vital mission area and turn our 
shared hope into an operational reality.
    Thank you for the opportunity to share our views.
            Sincerely,

            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
R. Thomas Van Arsdall, Executive Director.
                                 ______
                                 
       Submitted Statement by Biotechnology Industry Organization
    The Biotechnology Industry Organization (BIO) is the world's 
largest biotechnology organization, providing advocacy, business 
development and communications services for more than 1,100 members 
worldwide. BIO members are involved in the research and development of 
innovative healthcare, agricultural, industrial, and environmental 
biotechnology products.
    BIO would like to emphasize the value of agricultural research 
programs within the U.S. Department of Agriculture (USDA), which have 
sparked agricultural innovation and will help to solve the critical 
food and energy security challenges facing a rapidly growing global 
population.
    The United Nations predicts that the global population will rise to 
nine billion in 2050 and over ten billion by 2100. It is predicted that 
global agricultural production will need to double by 2050. Because 
there is a fixed amount of arable land on the planet, to meet these 
challenges, new and existing technologies must provide at least 70 
percent of the necessary increase in food production. Robust 
agricultural research will allow scientists to improve technologies and 
invigorate know-how so that humans can best produce food on a limited 
land base using safe, efficient, and sustainable methods.
    In the 6 decades since 1948, USDA estimates show that U.S. farm 
output increased by an average of 1.58 percent per year, inputs under 
the control of farmers increased by only 0.06 percent per year, and 
agricultural productivity increased by 1.52 percent per year (USDA-ERS, 
2011). Hence, virtually all the increase in U.S. farm output during the 
past 60 years is due to productivity increases and a negligible amount 
is due to increases in conventional inputs. According to the USDA 
Economic Research Service, farm productivity has risen 158 percent 
since 1948. This increase can be attributed to changes in the 
efficiency of farming practices and research and development of 
agricultural technologies. The return on investment of agricultural, 
food, nutrition, and natural resource research and development is $20 
or more to the U.S. economy for every dollar spent (Fuglie et al., 
2007).
    Growth in agricultural productivity during the last 2 decades of 
the twentieth century, which was sizable in developed countries and in 
some developing countries, was built on previous investments in 
agricultural research. For modern agriculture to fully flourish, 
investments in agricultural research must grow. Today, the United 
States is a leader in agriculture, producing $312 billion in 
agricultural products and exporting $108 billion annually.
    Unfortunately, however, investments in public agricultural research 
in the United States has slowed since 1980 (Huffman and Evenson 2006; 
Pardey et al. 2006).
    In the United States, broadly defined public agricultural research 
expenditures grew by an average of 3.2 percent per year (adjusted for 
inflation) during the 2 decades leading up to 1980. No net growth 
occurred between 1980 and 1990, and net growth averaged only 0.6 
percent per year between 1990 and 2009. Public funding of agricultural 
research in the rest of the world during the last 2 decades has 
outpaced U.S. research investment.
    Meeting the various complex modern agricultural demands of a 
growing global population will require raising global agricultural 
total factor productivity (TFP). The rate of TFP growth of U.S. 
agriculture has averaged about 1.5 percent annually over the past 50 
years, but stagnant (inflation-adjusted) funding for public 
agricultural research since the 1980s may be causing agricultural TFP 
growth to slow down. ERS simulations indicate that if U.S. public 
agricultural R&D spending remains constant (in nominal terms) until 
2050, the annual rate of agricultural TFP growth will fall to under 
0.75 percent and U.S. agricultural output will increase by only 40 
percent by 2050. Under this scenario, raising output beyond this level 
would require bringing more land, labor, capital, materials, and other 
resources into production (Heisey et al., 2011). With mean lags of 15 
to 20 years, agricultural productivity cannot be easily jump-started 
after a long period of stagnant investment in public agricultural 
research.
    BIO supports research funding for technologies that will provide 
fuel for the future, improve agricultural production efficiency, and 
allow us to raise crops in harsher climates. Research in plant and 
animal biotechnology will play a key role not only in improving food, 
feed, and fuel production and reducing the environmental impact of 
agriculture but also in improving models of human disease and producing 
pharmaceuticals for animal and human uses. Agricultural and forestry 
biotechnology also contribute to rural economies and rural job growth.
    BIO supports increased funding for the research programs at the 
Department of Agriculture, including all programs within the Research, 
Education, and Economics mission area: the National Institute of Food 
and Agriculture and its Agriculture and Food Research Initiative, the 
Agricultural Research Service, the National Agricultural Statistics 
Service, and the Economic Research Service and research conducted by 
the Forest Service. Results from these important research programs can 
be leveraged across the research arms of the government to solve 
critical problems that require science-based, cross-cutting and multi-
disciplinary solutions.
    Through biotechnology, animals can be raised that produce high 
concentrations of readily extractible human antibodies and other 
proteins to treat human diseases and protect military personnel and to 
replace tissues for regenerative medicine. High level research can be 
performed on livestock that have been engineered to accurately develop 
diseases that afflict humans. As agriculture continues to be pressed to 
be ever more productive and economically and environmentally 
sustainable, the targets of research are to increase yields; to develop 
more nutritious and safer foods; to reduce requirements for water, 
nitrogen and other inputs; and to develop disease resistant crops that 
require fewer chemical protectants, crops that are used to produce more 
and better biofuels, and crops that produce useful and valuable 
materials that will fuel the industrial and pharmaceutical sectors of 
the future.
    While biotechnology has been heavily utilized in commodity crops, 
it also shows great promise for specialty crops and in parts of the 
world not already realizing its benefits. Nutrient-enhanced crops and 
those tolerant of sub-standard growing conditions benefit people around 
the world who otherwise would have difficulty getting the proper 
nutrition. Many of these advances will come out the research performed 
within public institutions, such as the USDA. Most research in general, 
basic and pre-invention sciences, occurs in public and private 
universities. Applied research is shared among universities, government 
institutions and private firms.
    Publicly financed Research, Extension, and Education is a necessary 
complement to private sector research, focusing in areas where the 
private sector does not have an incentive to invest, when (1) the pay-
off is over a long term; (2) the potential market is more speculative; 
(3) the effort is during the pre-technology stage; and (4) where the 
benefits are widely diffused. Public research, extension and education 
help provide oversight and measure long-term progress. Public research, 
extension and education also act as a means to detect and resolve 
problems in an early stage, thus saving American taxpayer dollars in 
remedial and corrective actions.
    The Research Title of the farm bill represents the nation's 
signature Federal investment in the future of the food and agricultural 
sector. Other Farm Bill titles depend heavily upon the Research Title 
for tools to help achieve their stated objectives. Continued authorized 
and appropriated support for public research benefits producers 
domestically and worldwide while preparing for the future of all of 
agriculture.
References
    Fuglie, K. and P.W. Heisey. September 2007. Economic Returns to 
Public Agricultural Research. EB-10, U.S. Dept. of Agriculture, 
Economic Research Service.
    Heisey, P., S.L. Wang, and K. Fuglie. July 2011. Public Agriculture 
Research Spending and Future U.S. Agricultural Productivity Growth: 
Scenarios for 2010-2050. EB-17, U.S. Dept. of Agriculture, Economic 
Research Service.
    Huffman, W.E. and R.E. Evenson. 2006. Science for Agriculture: A 
Long-Term Perspective. 2nd ed. Blackwell Publishing, Ames, Iowa.
    Pardey, P.B., N.M. Beintema, S. Dehmer, and S. Wood. 2006. 
Agricultural Research: A Global Divide? IFPRI Food Policy Report. 
International Food Policy Research Institute, Washington, D.C.
    U.S. Department of Agriculture-Economic Research Service (USDA-
ERS). 2011. Agricultural Productivity in the United States, http://
www.ers.usda.gov/Data/AgProductivity/ (8 February 2011).
                                 ______
                                 
                          Submitted Questions
Response from National Institute of Food and Agriculture; Agricultural 
        Research Service; National Agricultural Statistics Service; and 
        Economic Research Service, U.S. Department of Agriculture
Questions Submitted By Hon. Steve Southerland II, a Representative in 
        Congress from Florida
    Question 1. Thank you for the U.S. Department of Agriculture's 
ongoing efforts and commitment toward research to sustain and foster 
U.S. agriculture production in our nation. I recognize the critical 
significance of continuation and strengthening of research programs 
authorized in the 2008 Farm Bill to address pressing agricultural 
priorities, particularly for specialty crops, a significant segment of 
the U.S. agricultural industry and in my home state of Florida.
    The 2008 Farm Bill, the Food, Conservation, and Energy Act of 2008 
(P.L. 110-246) strengthened emphasis on research, including 
establishment of the Specialty Crop Research and Initiative (Section 
7311) to address, ``the critical needs of the specialty crop industry 
by developing and disseminating science-based tools to address needs of 
specific crops and their regions, including--

          ``(1) research in plant breeding, genetics, and genomics to 
        improve crop characteristics, such as--

                  (A) product, taste, quality, and appearance;
                  (B) environmental responses and tolerances;
                  (C) nutrient management, including plant nutrient 
                uptake efficiency;
                  (D) pest and disease management, including resistance 
                to pests and diseases resulting in reduced application 
                management strategies; and
                  (E) enhanced phytonutrient content;

          ``(2) efforts to identify and address threats from pests and 
        diseases, including threats to specialty crop pollinators;
          ``(3) efforts to improve production efficiency, productivity, 
        and profitability over the long term (including specialty crop 
        policy and marketing);
          ``(4) new innovations and technology, including improved 
        mechanization and technologies that delay or inhibit ripening; 
        and
          ``(5) methods to prevent, detect, monitor, control, and 
        respondto potential food safety hazards in the production and 
        processing of specialty crops, including fresh produce.''

    Could you please elaborate on how the Specialty Crop Research 
Initiative (SCRI), aimed by its authors of the House Agriculture 
Committee to meet the critical challenges of specialty crop production 
in this nation--and my home state of Florida--which ranks second in the 
nation in specialty crop value, is serving these ends?
    Answer. NIFA believes that the keys to meeting the critical 
challenges of the specialty crop industries in this country, as 
articulated by the House Agriculture Committee in SCRI, are two-fold: 
(1) engaging stakeholders and incorporating their needs and (2) funding 
the highest quality science to develop the tools that address those 
needs.
    NIFA implements those two keys for an impactful program through 
several mechanisms. First, the Request for Applications (RFA), 
published each year to solicit applications for funding, includes a 
short list of priorities for each of the five focus areas identified in 
the SCRI legislation. These non-exclusionary priorities are written to 
be fairly generic for many specialty crops, as they were gleaned from 
the strategic plans and research roadmaps of many major U.S. specialty 
crops. Each year, NIFA reevaluates those priorities and makes minor 
adjustments as industry needs dictate. Second, from its inception, the 
SCRI program has asked applicants to include stakeholders and 
stakeholder organizations as full participants in their proposed 
projects. This means stakeholder engagement in: identifying project 
objectives, conducting the research and extension activities, and 
evaluating project impacts. Furthermore, each applicant must 
demonstrate that their project addresses an industry need. In the peer-
review process, each application is evaluated on these elements of 
stakeholder needs and engagement as part of the application's 
``relevance'' score. Based on the recommendations from a 2011 external 
review of the SCRI program, NIFA has reevaluated the relevance scoring 
and made some modifications for fiscal year 2012. Third, NIFA actively 
seeks to include scientists from specialty crop industries on peer-
review panels to help ensure that the industry perspective is fully 
considered and appreciated. Fourth, in addition to a possible score for 
relevance, each application receives up to an equal score for 
``scientific merit.'' Because of the highly competitive nature of the 
SCRI program, only those applications that have demonstrated strong 
industry relevance/need and high scientific merit are eventually 
considered for funding. Finally, most projects funded by the SCRI 
program are required to create, and meet regularly with, an advisory 
board consisting of industry, academia, NGOs, technology providers, 
etc. In most cases, specialty crop stakeholders are the majority, or 
only, members of these advisory boards.
    During the first 3 years of SCRI awards, investigators in Florida 
are participating in 16 different SCRI projects covering a variety of 
specialty crop needs that are important to that State's industries.
    In addition, the following excerpt from the SCRI external review 
report's Conclusion section attests that this NIFA program is meeting 
the intents of the SCRI legislation:

        The Review Panel believes that the SCRI Program is following 
        the guidelines mandated by the 2008 Farm Bill. The Panel views 
        the SCRI as an essential/critical Program to maintain and 
        enhance the competitiveness of the specialty crop industry in 
        the U.S. . . . Results from funded projects that are now in 
        mid-stream have already demonstrated value to the specialty 
        crop industry.

    Question 2. Specifically, within the Specialty Crop Research 
Initiative consideration process is there recognition of the following 
factors:

    a. Crops facing imminent dangers and threats to future production?

    b. Magnitude and significance of the specialty crop in crop value 
        nationally?

    c. Awards representational of specialty crop value regionally/
        state, in award distribution?

    d. Priorities of producer organizations and state agricultural 
        bodies?

    Answer. Applications to the SCRI program are evaluated by a 
scientific peer-review process based on both relevance to U.S. 
specialty crop industries and scientific merit. These two components of 
the review for each application are weighted equally. Given the 
extremely competitive nature of the program and the overall quality of 
applications received each year, only those applications that score 
very high on both components are considered for funding. Certainly, 
``imminent dangers and threats to future production'' is something that 
many good applications clearly demonstrate. In general, the quality of 
proposals as determined by review panels is such that NIFA could fund 
twice as many projects each year, if the funds were available to SCRI.
    Unlike the Specialty Crop Block Grant Program, which considers crop 
size in each state as part of funding allocations, a scientific grant 
program like the SCRI is intended to fund the best science, 
irrespective of any crop's magnitude regionally or nationally. While 
scientific merit can be evaluated quite objectively, it is much more 
problematic to impartially assess the needs of one industry/crop versus 
another. So, in the peer-review process, NIFA only asks that the panel 
assess whether stakeholder need has been established, and then let 
scientific merit guide the relative ranking of applications. All things 
being equal among a group of applications, however, the panelists may 
consider the size of the industry in its final ranking.
    One would expect that larger, national industries would have a 
larger, established base of scientific investigators already engaged, 
and so that scientific community would apply to SCRI at a higher rate 
and, all things being equal, receive a commensurate level of SCRI 
funding. In the first two years of the SCRI, NIFA examined the 
geographic distribution of awardees and subcontractors and found that 
maps depicting geographic participation in SCRI awards matched very 
closely maps displaying the intensity of U.S. specialty crop 
production. So, while a scientific grant program does not seek 
geographic proportionality, for the rationale stated above, SCRI 
projects and specialty crop production seem to align geographically.
    In addition to the response already provided regarding stakeholder 
input to the SCRI, each published RFA asks for stakeholder input to the 
program. Also, when preparing for the 2011 external review of SCRI, 
NIFA made a special request for stakeholder input to help inform the 
review team, publishing that request in the RFA and on our agency web 
site.

    Question 3. What are USDA's plan to address the National 
Agricultural Research Extension, Education and Economic Advisory Board 
(NAREEE) Report on Effectiveness of Research, Extension and Economics 
Programs for U.S. Specialty Crops, issued on July 23, 2011, which 
included recommendations and improvements from the specialty crops 
stakeholder community regarding the Specialty Crop Research Initiate?
    Answer. NIFA has received a copy of the NAREEE Board's report. A 
number of the issues raised in that report, with respect to the SCRI, 
are similar to several recommendations made by the SCRI external review 
panel in their report (see response to question no. 1 above). Many of 
that external review report's recommendations have been incorporated 
into the upcoming 2012 Request for Applications. However, for the 
record and to cover any remaining issues, NIFA plans to release a 
response to the NAREEE Board's report shortly.
    Question 4. I would like to formally commend the U.S. Department of 
Agriculture for their July 11 announcement to ``Strengthen Efforts to 
Address Citrus Greening'' through funding of $2 million into research 
through Agricultural Research Service (ARS) and USDA's National 
Institute of Food and Agriculture (NIFA) focusing $9 million in a 3 
year, competitive grants program targeting citrus greening, as well as 
establishment of a Citrus Disease Research and Development Advisory 
Committee These efforts are greatly appreciated and extremely valuable, 
and as is noted in the USDA's announcement:

        Citrus greening is one of the most devastating diseases 
        affecting any commercial agricultural crop, according to the 
        National Academy of Sciences. Citrus greening threatens to 
        destroy over 1 million commercial citrus acres that have an 
        annual production value of approximately $3 billion across the 
        nation. Yearly losses could reach $10 billion if citrus 
        greening is left unchecked. 

    Could you please detail how this vital collaborative and research 
initiative to Strengthen Efforts to Address Citrus Greening will be 
carried out? (Agencies of jurisdiction, timeline, collaborative 
stakeholders/research partners?)
    Answer. Under the aegis and leadership of the APHIS Citrus Health 
Research Program, ARS, and NIFA together with the National Citrus 
Mutual representatives from Florida, Texas, and California have formed 
a Science and Technology committee that coordinates research across the 
Citrus Greening research community. This coordination includes keeping 
an active inventory of currently funded research projects and helping 
the research community organize into strategic outcome working groups. 
The strategic outcomes, identified in an industry stakeholder workshop 
are designed to produce short-, medium- and long-term outcomes, 
respectively:

    a. Maintain citrus groves that are already infected with Citrus 
        Greening productive and alive (primarily Florida);

    b. Keep Citrus Greening disease from moving into areas that already 
        have the disease vector (the Citrus Psyllid)--(Texas, Arizona, 
        and California); and

    c. Create new Psyllid management systems and Citrus genetics that 
        render Citrus Greening a non-issue.

    Although each of these outcomes have distinct research pathways and 
activities, there are overlaps and feedback among them.
    The Citrus research community has embraced the strategic plan and 
is organized in working groups representing the three outcome areas, 
which meet via teleconference and report to the Science and Technology 
committee monthly.
    The Citrus research community meets biannually and will meet again 
in October, 2011. These meetings facilitate intra- and inter working 
group communications, research gap analyses, and peer and stakeholder 
review of research outcomes. It is expected that this upcoming meeting, 
and future such meetings, will be the genesis of collaborative projects 
leading to participation in NIFA funding opportunities on Citrus 
Greening.
    While the SCRI program has explicitly solicited Citrus Greening 
projects for the past several years, NIFA plans to further strengthen 
that focus in the upcoming 2012 SCRI solicitation. Specific research 
and extension targets in that solicitation will be closely aligned with 
the priorities identified by the Science and Technology committee, as 
noted above.
    Additionally, after receiving input from many stakeholders, 
Secretary Vilsack charged REE to work with the relevant components of 
USDA to devise several other strategies to address this serious threat. 
To this end, REE has been considering all options--from a stand-alone 
committee to an entity within the NAREEE board to broader task forces--
in the formation of the new committee Citrus Disease Research and 
Development Advisory Committee. While the details of the committee are 
still being worked out, the USDA is committed to ensuring that 
solutions incorporate continued input from producers, industry 
representatives, and the scientific community. As timing and 
flexibility are of utmost importance, REE is working quickly to design 
a mechanism that meets the interests and requirements of the many 
entities involved.

    Question 5. Could you indicate the specific reasons why Citrus 
Greening was not successful in an award through the Specialty Crop 
Research Initiative, for the last 3 years,* in concert with the 
recommendations of the Florida, Texas and California collaborative 
research efforts, given that citrus ranks second in crop value among 
fruit and vegetable crops, according to USDA's National Agricultural 
Statistics Service, and USDA indicates that ``Citrus greening is one of 
the most devastating diseases affecting any commercial agricultural 
crop, according to the National Academy of Sciences''?
---------------------------------------------------------------------------
    * Exception Texas ARS award in 2008.
---------------------------------------------------------------------------
    Answer. SCRI has funded a number of projects in its first three 
years of existence that are dealing with the Citrus Greening issue. Two 
of these projects (ARS, 2008; Arizona State Univ., 2010) address 
management and control strategies, covering prevention and economics. 
Two other projects (Carnegie-Mellon, 2008; Wash. State, 2009) are 
developing the management technologies for growers to better control 
the disease (precision spraying, early detection of HLB infection) and 
the genetic information for researchers to develop new plant material 
(Citrus genomics database).
    As noted above, the peer-review process equally weights relevance 
and scientific merit in the evaluation of applications. No one disputes 
the relevance of Citrus Greening projects to the needs of the citrus 
industry. However, in a competitive scientific grant program, 
applications must also demonstrate high scientific quality. Many of the 
applications to date dealing with Citrus Greening have lacked the 
necessary scientific merit for peer-review panels to rank them high 
enough for NIFA to consider them for funding. For reasons of 
confidentiality, NIFA only releases to an application's project 
director detailed information (individual reviews and peer-review panel 
summary) regarding why their project was not recommended for funding.

    Question 6. The National Plant Diagnostic Network (NPDN) was 
established in 2002 by legislative mandate to enhance agricultural 
security through plant diagnostic laboratories carried out by National 
Institute of Food and Agriculture (NIFA) and through the collective 
efforts of many individuals representing Land Grant Universities, 
federal agencies, state departments of agriculture, and other 
stakeholders, the NPDN has grown into an internationally respected 
consortium of plant diagnostic laboratories. The specific purpose of 
the NPDN is to provide a nationwide network of public agricultural 
institutions with a cohesive, distributed system to quickly detect high 
consequence pests and pathogens that have been introduced into 
agricultural and natural ecosystems, identify them, and immediately 
report them to appropriate responders and decision makers.
    NPDN Funding is located in the NIFA Budget: National Institute of 
Food and Agriculture President's Proposed Budget for 2011. Funding 
located under Integrated Activities--Item for Food and Agriculture 
Defense Initiative (This item includes both USDA National Animal Health 
Laboratory Network (NAHLN).
    I understand that funding for the National Plant Diagnostic 
Network, has been reduced by roughly 37% from FY 2010 to FY 2011:

        2010--$9.830 million enacted $4,283,386 to NPDN

        2011--$5.988 million reduction Enacted, $2,675,000 to NPDN

    Can you please let me know the Administration's plans and specific 
funding priorities for the National Plant Diagnostic Network program?
    Answer. The specific purpose of the NPDN is to provide a nationwide 
network of public agricultural institutions with a cohesive, 
distributed first detector and laboratory system to quickly detect high 
consequence pests and pathogens that have been introduced into 
agricultural and natural ecosystems, identify them, and immediately 
report them to appropriate responders and decision makers. To 
accomplish this mission, the NPDN has invested in plant diagnostic 
laboratory infrastructure and training, developed an extensive network 
of first detectors through education and outreach, and enhanced 
communication among agencies and stakeholders responsible for 
responding to and mitigating new outbreaks.
    NPDN is in the final year of a 5 year (May 2007-May 2012) 
Cooperative Agreement, and the strategic objectives for the five year 
plan are to:

    1. Maintain a strong diagnostic network through communications, 
        evolving standard operating procedures, and diagnostic training 
        for high consequence pathogen and pest outbreaks;

    2. Enhance the national database of real-time diagnostic records;

    3. Develop and keep a registry of trained first detectors (field 
        scouts, extension agents, certified crop consultants) of high 
        consequence pathogens and pests;

    4. Exercise, in every state, communications with regulatory 
        officials.

    The work plan for 2011, due to the budget cut, must curtail 
objective three activities, eliminate objective four activities, and 
reduce the number APHIS training sessions that diagnosticians can 
attend. Additionally, the NPDN was to complete the roll-out of a 
Quality Assurance/Quality Control accreditation system by the end of 
the Cooperative Agreement. With reduced funding, the QA/QC system will 
not be implemented.
    The highest order priority for the NPDN is to maintain its network 
of diagnostic laboratories. The NPDN system is currently responding to 
two high-impact outbreaks of regulatory plant diseases.
                                 ______
                                 
     House Committee on Agriculture Farm Bill Audit Questionnaire--
                     Agricultural Research Service
1. Program Name
    Agricultural Research Service (ARS).
2. Subprograms/Department Initiatives
    Animal Production and Protection

    The mission of the ARS Animal Production and Protection (APP) 
national programs is to provide the scientific information and tools to 
help support the U.S. food animal industries to continue to compete 
successfully in worldwide trade, provide the supply of nutritional 
animal products required by the nation, and contribute toward global 
food security. APP accomplishes this mission by research to maximize 
production efficiency and animal health through scientific innovation 
and the discovery and development of new technologies focused on 
national priorities. Strategic public-private partnerships are 
established to achieve our mission, including support of government 
action and regulatory agencies responsible for trade, biodefense, and 
global food security. Emphasis will be given to genetic improvements of 
traits related to production and production efficiencies and germplasm 
conservation; understanding the mechanisms of disease resistance, and 
the development of tools to prevent, control, or eradicate diseases 
that threaten our food supply and public health; and identifying and 
developing sustainable systems for production of high quality meat, 
fish, milk, and eggs that also ensure animal health and well-being. The 
portion of the program that produces new solutions to the many 
veterinary problems created by arthropod pests and vectors will be 
leveraged to solve related problems affecting human health and the 
well-being of American citizens.

    APP Statistics:

        Total Projects: 108
        Total Locations: 37
        Total Scientists: 295

    The Food Animal Production program conducts research to furnish 
scientific information about biotechnologies and management practices 
that ensure an abundant supply of competitively priced animal products. 
The mission of the Food Animal Production Program is to: safeguard and 
utilize animal genetic resources, associated genetic and genomic 
databases, and bioinformatic tools; develop a basic understanding of 
the physiology of livestock and poultry; and develop information, 
tools, and technologies that can be used to improve animal production 
systems, all to ensure an abundant, safe, and inexpensive supply of 
animal products produced in a healthy, competitive, and sustainable 
animal agriculture sector of the U.S. economy.
    U.S. systems of agricultural animal management and production face 
formidable challenges. One of the most exacting challenges is 
successful adaptation to the accelerating demands of society that 
impact animal productivity and product quality. The demands placed on 
the national system of food animal production by a rapidly changing 
world can only be met by technologies that optimally harness the 
inherent genetic potential of animal and plant germplasm in concert 
with certified industry and food marketing practices. Production 
systems that successfully identify, preserve, and harness that genetic 
potential will maximize profits, secure supply, increase market 
competitiveness, sustain small and mid-sized producers, and maintain 
genetic diversity and consumer confidence.
    This National Program addresses high-priority national needs for:

   Understanding, Improving, and Effectively Using Animal 
        Genetic and Genomic Resources

   Enhancing Animal Adaptation, Well-Being and Efficiency in 
        Diverse Production Systems

   Measuring and Enhancing Product Quality

        Total Projects: 32
        Total Locations: 17
        Total Scientists: 91

    The Animal Health program aims to deliver scientific information 
and tools to detect, control, and eradicate animal diseases of high 
national priority. The goal of the program is to protect and ensure the 
safety of the nation's agriculture and food supply through improved 
disease detection, prevention, control, and treatment. Basic and 
applied research approaches will be applied to solve animal health 
problems of high national priority. Emphasis will be given to methods 
and procedures to control animal diseases through the discovery and 
development of diagnostics, biotherapeutics, animal genomics 
applications, disease management systems, animal disease models and 
farm biosecurity measures.
    Achieving results in veterinary medical research, which provide 
useful information for problem-solving, often demands an integrated 
approach in which the experimental design may range from knowledge 
development at the molecular level to clinical trials that will lead to 
the development of countermeasures for preventing and controlling a 
disease outbreak in the field. This national program provides the means 
for the integration of research. Major initiatives draw upon relevant 
expertise within the national program, coordinating and integrating 
that expertise to develop a specific useful application of the 
knowledge. Research projects also attract Federal, university, industry 
and international partners. Because a significant number of projects in 
the animal health research portfolio focuses on the discovery of novel 
technologies, intellectual property strategies will be addressed in 
project plans to facilitate technology transfers and the investment by 
the private sector in the development of these technologies.
    This National Program addresses high-priority national needs for:

   Biodefense research

   Animal genomics and immunology

   Zoonotic, respiratory, reproductive, neonatal, enteric and 
        parasitic diseases

   Transmissible spongiform encephalopathies

        Total Projects: 40
        Total Locations: 11
        Total Scientists: 103

    The Veterinary, Medical and Urban Entomology program develops more 
effective means to prevent or suppress insects, ticks and mites that 
affect animal and human well being. The program aims to eliminate 
losses to animal production and products caused by arthropod borne 
diseases and arthropod induced trauma; to reduce the risk to humans 
from arthropod borne zoonotic diseases; to enhance the safety of animal 
products and the quality of life for humans; and to increase the value 
and competitiveness of United States agriculture.
    More detailed behavioral studies of certain activities (e.g., blood 
sucking) will result in the association of chemical and other stimuli 
with these behaviors. A new understanding will also present the 
possibility of entirely new tools being developed to alter arthropod 
behavior in such a way that their damage is prevented. Beyond the 
research needed to understand the nature of these behaviors, bioassays 
that accurately measure them will be necessary to find out what 
chemical or physical factors affect them. Before integrating bioassays 
into an evaluation scheme, they should be validated independently to be 
sure that they are measuring what is intended. Electrophysiology is 
another essential part of development, representing a range of 
activities and measurements. Among the organizational products required 
for maximum impact are a standard vocabulary for influences on 
hematophagous arthropods and a standard concept of how to develop 
useful products.
    This National Program addresses high-priority national needs for:

   Medical Entomology for the Public and Military

   Veterinary Entomology of Livestock and Poultry

   Pests that Damage Structures

   Fire Ants, other Invasive Ants, and Household Pests

        Total Projects: 13
        Total Locations: 7
        Total Scientists: 49

    The vision for the Aquaculture program is to support a thriving 
domestic industry based on improved genetic stocks and scientific 
information on biotechnologies and management practices to ensure a 
high quality, safe supply of healthful seafood and aquatic products.
    The U.S. aquaculture industries face formidable challenges. The 
demand for seafood is increasing worldwide, yet the ability for U.S. 
aquaculture producers to meet that demand requires development of 
technologies to reduce the cost of production while maintaining and 
improving product quality. Producers, processors and breeders are in 
need of systems that successfully identify, promote, and harness the 
aquatic animal improvements to maximize profits, secure supply, reduce 
environmental impacts, increase market competitiveness, sustain small 
and mid-sized scale producers, and earn consumer confidence. Research 
in the disciplines of genetics, nutrition, health, and physiology will 
support the biological improvement of animals, while ecology, 
engineering and economics will support the improvement of systems and 
help to ensure sustainability. Our research components strive to 
develop and ensure an abundant, safe, and affordable supply of seafood 
products for the 300 million U.S. consumers produced in a healthy, 
competitive, and sustainable aquaculture sector, a sector supported by 
over 4,300 aquaculture farmers that produced in excess of $1 billion 
worth of goods in 2005 (National Agricultural Statistics Service 
(NASS), 2005 Census of Aquaculture).
    This National Program addresses high-priority national needs for:

   Understanding, Improving, and Effectively Using Animal 
        Genetic and Genomic Resources

   Enhancing Animal Performance, Well-being and Efficiency in 
        Diverse Production Systems

   Defining Nutrient Requirements, Nutrient Composition of 
        Feedstuffs and Expanding Alternative Ingredients

   Improving Health and Welfare of Aquatic Animals

   Improving Production Systems, Developing New Products and 
        Enhancing Product Quality

        Total Projects: 23
        Total Locations: 11
        Total Scientists: 52

    Crop Production and Protection

    Crop Production and Protection (CPP) National Programs deliver 
science-based information, genetic resources, and technologies for 
increased crop productivity and quality, protection from plant diseases 
and pests, and economically and environmentally sustainable methods of 
crop production that meet consumers' demands for a ready supply of high 
quality, safe, affordable and nutritious food, the public's desire to 
protect the environment, and the global community's needs for food 
security.

    CPP Statistics:

        Total Projects: 379
        Total Locations: 78
        Total Scientists: 816

    The Plant Genetic Resources, Genomics, and Genetic Improvement 
program provides research that addresses national priorities of genetic 
resource conservation, genomics and genetic improvement. This program 
harnesses the inherent genetic potential of plants. This research 
develops, and effectively applies new knowledge of crop genes, genomes, 
and the control and expression of genes, to accelerate increases in 
productivity and improves the quality of crops; realized via 
traditional and novel plant breeding methods.
    Genetic resources are the foundation of our agricultural future. 
ARS crop genebanks contain the sources of resistance to biotic and 
abiotic stresses and new genes to improve the quantity and quality of 
crops. To ensure that these genes are available for research and 
breeding, ARS continues to acquire and conserve crop genetic resources, 
develop more effective screening methods for identifying superior 
traits, characterize the genetic profiles of genebank holdings, ensure 
that genetic resources are distributed where and when they are needed, 
and safeguard these collections and their associated information for 
future generations.
    New crop genetic improvement methods are incorporating advances in 
genome sequencing and analysis, molecular genetics, computational 
biology, and metabolic engineering. New crop breeding theories and 
strategies are being developed that more effectively capture the 
intrinsic genetic potential of germplasm-especially to improve key 
agronomic and horticultural traits-resulting in crops tailored for 
consumer and producer needs.
    This National Program addresses high-priority national needs for:

   Plant and Microbial Genetic Resource Management

   Crop Informatics, Genomics, and Genetic Analyses

   Genetic Improvement of Crops

   Plant Biological and Molecular Processes

        Total Projects: 179
        Total Locations: 55
        Total Scientists: 360

    The Plant Diseases program delivers research to develop and improve 
ways to reduce crop losses caused by plant diseases. The program 
focuses on developing effective disease control strategies that are not 
environmentally harmful, do not threaten the safety of consumers, and 
are compatible with sustainable and profitable crop production.
    Plant diseases--spread by viruses, viroids, bacteria, phytoplasmas, 
fungi, nematodes or other methods--cause billions of dollars in 
economic losses each year to agriculture, landscape, and forest 
settings in the United States. These diseases reduce yields, lower 
product quality or shelf-life, decrease aesthetic or nutritional value, 
and, sometimes, contaminate food and feed with toxic compounds. Control 
of plant diseases is essential for providing an adequate supply of 
food, feed, fiber and aesthetics. Yet, growers spend millions of 
dollars each year only to partially control the pathogens that attack 
their crops and other plants. Reducing these losses has long been a 
high priority for agriculture and for the Agricultural Research Service 
(ARS). Besides the obvious monetary benefits to producers and 
processors, successful plant health protection is important for 
maintaining and increasing food supplies with minimal increases in land 
under cultivation. Additionally, the knowledge and management of plant 
diseases of quarantine significance are vital, not only for protecting 
our domestic crops from foreign disease, but also for maintaining and 
expanding export markets for plants and plant products.
    This National Program addresses high-priority national needs for:

   Disease diagnosis: Detection, identification and 
        characterization of plant pathogens

   Biology, ecology, epidemiology, and spread of plant 
        pathogens and their relationships

   Plant disease resistance

   Biological and cultural strategies for sustainable disease 
        management

        Total Projects: 69
        Total Locations: 29
        Total Scientists: 141

    The Crop Protection and Quarantine program provides fundamental and 
applied research to develop improved strategies for the cost-effective 
management and control of native and invasive insect, mite, and weed 
pests, while minimizing impacts on the environment and human health. 
The rationale for this National Program is that the development and 
implementation of improved management and control strategies will 
contribute to maintaining the competitiveness and vitality of 
agriculture in America.
    Insects, mites, and weeds have a considerable impact on our 
nation's food and fiber crops, affecting domestic supply and exports 
with economic losses estimated to be in the tens of billions of 
dollars. This program also provides research contributing to greater 
productivity in traditional and organic agricultural and horticultural 
systems by improving and developing new, innovative control strategies, 
by improving existing control methods and by alerting growers and 
producers to problems so informed decisions regarding mitigation can be 
accomplished at the earliest possible time.
    This National Program addresses high-priority national needs for:

   Systematics and Identification (of invasive insects, mites 
        and weeds as a threat)

   Protection of Agricultural and Horticultural Crops

   Protection of Natural Ecosystems

   Protection of Post-Harvest Commodities and Quarantine

        Total Projects: 92
        Total Locations: 39
        Total Scientists: 211

    The Crop Production program's research develops economically and 
environmentally sound technologies that improve the production 
efficiency, quality, health and value of America's crops.
    Contemporary U.S. crop enterprises for annual, perennial, and 
greenhouse crop production are complex and depend on access to and 
successful integration of highly diverse components, such as a steady 
stream of superior crop varieties, new strategies for mitigation of 
crop losses from biotic and abiotic stresses, and mechanization and 
automation of undesirable or labor intensive activities. This program 
is developing successful new production systems to sustain or increase 
crop yield and quality by focusing on (1) productive and profitable 
crop management strategies for new and traditional crops that conserve 
natural resources; (2) efficient and effective integrated management 
strategies for multiple pests; (3) mechanization of management 
activities to address labor constraints; and (4) improved crop 
management models and decision aids.
    Pollination is a critical element in agriculture as well, because 
honey bees pollinate more than 130 crops in the United States and add 
$15 billion in crop value annually. Declining honeybee populations and 
honey production due to Colony Collapse Disorder (CCD) require special 
attention. CCD has now increased honey bee mortality to more than 30 
percent. This program provides research to improve honey bee and non-
apis bee health and well being, better hive management practices for 
more robust pollination, development of emerging technologies to be 
used to address current and future challenges of the bee keeping 
industry, conserving bee biodiversity, and develop pollinators for land 
restoration.

    This National Program addresses high-priority national needs for:

   Integrated Sustainable Crop Production Systems

   Bees and Pollination

        Total Projects: 24
        Total Locations: 17
        Total Scientists: 71

    The Methyl Bromide Alternatives program provides research to 
develop alternatives to the agricultural uses of methyl bromide, a 
widely used fumigant and known ozone depletor. Methyl bromide is a 
highly efficacious fumigant that has for a number of decades been used 
on more than 100 crops, in forest and ornamental nurseries, and on wood 
products to control insects, nematodes, weeds, and pathogens, and thus, 
has been critical to important segments of U.S. agriculture. The 
research focuses on strawberry, pepper, tomato, perennial replant, 
field-grown propagative material, and ornamental and cut flower 
cropping systems for pre-plant methyl bromide use, and for processing 
and storage structures, fresh and durable commodities, and quarantine 
for post-harvest use. The ultimate goal of this National Program is to 
make available to the U.S. agriculture community environmentally 
acceptable, practical, economically feasible, and sustainable 
alternatives to methyl bromide.
    The U.S. Department of Agriculture (USDA) has vigorously responded 
to the methyl bromide challenge. It has brought together agricultural 
and forestry leaders from private industry, academia, state 
governments, and the Federal Government to assess the problem, 
formulate priorities, and implement research directed at providing 
solutions to the problems predicted by the methyl bromide phase-out. 
The Agricultural Research Service (ARS) was assigned the lead in this 
process and has emphasized the importance of research on alternatives 
to methyl bromide.
    This National Program addresses high-priority national needs for:

   Pre-plant Soil Fumigation Alternatives

   Post-Harvest Alternatives

        Total Projects: 15
        Total Locations: 10
        Total Scientists: 33

    Natural Resources and Sustainable Agricultural Systems (NRSAS)

    Sustainable agricultural systems produce the agricultural crops and 
livestock needed by societies; protect the natural resource foundation 
essential for production, processing, and other uses; and provide 
economic and social value to producers, processors, consumers, and 
communities. ARS develops scientific knowledge that enhances quality of 
life for all Americans by ensuring safe, affordable, and sustainable 
food, feed, fiber and renewable energy while enhancing natural 
resources and the environment. ARS research creates profitable 
agricultural systems that capitalize on the nation's vast renewable 
natural resources to preserve the fertility and productivity of soils, 
provide abundant and high quality water supply and clean air, maintain 
healthy agricultural and rangeland ecosystems, and offer renewable 
energy and fuel alternatives that form the basis of U.S. economy and 
the well being of rural America.

    NRSAS Statistics:

        Total Projects: 171
        Total Locations: 71
        Total Scientists: 518

    The Water Availability and Watershed Management National Program 
conducts research that helps provide integrated, effective, and safe 
water resource management. There is no substitute for fresh water, nor 
are there replacements for its essential role in maintaining human 
health, agriculture, industry, and ecosystem integrity. ARS scientists 
conduct fundamental and applied research on the processes that control 
water availability and quality and develop new and improved 
technologies for managing agricultural water resources to help ensure 
the health and economic growth of the nation. Results provide the 
technologies to manage and deliver safe and reliable fresh water 
supplies to the agricultural, urban, and industrial sectors of society 
while enhancing the aquatic natural resources of the nation. Results 
are a key part of the USDA's Conservation Effects Assessment Project 
(CEAP), which seeks to determine and improve the effectiveness of farm 
bill conservation practices and programs. Strategic approaches include 
coordination of ARS' infrastructure of experimental watersheds and 
rangelands, located in all major production regions of the nation, as a 
single long-term agroecosystems research network focusing on natural 
resources that provide the foundation for agriculture, especially 
water.
    This National Program addresses high-priority national needs for:

   Effective Water Management in Agriculture

   Erosion, Sedimentation, and Water Quality Protection

   Improving Conservation Effectiveness

   Improving Watershed Management and Ecosystem Services in 
        Agricultural Landscapes

        Total Projects: 47
        Total Locations: 30
        Total Scientists: 151

    The Climate Change, Soils, and Emissions National Program conducts 
research to improve the quality of atmosphere and soil resources, 
understand how agriculture and climate affect each other, develop 
strategies to adapt agricultural systems to climate variability, 
mitigate gaseous and particulate emissions, and convert research 
results into decision-support capabilities for end-users.
    The effects of climate change create challenges to agriculture and 
offer new opportunities for production, and these are identified and 
managed through research on crop and livestock responses and resilience 
to abiotic stresses; changing risks related to pests, pathogens, and 
weeds; soil, nutrient, and water management; and carbon sequestration. 
Enhancement of soil productivity is a focus of ARS research and 
together with crop improvement research, offers promise for meeting 
future global agricultural demands. Atmospheric emissions from 
agriculture are under increased scrutiny due to potential negative 
environmental effects and threats to human and animal welfare. 
Emissions contribute to tensions between agriculture and residential 
communities from visibility impairment (haze) and nuisance odors. 
Strategic, coordinated research projects include the nation-wide 
Greenhouse gas Reduction through Agricultural Carbon Enhancement 
network (GRACEnet project); the Renewable Energy Assessment Project 
(REAP) in collaboration with universities; development of models such 
as the Soil and Water Assessment Tool (SWAT), which is used worldwide 
for conservation and land management applications; widely used models 
for assessing and managing wind and water erosion; and leadership in 
the Global Research Alliance on Agricultural Greenhouse Gases.
    This National Program addresses high-priority national needs for:

   Improvements of Air Quality via Management and Mitigation of 
        Emissions from Agricultural Operations

   Knowledge and Technologies for Reducing Atmospheric 
        Greenhouse Gas Concentrations Through Management of 
        Agricultural Emissions and Carbon Sequestration

   Agriculture to Adapt to Climate Change

   Maintaining and Enhancing Soil Resources

        Total Projects: 38
        Total Locations: 29
        Total Scientists: 97

    The Bioenergy National Program conducts research to develop 
technologies to enable sustainable commercial production of biofuels by 
the agricultural sector in ways that enhance our natural resources 
without disrupting existing food, feed, and fiber markets.
    ARS research creates new varieties and hybrids of bioenergy 
feedstocks with optimal traits; develops new optimal practices and 
systems that maximize the sustainable yield of high-quality bioenergy 
feedstocks; develops new, commercially preferred conversion 
technologies; and optimizes both the production of plant feedstocks and 
the biorefining of agricultural materials to bioenergy and value-added 
coproducts. Much of the research is conducted through the USDA Regional 
Biomass Research Centers, emphasizing development of crops and 
sustainable production methods that can be regionally successful. 
Strategic planning tools to identify research, technologies, and 
organizational actions needed to achieve commercial viability of 
biofuels are developed in cooperation with other agencies and industry. 
This research leads to strengthened rural economies, provides knowledge 
for increased supplies of renewable transportation fuel, enhance energy 
security, and supports efforts to improve the U.S. balance of trade.
    This National Program addresses high-priority national needs for:

   Feedstock Development

   Feedstock Production

   Biorefining

        Total Projects: 14
        Total Locations: 6
        Total Scientists: 45

    The Agricultural and Industrial Byproducts National Program 
conducts research to effectively and safely manage and use animal 
wastes and other agricultural and industrial byproducts in ways that 
maximize their potential benefits, while protecting the environment and 
human and animal health.
    Improvements are needed in animal feeding and management regimens 
to increase the proportion of dietary nutrients retained in the animal 
or animal products while decreasing the quantity of dietary nutrients 
excreted and lost to water, air, and soil. Research tracks the fate and 
transport of excreted nutrients in the major soil-crop systems common 
to animal agriculture, providing the foundation for developing Best 
Management Practices. New application methods improve nutrient use 
efficiency and incorporate wastes to conserve nitrogen while 
maintaining adequate crop residue to protect the soil from erosion and 
runoff. These practices, and their associated nutrient management 
plans, are developed from sound understanding of the fate and transport 
of specific nutrients for major soils, hydrologic conditions, and 
cropping systems. Other research addresses pathogen inactivation and 
die-off as well as their potential for regrowth as functions of 
environmental conditions (e.g., temperature, moisture, etc.) during all 
stages of waste management. Technologically sound methods are developed 
for utilizing byproducts that are characterized as beneficial and 
result in products that are commercially sustainable. This includes 
blending, composting, and amending byproducts as well as developing 
land application and management techniques that improve soil, water, 
and air quality in addition to improved plant growth. Much of the 
research is done in collaboration with private sector entities, with a 
strong emphasis on development of useful, safe, commercially desirable 
products from what would otherwise be considered wastes.
    This National Program addresses high-priority national needs for:

   Management, Enhancement, and Utilization of Manure Nutrients 
        and Resources

   Manure Pathogens and Pharmaceutically Active Compounds 
        (PACs)

   Atmospheric Emissions

   Developing Beneficial Uses of Agricultural, Industrial, and 
        Municipal Byproducts

        Total Projects: 17
        Total Locations: 15
        Total Scientists: 54

    The Rangeland, Pasture & Forages National Program develops and 
integrates improved management practices, germplasm, and land-use 
strategies to optimize productivity, economic viability and 
environmental enhancement in managing vegetation, livestock and natural 
resources on private and public grass and forage lands.
    Grazing lands constitute the largest single land use in the United 
States. Their environmental and economic sustainability are essential 
to the nation, yet they are under stresses from many environmental 
factors and land uses. Research to mitigate these problems and 
strengthen their value include: enhancing conservation and restoration 
of ecosystems and agroecosystems through improvements based on the 
application of ecological principles; improving management of fire, 
invasive weeds, grazing, climate change and other agents of change; 
developing grazing-based livestock systems that reduce risk and 
increase profitability in existing and emerging markets; developing 
improved grass and forage legume germplasm for livestock, conservation, 
turf and bioenergy and bioproduct systems; improving the sustainability 
of turf management; and improving decision-support systems including 
improving inventory, monitoring, and assessment tools.
    This National Program addresses high-priority national needs for:

   Rangeland Management Systems to Improve Economic Viability 
        and Enhance the Environment

   Pasture Management Systems to Improve Economic Viability and 
        Enhance the Environment

   Sustainable Harvested Forage Systems for Livestock, 
        Bioenergy and Bioproducts

   Sustainable Turf Systems

        Total Projects: 35
        Total Locations: 25
        Total Scientists: 106

    The Agricultural System Competitiveness and Sustainability National 
Program integrates information and technologies to develop dynamic 
systems that enhance the productivity, profitability, energy 
efficiency, and natural resource management of American farms.
    The program uses interdisciplinary systems research to develop an 
understanding of how different kinds of farm enterprises function, and 
how changing or introducing new technology affect their productivity, 
profitability, energy efficiency, and natural resource stewardship. 
Finding the best combinations of practices helps producers achieve 
their production goals, while enhancing the environmental goods and 
services derived from agricultural lands. Diverse and dynamic 
agricultural systems in development can adjust to changing 
environmental and market conditions to increase the long-term financial 
viability and competitiveness of farms, enhance natural resource 
quality, contribute to the vibrancy of rural communities, and increase 
the food, fiber, and energy security for the nation and the world.
    This National Program addresses high-priority national needs for:

   Agronomic Crop Production Systems

   Specialty Crop Production Systems

   Integrated Whole Farm Production Systems

   Integrated Technology And Information To Increase Customer 
        Problem Solving Capacity

        Total Projects: 20
        Total Locations: 18
        Total Scientists: 65

    Nutrition, Food Safety and Quality

    The Nutrition, Food Safety and Quality (NFSQ) research area leads 
and coordinates ARS research and information dissemination to define 
the role of food and its components in optimizing health for all 
Americans; develop tests and processes that keep the food supply safe; 
reduce and control pathogens and toxins in agricultural products; and 
improve the economic viability and competitiveness of American 
agriculture by enhancing the quality and utilization of agricultural 
products for the benefit of producers and consumers.

    NFSQ Statistics:

        Total Projects: 226
        Total Locations: 47
        Total Scientists: 553

    The Human Nutrition program provides the science base to undergird 
U.S. food policy, i.e., the Dietary Guidelines for Americans, thus 
enabling Americans to make nutritious and health-promoting dietary 
choices. The mission of the Human Nutrition Program is to define the 
role of food and its components in optimizing health throughout the 
life cycle for all Americans. Distinctive aspects of this research 
include an emphasis on a food-based approach to improving health; the 
core capability to sustain long-term research; the availability of 
state-of-the-science equipment and facilities for human research across 
the lifecycle; and the conduct of multidisciplinary research to improve 
the nutritional value of the American diet and the food supply.
    This research is focused on maintaining health and preventing 
disease through food-based recommendations. This unique USDA research 
does not duplicate other Federal departments. The research emphasizes 
study of essential nutrients and nonessential health-promoting 
components in foods, evaluating the nutritional value of diets eaten by 
people in America, determining how consumption of specific foods or 
food components can enhance health, and developing strategies to 
improve food choices and lifestyle factors to promote health in 
Americans. Increasingly, research focuses on addressing over-
consumption and caloric imbalance (obesity related research) with 
incorporation of cutting-edge genomic and metabolomic technologies. 
Unique national resources that are part of this Program include the 
National Nutrient Databank and the ``USDA What We Eat in America/
NHANES'' national food consumption survey. Partnerships with other 
Federal agencies and nonprofit and industry groups allow ARS to 
leverage funds and build upon common goals. Information dissemination 
programs operated by the National Agricultural Library address general 
and specific human nutrition issues and audiences and include general 
Web portals such as www.nutrition.gov for the American consumer as well 
as the targeted websites for professionals such as the Food and 
Nutrition Information Center.
    This National Program addresses high-priority national needs for:

   Monitoring Nutrient Composition of the Food Supply and 
        Consumption by Americans

   Strengthening the Scientific Basis for Dietary Guidance for 
        Health Promotion and Disease Prevention

   Developing Strategies for Prevention of Obesity and Related 
        Diseases

   Conducting Research on Life Stage Nutrition and Metabolism

        Total Projects: 89
        Total Locations: 9
        Total Scientists: 172

    The Food Safety program protects food from pathogens, toxins, and 
chemical contamination during production, processing, and preparation. 
The safety of the food supply is a highly visible public health issue 
and a national priority for the Federal Government. The continued 
priority is partly due to the diverse and complex system of production, 
processing, and distribution of food in the U.S. and the increasing 
global distribution. Outbreaks of foodborne illness are seen as a major 
cause of morbidity and mortality, and economic costs, both nationally 
and internationally. The full extent of the disease burden is still 
unknown, even with recent Centers for Disease Control (CDC) estimates. 
Foodborne illnesses can be caused by microbial pathogens, parasites, 
viruses and an array of foodborne contaminants such as chemicals or 
toxins. The cause of every outbreak is still unknown, but persistent 
outbreaks of major commodity-specific foods that may directly affect 
public health, regulations, industry, and trade, require our immediate 
attention.
    ARS has developed an integrated approach to food safety, that is, 
food production is seen as a continuous process from production, 
through harvesting and processing, to retail and the consumer. Pre- and 
post-harvest are not separated but considered an integrated production 
system of safe and quality food. Interventions and controls that are 
applied to one phase will ultimately affect the other segments of food 
production and processing. Food safety research has also changed during 
the past decade, having moved past simple, surveillance/prevalence 
studies to asking more complex questions. Consequently, researchers are 
required to think creatively to solve problems, which means considering 
alternate perspectives, exploiting new opportunities and technologies, 
and crossing conventional boundaries. Multidisciplinary collaborations, 
especially between Centers/Institutes, nationally and internationally 
are an absolute necessity.
    ARS provides the intramural infrastructure and expertise to address 
short and long-term needs in food safety. Because of the 
infrastructure, ARS is uniquely poised to respond quickly to emerging 
and critical food safety issues. ARS also collaborates closely with 
Federal regulatory agencies as well as industry, professional, and 
international stakeholders to assist in addressing their specific food 
safety needs.
    This National Program addresses high-priority national needs for:

   Foodborne Contaminants

   Microbial Population Systems

   Systems Biology (Pathogenicity and Virulence)

   Technologies for the Detection and Characterization of 
        Microbial Contaminants

   Intervention and Control Strategies to Decrease or Eliminate 
        Pathogens

   Predictive Microbiology and Data Acquisition

   Chemical and Biological Contaminants: Detection Methodology, 
        Toxicology and Toxinology

        Total Projects: 64
        Total Locations: 14
        Total Scientists: 180

    The Quality and Utilization of Agricultural Products program 
conducts research to enhance the economic viability and competitiveness 
of U.S. Agriculture by maintaining the quality of harvested 
agricultural commodities or otherwise enhancing their marketability, 
meeting consumer needs, developing environmentally friendly and 
efficient processing concepts, and expanding domestic and global market 
opportunities through the development of value-added food and nonfood 
technologies and products, except energy and fuels.
    Research is being conducted on the development of nonfood, nonfuel 
biobased products from agricultural commodities and byproducts. 
Interest in biobased products has increased as consumers and 
governments have sought more environmentally friendly products that 
provide alternatives to petroleum and which do not contribute to 
greenhouse gases. Thus, biobased products can reduce our dependency on 
petroleum and provide a more sustainable technology for the future. 
Biobased products that were once too expensive to commercialize may now 
be affordable. There is some public concern that biobased products 
could contribute to the rising cost of food in the U.S. This program 
seeks opportunities to develop biobased products from agricultural 
feedstocks that do not compete with food, in cooperation with other ARS 
national programs and partners. ARS also supports quality and 
processing research on crop fiber, such as cotton, and animal hides, 
leather and wool. Stakeholders who produce fibers and hides constitute 
an important segment of our rural economy. These industries are 
severely impacted by energy and production costs and have lost market 
share to foreign competition. Technologies that improve fiber quality, 
reduce the energy consumption of processing equipment, and develop new 
products are needed to help the fiber industry to compete in a global 
market.
    This National Program addresses high-priority national needs for:

   Methods and Technologies to Enhance Quality & Utilization of 
        Food Crops and Animals

   Methods and Technologies to Enhance Quality & Utilization of 
        Agricultural Fibers

   Non-Food, Non-Fuel Biobased Products and Sustainable 
        Technologies/Processes

        Total Projects: 73
        Total Locations: 24
        Total Scientists: 201

    ARS International Research Programs

    ARS engages in international collaborations primarily that support 
its mission but may also conduct research under external funding that 
falls within its mission and also supports critical U.S. Foreign Policy 
initiatives. ARS international research collaborations enable an 
economically vibrant U.S. agricultural system by developing 
technologies, knowledge and tools that help U.S. producers be more 
productive, efficient and sustainable. ARS research also support the 
Foreign Agricultural Service's (FAS) mission by providing key research 
that helps FAS project crop production estimates in other countries and 
by engaging in collaborations that underpin food security. The Office 
of International Research Programs (OIRP) is an ARS Headquarters Office 
under the Office of National Programs in Beltsville, Maryland. The OIRP 
maintains a cadre of International Affairs Specialists who: (1) liaise 
with each National Programs; (2) provide special focus on specific 
regions of the world; and (3) oversee a portfolio of programs/projects 
that are important to U.S. foreign policy objectives as well as the 
agency's objectives.
    This Program is currently focused on three major areas:

   Global Food Security

   Biosecurity Engagement

   International Partnerships

    ARS Operates four Overseas Biological Control Laboratories (OBCLs) 
that offer the benefits of international projection of mission, 
training for key personnel, and broadening of potential solutions for 
invasive species. Having operations overseas forms a 365 days per year 
presence for ARS, something that could never be accomplished by 
temporary visits and assignments. As a result of that dedication to 
their missions and host countries, the overseas laboratories have 
established reputations as reliable partners. The flow of information, 
training, and agricultural progress go in both directions. The OBCLs 
are administered out of ARS Headquarters by a Director within the Crop 
Production and Protection (CPP) mission area of the Office of National 
Programs. There are four OBCLs:

   The European Biological Control Laboratory in Montpelier, 
        France

   The South American Biological Control Laboratory in Buenos 
        Aires, Argentina

   The Australian Biological Control Laboratory in Brisbane, 
        Australia

   The Sino-American Biological Control Laboratory in Beijing, 
        China

    ARS Technology Transfer Programs

    USDA broadly defines technology transfer as the adoption of 
research outcomes for public benefit. Innovations arising from USDA 
intramural research, such as new or improved technologies, processes, 
products and services, benefit the nation by increasing productivity, 
increasing efficiency (keeping costs low) and enhancing global 
competitiveness for the U.S. agriculture sector. Thus, technology 
transfer functions are critical to accelerating utility of public R&D 
investments, creating economic activity, and in job creation and 
sustainable economic development.
    Principal among the formal instruments of technology transfer are 
Cooperative Research and Development Agreements (CRADAs), patents, and 
invention licenses for commercialization by the private sector, as well 
as material transfer agreements and germplasm releases to industry.
    To assist USDA in transferring technologies to the private sector, 
the Agricultural Research Service (ARS) created the Agricultural 
Technology Innovation Partnership (ATIP) program consisting of ten 
economic development organizations across the U.S. serving as 
``intermediaries'' to further enhance the likelihood that research 
outcomes would be adopted by the private sector for commercialization. 
ATIP members coordinate regional cosponsored events with ARS, 
showcasing available technologies for licensing, and USDA intramural 
research capabilities available to businesses to assist in solving high 
priority, mission-related issues connected to the agricultural 
industries. Additionally, members provide the current or prospective 
private sector partners of ARS with access to business mentors, 
entrepreneur schools, seed and venture funds, and the Manufacturing 
Extension Partnership programs.
    The Agricultural Research Service (ARS) has been delegated 
authority by the Secretary of Agriculture to administer the patent 
program for ARS, the review of CRADAs and the technology licensing 
program for all intramural research conducted by USDA.
    ARS's Office of Technology Transfer (OTT) is assigned the 
responsibility for protecting intellectual property (IP), developing 
strategic partnerships with outside organizations, and performing other 
activities that effectively transfer ARS research outcomes and 
technologies to the marketplace. ARS-OTT is centralized in policy and 
approval procedures, but maintains field offices to provide one-on-one 
customer service to ARS researchers. To facilitate technology transfer, 
OTT is organized into five sections that include Administrative/
Headquarters, Patents Licensing, Marketing and Technology Transfer 
Coordinators (TTCs). TTCs are seven highly qualified employees 
stationed across the United States who are responsible for facilitating 
the development and transfer of USDA technologies. They serve as 
liaisons with scientists, ARS managers, university partners, and the 
private sector.
    Technology transfer is accomplished through many mechanisms, such 
as:

   developing written information for customers and 
        stakeholders, including scientific publications, publications 
        in trade journals, and reports to stakeholders;

   releasing plant germplasm to the public;

   transferring research materials to scientists outside of 
        ARS;

   entering into formal partnership agreements, such as CRADAs, 
        and other cooperative agreements;

   delivering specific research results to regulatory agencies 
        to support their actions;

   licensing IP (patents, Plant Variety Protections 
        Certificates, and biological materials);

   participating in meetings with industry organizations and 
        universities, workshops and field days; and distributing 
        information to the public via the ARS Information Staff, the 
        National Agricultural Library, and other sources.

    Enhanced Use Lease Authority

    Enhanced Use Lease (EUL) is provided under the authority of section 
7409 of the Food, Conservation and Energy Act of 2008, Public Law 110-
246 (112 Stat. 1651), commonly referred to as the 2008 Farm Bill. This 
authority grants the Secretary of the Department of Agricultural (USDA) 
the authority to establish a pilot program at the Beltsville 
Agricultural Research Center (BARC) to lease non-excess property to any 
private or public entities.
    Five calls for proposals were issued by ARS on or about December 4, 
2010, requiring businesses to set forth a Business and Leasing plan, a 
Development plan and a Property Management plan.
    Within the Development plan, businesses are to identify the 
collaborative research in-place or a plan of a potential project 
consistent with the research mission of the USDA. The six calls for 
proposals were directed to (i) use of greenhouse facilities, (ii) 10 
acres for bio-byproduct production, (iii) an under-utilized composting 
facility. (iv) Transgenic greenhouse space; and (v) large animal 
transgenic research space, with screened barn, surgery room, lunch room 
and storage and rest room facilities.
    Four proposals were submitted by small businesses. All of which had 
existing agreements with ARS. Proposals received from Renewable Carbon 
Management, LLC and EnviRemed were uncannily similar and were directed 
to a full scale composting business located at BARC. The two proposals 
were rejected by committee as being deficient in failing to outline a 
research component directed to the mission of ARS-USDA. Both entities 
were advised by letter of the deficiencies in their proposals and no 
reply was received. The existing agreements with these entities have 
expired.
    A Proposal from New Agriculture was received directed to production 
of plant proteins from tobacco for use in plastics manufacture and as a 
nutritional supplement. The proposal was unfocused and New Agriculture 
was invited to tour the facility in which the proposed operation was to 
be housed and to submit a more focused proposal directed to the 
specific space to be occupied. New Agriculture failed to follow-up; 
however a CRADA agreement is still active and is being worked to 
completion with this entity.
    A proposal from Plant Sensory Systems Inc. was received for the 
purpose of leasing two transgenic greenhouses in building 010 at BARC, 
for a total of 1859 ft\2\ for 3 years. The proposal was directed to 
growing transgenic corn for purposes of drought and heat tolerance and 
efficiency of nitrogen use. A lease was successfully negotiated and 
Plant Sensory Systems occupied space on or about May 1, 2011. Today 
both soybean and corn are being grown for the stated research purpose. 
In a direct quote from the company, ``we could not live without the 
space!''
    This EUL project supports the USDA priority of responding to 
climate change and is part of the Climate Change, Soils and Emissions 
(#212).

    Buildings and Facilities

    Because ARS operates at over 100 locations both nationally and 
internationally, a high priority and great degree of focus is placed on 
the maintenance of the agency's facility assets. The Secretary has 
received many requests from Members of Congress for the Administration 
to support budget increases to complete pending ARS capital improvement 
projects. In response, the Administrator of ARS was asked to establish 
an objective process to guide orderly and timely capital investments 
for ARS Laboratory facilities focusing on support to priority programs 
and other long-term requirements of USDA scientific research. The 
agency is also in the process of completing more than $176 million in 
repair and maintenance projects across the country as a result of 
funding from the A summary of those assets and a discussion of the 
agency's developing capital asset strategy are below.
    Land under ARS custody & control:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
                           Leased                         10,888
                      Owned                              393,260
                                     -----------------------------------
  Subtotal..........................                     404,148
                                     -----------------------------------
                        MOU                                2,051
                                     ===================================
    Total Acres.....................                     406,199
------------------------------------------------------------------------

    Buildings owned/leased (Gross Square Feet):

----------------------------------------------------------------------------------------------------------------
                                                                             Number                  GSF
----------------------------------------------------------------------------------------------------------------
             Owned Buildings               Existing Operational                  3,016            13,565,457
                                                Existing Excess                    294                80,498
                                  ------------------------------------------------------------------------------
  Subtotal.......................                                                3,310            14,345,955
                                                                     -------------------------------------------
                            Leased Buildings                                       116               495,596
                                                                     ===========================================
    Total........................                                                3,426            14,841,551
----------------------------------------------------------------------------------------------------------------


   105 Domestic Locations; 3 Foreign Locations; & 60 worksites.

   Location/Worksites collocated with Land-Grants/Institutes of 
        Higher Learning

     Land-Grant Locations--60

     Land-Grant Worksites--14

     Non Land-Grant Locations--4

     Non Land-Grant Worksites--1

   Replacement Value $3.64B

    With the issuance of Executive Order (E.O.) 13327, Federal Real 
Property Asset Management in February 2004, the USDA recognized the 
need to adopt a more consistent, structured, performance-based, 
integrated planning process to better enable the Agency to oversee 
management of its extensive real property portfolio. In October, 2007 
USDA issued the Real Property Capital Programming and Investment 
Process (CPIP). The CPIP was based upon the Office of Management and 
Budget (OMB) Capital Planning and Investment Control (CPIC) guidance 
(OMB A-11 Part 7; Planning, Budgeting, and Acquisition of Capital 
Assets.) An ARS specific CPIP--the ARS Building Block Plan (BBP)--was 
included as an appendix.
    Similar to the USDA Plan, ARS built its process around the OMB CPIC 
guidance; this allowed ARS to evaluate real property investments based 
upon risks and returns throughout their lifecycle while ensuring that 
USDA and ARS' investments are well-conceived, cost-effective, and 
support strategic mission and business goals.
    A key component of the ARS BBP is the use of investment review 
boards as the decision-making body in matters related to real 
property--the Boards are called Asset Management Review Boards (AMRB). 
There are two levels of review; the initial process begins at each of 
the eight Area offices, these eight plans are then consolidated and 
reviewed at the Headquarters level. The AMRB's membership includes 
representation from throughout the ARS and includes program, finance, 
budget, planning, and facilities. This membership ensures a balanced 
approach to investment decisions. The ARS Headquarters AMRB is chaired 
by the Deputy Administrator, Administrative & Financial Management and 
is responsible for:

   Reviewing new Capital investments (includes new 
        construction, repair, land purchase, and disposal) using a 
        standard set of criteria to ensure proposed projects that will 
        support the ARS and Department missions and program delivery 
        processes.

   Recommending approving/disapproving all projects over 
        $1,000,000. (The ARS AMRB assumes projects under $1,000,000 
        have been validated by the Area AMRB's).

   Reviewing opportunities to right-size inventories and 
        operations and management costs.

   Ensuring that both the Department's and ARS's criteria and 
        performance goals are considered and implemented when making 
        Agency investment decisions.

   Assuring that the ARS's Real Property program remains in 
        compliance with E.O. and implementing directives.

    As outlined above, once a decision is made on which real property 
assets warrant attention, there is an OMB process for analyzing capital 
investments. The process is generic, and it allows for the analysis of 
various capital investments, not just real property. The guidance 
provided in the USDA and ARS BBP process follows the basic criteria 
outlined within the OMB guidance.
    Informal discussions with NASA and National Institutes of Health 
(NIH) staff have indicated that their Capital Investment Process 
closely follows the OMB guidance. The criteria taken into account 
include the following:

   Does the investment in a major capital asset support core/
        priority mission functions that need to be performed by the 
        Federal Government? (How does the project support the 
        Secretaries priorities, Congressional mandates, and the 
        Department's and agency's strategic goals and objectives);

   Is the investment supported by a Life Cycle analysis?

   Does the investment improve the Real Property Performance 
        Measures? (1) Utilization; (2) Condition Index; (3) Mission 
        Dependency; and (4) Annual Operation & Maintenance (O&M) costs.

    The challenge for ARS is in identifying those real property assets 
that warrant priority attention and investment to ensure core and 
priority research needs are met. (There will always be a number of 
facilities that require immediate attention due to failing building 
systems and life safety issues; these assets also need to be 
addressed.) ARS has identified the following tasks as necessary to 
complete its capital investment strategy.

    Task 1--Bench mark the ARS BBP against other government and 
        industry organizations (General Services Administration (GSA), 
        Department of Defense (DOD) activities, NIH, university, 
        pharmaceutical, etc.). Include the decision making process, 
        investment strategies, business systems and automation systems 
        used, and metrics on expenditures for operation, sustainment, 
        and recapitalization of similar assets.

    Task 2--Identify funding amounts necessary to raise existing 
        facilities to an acceptable condition, sustain facilities at 
        that level, and recapitalize facilities.

    Task 3--(concurrent with task 2) Implement processes and procedures 
        to improve ARS management of its assets and prioritize 
        investment priorities through a decision matrix that aligns and 
        relates research program priorities and investment requirements 
        with associated infrastructure needs in a systematic way to 
        support a rank-ordered priority plan for identifying, 
        scheduling, and sequencing existing and out-year capital 
        investments needed to address infrastructure improvement 
        requirements on a regular and recurring basis consistent with 
        facility engineering industry norms. The ranking process will 
        consider Congressional directed projects, recent construction, 
        and general facilities that need to be accounted for in ranking 
        priorities. ARS program priorities will relate both to 
        facilities where specific research is conducted and also to 
        facilities where the work could be conducted.
3. Brief History
    The Agricultural Research Service was officially founded in 1953 
but has precursor agencies that date back as far as 1884 to the Bureaus 
of Plant and Animal Industry. The importance of agricultural research 
performed by the government goes back even farther, to the first work 
done to stem hog cholera outbreaks in 1868. In 1938, Congress 
appropriated funding to create agricultural research laboratories in 
Peoria, IL, Wyndmoor, PA, Albany, CA and New Orleans, LA. These 
locations still exist to this day as major centers of ARS work and 
concentrations of our science. We are proud of this long history of 
government commitment to solving agricultural problems that affect 
every single American in one way or another.
4. Purpose/Goals
    ARS conducts research to develop and transfer solutions to 
agricultural problems of high national priority and provide information 
access and dissemination to:

   Ensure high-quality, safe food, and other agricultural 
        products;

   Assess the nutritional needs of Americans;

   Sustain a competitive agricultural economy;

   Enhance the natural resource base and the environment; and

   Provide economic opportunities for rural citizens, 
        communities, and society as a whole.

    As part of the Research, Education, and Economics (REE) Mission 
Area, ARS, like its fellow REE agencies, focuses its research on five 
priorities:

   Climate change;

   Food safety;

   Children's nutrition and health;

   International food security;

   Bio-Energy.
5. Success in Meeting Programmatic Purpose/Goals
    Climate Change

    In an ARS study of the impact of global climate change, crops 
responded positively to future levels of atmospheric carbon dioxide 
(CO2), but soil tillage practices had little effect on this 
response. This first long-term study comparing tillage practices under 
high CO2 levels showed that elevated CO2 caused 
soybean and sorghum plants to increase photosynthesis while reducing 
transpiration, the amount of water the plants release. This resulted in 
increased water use efficiency, whether the crops were grown with no-
till or conventional tillage.
    ARS scientists have found that using alternative types of 
fertilizers can cut back on greenhouse gas emissions, at least in one 
part of the country, and are examining whether the alternatives offer 
similar benefits nationwide. Nitrogen fertilizers are often a necessity 
for ensuring sufficient crop yields, but their use leads to release of 
nitrous oxide, a major greenhouse gas, into the atmosphere. Fertilizer 
use is one reason an estimated 78 percent of the nation's nitrous oxide 
emissions come from agriculture.
    Current atmospheric ozone levels are already suppressing soybean 
yields, according to ARS scientists' studies of the effect of global 
climate change on crops. The scientists have been working on a project 
called ``SoyFACE''--short for Soybean Free Air Concentration 
Enrichment--to measure how the projected increases in carbon dioxide 
(CO2) and ozone will affect soybean production. The 
scientists found that soybean yields increase by about 12 percent at 
the elevated CO2 levels predicted for the year 2050 (550 
parts per million)--only \1/2\ of what previous studies estimated. They 
also found that increased ozone is quite harmful to soybean yields, 
reducing them by about 20 percent. In addition, current levels of ozone 
are already suppressing soybean yields by up to 15 percent.

    Food Safety

    Innovative studies by ARS scientists are providing new information 
about the impressive array of genes that a major foodborne pathogen, 
Escherichia coli O157:H7, calls into action when attempting to colonize 
leaves of fresh-cut lettuce. The investigation--the first to provide 
extensive details about the biology of E. coli O157:H7 in fresh-cut 
lettuce--could pave the way to new technologies to improve the safety 
of bagged salads.
    ARS scientists have used a type of high-tech imaging called 
``hyperspectral imaging'' to distinguish the foodborne pathogen 
Campylobacter from other microorganisms as quickly as 24 hours in 
laboratory tests. Campylobacter infections in humans are a major cause 
of bacterial foodborne illness both in the United States and other 
countries throughout the world. Normally, isolation and detection for 
identification of Campylobacter from foods like raw chicken can take 
several days to a week. This ``sensing'' technology, which was nearly 
100 percent accurate with pure cultures of the microorganisms, could be 
used for early detection of presumptive Campylobacter colonies.
    Using a cleansing solution to wash eviscerated chicken carcasses is 
effective in removing bacteria that cause human foodborne diseases, 
according to an ARS study. The findings provide data that may be useful 
to poultry producers in designing practical, non-chlorine-based 
sanitizers. The cleanser, which is composed of lauric acid and 
potassium hydroxide, could be used to sanitize chicken carcasses during 
processing prior to chilling. Since other countries do not use chlorine 
rinses, ARS is looking at alternatives for them and is evaluating the 
most effective rinses against foodborne pathogens in poultry.

    Children's Nutrition and Health

    Aspiring moms are often advised to achieve a healthy weight before 
they become pregnant, and to gain only the recommended amount of weight 
during their pregnancy, and ARS-funded studies could provide new 
insights into those recommendations. The studies focus on how 
influences that occur in the womb--and perhaps during the first few 
months of life--might affect development of a child's ability to 
regulate his or her weight later in life. In fact, the child's body-
weight-regulating mechanisms might be permanently altered by maternal 
signals associated with the mother's own overweight, the scientists 
say, and such maternal programming of the unborn child could increase 
the risk that the child would become an overweight or obese adult and 
would have a higher risk of obesity-related afflictions.
    Parents of kids age 2 and up can check a handy website every 6 
months to help determine if their children's weight gains or losses are 
heading in the right direction. ARS-funded scientists developed the 
easy-to-use, online resource and based it on growth charts issued by 
the Centers for Disease Control and Prevention. In just a few minutes 
spent at their computer, parents can easily calculate their child's 
BMI, or Body Mass Index, and put it into perspective by viewing the 
youngster's BMI percentile on a helpful graph.
    A collaborative study conducted by ARS scientists and Harvard 
University scientists showed decreased nutritional dietary quality and 
increased caloric intake among U.S. children on days when they consumed 
fast food. The authors analyzed existing dietary intake data from 6,212 
children and adolescents, aged 4 to 19, from a nationally 
representative USDA Continuing Survey of Food Intakes by Individuals, 
1994-1996, and the Supplemental Children's Survey, 1998. The findings 
showed that U.S. children who ate fast food, compared with those who 
did not, consumed more total calories, more calories per gram of food, 
more total and saturated fat, more total carbohydrate, more added 
sugars and more sugar-sweetened beverages, but less milk, fiber, fruit 
and nonstarchy vegetables.

    International Food Security

    ARS scientists have solved a longstanding mystery as to why a 
pathogen that threatens the world's wheat supply can be so adaptable, 
diverse and virulent. It is because the fungus that causes the wheat 
disease called stripe rust may use sexual recombination to adapt to 
resistant varieties of wheat. The scientists showed for the first time 
that stripe rust, caused by Puccinia striiformis, is capable of 
sexually reproducing on the leaves of an alternate host called 
barberry, a common ornamental.
    An international team of researchers co-led by an ARS scientist has 
sequenced the genomes of two fungal pathogens--one that threatens 
global wheat supplies and another that limits production of a tree crop 
valued as a future source for biofuel. The sequencing of the genetic 
codes of wheat stem rust pathogen (Puccinia graminis) and poplar leaf 
rust pathogen (Melampsora larici-populina) is expected to help 
researchers develop control strategies to address worldwide threats to 
wheat fields and tree plantations.
    ARS scientists and their colleagues completed a 4 year effort to 
sequence the genome of corn, an achievement expected to speed up 
development of corn varieties that will help feed the world and meet 
growing demands for using this important grain crop as a biofuel and 
animal feed. The results represent the largest and most complex plant 
genome sequenced to date.

    Bio-Energy

    ARS scientists have found that barley grain can be used to produce 
ethanol, and the leftover byproducts--barley straw, hulls, and dried 
distillers grains--can be used to produce an energy-rich oil called 
bio-oil. The bio-oil could then be used either for transportation fuels 
or for producing heat and power needed for the grain-to-ethanol 
conversion.
    ARS scientists have long-term studies underway to examine growing 
camelina as a bioenergy crop for producing jet fuel for the military 
and the aviation industry. This research supports the recently signed 
memorandum of understanding between the U.S. Department of Agriculture 
(USDA) and the Department of the Navy (DON) and interests of the 
Commercial Airlines Alternative Fuels Initiative (CAAFI). Native to 
Europe, camelina (Camelina sativa) is a member of the plant family 
Brassicaceae and has been grown since ancient times for use as lamp 
fuel, among other things. The seed's high oil content has made it a 
promising candidate as a new source for biofuels.
    ARS scientists have developed a new tool for deciphering the 
genetics of a native prairie grass being widely studied for its 
potential as a biofuel. The genetic map of switchgrass is expected to 
speed up the search for genes that will make the perennial plant a more 
viable source of bioenergy. Interest in using switchgrass as a biofuel 
has intensified in recent years because it can be burned to produce 
electricity and, like corn stalks, can be converted to ethanol. It also 
grows on marginal lands, is adaptable to different regions, and--as a 
perennial--does not need to be replanted each year, which means lower 
energy costs and less runoff.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Salaries and Expenses    Buildings and Facilities
------------------------------------------------------------------------
       FY 2002           $978,865            FY 2002          $216,824
       FY 2003         $1,048,906            FY 2003          $228,703
       FY 2004         $1,088,057            FY 2004           $63,434
       FY 2005         $1,108,129            FY 2005          $186,335
       FY 2006         $1,130,128            FY 2006          $149,883
       FY 2007         $1,132,031            FY 2007                $0
       FY 2008         $1,124,992            FY 2008           $51,752
       FY 2009         $1,143,459            FY 2009           $46,752
       FY 2010         $1,179,784            FY 2010           $70,873
       FY 2011         $1,133,230            FY 2011                $0
------------------------------------------------------------------------
Note: In FY 2011, the appropriation rescinded $230 million in balances
  from prior appropriations, and there was no funding received under the
  Buildings and Facilities line.

7. Annual Outlays (FY 2002-FY 2011) ($ in Millions)
    Aggregate agency outlays are below. See next table for details by 
location.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
                    FY 2002                             $928,330
                    FY 2003                           $1,024,665
                    FY 2004                           $1,076,374
                    FY 2005                           $1,107,953
                    FY 2006                           $1,133,833
                    FY 2007                           $1,099,270
                    FY 2008                           $1,135,728
                    FY 2009                           $1,133,144
                    FY 2010                           $1,169,025
                    FY 2011                           $1,115,892
------------------------------------------------------------------------


                 United States Department of Agriculture
                      Agricultural Research Service
             FY 2011 Estimated Research Funding by Location
                            ($ in thousands)
------------------------------------------------------------------------
                                                             2011 NTL
                        Location                             Estimate
------------------------------------------------------------------------
Alabama, Auburn
  Aquatic Animal Health Research                               2,302,355
  Soil Dynamics Research                                       3,604,375
                                                         ---------------
    Subtotal, Alabama                                          5,906,730
                                                         ---------------
Alaska, Fairbanks
  Subarctic Agricultural Research Unit                         5,465,003
                                                         ---------------
    Subtotal, Alaska                                           5,465,003
                                                         ---------------
Arizona, Maricopa--U.S. Arid Land Agricultural Research
 Center
  Aflatoxin Reduction                                            850,435
  Pest Management and Biocontrol Research                      2,897,456
  Plant Physiology and Genetics Research                       3,026,574
  Water Management and Conservation Research                   2,950,663
                                                         ---------------
  Maricopa Subtotal                                            9,725,128
                                                         ---------------
Arizona, Tucson
  Honey Bee Research                                           1,627,276
  Southwest Watershed Research                                 3,318,636
                                                         ---------------
    Tucson Subtotal                                            4,945,912
                                                         ===============
      Subtotal, Arizona                                       14,671,040
                                                         ===============
Arkansas, Booneville
  Dale Bumpers Small Farms Research Center                     1,764,605
Arkansas, Fayetteville
  Poultry Production and Products Safety Research              1,627,547
Arkansas, Little Rock
  Arkansas Children's Nutrition Center                         6,348,600
Arkansas, Stuttgart
  Dale Bumpers National Rice Research Center                   3,600,124
  Harry K. Dupree Stuttgart National Aquaculture               3,224,860
   Research Center
                                                         ---------------
    Stuttgart Subtotal                                         6,824,984
                                                         ===============
      Subtotal, Arkansas                                      16,565,736
                                                         ===============
California, Albany--Plant Gene Expression Center               4,116,816
California, Albany--Western Regional Research Center
  Bioproduct Chemistry and Engineering Research                3,924,646
  Crop Improvement/Utilization Research                        4,507,709
  Exotic and Invasive Weeds Research                           4,967,546
  Foodborne Contaminants Research                              4,246,950
  Genomics and Gene Discovery                                  2,092,410
  Plant Mycotoxins Research                                    3,007,727
  Processed Foods Research                                     3,855,196
  Produce Safety and Microbiology Research                     5,436,157
                                                         ---------------
    Albany Subtotal                                           36,155,157
                                                         ---------------
California, Davis
  Crops Pathology and Genetics Research                        2,763,178
  National Clonal Germplasm Repository--Tree Fruit & Nut       1,304,663
   Crops & Grapes
  Western Human Nutrition Research Center:
    Obesity And Metabolism Research                            3,400,766
    Immunity and Disease Prevention Research Unit              3,485,541
                                                         ---------------
    Davis Subtotal                                            10,954,148
                                                         ---------------
California, Parlier--San Joaquin Valley Agricultural
 Sciences Center
  Commodity Protection and Quality Research                    3,358,348
  Crop Diseases, Pests and Genetics                            5,429,823
  Plant Genetic Resources Conservation                           625,023
  Water Management Research                                    2,363,685
                                                         ---------------
    Parlier Subtotal                                          11,776,879
                                                         ---------------
California, Riverside
  U.S. Salinity Laboratory:
    Contaminant Fate And Transport Research                    2,114,961
    Water Reuse And Remediation Research                       2,316,566
  National Clonal Germplasm Repository for Citrus              1,142,398
                                                         ---------------
      Riverside Subtotal                                       5,573,925
                                                         ---------------
California, Salinas
  Crop Improvement And Protection Research                     4,907,345
California, Shafter
  Western Integrated Cropping Systems Research                 1,455,204
                                                         ===============
    Subtotal, California                                      70,822,658
                                                         ===============
Colorado, Akron
  Central Plains Resources Management Research                 2,049,276
Colorado, Fort Collins
  Agricultural Systems Research                                2,132,160
  Plant and Animal Genetic Resources Preservation              4,620,480
   Research Unit
  Soil, Plant And Nutrient Research                            2,782,077
  Sugarbeet Research                                             797,220
  Water Management Research                                    1,819,074
                                                         ---------------
    Fort Collins Subtotal                                     12,151,011
                                                         ===============
      Subtotal, Colorado                                      14,200,287
                                                         ===============
Delaware, Newark
  Beneficial Insects Introduction Research                     2,069,908
                                                         ===============
    Subtotal, Delaware                                         2,069,908
                                                         ===============
District of Columbia
  U.S. National Arboretum:
    Education Unit                                             1,328,736
    Floral And Nursery Plants Research Unit                    6,489,013
    Gardens Unit                                               3,594,923
                                                         ===============
      Subtotal, District of Columbia                          11,412,672
                                                         ===============
Florida, Brooksville
  Beef Cattle Research                                         1,249,875
Florida, Canal Point
  Sugarcane Production Research                                2,888,264
Florida, Fort Lauderdale
  Invasive Plant Research Laboratory                           2,552,219
Florida, Fort Pierce--U.S. Horticultural Research
 Laboratory
  Horticulture and Breeding Research                           4,117,253
  Quality Improvement in Citrus and Subtropical Products       2,644,308
   Research
  Subtropical Insects Research                                 2,964,198
  Subtropical Plant Pathology Research                         4,543,843
                                                         ---------------
    Fort Pierce Subtotal                                      14,269,602
                                                         ---------------
Florida, Gainesville--Center for Medical, Agricultural
 and Veterinary Entomology
  Chemistry Research                                           3,464,716
  Imported Fire Ant and Household Insects Research             2,120,122
  Insect Behavior and Biocontrol Research Unit                 4,034,501
  Mosquito and Fly Research                                    2,455,817
                                                         ---------------
    Gainesville Subtotal                                      12,075,156
                                                         ---------------
Florida, Miami
  Subtropical Horticulture Research                            4,569,783
                                                         ===============
    Subtotal, Florida                                         37,604,899
                                                         ===============
Georgia, Athens
  Southeast Poultry Research Laboratory:
    Endemic Poultry Viral Diseases Research                    1,839,675
    Exotic And Emerging Avian Viral Diseases Research          3,908,077
  Richard B. Russell Research Center:
    Bacterial Epidemiology and Antimicrobial Resistance        3,401,577
     Research
    Egg Safety and Quality Research                            2,200,757
    Poultry Microbiological Safety Research                    2,735,627
    Poultry Processing and Swine Physiology Research           1,721,610
    Quality and Safety Assessment Research                     3,847,038
    Toxicology and Mycotoxin Research                          2,617,726
  Southern Piedmont Conservation Research                      2,659,303
                                                         ---------------
      Athens Subtotal                                         24,931,390
                                                         ---------------
Georgia, Byron
  Fruit and Nut Research                                       3,650,947
Georgia, Dawson
  Peanut Research                                              3,878,854
Georgia, Griffin
  Plant Genetic Resources Conservation Research                2,318,940
Georgia, Tifton
  Crop Genetics and Breeding Research                          2,205,021
  Crop Protection and Management Research                      4,075,707
  Southeast Watershed Research                                 3,412,954
                                                         ---------------
    Tifton Subtotal                                            9,693,682
                                                         ===============
      Subtotal, Georgia                                       44,473,813
                                                         ===============
Hawaii, Hilo--U.S. Pacific Basin Agricultural Research
 Center
  Tropical Crop and Commodity Protection Research Unit         5,961,010
  Tropical Plant Genetic Resources and Disease Research        3,583,427
   Unit
                                                         ===============
    Subtotal, Hawaii                                           9,544,437
                                                         ===============
Idaho, Aberdeen
  Small Grains and Potato Germplasm Research                   6,011,779
Idaho, Boise
  Watershed Management Research                                2,142,620
Idaho, Dubois
  Range Sheep Production Efficiency Research                   2,149,498
Idaho, Kimberly
  Northwest Irrigation and Soils Research                      3,584,719
                                                         ===============
    Subtotal, Idaho                                           13,888,616
                                                         ===============
Illinois, Peoria--National Center for Agricultural
 Utilization Research
  Bacterial Foodborne Pathogens & Mycology Research            6,453,938
  Bioenergy Research                                           4,215,810
  Bio-Oils Research                                            4,260,469
  Crop Bioprotection Research                                  2,876,133
  Functional Foods Research                                    4,650,895
  Plant Polymer Research                                       5,032,373
  Renewable Product Technology Research                        4,328,884
                                                         ---------------
    Peoria Subtotal                                           31,818,502
                                                         ---------------
Illinois, Urbana
  Global Change and Photosynthesis Research                    2,959,242
  Soybean/Maize Germplasm, Pathology, and Genetics             2,771,594
   Research
                                                         ---------------
    Urbana Subtotal                                            5,730,836
                                                         ===============
      Subtotal, Illinois                                      37,549,338
                                                         ===============
Indiana, West Lafayette
  Crop Production and Pest Control Research                    3,514,487
  Livestock Behavior Research                                  1,471,316
  National Soil Erosion Research                               2,766,782
                                                         ===============
    Subtotal, Indiana                                          7,752,585
                                                         ===============
Iowa, Ames
  Corn Insects and Crop Genetics Research                      6,881,204
  National Animal Disease Center:
    Food Safety and Enteric Pathogens                          5,384,398
    Infectious Bacterial Diseases                              9,413,272
    Ruminant Diseases and Immunology                           7,217,472
    Virus and Prion                                           10,029,973
  Plant Introduction Research                                  3,407,852
  National Laboratory for Agriculture and the
   Environment:
    Soil, Water & Air Resources Research                       3,428,406
    Agroecosystems Management Research                         5,323,618
                                                         ===============
      Subtotal, Iowa                                          51,086,195
                                                         ===============
Kansas, Manhattan--Center for Grain and Animal Health
 Research
  Arthropod-Borne Animal Diseases Research                     3,133,205
  Engineering and Wind Erosion Research                        2,204,583
  Grain Quality and Structure Research                         2,973,412
  Hard Winter Wheat Genetics Research                          2,712,749
  Stored Product Insect Research                               2,777,678
                                                         ===============
    Subtotal, Kansas                                          13,801,627
                                                         ===============
Kentucky, Bowling Green
  Animal Waste Management Research                             2,583,864
Kentucky, Lexington
  Forage-Animal Production Research                            2,635,527
                                                         ===============
    Subtotal, Kentucky                                         5,219,391
                                                         ===============
Louisiana, Baton Rouge
  Honey Bee Breeding, Genetics, and Physiology Research        2,580,696
Louisiana, Houma
  Sugarcane Research                                           4,068,690
Louisiana, New Orleans--Southern Regional Research
 Center
  Commodity Utilization Research                               4,449,989
  Cotton Chemistry and Utilization Research                    3,573,813
  Cotton Fiber Bioscience Research                             1,344,318
  Cotton Structure and Quality Research                        3,535,833
  Food and Feed Safety Research                                4,871,129
  Food Processing and Sensory Quality Research                 4,509,075
  Formosan Subterranean Termite Research                       2,868,331
                                                         ---------------
    New Orleans Subtotal                                      25,152,488
                                                         ===============
      Subtotal, Louisiana                                     31,801,874
                                                         ===============
Maine, Orono
  Cranberry Research                                             374,250
  National Cold Water Marine Aquaculture Center                  820,496
                                                         ===============
    Subtotal, Maine                                            1,194,746
                                                         ===============
Maryland, Beltsville
  Animal and Natural Resources Institute:
    Animal Biosciences and Biotechnology Laboratory            6,675,716
    Animal Improvement Programs Laboratory                     2,632,700
    Animal Parasitic Diseases Laboratory                       6,850,965
    Bovine Functional Genomics Laboratory                      6,649,867
    Crop Systems and Global Change Laboratory                  2,673,959
    Environmental Management and By-Product Utilization        5,196,763
     Laboratory
    Environmental Microbial and Food Safety Laboratory         7,773,429
    Hydrology and Remote Sensing Laboratory                    4,861,439
    Sustainable Agricultural Systems Laboratory                4,649,332
  Beltsville Human Nutrition Research Center:
    Diet, Genomics and Immunology Laboratory                   3,796,455
    Food Components and Health Laboratory                      5,636,649
    Food Composition and Methods Development Laboratory        2,585,426
    Food Surveys Research Group                                6,588,506
    Nutrient Data Laboratory                                   3,137,610
  Plant Sciences Institute:
    Bee Research Laboratory                                    2,476,706
    Food Quality Laboratory                                    3,895,437
    Genetic Improvement for Fruits and Vegetables              5,420,857
     Laboratory
    Invasive Insect Biocontrol and Behavior Laboratory         6,261,849
    Molecular Plant Pathology Laboratory                       3,673,159
    National Germplasm Resources Laboratory                    4,309,679
    Nematology Laboratory                                      2,478,053
    Soybean Genomics and Improvement Laboratory                4,169,210
    Sustainable Perennial Crops Laboratory                     4,100,507
    Systematic Mycology and Microbiology Laboratory            1,953,259
    Systematics Entomology Laboratory                          4,736,782
                                                         ---------------
      Beltsville Agricultural Research Center Subtotal       113,184,314
                                                         ---------------
Maryland, Beltsville--National Agricultural Library           21,184,588
Maryland, Frederick
  Foreign Disease-Weed Science Research                        5,630,325
                                                         ===============
    Subtotal, Maryland                                       139,999,227
                                                         ===============
Massachusetts, Boston
  Human Nutrition Research Center on Aging                    15,258,288
                                                         ===============
    Subtotal, Massachusetts                                   15,258,288
                                                         ===============
Michigan, East Lansing
  Avian Disease and Oncology Research                          3,269,791
  Sugarbeet and Bean Research                                  1,326,766
                                                         ===============
    Subtotal, Michigan                                         4,596,557
                                                         ===============
Minnesota, Morris
  Soil Management Research                                     2,643,268
Minnesota, St. Paul
  Cereal Disease Research                                      2,547,162
  Plant Science Research                                       2,493,211
  Soil and Water Management Research                           1,752,683
                                                         ---------------
    St. Paul Subtotal                                          6,793,056
                                                         ===============
      Subtotal, Minnesota                                      9,436,324
                                                         ===============
Mississippi, Mississippi State
  Crop Science Research Laboratory:
    Corn Host Plant Resistance Research                        2,050,412
    Genetics and Precision Agriculture Research                4,292,462
  Poultry Research                                             2,873,253
                                                         ---------------
    Mississippi State Subtotal                                 9,216,127
                                                         ---------------
Mississippi, Oxford
  National Sedimentation Laboratory:
    Water Quality and Ecology Research                         3,345,131
    Watershed Physical Processes                               5,169,338
  Natural Products Utilization Research                        5,525,076
                                                         ---------------
      Oxford Subtotal                                         14,039,545
                                                         ---------------
Mississippi, Poplarville
  Southern Horticultural Research                              5,168,880
Mississippi, Stoneville
  Biological Control of Pests Research                         5,246,151
  Catfish Genetics Research                                    8,860,750
  Cotton Ginning Research                                      1,428,364
  Crop Genetics Research                                       6,450,422
  Crop Production Systems Research                             5,655,407
  Genomics and Bioinformatics Research                         1,831,962
  Human Nutrition Research                                       273,454
  Southern Insect Management Research                          4,687,200
  Soybean Research                                               778,425
                                                         ---------------
    Stoneville Subtotal                                       35,212,135
                                                         ===============
      Subtotal, Mississippi                                   63,636,687
                                                         ===============
Missouri, Columbia
  Biological Control of Insects Research                       1,692,322
  Cropping Systems and Water Quality Research                  3,172,521
  Plant Genetics Research                                      4,239,347
                                                         ===============
    Subtotal, Missouri                                         9,104,190
                                                         ===============
Montana, Miles City
  Range and Livestock Research                                 3,337,966
Montana, Sidney--Northern Plains Agricultural Research
 Laboratory
  Agricultural Systems Research Unit                           2,563,705
  Pest Management Research Unit                                2,573,427
                                                         ---------------
    Sidney Subtotal                                            5,137,132
                                                         ===============
      Subtotal, Montana                                        8,475,098
                                                         ===============
Nebraska, Clay Center--U.S. Meat Animal Research Center
  Animal Health Research                                       1,552,861
  Environmental Management Research                            1,957,037
  Genetics and Breeding Research                               4,215,173
  Meats Safety & Quality Research                              5,349,777
  Nutrition Research                                           2,972,038
  Reproduction Research                                        3,537,864
                                                         ---------------
    Clay Center Subtotal                                      19,584,750
                                                         ---------------
Nebraska, Lincoln
  Agroecosystem Management Research                            3,175,627
  Grain, Forage, and Bioenergy Research                        2,808,228
                                                         ---------------
    Lincoln Subtotal                                           5,983,855
                                                         ===============
      Subtotal, Nebraska                                      25,568,605
                                                         ===============
New Mexico, Las Cruces
  Cotton Ginning Research                                      1,856,867
  Range Management Research                                    4,174,766
                                                         ===============
    Subtotal, New Mexico                                       6,031,633
                                                         ===============
New York, Geneva
  Grape Genetics Research                                      1,662,812
  Plant Genetic Resources                                      2,263,266
                                                         ---------------
    Geneva Subtotal                                            3,926,078
                                                         ---------------
New York, Greenport
  Foreign Animal Disease Research                              3,840,400
New York, Ithaca
  Biological Integrated Pest Management Research               3,283,196
  Plant, Soil and Nutrition Research                           5,539,605
  Plant-Microbe Interactions Research                          1,771,550
                                                         ---------------
    Ithaca Subtotal                                           10,594,351
                                                         ===============
      Subtotal, New York                                      18,360,829
                                                         ===============
North Carolina, Raleigh
  Food Science Research                                        1,310,075
  Market Quality and Handling Research                         1,112,911
  Plant Science Research                                       4,922,910
  Soybean and Nitrogen Fixation Research                       2,055,687
                                                         ===============
    Subtotal, North Carolina                                   9,401,583
                                                         ===============
North Dakota, Fargo--Red River Valley Agricultural
 Research Center
  Animal Metabolism-Agricultural Chemicals Research            2,405,557
  Cereal Crops Research                                        4,104,352
  Insect Genetics and Biochemistry Research                    1,928,232
  Sugarbeet and Potato Research                                2,290,933
  Sunflower and Plant Biology Research                         3,542,935
  Weed Biology Research                                        1,511,423
                                                         ---------------
    Fargo Subtotal                                            15,783,432
                                                         ---------------
North Dakota, Grand Forks--Grand Forks Human Nutrition
 Research Center
  Dietary Prevention of Obesity-Related Research               4,337,437
  Healthy Body Weight Research                                 5,224,694
                                                         ---------------
    Grand Forks Subtotal                                       9,562,131
                                                         ---------------
North Dakota, Mandan
  Natural Resource Management Research                         3,442,163
                                                         ===============
    Subtotal, North Dakota                                    28,787,726
                                                         ---------------
Ohio, Columbus
  Soil Drainage Research                                       1,477,805
Ohio, Coshocton
  North Appalachian Experimental Watershed Research            1,250,740
Ohio, Wooster
  Application Technology Research                              3,236,110
  Corn and Soybean Research                                      879,325
  Soft Wheat Quality Research                                    943,096
                                                         ---------------
  Wooster Subtotal                                             5,058,531
                                                         ===============
    Subtotal, Ohio                                             7,787,076
                                                         ===============
Oklahoma, El Reno--Grazinglands Research Laboratory
  Forage and Livestock Production Research Unit                2,933,754
  Great Plains Agroclimate and Natural Resources               2,427,656
   Research Unit
                                                         ---------------
    El Reno Subtotal                                           5,361,410
                                                         ---------------
Oklahoma, Lane--South Central Agricultural Research
 Laboratory
  Genetics and Production Research                             1,962,617
Oklahoma, Stillwater
  Hydraulic Engineering Research                                 938,916
  Wheat, Peanut, and Other Field Crops Research                2,721,669
                                                         ---------------
    Stillwater Subtotal                                        3,660,585
                                                         ---------------
Oklahoma, Woodward
  Rangeland and Pasture Research                               1,645,398
                                                         ===============
    Subtotal, Oklahoma                                        12,630,010
                                                         ===============
Oregon, Burns
  Range and Meadow Forage Management Research                  2,726,833
Oregon, Corvallis
  Forage Seed and Cereal Research                              4,633,549
  Horticultural Crops Research                                 5,741,888
  National Clonal Germplasm Repository                         1,484,276
                                                         ---------------
    Corvallis Subtotal                                        11,859,713
                                                         ---------------
Oregon, Pendleton
  Soil and Water Conservation Research                         1,961,163
                                                         ===============
    Subtotal, Oregon                                          16,547,709
                                                         ===============
Pennsylvania, University Park
  Pasture Systems & Watershed Management Research              4,216,231
Pennsylvania, Wyndmoor--Eastern Regional Research Center
  Biobased and Other Animal Co-Products Research               3,668,679
  Dairy and Functional Foods Research                          4,966,168
  Food Safety and Intervention Technologies Research           5,784,714
  Molecular Characterization of Foodborne Pathogens            6,939,849
   Research
  Residue Chemistry and Predictive Microbiology Research       4,766,582
  Sustainable Biofuels and Co-Products Research                5,416,802
                                                         ---------------
    Wyndmoor Subtotal                                         31,542,794
                                                         ===============
      Subtotal, Pennsylvania                                  35,759,025
                                                         ===============
South Carolina, Charleston
  Vegetable Research                                           4,434,754
South Carolina, Clemson
  Cotton Quality Research                                      2,355,935
South Carolina, Florence
  Coastal Plain Soil, Water and Plant Conservation             4,148,647
   Research
                                                         ===============
    Subtotal, South Carolina                                  10,939,336
                                                         ===============
South Dakota, Brookings
  Integrated Cropping Systems Research                         2,968,164
                                                         ===============
    Subtotal, South Dakota                                     2,968,164
                                                         ===============
Texas, Beaumont
  Rice Research                                                1,428,857
Texas, Bushland--Conservation and Production Research
 Laboratory
  Renewable Energy and Manure Management Research              1,731,850
  Soil and Water Management Research                           5,228,070
                                                         ---------------
    Bushland Subtotal                                          6,959,920
                                                         ---------------
Texas, College Station--Southern Plains Agricultural
 Research Center
  Areawide Pest Management Research                            3,233,491
  Cotton Pathology Research                                    1,511,849
  Crop Germplasm Research                                      3,363,939
  Food and Feed Safety Research                                5,087,980
                                                         ---------------
    College Station Subtotal                                  13,197,259
                                                         ---------------
Texas, Houston
  Children's Nutrition Research Center                        13,677,579
Texas, Kerrville--Knipling-Bushland U.S. Livestock
 Insects Research Laboratory
  Screwworm Research                                           1,023,231
  Tick and Biting Fly Research                                 4,640,802
                                                         ---------------
    Kerrville Subtotal                                         5,664,033
                                                         ---------------
Texas, Lubbock--Cropping Systems Research Laboratory
  Cotton Production and Processing Research                    1,187,720
  Livestock Issues Research                                    1,157,043
  Plant Stress and Germplasm Development Research              3,635,239
  Wind Erosion and Water Conservation Research                 3,058,531
                                                         ---------------
    Lubbock Subtotal                                           9,038,533
                                                         ---------------
Texas, Temple
  Grassland, Soil and Water Research Laboratory                3,585,877
Texas, Weslaco--Kika de la Garza Subtropical
 Agricultural Research Center
  Beneficial Insects Research                                  2,967,672
  Crop Quality and Fruit Insects Research                      1,972,766
  Honey Bee Research                                           1,616,482
  Integrated Farming and Natural Resources Research            3,140,728
                                                         ---------------
    Weslaco Subtotal                                           9,697,648
                                                         ===============
      Subtotal, Texas                                         63,249,706
                                                         ===============
Utah, Logan
  Forage and Range Research                                    3,931,926
  Poisonous Plant Research                                     3,292,975
  Pollinating Insect-Biology, Management, Systematics          1,784,531
   Research
                                                         ===============
    Subtotal, Utah                                             9,009,432
                                                         ===============
Washington, Prosser
  Vegetable and Forage Crops Production Research               3,319,128
Washington, Pullman
  Animal Disease Research                                      6,957,540
  Grain Legume Genetics Physiology Research                      974,874
  Land Management and Water Conservation Research              1,673,928
  Plant Germplasm Introduction and Testing Research            2,735,366
  Root Disease and Biological Control Research                 1,485,447
  Wheat Genetics, Quality Physiology and Disease               2,686,923
   Research
                                                         ---------------
    Pullman Subtotal                                          16,514,078
                                                         ---------------
Washington, Wapato
  Fruit and Vegetable Insect Research                          4,550,497
Washington, Wenatchee
  Physiology and Pathology of Tree Fruits Research             2,107,760
                                                         ===============
    Subtotal, Washington                                      26,491,463
                                                         ===============
West Virginia, Beaver
  Appalachian Farming Systems Research Center                  7,376,867
West Virginia, Kearneysville--Appalachian Fruit Research
 Laboratory
  Innovative Fruit Production, Improvement and                 7,185,870
   Protection
West Virginia, Leetown
  Cool and Cold Water Aquaculture Research                     7,157,417
                                                         ===============
    Subtotal, West Virginia                                   21,720,154
                                                         ===============
Wisconsin, Madison
  Cereal Crops Research                                        2,657,598
  U.S. Dairy Forage Research Center:
    Cell Wall Biology and Utilization Research                 3,019,146
    Dairy Forage and Aquaculture Research                      4,696,175
    Environmentally Integrated Dairy Management                1,781,972
  Vegetable Crops Research                                     3,933,194
                                                         ===============
      Subtotal, Wisconsin                                     16,088,085
                                                         ===============
Wyoming, Cheyenne
  Rangeland Resources Research                                 2,313,149
                                                         ===============
    Subtotal, Wyoming                                          2,313,149
                                                         ===============
Puerto Rico, Mayaguez
  Tropical Crops and Germplasm Research                        2,837,405
                                                         ===============
    Subtotal, Puerto Rico                                      2,837,405
                                                         ===============
Other Countries
  Argentina, Buenos Aires--South American Biological             532,225
   Control Laboratory
  France, Montpellier--European Biological Control             3,078,341
   Laboratory
                                                         ===============
    Subtotal, Other Countries                                  3,610,566
                                                         ===============
      ARS Research Total                                     965,639,582
                                                         ===============
Repair & Maintenance of Facilities (Arboretum & NAL)           1,553,266
Office of the Director--WRRC Renovation                          495,096
Administrator and Immediate Staffs                            54,740,337
National Programs                                             36,916,510
Administrtive and Financial Management                        28,557,007
Research Operations and Management                            16,994,855
Beltsville Area Office of the Director                         5,936,605
North Atlantic Area Office of the Director                     3,291,214
Midwest Area Office of the Director                            3,252,327
Pacific West Area Office of the Director                       3,751,231
Northern Plains Area--Office of the Director                   3,276,233
Southern Plains Area Office of the Director                    2,819,470
Mid South Area Office of the Director                          2,913,196
South Atlantic Area Office of the Director                     3,093,069
                                                         ---------------
  Subtotal, Admin                                            165,542,054
                                                         ===============
    Total ARS                                              1,133,229,998
------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
                                                         United States Department Of Agriculture
                                                              Agricultural Research Service
                                                         Annual Delivery Cost (FY 2007-FY 2011)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
    USDA Strategic Goal 1: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically thriving.
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
          Program Items               ($000)          ($000)          ($000)          ($000)          ($000)
 
Product Quality/Value Added               95,383          94,310          96,737          99,496          99,950
Livestock Production                      38,510          38,077          38,830          39,368          39,547
Crop Production                          114,550         113,262         115,396         107,564         119,763
National Agricultural Library             21,428          20,843          21,022          21,213          20,010
Repair and Maintenance                    17,635          17,524          17,491          17,461          17,503
Collaborative Research Program             2,959           3,824           2,913              --              --
Miscellaneous Fees                         8,727             554             120             167              --
  Indirect Costs                          28,263          29,000          30,220          29,738          31,030
                                 -------------------------------------------------------------------------------
    Total Costs                          327,455         317,394         322,729         315,007         327,803
    FTEs                                   2,182           2,154           2,114           2,106           2,436
----------------------------------------------------------------------------------------------------------------
 
Note: Total is from 2012 and was based on the Full Year Continuing Resolution.


--------------------------------------------------------------------------------------------------------------------------------------------------------
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
    USDA Strategic Goal 2: Ensure our National Forests and private working lands are conserved, restored, and made more resilient to climate change,
 while enhancing our water resources.
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
          Program Items               ($000)          ($000)          ($000)          ($000)          ($000)
 
Environmental Stewardship                178,547         176,539         179,109         185,975         186,825
  Indirect Costs                          18,699          19,211          19,901          20,664          20,758
                                 -------------------------------------------------------------------------------
    Total Costs                          197,246         195,750         199,010         206,639         207,583
    FTEs                                   2,084           2,058           2,024           2,017           1,709
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
    USDA Strategic Goal 3: Help America promote agricultural production and biotechnology exports as America works to increase food security.
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
          Program Items               ($000)          ($000)          ($000)          ($000)          ($000)
 
Livestock Production                      38,510          38,077          38,830          39,368          39,548
Crop Production                           91,081          90,058          91,880         107,564          96,348
  Indirect Costs                          13,572          13,943          14,523          16,326          15,100
                                 -------------------------------------------------------------------------------
    Total Costs                          143,163         142,078         145,233         163,258         150,996
    FTEs                                   1,079           1,065           1,050           1,056           1,060
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
 
---------------------------------------------------------------------------------------------------------------------------------------------------------
    USDA Strategic Goal 4: Ensure that all of America's children have access to safe, nutritious and balanced meals.
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
          Program Items               ($000)          ($000)          ($000)          ($000)          ($000)
 
Food Safety                               94,818          94,240          95,126          96,837          96,837
Human Nutrition                           77,545          76,964          76,778          80,761          80,761
Livestock Protection                      78,528          73,967          74,659          80,825          81,194
Crop Protection                          178,341         176,334         180,283         184,346         185,140
H1N1 Transfer                                 --              --              --           1,416              --
  Indirect Costs                          44,952          45,868          47,427          49,197          49,325
                                 -------------------------------------------------------------------------------
    Total Costs                          474,184         467,373         474,273         493,382         493,257
    FTEs                                   3,166           3,130           3,080           3,103           3,077
----------------------------------------------------------------------------------------------------------------
 
Note: Annual delivery cost is reported consistent with the President's 2012 Budget and the USDA Strategic Plan
  FY 2010-2015.

9. Eligibility Criteria
    ARS is not a granting agency and as such does not have programs 
that distribute money to outside organizations and thus does not have 
eligibility criteria for its programs.
10. Utilization (Participation) Data
    In the traditional sense, because ARS is an intramural research 
agency, it does not have direct outside utilization of it programs by 
other individuals or entities through granting. However, the agency 
does execute a large number of extramural agreements with other 
research organizations and does provide funding to aid in the 
completion of these projects by our collaborators. A summary of the 
agency's current extramural agreements is below and a detailed list 
follows. The table below reflects the aggregate of agreements currently 
in force. These agreements may have been entered into and funds 
obligated as early as 2006.

------------------------------------------------------------------------
                                           Number of
      Performing Organization Type         Agreements    Dollar Amount
------------------------------------------------------------------------
Other Federal Agency                                1        $150,000.00
State Agricultural Experiment Station              34     $36,766,986.24
1862 Land-Grant College                         1,335    $189,618,764.02
1890 Land-Grant College or Tuskegee               138     $17,860,097.79
 Institute
Private University or College                      46     $54,664,158.92
Public University or College (non-land-           114     $53,134,432.50
 grant)
Private for Profit Organization                    14        $797,632.44
Private nonprofit Organization                    112     $78,111,607.51
State or Local Government                           8      $1,642,399.00
Small Business                                      4        $836,658.35
Minority-owned Business                             1         $45,000.00
Female Owned Business                               2         $95,000.00
Other                                               5      $1,741,095.10
Individual                                          4        $293,775.00
Tribal Colleges and Universities                    1        $102,000.00
Foreign                                            97     $10,610,575.57
                                         -------------------------------
  Total                                         1,916    $446,470,182.44
------------------------------------------------------------------------


------------------------------------------------------------------------
    Type Perf Org                          Number of
     Description        Cooperator Name    Agreements    Dollar Amount
------------------------------------------------------------------------
FR Other Federal      NASA Goddard Space            1        $150,000.00
 Agency                Flight Center
SA State              Connecticut                   2      $3,950,532.00
 Agricultural          Agricultural
 Experiment Station    Experiment
                       Station
SA State              Mississippi Agri &           29     $30,708,547.24
 Agricultural          Forestry Exp
 Experiment Station    Station
SA State              Rutgers-New Jersey            2      $1,976,457.00
 Agricultural          Agricultural
 Experiment Station    Exper Sta
SA State              Texas Agricultural            1        $131,450.00
 Agricultural          Experiment
 Experiment Station    Station
LG 1862 Land-Grant    Arizona Board Of              9      $2,296,472.94
 College               Regents
LG 1862 Land-Grant    Auburn University            10      $5,000,208.94
 College
LG 1862 Land-Grant    Board of Regents--           14        $913,982.67
 College               Univ of Wisconsin
                       System
LG 1862 Land-Grant    Board of Trustees             3        $935,280.00
 College               of the Univ of
                       Illinois
LG 1862 Land-Grant    Clemson University           11      $1,219,728.86
 College
LG 1862 Land-Grant    Colorado State               25      $2,105,979.45
 College               University
LG 1862 Land-Grant    Cornell University           53      $7,323,596.03
 College
LG 1862 Land-Grant    Curators of the              26      $7,473,576.87
 College               University of
                       Missouri
LG 1862 Land-Grant    Iowa State                   50      $3,090,966.48
 College               University
LG 1862 Land-Grant    Kansas State                 43      $6,817,111.89
 College               University
LG 1862 Land-Grant    Louisiana State              18      $8,471,005.47
 College               Univ Agricultural
                       Center
LG 1862 Land-Grant    Michigan State               37      $3,829,112.74
 College               University
LG 1862 Land-Grant    Mississippi State             9      $7,676,027.00
 College               University
LG 1862 Land-Grant    Montana State                 7        $151,474.06
 College               University
LG 1862 Land-Grant    New Mexico State             21      $2,366,107.72
 College               University
LG 1862 Land-Grant    North Carolina               55      $3,819,326.99
 College               Agricultural
                       Research Service
LG 1862 Land-Grant    North Carolina                4        $170,640.00
 College               State University
LG 1862 Land-Grant    North Dakota State           59      $7,362,212.36
 College               University
LG 1862 Land-Grant    Ohio State                    1          $4,000.00
 College               University
                       Libraries
LG 1862 Land-Grant    Ohio State                   14      $2,726,026.25
 College               University
                       Research
                       Foundation
LG 1862 Land-Grant    Oklahoma State               19        $693,196.24
 College               University
LG 1862 Land-Grant    Oregon State                 87      $7,425,573.67
 College               University
LG 1862 Land-Grant    Pennsylvania State           29      $2,779,442.93
 College               University
LG 1862 Land-Grant    Purdue University            31      $6,867,373.78
 College
LG 1862 Land-Grant    Regents of the               89     $17,035,168.73
 College               University of
                       California
LG 1862 Land-Grant    Regents of the               14      $2,796,725.31
 College               University of
                       Minnesota
LG 1862 Land-Grant    Rutgers, The State            7        $743,699.60
 College               University of New
                       Jersey
LG 1862 Land-Grant    South Dakota State           17      $2,051,651.23
 College               University
LG 1862 Land-Grant    Texas A&M                     9        $337,883.00
 College               University
LG 1862 Land-Grant    Texas A&M                     3         $74,000.00
 College               University-
                       Kingsville
LG 1862 Land-Grant    Texas AgriLife               34      $5,627,731.56
 College               Research
LG 1862 Land-Grant    The Board of                  6        $281,745.08
 College               Trustees,
                       University of
                       Illinois
LG 1862 Land-Grant    The Ohio State               14        $120,464.95
 College               University
LG 1862 Land-Grant    U of AK--Alaska               2        $113,250.50
 College               Agric & Forestry
                       Exp Sta
LG 1862 Land-Grant    U of ID--Idaho                2        $140,086.51
 College               Agricultural Exp
                       Sta
LG 1862 Land-Grant    University of                 6      $2,901,927.79
 College               Alaska
LG 1862 Land-Grant    University of                 2         $27,401.00
 College               Alaska Museum
LG 1862 Land-Grant    University of                 4         $73,143.92
 College               Arizona
LG 1862 Land-Grant    University of                20      $1,240,258.30
 College               Arkansas
LG 1862 Land-Grant    University of                 3        $112,500.00
 College               California
LG 1862 Land-Grant    University of                58      $2,126,281.93
 College               California, Davis
LG 1862 Land-Grant    University of                 8      $5,344,456.98
 College               Connecticut
LG 1862 Land-Grant    University of                17        $689,161.03
 College               Delaware
LG 1862 Land-Grant    University of                32      $3,088,401.12
 College               Florida
LG 1862 Land-Grant    University of                 7        $271,828.00
 College               Georgia
LG 1862 Land-Grant    University of                23      $7,054,349.38
 College               Hawaii
LG 1862 Land-Grant    University of                22      $2,404,977.12
 College               Idaho
LG 1862 Land-Grant    University of                44      $6,211,402.53
 College               Illinois
LG 1862 Land-Grant    University of                 3        $281,017.72
 College               Kentucky
LG 1862 Land-Grant    University of                 9      $5,987,369.21
 College               Kentucky Research
                       Foundation
LG 1862 Land-Grant    University of                 9        $417,891.00
 College               Maine
LG 1862 Land-Grant    University of                44      $5,265,610.54
 College               Maryland at
                       College Park
LG 1862 Land-Grant    University of                 1         $41,042.00
 College               Maryland
                       Biotechnology
                       Inst
LG 1862 Land-Grant    University of                 2         $47,319.00
 College               Massachusetts
LG 1862 Land-Grant    University of                30      $1,984,057.37
 College               Minnesota
LG 1862 Land-Grant    University of                31      $5,076,024.35
 College               Nebraska
LG 1862 Land-Grant    University of                 9        $625,104.00
 College               Nevada
LG 1862 Land-Grant    University of                 3        $220,062.83
 College               Puerto Rico
LG 1862 Land-Grant    University of                 1        $106,680.00
 College               Rhode Island
LG 1862 Land-Grant    University of                19      $3,305,247.57
 College               Tennessee
LG 1862 Land-Grant    University of                 3         $55,948.80
 College               Texas Medical
                       Branch
LG 1862 Land-Grant    University of                 3         $54,979.00
 College               Vermont & St
                       Agricultural Col
LG 1862 Land-Grant    University of                40      $2,419,070.00
 College               Wisconsin--Madiso
                       n
LG 1862 Land-Grant    University of                 6        $416,685.31
 College               Wyoming
LG 1862 Land-Grant    Utah State                   16      $2,715,207.87
 College               University
LG 1862 Land-Grant    Virginia                     14      $4,082,277.28
 College               Polytechnic
                       Institute and
                       State Univ
LG 1862 Land-Grant    West Virginia                 4      $3,548,993.27
 College               University
                       Research
                       Corporation
HB 1890 Land-Grant    Alabama A&M                   3        $672,747.22
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Alcorn State                  3      $1,652,469.83
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Delaware State                3        $104,371.11
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Florida A&M                   1        $516,283.00
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Fort Valley State             1          $4,000.00
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    North Carolina                1         $22,000.00
 College or Tuskegee   Agric & Tech
 Institute             State University
HB 1890 Land-Grant    Southern                      1      $1,262,000.00
 College or Tuskegee   University & A&M
 Institute             College
HB 1890 Land-Grant    Tennessee State               3      $2,233,030.51
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Tuskegee                      1        $125,358.15
 College or Tuskegee   University
 Inst.
HB 1890 Land-Grant    University of                 5      $1,261,534.45
 College or Tuskegee   Arkansas at Pine
 Institute             Bluff
HB 1890 Land-Grant    University Of                 4        $503,000.00
 College or Tuskegee   Maryland/Eastern
 Institute             Shore
HB 1890 Land-Grant    Virginia State                1         $37,029.00
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    Washington State            109      $8,956,772.52
 College or Tuskegee   University
 Institute
HB 1890 Land-Grant    West Virginia                 3        $519,502.00
 College or Tuskegee   State Univ Res
 Institute             and Dev Corp
PR Private            Abilene Christian             1          $5,000.00
 University or         University
 College
PR Private            Baylor College of             6     $17,670,562.00
 University or         Medicine
 College
PR Private            Brandeis                      1        $249,447.00
 University or         University
 College
PR Private            Brigham Young                 1         $30,890.45
 University or         University
 College
PR Private            Columbia                      2        $256,341.00
 University or         University in the
 College               City of New York
PR Private            Drexel University             3         $10,000.00
 University or
 College
PR Private            Duke University               1         $20,000.00
 University or
 College
PR Private            Eastern Mennonite             1         $15,000.00
 University or         University
 College
PR Private            Johns Hopkins                 1      $2,798,370.00
 University or         University
 College
PR Private            Miami University              1        $268,494.00
 University or
 College
PR Private            Mountain State                1        $725,755.49
 University or         University
 College
PR Private            Texas Christian               1         $20,000.00
 University or         University
 College
PR Private            Tufts University             15     $28,151,966.58
 University or
 College
PR Private            Tulane University             3      $2,596,653.73
 University or
 College
PR Private            Washington                    3         $81,166.00
 University or         University in St.
 College               Louis
PR Private            William Carey                 1         $14,883.00
 University or         University
 College
PR Private            Wilson College                1         $20,000.00
 University or
 College
PR Private            Wittenberg                    1          $8,000.00
 University or         University
 College
PR Private            Xavier University             1         $14,674.35
 University or
 College
PR Private            Yale University               1      $1,706,955.32
 University or
 College
PU Public University  Arkansas State                2         $82,979.97
 or College (non-      University
 land-grant)
PU Public University  Board of Trustees,            1        $624,390.00
 or College (non-      Southern Illinois
 land-grant)           Univ
PU Public University  California State              1         $27,390.00
 or College (non-      Univ Fresno
 land-grant)
PU Public University  Columbia Basin                1         $10,000.00
 or College (non-      College
 land-grant)
PU Public University  Florida Atlantic              1      $1,659,942.12
 or College (non-      University
 land-grant)
PU Public University  George Mason                  1         $30,000.00
 or College (non-      University
 land-grant)
PU Public University  George Mason                  3        $129,680.00
 or College (non-      University
 land-grant)
PU Public University  Indiana University            1         $63,631.00
 or College (non-
 land-grant)
PU Public University  Mississippi Valley            4         $31,276.00
 or College (non-      State University
 land-grant)
PU Public University  Northern Illinois             2         $61,000.00
 or College (non-      University
 land-grant)
PU Public University  Ohio State                    1         $54,667.00
 or College (non-      University
 land-grant)           Agricultural Tech
                       Inst
PU Public University  Southeastern                  1         $11,700.00
 or College (non-      Louisiana
 land-grant)           University
PU Public University  Southern Illinois             1         $16,000.00
 or College (non-      University
 land-grant)
PU Public University  Stephen F. Austin             2         $11,000.00
 or College (non-      State University
 land-grant)
PU Public University  Tarleton State                1          $9,955.96
 or College (non-      University
 land-grant)
PU Public University  Tennessee Tech                1         $10,800.00
 or College (non-      University
 land-grant)
PU Public University  Texas State                   8      $2,694,602.00
 or College (non-      University
 land-grant)
PU Public University  Truman State                  1          $9,756.00
 or College (non-      University
 land-grant)
PU Public University  University of                 1          $6,600.00
 or College (non-      Akron
 land-grant)
PU Public University  University of                 1      $1,153,656.00
 or College (non-      Arkansas at
 land-grant)           Little Rock
PU Public University  University of                 1        $151,847.95
 or College (non-      Central Florida
 land-grant)
PU Public University  University of Iowa            5        $123,500.00
 or College (non-
 land-grant)
PU Public University  University of                 1         $33,265.00
 or College (non-      Louisiana at
 land-grant)           Lafayette
PU Public University  University of                11        $448,046.87
 or College (non-      Maryland
 land-grant)
PU Public University  University of                 1         $46,628.00
 or College (non-      Memphis
 land-grant)
PU Public University  University of                15     $25,963,746.17
 or College (non-      Mississippi
 land-grant)
PU Public University  University of                 5      $1,105,355.00
 or College (non-      Missouri
 land-grant)
PU Public University  University of New             2         $20,004.00
 or College (non-      Orleans
 land-grant)
PU Public University  University of                 1          $9,600.00
 or College (non-      North Carolina
 land-grant)
PU Public University  University of                 8      $6,477,316.47
 or College (non-      North Dakota
 land-grant)
PU Public University  University of                 2        $431,219.00
 or College (non-      North Texas
 land-grant)
PU Public University  University of                 1         $59,826.00
 or College (non-      Northern Iowa
 land-grant)
PU Public University  University of                 1          $3,839.98
 or College (non-      Oklahoma
 land-grant)
PU Public University  University of                 1         $15,000.00
 or College (non-      Oregon
 land-grant)
PU Public University  University of                 2         $71,543.00
 or College (non-      Pittsburgh
 land-grant)
PU Public University  University of                 1      $1,300,000.00
 or College (non-      Southern
 land-grant)           Mississippi
PU Public University  University of                 4      $2,453,938.77
 or College (non-      Toledo
 land-grant)
PU Public University  University of                 6        $773,600.64
 or College (non-      Washington
 land-grant)
PU Public University  University of                 1        $995,206.00
 or College (non-      Wisconsin--Milwau
 land-grant)           kee
PU Public University  West Chester                  1         $39,991.00
 or College (non-      University of
 land-grant)           Pennsylvania
PU Public University  West Texas A&M                5        $831,610.00
 or College (non-      University
 land-grant)
PU Public University  Western Illinois              1         $75,000.00
 or College (non-      University Inc
 land-grant)
PU Public University  Western Kentucky              3      $5,005,322.60
 or College (non-      University
 land-grant)
PP Private for        Agriculture                   1        $137,695.00
 Profit Organization   Development
                       Group, Inc.
PP Private for        Biotechnology                 1        $195,122.00
 Profit Organization   Foundation, Inc.
PP Private for        Clear Springs                 1         $30,000.00
 Profit Organization   Foods, Inc.
PP Private for        Craft Technologies            1          $3,240.00
 Profit Organization   Inc
PP Private for        Duarte Nursery/Dry            1          $5,000.00
 Profit Organization   Creek
                       Laboratories
PP Private for        Empire Prototype              1        $125,492.44
 Profit Organization   and Product
                       Development, Inc.
PP Private for        Fabrate, LLC                  1         $20,000.00
 Profit Organization
PP Private for        ISCA Technologies             1         $50,000.00
 Profit Organization
PP Private for        Norwalt Design,               1         $59,310.00
 Profit Organization   Inc.
PP Private for        Pasteuria                     1         $48,519.00
 Profit Organization   BioScience
PP Private for        Peerbolt Crop                 1         $30,254.00
 Profit Organization   Management
PP Private for        Smith Helicopters,            1         $55,000.00
 Profit Organization   Inc.
PP Private for        SPECTIR LLC                   1         $46,000.00
 Profit Organization
PP Private for        Spectrum Research             1          $7,000.00
 Profit Organization   Inc.
PP Private for        Tetracam Company,             1          $5,000.00
 Profit Organization   Inc.
PN Private nonprofit  American Assoc of             1        $165,855.00
 Organization          Botanic Gardens &
                       Arboreta
PN Private nonprofit  American                      1          $4,000.00
 Organization          Biological Safety
                       Association
PN Private nonprofit  American Chemical             1          $3,400.00
 Organization          Society
PN Private nonprofit  American Council              1         $43,000.00
 Organization          for Food Safety &
                       Quality
PN Private nonprofit  American Indian               1         $20,000.00
 Organization          Science &
                       Engineering
                       Society
PN Private nonprofit  American                      1         $33,000.00
 Organization          Phytopathological
                       Society
PN Private nonprofit  American Society              1          $4,000.00
 Organization          for Nutrition,
                       Inc.
PN Private nonprofit  American Society              1         $39,933.52
 Organization          for Testing
                       Materials
PN Private nonprofit  AOAC                          1          $2,000.00
 Organization
PN Private nonprofit  Arkansas                      3     $34,243,929.10
 Organization          Children's
                       Hospital
PN Private nonprofit  Arkansas                      1      $1,637,550.00
 Organization          Children's
                       Hospital Research
                       Center
PN Private nonprofit  Audubon Nature                1        $692,046.66
 Organization          Institute
PN Private nonprofit  Beet Sugar                    1         $58,659.85
 Organization          Development
                       Foundation
PN Private nonprofit  Biotechnology Res             2      $9,325,847.00
 Organization          & Develop Center
PN Private nonprofit  Boys, Girls, &                1        $282,500.00
 Organization          Adults Comm Dev
                       Ctr (BGACDC)
PN Private nonprofit  Brooklyn Botanic              1          $5,000.00
 Organization          Garden
PN Private nonprofit  Canaan Valley                 1      $1,286,972.00
 Organization          Institute, Inc.
PN Private nonprofit  Cary Christian                1          $4,000.00
 Organization          Center, Inc.
PN Private nonprofit  Cold Spring Harbor            1        $548,750.79
 Organization          Laboratory
PN Private nonprofit  Conference on                 1         $22,500.00
 Organization          Asian Pacific
                       American Leadersh
PN Private nonprofit  Council for                   1         $20,000.00
 Organization          Agricultural Sci
                       & Tech (CAST)
PN Private nonprofit  Crow Valley                   1        $258,302.24
 Organization          Livestock Coop
                       Inc
PN Private nonprofit  Delta Health                  2        $500,268.00
 Organization          Alliance
PN Private nonprofit  Donald Danforth               1         $50,000.00
 Organization          Plant Science
                       Center
PN Private nonprofit  Environmental                 1         $96,702.39
 Organization          Resource
                       Coalition
PN Private nonprofit  Farm Foundation               2         $57,000.00
 Organization
PN Private nonprofit  FASEB                         1          $5,000.00
 Organization
PN Private nonprofit  Geisinger Clinic              1        $362,085.57
 Organization
PN Private nonprofit  Gordon Research               1          $4,000.00
 Organization          Conferences
PN Private nonprofit  Hawaii Agriculture            1      $1,712,779.00
 Organization          Research Center
PN Private nonprofit  High Plains RCD               1          $2,500.00
 Organization          Council, Inc.
PN Private nonprofit  Imperial Valley               1        $180,820.00
 Organization          Cons Res Ctr Com
PN Private nonprofit  J. Craig Venter               3        $898,755.00
 Organization          Institute
PN Private nonprofit  Just Food, Inc.               1          $4,900.00
 Organization
PN Private nonprofit  Malpais                       1         $10,000.00
 Organization          Borderlands Group
PN Private nonprofit  Marshfield Clinic             1         $66,000.00
 Organization          Research
PN Private nonprofit  MBI International             1        $962,000.00
 Organization
PN Private nonprofit  MedStar Health                2        $286,590.00
 Organization          Research
                       Institute
PN Private nonprofit  Methyl Bromide                1         $40,000.00
 Organization          Alternatives
                       Outreach
PN Private nonprofit  Michael Fields                1        $624,213.00
 Organization          Agricultural
                       Institute
PN Private nonprofit  Missouri Botanical            1         $60,000.00
 Organization          Garden
PN Private nonprofit  Morton Arboretum              2         $34,535.00
 Organization
PN Private nonprofit  Nat Assoc of Seed             1         $25,000.00
 Organization          and Venture Funds
                       (NASVF)
PN Private nonprofit  National Academy              1         $50,000.00
 Organization          of Sciences
PN Private nonprofit  National Center               6      $4,378,850.00
 Organization          for Genome
                       Resources
PN Private nonprofit  National Cotton               1        $333,836.00
 Organization          Council
PN Private nonprofit  National Turfgrass            1          $8,000.00
 Organization          Evaluation
                       Program, Inc.
PN Private nonprofit  Pollinator                    1         $12,927.00
 Organization          Partnership
PN Private nonprofit  Potato Variety                1         $14,237.00
 Organization          Management
                       Institute
PN Private nonprofit  Practical Farmers             1        $173,072.00
 Organization          of Iowa
PN Private nonprofit  Research                      1        $236,735.00
 Organization          Foundation of
                       SUNY
PN Private nonprofit  Rodale Institute              4        $498,062.00
 Organization
PN Private nonprofit  Samuel Roberts                2         $11,800.00
 Organization          Noble Foundation
PN Private nonprofit  Society for Range             3         $69,512.00
 Organization          Management
PN Private nonprofit  Soil and Water                3         $16,300.00
 Organization          Conservation
                       Society
PN Private nonprofit  Sugar Processing              1         $86,666.66
 Organization          Research
                       Institute
PN Private nonprofit  The Conservation              2     $11,339,104.00
 Organization          Fund
PN Private nonprofit  The Institute for             1         $53,625.00
 Organization          Genomic Research
                       (TIGR)
PN Private nonprofit  The Research                  1         $11,215.42
 Organization          Foundation of
                       SUNY
PN Private nonprofit  The Student                   2         $88,608.00
 Organization          Conservation
                       Association, Inc.
PN Private nonprofit  U.S. Civilian                 1      $4,361,346.00
 Organization          Research &
                       Develop.
                       Foundation
PN Private nonprofit  University of                 2        $253,193.00
 Organization          Alabama
PN Private nonprofit  University of                31      $1,494,236.30
 Organization          Georgia Research
                       Foundation
PN Private nonprofit  Woods End Research            1         $30,000.00
 Organization          Laboratory
PN Private nonprofit  World Food Prize              2        $477,146.00
 Organization          Foundation
SL State or Local     Arizona Cotton                1        $158,699.00
 Government            Research &
                       Protection
                       Council
SL State or Local     Nevada Tahoe                  1          $4,100.00
 Government            Conservation
                       District
SL State or Local     Oklahoma Water                1        $274,100.00
 Government            Resource Board
SL State or Local     Pennington                    2      $1,123,500.00
 Government            Biomedical
                       Research Center
SL State or Local     Soil & Water                  1         $72,000.00
 Government            Conser District
                       Dekalb County
SL State or Local     Texas Engineering             2         $10,000.00
 Government            Experiments
                       Station
SB Small Business     Alaska Berries                1          $1,658.35
SB Small Business     Applied Biomics,              1         $16,188.00
                       Inc.
SB Small Business     Crystal River                 1         $30,000.00
SB Small Business     Houma Avionics,               1          $5,000.00
                       Inc.
SB Small Business     Service                       1        $800,000.00
                       Specialist, Ltd.
MO Minority-owned     Federal Asian                 1         $45,000.00
 Business              Pacific American
                       Council
FO Female Owned       ASOMBRO Institute             1         $13,000.00
 Business              for Science
                       Education
FO Female Owned       Bluewave                      1         $82,000.00
 Business              Microbics, LLC
OT Other              Akwesasne Task                1         $30,000.00
                       Force on the
                       Environment
OT Other              Boyce Thompson                2      $1,674,907.10
                       Inst Plant Rsch,
                       Inc.
IN Individual         Barry Lavine                  1         $12,075.00
IN Individual         Brent Larson                  1          $8,000.00
IN Individual         Darrel M. Temple              1        $198,700.00
IN Individual         Earline Strickland            1         $75,000.00
TC Tribal Colleges    Cankdeska Cikana              1        $102,000.00
 and Universities      Community College
FN Foreign            Agricultural                  1         $33,000.00
                       Research Council
FN Foreign            Agriculture and               1         $85,800.00
                       Agri-Food Canada
FN Foreign            Al-Qasemi Academic            1         $40,000.00
                       Collage
FN Foreign            Animal Sciences               1        $243,902.00
                       Institute
FN Foreign            Azerbaijan                    1          $4,000.00
                       National Academy
                       of Sciences
FN Foreign            Biotechnology &               3         $40,000.00
                       Biological
                       Control Agency
FN Foreign            Bioversity                    1        $165,659.00
                       International
FN Foreign            Bioversity                    1         $32,580.00
                       International--CI
                       AT
FN Foreign            Cabi BioSciences,             2        $987,808.00
                       U.K.
FN Foreign            CAPECO                        1        $182,500.00
FN Foreign            CATIE                         3        $150,659.00
FN Foreign            Chinese Academy of            1        $464,508.65
                       Agricultural
                       Sciences
FN Foreign            Chung-Ang                     1         $20,000.00
                       University
FN Foreign            CIMMYT                        4        $441,403.15
FN Foreign            CIRAD-BIOS                    2        $160,900.00
FN Foreign            Cocoa Research                1         $80,000.00
                       Institute of
                       Ghana
FN Foreign            CONCELLAE, AB                 1         $40,000.00
FN Foreign            Consultoria                   1          $7,000.00
                       Agropecuaria
                       Junior (CONAPEC
                       Jr.)
FN Foreign            CORPOINIAP                    1         $87,000.00
FN Foreign            CSIRO Entomology              1      $1,835,431.00
FN Foreign            Department of                 1        $269,000.00
                       Animal Health
FN Foreign            Department of                 1         $13,500.00
                       Veterinary
                       Services
FN Foreign            Elhawakeer-                   1         $40,000.00
                       Association
FN Foreign            Far East Forestry             1         $25,000.00
                       Research
                       Institute
FN Foreign            Federal University            1         $35,000.00
                       of Santa Maria
FN Foreign            Gyeongsang                    1         $60,309.00
                       National
                       University
FN Foreign            Honduran                      1          $7,000.00
                       Foundation for
                       Agriculture
                       Research
FN Foreign            ICARDA                        4         $80,000.00
FN Foreign            ICIPE--Intl Centre            2        $185,000.00
                       of Insect Physio
                       and Ecol
FN Foreign            IICA Costa Rica               1          $3,000.00
FN Foreign            ILIA Chavchavadze             1         $13,370.00
                       State University
FN Foreign            Indian Council of             1        $453,000.00
                       Agricultural
                       Research
FN Foreign            INIA                          1         $39,000.00
FN Foreign            INIAP                         1          $6,150.00
FN Foreign            INIFAP                        2         $45,500.00
FN Foreign            INRA Animal                   1          $5,000.00
                       Genetics Division
FN Foreign            Institute of                  1         $24,000.00
                       Botany
FN Foreign            Instituto de                  1        $455,000.00
                       Cultivos
                       Tropicales
FN Foreign            Instituto Nacional            3        $219,890.00
                       de Technologia
                       Agropecuari
FN Foreign            Instituto UNIEMP              1        $143,080.00
FN Foreign            International                 4        $216,898.00
                       Institute
                       Tropical
                       Agriculture
FN Foreign            International                 2        $319,500.00
                       Livestock
                       Research
                       Institute
FN Foreign            International                 1          $4,500.00
                       Potato Center
                       (CIP)
FN Foreign            International                 1        $868,730.00
                       Science &
                       Technology Center
FN Foreign            Kenya Agricultural            2        $257,968.00
                       Research Service
FN Foreign            Kenya Medical                 1        $250,000.00
                       Research
                       Institute
FN Foreign            Kyrgyz National               1         $17,490.00
                       Agrarian
                       University
FN Foreign            Ministry of                   1        $100,000.00
                       Agriculture &
                       Land Reclamation
FN Foreign            National Genebank             1          $4,000.00
                       of Morocco
FN Foreign            Natl Ctr for Agr              1         $17,000.00
                       Reseach &
                       Extension (NCARE)
FN Foreign            Philippine Animal             2        $487,652.00
                       Health Center
                       (PAHC)
FN Foreign            PICTIPAPA                     1         $12,541.00
FN Foreign            Plant Research                1          $3,787.28
                       (NZ) Ltd
FN Foreign            Polish Academy of             1         $16,000.00
                       Sciences
FN Foreign            Punjab                        1         $80,000.00
                       Agricultural
                       University
FN Foreign            Rothamsted                    1          $5,000.00
                       Experiment
                       Station
FN Foreign            Seoul National                2         $20,000.00
                       University
FN Foreign            Simon Fraser                  2        $115,000.00
                       University
FN Foreign            South African                 1          $3,000.00
                       Agricultural
                       Research Council
FN Foreign            Tel Aviv                      2         $33,000.00
                       University
FN Foreign            The University of             1        $132,000.00
                       Adelaide
FN Foreign            Universidad                   1          $2,000.00
                       Autonoma de
                       Zacateca
FN Foreign            University of                 1         $22,000.00
                       Calgary
FN Foreign            University of                 1         $64,940.00
                       Ottawa
FN Foreign            University of                 2        $146,265.00
                       Reading
FN Foreign            University of                 1          $7,000.00
                       Saskatchewan
FN Foreign            University of                 1         $15,000.00
                       Science and
                       Technology of
                       China
FN Foreign            University of the             2        $128,574.49
                       West Indies
FN Foreign            Wuhan Botanical               1         $32,780.00
                       Garden, Chinese
                       Academy Scienc
FN Foreign            Zentralverband der            1          $4,000.00
                       Deutschen
                       Schweineprodukti
                                         -------------------------------
                                                1,916    $446,470,182.44
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    ARS research does not duplicate or overlap other programs. REE and 
ARS are committed to maximizing Federal dollars by ensuring systematic 
monitoring and evaluation. While the scientific method requires the 
flexibility to replicate results, ARS and NIFA leadership, program 
managers, and researchers rigorously track scientific projects to avoid 
duplication. In addition NIFA and ARS hold joint stakeholder meetings 
on scientific research to pull together research projects that are 
compatible and not duplicative.
    ARS does play a critical role in providing research relevant to the 
mission of USDA's action and regulatory agencies and other Federal 
departments. Examples include:

   Research on bacterial pathogens in produce and meats is 
        relevant to the missions of the Food and Drug Administration 
        and the USDA, Food Safety and Inspection Service, respectively.

   Improving conservation practices enhances the environmental 
        benefits of farm bill conservation programs and supports the 
        mission of the Natural Resources Conservation Service.

   Research on the nutrient needs of children, adults and the 
        elderly provides the science base to undergird U.S. food 
        policy, the Dietary Guidelines for Americans, essential to the 
        missions of USDA (Food and Nutrition Service (FNS), Center for 
        Nutrition Policy and Promotion (CNPP), ERS), Health and Human 
        Services (Food and Drug Administration (FDA), CDC, NIH), and 
        the Department of Defense.

   Determining the effects of biotech products on the ground 
        beetle population benefits sustainable agricultural 
        productivity and also is relevant to the mission of USDA, 
        APHIS, Biotechnology Regulatory Services.

   Long-term assessment of the effectiveness of biotech 
        products contributes to maintaining crop disease protection but 
        is also relevant to the mission of the Environmental Protection 
        Agency.

   Research on tree pathogens benefits fruit tree improvement 
        but is also relevant to forest trees and contributes to the 
        mission of the Forest Service.

   Research on reducing cereal grain mycotoxins improves grain 
        quality but is also relevant to the mission of the Grain 
        Inspection, Packers, and Stockyards Administration (GIPSA).

   Research on effective biological control of invasive weeds 
        and pests supports sustainable farming systems but is also be 
        relevant to protecting the U.S. border and the mission of 
        Homeland Security.

   Developing new sorghum and forage grass germplasm with high 
        value for animal feed also benefits the mission of the 
        Department of Energy to develop biofuels.

   Creation of planning tools for research, development, and 
        commercial production of biofuels benefits plans for the 
        Department of Defense and the Federal Aviation Administration 
        to achieve diverse fuel sources.

   Research contributing to the sound design, maintenance, and 
        assessment of dams, levees, and channels for water storage and 
        control supports the mission of the Army Corps of Engineers and 
        the Federal Emergency Management Agency.

   Development of vaccines, diagnostic tests and other 
        countermeasures to control foreign animal diseases in 
        coordination with the Department of Homeland Security to help 
        the Animal Plant Health Inspection Services to protect the 
        United States from these diseases.

   Research to develop and validate novel methods to protect 
        United States military deployed abroad from threats posed by 
        disease-carrying insects. This program is in support of the 
        Department of Defense.

    ARS partners with other Federal agencies in responding to national 
needs and emergencies through cooperation in Task Forces and 
Interagency Working Groups that identify urgent research needs and 
agency roles. Recent examples include interagency task forces and 
working groups to develop and implement action plans to address Soybean 
Rust, Avian Influenza, Childhood Obesity, Antibiotic Resistance, Citrus 
Greening, Ug99 Wheat Stem Rust, Water Resources, and Climate Change. 
These group's national plans clearly identify the specific roles and 
responsibilities of ARS research projects and researchers. Often, ARS 
is responsible for providing unique disease and pest scientific 
expertise, specialized genetic resources and collections, critical 
human nutrition and food safety expertise and resources, natural 
resource management expertise, and nationally coordinated research 
teams.
    ARS partners with the USDA Research, Education and Economics (REE) 
agencies through the leadership of the Under Secretary and Chief 
Scientist. One of the most important of these partnerships is with the 
National Institute of Food and Agriculture (NIFA), which provides 
grants that support universities and also much collaboration between 
universities and ARS. ARS research is funded by Congressional 
appropriations that can support multi-year, long-term research while 
NIFA grants support complementary, shorter-term agricultural research. 
Cooperation and avoidance of duplication is guided through REE 
administrative leadership, budget development, and according to REE 
research priorities. The REE Action Plan identifies important goals for 
the agencies and specifies the role of ARS, NIFA and the other REE 
agencies. Other coordination is provided by multiple working groups, 
committees, and joint customer/stakeholder workshops that insure that 
ARS long-term research is optimally leveraged with NIFA awards and 
research supported by other agencies. These types of partnerships are a 
perfect mesh of interests and collaboration for the public good. The 
list of accomplishments that have come from partnerships between ARS 
and land-grant schools is long and impressive. Examples include:

   The Interagency Working Group on Plant Genomes, guides 
        research on plant genome sequencing with NIFA supporting 
        sequencing projects and ARS supporting crop genome database to 
        curate and distribute the data information to crop breeders and 
        other researchers (REE Action Plan, Goal 8).

   ARS manages and safeguards the national genebanks and seed 
        collections. NIFA has recently awarded a Triticeae grant to a 
        university-led project that will evaluate accessions in the ARS 
        small grains collection for weather stress tolerance traits.

   The USDA BioEnergy Science team guides interagency 
        cooperative research on bioenergy with ARS researchers 
        developing new bioenergy feedstock lines.

   ARS and NIFA national program leaders include their 
        counterparts in national program planning workshops including 
        some joint workshops such as the 2011 joint ARS-NIFA Animal 
        Genomics Workshop.

    In addition to complementing the work of other agencies, ARS 
ensures that duplication and overlap are avoided within its own 
programs by developing nationally coordinated research Action Plans for 
each of the ARS National Programs. The ARS Office of National Programs 
and National Program Leaders provide oversight to guarantee that 
individual ARS project plans are targeted to the problem priorities and 
optimally coordinated to achieve the expected results. The National 
Programs are planned centrally with extensive input with external 
customers, stakeholders, research partners, and ARS scientists. Those 
providing perspectives on problems to be solved and research needs 
include producers, industry and other agricultural processors, 
consumers, Administration officials, representatives of USDA action and 
regulatory agencies, other government agencies, Congress, non-
governmental groups (e.g., commodity groups and advisory groups), state 
and local governments, national and international trade organizations, 
university scientists, private researchers, and government 
laboratories. Research collaborations among Agency scientists and with 
non-ARS scientists are a frequent outcome of the input and planning 
process, which ensures complementary objectives and approaches, 
prevents redundancies, and leads to research projects and programs that 
have impact for the public. Routinely, the agency's senior line 
managers and field scientists also meet with customers, stakeholders, 
and partners to build a strong understanding of regional and local 
issues.
    Input from these constituencies leads to development of an Action 
Plan that provides the documentation of needs and researchable 
problems, which guides development of individual research project 
plans. Those plans--which include an assessment of related research 
already accomplished or in progress--are reviewed by peer panels who 
have the Action Plan in hand. This rigorous process, developed by ARS 
in response to a mandate in the 1995 Farm Bill, is a further check 
point for ensuring that research will solve problems without wasteful 
programmatic redundancies.
    In an era of limited available funds, there is a strong incentive 
to not repeat what others in the agricultural research arena are doing 
unless there is a stronger public good provision requirement. ARS 
national leaders and scientists participate on over 160 Federal 
interagency working groups, and an uncounted but similarly large number 
of formal and informal professional associations and an even larger 
number of private-academic-ARS scientist work collaborations. As a 
result, ARS prevents redundancies in its programs, complements the 
missions of many other science-based Departments and agencies, and 
achieves much of the value in its research through mission-driven 
responsiveness to customer needs.

    Intra-Agency Duplication

    As an example of how the agency conducts research on important 
issues in multiple locations across the country without duplicating 
itself, the agency would like to highlight three particular programs 
that have multiple scientists collaborating across the country to 
answer complex research questions without unnecessary duplication.

    ARS Watersheds

    The Agricultural Research Service (ARS) operates a network of 
approximately 23 Benchmark Watersheds, Experimental Ranges, and 
associated/related research facilities that collect long-term physical, 
chemical, and biological data on agricultural sustainability, climate 
change, ecosystem services, and natural resource conservation at the 
watershed or landscape scale. Data records extend as far back as 98 
years. The distribution of these sites across the nation gives them 
great value because the interactions of agricultural production systems 
with natural resources are highly environment-dependent. ARS sustains 
this land-based infrastructure for research and environmental 
management testing to enable understanding and forecasting of the 
nation's capacity to provide agricultural commodities and other 
ecosystem goods and services under geographically variable, ever-
changing environmental and resource-use conditions.
    In addition to supporting high-quality, location-based research, 
these sites provide an unparalleled opportunity to make important 
comparisons between very different environments, across large 
distances. The multi-location approach allows ARS to develop research 
questions that are shared and coordinated across sites; provide the 
capacity to address these large-scale questions across sites through 
shared research protocols; collect compatible data sets across sites; 
provide the capacity and infrastructure for cross-site data analysis; 
and generally facilitate and foster shared engagement in agricultural 
research across the nation's highly diverse environments.
    The watershed/rangeland network is a key infrastructure for the 
research in many ARS National Programs and addresses the needs of other 
USDA agencies, such as the evaluation and improvement of farm bill 
conservation programs through the Conservation Effects Assessment 
Project (CEAP). Collectively, the sites are a platform to support 
multi-organization research and funding efforts; a resource for 
developing and testing regional- and national-scale hypotheses that 
cannot be undertaken by individual locations alone; and a foundation 
for developing long-range, multi-agency/institutional funding plans.
    During the last 10 years, a concept for a Long-Term Agroecosystems 
Research (LTAR) network has been proposed in a number of highly visible 
publications, e.g., the 2003 National Research Council report, 
Frontiers in Agricultural Research, which urged the USDA to adapt a 
strategic, long-term approach to food and agricultural research. 
Creation of a new LTAR network would cost tens of millions of dollars, 
and universities or other organizations could not likely duplicate the 
existing ARS resource and its long-term data records. Two of ARS' 
Experimental Range research sites are already part of the National 
Science Foundation's (NSF) Long-Term Ecological Research (LTER) 
Network; three have been selected to become part of NSF's proposed 
National Ecological Observatory Network (NEON). Thus, the 
geographically distributed LTAR network needed by the scientific 
community already exists in ARS' experimental watershed/rangeland 
network.
    ARS' unique watershed/rangeland resource is widely available for 
partnerships with non-USDA organizations, and research in cooperation 
with university scientists, other Federal agencies, and others is 
widespread within the network.

    ARS Bee Research

    The bee industry is essential for the security of the nation's food 
supply. Pollination is responsible for $15 billion in added crop value; 
bee pollinated crops include important field crops such as alfalfa, and 
many fruits and nuts, major sources of vitamins. The bee industry is 
threatened by invasive mites (varroa and tracheal), predators (small 
hive beetle), diseases (American foulbrood, chalkbrood, viruses), 
insecticide poisoning, Africanization of managed colonies, the 
pressures of migratory beekeeping, and other problems leading to 
decreased colony health and manageability. With the appearance of 
colony collapse disorder in 2007, 30% or more of the nation's colonies 
are now lost annually, an unsustainable situation that threatens the 
entire bee industry and crops such as almond and apple that are totally 
dependent on bee pollination. In response, ARS has the core national 
responsibility for ensuring an adequate force of pollinators, and 
conducts honey bee research at four laboratories, in Arizona, 
Louisiana, Maryland, and Texas. In addition, ARS conducts research on 
other (non-honey bee) pollinating bees in Utah. Each laboratory has a 
unique regional advantage and research role:

   Arizona, Tucson, the ``Bee Health and Nutrition 
        Laboratory'': (1) determines nutritional needs of bees and 
        develops supplementary diets such as a highly successful 
        protein diet now commercialized as MegaBee; (2) determines the 
        negative effects of fungicides and bactericides on bee bread, 
        the fermented pollen-based protein diet that bees store to feed 
        their brood; (3) conducts research for beekeepers that 
        transport colonies for pollination, particularly into 
        California, where crops pollinated by bees have a value in 
        excess of $12.7 billion; (4) identifies new compounds for 
        varroa mite control, such as newly commercialized plant beta-
        acids from hops; (5) develops tools to manage the genetics of 
        commercial colonies in Africanized areas; (6) and maintains an 
        Africanized Honey Bee (AHB) Identification Service.

   Louisiana, Baton Rouge, the ``Bee Breeding Laboratory'': (1) 
        focuses uniquely on breeding improved bees, and has developed a 
        Southern-based island system for isolation of breeding stocks 
        during breeding; (2) selected and commercialized the Russian 
        bee for varroa and tracheal mite resistance (and high honey 
        production and survival in harsh climates); (3) and is using 
        molecular and other techniques to determine genes for 
        introgression of resistance traits into bee lines preferred by 
        beekeepers for their docility, honey production, and other 
        characteristics.

   Beltsville, Maryland, the ``Bee Disease Laboratory'': (1) 
        has a Bee Disease Diagnosis Service that works with APHIS to 
        prevent introduction of new pathogens and pests; (2) has been 
        lead in developing antibiotics for controlling bee bacterial 
        diseases and kits for detection of bee viruses for maintenance 
        of pure stock; and, (3) is the laboratory leading international 
        efforts to exploit the genomes of bees and their parasites and 
        pathogens.

   Texas, Weslaco, the ``Bee IPM Laboratory'': (1) conducts 
        research in a region that has served as a pathway for invasive 
        problems, e.g., Africanized honey bee; (2) is the principal 
        laboratory developing systems, including miticide resistance 
        management, for control of bee pests; and (3) is working to 
        elucidate bee immunity to disease.

   Utah, Logan, the ``Native Bee Laboratory'': (1) is the only 
        ARS facility (and only large facility in the world) developing 
        alternative species of bees for pollination of crops and for 
        land restoration; and, (2) maintains the premier bee 
        systematics laboratory.

    ARS Beef Production Research

    Beef cattle research is conducted in the USDA-ARS in three primary 
locations: the U.S. Meat Animal Research Center in Clay Center Nebraska 
(USMARC), Fort Keogh Livestock and Range Research Laboratory in Miles 
City, Montana and the Sub Tropical Agriculture Research Station in 
Brooksville, Florida (STARS). Research and priority for these ARS labs 
is outlined below. In addition, ARS conducts research in forage 
efficiencies, manure management, range and pasture management, parasite 
control, climate change/adaptation and forage toxicology at various 
other locations where cattle and/or sheep serve as experimental units, 
but are not the focus of the primary research objectives.
    USMARC: Research at USMARC is focused on bovine genetic and 
genomics and improvement of beef cattle growth and efficiencies in 
typical corn belt pasture production systems. Beef cattle research is 
specifically focused on improving feedlot nutrient utilization 
efficiency, enhancing reproductive efficiencies, improving meat quality 
and consumer acceptance, combating bovine respiratory disease and 
improving the management and adaptability of feedlot cattle to 
environmental stressors. USMARC also conducts significant research in 
emerging genetic and genomic technologies to improve the rate of 
genetic improvement for numerous traits of economic importance for the 
beef industry.
    Fort Keogh: Research at Fort Keogh in Miles City Montana is focused 
on range cattle production efficiencies particularly on cow-calf 
production and the interface between beef cattle production and range-
forage management and ecosystem services on open range lands in the 
Western U.S. Specific beef cattle research includes genetic and genomic 
technology development to improve the productivity and efficiency of 
cattle grazing open range and the improvement of reproductive 
efficiencies of cows in typical Western range production environments. 
Additional research is focused on rumen ecology and the relationship 
between the rumen microbiome and beef cattle production efficiencies, 
particularly in cow-calf production systems.
    STARS: Research at STARS in Brooksville Florida is focused on breed 
improvement of cattle adapted to the severe production environments of 
the subtropics which include additional stressors of poorer quality 
forages, extreme heat and humidity, and significantly increased disease 
and parasite infestation challenges than cattle production in the rest 
of the U.S. Beef cattle production in the subtropics of the U.S. is 
largely confined to the cow-calf sector but represents 40% of the total 
U.S. beef cow herd. Specific research is being conducted to improve the 
Brahman (Bos indicus) breed and their crosses to enhance adaptation 
throughout the subtropics and tropics around the world. Brahman cattle 
exhibit adaptive characteristics for these extreme environments but are 
discriminated against for poor dispositions, inferior reproductive 
performance, inferior feedlot performance, and inferior carcass quality 
particularly meat tenderness. To ensure the sustainability and 
competitiveness of beef producers in sub-tropical and tropical 
environments Brahman cattle are being genetically improved to 
consistently demonstrate better performance and efficiency for these 
critical economic traits.
12. Waste, Fraud and Abuse
    There are currently no fraud, waste, and abuse audits ongoing. The 
agency utilizes various internal procedures to prevent and detect 
fraud, waste, and abuse instances and provide an annual assurance 
statement to the Department of Agriculture Chief Financial Officer with 
our assessment of the effectiveness of our procedures. Over the past 
several years, the assurance statement has not identified any 
exceptions related to fraud, waste, and abuse. Some of the procedures 
that support our assurance statement are as follows:

   Office of Management and Budget Circular A-123 Appendix A 
        ``Internal Control over Financial Reporting'' covering 
        Financial Reporting, Reimbursable Agreements, Property 
        Management, Funds Management, Budgeting, and Human Resources

   Consolidated Assistance, Review, and Evaluations of ARS Area 
        offices and Locations

   National Program Reviews

   National Institute of Standards and Technology and Federal 
        Information Security Management Act Risk Assessments

   Human Resources Management Evaluations

   Quality Control Reviews of Near Field Communications (NFC) 
        Data Elements

   Facilities Contracting and Engineering Management Design 
        Review Board and Contract Review Board Meetings

   Safety, Health, and Environmental Management Reviews, 
        Evaluations, and Studies

   Procurement and Personal Property Management Reviews

   Purchase Card Audits and Reviews

    Open Audit Summary

    ARS is undergoing several Government Accountability Office (GAO) 
and Office of the Inspector General (OIG) audits. The focus of the 
majority of these audits is how effective and efficient ARS is in 
conducting its research, securing and protecting select agents, 
addressing critical and emerging issues (such as Colony Collapse 
Disorder) and managing its resources. In the table below is a breakout 
of the different types of audits ongoing at ARS.

----------------------------------------------------------------------------------------------------------------
                                                          Financial and       Fraud, Waste and
   Audit Entity     Program Audits       IT Audits        Administrative       Abuse Audits/        Total Open
                                                              Audits           Investigations         Audits
----------------------------------------------------------------------------------------------------------------
           GAO                 11                 1                   0                   0                 12
           OIG                  2                 3                   2                   0                  7
----------------------------------------------------------------------------------------------------------------


    Open GAO Audit Findings

    There is currently one GAO audit with open findings that ARS must 
address related to Agroterrorism Response and Recovery Efforts. ARS has 
responded to these findings and is awaiting additional instructions. In 
our response, ARS did not disagree with the findings, however the 
agency believes that additional information is required to further 
explain observations made in the report.

    GAO Audits (In Progress)

120788, DOD Research Facilities and Administration Cost Reimbursement
311044, Update to the 2005 Wireless Network Security Report
361174, Quality Assurance of Carbon Offsets in U.S. Climate Change 
    Programs
361177, The USDA Protocols and Standards to Ensure the Safety of Meat 
    and Other Food Procured by Schools
361185, Renewable Energy Initiatives
361191, Ethanol Blends and Risk
361204, Agroterrorism Response and Recovery Efforts
361216, Chesapeake Bay Action Plan
361223, Antibiotic Use in Food and Animals
361260, USDA Efforts to Reduce E. Coli
460612, High Containment Laboratories: GAO Assessment of Commissioned 
    Reports on Biosafety and Biosecurity
460619, Duplication of Federal Inspections of High-Containment 
    Laboratories

    OIG Audits (In Progress)

50401-01-11, Fiscal Year 2011 USDA Consolidated Financial Statements 
    Audit
50501-1-12, USDA's Security over Domain Name Systems Services
50501-2-12, FY 2011 Federal Information Security Management Act Audit
50601-01-22, Effectiveness of the Departments Recent Efforts to 
    Entrance Agricultural Trade
50703-01-HQ, Oversight and Control of USDA ARRA Activities
50099-84-HY, USDA's Response to Colony Collapse Disorder
50501-01-IT, USDA's Management and Security Over Wireless Handheld 
    Devices
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
House Committee on Agriculture Farm Bill Audit Questionnaire--National 
                   Institute of Food and Agriculture
1. Program Name
    1890 Institutions Capacity Building Grants Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    This program is authorized by section 1417(b)(4) of the National 
Agricultural Research, Extension, and Teaching Policy Act of 1977, as 
amended (NARETPA) (7 U.S.C. 3152(b)(4)) and pursuant to annual 
appropriations made available specifically for the 1890 Capacity 
Building Program.
    Section 7107 of the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill) (Pub. L. 110-246) amended the authority for the 1890 
Capacity Building Program to allow for extension capacity building, as 
well as teaching and research. In accordance with the statutory 
authority, subject to the availability of funds, the Secretary of 
Agriculture may make competitive grants, for a period not to exceed 5 
years, to design and implement food and agricultural programs to build 
Teaching, Research and Extension capacity at colleges and universities 
having significant minority enrollments.
4. Purpose/Goals
    The purpose of the 1890 Capacity Building Program is to support 
research, education, and extension as well as integrated research, 
teaching, and/or extension by awarding grants that address key problems 
of national, regional, and multi-institutional importance in sustaining 
all components of agriculture, including farm efficiency and 
profitability, ranching, renewable energy, forestry (both urban and 
agroforestry), aquaculture, rural communities and entrepreneurship, 
human nutrition, food safety, family and consumer sciences, 
biotechnology, and conventional breeding.
5. Success in Meeting Programmatic Purpose/Goals
    The 1890 Capacity Building Grant strengthens teaching, research and 
extension programs in the food and agricultural sciences by building 
the institutional capacities of the 1890 Land-Grant Institutions, and 
Tuskegee University. The program supports projects that strengthen 
teaching programs in the food and agricultural sciences in the need 
areas of curriculum design and materials development, faculty 
development, and others. It supports projects that strengthen research 
and extension programs in need areas of studies and experimentation, 
extension program development support systems, and others.
    Examples of success include:
    As a result of the capacity building grant at Kentucky State 
University, the Geospatial Education and Analysis Center provided ESRI 
(a GIS software company) authorized training to faculty, staff, and 
students and to state, regional and local government employees and 
others who use the ESRI suite of software products. The KSU GIS 
Training facility has had 382 students take the Introduction to ArcGIS 
I and II courses taught by KSU staff. Almost ten percent of the total 
number of students that enrolled in the courses were KSU students, 
faculty, and staff. The Center's ESRI Authorized Training courses have 
provided the facility the means to be self-sustaining. The center 
generates funds needed to maintain the equipment, upgrade the facility, 
and invest in new hardware, software, and data needed to meet the needs 
of campus users, as well as local GIS users. The KSU GIS resources have 
been used to produce several map products that are in use by the 
Frankfort/Franklin County Riverfront Development Commission in their 
efforts to create better interaction between citizens and the Kentucky 
Riverfront environment.
    An educational effort at Tennessee State University (TSU) 
collaborates with India's G.B. Pant Agricultural University of 
Agriculture and Technology (GBPUA&T) to internationalize TSU's 
agriculture program, enhance the competitiveness of Tennessee's 
agricultural entrepreneurs, and foster on-going research collaborations 
with GBPUA&T faculty. The new course contents were developed for two 
courses in agribusiness after the interactive meetings with faculty and 
students of the GBPUA&T and other Indian agricultural universities on 
issues related to curriculum in Agribusiness. International content is 
being integrated in several courses at TSU's undergraduate and graduate 
agriculture program. The content has greater examples of real-life 
situations. More interdisciplinary content in courses are being 
designed to include research opportunities for graduate and 
undergraduate students. Scientific information is being made available 
on faculty and student experience with international exchange program, 
and best management practices and lessons learned. Students now have a 
better appreciation and understanding of global problems.
    Fort Valley State University (FVSU) in Georgia has designed and 
developed an Outdoor Forestry Classroom/Laboratory to provide hands-on 
and experiential learning experiences to students enrolled in the 
FVSU's forestry course, to use the Outdoor Forestry Classroom/
Laboratory to train and prepare high school agriculture students for 
various forestry career development events, and to use the Outdoor 
Forestry Classroom/Laboratory for summer workshops for high school 
agriculture teachers throughout the state of Georgia. During Spring 
2009, Area 3 of district number 4 of Georgia used the site to conduct 
Forestry Career Development Event activities. One hundred and fifty 
high school students were in attendance and had the opportunity to 
interact and discuss careers in the forestry industry with foresters 
from USDA, the Georgia Forestry Commission and Weyerhaeuser. In the 
future this site will be used to train and prepare high school 
agriculture students (FFA) for various forestry career development 
events. Forestry Camps (Workshops) will be conducted to upgrade the 
skills of limited resource forestry, land owners and provide continuing 
education for FFA teachers.
    Participation in global education programs is low and there are 
deficiencies in gathering and managing data for decision-making in 
global education programs. A NIFA-funded project at North Carolina A&T 
State University developed a set of best practices and retool curricula 
to equip faculty and students with the skills needed to function 
smartly around the world in order to strengthen America's leadership in 
international agriculture. As outcome, a 30 percent improvement in 
international content in curricula in agricultural courses; a reported 
increase of 40 percent in participation in study abroad programs among 
students enrolled in schools of agriculture in 1890 institutions; a 40 
percent increase in awareness of and interest in international 
agricultural issues among faculty and students in schools of 
agriculture in 1890 institutions. In the long run the project will 
produce students and faculty capable of working with their counterparts 
in a transnational context to solve complex global agricultural 
problems.

                                               6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
                                                                (in thousands of dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY02         FY03        FY04        FY05        FY06        FY07        FY08        FY09        FY10        FY11
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Annual Budget Authority        $9,479      $11,404      $11,411     $12,312     $12,189     $12,375     $13,592     $15,000     $18,250     $19,336
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                   FY07             FY08             FY09             FY10             FY11
----------------------------------------------------------------------------------------------------------------
         Annual Outlays             $1,238           $7,547          $13,246          $14,762          $17,059
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                   FY07             FY08             FY09             FY10             FY11
----------------------------------------------------------------------------------------------------------------
   Annual Delivery Cost               $495             $544             $600             $730             $773
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Applications may only be submitted by 1890 Land-Grant Institutions, 
including Tuskegee University and West Virginia State University.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                110              None               344
      Received
Applications Funded           43              None               118
------------------------------------------------------------------------
Note: FY 2009 funds were awarded collectively with FY 2010 funds.

11. Duplication or Overlap with Other Programs
    USDA's Research, Education, and Economics (REE) mission area is 
committed to maximizing Federal dollars by ensuring systematic 
monitoring and evaluation. While the scientific method requires the 
flexibility to replicate results, NIFA's leadership, program managers, 
and researchers rigorously track scientific projects through its 
Current Research Information System (CRIS) to avoid duplication. 
Program leadership also holds joint stakeholder meetings and/or 
coordinates with other science agencies (ARS, ERS, others) to ensure 
that programs are complementary, and do not duplicate other science 
programs in USDA and other Federal agencies. The creation and staffing 
of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Agriculture and Food Research Initiative (AFRI).
2. Subprograms/Department Initiatives
        Foundational Program
        Childhood Obesity
        Climate Change
        Global Food Security
        Food Safety
        Sustainable Bioenergy
        NIFA Fellowship Grant Program
3. Brief History
    Section 7406 of the 2008 Farm Bill amended section 2(b) of the 
Competitive, Special, and Facilities Research Grant Act (7 U.S.C. 
450i(b)) to authorize AFRI.
4. Purpose/Goals
    The Foundational Program Request for Application (RFA) focuses on 
building a foundation of knowledge in fundamental and applied food and 
agricultural sciences critical for solving current and future societal 
challenges.
    The Childhood Obesity Prevention Challenge Area RFA focuses on the 
societal challenge to end child obesity through specific program areas 
that are designed to achieve the long-term outcome of reducing the 
prevalence of overweight and obesity among children and adolescents.
    The Climate Change RFA focuses on the societal challenge to 
mitigate and adapt to climate change through specific program areas 
that are designed to achieve the long-term outcome of reducing the use 
of energy, nitrogen, and water in the production of food, fiber and 
fuel, and increase carbon sequestration.
    The Global Food Security RFA focuses on the societal challenge to 
keep American agriculture competitive while ending world hunger through 
specific program areas that are designed to achieve the long-term 
outcome of increasing food availability and decreasing the number of 
food insecure individuals.
    The Food Safety Challenge Area RFA focuses on the societal 
challenge to improve food safety for all Americans through specific 
program that areas are designed to achieve the long-term outcome of 
reducing foodborne illnesses and deaths through a safe food supply.
    The Sustainable Bioenergy RFA focuses on the societal challenge to 
secure America's energy future through specific program areas that are 
designed to achieve the long-term outcome of reducing the national 
dependence on foreign oil through the production of sustainable 
bioenergy.
    The AFRI NIFA Fellowships Grant Program is focused on developing 
technical and functional competence for pre-doctoral students, and the 
research independence and teaching credentials of postdoctoral 
scientists in the food, forestry and agricultural sciences that are 
within NIFA's challenge areas through well-developed and highly 
interactive mentoring and training activities.
5. Success in Meeting Programmatic Purpose/Goals
    AFRI at the National Institute of Food and Agriculture (NIFA) is 
charged with funding research, education, and extension grants and 
integrated research, extension, and education grants that address key 
problems of national, regional, and multi-state importance in 
sustaining all components of agriculture, including farm efficiency and 
profitability, ranching, renewable energy, forestry (both urban and 
agroforestry), aquaculture, rural communities and entrepreneurship, 
human nutrition, food safety, biotechnology, and conventional breeding. 
Providing this support requires that AFRI advances fundamental sciences 
in support of agriculture and coordinates opportunities to build on 
these discoveries. This will necessitate efforts in education and 
extension that deliver science-based knowledge to people, allowing them 
to make informed practical decisions.
    Examples of success include:
    The AFRI Wheat Coordinated Agricultural Project (WheatCAP) is led 
by the University of California, Davis implemented genetic Marker 
Assisted Selection (MAS) strategies for quality and disease resistance 
traits across the U.S. public breeding programs. The project generated 
approximately 1,000,000 MAS data points that were used to develop 90 
new germplasm lines and cultivars and thousands of improved lines for 
breeding. The WheatCAP provided a stimulating learning environment that 
supported training of 117 undergraduates and 73 graduate students, many 
of which are being hired as breeders in companies and public 
institutions.
    An international team of scientists have mapped the genome of the 
plant pathogen that causes downy mildew disease which causes major 
losses to crops such as corn, grapes, and lettuce. The genome sequence 
of Hyaloperonospora arabidopsidis, the pathogen that causes downy 
mildew disease, is published this week in the journal Science. In the 
paper, researchers compare the sequence of H. arabidopsidis with other 
fully-sequenced genomes of destructive plant pathogens to shed light on 
the differences in the ways microbes interact with their host and how 
those differences evolve. The study could lead to new ways to 
investigate how these pathogens cause plant disease and find new ways 
to prevent plant loss in the future.
    S. Enteritidis and C. jejuni are major foodborne pathogens 
transmitted through poultry products. Many plant-derived antimicrobials 
are natural, generally regarded as safe molecules used to preserve 
foods and enhance food flavor. Preliminary research by Connecticut 
scientists revealed that plant molecules, including trans-
cinnamaldehyde, carvacrol, thymol, and eugenol were bactericidal on S. 
Enteritidis and C. jejuni in chicken bowel contents in the laboratory. 
Additionally, trans-cinnamaldehyde and eugenol reduced significant 
bowel populations of these pathogens in chickens. The current research 
is investigating the effect of trans-cinnamaldehyde, carvacrol, thymol, 
and eugenol as dietary supplements to reduce colonization of S. 
Enteritidis and C. jejuni in broiler chickens and their safety in 
chickens. The work will potentially lead to decreased outbreaks of 
salmonellosis and campylobacteriosis, thereby improving public health 
and economic opportunities for poultry farmers.
    Scientists at the University of Wisconsin created a Relative 
Antioxidant Index (RACI) which provides standardization of information 
about the antioxidant content of various fruits and vegetables and is 
useful as a ranking tool for use by the food industry, scientists, and 
consumers. The RACI statistically integrates the antioxidant capacity 
values generated using seven different chemical methods and was 
validated using 20 commonly consumed vegetables.
    With funding from NIFA, scientists at the University of California-
Davis have identified the genes in wheat that are responsible for the 
plant's tolerance to freezing temperatures. This discovery may lead to 
improved crop production since wheat breeders have long recognized the 
need to produce cultivars with greater resistance to freezing 
temperatures, but have had limited success to date.
    NIFA-funded scientists at the University of Missouri in cooperation 
with the Agricultural Research Service developed a new tool for cattle, 
called the Illumina BovineSNP50 Chip. This tool allows scientists to 
examine the animal's entire genome to detect variations in a more 
efficient and economical way. Researchers around the world are using 
the chip to identify regions within the bovine genome that harbor 
variants that cause animals to differ in the outward expression of 
important traits. More importantly, the high resolution of this snip 
chip will allow scientists to predict an animal's total genetic merit 
from its SNP profile. Breeding companies are using the chip to assist 
in the genetic selection process of dairy animals. As a result, the 
industry is saving millions of dollars annually by more efficiently 
prescreening young bulls and streamlining the process of identifying 
elite cows. Producers base these and other decisions on each animal's 
genetic merit, as estimated from their SNP profiles.

                           6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget   $120,452  $166,045  $164,02  $179,55  $181,17  $190,22  $190,88  $201,50  $262,48  $264,47
           Authority                            7        2        0        9        3        4        2        0
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                   FY07             FY08             FY09             FY10             FY11
----------------------------------------------------------------------------------------------------------------
         Annual Outlays             $9,511          $76,124         $143,464         $198,017         $223,339
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                   FY07             FY08             FY09             FY10             FY11
----------------------------------------------------------------------------------------------------------------
   Annual Delivery Cost             $7,609           $7,635           $8,060          $10,499          $10,579
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    AFRI makes awards under two legislative authorities with different 
eligibilities. Depending on Program Area Priorities and the requested 
activities, the authority used, and hence eligibility, may differ 
within a particular Program Area.
    Eligibility is also linked to the project type requested in Program 
Area Descriptions.
    Eligible applicants for Research Projects include:

   State Agricultural Experiment Stations;

   Colleges and universities (including junior colleges 
        offering associate degrees orhigher);

   University research foundations;

   Other research institutions and organizations;

   Federal agencies;

   National laboratories;

   Private organizations or corporations;

   Individuals who are U.S. citizens, nationals, or permanent 
        residents; and

   any group consisting of two or more entities identified in 
        (1) through (8).

    Eligible institutions do not include foreign and international 
organizations.
    Eligible applicants for Integrated Projects include: (1) colleges 
and universities; (2) 1994 Land-Grant Institutions; and (3) Hispanic-
serving agricultural colleges and universities.
    Eligible applicants for the Research, Education, or Extension 
Projects include: (1) State Agricultural Experiment Stations; (2) 
colleges and universities (including junior colleges offering associate 
degrees or higher); (3) university research foundations; (4) other 
research institutions and organizations; (5) Federal agencies, (6) 
national laboratories; (7) private organizations or corporations; (8) 
individuals who are U.S. citizens, nationals, or permanent residents; 
and (9) any group consisting of two or more entities identified in (1) 
through (8).
    Eligible institutions do not include foreign and international 
organizations.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None             2,417             1,569
      Received
Applications Funded         None               151               350
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
    A peer review panel verifies that the project described in the 
application is original compared to the published literature; however, 
a search of the CRIS database is also conducted to ensure that the 
program is not unwarrantedly repeating work that is not yet published 
in scientific journals or other outlets. The CRIS search would include 
any work under the name of the Project Director (PD) and a separate 
search for key words associated with the specific investigation 
described in the project application. Search results must be checked 
for the possibility of supporting duplicative work by two different 
investigators or the overlapping support of one investigator from two 
sources for essentially the same work. Should the NIFA National Program 
Leader (NPL) suspect duplication of effort the NPL must contact the PD 
to discuss any potential or suspected overlaps or duplication. The AFRI 
will not fund any project for overlapping objectives receiving funds 
from another USDA program or that is unnecessarily duplicative. The 
search is documented on the Competitive Proposal Recommendation Form 
(Form 3) with the following statement: ``A CRIS search performed on 
(Date) for the PD and using the following key words deemed appropriate 
for this application: (key words). Results confirm that this is 
original work and is not inappropriately duplicative of, or overlapping 
with, other work supported by USDA.''
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Beginning Farmer and Rancher Development Program (BFRDP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 7405(c) of the Farm Security and Rural Investment Act of 
2002 (2002 Farm Bill) (Pub. L. 107-171) (7 U.S.C. 3319f(c)), as amended 
by section 7410 of the 2008 Farm Bill, established a competitive grants 
program for the purpose of providing education, outreach, training and 
technical assistance to benefit beginning farmers and ranchers in the 
United States.
    Section 7405(d) of the 2002 Farm Bill established beginning farmer 
and rancher education teams to develop curricula and conduct 
educational programs and workshops for beginning farmers orranchers in 
diverse geographical areas of the United States.
4. Purpose/Goals
    The primary goal of BFRDP is to enhance food security by providing 
beginning farmer and rancher producers and their families in the U.S. 
and its territories, with the knowledge, skills and tools needed to 
make informed decisions for their operations, and enhance their 
sustainability.
5. Success in Meeting Programmatic Purpose/Goals
    Training activities are the cornerstone of almost all the BFRDP 
grantee programs. Types of training included webinars, seminars, 
internships, mentorships, on-farm field days, etc. Face-to-face 
training events, such as regular non-credit courses or workshop 
sessions at farming conferences, were the most frequent types of 
events. More than 5,000 new and potential farmers were counted as 
participants in BFRDP project training events. Most attended face-to-
face workshops or courses, but many also participated in other types of 
training, including roundtable discussions, hands-on field days, farm 
internships, and working with mentor farmers. This outcome indicates 
that the BFRDP goal to train more than 6,000 beginning farmers and 
ranchers will most likely be met, if not greatly exceeded. Data from 
BFRDP training program participants who responded to surveys shows that 
approximately 17 percent of the 5,339 farmers trained had very little 
or no experience in farming. About 12-16 percent are farm workers, 
females, limited resource, and socially disadvantaged.
    Examples of success include:
    The Northeast Beginning Farmer Coalition is a learning network for 
beginning farmer training programs. Three major strategies to foster 
the network include the delivering of mentoring, training, and program 
development resources; developing evaluation resources and outreach 
strategies to understand and enhance the impacts of training efforts; 
and engaging K-12 teachers and young farmer activists to shift youth 
cultural norms about farming career options. During the coalition's 
first year, it conducted needs assessments of new farm start-ups 
focused on gaps in service. A course to train new instructors reached 
20 farmers, nonprofit, and extension educator participants. Attendees 
developed five new online courses for beginning farmers. The coalition 
also developed and reviewed materials and resources and created 
resources to support teachers at eight schools in New York with 
agriculture education programs.
    The Western Navajo Nation Beginning Farmers and Ranchers Project 
engages, prepares, and supports socially disadvantaged, underserved, 
and limited resource beginning Navajo farmers and ranchers in eight 
communities covering 8,000 square miles of the Navajo Nation. The 
overall goal of the project is to provide Navajo community members who 
wish to begin farming and ranching with the skills to effectively 
launch sustainable agricultural operations using traditional and 
contemporary agricultural techniques in conjunction with effective 
business practices. Utilizing multiple learning methods, the project 
features Navajo language-based instruction, intensive experiential 
education with successful Navajo farmer and rancher mentors, regional 
peer roundtables with expert facilitators, and production experts. The 
project is teaching ancestral traditional ways to introduce 
participants to farming or ranching.
    In the first year, the project worked with 13 chapter members 
through direct agricultural training and networking activities that 
included two roundtables, two conferences, and weekly classes in 
technology, business, or introductory farming and ranching to 1,000+ 
participants. Fifty percent of participants are women. Seventy percent 
are farming or ranching less than 1 year, or do not farm/ranch 
currently. The project staff is comprised of four traditional Navajo 
locals of varying ages and educational backgrounds. All are bilingual, 
fluent in Navajo, and culturally sensitive to the target group's 
history and challenges
    The Florida A&M University New and Beginning Farmer Training 
Program encourages farm entry by removing the barriers in four major 
areas that face the next generation farmers: (1) access to training, 
education, and technical assistance; (2) access to land; (3) access to 
capital and credit, and; (4) access to markets. This project uses non-
traditional approaches in its extension training and assistance 
activities to reach the target African-American audience. These 
opportunities include the Young Farmer Entrepreneur Incubator; a 
business incubator model for agricultural production and marketing 
demonstrations that targets new and beginning farmers under the age of 
25; and a beginning farmer demonstration/training website with various 
alternative enterprises, production management practices, and market 
development models. The demonstration site uses hands-on training 
activities in collard and green bean production and marketing to show 
the viability of alternative market opportunities, including 
institutions, retail, and direct-to-consumer outlets.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                              FY 2007           FY 2008           FY 2009           FY 2010          FY 2011
----------------------------------------------------------------------------------------------------------------
                                   (1)               (1)           $18,000           $19,000           $19,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                 FY 2007          FY 2008          FY 2009          FY 2010          FY 2011
----------------------------------------------------------------------------------------------------------------
                                       (1)              (1)           $1,800          $10,000          $18,550
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                 FY 2007          FY 2008          FY 2009          FY 2010          FY 2011
----------------------------------------------------------------------------------------------------------------
                                       (1)              (1)             $720             $760             $760
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided by transfer from Commodity Credit Corporation (CCC).

9. Eligibility Criteria
    BFRDP program recipients must be a collaborative state, tribal, 
local, or regionally-based network or partnership of public or private 
entities, which may include: a state cooperative extension service; a 
Federal, state or tribal agency; a community-based and nongovernmental 
organization; college or university (including an institution awarding 
an associate's degree) or foundation maintained by a college or 
university; or any other appropriate partner, as determined by the 
Secretary. In accordance with the authorizing legislation, Priority 
will be given to partnerships and collaborations led by or including 
nongovernmental and community-based organizations with expertise in new 
agricultural producer training and outreach.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None               196               122
      Received
Applications Funded         None                29                40
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Community Food Projects Competitive Grants Program (CFPCGP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    CFPCGP was authorized by Section 25 of the Food Stamp Act of 1977 
(7 U.S.C. 2034), as amended by the Food and Nutrition Act of 2008 and 
reauthorized by Section 4402 of the 2008 Farm Bill.
    Since 1996, CFPCGP has promoted self-sufficiency and food security 
in low-income communities through community food projects (CFP) and 
Training and Technical Assistance (T&TA) projects. CFPs unite the 
entire food system, assessing strengths, establishing linkages, and 
creating systems that improve self-reliance over food needs.
4. Purpose/Goals
    CFPCGP was established to meet the needs of low-income people by 
increasing access to fresher, more nutritious food supplies; increase 
the self-reliance of communities in providing for their own food needs; 
promote comprehensive responses to local food, farm, and nutrition 
issues; meets specific state, local, or neighborhood food and 
agricultural needs for infrastructure improvement and development; 
plans for long-term solutions; and create innovative marketing 
activities that benefit both agricultural producers and low-income 
consumers. Grants are intended to help eligible private nonprofit 
entities in need of a one-time infusion of Federal assistance to 
establish and carryout multipurpose community food projects.
5. Success in Meeting Programmatic Purpose/Goals
    Examples of success include:
    The Philadelphia Horticultural Society (PHS) is establishing and 
developing a network of urban entrepreneurial growers in Philadelphia 
that will significantly increase the supply of locally grown fruits and 
vegetables to Philadelphia communities. Over the course of 3 years, 
approximately 66 entrepreneurial growers are being supplied with 
locally grown seedlings as well as soil, tools and all necessary 
materials for sustainable urban food gardening for market. These 
growers are developing skills and experience in areas such as organic 
pest management, season extension, growing for market, crop planning, 
marketing, and networking through five mandatory workshops and on-going 
technical assistance delivered by PHS staff. Marketing and distribution 
opportunities for the growers are being developed by PHS staff (with 
grower input) and includes community farmers markets, mobile purchase 
by a local co-op market, purchase by a local food assistance provider, 
and relationships with 20 wholesale outlets. They are also establishing 
and operating three Neighborhood Green Centers to serve the network of 
growers as well as the surrounding community; and improving food 
security and access to affordable, locally grown produce in targeted 
neighborhoods by establishing three community farmers markets with 
partner organizations to provide 50 market days over the course of 3 
years in targeted areas in which CGA produce can be sold at affordable 
prices. Over 4300 pounds of naturally grown produce was made available 
to local residents during this first year of the project. As additional 
growers are added in years 2 and 3, this annual output will increase.
    The American Friends Service Committee in New Mexico (AFSC) is to 
increasing economic development and food security for low-income 
communities in the South Valley and surrounding areas. They are 
providing direct technical assistance to farmers to develop farm 
infrastructure, increase technical farming skills and entrepreneurial 
capacity; facilitating the development of a network of community-based 
farms with a joint business plan and set up procurement by 
institutional buyers, retail outlets, and wholesale distributors and 
families; (3) documenting training curricula, best practices and 
lessons learned for farmer-to-farmer information sharing and outreach; 
and increasing local food sales and nutritional education in 
Albuquerque Public Schools and among low-income communities in the 
South Valley. The project has met and exceeded expectations in its 
first year, especially in terms of training outcomes (meeting trainee 
learning objectives) and enterprise capacity. Project participants 
experienced market growth, production growth, and increased income, 
notable given the farmers limited to no farming experience or training 
at the beginning of the project. The year one trainees/farmers all have 
ongoing farm enterprises and expect to continue to earn substantial 
parts of their household income from farming into the near future. In 
addition to its market successes, the establishment of ACN promises to 
represent an important advancement in institutionalized organizational 
collaboration in the South Valley.
    World Hunger Year, Inc. (WHY) is working in conjunction with the 
Community Food Security Coalition (CFSC) on ongoing evaluation of the 
Food Security Learning Center (FSLC). These evaluation measures will 
help gain a better understanding of the FSLC audience, what tools and 
resources they need to conduct their work or research and how to take 
action and combat challenges facing our food system. WHY staff is 
currently evaluating the effectiveness of the FSLC. This includes 
determining how the outcomes and outputs of the FSLC can be best 
measured. Finally, WHY will document major initiatives that take place 
as a result of this project through event surveys, meeting minutes, 
photographs and video, etc. These will be used to inform future 
decisions, delegate responsibilities and write final reports.

                           6. Annual Budget Authority (Fiscal Year (FY) 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget     $5,000    $5,000   $5,000   $5,000   $5,000   $5,000     * $0  $10,000   $5,000   $5,000
           Authority
----------------------------------------------------------------------------------------------------------------
* FY 2008 funds were made available to NIFA in FY 2009.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                 FY 2007          FY 2008          FY 2009          FY 2010          FY 2011
----------------------------------------------------------------------------------------------------------------
         Annual Outlays                (*)              (*)              (*)              (*)              (*)
----------------------------------------------------------------------------------------------------------------
* Mandatory funding was provided by transfer from the Food and Nutrition Service. Therefore, NIFA does not
  report outlays for the program.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                 FY 2007          FY 2008          FY 2009          FY 2010          FY 2011
----------------------------------------------------------------------------------------------------------------
   Annual Delivery Cost               $200               $0             $400             $200             $200
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    A. Community Food Projects (CFP) and Planning Projects (PP) 
Eligibility

    Only private, nonprofit entities, meeting the following three (3) 
requirements are eligible to receive a CFP or PP grant:

          (a) have experience in the area of:

                  (i) community food work, particularly concerning 
                small and medium-size farms, including the provision of 
                sustainably produced food to people in low-income 
                communities and the development of new markets in low-
                income communities for agricultural producers; or
                  (ii) job training and business development activities 
                for food-related activities in low-income communities;

          (b) demonstrate competency to implement a project, provide 
        fiscal accountability, collect data, and prepare reports and 
        other necessary documentation; and
          (c) demonstrate a willingness to share information with 
        researchers, evaluators, practitioners, and other interested 
        parties, including a plan for dissemination of results.

    B. Partners and Collaborators

    Applicants with CFP and PP proposals are encouraged to seek and 
create partnerships with public or private, nonprofit or for-profit 
entities, including links with academic institutions (including 
minority-serving colleges and universities), and/or other appropriate 
professionals, community-based organizations, and local government 
entities. Only the applicant must meet the eligibility requirements. 
Project partners and collaborators need not meet the eligibility 
requirements.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                113               159               171
      Received
Applications Funded         None                50                27
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    Complainant (an employee of the grantee, Our School of Blair 
Grocery, New Orleans) contacted NIFA alleging that grantee has depleted 
most of the approx. $299,000 award without fulfilling the required 
budgetary items or the programming listed in the proposal. Complaint 
was received March 29, 2011and review is ongoing.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Distance Education Grants for Insular Areas.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The Distance Education Grants for Insular Areas (DEG) program is 
administered under the Provisions of 7 U.S.C. 3362, to strengthen the 
capacity of Insular Area institutions to carry out distance education 
programs in the food and agricultural sciences. This program was first 
funded in FY 2010.
4. Purpose/Goals
    The purpose of this program is to strengthen the capacity of 
institutions of higher education in Insular Areas to carry out resident 
instruction, curriculum, and teaching programs in the food and 
agricultural sciences through distance education technology. The 
Distance Education Grants Program for Institutions of Higher Education 
in Insular Areas (DEG) is a NIFA-administered competitive grants 
program focused on improving formal, post-secondary agricultural 
sciences education.
5. Success in Meeting Programmatic Purpose/Goals
    Although this grant program is too new to have any discernable 
success to date examples of expected success include:
    These new funds will strengthen the University of Guam's Distance 
Education for the Consortium of Caribbean and Pacific Island 
institutions (CariPac) and are a key strategy for fulfilling the 
mission. The Caribbean and Pacific Island students contribute to 
sustaining a balanced and healthy society, and provide excellent higher 
education in Agriculture and Food Science, within the Insular Areas, to 
meet the evolving needs of a global society supports the Distance 
Education program goals: (1) to increase the number of graduates with a 
degree in the food and agricultural sciences and (2) helps students 
achieve their career goals and help meet workplace needs by increasing 
the quality of undergraduate instruction. The goals of CariPac are to 
harness research and education to help address local food, 
agricultural, and environmental needs; support local economic growth; 
and to prepare students to achieve their own personal career goals.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)             (1)             (1)            $750            $749
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)             (1)             (1)             $38            $112
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              (1)             (1)             (1)             $30             $30
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

9. Eligibility Criteria
    Applications may only be submitted by an institution of higher 
education, as defined in section 101(a) of the Higher Education Act of 
1995 (20 U.S.C. 1001(a)), that is located in an Insular Area and that 
has a demonstrable capacity to carry out teaching and extension 
programs in the food and agricultural sciences. Individual land-grant 
colleges and universities, and other institutions that have secured 
land-grant status through Federal legislation, and which are located in 
Insular Areas are automatically eligible for awards under the DEG 
grants program, either as direct applicants or as parties to a 
consortium agreement. The eight insular areas are the Commonwealth of 
Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern 
Mariana Islands, the Federated States of Micronesia, the Republic of 
the Marshall Islands, the Republic of Palau, and the Virgin Islands of 
the United States.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None              None                 1
      Received
Applications Funded         None              None                 1
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Farm Business Management and Benchmarking Program (FBMB).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The authority for this program is under Section 7208 of the 2008 
Farm Bill which amended the Food, Agriculture, Conservation and Trade 
Act of 1990 by adding section 1672D (7 U.S.C. 5925f) which established 
a competitive research and extension grants program to support improved 
farm management. The FBMB program was newly authorized by the FCEA and 
initially funded in FY 2010.
4. Purpose/Goals
    The Farm Business Management and Benchmarking (FBMB) Competitive 
Grants Program provides funds to (1) improve the farm management 
knowledge and skills of agricultural producers; and (2) establish and 
maintain a national, publicly available farm financial management 
database to support improved farm management.
5. Success in Meeting Programmatic Purpose/Goals
    Although this grant program is too new to have any discernable 
success to date examples of expected success include:
    This competitive grants program provides funds to improve the farm 
management knowledge and skills of agricultural producers; and 
establish and maintain a national, publicly available farm financial 
management database to support improved farm management.
    The University of Minnesota is leading the effort by developing and 
maintaining a national, publicly available online farm financial 
database that any U.S. producer can use for benchmarking and improving 
their farm management. The project will improve the profitability and 
competitiveness of small and mid-sized U.S. farms and ranches by 
providing benchmarking resources using high-quality farm financial 
management data. Benchmarking allows producers to compare their 
performance to farms and ranches of similar size that produce the same 
products. The benchmarking database will let producers identify their 
businesses strengths and weaknesses. To develop and expand a national 
benchmarking database of actual farm data, the data will be collected 
by farm business management education programs and associations that 
deliver financial analyses to producers. Data collection and 
aggregation into a national database will be accomplished through 
increased collaboration between state-level farm management education 
programs and associations. A National Farm Management Center is being 
established to develop and maintain the benchmarking database and to 
facilitate collaboration among the many state level programs that will 
partner to implement the database. The national center will coordinate 
development of standardized procedures and training for financial 
analysis and data collection methodologies to ensure the database 
provides uniform benchmarking data. Twelve farm business management 
education programs and associations in eleven states will collaborative 
to implement this project. Several additional programs will be involved 
in a task force to discuss how to expand the database to include more 
states. The national database will be publicly available to all U.S. 
producers. Use of the database for benchmarking will improve producers' 
abilities to successfully manage risk and financial challenges and to 
become more globally competitive.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)             (1)             (1)          $1,500          $1,497
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)             (1)             (1)            $150            $825
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              (1)             (1)             (1)             $60             $60
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2010.

9. Eligibility Criteria
    Pursuant to 7 U.S.C. 450i(b)(7), eligible applicants means: (A) 
state agricultural experiment stations; (B) colleges and universities; 
(C) university research foundations; (D) other research institutions 
and organizations; (E) Federal agencies; (F) national laboratories; (G) 
private organizations or corporations; (H) individuals; or (I) any 
group consisting of two or more of the entities described in 
subparagraphs (A) through (H).

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None              None                 6
      Received
Applications Funded         None              None                 1
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Food and Agriculture Defense Initiative (FADI).
2. Subprograms/Department Initiatives
        National Animal Health Laboratory Network (NAHLN)
        National Plant Diagnostic Network (NPDN)
        Extension Disaster Education Network (EDEN)
3. Brief History
    Section 1484 (7 U.S.C. 3351) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 (NARETPA), which was amended 
by the 2002 Farm Bill, provides amounts for agricultural research, 
extension, and education. There are also amounts authorized to be 
appropriated for agricultural research, education, and extension 
activities for biosecurity planning and response.
    According to NARETPA of 1977, using any authority available to the 
Secretary, the Secretary shall use funds made available under this 
section to carry out agricultural research, education, and extension 
activities (including through competitive grants) for the following:

    (1) To reduce the vulnerability of the United States food and 
        agricultural system to chemical or biological attack.

    (2) To continue partnerships with institutions of higher education 
        and other institutions to help form stable, long-term programs 
        to enhance the biosecurity of the United States, including the 
        coordination of the development, implementation, and 
        enhancement of diverse capabilities for addressing threats to 
        the nation's agricultural economy and food supply with special 
        emphasis on planning, training, outreach, and research 
        activities related to vulnerability analyses, incident 
        response, and detection and prevention technologies.

    (3) To make competitive grants to universities and qualified 
        research institutions for research on counterbioterrorism.

    (4) To counter or otherwise respond to chemical or biological 
        attack.
4. Purpose/Goals
    a. The National Animal Health Laboratory Network (NANLN)--The 
        United States Department of Agriculture established the NAHLN 
        as part of a national strategy to coordinate and network the 
        diagnostic testing capacities of the Federal veterinary 
        diagnostic laboratories with the extensive infrastructure 
        (facilities, professional expertise, and support) of state and 
        university veterinary diagnostic laboratories. This network 
        enhances the nation's early detection of, response to, and 
        recovery from animal health emergencies, including bioterrorist 
        events, newly emerging diseases, and foreign animal disease 
        (FAD) agents that threaten the nation's food supply and public 
        health. NIFA and the Animal and Plant Health Inspection Service 
        cooperatively provide leadership for this network.

    b. National Plant Diagnostic Network (NPDN)--The NPDN mission is to 
        quickly detect, diagnose and communicate outbreaks of newly 
        introduced and emerging high consequence pests in over 1 
        billion acres of forest, pasture, and crop lands of the United 
        States of America (please see attached Impact of the NPDN). 
        Early detection leads to early response and successful 
        remediation.

    c. Extension Disaster Education Network (EDEN)--The Extension 
        Disaster Education Network (EDEN) mission is to reduce the 
        impact of disasters through extension education. Seventy 
        institutions from all 50 states and three U.S. territories 
        participate in EDEN. This valuable network of multidisciplinary 
        professionals ensures that the cooperative extension system can 
        appropriately respond to local, state, regional, and national 
        education needs during a crisis. This network and its 
        management fit well into the nation's Homeland Security 
        framework.
5. Success in Meeting Programmatic Purpose/Goals
    The National Animal Health Laboratory Network (NAHLN) is a national 
network of non-Federal public animal diagnostic laboratories; under the 
leadership of NIFA, Animal and Plant Health Inspection Service (APHIS), 
and the American Association of Veterinary Laboratory Diagnosticians. 
It has 12 core laboratories who receive NIFA support; which are located 
at Cornell University (New York), Louisiana State University, 
University of Georgia, Texas A&M, University of Wisconsin, Iowa State 
University, Colorado State University, Washington State University, 
University of California at Davis, University of Arizona, North 
Carolina Department of Agriculture and Consumer Services, and Florida 
Department of Agriculture and Consumer Services. In addition to these 
core laboratories, NIFA provides a reduced amount of funding for 
laboratories in 16 other states: Oregon, Utah, New Mexico, Wyoming, 
South Dakota, Nebraska, Kansas, Minnesota, Mississippi, Tennessee, 
Indiana, Michigan, Kentucky, Ohio, Pennsylvania, and New Jersey. Animal 
disease-detection criteria have been developed for the following ten 
high-consequence diseases: Foot-and-Mouth Disease, Exotic Newcastle 
Disease, Classical Swine Fever (or hog cholera), High Pathogen Avian 
Influenza, Low Pathogen Avian Influenza, Bovine Spongiform 
Encephalopathy, Scrapie, Chronic Wasting Disease, Rift Valley Fever and 
African Swine Fever. African Swine Fever, added in Fiscal Year 2010, 
causes swine to have high fevers, reddening of the skin, hemorrhages in 
lymph nodes and internal organs, and occasionally enlargement of the 
spleen. NAHLN is part of a national strategy to coordinate the nation's 
Federal, state and university laboratory resources.
    The National Plant Diagnostic Network (NPDN) is a 50 state network 
of land-grant university based plant diagnostic laboratories. The 
network is led by diagnostic laboratory centers at Cornell University 
(New York), University of Florida, Kansas State University, Michigan 
State University, and University of California at Davis. These 
institutions receive direct funding from NIFA and provide support to 
the other land-grant plant diagnostic laboratories in their region 
through subcontracts, training, and leadership. Because of this, plant 
laboratories in every state receive Federal funding and other support 
from the five NPDN centers. All 50 states and many U.S. territories are 
connected to the NPDN through digital distance diagnostics, used 
throughout the nation to speed early detection of high consequence 
plant pathogens and solve other agricultural problems. This web-based 
diagnostics system allows plant diagnosticians in one location to 
transmit a digital image across the country to someone with special 
expertise. Plant disease (and insect) detection criteria have been 
developed for soybean rust, sudden oak death, Ralstonia stem rot, plum 
pox virus, pink hibiscus mealybug, potato wart, huanglongbing (citrus 
greening), Potato Cyst Nematode, Late Blight and Beet Curly Top. The 
laboratory network partnered with other cooperative extension officials 
to quickly and efficiently conduct a widespread outreach and detection 
campaign on tomato and potato Late Blight, which became a significant 
problem in 2009 for the first time since the network was established. A 
new diagnostic test was implemented for Beet Curly Top, a disease 
spread by insects that affects tomatoes, sugarbeets, table beets, 
beans, and cucurbits.
    The Extension Disaster Education Network (EDEN) is a collaborative 
multi-state effort by extension services across the country to improve 
the delivery of services to citizens affected by disasters. NIFA leads 
this effort. For example, the University of Arkansas Cooperative 
Extension Service assisted communities in the aftermath of severe ice 
storms and tornadoes that tore through Arkansas in the winter and 
spring. Faculty and staff helped residents and community leaders cope 
with disaster, identify and locate sources of assistance, make 
emergency plans, find information on emergency sheltering, manage storm 
damaged trees and debris, and negotiate FEMA regulations

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                           FY04        FY05        FY06       FY07       FY08       FY09       FY10       FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget       $7,953      $8,928     $9,900     $9,900     $9,830     $9,830     $9,830     $5,988
            Authority
----------------------------------------------------------------------------------------------------------------


                   7. Annual Outlays (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                      FY06     FY07     FY08     FY09     FY10     FY11
------------------------------------------------------------------------
   Annual Outlays               $495   $3,957   $7,397   $9,848   $9,638
------------------------------------------------------------------------


                8. Annual Delivery Cost (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                      FY06     FY07     FY08     FY09     FY10     FY11
------------------------------------------------------------------------
  Annual Delivery               $396     $393     $393     $393     $240
              Cost
------------------------------------------------------------------------

9. Eligibility Criteria
    Although applications may be submitted by universities and 
qualified research institutions for research on counterbioterrorism, 
NIFA makes awards through non-competitive cooperative agreements.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 35                35                36
      Received
Applications Funded           35                35                35
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Food Animal Residue Avoidance Database Program (FARAD).
2. Subprograms/Department Initiatives
    There are no subprograms.
3. Brief History
    Section 604 of the Agricultural Research, Extension, and Education 
Reform Act of 1998 (7 U.S.C. 7642) authorized this program. Section 
7312 of the 2008 Farm Bill authorized appropriations and reauthorized 
the program through FY 2012.
4. Purpose/Goals
    This funding is used to establish and maintain FARAD, a computer-
based decision support system designed to provide livestock producers, 
extension specialists, and veterinarians with practical information on 
how to avoid drug, pesticide, and environmental contaminant residue 
problems.
5. Success in Meeting Programmatic Purpose/Goals
    NIFA administers the funding that establishes and maintains the 
Food Animal Residue Avoidance Databank (FARAD), a computer-based 
decision support system designed to provide livestock producers, 
extension specialists, and veterinarians with practical information on 
how to avoid drug, pesticide, and environmental contaminant residue 
problems. The drugs and pesticides used in modern animal agriculture 
improve animal health and thereby promote more efficient and humane 
production.
    Wherever drugs are used to treat sick animals or prevent disease, 
there is a potential that residues may be incurred. The U.S. Food and 
Drug Administration (FDA), which must approve all drugs meant to be 
marketed for use in animals, establishes tolerances for drug residues 
(similar to speed limits) to ensure food safety. The FDA also 
establishes ``withdrawal times'' or ``withholding periods,'' which are 
times after drug treatment when milk and eggs are not to be used for 
food and during which animals are not to be slaughtered. This allows 
time for the animals to eliminate the drug residues.
    FARAD is a repository of comprehensive residue avoidance 
information. FARAD also is sanctioned to provide these estimates to the 
U.S. Pharmacopeia-Drug Information (USP-DI) Veterinary Medicine 
Advisory Committee. Since 1982, FARAD has been working with producers, 
extension specialists and agents, and veterinarians to help avoid and 
mitigate residue problems. As a cooperative multi-state program, FARAD 
is available nationwide to offer advice about residue avoidance.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)             (1)            $806          $1,000            $998
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)             (1)            $484            $898            $977
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              (1)             (1)             $32             $40             $40
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

9. Eligibility Criteria
    The Secretary shall offer to enter into a contract, grant, or 
cooperative agreement with one or more appropriate colleges and 
universities to operate the FARAD program.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None                 5                 4
      Received
Applications Funded         None                 5                 4
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Grants for Youth Serving Institutions (Rural Youth Development 
Grants Program or RYD).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 410 of the Agricultural Research, Extension, and Education 
Reform Act of 1998 (7 U.S.C. 7630) authorized this program.
    Section 7309 of the 2008 Farm Bill reauthorized 7 U.S.C. 7630 and 
also amended to provide additional flexibility in content delivery to 
each organization receiving funds and to allow recipients to 
redistribute all or part of the funds to individual councils or local 
chapters without further need of approval from the Secretary.
4. Purpose/Goals
    The goals are to support and enhance the goals, objectives, and 
priorities of the eligible youth organizations; Support programs which 
address issues and needs of rural youth; Involve youth in design and 
implementation of their educational activities; Increase knowledge, 
skills, attitudes and behaviors necessary for rural youth to live 
productive, contributing, and fulfilling lives; and Increase economic 
opportunities and sustainability and improve quality of life in rural 
communities through enhanced human, social, civic, natural, financial, 
cultural, and built capital.
5. Success in Meeting Programmatic Purpose/Goals
    NIFA makes grants available to the Girl Scouts of the United States 
of America, the Boy Scouts of America, the National 4-H Council, and 
the National FFA Organization to establish pilot projects to expand the 
programs carried out by the organizations in rural areas and small 
towns.
    Examples of success:
    The Girl Scouts in Rural Communities (GSRC) project utilizes Girl 
Scouting to facilitate the training and experiences that will empower 
rural girls with the leadership and personal development assets and 
skills to improve their lives and their communities. Funds enable the 
implementation of the ``Challenge and Change: Challenge Yourself, 
Change Your World'', a social entrepreneurship curriculum-based project 
for rural teen girls (ages 14-17) that was launched in FY 2005. Through 
this program the Girls Scouts recruit and train rural girls in social 
entrepreneurship (Challenge and Change Curriculum); provide 
opportunities for rural girls to assess the needs of their rural 
communities; provide opportunities for rural girls to identify, plan 
and lead projects aimed at solving identified needs in their 
communities; recruit and train adults to facilitate girl participation 
and serve as caring adults; and develop partnerships with other 
organizations in their communities to facilitate social 
entrepreneurship projects and the development of rural girls.
    National FFA Organization is providing outreach and dissemination 
of their ``Living to Serve'' materials to over 7,000 chapters serving a 
membership base of approximately 500,000. They deliver tools that 
motivate and mobilize rural youth to partner with adults in joint 
ventures to create change in their communities that address identified 
needs and build capital. This program was the catalyst to move FFA from 
a model of ``community service'' to a much more rich and meaningful 
model of ``service-learning''. The ``Living to Serve'' instructional 
materials provide education on the principles of service-learning. 
These projects have dealt with specific community needs identified by 
the FFA members, plus the overarching goal of civic engagement and 
youth leadership.
    The National 4-H Council implemented the ``Engaging Youth, Serving 
Community'' (EYSC) program that supports land-grant university efforts 
to develop, implement, and evaluate community based issues forums and 
action plans in rural communities. Projects provide youth with adult 
partners and constructive peer interaction through youth-adult 
partnerships and empower youth through meaningful leadership roles and 
life skills development. Youth and adults gain the life skills and 
experience needed to emerge as effective leaders and contributing 
members of society; develop positive attitudes towards the roles of 
youth in communities; improve their abilities to work with diverse 
community members to identify local issues and develop strategies for 
addressing these issues; and provide more opportunities for youth and 
families in rural communities for positive youth development 
experiences during out-of-school time.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget     $8,000    $2,981   $2,667   $2,646   $1,980   $1,980   $1,737   $1,767   $1,784   $1,780
           Authority
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
  Credit Corporation funds.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays           $1,188          $1,775          $1,723          $1,761          $1,783
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
  Credit Corporation funds.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              $79             $70             $71             $71             $71
----------------------------------------------------------------------------------------------------------------
Note: In FY 2002, Grants for Youth Serving Institutions were funded by transfer to the agency from Commodity
  Credit Corporation funds.

9. Eligibility Criteria
    Pursuant to 7 U.S.C. 7630(a), only the Girl Scouts of the United 
States of America (GSUSA), the National 4-H Council (4-H), the Boy 
Scouts of America (BSA), and the National FFA Organization (FFA) are 
eligible.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                  3                 3                 4
      Received
Applications Funded            3                 3                 3
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Healthy Urban Food Enterprise Development Center (HUFED).
2. Subprograms/Department Initiatives
    There are no subprograms.
3. Brief History
    The Healthy Urban Food Enterprise Development Center (HUFED) 
legislative authority is located in Section 25(h) (7 U.S.C. 2034(h)) of 
the Food and Nutrition Act of 2008. The HUFED Center program was 
created to respond to the need to redevelop a food enterprise structure 
in the United States in order to make more healthy, affordable food 
available in low-income areas, to improve access for small and mid-
sized agricultural producers, and to promote positive economic 
activities generated from attracting healthy food enterprises into 
underserved communities.
    Section 4402 of the 2008 Farm Bill provided mandatory funding for 
the HUFED Center and program-specific requirements.
4. Purpose/Goals
    The purpose of the HUFED Center grant program is to establish and 
support a Healthy Urban Food Enterprise Development Center to increase 
access to healthy affordable foods, including locally produced 
agricultural products, to underserved communities. The HUFED Center 
will provide training and technical assistance for food enterprises and 
award sub-grants to eligible entities for healthy food enterprise 
development.
5. Success in Meeting Programmatic Purpose/Goals
    The purpose of the this program is to establish and support a 
Healthy Urban Food Enterprise Development Center (HUFED) to increase 
access to healthy affordable foods, including locally produced 
agricultural products, to underserved communities.
    Since the Center started, several high profile Federal initiatives 
interested in food access have emerged: Let's Move; Know Your Farmer, 
Know Your Food; and Healthy Food Financing Initiative. They have been 
actively pursuing news, information, and research to better position 
the Center to take advantage of the direction and interest in food 
access and regional food systems. The Center's understanding of the 
need for funding for healthy food enterprises was significantly 
deepened. They received 538 Letters of Interest (LOIs) within a 4 week 
outreach period. The LOIs spanned across the country, and included 47 
states, as well as the District of Columbia and the U.S. Virgin 
Islands. A preliminary analysis of the applicant database has provided 
further insight on the landscape of food access work, which will inform 
future strategies not only for HUFED, but also for USDA. The 
enterprises for Year 1 grantees are underway and outcomes and impacts 
from their enterprises will be reported in Year 2's Accomplishments 
Report. Due to the new high profiled initiatives, the Center has taken 
a stronger effort in meeting and sharing information with USDA Deputy 
Undersecretaries and Senior Advisors to further link the Center's 
resources and knowledge. After designing and managing the proposal 
process for Year 1, an evaluation was conducted to identify 
efficiencies and areas of improvement for future RFAs. The grant making 
process will be streamlined towards the needs of the applicants, as 
well as the review panel. As the grantees begin the enterprises, HUFED 
is working with the internal evaluator, Kingslow Associates LLC, to 
ensure that metrics and indicators are in place so that the Center as 
well as the individual enterprises, can effectively measure their 
successes and challenges, with the long term goal of documenting best 
practices and lessons learned. The Center is also providing grantees 
guidance, and coaching around evaluation, and assisting with reporting 
and working with government grants, as needed.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)             (1)          $1,000          $1,000          $1,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)             (1)            $100            $550          $1,000
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              (1)             (1)            $100            $100            $100
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009. Mandatory funding was provided through direct appropriation from the farm bill.

9. Eligibility Criteria
    Eligible Applicants are nonprofit organizations are eligible to 
apply for and receive awards under the HUFED Center authority (7 U.S.C. 
2034(h)(2)).
    Regarding Eligible Applicants for Subgrants, the term ``eligible 
entity'' for the purpose of subgrants means (A) a nonprofit 
organization; (B) a cooperative; (C) a commercial entity; (D) an 
agricultural producers; (E) an academic institution; (F) an individual; 
and (G) such other entities as the Secretary may designate. Award 
recipients may subcontract to organizations not eligible to apply 
provided such organizations are necessary for the conduct of the 
project.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None                13                 1
      Received
Applications Funded         None                 1                 1
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Hispanic-Serving Agricultural Colleges and Universities (HSACU).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The authority for this program is under Section 7101 of the 2008 
Farm Bill which amended section 1404 of the National Agricultural 
Research, Extension, and Teaching Policy Act of 1977 to add a 
definition for a new group of cooperating educational institutions 
known as Hispanic-Serving Agricultural Colleges and Universities.
    Additionally, Section 7129 of the 2008 Farm Bill authorizes the 
following five new programs for HSACUs: (1) HSACU Endowment Fund 
(formula-based); (2) HSACU Equity Grants Program (formula-based); (3) 
HSACU Institutional Capacity-Building Grants Program (competitive); (4) 
HSACU Extension Grants Program (competitive); and (5) HSACU Fundamental 
and Applied Research Grants Program (competitive).
    As of FY 2011, none of the five new programs have received an 
appropriation.
4. Purpose/Goals
    Establishing a process to identify and certify HSACUs supports the 
Federal Government-wide initiative to streamline and standardize all 
Federal assistance processes across the Federal Government. NIFA will 
be able to apply consistent rules used to determine HSACU eligibility 
for Federal assistance programs, including programs created or amended 
by the passage of the FCEA.
    Use of funds from the HSACU Endowment Fund and the resulting 
interest distribution are authorized under the Act of August 30, 1980, 
(commonly known as the `Second Morrill Act') (7 U.S.C. 321 et seq.). 
These funds benefit the HSACUs by supporting teaching programs in the 
food and agricultural sciences in the targeted areas of (1) curricula 
design and instructional materials development, (2) faculty development 
and preparation for teaching, (3) instruction delivery systems, (4) 
student experiential learning, (5) equipment and instrumentation for 
teaching, and (6) student recruitment and retention.
5. Success in Meeting Programmatic Purpose/Goals
    This program was not funded by appropriation and, therefore, has no 
examples of success in meeting programmatic goals. However, another 
funded program within NIFA, Higher Education--Hispanic Serving 
Institutions has examples of success which include:
    The education program at California State University in Fresno has 
improved and enhanced the capacity of food and agricultural science 
education on organic agriculture for plant science, food science, 
dietetic, and culinology. The grant helped create and facilitate an 
expansion of organic farming for teaching, research, and outreach 
programs. This project has attracted a number of under-represented 
student groups who are interested in learning and working with various 
aspects of healthy farming. CSU-Fresno has been able to establish year-
round organic vegetable operation, organic greenhouse, organic herb 
garden, compost and vermicompost on campus farm operations for the 
first time which became an outdoor classroom demonstration to various 
classes and interested individuals, community, and local organizations 
such as Fresno City College, 4-H programs, and K-12 schools.
    The function of the TREE (Teaching and Research in Environmental 
Ecology) Program at the University of Texas at San Antonio is to 
recruit, retain and financially support underrepresented undergraduates 
and graduate students. Workshops, training programs and mentorship from 
local community entities have been used to foster and develop the 
student's interest in careers in conservation and natural resources. 
While only three role-model seminars were planned, twenty-eight (28) 
role-model seminars were presented by a USDA research scientist, the 
Endangered Species Grants Coordinator from Texas Parks and Wildlife, 
faculty from the University of Texas at San Antonio, and faculty from 
other universities in the United States. The program has increased the 
number of minority and disadvantaged students participating in 
conservation and natural resource research from one to twelve.
    Through partnerships with USDA Forest Service, University of 
California Riverside and University of California Santa Barbara, Mt. 
San Jacinto College in San Jacinto, California has implemented a 
strategic student recruitment and retention plan to increase diversity 
in the Environmental Studies degree program and facilitate seamless 
transfer to 4 year universities. As a result there have been 
significant increases in enrollment and retention of underrepresented 
groups. There has been a 148% growth in students enrolling and majoring 
in environmental studies during the first year of the project, and a 
205% growth moving into the second year. The Summer Field Institute 
showed a 400% increase in the enrollment of Hispanic and other under-
represented students, outpacing the 375% growth in overall enrollment 
over the last year. Students mentored under this program have become 
increasingly active on campus and in the local communities, which will 
likely generate future growth as well.
6. Annual Budget Authority (FY 2002-FY 2011)
    This program has not been funded.
7. Annual Outlays (FY 2002-FY 2011)
    This program has not been funded.
8. Annual Delivery Cost (FY 2002-FY 2011)
    This program has not been funded.
9. Eligibility Criteria
    HSACUs are defined as colleges and universities that qualify as 
Hispanic-serving Institutions (HSIs) and offer associate, bachelors, or 
other accredited degree programs in agriculture-related fields.
    HSACUs do not include 1862 land-grant institutions, as defined in 
section 2 of the Agricultural Research, Extension, and Education Reform 
Act of 1998 (7 U.S.C. 7601).

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None              None              None
      Received
Applications Funded         None              None              None
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Integrated Research, Education, and Extension Competitive Grants 
Program (Section 406).
2. Subprograms/Department Initiatives
    A. Water Quality

    B. Food Safety

    C. Regional Pest Management Centers

    D. Crops at Risk *
---------------------------------------------------------------------------
    * No funds were provided for this program in FY 2011 or FY 2012 
Budgets

---------------------------------------------------------------------------
    E. Risk Avoidance and Mitigation *

    F. Methyl Bromide Transition

    G. Organic Transitions
3. Brief History
    Section 406 of the Agricultural Research, Extension, and Education 
Reform Act of 1998 (AREERA) (7 U.S.C. 7626), as reauthorized by Section 
7306 of the 2008 Farm Bill and authorized a competitive grants program 
that provides funding for integrated, multifunctional agricultural 
research, extension, and education activities.
    Section 7206 of the 2002 Farm Bill amended section 406(b) of AREERA 
to add the 1994 Land-Grant Institutions as eligible to apply for grants 
under this authority.
    Section 7129 of the FCEA amended section 406(b) of AREERA (7 U.S.C. 
7626(b)), adding Hispanic-serving agricultural colleges and 
universities (HSACUs) as eligible entities for competitive funds 
awarded under this authority.
4. Purpose/Goals
    The purpose of the Integrated Research, Education, and Extension 
Competitive Grants Program (Section 406) is to provide funding for 
integrated, multifunctional agricultural research, extension, and 
education activities through a research, education, and extension 
competitive grants program. Grants are to be awarded to address 
priorities in United States agriculture that involve integrated 
research, education, and extension activities as determined by the 
Secretary in consultation with the National Agricultural Research, 
Extension, Education, and Economics Advisory Board (NAREEEAB).
5. Success in Meeting Programmatic Purpose/Goals
    Examples of success include:

    Water Quality Program

    Faculty at the University of Rhode Island are heading up the 
Northeast States and Caribbean Islands (NESCI) Regional Water Program 
which is promoting collaboration, enhancing delivery of successful 
programs, and encouraging multi-state efforts to protect and restore 
water resources. The regional Sustainable Landscaping focus area has 
developed lawn care recommendations specific for northern and southern 
New England and is using these recommendations with residents to 
promote water quality protection. Post-evaluations of private well 
water workshops indicate that workshop participants are adopting 
practices to protect their private well, including: 52% had their well 
water tested; 67% inspected their wellhead; 18% maintained their water 
treatment system; 13% had a water treatment system installed. Moreover, 
Private Wells Nonpoint Education for Municipal Officials (NEMO) 
programs work with communities are resulting in changes to community 
plans, land use regulations, development practices, and the local 
decision making process that include strategies to protect water 
quality.
    The University of Maine has worked with four communities which have 
learned more about groundwater resources, private well water, and water 
quality testing. Training participants expressed increased awareness 
and interest in local groundwater issues and solutions to address 
quality and quantity concerns. To date, the trainings enabled 90 
students and parents to participate in ``GET WET!'' (a K-12 
environmental education program) and private well water screening for 
contaminants. At three different academic conferences, they shared 
preliminary findings regarding (a) social capital production through 
community-based research about groundwater and private wells, and (b) 
the factors that influence private well water testing as a result of 
extension activities, and intergenerational learning between students 
and parents of environmental education content.

    Food Safety Program

    Scientists at the University of Wisconsin are assisting small and 
very small plants in HACCP validation through: (1) development of 
methods for in-plant validation of heating/drying regimes used in 
making ground and formed beef jerky and for in-plant validation of beef 
carcass interventions, using lactic acid bacteria as pathogen 
surrogates; and (2) development of a multi-media outreach program to 
disseminate project results and assist processors and regulators in 
validating Critical Limits. This research showed that methods commonly 
recommended to consumers for drying beef jerky in home-style products 
do not produce a safe product. Recommendations are being prepared to 
share with consumers wishing to make ground-and-formed beef jerky 
safely at home.
    According to the Centers for Disease Control & Prevention, human 
enteric viruses are estimated to cause \2/3\ of the foodborne illness 
in the U.S. each year, with the great majority of those attributed to 
norovirus (NoV). Fruits and vegetables have increasingly been 
implicated as vehicles for NoV gastroenteritis. Researchers in Illinois 
are developing a method which will serve as a foundation for upcoming 
cross contamination studies which will in turn lead to the development 
of a risk assessment model for NoV transfer within the food service 
setting. The methods developed from this project thus far, allowed for 
an assessment of recover methods for viruses. Recovery rates varied 
widely and the project team was able to use the information in method 
selection and refinement to ensure consistent recovery of viruses.

    Regional Pest Management Centers

    The goal of the Regional Integrated Pest Management Centers (IPM 
Centers) is to promote the development and implementation of IPM by 
facilitating collaboration across states, disciplines, and purposes. 
IPM Centers will establish and maintain information networks, build 
partnerships to address pest management challenges and opportunities, 
evaluate the impact of IPM implementation, communicate positive 
outcomes to key stakeholders, and manage funding resources effectively. 
The IPM Roadmap addresses pest management needs for production 
agriculture, natural resources and recreational environments, and 
residential and public areas.
    Examples of success include:
    The Integrated Pest Management Pest Information Platform for 
Extension and Education (ipmPIPE) informs growers about seasonal 
development and spread of Asian soybean rust, a devastating disease of 
legumes. The Regional IPM Centers manage this program that has allowed 
soybean growers to save a conservative estimate of $1 billion or more 
since 2005. Most of the savings derive from the ability by growers of 
98% of the crop to avoid unnecessary fungicide applications. USDA's 
Economic Research Service estimated farmers avoided as much as 0.2lb of 
fungicide per acre per season, which works out to about 74 million 
pounds of fungicide avoided since 2005. Soybean growers in Gulf Coast 
states, where the disease is more prevalent, use the program to 
properly choose fungicides and time applications to protect their crop. 
In a similar program, pecan growers estimated gains of $268/acre from 
the ipmPIPE Pecan system representing a potential benefit of $77 
million for the 288,000 acres in participating states. Another ipmPIPE 
component for vine crops (cucumber, pumpkin, melons, etc.) saved many 
participants 2-3 fungicide sprays in 2009.
    The Regional IPM Centers are collaborating with the EPA Tribal 
Pesticide Program Council (TPPC), USDA Tribal Education Equity and 
Extension Programs, 1994 and 1862 Land-Grant institutions, First 
American Land-Grant College and Organization Network (FALCON), American 
Indian Higher Education Consortium and First Nations to increase IPM 
practices and reduce pesticide usage and risk on reservations. The 
development of culturally sensitive IPM curricula and training modules 
allows for greater acceptance and implementation of IPM practices on 
the 56 million acres of tribal land. The program focuses on developing 
relationships at the state, regional and national levels to share 
knowledge of existing practices and foster adoption of these practices 
by other First Nations.
    The Regional IPM Centers are coordinating ``IPM Training in Public 
Housing,'' a national project to reduce pest-related risks that can 
trigger asthma. This collaborative effort between the Regional IPM 
Centers, U.S. Department of Housing and Urban Development's Healthy 
Homes Initiative, the Environmental Protection Agency, Land-Grant 
institutions, and public housing personnel and residents is 
implementing IPM to reduce human health risks. There are 1.2 million 
public housing units in the U.S. This project addresses many urban pest 
issues including bed bug infestations that are increasing at an 
alarming rate across the U.S. Partnering with the public housing 
personnel and residents will allow this sustainable approach to have 
long-term impacts in reducing asthma and other human health problems 
resulting from pest infestations.

    Crops at Risk

    In December 2008, the invasion of the Mexican rice borer (MRB) was 
discovered in two pheromone traps a few kilometers from the western 
Louisiana state line, in accordance with previously modeled forecasts. 
Annual yield losses of $220 million (sugarcane) and $45 million (rice) 
are forecast when the regions of both industries become fully infested. 
Research at Louisiana State University indicates that management 
techniques to mitigate the infestation which involve irrigation in 
sugarcane can reduce MRB losses up to 29%, use of environmentally 
friendly insecticides can reduce losses up to 53%, and resistant 
cultivars can reduce losses by 24%. The multi-year quarantine on MRB 
movement through the transport of sugarcane into Louisiana is projected 
to save between $1.1 and $3.2 billion (depending on management) during 
the time for complete invasion of both industries.
    The University of California Davis has developed a polymerase chain 
reaction (PCR)-based diagnostic assay to differentiate races one and 
two of Verticillium dahliae, the pathogen that causes Verticillium wilt 
in lettuce. No resistance in lettuce cultivars is currently available 
against race two. This assay has allowed the determination of the 
current distribution of the two races in coastal California. Based on 
these results, the growers have been able to avoid planting lettuce in 
fields that contained race two. These results have been disseminated 
widely to the California Leafy Greens Board that is attended by 
growers, processors, seed company representatives, and everyone 
associated with the lettuce supply chain.

    Risk Avoidance and Mitigation

    Scientists at the University of Georgia developed a method which 
documented high level of resistance to Tomato spotted wilt virus (TSWV) 
in tomato under field conditions. This single tactic provides an 
available, viable means of managing this serious pest problem in 
commercial production systems. Growers were able to view the different 
resistant cultivars in the field so that they could evaluate the plants 
directly. Growers that participated in this project will likely base 
planting decisions on these results in subsequent commercial plantings. 
As early in the project as 2009, scientists were able to demonstrate an 
8-12 fold increase in tomato yield with the resistant lines under heavy 
TSWV infection pressure in the field. The implementation of the use of 
host plant resistant lines and other tactics presented here could save 
growers millions of dollars annually.
    Research by scientists in California is developing integrated pest 
management strategies to control the potato psyllid, a pathogen which 
is causing millions of dollars in damage to crops. As a result of 
research there has been a change in the understanding that many 
pesticides reduce transmission of the bacterial pathogen by the potato 
psyllid through repellency, not simply by killing the psyllid. As the 
result of an aggressive effort to disseminate this information, growers 
are beginning to change their pesticide use patterns from very 
intensive weekly control efforts that relied on large amounts of 
chemical pesticides, to a more sustainable approach using greener 
chemistries and application technique. This more sustainable approach 
also incorporates sampling to eliminate pesticide applications when the 
pest is not present, and to manage the potential development of 
pesticide resistance. As a result fewer pesticide applications are 
made, resulting in reduced costs to the grower and enhanced 
profitability, and as importantly, reduced farm worker and consumer 
exposure to agricultural chemicals.

    Methyl Bromide Transition

    The goal of the Methyl Bromide Transitions (MBT) program is to 
support the discovery and implementation of practical pest management 
alternatives to methyl bromide uses or minimize methyl bromide 
emissions for which the United States is requesting critical use 
exemptions. The program seeks to ensure that economically viable and 
environmentally sound alternatives to methyl bromide are in place and 
available as soon as possible. The program is focused on integrated 
commercial or field scale research that targets short- to medium-term 
solutions and associated extension activity that will foster the 
adoption of these solutions.
    Kansas State University's objective it to show a reduction in 
methyl bromide (MB) usage as a structural treatment in food-processing 
facilities by facilitating adoption of MB alternatives strategies such 
as sulfuryl fluoride (SF), heat treatment and integrated pest 
management (IPM) approaches through pilot and commercial scale 
evaluations. Documenting cost-effectiveness of each strategy is central 
to adoption of MB strategies. The work also involves quantifying 
effects of structure air-tightness and weather conditions on fumigant 
emissions from and dispersion around fumigated structures, an aspect 
useful in defining buffer zones for MB and SF fumigants. Research 
results showed that both methyl bromide and sulfuryl fluoride 
equilibrated throughout the five floors of the 340,000 cubic foot mill 
within 2 hours. Results are encouraging. When 1,250 pounds of sulfuryl 
fluoride was applied in a May application, all life stages of the red 
flour beetle were killed when using forced air heat treatment.
    Virginia ranks third in the U.S. in fresh-market tomato production, 
with the majority of acres grown on plasticulture, utilizing methyl 
bromide (MeBr). Bell peppers are grown using similar production 
practices. Both of these crops are highly susceptible to soilborne 
pests and overgrowth by noxious weeds. The use of MeBr has been the 
primary tool to suppress these pest problems, and tomatoes and peppers 
are listed as MeBr Critical Use Nominations for 2009. Results of 
research at Virginia Tech show that field trials in 2008 and 2009 were 
able to identify a bacterial wilt resistant tomato cultivar (BHN669) 
that produced commercially acceptable fruit and yield. A small acreage 
of BHN669 was commercially produced in 2009 by two tomato producing 
companies and was found to be a suitable cultivar in terms of agronomic 
qualities and was extremely successful at delivering acceptable yields 
with high levels of bacterial wilt resistance. In 2010, full scale 
production using BHN669 was implemented by several producers resulting 
in successful management of bacterial wilt in historically problematic 
fields. Cultivar screens are continuing in small research plots to 
determine if any replacements other than BHN669 are suitable for 
production on the Eastern Shore of Virginia. In addition to the 
favorable results obtained with BHN669, the fumigant dimethyl disulfide 
(DMDS) was discovered to effectively suppress levels of bacterial wilt 
in small plots.

    Organic Transition Program

    Georgia scientists examined the feasibility of using protected 
cultivation in plastic tunnels as a means of producing high quality, 
organic blueberries, blackberries, and raspberries under southeastern 
conditions. As a result, high tunnels were found to speed up vegetative 
and reproductive development of blueberries. Tunnels were effective at 
advancing the spring harvest of highbush blueberries and the summer 
harvest of floricane blackberries and raspberries. Tunnels also 
extended the season of autumn-producing primocane blackberries and 
raspberries. Overall, tunnels advanced spring production and extended 
fall production of blackberries and raspberries, increasing total 
harvest and berry size. Upon completion of the research, the high 
tunnels in Georgia became an integral part of the organic teaching 
program, assuring that students get hands-on experience with high 
tunnels.
    Organic soybean growers have few options for controlling the 
soybean aphid, which can severely depress soybean yields. Scientists in 
Minnesota found that planting a rye winter cover crop prior to soybeans 
can lead to lower densities of soybean aphids and an increase in yield 
when soybean aphid pressure is high. This is an important finding for 
organic farmers that have no reliable insecticides to use against 
soybean aphid.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget    $42,853   $43,942  $39,558  $42,714  $42,286  $42,286  $41,990  $41,990  $45,148  $28,942
           Authority
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays           $2,114         $16,900         $29,451         $40,384         $41,679
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost           $1,691          $1,680          $1,680          $1,806          $1,158
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Colleges and universities (as defined in section 1404 of NARETPA) 
(7 U.S.C. 3103) are eligible to submit applications for the Integrated 
Research, Education, and Extension Competitive Grants (Section 406) 
Programs.
    Section 1404 of NARETPA was amended by section 7101 of the Food, 
Conservation, and Energy Act of 2008 (Pub. L. 110-246), to define and 
include as eligible, Hispanic-serving Agricultural Colleges and 
Universities (HSACUs), and to include research foundations maintained 
by eligible colleges or universities.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                289               375               319
      Received
Applications Funded           77                95                84
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    McIntire-Stennis Cooperative Forestry Research Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Pub. L. 87-778 (76 Stat.806, 16 U.S.C. 582a, et seq.) signed into 
law on October 10, 1962, is also known as the McIntire-Stennis 
Cooperative Forestry Research Act. This law provides the basis for 
Federal funding in forestry research and graduate education programs at 
state-certified schools of forestry in the United States.
    Funding is provided to the states through a formula-based 
allocation process which depends on several factors. First, a base 
amount (approximately $25,000) is allocated to each state; however, 
this base amount is excluded from the formula. The balance of funding 
to each state is determined through a ranking process and dependent 
upon the following three factors: (1) forty percent of the remaining 
balance is allocated based on the area of non-Federal commercial 
forestland; (2) forty percent is allocated based upon the volume of 
timber cut annually from stock; and (3) twenty percent is allocated 
based on the total expenditures for forestry research from non-Federal 
sources. Funds are then distributed to the eligible state-certified 
Institutions within the state as determined by the Governor's designee.
    Section 7412 of the Food, Conservation, and Energy Act of 2008 
amended section 2 of the McIntire-Stennis Cooperative Forestry Act (16 
U.S.C. 582a-1) to include the 1890 Land-Grant Institutions and made 
this change effective October 1, 2008. On an annual basis, USDA 
contacts the Governors of each state in which an eligible 1890 
institution is located and receives the names of the McIntire-Stennis 
certified institutions and the proportionate amount of the state's 
McIntire-Stennis funding that is to be allocated to each.
4. Purpose/Goals
    The purpose of this program is to increase forestry research in the 
production, utilization, and protection of forestland; to train future 
forestry scientists; and to involve other disciplines in forestry 
research.
5. Success in Meeting Programmatic Purpose/Goals
    This program assists all states in carrying out a program of state 
forestry research at state forestry schools and colleges and developing 
a trained pool of forest scientists capable of conducting needed 
forestry research, which should include: (1) ecological restoration; 
(2) catastrophe management; (3) valuing and trading ecological 
services; (4) energy conservation, biomass energy and bio-based 
materials development; (5) forest fragmentation: (6) carbon 
sequestration and climate change; and (7) ways of fostering healthy 
forests and a globally competitive forest resources sector.
    Examples of success include:
    Scientists in Kansas have produced applied knowledge on a series of 
herbicides to eradicate saltcedar, which is an invasive weed tree found 
on the flood plains on the Cimmaron National Grasslands in Kansas. From 
this research, techniques have been developed that result in more 
effective control with reduced labor and herbicides with a resulting 
reduction in costs.
    An invasive insect, the woodwasp Sirex noctilio, has recently 
become established in North American where it poses a significant 
threat to pine forests. The wasp transmits a pathogenic fungus and 
helps the fungus establish lethal infections by injecting a phytotoxic 
mucus into the trees along with the fungus and its eggs. Basic research 
at the University of Georgia is using advanced genomic and proteomic 
approaches to identify the bioactive protein and peptide constituents 
of the wasp mucus that facilitate fungal colonization of the pine 
tissues. Better understanding of the constituents and their mechanisms 
of action will enable development to develop genetic approaches and 
strategies to improve pine resistance to this pest.
    Research at the University of Kentucky on the black bear in both 
Florida and Kentucky have provided important demographic, resource and 
habitat use, and movement data valuable to wildlife and other natural 
resource managers and land stewards. Detailed GPS-based movement data 
are providing a foundation for new analytical approaches that is 
changing the way black bear and other large mammal telemetry data are 
collected and interpreted. These findings continue to inform both 
professional and public findings and perceptions of these ecologically 
and economically important species. Both the black bear and elk have 
the potential to drive a productive recreation-based economy in 
economically challenged southeastern Kentucky. A science-based 
understanding and appreciation for the black bear and elk will strongly 
influence educational efforts and concomitant public perceptions about 
the species in ways that reduce human-wildlife conflict and that 
promotes species viability.
    Research at the University of Illinois developed methods which were 
used to map the flooding regimes and internal drainage of soils in 
newly-acquired Weaver Park in Urbana, Illinois. This information is 
being used to plan the ecological restoration of native forest, 
prairie, and wetland plants in the park. A soil moisture regime map 
with micro-ecosystem level precision and greater accuracy than county 
soil maps was developed and reported in an article in the journal 
``Restoration Ecology.'' Soil moisture adaptations of plants to be used 
in the ecosystem restoration project are being matched to planting 
sites across a precisely mapped gradient of soil moisture from flooded 
to moderately well-drained. This is being done through a collaboration 
among the University of Illinois Agricultural Experiment Station, the 
Illinois State Geological Survey, and the Urbana Park District.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget    $21,884   $21,742  $21,755  $22,205  $22,008  $30,008  $24,791  $27,535  $29,000  $32,934
           Authority
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays          $27,007         $25,313         $27,261         $28,854         $32,541
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost             $900            $744            $826            $870            $988
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Applications may be submitted by state-certified Schools of 
Forestry as stipulated in accordance with Section 2 of Pub. L. 87-788, 
McIntire-Stennis Act.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 65                65                65
      Received
Applications Funded           65                65                65
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    New Era Rural Technology Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Section 1405 of the National Agricultural Research, Extension, and 
Teaching Policy Act (NARETPA) of 1977, as amended (7 U.S.C. 3121), 
designates the U.S. Department of Agriculture (USDA) as the lead 
Federal agency for agriculture research, extension and teaching in the 
food and agricultural sciences.
    Section 1473E of NARETPA (7 U.S.C. 3319e), as amended, required the 
establishment of a New Era Rural Technology Competitive Grants Program 
(RTP), which NIFA administers.
    The RTP was authorized by Section 7137 of the 2008 Farm Bill and 
first funded in 2009.
4. Purpose/Goals
    The New Era Rural Technology Competitive Grants Program will make 
grants available for technology development, applied research, and/or 
training, with a focus on rural communities, to aid in the development 
of a workforce for bioenergy, pulp and paper manufacturing, or 
agriculture-based renewable energy.
5. Success in Meeting Programmatic Purpose/Goals
    The New Era Rural Technology Competitive Grants Program makes 
grants available to community colleges or advanced technological 
centers, located in a rural area, for technology development, applied 
research, and training necessary to produce graduates capable of 
strengthening the nation's technical, scientific and professional 
workforce in the fields of bioenergy, pulp and paper manufacturing, and 
agriculture-based renewable energy resources.
    Examples of success include:
    North Dakota State College of Science is addressing the workforce 
training needs in emerging technologies through the creation of a 
Regional Bio-fuels Advanced Technological Center (RBATC) The RBATC is 
addressing the educational and technical training needs in the biofuels 
industry in Minnesota, North Dakota and South Dakota by establishing an 
education and training center designed to deliver biofuels industry 
based, educational programs, hands-on skill development and industry 
training. The workforce challenges addressed by the RBATC include: (1) 
availability and capacity of education and training; (2) development of 
entry-level employee skills; (3) enhancement of incumbent employee 
skills; (4) promotion of career awareness and outreach opportunities 
for students and the general public.
    Treasure Valley Community College in Oregon is conducting regional 
agriculture-based renewable energy summit with broad-based 
representation from regional businesses, agencies and education for the 
purpose of providing information for identifying: current agricultural 
renewable energy practices in the rural region, new or expanded 
renewable energy practices planned in the next 3-5 years, workforce 
skills related to renewable energy needed by agriculture-related 
employers where workforce skills are taught in current programs, and 
where revisions or new programs are required. They are developing and 
disseminating a final strategic workforce plan to guide curricular 
improvement, revision and innovation Identify and implement renewable 
energy curricular revision options to in agriculture, natural 
resources, and basic manufacturing.
    An Indian Hills Community College in Iowa project is focusing on 
improving the quality of bioenergy education through professional 
development for instructors and creating opportunities for students to 
gain valuable experiential learning through internships and applied 
research with bioenergy companies. It is improving the students' 
marketable skills and exposing them to industry contacts for future 
employment references and connections. For the industry, this program 
is helping smaller bioenergy companies realize the value of internships 
which is, in turn, creating a sustainable pool of companies for student 
internship opportunities in the future. It is also helping smaller 
bioenergy companies conduct applied research to support specific 
product development projects that they might otherwise have been unable 
to afford.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)             (1)            $750            $875            $873
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)             (1)             $75            $425            $819
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost              (1)             (1)             $30             $35             $35
----------------------------------------------------------------------------------------------------------------
1 Funding began in FY 2009.

9. Eligibility Criteria
    Applications may be submitted by either: (1) public or private 
nonprofit community colleges, or (2) post-secondary, degree-granting 
advanced technological centers, either of which must:

    a. be located in a rural area (see definition in Part VIII, E.);

    b. have been in existence as of June 18, 2008;

    c. participate in agricultural or bioenergy research and applied 
        research;

    d. have a proven record of development and implementation of 
        programs to meet the needs of students, educators, business, 
        and industry to supply the agriculture-based, renewable energy 
        or pulp and paper manufacturing fields with certified 
        technicians, as determined by the Secretary; and

    e. have the ability to leverage existing partnerships and 
        occupational outreach and training programs for secondary 
        schools, 4 year institutions, and relevant nonprofit 
        organizations.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None                13                13
      Received
Applications Funded         None                 6                 5
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Outreach and Assistance for Socially Disadvantaged Farmers and 
Ranchers.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Established by the Food, Agriculture, Conservation, and Trade Act 
of 1990, Section 2501, Public Law 101-624, 7 U.S.C. 2279. In accordance 
with Section 14013 of the 2008 Farm Bill, the Office of Advocacy and 
Outreach was established within USDA and authority to carry out this 
program was transferred to that office.
4. Purpose/Goals
    The objective of the Outreach and Assistance for Socially 
Disadvantaged Farmers and Ranchers (OASDFR) program is to provide 
outreach, training, education, assistance, and technical assistance to 
encourage and assist socially disadvantaged farmers, ranchers and 
forest landowners in owning and operating farms, ranches and 
nonindustrial forestlands.
    The intent of the competitive grant program is to communicate in a 
linguistically appropriate manner, to socially disadvantaged farmers, 
ranchers and forest landowners about participating equitably in the 
full range of agricultural programs offered by the Department.
5. Success in Meeting Programmatic Purpose/Goals
    Examples of success include:
    As a result of outreach activities by the University of Arkansas at 
Pine Bluff, approximately 20 individuals were assisted in developing 
financial plans for their farm operations. Eight producers used their 
plans to obtain $763,000.00 in USDA Operating Loans. Six producers were 
assisted in restructuring their debts, and five producers were assisted 
in developing plans to determine the feasibility of adding different 
alternatives to their operation. Many of these producers were assisted 
in determining crop insurance premium cost, breakeven prices, and in 
developing marketing plans for their grain crops. Five individuals were 
assisted in using their local elevators to pre-market portions of their 
crops using forward contracts. Using Conservation Programs--In Central 
Arkansas approximately eight Environmental Quality Incentive Program 
(EQIP) contracts were awarded to Socially Disadvantaged Producers for a 
total of $683,575. Most of this went toward helping producers level 
land to improve drainage and increase irrigation efficiency.
    As a result of outreach activities at Alcorn State University in 
Mississippi, 102 borrowers received structured training to increase 
their knowledge and skills needed to complete a balance sheet, income 
statement and inventory analysis for their farming operations. 
Borrowers have gained knowledge of current farm practices, minimize 
farm risks. Borrowers also met their educational requirement according 
to the USDA-FSA regulation and qualify to receive additional funds from 
USDA and have currently assisted in putting $2.5 million into the 
Mississippi economy. There were a 100 percent passing rate. In 
addition, 176 small farmers now have the knowledge, skills and a 
formulized record keeping system to keep accurate farm records; 72 
small farmers have gained knowledge of legal issues associated with 
family farm operations and the risk management strategies; and 531 
small farmers, ranchers and women and business are knowledgeable of new 
and innovative alternative enterprises that would have a greater return 
with less startup capital or input cost.
    Because of the New Entry Sustainable Farming Project (New Entry) 
which assists immigrants, refugees, and other underserved producers to 
develop commercial farming opportunities across Eastern Massachusetts, 
farmers participating in New Entry since October 2008 have increased 
their technical crop production skills, trained and shared practical 
farm skills with each other, and utilized educational resources on New 
Entry's website. Since October, a total of 29 potential farmers 
enrolled in the Explore Farming classes to assess their farming 
interest and a total of 45 people enrolled in the Farm Business 
Planning Course (FBPC). New Entry graduated total of 23 people from its 
FBPC, representing 19 farm businesses. All graduates completed a 
comprehensive business plan. 12 new graduates are currently 
implementing their business plans on farmland, and another nine New 
Entry farmers graduates began another season of business/production 
plan implementation. New Entry farmers are experiencing an increase in 
production and sales over prior years. A total of 20 New Entry farmers 
have joined together into a cooperative to sell their produce into the 
2009 Community Supported Agriculture (CSA) program. A total of 218 CSA 
shares were purchased by customers (double over 2008). Combined CSA 
revenues for New Entry farmers are projected to be about $67,000 for 
the 2009 season.
    As a result of the Small Farm Program's outreach activities at the 
University of California, small-scale growers, many of whom speak 
Spanish, Hmong, or Chinese as their primary language, have gained 
access to results of applied research on specialty crops, business 
management skills, relevant market analysis, and irrigation/water 
quality management in agriculture. Information was disseminated through 
ongoing personal consultations, workshops, classes, field days, radio 
and printed newsletters and other printed materials. The diversity of 
information delivery means that small-scale producers in the five 
regions covered by the Small Farm Program gained access to one-on-one 
consultation when relevant, and that this information also reached 
wider audiences. Workshops and classes typically attracted between 20 
and 60 producers, while field days and conferences reached 100 or more 
during this period.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget     $3,243    $3,470   $5,935   $5,888   $5,940   $5,940   $6,395  $15,000       $0       $0
           Authority
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
  was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                             FY08               FY09               FY10               FY11
----------------------------------------------------------------------------------------------------------------
                  Annual Outlays              $1,500             $8,250            $13,500             $6,750
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
  was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost             $238            $256            $750              $0              $0
----------------------------------------------------------------------------------------------------------------
Note: Became a mandatory program in FY 2009; Mandatory funding was provided by transfer from CCC. The program
  was delegated to the Assistant Secretary for Civil Rights, Office of Advocacy and Outreach in FY 2010.

9. Eligibility Criteria
    As determined in 7 U.S.C. 2279, eligibility is defined as follows: 
1890 Land-Grant Institutions, including Tuskegee University and West 
Virginia State College, Indian Tribal Community Colleges, Alaska Native 
Cooperative Colleges, Hispanic-serving post-secondary educational 
institutions, other accredited post-secondary educational institutions, 
and Indian tribes providing agricultural education or other 
agriculturally-related services to socially disadvantaged farmers and 
ranchers in their region, and community-based organizations that: (1) 
have demonstrated experience in providing agricultural education or 
other agriculturally related services to socially disadvantaged farmers 
and ranchers in their region; (2) provides documentary evidence of its 
past experience in working with socially disadvantaged farmers and 
ranchers during the 2 years preceding its application for assistance; 
and (3) does not engage in activities prohibited under Section 
501(c)(3) of the Internal Revenue Code of 1986.
    Also eligible are organizations or institutions that received 
funding under 7 U.S.C. 2279(a) before January 1, 1996, but only with 
respect to projects that the Secretary considers are similar to 
projects previously carried out by the organization or institution 
under such subsection.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 57                91              None
      Received
Applications Funded           15                55              None
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Secondary Education, Two-Year Postsecondary Education, and 
Agriculture in the K-12 Classroom Challenge Grants Program.
2. Subprograms/Department Initiatives
    There are no subprograms.
3. Brief History
    Section 1405 of the National Agricultural Research, Extension, and 
Teaching Policy Act of 1977, as amended, (7 U.S.C. 3121) designates the 
U.S. Department of Agriculture (USDA) as the lead Federal agency for 
agriculture research, extension and teaching in the food and 
agricultural sciences. Section 7109 of the Food, Conservation, and 
Energy Act of 2008 (P.L. 110-246) amends authority for this program 
contained in section 1417(j) of the National Agricultural Research, 
Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3152(j)).
    Section 7109 of the 2008 Food, Conservation, and Energy Act (Pub. 
L. 110-246) expanded the eligibility to include other institutions of 
higher education and nonprofit organizations and the objectives to 
support current Agriculture in the classroom programs for grades 
Kindergarten through 12.
4. Purpose/Goals
    The Secondary Education, Two-Year Postsecondary Education, and 
Agriculture in the K-12 Classroom Challenge Grants (SPECA) program 
seeks to: (a) promote and strengthen secondary education and 2 year 
post-secondary education in agri-science and agribusiness in order to 
help ensure the existence in the United States of a qualified workforce 
to serve the food and agricultural sciences system; and (b) promote 
complementary and synergistic linkages among secondary, 2 year post-
secondary, and higher education programs in the food and agricultural 
sciences in order to advance excellence in education and encourage more 
young Americans to pursue and complete a baccalaureate or higher degree 
in the food and agricultural sciences.
5. Success in Meeting Programmatic Purpose/Goals
    Agriculture in the Classroom (AITC) is a partnership of 
agriculture, business, education, government, and volunteers, 
coordinated through NIFA Higher Education Programs, to improve 
agricultural literacy in the nation's secondary schools. AITC 
accomplishes this goal through two mechanisms; projects developed by 
the national office, and projects developed by the individual state 
programs.
    Examples of success include:
    New York has developed school food gardens through the New York Ag 
in the Classroom Kids Growing Food program. Survey data indicates that 
the gardens impacted well over 65,000 students, teachers, and community 
members in 2007 by creating opportunities to make links to agriculture, 
food systems, and good nutrition; increasing student motivation; 
providing opportunities for peer teaching; teaching life skills; 
integrating garden-based learning into the core curriculum; and 
involving the community in the gardens. Moreover, 40,000 elementary age 
students received instruction during New York's Ag Literacy Week 
Program, 150 Educators were trained on the Food, Land and People 
Curriculum, and over 30,000 passed through the Moo Country area at the 
New York State Fair.
    In California Ag in the Classroom (CFAITC), the number of CFAITC 
ambassadors increased by 10.3% in 2010 (13,427 in December 2010 
compared to 12,173 in December 2009), showing significant gains in the 
target audience. CFAITC is represented by Ambassadors in 44% of 
California's schools. The CFAITC website (www.learnaboutag.org) 
received 23% more website hits (2,626,608 in total) in 2010 compared to 
2009, an increase of more than 492,761 website hits. Moreover, 100 
percent of conference attendees agreed that, after attending the 
conference they would implement the materials/ideas received upon 
returning to class.
    In Michigan, Agricultural Literacy activities conducted by 
volunteers, increased across the state by 30 percent in 2010. The 
number of students reached through agriculture in the classroom 
increased by 40 percent in 2010. 80 percent of the volunteers trained 
at the state level conduct AITC lessons at the local level. Volunteer 
involvement in Michigan Agricultural Education programs rose by 25 
percent in 2010. The number of Project RED (Rural Education Day) events 
held across the state has increased by 35 percent to 31 counties, 46 
percent of all the involved counties across the state. Moreover, 
teachers reached through in-service activities increased by 25 percent 
in 2010. Of the teachers trained, 90 percent said they planned to 
continue to integrate agriculture into their existing curriculum.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget     $1,000      $994     $890     $992     $990     $990     $983     $983     $983     $981
           Authority
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              $50            $148            $494            $987            $983
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
     Annual Outlays                                                      $50     $148     $494     $987     $983
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Applications may only be submitted by: (1) public secondary 
schools, (2) public or private nonprofit junior and community colleges, 
(3) institutions of higher education, or (4) nonprofit organizations.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 43                75                66
      Received
Applications Funded           24                24                24
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Smith-Lever 3(d) Extension Activities Programs.
2. Subprograms/Department Initiatives
    A. Expanded Food and Nutrition Education (EFNEP)

    B. Pest Management

    C. Farm Safety (aka Assistive Technology Program for Farmers with 
        Disabilities or AgrAbility)

    D. New Technologies for Agricultural Extension

    E. Children, Youth, and Families at Risk (CYFAR)

    F. Youth Farm Safety Education and Certification

    G. Sustainable Agriculture (SARE)

    H. Federally Recognized Tribes (formerly Extension Indian 
        Reservation or EIRP)
3. Brief History
    Various Extension Activities are authorized under Section 3(d) of 
the Smith-Lever Act (7 U.S.C. 343(d)); section 1680 of the Food, 
Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5933).
    Section 7116 of the Food, Conservation, and Energy Act of 2008 
(FCEA) provided several amendments to Section 1425 of the National 
Agricultural Research, Extension, and Teaching Policy Act of 1977 
(NARETPA) (7 U.S.C. 3175); including inserting sec. 1425 Nutrition 
Education Program and the definition of 1862 and 1890 Institutions for 
the Agricultural Research, Extension, and Education Reform Act of 1998 
(7 U.S.C. 7601).
    Section 7403 of the Food, Conservation, and Energy Act of 2008 
(Public Law 110-246) (FCEA) amended section 3(d) of the Smith-Lever Act 
(7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-
grant institutions, including Tuskegee University and West Virginia 
State University, and the University of the District Columbia, to 
compete for and receive these funds directly from the Secretary of 
Agriculture. However, section 1425 of the National Agricultural 
Research, Extension, and Teaching Policy Act of 1977 (NARETPA) provides 
a statutory formula for the distribution of funds appropriated for the 
Expanded Food and Nutrition Education program (EFNEP). Section 7116 of 
FCEA amended NARETPA section 1425 to revise this statutory formula 
effective October 1, 2008.
4. Purpose/Goals
    Expanded Food and Nutrition Education (EFNEP)

    Grants under this program are to assist all states in carrying out 
a program of extension activities designed to employ and train 
professional and paraprofessional aides to engage in direct nutrition 
education of low-income families and in other appropriate nutrition 
education programs.

    Pest Management

    Pest management includes a wide range of programs addressing human 
health, environmental and economic issues related to the management of 
pest populations through a variety of science based technologies. 
Americans want safe, pest and disease-free homes, schools, parks, 
recreational areas, as well as a safe and affordable supply of blemish-
free food products and a wholesome pesticide-free environment. NIFA 
funds programs and projects which support research, education, and 
extension activities that promote pest management in general, and 
reduced risk pest management in particular. The agency's pest 
management programs are implemented through working partnerships with 
scientists in our nation's colleges and universities, other Federal 
agencies and the private sector.

    Farm Safety (aka Assistive Technology Program for Farmers with 
Disabilities or AgrAbility)

    AgrAbility increases the likelihood that individuals with 
disabilities and their families engaged in production agriculture 
(AgrAbility customers) become more successful. The primary outcome is 
enhanced quality of life for people with disabilities in agriculture. 
The program supports cooperative projects in which State Cooperative 
Extension Services (CES) based at either 1862 or 1890 Land-Grant 
Universities subcontract to private, nonprofit disability 
organizations. Measures of success may include improvements in 
customers' financial stability or access to life activities and the 
capacity of states and regions to deliver services this population 
requires in a timely and satisfying manner. To address the specialized 
needs of AgrAbility's customers, the program builds service capacity on 
national, regional, state, and local levels through education and 
networking. In the absence of capacity, projects provide assistance to 
customers. Projects use marketing to direct the public to initiatives 
in education, networking, and assistance.

    New Technologies for Agricultural Extension

    The purpose of the New Technologies for Ag Extension Program (NTAE) 
is to increase the capacity of each state to contribute expertise and 
content to the development of eXtension, a national web-based 
information and education delivery system that provides direct access 
to science-based educational resources from land-grant and other 
partner institutions about subjects of high importance to the general 
public. This initiative is intended to dramatically change how the CES 
does business with its customers. Applications are being solicited for 
the NTAE to deliver: state of the art technology and software 
applications, high quality leaders and staff, training for an 
exceptional CES workforce, legally binding contractual and financial 
instruments, and comprehensive evaluation, communications and marketing 
activities.

    Children, Youth, and Families at Risk (CYFAR)

    Through an annual Congressional appropriation for the National 
Children, Youth, and Families at Risk (CYFAR) Program, NIFA allocates 
funding to land-grant university extension services for community-based 
programs for at-risk children and their families. Since 1991, CYFAR has 
supported programs in more than 600 communities in all states and 
territories. State and local public and private organizations have 
contributed cash and in-kind resources that match or exceed the Federal 
appropriation. The CYFAR Program is based on research on effective 
programs for at-risk youth and families and on the human ecological 
principle of working across the lifespan in the context of the family 
and community. To assure that critical needs of children and families 
are met, CYFAR supports comprehensive, intensive, community-based 
programs developed with active citizen participation in all phases. 
CYFAR promotes building resiliency and protective factors in youth, 
families, and communities. CYFAR supports collaboration--forming 
lasting partnerships to achieve greater outcomes and to provide a 
support base for sustaining programs for those at risk. CYFAR also 
promotes the use of technology to improve programs, provide efficient 
access to educational resources, and provide essential technological 
skills for youth and adults in at-risk environments.

    Youth Farm Safety Education and Certification

    The Youth Farm Safety Education and Certification Program (YFSEC) 
supports national efforts to deliver timely, pertinent, and appropriate 
training to youth seeking employment or already employed in 
agricultural production. The program has critical ties to the current 
regulations for youth employment in agriculture, especially the 
exemptions provided in 29 CFR Part 570, subpart E-1 for youth under the 
age of 16 employed in some agricultural occupations having obtained 
certification. Significant changes in agricultural production and in 
the agricultural workforce since this regulation took effect in the 
early 1970's have encouraged the USDA to consider training and 
certification innovations along with developing appropriate training 
and restrictions on youth employment in hazardous agricultural jobs. 
YFSEC's funding has appeared under the Smith-Lever 3(d) line for Youth 
Farm Safety Education and Certification since 2001.

    Sustainable Agriculture (SARE)

    SARE works to increase knowledge about--and help farmers and 
ranchers adopt--practices that are profitable, environmentally sound, 
and good to communities. Several types of competitive grants are 
awarded by four regional administrative councils. Research and 
education grants, generally ranging from $60,000 to $150,000, fund 
projects that usually involve scientists, producers and others in an 
interdisciplinary approach. Professional development grants, generally 
ranging from $20,000 to $90,000, offer educational opportunities for 
extension, NRCS, and other agricultural professionals. Producer grants, 
typically between $1,000 and $15,000, go to farmers and ranchers who 
test innovative ideas and share the results with their neighbors. 
Projects address crop and livestock production and marketing, 
stewardship of soil and other natural resources, economics and quality 
of life.

    Federally Recognized Tribes (formerly Extension Indian Reservation 
or EIRP)

    The purpose of this program is to support Extension Agents who 
establish Extension education programs on the Indian Reservations and 
Tribal jurisdictions of Federally-Recognized Tribes. To the extent 
practicable, priorities should reflect the following national critical 
needs areas: (1) Development of sustainable energy; (2) Increased 
global food security; (3) Adaptation/mitigation of agriculture and 
natural resources to global climate change; (4) Reduction of childhood 
and adolescent obesity; and (5) Improved food safety.
5. Success in Meeting Programmatic Purpose/Goals
    Expanded Food and Nutrition Education Program

    The Expanded Food and Nutrition Education Program (EFNEP) program 
continues to be highly effective in changing participants' behaviors, 
resulting in significant improvements in daily living skills. In 2010 
94 percent of adults reported improvements in their diets including 
consuming the equivalent of nearly one additional cup of fruits and 
vegetables, 84 percent of recent graduates improved food management 
practices, 89 percent improved nutrition practices, and 67 percent 
improved food safety practices. Multiple cost-benefit studies in past 
years show that every dollar invested in EFNEP results in from $3.63 to 
$10.64 in saved health care costs and $2.48 saved in food expenditures. 
State success examples include: Pennsylvania State University's EFNEP 
reported over 96% of the EFNEP adult participants made positive changes 
in one or more food groups including consuming the equivalent of an 
additional \1/2\ cup of fruits and vegetables. Louisiana State 
University's EFNEP survey found that over 96% of EFNEP program 
participants reported positive change in any food group at program exit 
including consuming the equivalent of one additional cup of fruits and 
vegetables. Utah State University's EFNEP reported over 98% of its 
EFNEP families made a positive change in consumption of at least one 
food group including consuming the equivalent of nearly one additional 
cup of fruits and vegetables. The Mississippi State University 
Extension EFNEP reported over ninety-five percent (95%) of the EFNEP 
adult participants made positive changes in one or more food groups. 
The Iowa State University EFNEP survey found that over 98% of EFNEP 
program participants reported positive change in any food group at 
program exit. The University of Missouri reported over 87% of its EFNEP 
families made a positive change in consumption of at least one food 
group.

    Smith-Lever 3(d) Program

    The Smith-Lever 3(d) Renewable Resources Extension Act (RREA) calls 
for ``expanded extension programs for forest and rangeland resources'' 
to enhance the sustainability of these renewable natural resources. 
With NIFA funding, 69 land-grant institutions educated private 
forestland and rangeland owners regarding forest and rangeland 
sustainability. As a result of these activities: 937 income-generating 
business were created or expanded, 2,390 new jobs were created, 27,300 
landowners increased their awareness of forest or rangeland resources, 
21,100 landowners implemented at least one new renewable resource 
practice, landowners either earned or saved and estimated $17,810,000, 
loggers either earned or saved $198,571,756 by adopting new harvesting 
technologies, and every RREA dollar leverages from $5-$15 from state, 
county and other resources.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                FY02      FY03      FY04      FY05      FY06      FY07      FY08      FY09      FY10      FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever    $32,688   $31,926   $28,563   $28,228   $29,955   $30,979   $31,970   $32,383   $33,199   $33,133
 3(d)
 Extension
 Activities
 Programs
 (excluding
 EFNEP)
Expanded       $32,688   $31,926   $28,563   $28,228   $29,955   $30,979   $31,970   $32,383   $33,199   $33,133
 Food and
 Nutrition
 Education
 Program
 (EFVEP)
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                                     FY07         FY08         FY09         FY10         FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever 3(d) Extension Activities Programs       $18,587      $30,644      $31,568      $32,531      $33,117
 (excluding EFNEP)
Expanded Food and Nutrition Education Program        $38,123      $62,843      $64,584      $66,610      $67,899
 (EFVEP)
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                                     FY07         FY08         FY09         FY10         FY11
----------------------------------------------------------------------------------------------------------------
Smith-Lever 3(d) Extension Activities Programs        $1,131       $1,278       $1,187       $1,328       $1,325
 (excluding EFNEP)
Expanded Food and Nutrition Education Program           $341         $422         $446         $522         $517
 (EFVEP)
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Section 7403 of the Food, Conservation, and Energy Act of 2008 
(Public Law 110-246) (FCEA) amended section 3(d) of the Smith-Lever Act 
(7 U.S.C. 343(d)) to provide the opportunity for 1862 and 1890 land-
grant institutions, including Tuskegee University and West Virginia 
State University, and the University of the District of Columbia, to 
compete for and receive these funds directly from the Secretary of 
Agriculture.
10. Utilization (Participation) Data
    For Smith-Lever 3(d) Extension Activities Programs (excluding 
EFNEP):

------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                193               269               274
      Received
Applications Funded          165               223               234
------------------------------------------------------------------------

    For Expanded Food and Nutrition Education Program (EFNEP):

------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 74                75                75
      Received
Applications Funded           74                75                75
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    One OIG Hotline complaint (PS-1399-0071) was investigated alleging 
misuse of Federal funds by the grantee (the University of Hawaii) 
Cooperative Extension Service (CES). The complainant alleged that the 
university did not use NIFA CES program funds to fill the position of 
CES Agent for coffee producers left vacant by the former agent's 
resignation. As a result, the complainant was concerned that CES 
funding to provide assistance to farmers may have been diverted to 
other uses. The USDA OIG and NIFA both investigated the allegations and 
determined that the allegations do not appear to be substantiated, and 
no further review was warranted.
    The funding involved is primarily Smith-Lever 3(b) and (c); and to 
a lesser extent Smith-Lever 3(d) Extension Activities Programs.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Specialty Crop Research Initiative Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    The authority for this program is under Section 7311 of the 2008 
Farm Bill which amended Section 412 to the Agricultural Research, 
Extension, and Education Reform Act of 1998 (7 U.S.C. 7621 et seq.) and 
established the Specialty Crop Research Initiative Program. This 
represents a newly authorized and newly funded program.
4. Purpose/Goals
    The Specialty Crop Research Initiative (SCRI) Program was 
established to address the critical needs of the specialty crop 
industry by developing and disseminating science-based tools to address 
needs of specific crops and their regions including research in plant 
breeding, genetics, and genomics to improve crop characteristics (such 
as product, taste, quality, and appearance; environmental responses and 
tolerances; nutrient management, including plant nutrient uptake 
efficiency; pest and disease management, including resistance to pests 
and diseases resulting in reduced application management strategies; 
and enhanced phytonutrient content); efforts to identify and address 
threats from pests and diseases, including threats to specialty crop 
pollinators; efforts to improve production efficiency, productivity, 
and profitability over the long term (including specialty crop policy 
and marketing); new innovations and technology, including improved 
mechanization and technologies that delay or inhibit ripening; and 
methods to prevent, detect, monitor, control, and respond to potential 
food safety hazards in the production and processing of specialty 
crops, including fresh produce.
5. Success in Meeting Programmatic Purpose/Goals
    The Specialty Crop Research Initiative (SCRI) was established to 
solve critical industry issues through research and extension 
activities. SCRI gives priority to projects that are multi-state, 
multi-institutional, or trans-disciplinary; and include explicit 
mechanisms to communicate results to producers and the public. Projects 
must address at least one of five focus areas: research in plant 
breeding, genetics, and genomics to improve crop characteristics; 
efforts to identify and address threats from pests and diseases, 
including threats to specialty crop pollinators; efforts to improve 
production efficiency, productivity, and profitability over the long 
term; new innovations and technology, including improved mechanization 
and technologies that delay or inhibit ripening; and methods to 
prevent, detect, monitor, control, and respond to potential food safety 
hazards in the production and processing of specialty crops.
    Examples of success include:
    The RosBREED project being led by Michigan State University is 
creating a national, dynamic, sustained effort in research, 
infrastructure establishment, training, and extension for applying 
marker-assisted breeding (MAB) to deliver improved plant materials more 
efficiently and rapidly. The Rosaceae family (almonds, apples, 
apricots, blackberries, peaches, pears, plums, sweet cherries, tart 
cherries, strawberries, raspberries, roses and other ornamentals) 
provides vital contributions to human health and well-being, and 
collectively constitutes the economic backbone of many U.S. rural 
communities. Rosaceae genetics and genomics are developing rapidly but 
have not been translated to routine practical application. This project 
will increase the likelihood of new cultivar adoption, enlarge market 
potential, and increase consumption of rosaceous fruits by using 
socioeconomic knowledge of stakeholder values and consumer preferences 
to inform breeding; establish sustainable technical infrastructure for 
an efficient MAB Pipeline in Rosaceae, including crop specific SNP 
genome scan platforms for breeding-relevant germplasm exploiting the 
shared ancestry of Rosaceae crops; integrate breeding and genomics 
resources by establishing a user-friendly U.S.-wide standardized 
statistical framework and breeding information management system; 
implement MAB in core RosBREED breeding programs with a common focus on 
fruit quality traits; and enhance sustainability of cultivar 
development by transferring MAB technologies to the public and private 
community of U.S. Rosaceae breeders through training current and future 
breeders as well as engaging the production, processing and marketing 
sectors, allied scientists, and consumers.
    Carnegie Mellon University is working with the specialty crop 
industry to fulfill its vision of significantly reducing the cost of 
production of U.S. fruit. They are developing, integrating, testing, 
deploying, and assessing a carefully chosen set of information, 
mobility, manipulation and plant science technologies, assessing their 
socioeconomic utility, and transferring results to the end-users via 
commercialization and outreach. Among the numerous preliminary results 
include initial trials with harvest assist system showed ten percent 
improvement in harvesting speed with 5% reduction in bruising; 
management efficiency trials in pilot orchards demonstrated increases 
in efficiency as high as 78 percent; and over 27 percent of 
Pennsylvania producers who attended field days are adopting trellised 
planting systems to increase efficiency and 65 percent plan to make 
this change.
    Washington State University (WSU) is leading a team of scientists 
in the western U.S. to improve the long-term sustainability of the 
apple, pear and walnut industries in the by enhancing biological 
control of pest insects and mites, and synthesize the information 
developed in this project along with existing information to provide 
the outreach tools needed to bring about change in grower practices. 
Preliminary results are encouraging and will be added to the WSU-
Decision Aid System and University of California UC-IPM web sites for 
easy access and will be very useful to apple, pear and walnut growers 
and pest control advisors. These recommendations will to lead to 
increased biological control in orchards, which should reduce pesticide 
inputs leading to higher grower profits and lower worker safety 
problems.
    Water and nitrogen management in deciduous perennial crops is 
constrained by a lack of information and an inability to provide 
targeted management. Currently, the application of fertilizers and 
water follows standardized practice with little consideration of 
spatial, temporal and crop variability resulting in lost income and 
negative environmental impact. The University of California is 
addressing these needs through a multi-discipline, multi-scale activity 
that integrates remote and local sensing, with modeling and on-farm 
validation to derive grower appropriate management tools and sound 
knowledge to inform policy decisions. Initial activities are being 
conducted in Almond, Pecan, Grape and Pistachio and are being adapted 
to the full range of perennial fruit and nut species through 
collaborative agreements in years 3 through 5 of this project. Thus 
far, the RESET remote sensing model (which measures evaporation and 
transpiration) has been published online, and provides e-mail output to 
users. Researchers in California have tested the model against Almond 
data and have help improved the operation and user interface of the 
model.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
       Annual Budget Authority              (1)         $30,000         $50,000         $50,000         $50,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)          $1,500         $13,000         $30,500         $45,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              (1)          $1,200          $1,720          $2,000          $2,000
----------------------------------------------------------------------------------------------------------------
1 Program was first authorized in 2008.
Note: Mandatory funding was provided by transfer from CCC.

9. Eligibility Criteria
    The Secretary may carry out the SCRI Program through (1) Federal 
Agencies; (2) national laboratories; (3) colleges and universities; (4) 
research institutions and organizations; (5) private organizations or 
corporations; (6) state agricultural experiment stations; (7) 
individuals; or (8) groups consisting of two or more entities described 
in paragraphs (1) through (7).
    In making grants under this section, the Secretary shall provide a 
higher priority to projects that (1) are multi-state, multi-
institutional, or multi-disciplinary; and (2) include explicit 
mechanisms to communicate results to producers and the public.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                238               265               149
      Received
Applications Funded           27                92                32
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Sun Grant Program.
2. Subprograms/Department Initiatives
    There are no subprograms.
3. Brief History
    The authority for this program is contained in section 7526 of the 
2008 Farm Bill. USDA received its first funding for this program in FY 
2010.
4. Purpose/Goals
    The purpose of this program is to provide grants to the North-
Central, Southeastern, South-Central, Western, and Northeastern Sun 
Grant Centers and the Western Insular Pacific Subcenter (as designated 
in section 7526(b)(1)(A)-(F) of the FCEA). The Sun Grant Centers and 
Subcenter will use the majority of grant funds for competitive grants 
and the remainder for research on technology development and 
implementation.
    All activities conducted in this program must seek to (a) enhance 
national energy security through the development, distribution, and 
implementation of bio-based energy technologies; (b) promote 
diversification in, and the environmental sustainability of, 
agricultural production in the United States through bio-based energy 
and product technologies; (c) promote economic diversification in rural 
areas of the United States through bio-based energy and product 
technologies; and (d) enhance the efficiency of bioenergy and biomass 
research and development programs through improved coordination and 
collaboration among the Department of Agriculture, the Department of 
Energy, and land-grant colleges and universities.
5. Success in Meeting Programmatic Purpose/Goals
    Although this grant program is too new to have any discernable 
success to date examples of expected success include:
    This program is providing grants to the North-Central, 
Southeastern, South-Central, Western, and Northeastern Sun Grant 
Centers and the Western Insular Pacific Sub-center. All activities 
conducted in this program are seeking to enhance national energy 
security through the development, distribution, and implementation of 
biobased energy technologies; promote diversification in, and the 
environmental sustainability of, agricultural production in the United 
States through biobased energy and product technologies; promote 
economic diversification in rural areas of the United States through 
biobased energy and product technologies; and enhance the efficiency of 
bioenergy and biomass research and development programs through 
improved coordination and collaboration among the Department of 
Agriculture, the Department of Energy, and land-grant colleges and 
universities.

              6. Annual Budget Authority (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
Annual Budget Authority                  $2,250                 $2,246
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.


                   7. Annual Outlays (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
        Annual Outlays                     $225                 $1,237
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.


                8. Annual Delivery Cost (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
  Annual Delivery Cost                      $90                    $90
------------------------------------------------------------------------
Note: Program was first funded in FY 2010.

9. Eligibility Criteria
    Eligible applicants are the five centers that will competitively 
award projects to eligible entities in the states and territories 
within their regions:
    North-Central Center--A north-central sun grant center at South 
Dakota State University for the region composed of the States of 
Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, North Dakota, 
South Dakota, Wisconsin and Wyoming.
    Southeastern Center--A southeastern sun grant center at the 
University of Tennessee at Knoxville for the region composed of the 
States of Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, Tennessee and Virginia, the Commonwealth of 
Puerto Rico, and the United States Virgin Islands.
    South-Central Center--A south-central sun grant center at Oklahoma 
State University for the region composed of the States of Arkansas, 
Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas.
    Western Center--A western sun grant center at Oregon State 
University for the region composed of the States of Alaska, Arizona, 
California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington and a 
Western Insular Pacific Subcenter at the University of Hawaii for the 
region of Alaska, Hawaii, Guam, American Samoa, the Commonwealth of the 
Northern Mariana Islands, the Federated States of Micronesia, the 
Republic of the Marshall Islands, and the Republic of Palau.
    Northeastern Center--A northeastern sun grant center at Cornell 
University for the region composed of the States of Connecticut, 
Delaware, Massachusetts, Maryland, Maine, Michigan, New Hampshire, New 
Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, and West 
Virginia.
    Funding for the Western Insular Pacific Sun Grant Subcenter at 
University of Hawaii must come from Western Sun Grant Center at Oregon 
State University.
    Eligible applicants for competitively awarded projects within the 
respective regions of the individual Sun Grant Centers and Subcenter 
are: state agricultural experiment stations; colleges and universities; 
university research foundations; other research institutions and 
organizations; Federal agencies; national laboratories; private 
organizations or corporations; individuals; or any group consisting of 
two or more of the entities described in this paragraph.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None              None                 5
      Received
Applications Funded         None              None                 5
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Tribal Colleges Education Equity Grants Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Authority for this program is contained in the Equity in 
Educational Land-Grant Status Act of 1994 (7 U.S.C. 301 note) as 
amended by the Agricultural Research, Extension, and Education Reform 
Act of 1998 (7 U.S.C. 7601 note). Under this authority, appropriated 
funds are to be awarded to the 1994 Land-Grant Institutions 
(hereinafter referred to as 1994 Institutions) for Education capacity 
building and funds are to be distributed equally among institutions 
that meet eligibility requirements.
    Section 7402 of the 2008 Farm Bill added Ilisagvik College as a 
1994 Land-Grant Institution.
4. Purpose/Goals
    The purpose of the Tribal Colleges Education Equity Grants Program 
(TCEG) is to provide funding to enhance educational opportunities for 
Native Americans in the food and agricultural sciences. The TCEG 
program is intended to strengthen institutional capacity to deliver 
relevant formal education opportunities. The TCEG is intended to be a 
component of the applicant 1994 institution's land-grant roadmap or 
strategic planning process. To the extent practicable, priorities 
should reflect NIFA's following national critical needs areas: (a) 
Development of sustainable energy; (b) Increased global food security; 
(c) Adaptation/mitigation of agriculture and natural resources to 
global climate change; (d) Reduction of childhood and adolescent 
obesity; and (e) Improved food safety.
5. Success in Meeting Programmatic Purpose/Goals
    This program provides funding to enhance educational opportunities 
for Native Americans in the food and agricultural sciences; and 
strengthens institutional capacity to deliver relevant formal education 
opportunities.
    Examples of success include:
    As a result of a move of the Equity program to the Math & Science 
Department at Oglala Lakota College in South Dakota, the program has 
had a 300% increase in contact with new and/or potential students for 
the Natural Resource degree plan of study. Two Native American men 
advanced their care goals through hard work earning an Associate of 
Arts or a Baccalaureate of Science degree in either General Agriculture 
or Natural Resource Management. The program has been able to serve a 
larger group of students through instruction of the course Bio 113 
People and the Environment, which is a core course to meet the science 
requirements in the majority of Oglala Lakota College's degree 
programs. Moreover, a current student working for the Bureau of Indian 
Affairs in Pine Ridge South Dakota stated that through the programs 
course content he learned more than he has in any other program, 
especially courses taught by the project director.
    The Omaha Nation and Santee Sioux have epidemic numbers for Health 
Problems, diabetes, obesity, heart disease, and malnutrition. Nebraska 
Indian Community College (NICC) is enhancing the short-term and long-
term educational opportunities for the Omaha Nation and Santee Sioux 
Nation by strengthening specific instructional programs in the Food, 
Natural Resources, Native Foods and Agricultural Sciences Area. Twenty-
six students were enrolled in courses with a specific focus in agri-
science and agribusiness. Other courses incorporated these topics to a 
lesser extent. The impacted students are in a wide-variety of degrees 
(education, science, business, general liberal arts), allowing for 
information to be disseminated to a large constituency in these 
communities.
    A Sinte Gleska University (South Dakota) project developed 
curricula and syllabi in Natural Resources History and Management, 
Tribal Land Management and History, Horticulture and Environmental Law. 
This project also worked on revision of the Tribal Land Management 
degree programs and produced new degree programs. They also developed a 
career guide for students based on available careers on the Rosebud 
Reservation. As a result, one student completed a bachelor's degree in 
Environmental Science; ten students have been recruited to the Tribal 
Lands Management degree program; collaborations have been formed with 
tribal land programs, Federal land programs and with South Dakota state 
extension programs; Career Guide is available for local schools and as 
a recruitment tool; and an advisory committee was formed to provide 
community and stakeholders input into future planning for the USDA 
programs.
    The Turtle Mountain Community College's (North Dakota) formed an 
articulation agreement between the college and a local agricultural 
high school--St. John Public--to provide Equine Science offerings to 
its students as dual credit. They designed and implemented agricultural 
related curriculum in GIS/GPS and NSCA Certified Personal Trainer 
Certificate which will be part of the college's course catalog. 
Moreover, the College enhanced the community's knowledge of animal 
sciences by offering a series of workshops throughout the year and 
provided educational opportunities to youth and adults in a vast array 
of subjects in the areas of health, wellness, community wellness, and 
outreach education. The program has allowed the community to 
participate in a vast number of educational programming in the 
agricultural fields. Participating students are now academically 
prepared to further their education or seek employment in Equine 
Science, GPS/GIS and Certified Personal Training. The program has 
perked the interest of the community to be more actively involved in 
gardening and other agricultural-related disciplines which will in turn 
contribute to better health and fitness. The college's Anishinabe 
Center has become a `One Stop Wellness Center' which actively promotes 
and has integrated the seven pillars of wellness--Social, Emotional, 
Occupational, Spiritual, Physical, Environmental, and Intellectual.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                        FY02      FY03      FY04     FY05     FY06     FY07     FY08     FY09     FY10     FY11
----------------------------------------------------------------------------------------------------------------
      Annual Budget     $1,549    $1,689   $1,679   $2,232   $2,228   $3,342   $3,319   $3,342   $3,342   $3,335
           Authority
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays             $167            $500          $1,669          $3,334          $3,330
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
          Annual Delivery Cost               $0              $0              $0              $0              $0
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Tribal colleges and universities designated as 1994 Land-Grant 
Institutions under the Educational Land-Grant Status Act of 1994, as 
amended. This Act, as amended in Section 533(a), requires that each 
1994 Land-Grant Institution be accredited or making progress towards 
accreditation and be recognized as a legal entity. If accreditation is 
being sought, a college must demonstrate its progress towards 
accreditation by a letter from a nationally recognized accreditation 
agency affirming receipt of application for an accreditation site visit 
or other such documentation.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                 30                31                30
      Received
Applications Funded           30                30                30
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Veterinary Medicine Loan Repayment Program.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    In January 2003, NVMSA was passed into law adding section 1415A to 
the National Agricultural Research, Extension, and Teaching Policy Act 
of 1997. This law established a new Veterinary Medicine Loan Repayment 
Program (7 U.S.C. 3151a)
    Section 7105 of the 2008 Farm Bill amended section 1415A to revise 
the determination of veterinarian shortage situations to consider (1) 
geographical areas that the Secretary determines have a shortage of 
veterinarians; and (2) areas of veterinary practice that the Secretary 
determines have a shortage of veterinarians, such as food animal 
medicine, public health, epidemiology, and food safety. This section 
also added that priority should be given to agreements with 
veterinarians for the practice of food animal medicine in veterinarian 
shortage situations.
4. Purpose/Goals
    USDA's Veterinary Medicine Loan Repayment Program (VMLRP), 
authorized by the National Veterinary Medical Services Act (NVMSA) 
helps qualified veterinarians offset a significant portion of the debt 
incurred in pursuit of their veterinary medicine degrees in return for 
their service in certain high-priority veterinary shortage situations. 
The National Institute of Food and Agriculture (NIFA) will carry out 
NVMSA by entering into educational loan repayment agreements with 
veterinarians who agree to provide veterinary services in veterinarian 
shortage situations for a determined period of time.
5. Success in Meeting Programmatic Purpose/Goals
    Veterinarians are critical to the national food safety and food 
security infrastructures, and to the health and well-being of both 
animals and humans; however, major studies indicate significant and 
growing shortages of food supply veterinarians and veterinarians 
serving in certain other high priority specialty areas. A leading cause 
for this shortage is the heavy cost of 4 years of professional 
veterinary medical training, which can average between $100,000 and 
$140,000. Congress established the VMLRP as a way to remedy this 
growing need.
    In Fiscal Year 2010, NIFA made 62 award offers of which 53 were 
accepted for a total of $5,185,970 (includes loan and tax payments) 
with the average award at $97,848 (includes loan and tax payments). The 
average eligible debt for repayment was $98,672. Sixty-five percent of 
recipients received the maximum payment of $25,000 per year (plus 
taxes), and 65 percent of awards went to those who obtained their 
Doctor of Veterinary Medicine within the last 3 years. Thirty-four 
states will fill at least one shortage area through VMLRP:

   Iowa will fill five shortage areas

   Idaho, Kansas and Texas will fill four shortage areas

   Kentucky and South Dakota will fill three shortage areas

    Shortage type breakdown:

   Type 1 (at least 80 percent private practice): 24 awards

   Type 2 (at least 30 percent private practice): 24 awards

   Type 3: (at least 49 percent public practice): 5 awards

    Participants are required to serve in one of three types of 
shortage situations. Type 1 shortage areas are private practice 
dedicated to food animal medicine at least 80 percent of the time. Type 
2 shortages are private practices in rural areas dedicated to food 
animal medicine up to 30 percent of the time. Type 3 shortage areas are 
dedicated to public practice up to 49 percent of the time.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                   FY06          FY07          FY08          FY09          FY10          FY11
----------------------------------------------------------------------------------------------------------------
   Annual Budget Authority           $495          $495          $869        $2,950        $4,800       $4,790
----------------------------------------------------------------------------------------------------------------
Note: Funding began in FY 2006.


                                       7. Annual Outlays (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              $50            $310            $909          $2,199          $3,967
----------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2007-FY 2011)
                                            (in thousands of dollars)
----------------------------------------------------------------------------------------------------------------
                                        FY07            FY08            FY09            FY10            FY11
----------------------------------------------------------------------------------------------------------------
                Annual Outlays              $50             $87            $295            $480            $479
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    To be eligible to apply to the VMLRP, an applicant must: (1) Have a 
degree of Doctor of Veterinary Medicine (DVM), or the equivalent, from 
a college of veterinary medicine accredited by the AVMA Council on 
Education; (2) Have qualifying educational loan debt as defined in 7 
CFR 3431 Section 3; (3) Secure an offer of employment or establish and/
or maintain a practice in a veterinary shortage situation, as 
determined by the Secretary, within the time period specified in the 
VMLRP service agreement offer; and (4) provide certifications and 
verifications in accordance with 7 CFR 3431 Section 16.

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications                  0                 0               260
      Received
Applications Funded            0                 0                53
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Women in Minorities in Science, Technology, Engineering and 
Mathematics Fields Program (WAMS).
2. Subprograms/Department Initiatives
    There are no subprograms.
3. Brief History
    Section 7204 of the 2008 Farm Bill amended Section 1672 of the 
Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5925), 
authorizes the Secretary of Agriculture to make competitive grants to 
support research and extension activities to increase participation by 
women and underrepresented minorities from rural areas in the fields of 
science, technology, engineering, and mathematics.
4. Purpose/Goals
    Purpose/Goals include:

    (1) To support research and extension projects to increase 
        participation by women and underrepresented minorities from 
        rural areas in science, technology, engineering, and 
        mathematics fields related to the food and agricultural 
        sciences;

    (2) to improve the economic health and viability of rural 
        communities through the development of research and extension 
        initiatives focused on new and emerging employment 
        opportunities in STEM occupations; and

    (3) to fund projects that address the national challenge to 
        increase the number and diversity (i.e., having a food and 
        agricultural sciences workforce representative of the nation's 
        population) of students entering food and agriculture related 
        STEM disciplines.
5. Success in Meeting Programmatic Purpose/Goals
    Although this grant program is too new to have any discernable 
success to date examples of expected success include:
    An education grant to Twin Cities Public Television in Minnesota 
aims to encourage more girls to consider careers in STEM fields via the 
``SciGirls'' program. While girls and women have increased their 
representation in many fields of science in recent years, their 
progress is still not keeping pace with the rising demand for skilled 
workers in many STEM fields. Although women make up nearly \1/2\ the 
college-educated workforce, they represent only \1/4\ of the college-
educated workforce in science and engineering occupations. ``SciGirls'' 
will be distributed through PBS Plus to the nation's 350 PBS stations. 
From experience with comparable PBS Plus programs, they project that 
each episode will attract several million viewers over its broadcast 
life, nearly \1/2\ of which will be rural audiences.
    A University of Georgia project is enhancing the readiness of women 
and underrepresented males from Georgia's rural communities to 
successfully transition into careers in STEM in general and food, 
agriculture, natural resources, and related sciences (UFANRRS) in 
particular. In addition to addressing the clogs in the existing 
pipeline of trained women and minorities from high school to 
undergraduate degrees, the project is also including a component that 
introduces middle school students to career options in food and 
agricultural sciences. The innovativeness and significance of this 
project rest on the project's design in building the pipeline to the 
undergraduate pool through increased interest in STEM programs early in 
the education process and recognizing the need to transition students 
from bachelor's to master's STEM programs through better preparation.

              6. Annual Budget Authority (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
Annual Budget Authority                    $400                   $399
------------------------------------------------------------------------
Note: Funding began in FY 2010.


                   7. Annual Outlays (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
        Annual Outlays                     $240                   $387
------------------------------------------------------------------------
Note: Funding began in FY 2010.


                8. Annual Delivery Cost (FY 2007-FY 2011)
                        (in thousands of dollars)
------------------------------------------------------------------------
                                    2010                    2011
------------------------------------------------------------------------
  Annual Delivery Cost                      $16                    $16
------------------------------------------------------------------------
Note: Funding began in FY 2010.

9. Eligibility Criteria
    Eligible applicants are: (a) state agricultural experiment 
stations; (b) colleges and universities; (c) university research 
foundations; (d) other research institutions and organizations; (e) 
Federal agencies; (f) national laboratories; (g) private organizations 
or corporations; (h) individuals; or (i) any group consisting of two or 
more of the entities described in subparagraphs (a) through (h).

                  10. Utilization (Participation) Data
------------------------------------------------------------------------
    Fiscal Year            2008              2009              2010
------------------------------------------------------------------------
 Applications               None              None                13
      Received
Applications Funded         None              None                 2
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    REE is committed to maximizing Federal dollars by ensuring 
systematic monitoring and evaluation. While the scientific method 
requires the flexibility to replicate results, NIFA's leadership, 
program managers, and researchers rigorously track scientific projects 
through its Current Research Information System (CRIS) to avoid 
duplication. Program leadership also holds joint stakeholder meetings 
and/or coordinates with other science agencies (ARS, ERS, others) to 
ensure that programs are complementary, and do not duplicate other 
science programs in USDA and other Federal agencies. The creation and 
staffing of the USDA Office of the Chief Scientist has bolstered this 
coordination.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
House Committee on Agriculture Farm Bill Audit Questionnaire--National 
                    Agricultural Statistics Service
1. Program Name
    National Agricultural Statistics Service.
2. Subprograms/Department Initiatives
    Agricultural Estimates and Census of Agriculture:

    i. 2008 Organic Production Survey,

    ii. Cash Rents Survey,

    iii. Prices Survey,

    iv. Specialty Crops Survey, and

    v. Civil Rights Report.
3. Brief History
    a. 2008 Organic Program Survey: The 2007 Census of Agriculture 
        showed more than 20,000 farmers engaged in organic production 
        in the United States. As a follow-up to the 2007 Census, USDA 
        conducted it first ever, wide-scale survey of organic 
        agriculture.

    b. Cash Rents Survey: NASS has been directed through the 2008 Farm 
        Bill to collect cash rents data for use by the Farm Service 
        Agency (FSA) in program administration. The Food, Conservation, 
        and Energy Act of 2008, Section 2110, states,

                        ``The Secretary (acting through the National 
                        Agricultural Statistics Service) shall conduct 
                        an annual survey of per acre estimates of 
                        county average market dry land and irrigated 
                        cash rental rates for cropland and pastureland 
                        in all counties or equivalent subdivisions 
                        within each state that have 20,000 acres of 
                        cropland or pastureland.''

                        The Cash Rents Survey is conducted annually by 
                        the USDA's National Agricultural Statistics 
                        Service (NASS). The Cash Rents Survey obtains 
                        annual average cash rental rates by farmers and 
                        ranchers for all counties in the U.S. that meet 
                        the requirements outlined in the 2008 Farm 
                        Bill. This survey provides the basis for 
                        estimates of the current year's Cash Rent paid 
                        for Irrigated Cropland, Non-irrigated Cropland, 
                        and Permanent Pasture. Data collection on the 
                        Cash Rents Survey is from February through mid 
                        July. The final 2011 Cash Rents estimates will 
                        be published on September 9, 2011. Data will be 
                        published at the county, district, state, and 
                        national level.

    c. Prices Survey: The collection and publication of prices received 
        by farmers gained importance with passage of the Farm Security 
        and Rural Investment Act of 2002 (2002 Farm Bill) and the 
        importance continued with the passage of the Food, 
        Conservation, and Energy Act of 2008 (2008 Farm Bill).

    d. Specialty Crops Survey: Issued in November 2009, this is the 
        first time NASS has summarized and published the Census of 
        agriculture data for specialty crops.

    e. Civil Rights Report: FARM BILL Section 14006 TRANSPARENCY AND 
        ACCOUNTABILITY FOR SOCIALLY DISADVANTAGED FARMERS OR RANCHERS 
        requires USDA to annually compile program application and 
        participation rate data regarding socially disadvantaged 
        farmers or ranchers: race, ethnicity, and gender for the entire 
        U.S. for each state and county.
4. Purpose/Goals
    a. 2008 Organic Program Survey: Through the Organic Production 
        Survey, USDA's National Agricultural Statistics Service (NASS) 
        gathered additional information on how the growth of organic 
        farming is changing the face of U.S. agriculture. This survey 
        gave organic producers an opportunity to share information 
        about their industry and help ensure the continued growth and 
        sustainability of organic farming in the United States. The 
        survey results can be utilized to help shape decisions 
        regarding farm policy, funding allocations, availability of 
        goods and services, community development and other key issues. 
        In addition, the information can help producers of organic 
        agriculture make informed decisions about the future of their 
        own organic production operations. The survey looked at organic 
        farming during the 2008 calendar year, including:

       Production of field crops, vegetables, fruits, tree 
            nuts, berries, livestock and 
              poultry

       Production practices, including pest management, cover 
            crops, crop rota-
              tion, rotational grazing, conservation tillage, water 
            management and buffer
              zones

       Production expenses

       Marketing practices, including wholesale, retail and 
            direct-to-consumer
              sales

       Value-added production and processing

    The survey included not only farm operations that are currently 
        engaged in organic production, but those making the transition 
        to organic agriculture.

    b. Cash Rents Survey: The Cash Rents Survey provides the per acre 
        estimate of county average cash rent paid by farmers. Estimates 
        derived from this survey supply basic information needed by 
        farmers to make decisions for both short term and long term 
        planning. The Cash Rents Report may also be used by individual 
        producers in planning expenses for their agricultural operation 
        or by Extension or University Staff in developing operating 
        budgets for agricultural operations in their locale.

    c. Prices Survey: Farm commodity prices are subject to the market 
        forces of supply and demand. However, in times of depressed 
        commodity prices the government will make counter cyclical 
        payments to producers to assist them. The 2008 Farm Bill 
        continued many of the commodity programs introduced in the 2002 
        Farm Bill, adjusting payment levels and eligibility while 
        introducing the ACRE program. The data showing prices received 
        by farmers is collected and published by NASS, and is critical 
        to implementing and administering these programs.

    d. Specialty Crops Survey: The 2007 Census of Agriculture Specialty 
        Crop publication provides data that supplement the 2007 Census 
        of Agriculture, Volume 1. As a service to agricultural and 
        economic data users, the 2007 data for specialty crops are 
        published at the U.S. and state-level.

    e. Civil Rights Report: As stated in the farm bill ``Using the 
        technologies and systems of the National Agricultural 
        Statistics Service, the Secretary shall compile and present the 
        data compiled under paragraph (1) for each program described in 
        the paragraph in a manner that includes the raw numbers and 
        participation rates for (A) the entire United States; (B) each 
        state; and (C) each county in each state.'' The department will 
        use the report to ensure all farm producers are treated 
        equitably by departmental service providers.
5. Success in Meeting Programmatic Purpose/Goals
    a. 2008 Organic Program Survey: Data were collected, edited, 
        analysis conducted and results released on February 3, 2010. 
        There was an 87 percent response rate and NASS counted 14,540 
        USDA certified and exempt organic farms.

    b. Cash Rents Survey: The survey has been conducted each year since 
        the 2008 Farm Bill was enacted. Published results have been 
        made available to FSA and the general public for 2008, 2009, 
        and 2010 as mandated by the farm bill. The 2011 results will be 
        published on August 4, 2011.

    c. Prices Survey: NASS has maintained this important data series 
        for many years, making this critical data available to FSA and 
        the general public. Data are published each month in the 
        Agriculture Prices report--a Principal Economic Indicator of 
        the United States.

    d. Specialty Crops Survey: A volume was published on this subject 
        in November 2009 at the U.S. level and state level. An 
        additional volume was published for Outlying Areas including 
        Puerto Rico, U.S. Virgin Islands, Guam, and the Commonwealth of 
        Northern Mariana Islands.

    e. Civil Rights Report: NASS has participated with the department 
        in an ongoing process for several years to fulfill this 
        important section of the farm bill: ``(1) Annual requirement.--
        For each county and state in the United States, the Secretary 
        of Agriculture (referred to in this section as the 'Secretary') 
        shall annually compile program application and participation 
        rate data regarding socially disadvantaged farmers or ranchers 
        by computing for each program of the Department of Agriculture 
        that serves agricultural producers and landowners--

                          (A) raw numbers of applicants and 
                        participants by race, ethnicity, and gender, 
                        subject to appropriate privacy protections, as 
                        determined by the Secretary; and
                          (B) the application and participation rate, 
                        by race, ethnicity, and gender, as a percentage 
                        of the total participation rate of all 
                        agricultural producers and landowners.''

    NASS has created a web-based tool that will provide participation 
        rates for every applicable USDA program at the state and county 
        level. NASS has worked with other agencies in developing a 
        format the agencies can use to submit participation data to the 
        database which the web-based tool uses. This software works to 
        facilitate data queries for USDA program Agencies who will load 
        program application and participation data and will be 
        maintained by the Department. As per the farm bill, both 
        percentage rate and number of applicants and participants will 
        be available. NASS has also summarized the data for total 
        agricultural producers at the appropriate levels which will be 
        used as the denominator in the participation rate calculation.

                                                      6. Annual Budget Authority (FY 2007-FY 2011)
                                                        National Agricultural Statistics Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           FY 2008      FY 2009      FY 2010      FY 2011      FY 2012      Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Budget Authority from the Farm Bill
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. 2008 Organic Production Survey--Farm bill funds transferred to NASS    $1,000,000                                                          $1,000,000
 through Farm Service Agency (FSA) Commodity Credit Corporation (CCC)
b. Cash Rents Survey--Reimbursable Agreement with FSA CCC                   $800,000   $4,811,132   $5,700,000   $5,700,000   $4,275,000     $21,286,132
c. Prices Survey--Reimbursable Agreement with FSA CCC                     $2,486,000   $2,800,000   $2,800,000   $2,800,000   $2,800,000     $13,686,000
d. Specialty Crops Survey *                                                       --           --           --           --           --              --
e. Civil Rights Report *                                                          --           --           --           --           --              --
                                                                        --------------------------------------------------------------------------------
  Grand Total                                                             $1,800,000   $4,811,132   $5,700,000   $5,700,000   $4,275,000     $22,286,132
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The farm bill directed work to be done on Specialty Crops Survey and Civil Rights Report but no funds were given through the farm bill.


                                                           7. Annual Outlays (FY 2002-FY 2011)
 
 
 
    Budget authority is the authority provided by public law to enter into financial obligations that will result in immediate or future outlays of
 funds. Outlays are the issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a Federal obligation. Outlays may be
 from unexpended balances of prior-year budgetary resources plus the current budgetary resources.
    For example: The farm bill authorized $1.0 million in 2008 for the Organic Production Survey but most of those funds were obligated and spent in
 2009. The farm bill directed work on Specialty Crops and Civil Rights but no funds were provided in the farm bill. NASS used resources from the Census
 of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service provided under
 Census of Agriculture authority.
 


                                                        National Agricultural Statistics Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           FY 2008      FY 2009      FY 2010      FY 2011      FY 2012      Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Outlays of Farm Bill Funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. 2008 Organic Production Survey--Farm bill funds transferred to NASS       $12,355     $987,645           $0           $0           $0      $1,000,000
 through FSA CCC
b. Cash Rents Survey--Reimbursable Agreement with FSA CCC                   $800,000   $4,811,132   $5,700,000   $5,700,000   $4,275,000     $21,286,132
c. Prices Survey--Reimbursable Agreement with FSA CCC                     $2,486,000   $2,800,000   $2,800,000   $2,800,000   $2,800,000     $13,686,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Outlays of NASS Funds for Farm Bill Directed Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
d. Specialty Crops Survey *                                                       $0      $15,413       $9,438           $0           $0         $24,851
e. Civil Rights Report *                                                      $1,512       $4,320       $9,720      $11,448           $0         $27,000
                                                                        --------------------------------------------------------------------------------
  Grand Total                                                               $813,867   $5,818,510   $5,719,158   $5,711,448   $4,275,000     $22,337,983
--------------------------------------------------------------------------------------------------------------------------------------------------------
* NASS redirected funds to fulfill the farm bill direction. NASS used resources from the Census of Agriculture to summarize data needed for the survey
  and report. This data is considered a special tabulation of the Census, a service provided under Census of Agriculture authority.


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    NASS programs are very integrated; most of the surveys are done from questionnaires with the farmers and ranchers. The questions cover a wide
 variety of crops; farming and ranching practices; operator characteristics (primary occupation, sex, age, race, and Spanish, Hispanic, or Latino
 origin); farm size and type of ownership (family, partnership, corporation, other). NASS produces over 500 reports derived from this data.
 


                                                        National Agricultural Statistics Service
                                                                 Annual Cost of Surveys
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           FY 2008      FY 2009      FY 2010      FY 2011      FY 2012      Grand Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 a. 2008 Organic Production Survey--Farm bill funds transferred to NASS through FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Salary expenses Subtotal                                                   $12,355     $987,645           $0           $0           $0      $1,000,000
  FTEs                                                                           0.0          6.2          0.0          0.0          0.0             6.2
                                                                        --------------------------------------------------------------------------------
  2008 Organic Production Survey--funds appropriated to NASS Salary         $174,410     $441,040           $0           $0     $615,450
   expenses Subtotal
    Contracts                                                                     $0     $485,897           $0           $0           $0        $485,897
    Printing                                                                      $0           $0      $45,008           $0           $0         $45,008
    Postage                                                                       $0      $59,947           $0           $0           $0         $59,947
                                                                        --------------------------------------------------------------------------------
      Subtotal                                                                    $0     $720,254     $486,049           $0           $0      $1,206,303
      FTEs                                                                       0.1          4.6          4.1          0.0          0.0             8.8
                                                                        ================================================================================
        Total                                                                $12,355   $1,707,899     $486,049           $0           $0      $2,206,303
        Total FTEs                                                               0.1         10.8          4.1          0.0          0.0            15.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                b. Cash Rents Survey--Reimbursable Agreement with FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Salary expenses Subtotal                                                  $800,000   $4,811,132   $5,700,000   $5,700,000   $4,275,000     $21,286,132
  FTEs                                                                           7.4         44.3         52.5         52.5         39.4           196.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  c. Prices Survey--Reimbursable Agreement with FSA CCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Salary expenses Subtotal                                                $2,486,000   $2,800,000   $2,800,000   $2,800,000   $2,800,000     $13,686,000
  FTEs                                                                          22.9         25.8         25.8         25.8         25.8           126.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 d. Specialty Crops Survey *--Funds appropriated to NASS
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Salary expenses Subtotal                                                        $0      $13,313       $4,438           $0           $0         $17,750
  FTEs                                                                           0.0          0.1          0.0          0.0          0.0             0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  e. Civil Rights Report *--Funds appropriated to NASS
--------------------------------------------------------------------------------------------------------------------------------------------------------
  Salary expenses                                                             $1,512       $4,320       $9,720      $11,448           $0         $27,000
  FTEs                                                                           0.0          0.0          0.1          0.1          0.0             0.2
                                                                        ================================================================================
    Grand Total                                                           $3,299,867   $9,336,664   $9,000,206   $8,511,448   $7,075,000     $37,223,185
    Grand Total FTEs                                                            30.4         81.0         82.5         78.4         65.2           337.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The farm bill directed work to be done on Specialty Crops and Civil Rights but funds were not given from the farm bill. NASS used resources from the
  Census of Agriculture to summarize data needed for the survey and report. This data is considered a special tabulation of the Census, a service
  provided under Census of Agriculture authority.

9. Eligibility Criteria
    a. 2008 Organic Production Survey: USDA-certified organic 
        producers; Producers exempt from USDA certification; Producers 
        transitioning to organic identified from the 2007 Census of 
        Agriculture and updated for newly certified, exempt, and 
        transitioning farms.

    b. Cash Rents: The population for the Cash Rents Survey is the 
        USDA-NASS farm population. It includes ``all operations that 
        sold or have the potential to sell at least $1,000 worth of 
        agricultural products during the year.'' A sample of farmers/
        ranchers is surveyed that have or could have a cash rental 
        agreement.

    c. Prices Survey: All entities that purchase grains, oilseeds, 
        pulse crops, peanuts, or cotton directly from farmers are 
        eligible to be surveyed, and represent the population. All 
        sampled units are visited each year to go over all procedures 
        and detailed reporting instructions to ensure that the data is 
        accurate and complete.

    d. Specialty Crops Survey: A specialty crop is defined by Section 3 
        of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 
        1621 note; Public Law 108-465) as fruits and vegetables, tree 
        nuts, dried fruits, and nursery crops (including floriculture). 
        Maple syrup is included because some USDA agencies consider it 
        a specialty crop. Data are provided that include and exclude 
        maple syrup to accommodate either definition.

    e. Civil Rights Report: The population for the Civil Rights Report 
        is the USDA-NASS farm population. It includes ``all operations 
        that sold or have the potential to sell at least $1,000 worth 
        of agricultural products during the year.''
10. Utilization (Participation) Data
    a. 2008 Organic Production Survey: The final mail list included 
        28,938 farms that met the criteria of which 14,540 farms were 
        USDA certified or exempt.

    b. Cash Rents: NASS sampled approximately 220,000 producers and 
        strives to get 80% percent response rate.

    c. Prices Survey: NASS strives to achieve an 80% response rate for 
        operations surveyed each month.

    d. Specialty Crops Survey: The number of farms producing specialty 
        crops totals 247,772.

    e. Civil Rights Report: NASS used already collected data from the 
        Census of Agriculture. The Census form was mailed to 
        approximately 3.1 million potential farm operations. The 2007 
        Census of Agriculture counted 2.2 million farming operations. 
        USDA program agencies will load application and participation 
        data for their programs. The application and participation 
        rates and data will then be available to the general public.
11. Duplication or Overlap with Other Programs
    a. 2008 Organic Production Survey: No duplication. These data were 
        collected from the organic producers themselves and not from 
        certifying entities as is published from other agencies.

    b. Cash Rents: No duplication. This is the only source of 
        information on farm level cash rent rates for all qualifying 
        counties in the United States.

    c. Prices Survey: No duplication. This data series is the only 
        available source of prices received by farmers available for 
        the U.S.

    d. Specialty Crops Survey: No duplication.

    e. Civil Rights Report: No duplication. This is the only source of 
        information for participation and application rate data.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
House Committee on Agriculture Farm Bill Audit Questionnaire--Economic 
                            Research Service
1. Program Name
    Economic Research Service (ERS).
2. Subprograms/Department Initiatives
    Economic Research and Analysis.
3. Brief History
    The Economic Research Service (ERS) was established in 1961 from 
components of the former Bureau of Agricultural Economics principally 
under the authority of the Agricultural Marketing Act of 1946 (7 U.S.C. 
1621-1627).
4. Purpose/Goals
    The mission of ERS is to inform and enhance public and private 
decision making on economic and policy issues related to agriculture, 
food, the environment, and rural development.
    ERS has six strategic goals which correspond to each of the four 
USDA strategic goals. To achieve these goals, ERS enhances the 
understanding of policy makers, regulators, program managers, and those 
shaping debate of economic issues affecting agriculture, food, the 
environment, and rural development. Activities to support ERS' mission 
and goals involve research and development of economic and statistical 
indicators on a broad range of topics, including but not limited to 
global agricultural market conditions, trade restrictions, agribusiness 
concentration, farm and retail food prices, foodborne illnesses, food 
labeling, nutrition, food assistance programs, agrichemical usage, 
livestock waste management, conservation, agricultural productivity, 
technology transfer, and rural employment. Research results and 
economic indicators on such important agricultural, food, natural 
resource, and rural issues are fully disseminated to public and private 
decision makers through published and electronic reports and articles; 
special staff analyses, briefings, presentations, and papers; 
databases; and individual contacts.
5. Success in Meeting Programmatic Purpose/Goals
    The long-term performance goal for the Economic Research Service is 
the successful execution of the ERS program of economic research and 
analysis to provide policy makers, regulators, program managers, and 
those shaping the public debate on agricultural economic issues with 
timely, relevant, and high quality economic research, analysis, and 
data to enhance their understanding of economic issues affecting food 
and agriculture. The key outcome of the ERS program is informed public 
and private decision-making on economic and policy issues related to 
agriculture, food, the environment, and rural development.
    Central to effective ERS performance is successful completion of 
planned research that enhances understanding by policy makers, 
regulators, program managers, and those shaping the public debate of 
economic issues related to enhancing economic opportunities for 
agricultural producers. ERS research and management practices use many 
methods to ensure that the direction of agency research activities 
reflects current and anticipated needs of ERS stakeholders and 
customers, that research and analysis produced by the agency adheres to 
disciplinary standards to ensure the highest possible quality, and that 
the agency's research products are delivered in a way that is 
accessible to customers.
    ERS interacts with stakeholders and customers in many ways to 
ensure that the research agenda focuses on topics relevant to public 
and private decision makers. ERS regularly convenes workshops, 
stakeholder sessions, or other meetings in which the results of recent 
agency research are discussed, upcoming policy issues are identified, 
and questions for future research are explored.
    ERS strategic planning activities include reviews of progress in 
meeting program plans and implementing revisions as necessary. ERS 
strategic planning includes discussions with customers and stakeholders 
on prospective research projects to meet anticipated needs of policy 
officials. Stakeholder conferences are used to help set priorities for 
ERS extramural funding programs. ERS management regularly discusses 
implementation of research activities with key customers and 
stakeholders including USDA Agencies, other Federal departments, 
Congressional staff and members, and private sector partners to ensure 
continued and improved agency effectiveness. Suggestions and ideas from 
our key customers informs our program planning process to ensure that 
ERS continues to provide the information, data, market outlook and 
analysis needed to inform decision making on economic issues related to 
food, agriculture, and rural America.
    ERS uses independent expert review panels that evaluate the 
effectiveness of the ERS program of economic research and analysis to 
enable better informed decisions on food and agricultural policy 
issues. Over the past 6 years, review panels have assessed major 
segments of the ERS program. In each review, the external panels assess 
the relevance, quality, and performance of program plans, activities, 
and accomplishments. This assessment includes an evaluation using a 
quantitative analysis tool to rate portfolio effectiveness on a multi-
category scale (excellent, adequate, needs improvement). The panel 
recommendations are used in agency strategic planning and priority 
setting. All past reviews have rated ERS performance as ``Excellent.''
6. Annual Budget Authority (FY 2002-FY 2011) ($000)
        FY 2002: $67,154
        FY 2003: $68,674
        FY 2004: $70,981
        FY 2005: $74,170
        FY 2006: $75,172
        FY 2007: $75,193
        FY 2008: $77,397
        FY 2009: $79,500
        FY 2010: $82,478
        FY 2011: $81,814
7. Annual Outlays (FY 2002-FY 2011) ($000)
        FY 2002: $69,892
        FY 2003: $70,262
        FY 2004: $65,543
        FY 2005: $72,847
        FY 2006: $72,778
        FY 2007: $72,760
        FY 2008: $77,707
        FY 2009: $79,719
        FY 2010: $67,927
        FY 2011: $82,000 (est.)

                                                    8. Annual Delivery Cost (FY 2007-FY 2011) ($000)
 
                                             FY 2002    FY 2003    FY 2004    FY 2005    FY 2006    FY 2007    FY 2008    FY 2009    FY 2010    FY 2011
 
Salaries and Expenses                         $34,157    $32,945    $39,621    $39,675    $40,781    $42,311    $45,080    $48,897    $52,361    $52,400
Data Acquisition                               $4,000     $6,500     $6,950    $10,450    $10,027    $10,250    $13,116    $16,407    $16,095    $16,199
Contracts, Agreements, and Grants             $12,859    $11,732     $5,130     $5,899     $6,899     $5,240     $8,750     $8,223     $9,050     $8,634
  Direct costs                                                         $492       $270       $283       $480     $2,176     $1,757     $1,200     $1,200
  Indirect Costs *                            $16,029    $17,243    $18,637    $17,743    $17,015    $16,335     $7,908     $3,606     $3,037     $3,381
                                           -------------------------------------------------------------------------------------------------------------
    Total Cost                                $67,045    $68,420    $70,830    $74,037    $75,005    $74,616    $77,030    $78,890    $81,743    $81,814
    Total FTEs                                    479        462        439        427        400        376        386        388        400        400
 
* Variances in Indirect Costs throughout the years are attributed to differences in charging data acquisition, contracts, and agreements to the budget
  object class for categories included in Indirect costs.

9. Eligibility Criteria
    N/A.
10. Utilization (Participation) Data
    N/A.
11. Duplication or Overlap with Other Programs
    The four REE agencies are complementary and have distinct missions. 
The National Agriculture Statistics Service (NASS) conducts basic 
statistically valid surveys to create a body of data that reflects on-
the-ground factual information. ERS constructs data series, using data 
from a variety of sources, to inform its program of research and market 
analysis. Data collected by NASS are used by ERS for its farm income 
estimates and research, and in the ERS program of market outlook and 
analysis. Other data and research in ERS, such as the food security 
statistics, rely on survey agreements with other Federal agencies such 
as the Census bureau. ERS provides data, research and analysis that 
support the wide range of program and policy issues of importance to 
USDA. ERS data, information and analysis meet the information needs of 
USDA policy makers and programs, and are used by the media, trade 
associations, public interest groups, and the general public. Findings 
are useful to inform policymakers and for continuously improving the 
quality of the market information that guides production decisions and 
risk management.
    ERS provides social science research and analysis to complement the 
other scientific expertise of the REE agencies in multidisciplinary 
research. ERS collaborates with ARS in carrying out research to address 
the needs of U.S. agriculture, including research and data development 
to support rural prosperity, agricultural productivity, global food 
security, food safety, and better diets. ERS coordinates with NIFA 
regarding extramural funding priorities and identifying promising new 
areas for research.
    ERS is the primary source of statistical indicators that, among 
other things, gauge the health of the farm sector (including farm 
income estimates and projections), assess the current and expected 
performance of the agricultural sector (including trade), and provide 
measures of food insecurity here and abroad. ERS is one of the 14 OMB 
officially-designated Federal statistical agencies.
    ERS collaborates with the staff of the Office of the Chief 
Economist and staff economists in USDA program agencies to provide 
data, research findings, and market analysis and outlook to support 
Departmental decision making on program implementation and development.
12. Waste, Fraud and Abuse
    No such instances have to date been identified.
13. Effect of Administrative PAYGO
    None.


                       AGRICULTURAL PROGRAM AUDIT

                  (EXAMINATION OF USDA DAIRY PROGRAMS)

                              ----------                              


                      THURSDAY, SEPTEMBER 8, 2011

     Subcommittee on Livestock, Dairy, and 
                                   Poultry,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 2:15 p.m., in 
Room 1300, Longworth House Office Building, Hon. Thomas J. 
Rooney [Chairman of the Subcommittee] presiding.
    Members present: Representatives Rooney, Goodlatte, 
Neugebauer, Conaway, Huelskamp, DesJarlais, Gibson, Ribble, 
Cardoza, Scott, Courtney, Boswell, Owens, Peterson (ex 
officio), Costa, and Welch.
    Staff present: John Goldberg, Debbie Smith, Lauren 
Sturgeon, Suzanne Watson, Michelle Weber, John Konya, Nathaniel 
B. Fretz, Mary Knigge, and Jamie Mitchell.

OPENING STATEMENT OF HON. THOMAS J. ROONEY, A REPRESENTATIVE IN 
                     CONGRESS FROM FLORIDA

    The Chairman. This hearing of the Subcommittee on 
Livestock, Dairy, and Poultry for the purpose of conducting an 
agricultural program audit; an examination of USDA dairy 
programs will come to order.
    I would like to welcome y'all to today's hearing to review 
the current dairy programs. I would like to begin by thanking 
Ranking Member Cardoza for his help in preparing for today's 
hearing. I would also like to welcome our witnesses and extend 
our gratitude for you making the effort to be here and to share 
your time and expertise with our Subcommittee.
    This hearing is the tenth in a series of audits of USDA 
farm programs. Through these discussions, we hope to gain a 
better understanding of how each program is operating and what 
we might do to improve farm policy, moving forward. Our 
witnesses today will share their knowledge and expertise in 
administering Federal dairy programs.
    The events of 2009 exposed what many have long held to be 
an inadequacy of some of our current dairy programs. While some 
observers may argue that additional funding may improve the 
overall effectiveness of our dairy safety net, our current 
budgetary outlook makes this option a nonstarter. Innovative 
and effective ideas are needed in order to ensure that our 
programs support our producers, facilitate product and market 
development, and continue to ensure the availability of safe, 
abundant, and affordable products for our consumers.
    Our witnesses will provide the Subcommittee with detailed 
information on existing programs, testifying to their current 
conditions, productivity, and possible public policy 
challenges. In this hearing, we hope to gain some perspective 
about the issues we should focus on in greater detail later in 
this Congress.
    I appreciate my colleagues' attendance and interest in this 
hearing and encourage suggestions and recommendations as we 
move forward with our Subcommittee's agenda.
    [The prepared statement of Mr. Rooney follows:]

   Prepared Statement of Hon. Thomas J. Rooney, a Representative in 
                         Congress from Florida
    Good afternoon, and welcome to today's hearing to review current 
dairy programs. I would like to begin by thanking Ranking Member 
Cardoza for his help in preparing for today's hearing. I would also 
like to welcome our witnesses and extend our gratitude for making the 
effort to be here and to share their time and expertise with our 
Subcommittee.
    This hearing is the tenth is a series of audits of USDA farm 
programs. Through these discussions we hope to gain a better 
understanding of how each program is operating and what we might do to 
improve farm policy, moving forward. Our witnesses today will share 
their knowledge and expertise in administering Federal dairy programs.
    The events of 2009 exposed what many have long-held to be an 
inadequacy of some of our current dairy programs. While some observers 
may argue that additional funding may improve the overall effectiveness 
of our dairy safety net, our current budgetary outlook makes this 
option a non-starter. Innovative and effective ideas are needed in 
order to ensure that our programs support our producers, facilitate 
product and market development, and continue to ensure the availability 
of safe, abundant and affordable products for our consumers.
    Our witnesses will provide the Subcommittee with detailed 
information on existing programs, testifying to their current 
conditions, productivity, and possible public policy challenges. In 
this hearing we hope to gain some perspective about the issues we 
should focus on in greater detail later in this Congress.
    I appreciate my colleagues' attendance and interest in this hearing 
and encourage suggestions and recommendations as we move forward with 
our Subcommittee's agenda.

    The Chairman. With that, I would like to recognize the 
Ranking Member, Representative Cardoza.

 OPENING STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE 
                  IN CONGRESS FROM CALIFORNIA

    Mr. Cardoza. Thank you, Mr. Chairman.
    I very much appreciate your friendship and your 
organizational ability putting this hearing together. I want to 
also thank our witnesses for being with us today. This is a 
vital hearing with regard to our dairy programs at USDA.
    The dairy industry has always faced a rocky road, but the 
past few years have been particularly challenging. In 
California, we produce 21 percent of the country's milk supply, 
producing some of the highest amounts of cheese, milk, butter, 
yogurt, nonfat dry milk than anywhere else in the country.
    Alone, the dairy industry produces $4.5 billion in annual 
sales and generates $63 billion in economic activity. This 
equates to over 443,000 jobs for our country; therefore, it is 
vital that USDA implement programs that keep the industry 
strong and are equitably distributed throughout the country in 
order to keep dairymen and women producing wholesome products 
that we all enjoy and so that parents can provide their 
children with the best available nutrition.
    It is also essential that this Congress enact dairy policy 
reforms that lift up the industry and lay the foundation for 
the future of dairy production. As a country and as a 
Committee, we need to ensure that we lay the long-term 
foundation for a strong industry so that we can continue to 
produce milk and other dairy products at home and not rely on 
imports from other countries. Producing our own food is vital 
to our national security. It is imperative that we protect our 
domestic food production industry, especially the dairy 
industry.
    I look forward to hearing from our witnesses today and 
thank them all for being here. We will use this information to 
craft dairy policies, moving forward, and I appreciate your 
input.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Cardoza follows:]

   Prepared Statement of Hon. Dennis A. Cardoza, a Representative in 
                        Congress from California
    Thank you, Mr. Chairman, and thank you to our witnesses for sharing 
with us today the status of the dairy programs at USDA.
    The dairy industry has always faced a rocky road, but the past few 
years have been particularly challenging.
    In California, we produce 21% of the country's milk supply, 
producing some of the highest amounts of cheese, milk, butter, yogurt, 
and nonfat dry milk in the country.
    Alone, the dairy industry produced $4.5 billion in annual sales and 
generated $63 billion in economic activity. This equates to over 
443,000 jobs.
    Therefore, it is vital that USDA implement programs that keep the 
industry strong and are equitably distributed throughout the country, 
to keep dairymen and women producing the wholesome products that we all 
enjoy, and so that parents can provide their children with the best 
available nutrition.
    It is also essential that this Congress enact dairy policy reforms 
that lift up the industry and lay a foundation for the future of dairy 
production.
    As a country and as a Committee, we need to ensure that we lay the 
long-term foundation for a strong industry so that we can continue to 
produce milk and other dairy products at home--and not rely on imports 
from other countries.
    Producing our own food is vital to our national security. It is 
imperative that we protect our domestic food production industry, 
including dairy.
    I look forward to hearing from our witnesses today and thank them 
for being here. We'll use this information to craft dairy policies, 
moving forward, and I appreciate your input. Thank you.

    The Chairman. Thank you, Mr. Cardoza.
    The chair would request that other Members submit their 
opening statements for the record so that the witnesses may be 
able to begin their testimony and ensure that there is ample 
time for questions.
    [The prepared statements of Mr. Peterson and Mr. Baca 
follow:]

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota
    Good afternoon. Thank you Chairman Rooney and Ranking Member 
Cardoza for continuing the Agriculture Committee's farm bill audit 
hearings.
    We have known for some time now that our current dairy programs are 
not working. They are not keeping pace with the challenges facing 
today's dairy industry.
    I worry that if we have another situation like we had in 2009 we 
could easily lose half our nation's dairies. Unfortunately, the current 
environment in the dairy sector is becoming very similar to what we saw 
leading up to the 2009 collapse. This is why I believe we need to 
address dairy programs sooner than later.
    I've put forward a draft dairy reform proposal that I hope to 
introduce in the coming weeks. We can discuss the proposal more at 
another time but I do believe that we're on the right track to reaching 
a solution.
    It is also important to note that whatever this Committee decides 
to do, with dairy programs specifically or the farm bill as a whole, we 
will have to make some tough choices to reduce spending.
    Again, I thank the chair for holding today's hearing and look 
forward to hearing from our witnesses.
                                 ______
                                 
Prepared Statement of Hon. Joe Baca, a Representative in Congress from 
                               California
    Chairman Rooney and Ranking Member Cardoza:

    I am pleased to be here today to review the current state of dairy 
programs at USDA--and to discuss what steps, if any, the Federal 
Government should take to stabilize the dairy market in the 2012 Farm 
Bill.
    I thank the Chairman and Ranking Member for convening this hearing 
and hope we will be able to gain valuable insight into this critical 
issue.
    I also want to thank our witnesses for coming here today--and 
taking time from their schedule to help us in Congress better 
understand current dairy policy.
    Everyone in this room understands the important work America's 
dairy farmers do, and the vital need to keep the dairy industry healthy 
and prosperous.
    When agricultural markets fluctuate, there is a direct and 
significant impact on our nation's food supply--and thus the health and 
nutrition of virtually every American.
    In my own Congressional District in the Inland Empire of 
California--dairy is a significant agricultural and economic product.
    We all know the dairy industry has been hit harder than most by the 
recent economic downturn. We also know that our dairy farmers continue 
to see higher levels of production costs.
    As Members of the Subcommittee on Livestock, Dairy, and Poultry, it 
is vitally important that we review the current efficiency and 
effectiveness of dairy programs.
    America's dairy industry must remain strong and secure.
    We must be willing to work together on this issue. The USDA, 
industry groups, the Federal and state governments all play an 
important role in stabilizing our markets.
    I look forward to hearing from our witnesses today and again thank 
the Chairman and Ranking Member for their leadership.
    Thank you.

    The Chairman. I would like to welcome our panel of 
witnesses to the table: Mr. Juan Garcia, Acting Deputy 
Administrator for Farm Programs, Farm Service Agency, U.S. 
Department of Agriculture, accompanied by Dr. Larry Salathe, 
Senior Economist, Office of the Chief Economist, USDA; and Ms. 
Dana Coale, Deputy Administrator for Dairy Programs, 
Agricultural Marketing Service, U.S. Department of Agriculture, 
Washington, D.C.
    Mr. Garcia, please begin when you are ready.

           STATEMENT OF JUAN M. GARCIA, ACTING DEPUTY
  ADMINISTRATOR FOR FARM PROGRAMS, FARM SERVICE AGENCY, U.S. 
                   DEPARTMENT OF AGRICULTURE,
 WASHINGTON, D.C.; ACCOMPANIED BY LARRY SALATHE, Ph.D., SENIOR 
                 ECONOMIST, OFFICE OF THE CHIEF
                        ECONOMIST, USDA

    Mr. Garcia. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Cardoza, and Members of the 
Subcommittee, thank you for the opportunity to discuss the 
dairy provisions associated with the 2008 Farm Bill. Today, I 
will review dairy programs of the Farm Service Agency, Foreign 
Agricultural Service and Risk Management Agency. I will also 
briefly mention some important dairy assistance programs 
authorized outside the farm bill.
    Dairy production in the United States is marked by 
significant volatility and low market predictability. Our dairy 
producers are the most productive in the world, but their 
livelihood comes with a great deal of uncertainty regarding 
prices and input costs. Given the roller coaster cycle of the 
dairy market, market downturns can have very significant 
impacts very quickly. We saw this unfold in 2009 with the last 
dramatic and rapid decline in dairy prices. The global economic 
recession, the melamine scare in China, and increases in the 
value of the dollar lowered the demand for U.S. dairy products 
in world markets, while grain prices kept feed costs relatively 
high. As you know, this puts tremendous pressure on U.S. dairy 
producers.
    Since 2009, Secretary Vilsack has exercised every authority 
at hand to provide as much relief as possible to dairy 
producers under a variety of programs. Today, I would like to 
mention those programs briefly.
    Since April 2009, FSA has provided more than $900 million 
for producers under the Milk Income Loss Contract Program, 
which makes payments when market prices are low relative to a 
level fixed in statute. Most of those payments went out at the 
height of the crisis in 2009.
    We are also working hard to be sure credit is available for 
dairy producers, in particular during market downturns when 
commercial credit is hard to come by.
    In March 2009, FSA authorized the release of MILC sales 
proceeds for essential family living and farm operating 
expenses and notified borrowers of a wide variety of additional 
loan servicing options.
    Stable markets are crucial to a healthy dairy industry. The 
Commodity Credit Corporation stands ready to buy certain dairy 
products at support levels under the Dairy Product Price 
Support Program. By doing so, the Dairy Product Price Support 
Program helps support market prices. The acquired products are 
largely used to provide assistance to needy families, both in 
the U.S. and overseas.
    The Foreign Agricultural Service, in turn, operates a Dairy 
Export Incentive Program, which provides a bonus on a bid basis 
to exporters of dairy products to bridge the gap between world 
market prices and U.S. domestic prices. Since 2002, world dairy 
prices have warranted issuing allocations under the program 
five times.
    In addition to these authorities under the farm bill, USDA 
has also expedited emergency non-farm bill aid to producers. 
The Fiscal Year 2010 Agricultural Appropriations Act authorized 
$290 million in additional direct payments to dairy producers 
under the Dairy Economic Loss Program, as well as $60 million 
for the purchase of cheese and other products. The $290 million 
was paid in near record time, with payments beginning within 60 
days of legislative passage. We are particularly proud that 
these important payments were made so quickly to the greatest 
possible benefit during a time of crisis for U.S. dairies.
    Finally, insurance makes up an important part of the safety 
net for dairy producers. There are two basic insurance models 
used to provide livestock insurance: the Livestock Risk 
Protection and Livestock Gross Margin. The Livestock Risk 
Protection provides protection against unexpected declines in 
the price of certain livestock, while the Livestock Gross 
Margin provides protection against unexpected declines in the 
gross margin of the insured livestock product for certain 
livestock, which includes milk.
    Mr. Chairman and Members of the Subcommittee, Secretary 
Vilsack and all of us at USDA recognize that volatility and 
market uncertainty affect all producers to a certain extent. 
Market fluctuations can be particularly dramatic in the dairy 
industry, and we have been very diligent in exercising a broad 
range of program authority to help dairy producers across 
America. We look forward to continuing our work with Congress 
on this important issue, providing information or technical 
assistance wherever we can.
    Mr. Chairman, this concludes my remarks and I would be 
happy to answer any questions you may have. Thank you very 
much.
    [The prepared statement of Mr. Garcia follows:]

 Prepared Statement of Juan M. Garcia, Acting Deputy Administrator for 
  Farm Programs, Farm Service Agency, U.S. Department of Agriculture, 
                            Washington, D.C.
    Mr. Chairman, Ranking Member, and Members of the Subcommittee, 
thank you for the opportunity to discuss the dairy provisions 
associated with the Food, Conservation, and Energy Act of 2008 (2008 
Farm Bill). I will be covering not only the programs associated with 
the Farm Service Agency (FSA), but also those associated with the 
Foreign Agricultural Service (FAS) and the Risk Management Agency 
(RMA). The programs of these agencies provide the backbone of the farm 
safety net for dairy producers. This hearing provides an opportunity to 
reflect on the performance of these programs under the 2008 Farm Bill, 
while thinking ahead to the upcoming farm bill debate.
    The dairy market situation has been extremely volatile in recent 
years, which has greatly affected FSA programs, in particular. I will 
start my discussion with those programs, intertwining information on 
the dairy market situation to highlight our response to the very weak 
economic climate faced by dairy producers in 2009.
Farm Service Agency Programs and the Dairy Crisis
    Several events converged in early 2009 that caused a dramatic and 
rapid decline in dairy prices, which averaged $12.93 per hundredweight 
(cwt.) for the calendar year, the lowest level since 2003. The global 
economic recession, the melamine scare in China, and increases in the 
value of the dollar lowered the demand for U.S. dairy products in world 
markets. In addition, more normal weather returned to the grass-fed 
dairy industry in New Zealand and Australia, which had been plagued by 
drought in the preceding years. And, at home, the economic crisis 
weakened the demand for dairy products.
    Meanwhile, feed costs remained relatively high in 2009, causing the 
ratio between milk and feed prices to fall to its lowest level in more 
than 25 years. Financial pressure led producers to cull additional 
dairy cows and reduce milk production. The number of milk cows dropped 
from 9.31 million head in January 2009 to 9.08 million head in December 
2009. In 2009, milk production declined by 0.3 percent, the first year-
over-year decline since 2001.
    Since April 2009, FSA has paid dairy producers more than $900 
million under the Milk Income Loss Contract (MILC) program, which makes 
payments when market prices are low relative to a level fixed in 
statute. The 2008 Farm Bill kept the same basic countercyclical price 
structure for the MILC program as in the 2002 Farm Bill, but also 
included a ``feed cost adjuster,'' which increases the size of the 
payment depending on ration costs.
    Most of these MILC payments occurred in calendar year 2009, 
although a payment of about $15 million was made for April production 
in early June, 2010. Since enactment of the 2008 Farm Bill, MILC 
payments have been made during 11 months; the feed cost adjuster had an 
impact on the payment in 5 of those months.
    The dairy crisis also affected producers' ability to receive 
financing from commercial sources. In March 2009, FSA issued guidance 
on assisting dairy producers with their credit needs. This notice 
announced that FSA Farm Loan Programs (FLP) was authorizing the release 
of milk sales proceeds for essential family living and farm operating 
expenses and notified FLP borrowers of servicing options that could be 
considered by FSA on a case-by-case basis, including extending 
repayment terms for annual operating loans for dairy farmers, 
rescheduling, consolidation, reamortization, and deferral for 1 to 5 
years. We also contacted guaranteed lenders to discuss FSA policies for 
dairy loans and remind them of loan servicing options available under 
the Guaranteed Loan Program that could be considered for certain 
producers.
    USDA also expedited emergency non-farm bill aid to producers during 
the dairy crisis. The Fiscal Year 2010 Agriculture Appropriations Act 
authorized $290 million in additional direct payments to dairy 
producers, as well as $60 million for the purchase of cheese and other 
products. The $290 million was paid in near-record time--with payments 
beginning within 60 days of legislative passage. Under the Dairy 
Economic Loss Assistance Program, eligible farmers received a one-time 
direct payment based on the amount of milk both produced and 
commercially marketed by their operations during the months of February 
through July 2009. A 100 cow dairy farm received payments of roughly 
$6,000; a 200 cow dairy, about $12,000; and operations of 400 cows or 
more, roughly $19,000. (Note that payments did not increase 
proportionately for large operations because of the application of a 6 
million pound production eligibility limitation.)
    In addition, the Commodity Credit Corporation (CCC) stands ready to 
buy certain dairy products at support levels under the Dairy Product 
Price Support Program (DPPSP). By doing so, the DPPSP helps support 
market prices. The acquired products are largely used to provide 
assistance to needy families, both in the U.S. and overseas. In total 
since October 2008, CCC has purchased nearly 270 million pounds of 
nonfat dry milk (NDM) under the DPPSP at a cost of $227 million. 
Expenditures for purchases, handling, transportation, and storage were 
an additional $16 million, bringing total program expenditures to $243 
million. No purchases have occurred since July 2009. Also during this 
time period, CCC purchased about 4.6 million pounds of butter, much of 
it during late 2008 and the first half of 2009. The Secretary announced 
in March 2009 that about 200 million pounds of NDM would be processed 
or bartered into value-added products, such as instantized nonfat dry 
milk, ultra high temperature milk, cheese, and ready-to-eat milk-based 
soups for the National School Lunch Program and the Emergency Food 
Assistance Program. USDA also temporarily increased DPPSP purchase 
prices for cheddar blocks, cheddar barrels, and NDM during August-
October 2009.
    With the mid-point of the all-milk price forecast to average a 
record of $20.40 per cwt. in calendar year 2011, no MILC payments are 
expected during the remainder of the year, nor are purchases under the 
DPPSP expected. While high feed costs are putting financial pressure on 
dairy producers, milk prices are at high enough levels that MILC 
payments will not be triggered in the foreseeable future. Indeed, no 
payments have been made under MILC for milk produced since April 2010.
    The current strong prices are in part due to strong world dairy 
markets, which are supporting higher U.S. exports and lower U.S. 
imports. Compared to the same period a year ago, March through May 
exports of U.S. dairy products were 36.4 percent higher for cheese, 
65.7 percent higher for butter and 13.7 percent higher for nonfat dry 
milk.
Dairy Export Incentive Program
    The Dairy Export Incentive Program (DEIP) was authorized under the 
Food Security Act of 1985 and most recently reauthorized in the 2008 
Farm Bill. This program, administered by the Foreign Agricultural 
Service, provides a bonus or subsidy on a bid basis to exporters of 
dairy products. By providing a subsidy on exports of dairy products, 
Congress intended DEIP to bridge the gap between world market prices 
and U.S. domestic prices. Commodities eligible under DEIP are milk 
powder, NDM, butterfat, and various cheeses.
    The authorizing legislation for DEIP provides that the subsidy may 
be paid in cash or in commodities held by the CCC. As CCC inventories 
diminished, DEIP evolved into the sole use of cash payments for the 
subsidy. DEIP is subject to U.S. export subsidy reduction commitments 
under the World Trade Organization's Uruguay Round Agreements, and is 
therefore capped annually by both subsidy value and quantity in 
accordance with those commitments. DEIP has helped to meet the needs of 
U.S. exporters and expand markets for U.S. dairy products when world 
prices are depressed due to the application of subsidies by other 
nations, particularly the European Union. Agricultural economists at 
FAS continuously monitor the world dairy situation and have the 
responsibility for recommending issuing allocations under DEIP as world 
dairy prices dictate.
    Since 2002, world dairy prices have warranted issuing allocations 
under DEIP five times. DEIP bonuses were last awarded in Fiscal Year 
2010 in an amount of $2.37 million, including for sales of mozzarella 
cheese to China and butter to Saudi Arabia.
Livestock Gross Margin-Dairy (LGM-Dairy) Program
    While not contained in the farm bill, insurance is an important 
part of the safety net for dairy producers. The Agricultural Risk 
Protection Act of 2000 amended the Federal Crop Insurance Act (FCIA), 
providing authority to RMA to offer insurance for livestock products. 
It also provided $20 million in funding to cover administrative and 
operating and premium subsidy costs for pilot livestock insurance plans 
each fiscal year. RMA currently reinsures eight livestock products, all 
of which were developed and submitted by private parties through 
authorities contained in section 508(h) of the FCIA. There are two 
basic insurance models used to provide livestock insurance--Livestock 
Risk Protection (LRP) and Livestock Gross Margin (LGM). LRP provides 
protection against unexpected declines in the price of feeder cattle, 
fed cattle, lamb, and swine. LGM provides protection against unexpected 
declines in the gross margin (difference between the price received and 
feed costs) of the insured livestock product for cattle, dairy (milk), 
and swine.
    The LGM-Dairy insurance product provides protection to dairy 
producers when the gross margin declines. LGM-Dairy uses futures prices 
for corn, soybean meal, and milk to determine the expected gross margin 
and the actual gross margin. LGM Dairy is a private sector pilot 
program owned and maintained by Iowa Agricultural Insurance 
Innovations, LLC (IAII). RMA works actively with this entity, and is 
aware that IAII continues to evaluate areas for potential improvement 
to make the product more effective and attractive for dairy farmers.
    Prior to Fiscal Year 2011, total annual expenditures on all 
livestock insurance products had never exceeded $5 million. For Fiscal 
Year 2011, about $345,523 had been spent to support all livestock 
products through mid-December, 2010, with LGM-Dairy accounting for 
$66,117 of the total. In response to dairy producer concerns, the 
Federal Crop Insurance Corporation (FCIC) Board of Directors approved 
changes to LGM-Dairy, which became effective in December 2010, 
including a shift in the premium due date to after the end of the 
insurance period and the addition of graduated producer premium 
subsidies. These changes, along with promotional efforts led by 
industry groups, resulted in a dramatic and immediate increase in 
sales. For the December 17, 2010 sales period, LGM-Dairy sales 
increased by almost $1.4 million, compared to less than $70,000 during 
all sales periods dating back to the beginning of the fiscal year.
    Subsequently, RMA revised the funding allocation for LGM-Dairy and 
added an additional $5 million to underwriting capacity, using funds 
from other livestock products that, to date, had limited sales. Because 
of continued strong sales of LGM-Dairy, further revisions to the 
funding allocation occurred, and $16 million were eventually allocated 
to LGM-Dairy and $4 million to the other seven livestock insurance 
plans. The $16 million in underwriting capacity ran out during the 
sales period in March 2011 and LGM Dairy sales for the remainder of 
Fiscal Year 2011 ceased at that time.
    As of August 8, 2011, less than $600,000 of funding remained for 
the other livestock insurance products for the remainder of fiscal 
2011. As funding is depleted for each insurance product, sales will 
cease for that product until funds become available again beginning 
with the 2012 Fiscal Year.
Dairy Industry Advisory Committee
    In response to the dairy crisis, USDA announced in August 2009 that 
nominations would be accepted to form a Dairy Industry Advisory 
Committee. The Secretary of Agriculture appointed 17 representatives 
from the dairy industry to serve in an advisory capacity, including 
producers and producer organizations, processors and processor 
organizations, handlers, consumers, academia, retailers, and others. 
The Committee's charge was ``to review the issues of: (1) farm milk 
price volatility and (2) dairy farmer profitability.'' USDA very much 
appreciates the work of this Committee, which submitted its final 
report to the Secretary in March 2011.
    This final report includes 23 wide-ranging recommendations. USDA is 
currently reviewing other recommendations and considering action as 
appropriate. We look forward to working with Congress to develop 
policies that provide the most efficient and cost-effective protection 
to the dairy sector.
Working Toward the Next Farm Bill
    Mr. Chairman, as we move forward toward development of the next 
farm bill, it is important that we approach this new legislation with 
an eye toward truly making a difference in the future of the lives of 
millions of rural Americans, while at the same time using scare 
resources wisely. In the coming months, I look forward to providing 
answers to your questions and helping to better frame and push the 
debate toward the topics and issues that are most important to our 
constituents.
    I am happy to respond to any questions. Thank you.

    The Chairman. Thank you, Mr. Garcia.
    The gentleman from California, Mr. Costa, is not a Member 
of the Subcommittee but has joined us today. I have consulted 
with the Ranking Member, and we are pleased to welcome him in 
the questioning of the witnesses.
    Now, we will move to the testimony of Ms. Coale.
    Ms. Coale, please begin when you are ready.

    STATEMENT OF DANA COALE, DEPUTY ADMINISTRATOR FOR DAIRY 
 PROGRAMS, AGRICULTURAL MARKETING SERVICE, U.S. DEPARTMENT OF 
 AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY LARRY SALATHE, 
                         Ph.D., SENIOR
         ECONOMIST, OFFICE OF THE CHIEF ECONOMIST, USDA

    Ms. Coale. Chairman Rooney, Ranking Member Cardoza and 
Members of the Subcommittee, thank you for inviting me to 
appear before you today to review the dairy programs 
administered by the Agricultural Marketing Service of the U.S. 
Department of Agriculture.
    I will provide you with an update on the activities 
authorized in the 2008 Farm Bill that I hope will be helpful as 
you examine dairy provisions for the 2012 Farm Bill.
    AMS dairy programs conduct several activities to facilitate 
the competitive and efficient marketing of milk and dairy 
products. I am going to focus my oral statement on the three 
areas specifically identified in the 2008 Farm Bill: Federal 
Milk Marketing Orders; Research and Promotion Programs; and 
Domestic and International Market News.
    The Federal Milk Marketing Order Program has been in 
existence since the 1930s when it was authorized by the 
Agricultural Marketing Agreement Act of 1937. Currently, there 
are ten Orders that represent nearly 65 percent of all milk 
marketed in the United States. Federal Milk Marketing Orders 
are designed to promote orderly marketing by classifying and 
computing a minimum value of milk that is reflective of supply 
and demand conditions. The Order program ensures that 
processors pay producers this minimum value by verifying market 
utilization, delivery weights and component tests.
    Through this verification process, the Federal Order 
program obtains and publishes extensive market information that 
aids producers and processors with marketing decisions. During 
2010, the Federal Order program ensured minimum payments to 
nearly 46,000 producers, totaling approximately $20.4 billion.
    Although Federal Milk Marketing Orders have been in 
existence for over 70 years, they are continually updated 
through the amendatory process. The 2008 Farm Bill made several 
changes to the amendatory process designed to expedite the time 
needed to implement changes. The new time-frames were 
implemented August 20, 2008. These time-frames decrease the 
rulemaking process from over 2 years to less than 12 months 
from the date a hearing is held. USDA has held one national 
proceeding utilizing the new process and successfully met the 
mandated time-frame.
    Based on the 2008 Farm Bill, AMS also established a Dairy 
Forward Pricing Program that allows dairy farmers to enter into 
forward price contracts with processors for non-fluid milk 
uses. The milk under contract is exempt from receiving minimum 
Federal Order prices. Participation in the program has been 
minimal, approximately 300 producers of a possible 10,000 to 
15,000. Low participation rates may be attributed to perceived 
unfavorable price relationships and a limited number of 
processors offering forward contracts.
    Finally, the 2008 Farm Bill authorized the formation of a 
commission to review the Federal Milk Marketing Order program. 
Since this item was not funded, USDA did not appoint a 
commission. However, Secretary Vilsack did appoint an advisory 
committee that reviewed overall dairy policy, including a 
review of Federal Milk Marketing Orders.
    AMS also has oversight responsibility for various research 
and promotion programs. The dairy industry has the two largest 
such programs, both overseen by dairy programs, one funded by 
producers at 15 cents per hundredweight and one funded by 
processors at 20 cents per hundredweight. The 2008 Farm Bill 
required expansion of the producer program to include a 
15 cents assessment on production in Alaska, Hawaii, the 
District of Columbia, and the Commonwealth of Puerto Rico. This 
assessment became effective on April 1, 2011. In addition to 
the expanded producer assessment, a 7.5 cents assessment was 
mandated for imported dairy products. This assessment became 
effective August 1, 2011.
    AMS provides a wealth of market information to dairy 
farmers through our voluntary Domestic and International Market 
News Program. The 2008 Farm Bill directed USDA to establish an 
electronic reporting system for price reporting of four dairy 
commodities: cheddar cheese, butter, dry whey, and nonfat dry 
milk. Since funding was not provided, USDA did not implement 
these provisions. However, the Mandatory Price Reporting Act of 
2010 mandated establishment of the program. AMS issued a 
proposed rule on June 10, 2011, to implement this mandate. 
Seven comments were filed in response to the proposal. A final 
rule is being prepared to implement the program. In addition, 
software programming has begun to develop the electronic format 
that will accommodate the weekly reporting of these dairy 
commodities.
    I hope this testimony and the subsequent questions and 
answers will prove useful to the Subcommittee as you undertake 
your work on the next farm bill. Thank you.
    [The prepared statement of Ms. Coale follows]

    Prepared Statement of Dana Coale, Deputy Administrator for Dairy
      Programs, Agricultural Marketing Service, U.S. Department of
                     Agriculture, Washington, D.C.
    Chairman Rooney, Ranking Member Cardoza, and Members of the 
Subcommittee, thank you for inviting me to appear before you today to 
review the dairy programs administered by the U.S. Department of 
Agriculture (USDA) and to provide a comprehensive picture of the dairy 
activities authorized in the Food, Conservation, and Energy Act of 2008 
(2008 Farm Bill). It is our hope that this examination of these dairy 
provisions will prove helpful as you begin work on the next farm bill.
    The Commodity Title (Title I) of the 2008 Farm Bill covered a wide 
range of dairy issues. USDA's Agricultural Marketing Service (AMS) and 
the Farm Service Agency (FSA) are the primary agencies with 
responsibility for implementing Title I. Mr. Garcia of FSA is here with 
me today to discuss their activities.
    The economic vitality and quality of life in rural America, as well 
as the U.S. economy at large, depend on a competitive, efficient, and 
productive agricultural system. To increase prosperity and 
sustainability in our nation's agricultural system and rural 
communities, AMS conducts oversight activities to protect producers 
from unfair business practices. To assist producers in management and 
marketing, AMS develops and oversees national standards for the 
production and handling of agricultural products. AMS also supports 
producers by providing market information and marketing tools that 
serve as the eyes and ears of American agriculture to cover numerous 
commodities on a daily basis and provides information that impacts 
billions of dollars in agricultural trading each year.
Federal Milk Marketing Orders
    Federal Milk Marketing Orders (FMMO) are authorized by the 
Agricultural Marketing Agreement Act of 1937, as amended. There are 
currently ten FMMO areas, impacting about 65 percent of all milk 
marketed in the U.S. These ten Orders are administered by eight market 
administrators.
    The objectives of the FMMO system are to stabilize market 
conditions, to benefit producers and consumers by establishing and 
maintaining orderly marketing conditions, and to assure consumers of 
adequate supplies of pure and wholesome milk at all times. The FMMO 
program guarantees dairy farmers a minimum price for their milk while 
assuring that consumers have an adequate supply of milk to meet their 
needs throughout the year.
    FMMOs are initiated and amended based on industry requests that are 
addressed through the formal rulemaking process. This involves 
hearings, briefings, recommended decisions, public comments, final 
decisions, farmer votes, and, ultimately, implementation by USDA. 
Changes in FMMOs are approved by an affirmative vote of \2/3\ of the 
eligible dairy farmers.
    The 2008 Farm Bill had three provisions related to FMMOs. The first 
directed USDA to establish supplemental rules to define guidelines and 
time-frames to improve the timeliness of the Federal Milk Marketing 
Order hearing process. AMS published this final rule on August 20, 
2008.
    Second, the 2008 Farm Bill directed AMS to establish a Dairy 
Forward Pricing Program to allow milk producers and cooperative 
associations to voluntarily enter into forward price contracts with 
milk handlers for milk used for non-fluid purposes. The program exempts 
handlers regulated under the Federal Milk Marketing Order from paying 
producers and cooperative associations the minimum Federal Order price 
for milk under forward contract. AMS published this final rule on 
October 31, 2008.
    Third, the 2008 Farm Bill authorized the Secretary to create a 
Commission to conduct a comprehensive review and evaluation of the 
current Federal Milk Marketing Order system and the other non-Federal 
Milk Marketing Order systems such as California. As no funding was 
provided, the commission was not established. However, on January 6, 
2010, USDA announced the selection of 17 members to the Dairy Industry 
Advisory Committee (DIAC). The activities of the DIAC will be discussed 
by FSA.
Research and Promotion
    Authorized by Federal legislation, research and promotion programs, 
often referred to as ``checkoffs'', are designed to strengthen the 
position of the industry in the marketplace and to maintain and expand 
domestic and foreign markets. The programs are funded by industry 
assessments. Board members are nominated by the industry and appointed 
by the Secretary of Agriculture. AMS oversees the activities of the 
boards and approves their budgets in order to assure compliance with 
the legislation.
    Dairy Programs oversees two dairy promotion and research programs. 
The Fluid Milk Promotion Act of 1990, as amended (Fluid Milk Act) (7 
U.S.C. 6401 et seq.), authorized the establishment of a national fluid 
milk processor promotion program to develop and finance generic 
advertising programs designed to maintain and expand markets and uses 
for fluid milk products produced in the contiguous 48 states and the 
District of Columbia. The Fluid Milk Order became effective December 
10, 1993. The Secretary appointed the initial National Fluid Milk 
Processor Promotion Board (Fluid Milk Board) on June 6, 1994. 
Processors administer the Fluid Milk Processor Promotion Program 
through the Fluid Milk Board.
    Since August 2002, processors marketing more than 3 million pounds 
of fluid milk per month, excluding those fluid milk products delivered 
to the residence of a consumer, fund this program through a 20 cents 
per hundredweight assessment on fluid milk processed and marketed in 
consumer-type packages in the contiguous 48 states and the District of 
Columbia.
    The second dairy promotion and research program, authorized by the 
Dairy Production Stabilization Act of 1983, is a national producer 
program for dairy product promotion, research, and nutrition education 
to increase human consumption of milk and dairy products. This self-
help program was funded by a mandatory 15 cents per hundredweight 
assessment on all milk produced in the contiguous 48 states and 
marketed commercially by dairy farmers and administered by the National 
Dairy Promotion and Research Board (Dairy Board).
    For this National Dairy Promotion and Research program, the 2008 
Farm Bill required that dairy promotion and research assessments apply 
to all states, the District of Columbia, the Commonwealth of Puerto 
Rico and dairy product importers. The assessment rate was set at 
15 cents per hundredweight for domestic milk and 7.5 cents per 
hundredweight for imported dairy products. A final rule implementing 
this provision was published March 18, 2011. All provisions became 
effective April 1, 2011, except provisions regarding dairy importer 
assessments which were effective August 1, 2011.
Market News
    AMS' Dairy Market News provides dairy farmers and their 
cooperatives, processors, buyers and sellers of dairy products, and 
others with timely and accurate market information on milk and dairy 
products that will help them in making current buying and selling 
decisions and in future planning. This information is released through 
reports issued daily, weekly, monthly and annually. These reports are 
available free of charge and the information is easily accessible.
    In collecting market information, reporters cover multiple markets 
that results in over 65 reports by constantly interviewing buyers, 
sellers, and brokers of fluid milk, cream, butter, cheese, condensed 
milk, and dried milk products. Currently, the industry voluntarily 
provides the information.
    AMS and the National Agricultural Statistics Service (NASS) also 
administer a Dairy Product Mandatory Reporting Program, which requires 
persons engaged in manufacturing dairy products to report certain 
information including the price, quantity, and moisture content where 
applicable, of certain dairy products sold by the manufacturer. The 
program also requires persons storing dairy products to report 
information on the quantity of dairy products stored.
    Currently, NASS collects information for the program and AMS 
provides verification and enforcement functions for dairy product price 
information. NASS publishes sales information for block cheddar cheese, 
barrel cheese, butter, dry whey, and nonfat dry milk on a weekly basis. 
Any manufacturer that markets less than 1 million pounds of these dairy 
products per year is exempt from the price reporting requirements.
    The 2008 Farm Bill directed USDA to establish an electronic 
reporting system for price reporting of these dairy commodities. As no 
funding was provided, AMS did not implement this provision. However, in 
September 2010, Congress passed the Mandatory Price Reporting Act of 
2010, mandating the establishment of this electronic reporting system 
(again without funding) while directing AMS to publish the information 
obtained for the preceding week not later than 3:00 p.m. Eastern Time 
on Wednesday of each week, rather than on Friday.
    On June 10, 2011, USDA issued a proposed rule to implement the 
provisions contained in the Mandatory Price Reporting Act of 2010. 
Under the proposed rule, AMS would develop the electronic system and 
collect the data. The comment period closed August 9, 2011, and AMS is 
currently reviewing the seven comments received.
Other AMS Dairy Activities
    AMS undertakes a number of other activities not referenced in the 
2008 Farm Bill that are of great importance to the dairy industry. AMS 
grading services assist the dairy industry in marketing high-quality 
dairy products by providing buyers and sellers with an impartial 
appraisal of product quality and to provide the consumer confidence in 
buying.
    AMS also provides certification services to assist in the export of 
dairy and related products. These certificates are issued to eligible 
plants which include those dairy plants listed in the Interstate Milk 
Shippers list (IMS list), the Food and Drug Administration maintained 
European Union Dairy Plant Reference list (EU list), and Dairy Plants 
Surveyed and Approved for USDA Grading Service (USDA Approved Plant 
list).
Conclusion
    AMS undertakes numerous activities to facilitate the competitive 
and efficient marketing of U.S. agricultural products. These efforts 
support the overall mission of USDA, which is to protect and promote 
food, agriculture, natural resources and related issues. I hope that 
this testimony and the subsequent questions and answers will prove 
useful to the Subcommittee as you undertake your work on the next farm 
bill.

    The Chairman. Thank you, Ms. Coale.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for Members 
who were here at the start of the hearing. After that, Members 
will be recognized in order of their arrival. I appreciate 
Members understanding.
    With that, I recognize the Ranking Member, Mr. Cardoza.
    Mr. Cardoza. Thank you.
    I have questions for Mr. Garcia.
    I want to thank you for your work with USDA Industry 
Advisory Committee. The committee recommends that USDA further 
study raising minimum fluid milk nutrition standards 
nationwide. A similar FAPRI study requested by the House Dairy 
Farmer Caucus showed that such a move could return several 
hundred million dollars to producers in just a few years, while 
consumers would pay only about a penny more per glass for milk, 
with up to a third more calcium and protein in that milk 
supply.
    One thing that the committee identified as an issue not 
addressed in the FAPRI study was the potential startup costs to 
processors. Is there a way for the Department to study what 
those processor startup costs might be?
    Mr. Garcia. Thank you, Mr. Cardoza.
    I may have to refer that to Ms. Coale since she has been 
doing some work with the advisory committee.
    Mr. Cardoza. Thank you.
    Ms. Coale.
    Ms. Coale. Thank you, Mr. Cardoza.
    As you know, the advisory committee submitted to the 
Secretary 23 recommendations, one of which did look at adopting 
the California milk solid standards. The Secretary, of those 23 
proposals, has been reviewing them. Over half of them require 
new or additional funding or additional legislative authority 
for the Secretary to take action on that.
    Currently, with regards to the California milk solid 
standards, the Secretary has been reviewing this proposal and 
is aware of an industry interest in looking at the startup 
costs associated with that. At this time, it is still under 
review by the Department.
    Mr. Cardoza. I would like to encourage the Department. I 
see great acceptance of the standards in California. The 
product is more nutritious, and I am a huge fan of increased 
standards.
    To follow up, the MILC Program is a prime example of 
government programs that pick between winners and losers, in my 
opinion. In fact, a USDA study a few years back confirmed that 
the program keeps farm milk prices lower than they would 
otherwise be. Could any of you please tell us what the total 
amount of money producers in each of the top five milk-
producing states have received from MILC under the farm bill, 
along with the most recent annual milk production figure for 
those states?
    Mr. Garcia. Mr. Cardoza, I don't have that information 
readily available, but we can provide that information as far 
as the top five states under the MILC Program.
    Mr. Cardoza. I would very much like to have that.
    Mr. Garcia. Yes, sir, we can provide that.
    [The information referred to is located on p. 971.]
    Mr. Cardoza. In 2009, Congress appropriated $350 million in 
emergency funds to help dairy farmers through what was then the 
worst economic crisis in at least a generation. This crisis was 
caused by significant decline in U.S. exports due to the 
worldwide financial crisis. Some of us thought that the entire 
$350 million should have gone to the purchase of cheddar cheese 
to donate to food banks which were having trouble keeping up 
with record demand in this country. In the end, only $60 
million went to cheese donations.
    Many have questioned the decision to purchase high-cost 
items, like shredded cheese, with these funds instead of the 
more reasonable and more widely available block cheese. Can you 
tell me what products were purchased and how quickly these 
donations were completed?
    Mr. Garcia. I am going to have to look at that, Mr. 
Cardoza. I think I have that information.
    [The information referred to is located on p. 972.]
    Mr. Cardoza. Please get back to me on that. I think that is 
a very important piece of information the Committee is going to 
need as we move forward not to make mistakes. As everybody 
knows, there is a shortage of dollars available to do these 
kinds of programs, and money is hard to come by, and we want to 
make sure that we get the most bang for the buck.
    Finally, for Ms. Coale, California producers have an 
extensive history in using a small part of their checkoff to 
educate consumers about how farmers care for their animals and 
the environment. AMS has oversight over the dairy checkoff, and 
I want to personally encourage you to continue to allow those 
activities with the intent of Congress for the dairy checkoff.
    Ms. Coale. Thank you. We will take that under advisement.
    Mr. Cardoza. Thank you.
    Thank you, Mr. Chairman. No further questions at this time.
    The Chairman. Thank you, Mr. Cardoza.
    The gentleman from Vermont, Mr. Welch, has also joined us 
and is also not a Member of the Committee.
    I have consulted with the Ranking Member, and without 
objection, we are pleased to welcome him to join in the 
questioning of the witnesses.
    Mr. Welch. Thank you very much, Mr. Chairman.
    The Chairman. With that, we will move to Mr. Conaway from 
Texas.
    Mr. Conaway. Thank you, Mr. Chairman.
    The existing array of programs we have available for milk 
from the 1930s; world distribution and world demand is 
different than it was then. Can you walk us through how that 
existing array helps and/or hurts the milk producers in this 
country be competitive with products they could otherwise 
produce and sell into the world market?
    Dr. Salathe. I will take that question.
    The dairy industry has changed a lot since the 1949 Act, 
which supported the price of milk at parity levels and 
supported milk prices at parity through the late 1970s, and 
then we had a change in programs because our purchases became 
burdensome under the Price Support Program. And after that, 
Congress lowered the purchase price--support price for milk and 
started instituting payment programs to producers to counter 
some of the price volatility or income volatility that they 
faced.
    Back in the 1970s and early 1980s, we were basically a net 
importer of dairy products. We also had import quotas on 
imports of dairy products, and so we were pretty well insulated 
from the international market. And as a result, if we increased 
our prices, we supported the prices to dairy producers, we 
didn't provide an incentive to expand world production of dairy 
products.
    That has changed, of course, under the WTO Uruguay round 
agreement, our market is now pretty open to imports of dairy 
products. We are also now a net exporter of dairy products. We 
are competitive in the world price--world market. We compete 
every day for markets outside our borders, and so it is very 
important to have a dairy policy that reflects that change in 
the market environment that producers and processors face.
    Mr. Conaway. The line here is that we pay producers to 
produce stuff that can't be sold in the world market, and if we 
were to adjust the incentives--and I am just parroting more 
than I understand really what is going on--this argument has 
been made that there is a disconnect between what we incent to 
be produced versus what could be sold to the world market. That 
is what I am trying to get at.
    Dr. Salathe. There has been an argument and continues to be 
an argument that the amount of nonfat dry milk we produce in 
this country has increased higher than it should because of the 
Price Support Program we have. We have a support program for 
nonfat dry milk, a Dairy Product Support Program for nonfat dry 
milk, cheddar cheese, and butter. And so there may be an 
incentive to produce more nonfat dry milk.
    I think over time that incentive probably is being reduced, 
other dairy products are being produced, value-added products, 
whey products, more protein-concentrate products are being 
produced in the U.S.
    Mr. Conaway. Okay. Well, I think I understand. Let's talk a 
little bit about the LGM Program, Ms. Coale, and that it looks 
to be oversubscribed in terms of popularity. I think in 
somebody's testimony or information we have, that we have about 
$20 million appropriated for support of that program. Demand 
looks like we are about $164 million a year versus the $20 
million. Are those numbers anything you guys are familiar with? 
Is the LGM----
    Dr. Salathe. Yes.
    Mr. Conaway.--popular enough that we should look at 
expanding it?
    Dr. Salathe. I think that is--we have a variety of tools to 
help dairy producers through difficult times. That is one of 
the tools we have right now. You are correct; it is limited in 
terms of budget authority at $20 million. That is all risk 
management products for livestock, including dairy are limited 
by that, and that has prevented us from expanding the dairy 
cattle product, Livestock Gross Margin for dairy cattle.
    I think that is a difficult question. That is one that you 
are going to have to wrestle with. It is one of the tools in 
the tool bag we have to help dairy producers, and you have to 
look at all those tools, which ones you want to expand and 
which ones you want to reduce in terms of budget authority.
    Mr. Conaway. Thank you, Mr. Chairman.
    I yield back.
    The Chairman. Thank you, Mr. Conaway.
    The Committee would now like to recognize the Ranking 
Member for the full Committee on Agriculture, Mr. Peterson.
    Mr. Peterson. Thank you, Mr. Chairman. I don't know who 
wants to answer this, but the dairy industry now has a safety 
net that is based largely on price through the Price Support 
Program, as you mentioned, and the MILC program. As you are 
aware, there is significant discussion around moving towards a 
margin-type program as opposed to price. Can you talk about 
dairy farm margins in the past few years and where they are 
likely to head with increased feed costs, and do you believe 
that dairy producers would be better supported if we had a 
safety net that focused on margin versus price?
    Dr. Salathe. I will attempt to the answer that, Mr. 
Peterson. Thank you for that question. It is a very good 
question. I wish we knew where margins were going. I think if 
you look at 2009, margins were very low compared to history. If 
you look at 2010, your average, depending on how you exactly 
calculate feed costs, but in the $8 range. Remember, it fell to 
an average of $4 in 2009 and some of the months were much lower 
than that.
    In 2010, we came pretty close to the average, and so far 
this year, we are pretty close to the historical average, 
despite the high feed costs, because we have had record high 
milk prices this year. Where it will go in the future is 
difficult to say. Obviously there is going to be some 
vulnerability. Over the long term, feed costs and milk prices 
go together, but in the very short term, milk prices may go 
down and feed costs may stay high.
    So, as we look out, it is very difficult to say, but we are 
going to have periods in which the milk margin is going to be 
below average, no doubt about it, because we have seen these 
cycles, and there is no doubt they are going to continue.
    Mr. Peterson. There are some in the industry who are still 
asking for daily price reporting. Can you talk about how much 
that would cost for USDA to administer and if you believe daily 
price reporting for the dairy industry would provide dairy 
producers with better tools than they would have with 
electronic reporting?
    Ms. Coale. Certainly. We are currently in the process of 
implementing weekly mandatory electronic reporting. At this 
particular point in time, we do not have that program 
implemented yet, and we only have estimated costs.
    Mr. Peterson. That is one that we asked you to do in the 
farm bill?
    Ms. Coale. Yes, that is correct. That is the one that was 
also mandated in the Mandatory Reporting Act of 2010. Currently 
that program, the software development costs are in the 
neighborhood of approximately $\1/2\ million. That is being 
taken out of the Fiscal Year 2011 monies that AMS reprioritized 
to be able to implement.
    Looking forward into 2012 as we actually implement that, we 
know that there will be costs associated with managing the 
program, and we are not quite certain exactly what those costs 
will be, although we are estimating them to be about in the 
neighborhood of $500,000 as well in 2012.
    When you look forward to daily reporting, this is an issue 
that has been raised in a rulemaking process that we are 
currently involved with in implementing the mandatory 
reporting. What I can tell you is that in one of the comments 
filed in response to that rulemaking, one of the reporters has 
indicated that daily reporting would be very difficult for the 
reporters to implement and would actually, instead of 
increasing market transparency, could in fact result in more 
misinformation being provided as the reporters would not be 
able to report accurate prices on a daily basis and would be 
submitting significant revisions to the numbers that they 
submit.
    Again, this is addressed in a comment that was filed and at 
this time the Department is reviewing.
    Mr. Peterson. You said a price reporter?
    Ms. Coale. Yes.
    Mr. Peterson. Who was that?
    Ms. Coale. The price reporter issuing that comment was 
Dairy America.
    Mr. Peterson. Was that the only comment you had?
    Ms. Coale. No. We received seven comments in regards to our 
initial proposed rule. All of those comments are available for 
the public on dairy program's website.
    Mr. Peterson. When do you close the comment period and move 
through the process?
    Ms. Coale. Yes. The comment period on the proposed rule, 
which in essence transfers the responsibility for mandatory 
reporting that is currently held by NASS to the Agricultural 
Marketing Service, the comment period ended the beginning--
first part of August. We are in review of those comments and 
preparing a final rule. The Mandatory Act required we implement 
the program within a year, and we are on schedule to hopefully 
have the program up and running in the first part of 2012.
    Mr. Peterson. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The chair thanks the Ranking Member.
    We will now move to Mr. Huelskamp.
    Mr. Huelskamp. Thank you, Mr. Chairman.
    I appreciate the opportunity to ask a few questions here, 
and I would like the general thoughts of the witnesses in 
reference to a reform proposal entitled, Foundation for the 
Future, and general thoughts of you all as far as its possible 
effectiveness and what it might do for the dairy industry, and 
so if you could each respond, I would appreciate it.
    Ms. Coale. First and foremost, Secretary Vilsack is on 
record as stating that the draft legislation that has been 
presented, which is based primarily off of Foundation for the 
Future is a good start and it identifies issues that need to be 
addressed by the dairy industry.
    We recognize at the Department that there are numerous 
proposals under consideration, both here at Congress and by the 
industry itself. We look forward to working with you here and 
to working with the industry to provide technical assistance 
and any analysis that would be requested or needed to be able 
to examine and further determine how those programs might be 
implemented and what the effects of those implementations might 
be.
    Mr. Huelskamp. And beyond the administrative issues, what 
do we expect the Administration or the Department to have a 
particular proposal or simply just to provide technical 
expertise as we talk about these changes?
    Ms. Coale. At this particular point in time, the Department 
is more than happy to provide any technical assistance that 
would be needed by you as you are reviewing the farm bill 
proposals and the legislative options that are presented. We do 
not have any intentions at this point of submitting any type of 
legislative language.
    Mr. Huelskamp. Okay. Are there any particular parts of the 
current programs that you would suggest are most effective or 
least effective when we are looking at proposed changes?
    Mr. Garcia. Thank you, Congressman.
    What I would like to do is comment somewhat on the Milk 
Income Loss Contract, the MILC. After the enactment of the 2008 
Farm Bill, it provided for, if I can call it, an improved 
safety net for producers because it included a feed cost 
adjuster to the $16.94 per hundredweight baseline. So if that--
if that feed cost adjuster did trigger, it would essentially 
add that amount to the $16.94 baseline for the program, thus 
providing additional payments for producers that qualified for 
the payment. So that was an improvement with the 2008 Farm Bill 
that we were able to administer.
    Mr. Huelskamp. And you think the MILC is a successful 
program or those that you would suggest, ``Hey, these are not 
working as we anticipated and could be improved or replaced?''
    Mr. Garcia. Well, as far as our producers are concerned, we 
did pay over $940 million under the MILC Program, especially 
during 2009. Now, there have been some concerns regarding the 
2,985,000 pound cap that is under the program. Now, we also 
have to recognize that as of September 1, 2012, there will be 
some changes in the program. The amount of cap will be reduced 
to 2.4 million pounds, plus other adjustments that will occur 
after September 1, 2012.
    Mr. Huelskamp. I appreciate that. One last question in 
reference to just trying to get to the heart of how we might 
improve the programs. My understanding is New Zealand and other 
countries have been more innovative in new products and the 
suggestion has been perhaps our policies have not promoted that 
innovation. Are there any particular changes that would allow 
us to compete more effectively in international markets or in 
domestic markets with innovative products?
    Dr. Salathe. Well, there are two programs that have been 
pointed to as affecting what we produce here in the United 
States and whether they reduce the incentives to develop new 
products. One is the Price Support Program, which we talked 
about earlier in reference to nonfat dry milk and whether that 
program provides an incentive to produce nonfat dry milk rather 
than other products that would be perhaps sold abroad as well 
as developing new products. There is also some concern about 
the Federal Milk Marketing Order Program doing a similar thing.
    I have not personally, despite being a dairy economist for 
probably 30 years, seen any quantitative assessment of those 
concerns, and so it is hard to say whether those are large, 
small, or medium effects that we should be concerned about. 
Nevertheless, I think those have been concerns that have been 
raised by a variety of people, and they are probably--for that 
reason, there may be legitimate concerns.
    Mr. Huelskamp. Thank you, Mr. Chairman.
    The Chairman. Next we move to Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Let me ask the first question to you, Mr. Garcia.
    I am worried that the expansion of the Livestock Gross 
Margin Dairy Program would be extremely limited, especially 
given the tight budgets we are dealing with right now here in 
Congress. Congress simply doesn't have the money to increase 
participation numbers at the current premium subsidy level. So, 
in your opinion, what effect would lowering the premium support 
level have on participation?
    Dr. Salathe. Well, under the program that was offered this 
past year in 2011, with the premium subsidy, we enrolled about 
2.4 percent of total milk production in the U.S. Prior to that, 
the program was very, very small, and we enrolled \1/10\ of 1 
percent of total milk production, in that range, and so if you 
reduce the premium subsidy, we would get, I would say, it is 
likely that you would get something in between that, between .1 
and 2 percent of total milk production would be enrolled in the 
program, so it would still be very small.
    Mr. Scott. So what is the current level, the bare minimum a 
producer or a private insurance company needs in order to 
participate?
    Dr. Salathe. Well, there is--the program that was offered, 
like I said, in 2010, when only very small numbers of producers 
were participating, and so it would--this is a guess on my 
part--that it was still possible to offer the program, even 
though participation was fairly low.
    Mr. Scott. So the current level is the bare minimum?
    Dr. Salathe. The current level of participation, about 2-
2.5 percent of total milk production enrolled in the program is 
kind of the maximum, kind of the maximum that is allowed under 
the current budget cap on livestock products offered by the 
Risk Management Agency.
    Mr. Scott. Ms. Coale, let me ask you this with respect to 
the Federal Milk Marketing Orders. I think they play a crucial 
role in another risk management tool, and that is hedging, but 
because of their structure, they produce a highly variable 
basis where a more stable basis is needed for accurate and 
useful hedging.
    So let me ask you what changes do you think could be made 
to the Federal Milk Marketing Order pricing system that would 
allow producers to make use of what is a valuable private 
sector risk management tool, hedging?
    Ms. Coale. Thank you. I think there are two areas that I 
would like to explore in response to this question. First and 
foremost, with regards to the Federal Order Program, as you are 
looking forward, one of the areas that the Department have seen 
great consensus in the industry with has to do with the way the 
minimum prices are established under the program. Currently, 
the Department uses a product price formula to establish the 
minimum prices that are used to pay producers for the milk that 
is marketed and pooled within a Federal Marketing Order.
    One of the other areas that the 2008 Farm Bill expanded was 
implementation of the Forward Contracting Program. What we have 
seen upon implementation of the program, that it is available 
to producers for all non-fluid milk that they market, but we 
have seen low participation rates. Primarily, while we have not 
completed any surveys since the pilot program was put in place 
back in 2004, what we believe from the information we obtained 
is that processors have not been offering contracts to their 
producers, and producers are somewhat hesitant to enter into a 
contract with a processor for what they perceive--and it is 
their perception, as it is a voluntary program--that it doesn't 
make economic sense for them to sign a forward contract.
    One of the interesting things to note is that while the 
program in 2009 only had 75 participants, currently there are 
about 300 participants who have signed contracts. So we are 
seeing a slight uptick in the amount that the program is 
utilized.
    Mr. Scott. Mr. Chairman, I did want to be able to ask one 
more.
    The Chairman. Absolutely.
    Mr. Scott. I wanted to ask you about tax liability real 
quickly--thank you, Mr. Chairman--because I know that producers 
like to reinvest their profits into their businesses in order 
to avoid tax liabilities. But, this can lead to an increase in 
supply when, in fact, demand is falling, and that is what has 
exasperated lag time between aligning supply and demand, and 
that has produced in the past a crisis as we have seen in the 
last few years. So if you could each very quickly--do each of 
you think that tax-deferred farm savings accounts are a viable 
method to both avoid tax liability and artificial bumps in 
production?
    Dr. Salathe. Farm savings account, of course, are a way 
to--I don't know if the word ``avoid'' is right--I mean, it is 
a short-run avoidance of tax liability. Obviously, when you 
take the money out, supposedly if there is no reduction in tax 
rate, when you take the money out, supposedly then you are 
going to pay tax when you take the money out. Maybe your income 
is lower, though, so your average tax rate would be lower on 
average.
    I think the question becomes, how many producers and what 
is their demographic makeup of those farmers that actually pay 
taxes? We know a number of farmers don't pay taxes for the 
reasons you indicate. You know, they might put it into their 
business, which may be a great long-term decision for them. For 
those that do that, there are some who would not change that 
decision because they want to expand and want to maintain their 
business. I think it is difficult at this point to say how many 
producers would benefit and what the response, market response, 
would be.
    Mr. Scott. Well, thank you very much.
    Thank you for your generosity, Mr. Chairman.
    The Chairman. Okay. We will move to Mr. Ribble.
    Mr. Ribble. Thank you, Mr. Chairman.
    Mr. Garcia, good afternoon. Thanks for being here today.
    I am from Wisconsin, and some of our smaller producers, 
actually quite a few of our small producers, participate in the 
Milk Income Loss Contract Program, and as Mr. Peterson's line 
of questioning implied, there are some proposals on the table 
to shift to a margin insurance component type of program. What 
is currently the average size of a dairy operation 
participating in the MILC Program, and how much do you expect 
the program to pay out this year?
    Mr. Garcia. If I can address your latter question, we have 
not issued any MILC Programs all year long since the prices 
have remained high. Of course, right now, the prices of milk 
are relatively high. Of course, it is predicted that with 
higher feed costs, we could see lower milk prices toward the 
end of this year or early next year. So there is a possibility 
that the MILC payments could trigger in either late December or 
early January.
    Now, as far as the average herd size of the producers that 
participate in this program, it is hard to tell because, of 
course, this program is available to your--if you would 
categorize your smaller producers in the neighborhood of 300 
cow dairy or your larger producers which--and I am from Texas. 
We have some of both. You know, we have the 160 cow dairy up to 
the 10,000 cow dairy. So, of course, all the producers can 
participate in that particular program.
    Now, the issue is that with the larger producers, that they 
can reach their cap limit of 2.985 million pounds in a month's 
time, where your smaller dairies will have--will take more time 
to reach that cap. So it is hard to come up with an average 
size of dairy producers that participate.
    Mr. Ribble. Is there statistical data available on the size 
of the producers that are using the program? Especially when 
you look back like 2009, when things were pretty rough, is 
there some statistical data that shows how that money was 
distributed by size?
    Dr. Salathe. Yes, I believe so. We have information in 
terms of the size of producers who got payments. All producers 
are eligible for the program. It is whether they hit the 
production limit or not, and so--but we probably do have data 
on the size of producers and what they received or whether they 
participated and got a payment or not.
    [The information referred to is located on p. 972.]
    Mr. Ribble. That would be interesting information for me, 
and if you could get that for me, I would appreciate it.
    Going along, I understand that many stakeholders within the 
dairy industry support the elimination of the Dairy Product 
Price Support Program. I have also talked with several 
operators in Wisconsin about the increasing importance of 
export markets to their farms. I have heard repeatedly from 
producers that they would like to sell their products on the 
world markets without obstacles in the way. What in your view 
should we be doing to expand export opportunities?
    Dr. Salathe. I guess I will take a shot at it by default. 
Honestly, we want to make sure our programs are conducive to us 
exporting abroad, so we want to look at our programs very 
carefully and make sure that they do allow us to export. I 
think free trade agreements are very important. We need to 
reduce the barriers abroad to our dairy products that exist 
now. We need to break those barriers down. There are sanitary 
types of restrictions. There are quotas on imports and things 
of that sort. We need to address those country by country as we 
can. I think those are the most important.
    I strongly agree and I agree with dairy farmers in 
Wisconsin, and I strongly think that our dairy industry is 
competitive and can be very competitive. There are producers in 
Australia we have to compete with. I think the market is big 
enough that we can, and we can have a significant share of the 
world market along with them. I think the future is very bright 
for the dairy industry in terms of expanding the export market. 
I think breaking down barriers is probably the number one thing 
and making our programs, being sure our programs do not 
interfere with us making good, quality dairy products for the 
export market.
    Mr. Ribble. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman, for holding this 
hearing.
    And actually before asking my question, I just want to take 
a point of personal privilege in recognizing in the back of the 
room Ms. Marsha Jette, who is the Connecticut FSA 
Administrator. She is in town for a meeting in Washington. She 
has had a pretty amazing year with the record snowstorms that 
destroyed a lot of livestock and dairy buildings in Connecticut 
and, obviously, Hurricane Irene last week, which wiped out a 
lot of silage. And her team is doing a great job helping 
Connecticut farmers deal with those disasters.
    I have to say, when Mr. Huelskamp asked the question about 
where the Administration's position was going to be on the 
Foundation for the Future, that your answer was that you are 
going to supply us with information, I was disappointed with 
that because, Secretary Vilsack when he established the Dairy 
Advisory Committee, I mean, that was a stroke of genius, after 
the agony of 2009, to get people feeling engaged in terms of 
the administration. And they have made a lot of 
recommendations. They have worked hard.
    It is my understanding over 20 recommendations, a lot of 
which are certainly relative to Mr. Peterson's proposal, and 
you know, we could use a little help here. I just feel like you 
have gone to all that extent of soliciting input, and I would 
hope that the Department is going to be more of an engaged 
partner in terms of this Committee trying to come up with a 
solution for this industry. And I just wondered if you could 
maybe give us a little more insight about what you are doing to 
do with the advisory committee's suggestions.
    Ms. Coale. Certainly, I will be happy to provide some more 
information on that.
    As you mentioned, the advisory committee was formed. It 
consisted of 17 individuals that were highly diverse, and they 
represented all facets of the dairy industry. Those individuals 
met and did an extensive amount of work in a very short period 
of time to develop 23 recommendations that they presented to 
the Secretary last spring. The Secretary did not put any 
qualifiers around the recommendations that the advisory 
committee could come forward with. So, therefore, he did not 
put any indicators on budgetary constraints or legislative 
authorities that would need to be considered when they were 
developing the recommendations.
    Consequently, of the 23 recommendations that were presented 
to the Secretary, over half of them requested either new 
funding or higher levels of funding, or requested or would 
require the Secretary to have new legislative authority in 
order to enact those particular recommendations.
    Of the remaining recommendations that exist, the Department 
has been actively working on five of those or has completed 
five of those recommendations. The Department also has three of 
the recommendations that we are working closely with you up 
here on as they do relate to various provisions contained in 
the draft legislation of Congressman Peterson, as well as other 
legislative proposals that have been presented up here.
    So we have taken what the advisory committee, the work that 
they have done, we have been reviewing it, analyzing it, 
providing information up here to help with the technical 
assistance that might be needed when it comes to actually 
determining what policy you want to implement with regards to 
that.
    Mr. Courtney. Well, I appreciate that, and I would hope, at 
some point, the Department would also maybe talk about what 
policy you would like to see implemented as well. I am not 
trying to be a wise guy here, but the purpose of this, is to 
have a dialogue and collaboration to come up with--these are 
tough issues.
    I mean, let me ask one, for example, I know Mr. Peterson's 
draft proposal explores expanding that crop insurance, the risk 
insurance program for dairy.
    What I hear back home is it is too complicated. As a 
product, it is just too unimaginable, particularly for smaller 
guys, let alone cost issues, which Mr. Scott mentioned earlier. 
Is the Department looking at issues like that? Are they trying 
to see if there is a better way to design the product so that 
it becomes more workable, particularly for smaller farmers?
    Dr. Salathe. I guess I am a little bit confused by your 
question. Are you talking about the Peterson draft bill, or are 
you talking about LGM-Dairy?
    Mr. Courtney. Well, obviously, the LGM-Dairy is what is out 
there right now.
    Dr. Salathe. Correct.
    Mr. Courtney. To some degree, the bill sort of tries to 
adopt that model a little bit but doesn't necessarily 
incorporate that specific program, but to me, we are going to 
run into that same issue if the Peterson bill passed, for 
example.
    Dr. Salathe. I think it is safe to say that the Secretary 
is very interested in having a dialogue. He is not interested 
in putting out a very specific proposal that then competes with 
some other proposal. He is not interested in that. The 
Secretary is very interested in dairy policy. I think he wants 
to come to some compromise or conclusion, and he feels very 
strongly that the safety net needs to be improved for dairy 
producers.
    I think, on the other hand, he recognizes that it is very 
difficult to get consensus in the dairy industry, and he also 
recognizes that we are in a very difficult budget situation. So 
he is interested in coming to some conclusion.
    Mr. Courtney. Again, hopefully, he will be an active 
participant in that.
    So I thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Courtney.
    We move to Mr. DesJarlais.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    And I thank the panel for being here today.
    I had the opportunity to speak with some of our dairy 
farmers in Tennessee's Fourth District over the August recess, 
and they sent me armed with several specific questions, but 
after listening to the testimony today, I agree with Mr. 
Courtney. I think that maybe it is premature to ask some of 
those, considering where we are at in this process, but not 
wanting them to be left out, let me just ask a very broad 
general question, tapping upon your expertise.
    What risk management programs do you feel are particularly 
successful and which ones not so much, and what do we do with 
those, moving forward, as we write the farm bill in Fiscal Year 
2012 to keep the dairy market strong and competitive?
    Dr. Salathe. Very good question. I wish had I an answer.
    I guess, risk management--I assume you are talking broadly 
about dairy programs in general, not about the risk management 
programs in particular?
    Mr. DesJarlais. More narrowly related to risk, go ahead and 
take a shot at either one.
    Dr. Salathe. Okay, thank you. Thank you very much.
    Basically, on dairy, we have four programs. As I see it, we 
have the MILC, Milk Income Loss Contract, program. It is a 
direct payment program. It pays when milk prices are low and 
feed prices are high. We have the Dairy Product Price Support 
Program, if you look at current price levels, milk prices would 
have to fall by about 50 percent before anything would kick in. 
I think most producers say that is too much; it doesn't provide 
enough of a safety net. And we have the Dairy Export Incentive 
Program, which nobody has addressed, which provides an export 
subsidy in certain instances when the world price is above the 
U.S. price. We haven't operated that program very often. We did 
operate all three of those programs in 2009.
    And then you have LGM-Dairy, which has a real problem in 
terms of its budget. The amount of outlays or amount of money 
provided for that program just doesn't, at this point, provide 
for a whole lot of participation.
    So you have--the main driver in this program, set of 
programs that we have, if you look at 2009, was the MILC 
program, which provided over $900 million in direct payments to 
producers. The next most important program was the Dairy 
Product Price Support Program, in which we purchased 276 
million pounds of nonfat dry milk and about 5 million pounds of 
butter in late 2008 and 2009. And DEIP we operated, but the 
quantities were fairly small.
    So that leaves, really, two programs--MILC and DPPSP. And 
those two programs--the National Milk's Foundation for the 
Future will eliminate those two programs and replace it with a 
margin insurance program.
    That is kind of a nutshell. There are, of course--farmers 
can and should think about using the futures market to lock in 
prices, to provide a safety net that way. Obviously, there are 
private-market tools that they can use, from forward 
contracting to some extent, futures markets as well.
    Mr. DesJarlais. Okay. I appreciate that.
    Does anybody have anything to add specifically on the dairy 
programs, the DPPSP or the MILC program, as far as its success 
or failure, moving forward?
    Dr. Salathe. The other thing that I would point out, being 
a trained economist--maybe not so trained, but anyway--that any 
program you put in place has both positive and negative 
impacts. If you provide payments to producers, direct payments 
to offset lower returns, that may keep more producers in 
business and may mitigate the signal to reduce production when 
production should be reduced. And so, on the other hand, it 
does allow some producers to stay in business.
    So there are these positive and negative consequences of 
any type of intervention, and it is very important to be 
cognizant of those.
    Mr. DesJarlais. Okay. Well, thank you for that. And then 
maybe next time around, we will get more into the specific 
questions. But I appreciate your thoughts.
    And I yield back.
    The Chairman. Mr. Costa?
    Mr. Costa. Thank you very much, Mr. Chairman, for allowing 
me to sit in on the Subcommittee hearing.
    My family has been involved in the dairy business for three 
generations, and I guess if I didn't have this job I could get 
a job somewhere milking cows. I do have some redeemable skills 
in that area.
    While you are correct to say in the last 6 months the 
prices have gotten better within the dairy industry, we are 
rebounding from perhaps the most difficult period the industry 
has been in in decades. As a matter of fact, if you look at the 
cycles, in 2000, 2003, 2006, and 2009, some estimate that the 
period between 2008 and 2010, that the industry, nationwide, 
lost anywhere between $15 billion and $20 billion in equity. I 
am talking about the dairy producers.
    And yet, part of it is obvious, why the size of the dairies 
continue to shrink and a growing number of large farms, large 
dairy farms, are still--that is the trend. What factors do you 
think are creating that trend?
    Dr. Salathe. Well, that is a very good question. But, the 
bottom line is that there is just--it is new technology for 
farmers.
    Mr. Costa. Marginal costs.
    Dr. Salathe. Marginal costs. Adoption of new technology 
allows farmers to produce milk at a lower cost. And so, if you 
have----
    Mr. Costa. Do you have the total number--you were taking 
about the MILC program to producers--how much was paid out in 
2009?
    Mr. Garcia?
    Mr. Garcia. It was about $940 million.
    Mr. Costa. And how many producers went out of business in 
2009?
    Mr. Garcia. The information that we have, Congressman, 
based on statistical data from the National Agricultural 
Statistics Service is, between 2008 and 2009, we had around 
three percent of producers that went out of business.
    Mr. Costa. Obviously, the MILC, then, therefore, isn't a 
very effective safety net in that instance, if that is the 
purpose and part for what it is done.
    The last time the Dairy Product Price Support Program 
purchased product, when was that?
    Mr. Garcia. It was in summer of 2009, August of 2009.
    Mr. Costa. How much product did it purchase?
    Mr. Garcia. It bought--really, it was one small purchase 
for back test purposes--well, I am sorry.
    Dr. Salathe, maybe you can help me with that one.
    Dr. Salathe. Well, under the Dairy Product Price Support 
Program, in late 2008 and through about August 2009, we 
purchased 276 million pounds of nonfat dry milk and 5 million 
pounds of butter.
    Mr. Costa. Some of my producers think that the Price 
Support Program takes the U.S. out of the export market and the 
margins based upon per hundredweight on whether or not we are 
in a surplus condition or below. Do you think that is the case?
    Dr. Salathe. Well, when we are purchasing product, we are 
supporting the world price on nonfat dry milk. So, by doing 
that, we are supporting prices to producers in----
    Mr. Costa. Do you think some companies or some co-ops are 
producing nonfat dry milk because of the program that is in 
place and they have a guaranteed purchaser?
    Dr. Salathe. I think you would have to ask them. I really 
don't have----
    Mr. Costa. Not going to tread in that water?
    Dr. Salathe. No.
    Mr. Costa. How much powder does the government currently 
have in storage today?
    Dr. Salathe. I don't believe we have any nonfat dry milk in 
storage.
    Mr. Costa. None?
    Mr. Garcia. I don't believe so. I don't believe there is 
any right now.
    Mr. Costa. Ms. Coale, the AMS has been studying 
alternatives, and you spoke of that, toward pricing formulas. 
What are some of the alternatives are you considering?
    Ms. Coale. We have been actively working with the industry 
to further develop and provide analysis on a different array of 
competitive pay prices that the industry is trying to 
establish. These are looking at primarily what cheese 
manufacturers are paying for their milk. And depending on the 
various proposals, there are different aspects that----
    Mr. Costa. Before my time expires, do you think the current 
four class system curtails market innovation?
    Ms. Coale. I do not believe that it curtails market 
innovation. We have seen that there are new products 
continually entering into the marketplace.
    Mr. Costa. Well, Mr. Chairman, I have other questions. I 
will submit them in writing.
    My time has expired. I appreciate your allowing me to sit 
on the Committee.
    I think that your efforts with the Subcommittee, given the 
volatile nature and the cycles that I referenced--if they 
continue in that pattern, 2000, 2003, 2006, 2009, it will mean 
that the next cycle will be next year. And with all the equity 
that has been lost in the dairy industry in recent years, I am 
not so sure we can survive another cycle as we did the last 
one. And I hope that we will all try to work together on behalf 
of dairy producers in America to avoid a crash, as we have just 
had over the last 2 year cycle, the last bust cycle.
    Thank you.
    The Chairman. Thank you, Mr. Costa. You are very welcome.
    Mr. Gibson?
    Mr. Gibson. Well, thanks, Mr. Chairman.
    And I thank the panelists for being here today.
    So, a comment and then a question, and if there is time, 
perhaps a second question.
    The comment: I want to begin by associating myself with the 
remarks of Mr. Courtney. You know, both of our districts, as 
well as Peter Welch's district, our districts have been hit 
very hard by Hurricane Irene and then the remnants of Lee. And, 
it is clear that the insurance program, the risk management 
tools are just not effective for us, with too many farmers, as 
Mr. Courtney mentioned finding it too complicated to sort 
through. And for other reasons, those risk management tools are 
just not revalent for us.
    And then there are other programs that seem to have a track 
record of effectiveness but yet have no money in them, like the 
Emergency Conservation Program, which helps with debris and 
other removal and replacing of fences and, certainly, trying to 
bring back the farm. From a conservation standpoint, in the 
watershed dimension of the program, helps us get into 
streambeds and not only remediate but also take us to a better 
level where we wouldn't be subject to future floods.
    So I guess that is a comment and perhaps a bit of 
frustration. And, certainly, I am new here, and we are going to 
have to work on this going forward. I look to the farm bill to 
try to do some reforms in insurance. But I guess I would pause 
and see if there is any reaction to that.
    Ms. Coale. If I could take a moment to comment on that.
    The Secretary is very attuned to what has happened in the 
Northeast----
    Mr. Gibson. Yes, he is.
    Ms. Coale.--with regards to Hurricane Irene. And just 
today, earlier this afternoon, he issued a press release on 
some actions that the Department has taken to help alleviate 
the distress that has been caused by the natural disaster.
    One such action that is being taken under the Federal Milk 
Marketing Order program, for those dairy producers whose milk 
has not been able to be picked up by their cooperative due to 
infrastructure damage, the Secretary has determined that we 
will allow that milk to be associated with the Federal Order 
pool as if it had been delivered to the marketplace. That will 
aid those producers in getting the benefit of receiving the 
Federal Order blend price for that amount of milk that they did 
dump.
    So the Secretary is very, very concerned about what is 
happening in the Northeast. And he has also outlined other 
programs, which he has mentioned in the press release, that are 
available to those producers.
    Mr. Gibson. I agree. And, I had a chance to meet with him 
just a few days ago, and I find him very concerned and vigilant 
and diligent to try to help us.
    I think that there is some work on this side that we are 
going to need to do, going forward. And, taking up his advice, 
Senator Gillibrand and I have a bill we just introduced 
yesterday that is looking to put money into those programs, 
those conservation programs, which will be helpful.
    But thank you for the dialogue on that.
    The question: Earlier in the dialogue here with Mr. 
Peterson, you were giving some initial feedback on the weekly 
electronic reporting. I am curious--and you were raising some 
concerns about that, about the potential counterproductive 
nature of it.
    I am curious--no doubt you have policy wonks down there. 
What is the latest thinking in the agency on how we might be 
able to get more dynamic price discovery in a manner that more 
accurately reflects supply and demand dynamics?
    Ms. Coale. To make certain that the record is clear, the 
Department is very supportive of weekly reporting, as is 
currently conducted by the National Agricultural Statistics 
Service, as well as what will be transferred to AMS with the 
Mandatory Price Reporting Act.
    The concerns that we have been hearing with regards to 
daily reporting are ones that the industry has expressed in 
relationship to how accurate that price information will be. 
And while you may be providing data out to producers, is that 
data really accurate and does that provide the information that 
they need to make marketing decisions?
    It is important to note that the dairy industry does 
operate differently than other commodities within agriculture, 
in that producers are paid based off of a monthly price. So 
receiving a daily report of what commodities are trading at 
does not translate directly into a pay price for those 
producers.
    Recognizing that the current system for determining minimum 
prices is based off of product price formulas that use the 
commodities in which we actually report on, we are very open to 
looking at returning to some type of a competitive pay price. 
And the Department did use a competitive pay price within the 
Federal Order system for a number of years, and it worked very 
effectively up until the milk that was being used to determine 
that competitive pay price basically disappeared.
    So there are challenges with how best to return to a 
competitive pay price that is truly going to reflect that value 
for the milk used in manufacturing, and is not going to over-
inflate the value but be reflective of what is needed to 
maintain supply and demand for the marketplace.
    Mr. Gibson. Interesting. Thank you very much for that 
response.
    I yield back.
    The Chairman. Thank you, Mr. Gibson.
    Mr. Welch?
    Mr. Welch. Again, thank you, Mr. Chairman.
    I have a couple of questions for Mr. Garcia about the Dairy 
Product Price Support Program. It is quite important, 
obviously, to Vermont farmers as well as others.
    You know, my understanding is the floor price for dairy 
created in the program is about $9.90 per farm--the farm gate 
price. And in the last 5 years, has that floor price ever been 
utilized as the actual floor price for dairy products? Or is it 
really fair to say that the floor price is just out of date and 
ineffective?
    Mr. Garcia. Dr. Salathe, can you help me out with that?
    I am sorry, I am going to have to defer to my economist.
    Mr. Welch. All right.
    Dr. Salathe. Well, under the 2008 Farm Bill, we no longer 
support the price of milk. There is no longer a support price 
designated in the farm bill.
    What is designated is minimum purchase prices for butter, 
cheddar cheese in barrels and blocks, and nonfat dry milk. 
Those can be actually reduced if purchases exceed certain 
levels. And there is flexibility, of course, to increase since 
they are minimums to increase purchase prices. But we did--like 
I said, we did buy nonfat dry milk in late 2008 and 2009 to the 
tune of 276 million pounds of nonfat dry milk and 5 million 
pounds of butter.
    Like I said, there is no floor price on milk. There is a 
floor price on the products themselves.
    Mr. Welch. All right. Let me ask my next question.
    In 2009, the Congressional Dairy Caucus, of which many of 
us are Members, asked Secretary Vilsack to raise the floor 
price for dairy products under the program. Secretary Vilsack 
responded and did raise the price, and we obviously thanked him 
for that action.
    However, the increase in the DPPS price support didn't have 
any positive change on the price paid to farmers. From the 
perspective of a Vermont dairy farmer, does the dairy price 
support provide literally any protection in today's market?
    Dr. Salathe. Well, if you go back and you look at when the 
Secretary made those changes--he increased the nonfat dry milk 
purchase price by 12 cents and, I believe, cheddar cheese by 
18 cents. If you look at when that occurred and the immediate 
response, in terms of what happened in terms of wholesale 
prices for those products, you did see an immediate change even 
though no purchases were made.
    So it is a little bit difficult to say that there was no 
effect when there was some effect, immediate effect, on 
wholesale prices when that announcement was made.
    Mr. Welch. All right. Let me ask my last question. I thank 
you.
    I have heard some concerns that the DPPSP price undercuts 
our export abilities. For example, the industry's ability to 
innovate new products, such as MPCs, has been hampered by the 
price support system, or so some people believe.
    Can you speak to that issue? Is there truth to the claim 
that the DPPSP price hinders our dairy exports?
    Dr. Salathe. Well, I think that we are competitive on the 
world market, we are competitive in terms of our dairy 
products. And so, when we do purchase dairy products under the 
Price Support Program, that does stabilize the price here as 
well as abroad. And I do think it probably does undercut our 
exports somewhat. However, I would say it was an important tool 
for us in 2008 and 2009 when milk prices collapsed. Like I 
indicated, we did purchase significant amounts of nonfat dry 
milk during that time.
    And I will reiterate another comment I made earlier, that 
when you intervene in the markets, no matter how you intervene 
in markets, it does have positive and negative ramifications. 
So you have to weigh those positive and negative ramifications.
    Mr. Welch. I yield back.
    The Chairman. Thank you, Mr. Welch.
    I wanted to take this opportunity to thank the witnesses 
for their testimony and for answering the questions from our 
Members; and all the Members that showed up, including a couple 
of special guests.
    I also want to thank the staff for all their hard work in 
preparing this hearing today on the USDA dairy program. We are 
going to look forward to arranging and organizing more meetings 
to continue to work toward solutions for this and all the other 
issues on the Subcommittee.
    So, with that, under the rules of the Committee, the record 
of today's hearing will remain open for 10 calendar days to 
receive additional material and supplementary written responses 
from the witnesses to any question posed by a Member.
    This hearing of the Subcommittee on Livestock, Dairy, and 
Poultry is adjourned.
    [Whereupon, at 3:35 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
   Supplementary Material Submitted by U.S. Department of Agriculture
    During the September 8, 2011 hearing entitled, Agricultural Program 
Audit: Examination of USDA Dairy Programs, requests for information 
were made to the U.S. Department of Agriculture. The following are 
their information submissions for the record.
Insert 1
          Mr. Cardoza. I would like to encourage the Department. I see 
        great acceptance of the standards in California. The product is 
        more nutritious, and I am a huge fan of increased standards.
          To follow up, the MILC Program is a prime example of 
        government programs that pick between winners and losers, in my 
        opinion. In fact, a USDA study a few years back confirmed that 
        the program keeps farm milk prices lower than they would 
        otherwise be. Could any of you please tell us what the total 
        amount of money producers in each of the top five milk-
        producing states have received from MILC under the farm bill, 
        along with the most recent annual milk production figure for 
        those states?
          Mr. Garcia. Mr. Cardoza, I don't have that information 
        readily available, but we can provide that information as far 
        as the top five states under the MILC Program.
          Mr. Cardoza. I would very much like to have that.
          Mr. Garcia. Yes, sir, we can provide that.

    See following tables:

                Milk Income Loss Contract (MILC) Program
                 Top Producers' Payments and Production
                          by State/Fiscal Year
                            as of 01/25/2012
------------------------------------------------------------------------
       Row Labels          Values Payment Totals  Paid Production Totals
------------------------------------------------------------------------
       California           $104,400,571.98          12,480,259,870
  2009..................     $85,814,553.72           6,959,242,651
  2010..................     $18,586,018.26           5,521,017,219
------------------------------------------------------------------------
            Idaho            $22,351,849.09           2,825,504,576
  2009..................     $18,713,813.32           1,602,963,230
  2010..................      $3,638,035.77           1,222,541,346
------------------------------------------------------------------------
         New York            $82,550,499.76           7,549,547,304
  2009..................     $73,500,545.34           5,065,859,188
  2010..................      $9,049,954.42           2,483,688,116
------------------------------------------------------------------------
     Pennsylvania            $76,248,956.41           6,301,537,139
  2009..................     $69,319,102.01           4,476,854,732
  2010..................      $6,929,854.40           1,824,682,407
------------------------------------------------------------------------
        Wisconsin           $195,565,282.93          19,859,501,257
  2009..................    $175,742,332.01          13,671,012,480
  2010..................     $19,822,950.92           6,188,488,177
------------------------------------------------------------------------
    Grand Total.........    $481,117,160.17          49,016,350,146
------------------------------------------------------------------------


                Milk Income Loss Contract (MILC) Program
                 Top Producers' Payments and Production
                          by Fiscal Year/State
                            as of 01/25/2012
------------------------------------------------------------------------
       Row Labels          Values Payment Totals  Paid Production Totals
------------------------------------------------------------------------
             2009           $423,090,346.40          31,775,932,281
  California............     $85,814,553.72           6,959,242,651
  Idaho.................     $18,713,813.32           1,602,963,230
  New York..............     $73,500,545.34           5,065,859,188
  Pennsylvania..........     $69,319,102.01           4,476,854,732
  Wisconsin.............    $175,742,332.01          13,671,012,480
------------------------------------------------------------------------
             2010            $58,026,813.77          17,240,417,865
  California............     $18,586,018.26           5,521,017,219
  Idaho.................      $3,638,035.77           1,222,541,346
  New York..............      $9,049,954.42           2,483,688,116
  Pennsylvania..........      $6,929,854.40           1,824,682,407
  Wisconsin.............     $19,822,950.92           6,188,488,777
------------------------------------------------------------------------
    Grand Total.........    $481,117,160.17          49,016,350,146
------------------------------------------------------------------------

Insert 2
          Mr. Cardoza. In 2009, Congress appropriated $350 million in 
        emergency funds to help dairy farmers through what was then the 
        worst economic crisis in at least a generation. This crisis was 
        caused by significant decline in U.S. exports due to the 
        worldwide financial crisis. Some of us thought that the entire 
        $350 million should have gone to the purchase of cheddar cheese 
        to donate to food banks which were having trouble keeping up 
        with record demand in this country. In the end, only $60 
        million went to cheese donations.
          Many have questioned the decision to purchase high-cost 
        items, like shredded cheese, with these funds instead of the 
        more reasonable and more widely available block cheese. Can you 
        tell me what products were purchased and how quickly these 
        donations were completed?
          Mr. Garcia. I am going to have to look at that, Mr. Cardoza. 
        I think I have that information.

    The Fiscal Year 2010 Agriculture Appropriations Act authorized $60 
million for the purchase of cheese and other products. USDA purchased 
approximately 10.2 million pounds of mozzarella cheese and 17.4 million 
pounds of cheddar cheese, at a cost just under $60 million. USDA held 
back just over $200,000 to cover offshore transportation and contract 
administration.
    Based on recipient needs, purchases were made for 10.2 million 
pounds of mozzarella (5.3 million pounds loaves/blocks, 4.9 million 
pounds shreds), and 17.4 million pounds of cheddar (8.8 million pounds 
loaves/blocks, 8.6 million pounds shreds).
    The contract awards were made for $48 million in January 2010, as 
responsive bids were not received for all recipient delivery locations. 
Contract awards for the remaining $12 million were issued in February 
2010. While there was a substantial time lag between the announcement 
of purchases and when donations were made, USDA schedules deliveries 
based on recipient needs and does not make payment to the vendor until 
the cheese is actually delivered, in accordance with procurement 
guidelines.
Insert 3
          Mr. Ribble. Is there statistical data available on the size 
        of the producers that are using the program? Especially when 
        you look back like 2009, when things were pretty rough, is 
        there some statistical data that shows how that money was 
        distributed by size?
          Dr. Salathe. Yes, I believe so. We have information in terms 
        of the size of producers who got payments. All producers are 
        eligible for the program. It is whether they hit the production 
        limit or not, and so--but we probably do have data on the size 
        of producers and what they received or whether they 
        participated and got a payment or not.

    The Milk Income Loss Contract (MILC) Program is designed to provide 
a direct payment to producers when milk prices fall below an 
established level adjusted for feed costs. Information on herd size is 
not collected by the Farm Service Agency when operations sign contracts 
for the program. Milk sales information is collected only during months 
when there is a payment rate for the program and operations are 
requesting payment, thus information on operation size is not available 
through the data collected under this program. However, data collected 
annually by the National Agricultural Statistics Service (NASS) on the 
distribution of dairy herds by size can be used to provide an 
indication of the distribution of MILC payments during Fiscal Year 2009 
by size of herd. Based on the herd size distribution data collected by 
NASS, we estimate that about 35-40 percent of FY 2009 MILC payments 
were paid to producers with less than 100 cows and 70-75 percent of 
payments were paid to producers with less than 200 cows.
Distribution of MILC Payments by Herd Size

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
                          Submitted Questions
Questions Submitted by Hon. Reid J. Ribble, a Representative in 
        Congress from Wisconsin
Response from Juan M. Garcia, Acting Deputy Administrator for Farm 
        Programs, U.S. Department of Agriculture, Farm Service Agency
    Question. Mr. Garcia, do you believe that elimination of the Dairy 
Export Incentive Program would significantly impact our participation 
in world markets?
    Answer. The Dairy Export Incentive Program (DEIP) helps exporters 
of U.S. dairy products meet prevailing world prices for targeted dairy 
products and destinations. Under the program and in conformity with 
U.S. obligations under the World Trade Organization, the U.S. 
Department of Agriculture pays cash to exporters as bonuses, allowing 
them to sell certain U.S. dairy products at prices lower than the 
exporter's costs of acquiring them. The major objective of the program 
is to develop export markets for dairy products where U.S. products are 
not competitive due to the use of export subsidies by other countries.
    The United States is currently competitive in world dairy markets 
without the need for the DEIP. At present, no nation--including the 
European Union (EU)--is using export subsidies for dairy products. The 
EU does not have significant stocks of surplus dairy products and is 
not expected to use export subsidies during 2011 or 2012.
    The United States is projected to be a major participant in world 
dairy markets in FY 2011 and FY 2012. Exports from the U.S. for 2011 
are forecast at over 400,000 metric tons of skim milk powder, over 
200,000 metric tons of cheese and over 60,000 metric tons of butter. 
The value of U.S. dairy exports is estimated at a record $4.2 billion 
in FY 2011. For FY 2012, U.S. dairy exports are forecast to remain 
strong at a value of $4.0 billion.
Response from Dana Coale, Deputy Administrator for Dairy Programs, U.S. 
        Department of Agriculture, Agricultural Marketing Service
    Question 1. Ms. Coale, as you are likely aware, several proposals 
are on the table for modifying the Federal Milk Marketing Order system. 
Is it your sense that we in Congress should legislate specific reforms, 
or would the process best be left to USDA with some broad parameters 
from Congress? If the latter, what sort of consensus would you need 
from us? How much agreement do we need to find here in Congress before 
USDA could begin its work?
    Answer. There are several industry proposals that are designed to 
make changes to the Federal Milk Marketing Order program. These 
proposals are focused primarily on making changes to the method 
utilized to establish minimum prices within the Federal Milk Marketing 
Order system. Typically, changes of this significance are determined 
utilizing the administrative formal rulemaking process, a transparent 
process that enhances participation by all interested persons. USDA 
recognizes the desire for Congress to provide specific guidance on how 
these minimum prices are established. We would suggest that Congress 
provide specific parameters on proposals that should be considered as 
alternatives for establishing minimum prices under Federal Milk 
Marketing Orders.

    Question 2. Ms. Coale, I understand that the FMMO system places the 
highest value on fluid milk. In the Upper Midwest, most of our milk is 
used for cheese. Consequently, many producers have talked with me about 
the need to modify this disparity. If we address this as part of the 
dairy reform process, how, in your view, can we push forward this kind 
of change through broad parameters?
    Answer. The Federal Milk Order program establishes minimum prices 
for milk based on the classification of milk according to its use and 
then these values are averaged together based on the individual 
utilization of these milk values. Milk utilized to produce Class I 
products receives the highest value because of the additional costs 
associated with servicing the fluid market. This higher price is 
established utilizing the highest price for manufacturing uses plus a 
Class I differential. These differentials vary from $1.60 per 
hundredweight in the Upper Midwest and Western United States to $6.00 
per hundredweight in Southern Florida. A change to how these values are 
determined could be directed by Congress by providing direction such as 
was provided in the 1996 Farm Bill. In the 1996 Farm Bill, Congress 
authorized the Secretary to review the Class I price structure as part 
of the consolidation of the orders, including the consideration of 
utilization rates and multiple basing points for developing a pricing 
system.
                                 ______
                                 
         Submitted Report by National Milk Producers Federation
National Milk Producers Federation
Foundation for the Future: Detailed Program Description
August 2011
Table of Contents
  Background
  Executive Summary
  Detailed Descriptions of Individual Program Elements

    Replace Current Federal Safety Net Programs
    Dairy Producer Margin Protection Program
    Federal Milk Marketing Order Reform
    Dairy Market Stabilization Program
    Conclusion

  Attachment 1
  Attachment 2
  Attachment 3
  Attachment 4
Background
    The National Milk Producers Federation (NMPF) created a new roadmap 
for U.S. dairy policy called Foundation for the Future. In June 2009, 
NMPF Chairman Randy Mooney formed the NMPF Strategic Planning Task 
Force aimed at exploring different approaches to dairy policy, 
including options that would work to achieve more effective protection 
for producer margins and stabilization of dairy markets.
    Task force members (Attachment 1) came from within the NMPF and/or 
Cooperatives Working Together (CWT) membership and were charged with 
making policy recommendations to the NMPF Board of Directors for 
further deliberation and subsequent action. The task force was designed 
to include viewpoints from all segments of the NMPF and CWT membership 
and the participants reflected a broad spectrum of demographics and 
affiliations. The task force was further broken down into three 
subcommittees (Attachment 2), each focusing on a specific aspect of 
dairy policy. The subcommittees carried out their specific assignments 
by drawing upon the best professional expertise and informational 
resources available to the industry from both private and public 
sources. Finally, in order to make certain that the demand-building 
programs of Dairy Management, Inc. and the U.S. Dairy Export Council 
were recognized in this important planning process, Tom Gallagher and 
Tom Suber, the respective leaders of these organizations also served as 
advisory members of the task force.
    The overriding purpose of the task force was to build consensus 
across the dairy producer community by identifying the underlying 
factors affecting producer income and examining the ways in which the 
producer community could realistically work to address those factors 
for the betterment of the industry. The specific goal of the task force 
was to analyze and develop a long-term strategic plan for consideration 
by the NMPF Board of Directors, which would have a positive impact on 
the various factors influencing both supply and demand for milk and 
dairy products.
    Through an initial round of listening sessions, the task force 
brought in a number of producer groups (Attachment 3) representing 
different industry segments and dairy producer constituencies all 
across the country to obtain widespread input and access to the best 
ideas circulating throughout the industry. Individual cooperatives were 
also invited to provide proposals to the task force for consideration. 
Following its meetings with the various dairy producer organizations, 
the task force began internal deliberations, to analyze and discuss the 
many proposals and options presented, and develop recommendations for 
the NMPF Board of Directors.
    As a result of this valuable exchange with various dairy 
organizations, NMPF developed Foundation for the Future. As envisioned 
by NMPF, Foundation for the Future offers much-needed change to many 
aspects of current dairy programs, some of which were designed in an 
earlier time to operate in a relatively closed domestic market. Today's 
market for U.S. dairy farmers' milk, however, is influenced to a much 
greater degree by global demand and supply, as the record prices of 
2008--and their disastrous plunge in 2009--have clearly demonstrated.
Executive Summary
    This Executive Summary provides an overview of the policy changes 
proposed by NMPF. Detailed descriptions of each of the elements 
comprising the Foundation for the Future program are also contained in 
this document. While each element of Foundation for the Future is 
identified separately, they were designed to work together to ensure 
the best possible result for U.S. dairy producers and the U.S. dairy 
industry, in general. It should be emphasized that each element of 
Foundation for the Future interlinks with one or more of the other 
elements to obtain maximum effect. It is therefore imperative that the 
entire package of Foundation for the Future be considered for the 
totality of its impact.
    Just as multiple problems contributed to an unprofitable situation 
for U.S. dairy farms recently, multiple solutions are required to 
achieve a more prosperous future. To meet this need, Foundation for the 
Future offers a multi-faceted approach by: (1) replacing existing 
Federal safety net programs; (2) creating a new Dairy Producer Margin 
Protection Program to protect against both severe and unsustainable 
loss of margin; (3) reforming the Federal Milk Marketing Order system; 
and (4) establishing a Dairy Market Stabilization Program to help 
address periodic imbalances in dairy supply and demand.
1. Replace Current Federal Safety Net Programs
    Foundation for the Future recommends discontinuing the Dairy 
Product Price Support Program (DPPSP) and the Milk Income Loss Contract 
(MILC) program in the next Farm Bill. Instead, Foundation for the 
Future proposes to convert the budgetary savings in the Federal dairy 
baseline to establish the Dairy Producer Margin Protection Program, as 
described further in this document.

    The Dairy Product Price Support Program (DPPSP) and the Milk Income 
Loss Contract (MILC) program deliver inadequate protection against 
periodic low milk prices and destructively-low margins that occur when 
input costs, especially feed prices, rise rapidly. The DPPSP is 
ineffective as a safety net because it hinders U.S. and world markets 
to adjust to supply-demand signals. It also stifles product innovation. 
The MILC program fails to assist farmers when they need it the most, 
often providing payments to producers when margins were in fact, 
relatively good. The feed cost adjustor in MILC assists only when feed 
costs are very high. In 2008, when producers were severely impacted by 
high feed costs, these programs didn't help them until after the milk 
price crashed at the end of the year.
2. Dairy Producer Margin Protection Program
    Foundation for the Future  recommends establishing a new program 
entitled the Dairy Producer Margin Protection Program (DPMPP) which is 
intended to support producer margins, not prices. DPMPP is a program 
that is designed to address both catastrophic conditions, which can 
result in the severe loss of equity for dairy farmers, such as those 
witnessed in 2009, as well as long periods of low margins, such as 
those in 2002. Under this program, ``margin'' is simply defined as the 
All-Milk Price minus feed costs. Feed costs are determined using a new 
feed ration that has been developed to more realistically reflect those 
costs associated with feeding the entire dairy farm enterprise, 
including milking cows, heifers, etc. The DPMPP operates on the premise 
of providing a basic level of protection (i.e., insurance coverage) for 
all producers and a voluntary supplemental coverage. The basic coverage 
is fully-subsidized by the Federal Government (as was the case with the 
DPPSP and MILC), while the supplemental coverage is voluntary and 
premiums are partially subsidized by the government, but in a manner in 
which the level of subsidization decreases as the level of coverage per 
hundredweight increases. Consequently, dairy farmers electing to insure 
their operations beyond the fully-subsidized basic level coverage would 
pay the non-subsidized portion of the premium associated with the 
supplemental coverage. The DPMPP is intended to be a Title I program 
operated by the Farm Service Agency (FSA). Since DPMPP is a margin 
insurance program, it is proposed to have no payment limitations based 
on income and/or size of herd.

    In the future, the solvency of dairy farms will depend ultimately 
on margins (the difference between milk prices and overall costs--in 
particular, feed costs) rather than just the milk price alone. The 
economic hardship of 2009 revealed that relatively high prices do not 
guarantee profitability when accompanied by high input costs. A program 
that helps provide income insurance coverage for dairy farmers during 
periods when their margins are low, or even negative, is a key element 
of Foundation for the Future.
    In developing the DPMPP, the following important principles were 
observed:

    (1) Losses caused by either low milk prices or high feed costs need 
        to be covered;

    (2) A dairy farmer's cost for the basic level of protection must be 
        subsidized by the Federal Government since the DPPSP and MILC 
        are being replaced by the DPMPP;

    (3) The level of voluntary supplemental protection should be 
        flexible, and producers should be able to purchase additional 
        protection to complement the nature of their operations;

    (4) The program should be voluntary, national in scope, and open to 
        all dairy farmers, regardless of size without payment 
        limitations;

    (5) The program should address both catastrophic conditions and 
        long periods of relatively low margins, yet not provide 
        incentives to create artificial over-production; and

    (6) The program must be easily accessed by all producers through a 
        simple application process or through the assistance of their 
        cooperative.
3. Federal Milk Marketing Order Reform
    Foundation for the Future's revisions to the Federal Milk Marketing 
Order (FMMO) Program address the following fundamental issues 
associated with the current milk pricing system that are of concern to 
both dairy producers and processors. The proposal:

   Replaces end product pricing formulas with a competitive 
        milk pricing system

   Incorporates a pricing system for two classes of milk: fluid 
        (Class I) and manufacturing (formerly Class II, III and IV 
        product uses)

   Maintains the ``higher of'' for establishing the fluid use 
        (Class I) minimum base price

   Maintains current Class I differentials

   Maintains the number and basic structure and provisions of 
        Federal Orders

    FMMOs have provided an important support system for dairy farmers 
and cooperatives for many years. They have worked to establish 
consistent pricing mechanisms for milk for all uses, provide audited 
data on marketed milk, and help maintain supplies for bottlers and to 
compensate their suppliers. In recent years, however, dairy markets 
have become more complex and current Federal Order provisions have 
experienced difficulty accommodating them. Markets have evolved--from 
regional, to national, and now global. Pricing has become complex and 
linked to markets--including unregulated areas, state marketing orders, 
and international, which are not under the control of FMMO regulation.
    The current end-product pricing formulas set minimum milk prices 
for dairy farmers by fixing a maximum gross margin for manufacturers of 
the benchmark products. This creates winners and losers between 
producers and processors, and even among cooperatives, and has strained 
commercial relationships and distracted from other potentially 
constructive reform efforts. When the end-product pricing formulas 
require adjustment, it is done through a lengthy and, most often, 
divisive FMMO formal rulemaking process. The goal of NMPF's effort is 
to develop a pricing system that compensates producers fairly, reduces 
price volatility, and creates a more dynamic dairy industry. The key in 
doing so is to eliminate the present end-product pricing formulas that 
have been troublesome since their establishment. Another goal is to 
create a timelier and more transparent system in order to avoid 
distorting market signals sent both to producers and processors.
4. Dairy Market Stabilization Program
    Foundation for the Future  is recommending the establishment of a 
Dairy Market Stabilization Program (DMSP) in order to address extreme 
volatility in dairy producer margins by sending strong and timely 
signals to producers that temporarily reducing milk production by a 
small percentage will have a positive impact on their overall margins. 
As the U.S. dairy industry increases its global participation, exposure 
to greater price volatility is more likely. The DMSP is intended to 
absorb some of the market shocks that this volatility may cause. The 
DMSP is designed to act swiftly, but infrequently, to address brief 
imbalances in the market. The program is also designed to work in 
conjunction with the Dairy Producer Margin Protection Program (DPMPP).

    Key principles of the DMSP include:

    (1) Allow for production growth--The program is intended solely to 
        intervene in the market to address temporary imbalances between 
        supply and demand. The program will send clear and timely 
        economic signals to producers that there is an imbalance in the 
        marketplace;

    (2) Reduce margin volatility--The program's ultimate objective is 
        to prevent acute imbalances in the marketplace that negatively 
        impact producer margins. By encouraging producers to lower 
        their milk marketings at appropriate times, prices should rise, 
        thus improving margins;

    (3) Minimize government intervention--The legislation will set the 
        parameters that trigger the program and USDA's role will be 
        limited to calculating the actual margin on a monthly basis 
        using data from CME and NASS information; and

    (4) Not encourage imports or discourage exports--Global and U.S. 
        markets must maintain a strong correlation. Such correlation 
        will allow domestic inventories to clear faster, encourage 
        exports, discourage imports, and help assure that market 
        downturns are of shorter duration.

    The program will only go into effect when the actual margin 
(determined using the same calculations of the DPMPP) falls below a set 
margin trigger level for two consecutive months. Once DMSP is 
triggered, producers will receive payment for only a certain percentage 
of their base milk marketings. The percentage of milk marketings upon 
which payment will be based shall be determined according to the 
severity of the margin loss. A maximum reduction in milk marketings 
upon which payment will be based will also be established according to 
a predetermined formula. Producers whose milk marketings in a month 
when the program is in effect are less than the set percentage of their 
base milk marketings upon which payment will be based would not be 
subject to a reduction in payment. The program would cease once the 
margin trigger level has been exceeded for two consecutive months. The 
DMSP will cover all producers in all markets. Monies resulting from 
reductions in producer payments will be collected by the Agricultural 
Marketing Service (AMS) using the same framework used to collect the 
dairy promotion monies and will apply to all milk marketed with no 
exemptions. The USDA will announce that the DMSP is being implemented 
30 days in advance of the month in which the program goes into effect. 
Although not effectuate through any decision-making on the part of AMS, 
the DMSP is intended to be a government program administered by that 
agency. The purpose of the monies collected through the DMSP is to 
effectively stimulate the domestic consumption of dairy products 
through contributions to food assistance programs.
Conclusion
    All of these recommendations and proposed changes will ultimately 
require a new way of thinking about U.S. dairy policy, milk pricing 
systems, and the impact of margin on individual dairy operations. NMPF 
is not underestimating the size of the shift in attitude necessary on 
the part of producers and other sectors of the industry to give these 
proposed programs a fair evaluation. We realize it will take a great 
deal of education and communication as we proceed to gain industry 
consensus on Foundation for the Future. However, if there is a lesson 
to be learned from 2009, it is that the present safety nets are 
inadequate, the present pricing system is not serving the industry 
well, and that change is needed. Foundation for the Future represents 
the timeliest opportunity for changing the direction of dairy policy 
for the future of our dairy farmers by assisting the entry of new 
generations of dairy farmers and helping the entire industry meet the 
challenges of a new global marketplace.
    For more detailed information on Foundation for the Future, 
including video and PowerPoint presentations, go to 
www.futurefordairy.com.
Detailed Descriptions of Individual Program Elements
1. Replace Current Federal Safety Net Programs
   Discontinuing the Dairy Product Price Support Program 
        (DPPSP) would allow greater flexibility to meet increased 
        global demand and shorten periods of low prices by reducing 
        foreign competition.

   Shifting resources from the DPPSP and Milk Income Loss 
        Contract (MILC) Program towards the new Dairy Producer Margin 
        Protection Program (DPMPP) would provide farmers with a more 
        effective safety net.

    Discontinuing the Dairy Product Price Support Program

    The DPPSP was created in 1949 as a means to help provide government 
support for farm-level milk prices. During most of its lifespan, the 
program targeted a set milk price, and then established pricing targets 
for key products, such as cheese, butter and non-fat milk powder, that 
would help support that price.
    In the 2008 Farm Bill, the program was altered to support specific 
products, ending its focus on a singular milk price, and targeting 
specific product price levels. Regardless of its function, however, 
NMPF believes it is now time to end the DPPSP and shift resources 
toward a new Federal safety net. Here's why:

    1. It supports dairy farmers all around the world and disadvantages 
        U.S. dairy farmers.

    The current program helps balance world supplies by encouraging the 
periodic global surplus of milk products to be purchased by U.S. 
taxpayers. As a result, dairy farmers in other countries, particularly 
the Oceania region, enjoy as much price protection from the DPPSP as 
our own U.S. farmers. Without the USDA's Commodity Credit Corporation 
(CCC), buying up occasional surpluses of dairy proteins in the form of 
nonfat dry milk, a temporarily lower world price would affect America's 
competitors, all of whom would be forced to adjust their production 
downward and ultimately hasten a global recovery in prices.

    2. It reduces total demand for U.S. dairy products and dampens our 
        ability to export, while encouraging more foreign imports into 
        the U.S.

    The price support program effectively reduces U.S. exports, by 
diverting some of the U.S. milk flow into government warehouses, rather 
than to commercial buyers in other nations. It creates a dynamic where 
it is more difficult for the U.S. to be a consistent supplier of many 
products, since sometimes the domestic industry has products to export, 
and at other times, the domestic industry just sells to the government.

    3. It acts as a disincentive to product innovation.

    The DPPSP distorts what the U.S. produces--for example, too much 
nonfat dry milk, and not enough protein-standardized skim milk powder, 
as well as specialty milk proteins, such as milk protein concentrates--
that are in demand both domestically and internationally.
    Because the price support program is a blunt instrument that will 
buy only nonfat dry milk and because some plants have been specifically 
built to produce nonfat dry milk, it puts the U.S. at a competitive 
disadvantage with respect to other global dairy vendors.

    4. It isn't effectively managed to fulfill its objectives.

    Although the DPPSP has a standing offer to purchase butter, cheese 
and nonfat dry milk, during the past 12 years, only the last of that 
trio has been sold to the USDA in any significant quantity. In essence, 
the product that the DPPSP really supports is nonfat dry milk. Even at 
times when the cheese price has sagged well beneath the price support 
target, cheese makers have chosen not to sell to the government for a 
variety of logistical and marketing-related reasons. NMPF has tried to 
address these problems, but the USDA shows no inclination toward 
facilitating greater purchases of product by recognizing the additional 
costs required to sell to government specifications. Once purchased, 
powder returning back to the market from government storage also 
presents challenges, dampening the recovery of prices as evidenced in 
Chart 1.
Chart 1
U.S. and World Prices--SMP/NFDM

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    5. It seeks to achieve price levels that are no longer relevant to 
        farmers.

    Even though the $9.90 per hundredweight target was eliminated in 
the last Farm Bill, the individual price support targets--$1.13 per 
pound for block cheese, $0.85 for powder, and $1.05 for butter--will 
essentially return Class III and IV prices around $10 per 
hundredweight. In an era of higher costs of production, that minimal 
price isn't acceptable in any way, shape or form as the following chart 
so clearly demonstrates. As shown on Chart 2, the effective price 
support level has been considerably less than the cost of production 
for many years. The government is not at all likely to raise the 
support prices (which would have negative consequences both for the 
burgeoning Federal deficit, as well as our trade treaty limitations), 
and even if it did, the industry would likely experience continued 
delays in the recovery of prices when the program is most needed.
Chart 2
Price Support Level and Costs of Production, 2006-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Source: USDA Economic Research Service.

    In summary, discontinuing the DPPSP would eventually result in 
higher milk prices for U.S. dairy farmers. By focusing on indemnifying 
against poor margins, rather than on a milk price target that is 
clearly inadequate, the industry can create a more relevant safety net 
that allows for quicker price adjustments, reduces imports and 
facilitates exports. As a result of the present DPPSP, the U.S. has, in 
effect, become the world's balancing plant. As time marches on, so, 
too, must our approach to helping U.S. dairy farmers.

    Discontinuing the Milk Income Loss Contract (MILC) Program

    MILC is a price-based safety net, which is as ineffective for 
today's dairy producers as the Dairy Product Price Support Program. In 
2008 and 2009, MILC proved to be an inconsistent safety net program for 
dairy farmers facing very low, or even negative, operating margins. 
MILC, despite its feed cost adjustor, does not adequately offset high 
feed costs and its price target does not track national farm milk 
prices.
    MILC payments depend on a low milk price. If milk prices are at 
average levels and feed costs are high, farmers can suffer substantial 
losses and still not receive any assistance from MILC. Although a feed 
cost adjustor was added in the 2008 Farm Bill, this program does not go 
into effect until the price of the National Agricultural Statistics 
Service (NASS) standard feed ration reaches $147 per ton (equivalent, 
for example, to $3.75 per bushel of corn, $9.50 per bushel of soybeans, 
and $130 per ton of alfalfa). It also only covers about 30 percent of 
the feed price increase above this high level. This was clearly 
inadequate through most of 2008, when high feed costs overwhelmed 
average milk prices and put most farmers into a deep hole without the 
help of any MILC payments. The current feed ration utilized in the MILC 
has not been sufficiently updated to reflect today's current dairy farm 
feeding practices. On the other hand, the Dairy Producer Margin 
Protection Program recommends utilizing a new feed ration reflective of 
the entire dairy feeding enterprise at the farm level.
    The MILC target price is a Class I price. Class I is currently 
based on the ``higher of'' Class III or IV prices, so when the Class IV 
(butter powder) price or the Class III (cheese) price is high, MILC 
payments can be low or zero, even if producers are facing low margins. 
That is why the whole premise of the Foundation for the Future is 
changing the focus of dairy farmers from price targets to margins.
    The MILC program is inequitable in its treatment of dairy farmers 
and, therefore, ineffective in its objective of providing economic 
relief to dairy farmers in time of need. Requiring producers who market 
more than 2.985 million pounds of milk a year to guess in which of the 
coming twelve months they will most need economic assistance is why it 
is ineffective. Limiting the level of protection to a maximum of 2.985 
million pounds of milk a year provides protection for less than 30 
percent of the total milk produced in the U.S. A basic principle of 
Foundation for the Future is that all farmers should be treated equally 
regardless of size or region.
    As dairy farmers face growing volatility in both their feed costs 
and their milk prices, the milk price-based dairy producer programs are 
no longer adequate or efficient. As evidenced significantly in 2009, 
the MILC program does not provide an effective safety net for dairy 
producers. It is for these reasons that Foundation for the Future  
recommends discontinuing the Dairy Product Price Support Program 
(DPPSP) and the Milk Income Loss Contract (MILC) program in the next 
Farm Bill and using the budgetary savings in the Federal dairy baseline 
to establish the new Dairy Producer Margin Protection Program as 
described next in this document.
2. Dairy Producer Margin Protection Program
    Foundation for the Future  recommends establishing a new program 
entitled the Dairy Producer Margin Protection Program (DPMPP), which is 
intended to support producer margins, not prices. DPMPP is a program 
that is designed to address both catastrophic conditions, which can 
result in the severe loss of equity for dairy farmers, such as those 
witnessed in 2009 as well as long periods of low margins, such as those 
experienced in 2002. Under this program, ``margin'' is simply defined 
as the All-Milk Price minus feed costs. Feed costs are determined using 
a new feed ration that has been developed to more realistically reflect 
those costs associated with feeding the entire dairy farm enterprise 
including milking cows, heifers, etc. The DPMPP operates on the premise 
of providing a basic level of protection (i.e., insurance coverage) for 
all producers and a voluntary supplemental coverage. The basic coverage 
is fully-subsidized by the Federal Government (as was the case with the 
DPPSP and MILC), while the supplemental coverage is voluntary and 
premiums are partially subsidized by the government, but in a manner in 
which the level of subsidization decreases as the level of coverage per 
hundredweight increases. Consequently, dairy farmers electing to insure 
their operations beyond the fully-subsidized basic level coverage would 
pay the non-subsidized portion of the premium associated with the 
supplemental coverage. The DPMPP is intended to be a Title I program 
operated by the Farm Service Agency (FSA). In terms of U.S. obligations 
as a member of the World Trade Organization (WTO), the program has also 
been designed to fit within the permitted provisions for agricultural 
policies, as well as within the subsidy limits permitted for U.S. 
agriculture. Finally, since DPMPP is a margin insurance program, it is 
proposed to have no payment limitations based on income and/or size of 
herd.

    Background

    Increased volatility in milk and feed markets has driven interest 
in developing a new approach to providing a Federal safety net for milk 
producers. Development of a new margin insurance program for milk 
producers will provide dairy farmers the support they need when their 
margins fall because of low milk prices or high feed costs. The program 
would enable producers to protect or insure their margin (All-Milk 
Price minus feed cost) by enrolling in a margin insurance/protection 
program. The DPMPP will help dairy farmers survive financially 
difficult times by paying them an insurance indemnity (payout) when 
catastrophic or significant losses occur in their dairy operations.

    The New Measure of Feed Costs

    DPMPP requires calculating the margin over feed costs on a dollar 
per hundredweight of milk basis. This is equal to the price received 
per hundredweight of milk minus the total cost of purchased feed needed 
to produce a hundredweight of milk. Other production cost components 
such as labor, energy, depreciation, capital, veterinary services, and 
nutritional supplements vary greatly across individual operations and 
will need to be addressed by producers when determining their desired 
level of coverage. To determine feed costs, DPMPP uses a new measure 
based on a daily ration for lactating cows shown in Table 1. The new 
feed ration was developed by NMPF with the support of a number of 
experts and prominent animal nutritionists (Attachment 4) from all 
across the country. This ration, which is for a cow producing the 
national average of 68.85 pounds of milk per day, uses the four feed 
ingredients shown in that table to capture the changes in dairy 
farmers' feed costs that result from volatile prices in the feed 
commodities markets.

                        Table 1--Daily Quantities of Feed Ingredients for a Lactating Cow
----------------------------------------------------------------------------------------------------------------
                                                                       Quantity of
                          Quantity of Dry                               Commercial       Quantity in Commercial
      Ingredient       Ingredient (lbs/day)    Moisture Content      Ingredient (lbs/       Units (units/day)
                                                                           day)
----------------------------------------------------------------------------------------------------------------
     Shelled Corn                   15.4                   14%                  17.9        0.319803 bushels
      Corn Silage                   16.0                   65%                  45.7        0.02286 tons
     Soybean Meal                    5.7                   12%                   6.5        0.003238 tons
      Alfalfa Hay                   10.0                   15%                  11.8        0.00588 tons
----------------------------------------------------------------------------------------------------------------

    The DPMPP feed cost measure also includes daily rations for all 
milk cows and replacement heifers on a model dairy farm enterprise that 
are not producing milk sold on a given day, but are necessary for the 
milk production enterprise. These include hospital cows, dry cows, and 
replacement calves and heifers of all ages, as shown in Table 2. The 
specific rations for these animals are also based on the same four feed 
ingredients, as shown in that table.

                        Table 2--Daily Quantities of Feed Ingredients for the Entire Herd
----------------------------------------------------------------------------------------------------------------
                                                                   Quantity in Commercial Units (units/day)
                                                 Dry Matter  ---------------------------------------------------
            Cow Type               Proportion     Consumed      Shelled                   Soybean
                                     of Herd      (lbs/day)    Corn (bu/   Corn Silage  Meal (tons/  Alfalfa Hay
                                                                  day)      (tons/day)      day)      (tons/day)
----------------------------------------------------------------------------------------------------------------
Milking Cows                            52.49%          47.1       0.3198       0.0229       0.0032       0.0059
Hospital Cows                            1.05%          47.1       0.3198       0.0229       0.0032       0.0059
Dry Cows                                 8.82%          24.0       0.0249       0.0172       0.0020       0.0042
Replacements Heifers:
 
  Calving within 1 year                 18.53%          23.0       0.0239       0.0164       0.0020       0.0041
  500 lbs. and over                      9.55%          15.0       0.0311       0.0107       0.0013       0.0022
  Less than 500 lbs.                     9.55%           7.0       0.0363       0.0045       0.0006       0.0006
----------------------------------------------------------------------------------------------------------------

    The total cost of feed per hundredweight of milk is determined by 
adding the total daily cost of purchasing the four feed ingredients 
used in the amounts shown in Table 2 and dividing the result by the 
daily volume of milk marketed, which is 0.6885 hundredweights for each 
milking cow. Because this feed cost measure is on a per hundredweight 
of milk basis, its calculated value for any set of prices for the four 
ingredients is the same regardless of the actual number of animals that 
make up the model dairy farm enterprise, as long as the animals of the 
various categories are in the proportions shown in Table 2. And because 
the feed cost used in the DPMPP margin calculation captures the total 
cost of feed purchased, it uses a shrink factor of 10 percent between 
the volumes of all feed ingredients purchased and the volumes of those 
ingredients actually consumed by animals.
    Although the new feed cost measure is derived from an analysis of 
daily feed rations, it has the same calculated value for any set of 
prices for the four ingredients regardless of the period of time used. 
For administering the DPMPP, this calculation will be done monthly 
using monthly prices for the four basic feed ingredients. The DPMPP 
feed cost for corn for a particular month will be calculated using the 
Chicago Mercantile Exchange (CME) average daily settlement price for 
every trading day during that month for the corn futures contract 
closest to expiration. The feed cost for soybean meal will be computed 
using the same methodology. The monthly price paid for alfalfa hay, per 
ton, will be the monthly price received by farmers in the U.S. reported 
by USDA's National Agricultural Statistics Service (NASS). The monthly 
price paid for corn silage, per ton, is determined using the monthly 
price paid for corn, as described above, by the formula:

Price of corn silage, per ton = 10.1  Price of corn, per bushel.

    The DPMPP feed cost measure can therefore be calculated using just 
three prices, for corn, soybean meal and alfalfa hay. The formula for 
this calculation is:

Feed cost per cwt. of milk = 1.192  Price of corn, per bushel + 
    0.00817  Price of soybean meal, per ton + 0.0152  Price of 
    alfalfa hay, per ton.

    Historical monthly feed costs since 2000 are shown in Chart 3 
below.
Chart 3
Feed Costs Per Cwt, 2000-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The role that feed costs play in the DPMPP is to capture the 
volatility of feed costs paid by dairy farmers, relative to an average 
or expected level. For this purpose, it is important that the measure 
used to calculate feed costs is adequately sensitive to the volatility 
or variability in the markets for feed components, as opposed to the 
actual level of these costs. For the period since 2000, the new DPMPP 
feed cost shows exactly the same level of variability as does the cost 
of feed to produce milk reported by USDA's Economic Research Service 
based on periodic farm survey data.
    The DPMPP milk-feed margin is then determined for each month as the 
difference between the monthly price received by farmers for all milk 
sold in the U.S., the All-Milk Price, reported by USDA/NASS minus the 
monthly feed cost, as determined above. The resulting monthly margins 
are shown in Chart 4 below for the period since 2000, together with the 
monthly All-Milk Price and the feed costs used to determine them.
Chart 4
Milk Price, Feed Costs, and Margins, 2000-2011

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Operation of the DPMPP

    The DPMPP will provide two levels of coverage: a Basic Plan and a 
Supplemental Plan (both described below). The DPMPP has been created to 
protect producers from catastrophic or significant losses due to low 
margins, not to set milk prices. Since it is an insurance program, the 
DPMPP is designed to cover all producers regardless of size or region. 
The DPMPP is intended to be a Federal Farm Program run by local Farm 
Services Agencies (FSA), not by private insurance companies. The DPMPP 
will not encourage or provide support for expanded production. Support 
will only be provided based on the producer's historical milk 
production, except for new entrants.
    Under the program, USDA will use historical data to project future 
margins (defined as All-Milk Price minus feed costs). The levels of 
protection under the program will be $4.00 for the Basic Plan and the 
maximum level of coverage under the Supplemental Plan will be the 
lesser of USDA's projected margin or $8.00.
    Producers will sign up for the Basic Plan at no cost. In addition, 
they will have an option to purchase Supplemental margin protection by 
paying a premium that is inversely subsidized as the level of requested 
level margin coverage increases. In other words, as the level of 
requested coverage increases, the percentage of the premium subsidized 
by the Federal Government decreases. The margin guarantees will be 
fixed for the duration of the Farm Bill once the producer has signed 
up.
    USDA will calculate, on a monthly basis, the margin (i.e., the 
actual All-Milk Price for that month minus the feed costs) by using: 
(1) the current formula for determining the All-Milk Price, and (2) the 
feed costs calculated on the basis of the new NMPF ration described on 
p. 16 [sic] in this document. USDA will calculate the average margin 
for each consecutive two month period and compare it to the Basic 
margin which will be set at $4.00 by the authorizing legislation at the 
start of the program, as well as the Supplemental margins for each 
individual producer (determined at the time the producer signed up) and 
calculate whether an insurance payment is necessary to the individual 
producer.

    The Basic Plan

    The Basic Plan is voluntary and is intended to address catastrophic 
losses only. It is, therefore, expected to be triggered rarely. As 
proposed, the Basic Plan margin guarantee will be $4.00 per 
hundredweight for 75 percent of their historic production. Producers 
will have the ability to sign up for the Basic Plan throughout the 
first year of implementation of the next Farm Bill.

    The Supplemental Plan

    The Supplemental Plan is also voluntary and is intended to provide 
additional margin protection beyond the Basic Plan's margin guarantee. 
However, producers will only be able to sign up for additional coverage 
up to an additional $4.00 per hundredweight unless USDA projects the 
average margin for the duration of the Farm Bill less than $8.00. 
Unlike the Basic Plan, producers will be able to cover up to 90 percent 
of their production history under this Supplemental Margin Protection 
Plan. The cost of this optional coverage for an individual producer 
will depend on the level of margin guarantee per hundredweight selected 
by the producer and the volume of milk production to be protected.
    Since this is a new concept, the producer will have a choice under 
the Supplemental Plan to purchase additional coverage throughout the 
first year. The producer will pay a prorated premium for the first year 
based on the date on which the producer purchases the coverage. Once 
the producer signs up, the terms of coverage, the level of additional 
coverage per hundredweight, and the percentage of the production 
history, will be fixed for the duration of the Farm Bill.
    As mentioned previously, the level of subsidy available to help pay 
for the premium under the Supplemental Plan will depend on the level of 
coverage per hundredweight selected by the producer. The higher the 
margin guarantee selected (i.e., the closer to the maximum level 
allowed), the lower the subsidized rate for the coverage.
    Under the Supplemental Plan, a producer will be able to guarantee a 
margin above the Basic Plan (minimum), but only up to the lesser of the 
$8.00 margin level or USDA's projected margin for the duration of the 
Farm Bill. As an example, Table 3 describes the premium rate per 
hundredweight above the margin guarantee under the Basic Plan (at 
$4.00) up to the maximum level of protection of $8.00 per 
hundredweight.

            Table 3--Premium Rates for Supplemental Coverage
------------------------------------------------------------------------
    Additional                            Additional
   Supplemental                          Supplemental      Premium Per
  Protection Per    Premium Per Cwt.    Protection Per         Cwt.
       Cwt.                                  Cwt.
------------------------------------------------------------------------
         $0.50             $0.015              $2.50            $0.230
         $1.00             $0.036              $3.00            $0.434
         $1.50             $0.081              $3.50            $0.590
         $2.00             $0.155              $4.00            $0.922
------------------------------------------------------------------------

    Table 4 is an example of how the premiums for supplemental coverage 
would be calculated using examples of projected margins, feed costs, 
and milk prices. In Example A below, a producer with 200 cows and a 
production history of 4.115 million pounds purchased an additional 
$2.00 of supplemental coverage on 90 percent of his/her production 
history. Under the Basic Plan with a margin guarantee of $4.00, the 
producer would have received ``no-cost'' coverage at a margin of $4.00 
on up to 75 percent of the amount of milk produced.
    The premium for supplemental coverage in this example is $0.155 per 
hundredweight and results in an annual premium of $5,760.00 each year 
for the life of the Farm Bill.

                 Table 4--Premium Calculator (Example A)
 
 
-------------------------------------------------------------------------
8Farm Data:0
 
   200 cow dairy
 
   20,576 lbs./cow
 
   4.129 million lb. production history
 
   Wants $2/cwt supplemental on 90% of production history
 
   Annual Premium Rate 15.5 cents/cwt
 
   Annual Premium $5,760 per year
 
82009 DPMPP Payout:0
 
   Basic Protection = $27,357
 
   Net Supplemental Protection = $47,136
 
   Total Net Payout = $74,492 or Average $1.81/cwt. for the year
------------------------------------------------------------------------

    Based on actual market conditions for 2009, the producer in this 
example would have received a payment of $27,357.00 from the Basic 
Plan. In addition, since the producer purchased $2.00 of supplemental 
coverage on 90 percent of his/her production history, the producer 
would have received an additional net payment of $47,136.00 in 
supplemental coverage and his/her total net payment for 2009 would have 
been $74,492.00 or $1.81 per hundredweight. The annual premium payment 
for this producer would have been only $5,760.00.
    Table 5 is an example of the same farm, but in this situation, the 
producer purchased additional margin protection under the Supplemental 
Plan at a $4.00 per hundredweight on 90 percent of his/her production 
history). This example would have a premium of $0.922 per 
hundredweight. and resulted in an annual premium of $34,022.00 each 
year for the life of the Farm Bill.

                 Table 5--Premium Calculator (Example B)
 
 
-------------------------------------------------------------------------
8Farm Data:0
 
   200 cow dairy
 
   20,576 lbs./cow
 
   4.115 million lb. production history
 
   Wants $4.00/cwt supplemental on 90% of production history
 
   Annual Premium Rate 92.2 cents/cwt
 
   Annual Premium $34,265 per year
 
82009 DPMPP Payout:0
 
   Basic Protection = $27,357
 
   Net Supplemental Protection = $80,571
 
   Total Net Payout = $107,928 or $2.62/cwt. for the year
------------------------------------------------------------------------

    The Dairy Producer Margin Protection Calculator available at 
www.futurefordairy.com can help farmers calculate base and supplemental 
coverage options on his/her own dairy operations, based on their annual 
milk production.

    Other Important DPMPP Specifics

   Dairy Producer Production History

    The DPMPP will not support new production. Under the DPMPP, farmers 
will be able to insure a percentage of their milk production history. 
Each producer signing up for the program will have a production 
history, which is defined as the year of highest milk production from 
among the 3 years preceding implementation of DPMPP. Any producer 
without at least one year of production history will be allowed to use 
the latest monthly data, extrapolated to a full 12 months prior to the 
implementation of the program.
    The production history is transferable solely with the farm or 
stays with the farmer. If the farm (installation) is sold, the 
production history will be transferable with the farm to the new owner. 
In special situations, where the farmer is moving his entire operation, 
the farmer will be able to keep the production history (with the old 
facility no longer having a production history). Additional parameters 
must be in place to avoid abuses of the ``farm sale/move'' option. The 
production history will be updated every new Farm Bill or 5 years, 
whichever comes first.

   Penalties (for Supplemental Buyers)

    Penalties must be severe to prevent farmers from opting out of the 
program if it is economically convenient to do so. Farmers not 
complying with their obligations will not be eligible to join the 
program again and will be required to pay back any payment received 
during the previous years. Exemptions will include farmer's death or 
full retirement (out of business for at least 7 years).

   New Farmers (Entries)

    Farmers will be allowed to enter the DPMPP only if they have no 
ownership interest in other dairy farms. USDA will use a Tax ID system 
(similar to other government programs) to verify this requirement. New 
entries will have to apply for coverage within 6 months after 
establishing the farm. New farms will be eligible to receive coverage 
under both the Basic Plan and the Supplemental Plan option.

    Economic Analysis of the Dairy Producer Margin Protection Program

    Two separate analyses of the impact the DPMPP program would have 
had on dairy farmer income in 2009--one by Dr. Peter Vitaliano, NMPF 
Vice President of Economic Policy and Market Research, and the other by 
Dr. Scott Brown of the University of Missouri and the Food and 
Agriculture Policy Research Institute (FAPRI)--yielded very similar 
results. Chart 5 below clearly shows the positive impact the DPMPP 
Basic Plan would have had on dairy farmer revenue had it been in place 
in 2009.
Chart 5
2009 DPMPP Basic Coverage Payments on 90% of Production History

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Prepared by: National Milk Producers Federation.
3. Federal Milk Marketing Order Reform
    Based upon extensive deliberation and analysis during the past 12 
months, a proposal for Federal Milk Marketing Order (FMMO) reform has 
been developed for inclusion in Foundation for the Future. This 
proposal addresses the fundamental issues associated with the current 
milk pricing system that are of concern to both dairy producers and 
processors. The proposal:

   Replaces end-product pricing formulas with a competitive 
        milk pricing system.

   Incorporates a pricing system for two classes of milk: fluid 
        (Class I) and manufacturing (formerly Class II, III and IV 
        product uses).

   Maintains the higher of for establishing the fluid use 
        (Class I) minimum base price.

   Maintains current Class I differentials.

   Maintains the number and basic structure and provisions of 
        Federal Orders.

    The proposed reform program is focused on basic pricing and changes 
in pooling that follow from the suggested revisions to the pricing 
system and recommends the consideration of additional and reformed 
balancing programs. The basic framework of FMMOs--including marketing 
areas, Class I differentials, producer location differentials and plant 
and producer pooling qualifications--are left intact by the proposal. 
That is, it does not propose to review or revise the myriad of Federal 
Order details that have been designed to serve many specific and 
regional needs.

    Introduction

    The Federal Milk Marketing Order system provides substantial 
benefits to producers. These include the equitable pooling of minimum 
Class I revenues, the dissemination of important market information, 
and the third-party audit of milk use in plants.
    Unfortunately, the current end-product pricing formulas used to 
calculate minimum manufacturing milk prices have had some unintended 
consequences since they replaced competitive milk price surveys in 
2000. The make allowances and yield factors built into these formulas 
have become a source of conflict within the industry and have created 
winners and losers. Producers believe that make allowances unfairly 
guarantee a profit to processors and processors insist that the 
formulas don't allow them to capture a fair return on their investment. 
There is also concern that the make allowances negatively impact the 
Dairy Product Price Support Program and put Federal Order processors at 
a competitive disadvantage with unregulated areas and state milk 
marketing orders.
    In addition, the inflexibility of minimum prices based on specific 
product prices can create risk for processors who produce other 
products, when the government requires them to pay a price that doesn't 
match the value of their products.
    There is also concern by both producers and processors that the 
Federal Orders don't adequately address the difficulty and expense of 
balancing fluid milk supplies.
    Consequently, the primary objectives of the Foundation for the 
Future Federal Order Reform proposal, are to:

    (1) Address the inequities and the inadequacies of end-product 
        pricing formulas;

    (2) Encourage manufacturers to produce new products resulting in 
        higher returns both to themselves and dairy producers; and

    (3) Provide more equitable rewards producers and handlers for 
        balancing milk supplies.

    The resulting proposal focuses on adopting competitive pricing for 
manufacturing milk, while maintaining minimum price protection for 
fluid milk, and pursuing new balancing programs in markets where 
needed. Many other elements of the Federal Orders developed over the 
years for many specific reasons, are left as they are, including Class 
I differentials, marketing areas, pool plant definitions, and producer 
pooling qualifications.
    The proposed reform program is more market-oriented while 
preserving the most valuable elements of Federal Orders. The use of a 
competitive pay price as the fundamental basis for pricing milk will 
enhance price discovery and facilitate the ability to export offering 
greater opportunities for U.S. dairy products in the global 
marketplace.

    Two Classes

    This Federal Order reform proposal will improve price discovery and 
the transparency of milk pricing. The key element of the proposal is 
the elimination of the end-product pricing formulas for manufacturing 
milk, including make allowances. All milk used in manufactured dairy 
products will be competitively priced. Consequently, there will be no 
minimum prices manufacturers are required to pay for milk used to 
produce these products.
    There will, in effect, be two classes of milk use:

   Class I_Fluid milk products. Milk used to produce fluid milk 
        products will be subject to minimum pricing, plus market-based 
        premiums.

   Class II_Manufactured products. Milk used for manufacturing 
        (under the current system Class II, III and IV products) will 
        be competitively priced in the market.

    Fluid milk (Class I) Price

    Each month, USDA's Agricultural Marketing Service will carry out a 
survey of the competitive price paid by proprietary cheese plants to 
cooperatives and individual producers for milk used to make cheese. 
Proprietary plants (including those with 50 percent cooperative 
ownership or less and managed by the proprietary partner) producing all 
types of cheese will be surveyed if they process a daily average of at 
least 250,000 pounds of milk and are not subject to minimum pricing for 
that milk (under a state order, for instance).
    The data collected by USDA in the survey will include pounds of 
milk and pounds of butterfat, all premiums, component values, hauling 
subsidies, and lab and field service costs where applicable. Forward 
contracted milk would not be included.
    USDA will publish the results of this survey for each of the five 
regions. These regions will correspond to, and expand upon, the current 
Federal Order markets, but are defined for reporting purposes only. 
There will be fewer reporting regions than Federal Order markets to 
ensure that each region has a sufficient volume of manufacturing milk 
use to result in a robust competitive pay price. California would be 
excluded from the survey so long as it continues to set a minimum price 
for cheese milk.
    The basic price determinant or ``price mover'' for fluid milk 
(Class I) nationally will be the higher of the national weighted 
average competitive cheese milk price survey, or the current Class IV 
formula butter powder milk value. The price mover will be announced in 
advance. For example, the Class I mover for April would be the higher 
of: (1) February's national average cheese milk competitive price, 
adjusted with weighted average NASS block and barrel cheese prices for 
the first 2 weeks of March; or (2) an advanced Class IV price as 
currently calculated. The April Class I price mover would be announced 
by the 23rd of March. The minimum price for Class I milk would be this 
national mover plus the current Class I differential at the plant.

    Manufacturing Milk Price

    The price producers are paid for milk in manufactured dairy product 
uses (as currently defined for Class II, III and IV) will be a 
competitive price. There will be no minimum price for manufacturing 
milk.
    Each region's competitive price for milk used to produce cheese, in 
addition to being used in establishing the Class I base price, as 
described above, will be used to determine the butter powder plant pool 
credit and the lowest of the regional competitive cheese milk prices 
will enter into the calculation of the Class I pool contribution. (See 
Pooling below.)

    Pooling

    In order to stabilize pooled values and eliminate most plant de-
pooling, the Federal Order pool would be a modified pooling of 
differentials, resulting in a producer price differential. That is, 
instead of pooling four class prices, relatively stable price 
differentials and balancing credits would be paid into and out of a 
differential pool, as follows:

   Since the concept of a ``blend price'' will no longer apply, 
        individual handlers of Class I milk would contribute to the 
        pool the lagged difference between their Class I price and the 
        lowest regional competitive price. Both the Class I price and 
        the lowest regional competitive price would be announced in 
        advance and lagged in the same way. The Class I pool 
        contribution would be consistently positive from month to 
        month, because it would not depend on a pooling of old and new 
        prices, but would only depend on the fixed Class I differential 
        and a consistently positive difference between the national 
        mover and the lowest regional cheese milk price. In fact, the 
        full contribution to the pool per hundredweight of Class I milk 
        would be known by the 23rd of the month before.

   Handlers of a subclass of perishable manufacturing milk 
        (generally products now in Class II) would contribute a fixed 
        differential of $0.30 per hundredweight in the pool.

   Handlers of milk used to make cheese would have no 
        contribution or draw.

   Handlers of milk used to produce butter and milk powders 
        would receive a payment from the pool when the national value 
        of milk used to make powder and butter as calculated using the 
        current Class IV formula adjusted for energy costs is less than 
        the regional competitive cheese milk price. When the Class IV 
        formula is higher than the regional competitive cheese price, 
        the Class IV handler shall pay the difference into the pool. 
        The payment to those who manufacture butter and milk powders 
        will not exceed the funds available in the pool. The blended 
        result after the distribution would be a producer price 
        differential for all pooled producer milk that would be paid 
        directly from the Market Administrator to producers and 
        producer cooperatives.

    Balancing and Transportation Credits Addendum

    USDA will be required to hold hearings, either at the national 
level or for individual orders, when requested for the purpose of 
considering and implementing proposals to compensate handlers that 
truly perform balancing services for the Class I market. These hearings 
are to include but not be limited to:

   A plant balancing credit to manufacturing plants that 
        provide balancing services to the market.

   Intramarket transportation credits for markets in which 
        balancing is based on long shipments of milk from within the 
        marketing area.

    How Foundation for the Future's Federal Order Reform Works

    Class I Price Mover and Minimum Price

    The Class I price mover for any given month is the higher of the 
weighted average national competitive cheese milk price from two months 
prior (the base month), or the advance Class IV formula price per 
hundredweight. The competitive cheese milk price will be updated using 
the change in the NASS cheddar cheese price from the first two weeks in 
the base month compared to the price for the first two weeks of the 
month immediately prior to the month for which the Class I price mover 
would be effective. The advance Class IV price is calculated using the 
current formula and the NASS butter and nonfat powder prices for the 
first two weeks of the month immediately prior to the month for which 
the Class I price mover would be effective.
    For example, the Class I price mover for June 2011 would be 
calculated as follows:

April competitive cheese price = $17.57

NASS Cheddar Price

   First two weeks April = $1.6768

   First two weeks May = $1.6413

NASS Butter Price

   First two weeks April = $1.9869

   First two weeks May = $2.0460

NASS Dry Whey Price

   First two weeks April = $0.4775

   First two weeks May = $0.4915

NASS NFDM Price

   First two weeks May = $1.6065

Adjusted April competitive cheese milk price = $17.57 ^ $0.23 = $17.34

Advanced Class IV Formula Price = $20.32

June 2011 Class I Price mover (higher of) = $20.32

    Class I handlers must pay their producers a minimum price equal to 
the lowest regional competitive cheese milk pay price in the country, 
adjusted as the mover is above and pay the difference between Class I 
price and the lowest regional competitive cheese milk price into the 
pool. The producer price differential (PPD) will be paid directly to 
producers and cooperatives by the Market Administrator.

    Class II Product Processor Milk Price and Pool Contribution

    Processors of products formerly categorized as Class II will pay 
their producers a competitive price. That is, it is what the processor 
must pay producers to secure a milk supply. There is no minimum price. 
However, the processors of these products shall pay $0.30 per 
hundredweight of milk processed into the Federal Order pool with which 
they are associated. Plant pooling and producer qualification 
requirements are unchanged.

    Cheese and Butter Powder Processors

    Class III and Class IV product processors price to their producers 
will be a competitive price. That is, it is what the processor must pay 
producers to secure a milk supply. There is no minimum price. Plant 
pooling and producer qualification requirements are unchanged. These 
plants make no pool contribution.

    Distribution of the Pool

    The funds in each order's pool shall consist of:

   From Class I handlers:

     The applicable Class I differential.

     The difference between the Class I price mover and the 
            lowest regional competitive advanced Class III survey price 
            adjusted as described above.

   From soft dairy product (Class II in the current system) 
        pool handlers/processors:

     The $0.30 differential.

   From butter powder milk pool handlers:

     Any amount that the butter powder (Class IV in the 
            current system) formula price (adjusted for energy costs of 
            processing) is above the region's competitive cheese milk 
            price.

    If the butter/powder formula price is below the region's 
competitive cheese milk price, the first distribution from an order's 
pool will be to handlers of butter powder milk up to a maximum of the 
total funds available in the pool.
    The remaining pool balance is paid to producers in the Producer 
Price Differential (PPD), subject to location adjustments and other 
pool balancing adjustments, as of today. So that the PPD cannot be 
negative, the draw for butter powder pool handlers cannot exceed the 
available pool balance. The PPD is paid directly to producers and to 
producer cooperative associations, to keep it separate from the 
competitive prices paid to producers by handlers/manufacturers.

    NMPF Five Year Analysis Summary

    The table shows the impact of the proposed Federal Order reforms as 
described above on the producer price differential in each order using 
actual pooled volumes and underlying market values.

            Table 6--Producer Price Differentials, 2006-2010
------------------------------------------------------------------------
                              Current          FFTF         Difference
------------------------------------------------------------------------
Northeast           1              $1.75           $2.01          +$0.26
Appalachian         5              $2.62           $2.94          +$0.32
Florida             6              $4.32           $4.72          +$0.40
Southeast           7              $2.72           $3.03          +$0.31
Upper              30              $0.29           $0.40          +$0.11
 Midwest
   Central         32              $0.48           $0.71          +$0.24
Mid-east           33              $0.80           $1.09          +$0.29
Pacific           124              $0.33           $0.74          +$0.41
 Northwest
Southwest         126              $1.41           $1.87          +$0.47
Arizona           131              $0.78           $1.01          +$0.23
------------------------------------------------------------------------
Based on pooling Class IV, snubbed to total value in the pool.


    In Summary

    Foundation for the Future's proposal to revise Federal Milk 
Marketing Orders will provide a number benefits:

   Discover a true market price for milk used in manufactured 
        products rather than a price generated by a formula using 
        thinly-traded product values and contentious make allowances.

   Reduce price volatility--analysis shows that a competitive 
        pricing system results in less volatility than product price-
        driven formulas.

   Encourage product innovation by not locking manufacturers 
        into a minimum price based on the value of a dissimilar 
        product.

   Provide more equitable compensation to the cooperatives and 
        other handlers who do the hard work of balancing fluid markets.

   Maintain the core framework of Federal Milk Marketing 
        Orders.

    Federal Orders provide an important support system for processors, 
dairy farmers, and cooperatives through pooling of Class I values, 
providing third-party audits to verify market pricing, and helping to 
maintain supplies for fluid processors by compensating their suppliers. 
Without reform, Federal Orders will be strained to the point that their 
existence comes into question, to the producer's loss.
    The reforms proposed as part of Foundation for the Future will 
accommodate the growing complexity of U.S. and international dairy 
markets while maintaining the basic framework of the FMMO system and 
preserving the elements of the orders that are most important to 
producers and processors. These reforms will promote a milk pricing 
system that compensates producers fairly, reduces price volatility, and 
creates a more dynamic dairy industry.
4. Dairy Market Stabilization Program
  b Foundation for the Future is recommending the establishment of a 
        Dairy Market Stabilization Program (DMSP) to address and 
        prevent extreme margin volatility for dairy producers by 
        sending strong and timely signals to producers that a small 
        percentage of additional milk production may have significant 
        consequences on their overall margins. The DMSP is intended to 
        absorb some of the market shocks that this volatility may 
        cause. The DMSP has been designed to act swiftly, but 
        infrequently, to address brief imbalances in the market. The 
        program will work in conjunction with the Dairy Producer Margin 
        Protection Program (DPMPP). DMSP is compatible with the United 
        State's WTO obligations.

    The U.S. dairy industry has been actively increasing its global 
participation. This increased interaction with global markets, will 
likely create more exposure to greater price volatility. Some of the 
key principles that guided the development of the DMSP include:

   Allow for production growth. The program is intended solely 
        to intervene in the market to address temporary imbalances 
        between supply and demand. The program will send clear economic 
        signals to producers that there is an imbalance in the 
        marketplace.

   Reduce margin volatility. The program's ultimate objective 
        is to restore balance between supply and demand in the 
        marketplace for milk. By encouraging producers to lower their 
        milk marketings at appropriate times, prices should rise, thus 
        improving margins.

   Keep government intervention at a minimum. The legislation 
        establishing the program will set the parameters that put it 
        into effect. USDA's role will be limited to determine the 
        actual monthly margin and to collect potential farmers' 
        contributions. It does not require a producer advisory board to 
        determine when the program would ``trigger in'' and to what 
        extent.

   Not encourage imports or discourage exports. Global and U.S. 
        markets must maintain a strong correlation. Such correlation 
        will allow domestic inventories to clear faster, encourage 
        exports, discourage imports, and help ensure that market 
        downturns are of shorter duration.

    Margin as the Trigger Mechanism for DMSP

    As in the case of the DPMPP, the DMSP will be based on margin (All-
Milk Price minus feed costs). After extensive analysis and review of 
state, regional and national data, it has been determined that the All-
Milk Price is the most appropriate and accurate measure for use in 
development of the margin. The new feed cost ration developed for the 
DPMPP will also be used in the feed cost formula for this program; 
hence the actual margin will be determined each month using the same 
methodology as the Dairy Producer Margin Protection Program.

    Program Operation

    USDA will calculate the monthly margin for both the DPMPP and the 
DMSP using identical methodology. The margin trigger levels for the 
DMSP will be set as follows:

   When the actual national margin is $6.00 or less for 2 
        consecutive months, producers will be paid the higher of 98 
        percent of their base milk marketings (definition follows) or 
        94 percent of their current milk marketing (definition 
        follows);

   When the actual national margin is $5.00 or less for 2 
        consecutive months, producers will be paid the higher of 97 
        percent of their base milk marketings or 93 percent of their 
        current milk marketing;

   When the actual national margin is $4.00 or less in a single 
        month, producers will be paid the higher of 96 percent of their 
        base milk marketings or 92 percent of their current milk 
        marketing.

    As noted above, the DMSP would only take effect when the actual 
margin is equal to or below the margin trigger level for 2 consecutive 
months, except that the program would go into effect if the national 
margin is equal to or below $4.00 per hundredweight in a single month. 
Conversely, when the DMSP is in effect, if the actual national margin 
exceeds the $6.00 trigger level margin for 2 consecutive months, the 
DMSP will be suspended.

    Producers whose milk marketings in a given month are less than the 
required percentage of their base milk marketings serving as the basis 
of payment when the program is in effect would not be subject to a 
reduction in payment. (See examples below.)

    Bases to be Used in the DMSP

    The specified percentage of base milk marketings which will serve 
as the basis of payment when the program is in effect will be 
calculated off the producer's base. The producer's base is defined as 
the 3 month average of the most recent of milk marketings prior to the 
notification from USDA that the margin trigger level has been reached. 
An example of a 3 month average would include the average of marketings 
for January, February, and March for a program to be implemented in 
May. This base would remain fixed at that level until the margin 
exceeds the $6.00 trigger level for 2 consecutive months. To address 
any conditions specific to individual operations (e.g., seasonality or 
grazing), a producer will have the option of choosing the same month in 
the previous year as his/her base for each month the DMSP is in effect, 
making the selection annually.

    Preventing an Influx of Dairy Product Imports

    When domestic prices are significantly higher than world prices, 
conditions are ripe for an influx of imported dairy products. 
Therefore, if either of the U.S. prices for cheddar cheese or skim milk 
powder (SMP) is 20 percent higher than the world price for the 
applicable commodity, DMSP will be discontinued unless the national 
average margin is below $4.00. In this case, conditions would be such 
that even if the world prices for cheddar cheese or SMP are 20 percent 
below the U.S. price, the implementation of the DMSP would continue.
    The following examples explain how the program is intended to work:
    Scenario--The average margin for 2 months, February and March, is 
below the set margin trigger level of $6.00. As a result of the margin 
falling below $6.00 for 2 consecutive months, producers will be 
notified in early April that beginning with the milk marketings for the 
month of May, they will receive payment for the greater of 98 percent 
of their base milk marketings (in this example the average of their 
January through March monthly marketings) or 94 percent of their milk 
marketings for May. For purposes of this example, it is assumed the pay 
price for the month of May is $14.00 per hundredweight.

   Producer A whose 3 month average base milk marketings is 
        1,000,000 pounds and markets 1,010,000 pounds in May will be 
        paid for 980,000 pounds of milk (1,000,000 pounds  98 
        percent). The DMSP deduction from his/her milk check for May is 
        30,000 pounds (1,010,000 pounds minus 980,000 pounds)  $14.00 
        per hundredweight = $4,200.00.

   Producer B whose 3 month average base milk marketings is 
        1,000,000 pounds and markets 1,200,000 pounds of milk in May. 
        In this example, 98 percent of his/her base is 980,000 pounds. 
        However, 94 percent of his/her current (May) milk marketings is 
        1,128,000 pounds. Therefore, the quantity of milk Producer B is 
        not paid for is 1,200,000 pounds ^ 1,128,000 = 72,000 pounds. 
        The deduction from his/her milk check would be 72,000 pounds  
        $14.00 per hundredweight = $10,080.00.

   Producer C also has a 3 month average base of 1,000,000 
        pounds and his/her milk marketings are 979,000 pounds in May. 
        This producer would have nothing deducted from his/her milk 
        check since milk production in May is below the required 98 
        percent of his/her base (980,000 pounds), serving as the basis 
        of payment. However, if this producer's June marketings were to 
        increase to 989,000 pounds, he/she would incur a reduction in 
        his/her milk check of $1260.00 (9000 pounds  $14.00 per 
        hundredweight), since his/her June marketings exceeded the 98 
        percent of base serving as the basis of payment.

   Producer D chooses the option of the same month in the 
        previous year. His/her base milk marketings were 1,000,000 
        pounds in May of the previous year and 1,010,000 pounds were 
        marketed in May of the current year. He/she will be paid for 
        980,000 pounds of milk (1,000,000 pounds  98 percent). The 
        DMSP deduction from his/her milk check for May is 30,000 pounds 
        (1,010,000 pounds ^ 980,000 pounds)  $14.00 per hundredweight 
        = $4,200.00.

    Administration of the Program

    The DMSP will cover all producers in all markets and is intended to 
be a government program administered by the Agricultural Marketing 
Service (AMS) of USDA. Monies will be collected by the AMS using the 
same framework as the dairy promotion checkoff monies and will apply to 
all milk marketed with no exceptions. The USDA will announce that the 
DMSP is being implemented 30 days in advance of the month in which the 
reduction in milk payments goes into effect. The trigger mechanism will 
be statutorily mandated to go into effect without USDA sanction when 
certain pre-determined economic conditions occur.

    How the Monies will be Collected and Managed

    The purpose of the monies collected via milk check deductions under 
the DMSP is to effectively stimulate the consumption of dairy products 
domestically. Foundation for the Future proposes that a DMSP board be 
established to oversee and direct the utilization of these producer 
monies into programs that will effectively work to increase the 
consumption of U.S. dairy products.
    The DMSP board shall be appointed by the USDA Secretary. It will 
consist of 24 directors representing the diverse dairy producer 
community throughout the U.S. All board decisions will require a \2/3\ 
affirmative vote.
    Utilizing the funds collected through the program, the DMSP board 
will have the authority to direct the purchase of dairy products for 
donations to food banks and other feeding or food aid programs.
    The board will conduct performance reviews of DMSP every two years 
and make recommendations to USDA Secretary for possible consideration 
by the Congress.
    The programs funded by the DMSP should be compatible with, but not 
duplicative of, the programs established by the dairy checkoff program. 
They should adhere to the principle of expanding consumption without 
cannibalizing existing sales. The DMSP board would have the authority 
to contract with a managing entity for execution and implementation of 
its objectives.

    Economic Analysis of the Impact of the Dairy Market Stabilization 
Program

    Dr. Scott Brown (FAPRI) also conducted an independent analysis of 
the DMSP. The full analysis is available online (http://
www.fapri.missouri.edu/outreach/publications/2011/
FAPRI_MU_Report_04_11.pdf).
    While the DMSP program does have a cost element to it for dairy 
farmers, the FAPRI analysis clearly demonstrates that the return on 
investment is ten-fold. The analysis assumes that when DMSP is in 
effect, half of the milk produced over the production base will be 
marketed. It also assumes that all producers select the same month in 
the previous year as their base.
    Chart 6 shows the impact the DMSP program would have had on dairy 
farmer margins in 2009. The blue bars represent the actual margins and 
the red bars indicate what the margins would have been with the DMSP in 
effect.
    Chart 7 quantifies the impact DMSP would have had on dairy farmer 
revenue in 2009. It demonstrates that the program would have yielded an 
increase in the average All-Milk Price in 2009 of $1.84 per 
hundredweight. By coupling this program with the DPMPP Basic Plan 
payment (that would have added another $0.10 per hundredweight), it is 
clear that the loss of equity at the farm level would have been 
significantly less severe during that period.
Chart 6
2009 Margins With/Without DMSP

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Prepared by: National Milk Producers Federation.
Chart 7
DMSP Would Have Raised the Average All-Milk Price $1.84/cwt. in 2009

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Prepared by: National Milk Producers Federation.

    How Margin Protection and Market Stabilization Work Together

    Foundation for the Future is a package of programs designed to work 
together. This is evident when looking at the impact the combination of 
the market stabilization program and the margin production program 
would have had on producers in 2009.
    This review uses the dairy operation in the example under the Dairy 
Producer Margin Protection Program section of this paper: a 200 cow 
dairy; 20,576 pounds per cow; 4,100,000 pounds production history; and 
$2.00 per hundredweight supplemental on 90 percent of production 
history. For this analysis, the producer selects the same month in the 
previous year as his/her production history.
    As seen in Chart 7 above, the DMSP program increases revenue. Chart 
6 above shows that the DMSP program's impact on the margin level 
reduces the duration of the margin protection program and the length of 
time it would have been in effect.
    The following examples using the 200 cow dairy described above. In 
the first, the producer does not reduce production when the DMSP 
program triggers in; in the second, the producer does make the 
reduction.

   Example--Producer 1: Does Not Reduce Production When DMSP Activates
 
 
-------------------------------------------------------------------------
82009 DMSP Milk Check Reductions:0
 
   March-May = $7,010
 
   September-November = $3,174
 
   Total Taken Off Milk Checks = $10,184
 
8Impact on Farm Revenue:0
 
   Net Increase in milk revenues = +$66,880
 
   Net Revenue Increase per Hundredweight = $1.63 average for
   the year
------------------------------------------------------------------------


       Example--Producer 2: Reduces Production When DMSP Activates
 
 
-------------------------------------------------------------------------
82009 DMSP Milk Check Reductions:0
 
   March-May = $0.00
 
   September-November = $0.00
 
   Total Taken Off Milk Checks = $0.00
 
8Impact on Farm Revenue:0
 
   Net Increase in milk revenues = +$77,064
 
   Net Revenue Increase per Hundredweight = $1.87 average for
   the year
------------------------------------------------------------------------


                    Example: Impact on Total Revenue
 
 
-------------------------------------------------------------------------
82009 DPMMP Payout:0
 
   $2.00/cwt supplemental on 90% of production history
 
   Supplemental Premium $5,760 per year
 
   Basic Protection Payment = $3,458
 
   Net Supplemental Protection Payment = $19,490
 
   Total DPMPP Net Payment = $22,951, $0.56/cwt.
 
   Producer 1--No Reduction: DMSP $1.63 + DPMPP $0.56 = Ave.
   +$2.19/cwt.
 
   Producer 2--Reduced Output: DMSP $1.87 + DPMPP $0.56 = Ave.
   +$2.43/cwt.
------------------------------------------------------------------------

Conclusion
    Working together, the programs of Foundation for the Future protect 
dairy farmer equity, create stability by reducing price and margin 
volatility, and minimize growth restrictions in milk production that 
are needed to provide U.S. dairy products to a growing global market. 
All dairy producers need to do is Rethink What's Possible.
                              attachment 1

                 2009 NMPF Strategic Planning Task Force
 
 
 
                         Chairman: Randy Mooney*
 
Jim Baird, Lone Star Milk Producers  Ralph McNall, St. Albans
                                      Cooperative Creamery, Inc.
Adrian Boer, Northwest Dairy         Keith Murfield, United Dairymen of
 Association                          Arizona
Jay Bryant, MD & VA Milk Producers   David Newhouse, Farmers Cooperative
 Coop Assn., Inc.                     Creamery
Richard Cotta,** California          Ken Nobis,* Michigan Milk Producers
 Dairies, Inc.                        Association
* Denotes NMPF Officers.
** CWT Coop Member Only.
Rod DeJong,* Northwest Dairy         Doug Nuttelman, Dairy Farmers of
 Association                          America, Inc.
Clint Fall, First District           Wayne Palla, Dairy Farmers of
 Association                          America, Inc.
Dave Fuhrmann,* Foremost Farms USA   Neal Rea, Agri-Mark
Thomas Gallagher, Dairy Management,  Clyde Rutherford,* Dairylea
 Inc.                                 Cooperative, Inc.
Bobby Hall, Upstate Niagara          Tom Suber, U.S. Dairy Export
 Cooperative, Inc.                    Council
Pete Kappelman, Land O'Lakes, Inc.   Paul Toft,* Associated Milk
                                      Producers, Inc.
Cornell Kasbergen,* Land O'Lakes,    John Wilson, Dairy Farmers of
 Inc.                                 America, Inc.
Mike McCloskey,* Select Milk         Joe Wright, Southeast Milk
 Producers, Inc.
 

                              attachment 2
Foundation for the Future Subcommittees
Dairy Market Stabilization--Chairman Wayne Palla, DFA

Adrian Boer, Northwest Dairy Association
Jay Bryant, MD & VA Milk Producers Coop
Richard Cotta, California Dairies, Inc.
Cornell Kasbergen, Land O'Lakes, Inc.
Gene Paul, National Farmers Organization
Neal Rea, Agri-Mark
David Scheevel, Foremost Farms USA
Tom Suber, U.S. Dairy Export Council

Dairy Producer Margin Protection--Chairman Ken Nobis, Michigan Milk 
    Producers Association

Clint Fall First District
Ed Gallagher Dairylea Cooperative, Inc.
Pete Kappelman Land O'Lakes, Inc.
Doug Nuttelman Dairy Farmers of America, Inc.
Tom Thompson United Dairymen of Arizona
Joe Wright Southeast Milk
Consultant: Bruce Babcock--Iowa State University

FMMO--Chairman Dave Fuhrmann, Foremost Farms

Jim Baird, Lone Star Milk Producers
Neil Gulden, Associated Milk Producers, Inc.
Mike McCloskey, Select Milk Producers
Keith Murfield, United Dairymen of Arizona
Jim Sleper, Land O'Lakes, Inc.
Rich Stammer, Agri-Mark
Jim Wegner, Northwest Dairy Association
Greg Wickham, Dairylea Cooperative, Inc.
John Wilson, Dairy Farmers of America, Inc.
                              attachment 3
Groups Presenting Proposals/Policy Statements at the NMPF Strategic 
        Planning Task Force on July 20-21, 2009 Meeting
American Farm Bureau Federation
Dairy Farmers Working Together
Holstein Association
Milk Producers Council
National Farmers Organization
National Farmers Union
Western United Dairymen
                              attachment 4
List of Industry Feed Ration Experts and Nutritionists
Development Team:

Steve Watrin, Land O'Lakes, Inc.
Ed Gallagher, Dairylea Cooperative, Inc.
Dr. Gordie Jones, Veterinarian, Farmer, Nutritionist

Reviewed by:

Dr. Mary Beth Hall, Ph.D., USDA Forage Center
Dr. Terry Howard, Ph.D., University of Wisconsin (retired)
Dr. Mike Hutjens, Ph.D., University of Illinois
Dr. Randy Shaver, Ph.D., University Of Wisconsin
National Milk Producers Federation
2101 Wilson Blvd., Suite 400
Arlington, VA 22201
Phone: 703-243-6111
Fax: 703-841-9328
[email protected]
www.futurefordairy.com
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--Farm 
                             Service Agency
1. Program Name
    Dairy Export Incentive Program (DEIP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Authorized by Congress under Sec. 153 of the Food Security Act of 
1985, the program provides a bonus or subsidy on a bid basis to 
exporters of eligible dairy products (butterfat, nonfat dry milk, whole 
milk powder and various cheeses). The payments may be made in cash or 
in commodities held by the Commodity Credit Corporation (CCC). 
Initially, the program provided the bonuses ``in-kind'' from surplus 
stocks of dairy products held by CCC. This, `in-kind' payment was 
replaced by the issuance of ``generic certificates'' redeemable for any 
inventory held by the CCC. As inventories diminished, the program 
evolved into the sole use of cash payments for the subsidy. As this 
program provides an export subsidy, it is subject to the subsidy 
reduction commitments of the United States under the Uruguay Round 
Agreements of the World Trade Organization (WTO). The program is 
therefore subject to both budget and quantity limits in accordance with 
those reduction commitments.
4. Purpose/Goals
    By providing a subsidy on exports of eligible dairy products, an 
amount intended to bridge the gap between world market prices and the 
U.S. domestic price, DEIP enables exporters to meet the lower world 
market prices, often influenced by the application of subsidies by 
other exporting countries--primarily the European Union (EU).
5. Success in Meeting Programmatic Purpose/Goals
    The program has been very successful in meeting the needs of 
exporters and expanding markets for U.S. dairy products when world 
prices are depressed due to the application of subsidies by other 
countries. This was most evident leading up to and during the 
implementation period of the Uruguay Round subsidy reduction 
commitments. At that time, the EU was aggressively subsidizing dairy 
exports. Almost 250,000 metric tons of dairy products were exported 
under DEIP in Fiscal Year 1995 and $162 million in bonus payments were 
committed under DEIP in Fiscal Year 1993.
6. Annual Budget Authority (FY 2002-FY 2011)
    This is a mandatory program with spending capped by our commitments 
under the WTO Uruguay Round Agreements. These are product specific and 
follow:

------------------------------------------------------------------------
      Dairy Product        Budgetary Cap ($Mil)      Quantity Cap (MT)
------------------------------------------------------------------------
    Nonfat dry milk                   $82.46                  68,201
          Butterfat                   $30.49                  21,097
             Cheese                    $3.63                   3,030
  Other (whole milk                   $0.021                      34
             powder)
                         -----------------------------------------------
  Total.................            $116.601                     N/A
------------------------------------------------------------------------


                   7. Annual Outlays (FY 2002-FY 2011)
------------------------------------------------------------------------
       Fiscal Year        Subsidy Awarded ($Mil)       Quantity (MT)
------------------------------------------------------------------------
               2002                   $54.62                  86,473
               2003                   $32.52                  86,155
               2004                    $2.68                  48,498
               2005                       $0                       0
               2006                       $0                       0
               2007                       $0                       0
               2008                       $0                       0
               2009                   $18.89                  50,886
               2010                    $2.37                   4,811
               2011                       $0                       0
------------------------------------------------------------------------

    The budget authority is restricted to the budgetary limits of our 
subsidy reduction commitments under the Uruguay Round Agreements. DEIP 
is designed to meet, not set, world market prices. Years where there 
has been limited use of DEIP reflect the United States' competitiveness 
in the world market without the need for a subsidy. This condition 
exists today.
8. Annual Delivery Cost (FY 2002-FY 2011)
    Delivery costs are a function of collateral duty when the program 
is operating. When not operating, program delivery costs are estimated 
at 0.10 FTE--largely a function of closing outstanding performance 
issues. When operational, USDA estimates that no more than two FTE 
equivalents are utilized to operate the program. In fiscal 2010, the 
program operated for 1 month and estimated delivery costs were under 
$40,000. In 2011, estimated delivery costs are under $10,000. The 
software costs for the program are under $1,000 per year.
9. Eligibility Criteria
    All potential exporters of U.S. dairy products can participate 
provided they have an agent in the United States and they are not 
suspended, debarred or otherwise prohibited from participation in U.S. 
Government programs.
10. Utilization (Participation) Data
    To date, 115 exporters of dairy products have participated in DEIP 
since inception.
    The following is a list of the number of participants for the 
period 2002-2011:

------------------------------------------------------------------------
             Fiscal Year                         Participants
------------------------------------------------------------------------
                       2002                                   17
                       2003                                   12
                       2004                                    4
                       2005                                    0
                       2006                                    0
                       2007                                    0
                       2008                                    0
                       2009                                   17
                       2010                                   12
                       2011                                    0
------------------------------------------------------------------------

11. Duplication or Overlap with Other Programs
    None.
12. Waste, Fraud and Abuse
    USDA is proactive in reviewing this program and its participants. 
Payments are not made until the exporters provide appropriate export 
documentation that is reviewed for compliance with program 
requirements. Where there is any indication of waste, fraud and abuse, 
the Department is aggressive in investigating those incidents. At this 
time we have no confirmed evidence of waste, fraud or abuse under DEIP.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Milk Income Loss Contract (MILC) Program.
2. Subprograms/Department Initiatives
    Subprogram--The 2010 Agricultural Appropriations Bill authorized 
$290 million for loss assistance payments under the Dairy Economic Loss 
Assistance Payment (DELAP) Program for eligible producers to receive a 
one-time payment based on the amount of milk both produced and 
commercially marketed by their operation during the months of February 
through July 2009.
3. Brief History
    The National Dairy Market Loss Program, later named the Milk Income 
Loss Contract Program, was initially authorized by Section 1502 of the 
Farm Security and Rural Investment Act of 2002 (2002 Farm Bill). The 
MILC program supports the dairy industry by providing direct 
countercyclical style payments to milk producers on a monthly basis 
when the Boston Federal Milk Marketing Order Class I price for fluid 
milk falls below the benchmark of $16.94 per hundredweight (cwt.). For 
production marketed during the authorized period, milk producers in 
eligible dairy operations received a payment equal to 45 percent of the 
difference between the benchmark and the Class I price, if this 
difference was positive. This rate was decreased by the Deficit 
Reduction Act of 2005 to 34 percent of the difference between $16.94 
and the Boston Class I Federal Milk Marketing Order price for October 
1, 2005 through August 31, 2007. The MILC program was amended further 
by the Agriculture Reconciliation Act of 2005 to extend the program 
through September 30, 2007, consistent with other farm bill programs 
ending September 30, 2007. The MILC program was last authorized by the 
2008 Farm Bill through September 30, 2012, and also introduced a feed 
cost adjustment to the monthly payment rate calculation. Under the MILC 
program, a dairy operation's monthly payment is based on the quantity 
of milk sold in a month in which a payment rate is in effect, up to a 
maximum of 2.985 million pounds per dairy operation, per fiscal year 
for the period beginning October 1, 2008 and ending August 31, 2012. 
Before October 1, 2008 the maximum eligible production had been 2.4 
million pounds.
    The MILC program replaces previous Dairy Market Loss Assistance 
programs that provided payments to dairy producers from 1997 through 
2000. MILC was implemented soon after authority for the Northeast Dairy 
Compact expired.
4. Purpose/Goals
    The purpose and goal of the MILC program is to stabilize milk 
producer revenue by compensating dairy producers when domestic milk 
prices fall below a specified level.
5. Success in Meeting Programmatic Purpose/Goals
    The MILC program has paid out approximately $2.5 billion to dairy 
operations over the first 5 initial years of program administration. 
Annual expenditures when the program was re-authorized for 2006 and 
2007 totaled over $510 million. Expenditures during the period 
authorized by the 2008 Farm Bill, to date, total $938 million. Due to 
the countercyclical nature of the program, the direct payments provide 
a safety net to dairy producers at times when they may struggle most as 
a result of low milk prices. The payments have reduced the financial 
stress on U.S. dairy operations during periods of low milk prices 
helping to sustain the domestic milk supply resulting in consumers 
being able to buy dairy products at lower prices than if the program 
was not operating.

                                                      6. Annual Budget Authority (FY 2007-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               FY 2002     FY 2003      FY 2004     FY 2005     FY 2006     FY 2007     FY 2008      FY 2009      FY 2010      FY 2011
                                Actual      Actual       Actual      Actual      Actual      Actual      Actual       Actual       Actual        Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk Income Loss Contracts           $0   $1,795,452     $221,126     $9,124     $351,586   $156.598       $2,153     $756,889     $181,527     $173,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Budget Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               FY 2002     FY 2003      FY 2004     FY 2005     FY 2006     FY 2007     FY 2008      FY 2009      FY 2010      FY 2011
                                Actual      Actual       Actual      Actual      Actual      Actual      Actual       Actual       Actual        Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Milk Income Loss Contracts           $0   $1,796,452     $221,126     $9,124     $351,586   $156.598       $2,153     $756,889     $181,527     $173,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible for payments, dairy producers must have produced cow 
milk in the U.S., and commercially marketed the milk produced anytime 
during the authorized period. Dairy producers must also be in 
compliance with Highly Erodible Land and Wetland conservation 
provisions and Adjusted Gross Income limitations. Signup for the 
program under the 2008 Farm Bill began December 22, 2008, and extends 
through the conclusion of the program on September 30, 2012. Payments 
are issued based on a start month selection by the producers in the 
dairy operation and are subject to a maximum eligible production limit 
of 2.985 million pounds per dairy operation per fiscal year. Payment 
start month selections must be made on form CCC-580 and submitted to an 
FSA Service Center on or before the 14th of the month before the month 
the dairy operation wants to begin payments. Production evidence for 
each applicable payment month must be provided to FSA before a MILC 
payment can be issued.
10. Utilization (Participation) Data
    51,975 dairy producers have participated in the MILC program from 
2008 to present, as authorized under the 2008 Act.
11. Duplication or Overlap with Other Programs
    No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
    There has been minimal to no waste, fraud, or abuse in the MILC 
program because verifiable production evidence must be provided by the 
producers in an eligible dairy operation to qualify for program 
benefits. During the FY 2010 CORP review for improper payments for MILC 
program, it was determined that MILC improper payment error rates 
increased because of the lack of proper supporting documentation, such 
as eligibility forms, before disbursing a MILC payment. FSA continues 
to make eliminating improper payments a top priority and has 
incorporated the priority into strategic planning and performance 
measures.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Dairy Indemnity Payment Program (DIPP).
2. Subprograms/Department Initiatives
    Subprogram--none.
    Department Initiatives--none.
3. Brief History
    The Dairy Indemnity Payment Program was originally authorized by 
Public Law 90-484, the Act of August 13, 1968 (7 U.S.C. 4501), and has 
been extended numerous times. The Food, Conservation, and Energy Act of 
2008, Public Law 110-246, extended the program through 2012. Most 
recently, funds were appropriated for DIPP by the Department of Defense 
and Full-Year Continuing Appropriations Act of 2011, Public Law 112-10.
    DIPP is available to dairy farmers for milk, or cows producing 
milk, and manufacturers of dairy products who, through no fault of 
their own, have been directed to remove their milk or dairy products 
from commercial markets because of the presence of certain chemical or 
toxic residue in the products. Under DIPP, payments are made to dairy 
producers when a regulatory agency directs them to remove their raw 
milk from the commercial market because it has been contaminated by 
pesticides, nuclear radiation, or fallout, or toxic substances and 
chemical residues other than pesticides. Payments are made to 
manufacturers of dairy products only for products removed from the 
market because of pesticide contamination. Dairy producers and 
manufacturers are eligible for indemnification from the date the milk 
was officially removed from the market by a public regulatory Agency 
through the date the milk is officially reinstated to the market by a 
public regulatory Agency, based on the fair market value determined for 
the milk. To apply for DIPP benefits, affected producers and 
manufacturers must meet all eligibility requirements and submit a 
completed FSA-373 to their USDA Service Center or FSA Office no later 
than December 31 following the fiscal year in which the loss occurred.
4. Purpose/Goals
    The purpose and goal of DIPP is to indemnify dairy farmers and 
manufacturers of dairy products who, through no fault of their own, 
suffer income losses with respect to milk or milk products removed from 
commercial markets because such milk or milk products contain certain 
harmful residues.
5. Success in Meeting Programmatic Purpose/Goals
    DIPP has successfully allowed dairy producers and manufacturers, to 
recover financial losses suffered from being directed by a public 
regulatory agency to remove their production from the commercial 
market, when removal has been through no fault of their own. This 
financial compensation allows producers to maintain business operations 
and slows the exit of U.S. dairy operations from the dairy business. 
This program also ensures a healthy milk supply for U.S. consumers.

                                                      6. Annual Budget Authority (FY 2007-FY 2011)
                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dairy Indemnity Payments                $100        $100        $100        $100        $100        $100        $100        $876        $876        $100
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                         FY 2002 Through FY 2011 Budget Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dairy Indemnity Payments                $124        $393        $601        $349        $132        $181        $144        $651        $162        $200
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Income Support and Disaster
 Assistance
  Price Support and Marketing         11,286,100       9,509,047       8,290,909       6,313,263       6,095,604
   Assistance Loans
  Loan Deficiency Payments               173,751           6,036         148,553         191,647          36,565
  Direct Payments                      3,957,175       4,821,206       4,176,795       4,898,085       4,950,410
  Countercyclical Payments             3,158,554         359,064       1,213,300         902,584         131,848
  ACRE Payments                                0               0               0               0         446,633
  Milk Income Loss Contract              157,850           2,153         769,900         181,527         173,000
   Payments
  Tobacco Payments                       955,495         954,817       1,130,095         954,091         960,000
  Other Direct Payments                   25,695          29,768          84,375         103,432          80,504
  NAP Payments                           126,951          73,989          40,700          98,745         116,873
  Crop Disaster Assistance                58,591           1,281         114,828            ^109               0
  Livestock Indemnity Program                198               2           1,716          91,825          77,000
  Emergency Livestock Assistance             664              25           1,926            ^403               0
  Emergency Conservation Program         149,727         128,456               0          92,459          39,719
  Biomass Crop Assistance                                      0               0         248,202         199,000
  Emergency Forest Restoration                                 0               0               0          18,000
   Program
  Tree Assistance Program                  1,973           1,010              68              90               0
  CCC Interest Expenditures              648,627         140,936           2,856          10,426          16,635
  Dairy Indemnity Program                    181             144             651             162             200
  Emergency Forestry                       6,302          12,717           7,854           8,297           9,291
   Conservation Program
  USDA Supplemental Assistance,                0               0          83,814         295,600         295,600
   appropriated
  FSA Disaster Assistance,                     0       2,541,733               0               0               0
   appropriated
  Reforestation Pilot Program                  0             794             794             800             800
  Agricultural Disaster Relief                 0               0           6,000       1,573,278       1,926,134
   Trust Fund
  Aquaculture Grants (123317)                  0               0          48,500          39,942               0
  Farm Storage Facility Loans                548               0          12,500               0               0
    Administrative costs                 776,465         683,795         694,980         744,303         753,934
     (direct)
    Indirect costs                        47,548         234,633         226,905         242,967         246,299
                                 -------------------------------------------------------------------------------
      Total Costs                     21,532,395      19,501,606      17,058,019      16,991,214      16,574,049
      FTEs                                 8,905           8,620           9,529           8,355           8,140
 

9. Eligibility Criteria
    To be eligible to receive DIPP payments, the producer must have 
produced whole milk that was removed from the commercial market 
pursuant to the direction of a public regulatory agency, not have been 
responsible for the milk contamination, or not have been indemnified 
for the same loss from another source.
    In addition, the producer must certify to the compliance with 
Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) 
provisions and submit a complete application to the county Farm Service 
Agency office no later than December 31 following the end of the fiscal 
year in which the loss occurred.
10. Utilization (Participation) Data
    Participation in DIPP varies from one fiscal year to another. Since 
2008, weather conditions in various regions within the United States 
prompted regulatory agencies to remove dairy producers from marketing 
milk because of aflatoxin found in their milk. Below are the number of 
applications and total dollars paid for DIPP from FY 2008 through FY 
2011.

   FY 2008--14 applicants--$144,388

   FY 2009--22 applicants--$650,788

   FY 2010--18 applicants--$158,951

   FY 2011--22 applicants--$261,256
11. Duplication or Overlap with Other Programs
    No duplication or overlap with other programs.
12. Waste, Fraud and Abuse
    Minimal to no waste, fraud, or abuse in the DIPP program because of 
the many eligibility factors that require verifiable evidence from 
official sources that must be provided by the producers in an eligible 
dairy operation to qualify for program benefits. Applications for 
benefits are verified by the County Committee, State Committee, and 
National Office before payment is authorized to a producer.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Dairy Product Price Support Program (DPPSP).
2. Subprograms/Department Initiatives
    Dairy Economic Loss Assistance Program (DELAP). The 2010 
Agriculture Appropriations bill authorized the purchase of cheese worth 
$60 million for donation to feeding programs.
    2009 expansion of feeding programs--On March 26, 2009 Secretary 
Vilsack announced a disposition plan for inventories of nonfat dry milk 
(NDM) that totaled 232.9 million pounds, which had been purchased by 
the CCC at the NDM support price. The plan was intended to help support 
both low-income families, domestically and internationally, as well as 
dairy farmers challenged by high feed and low dairy prices. Through 
this initiative, CCC donated 30 million lbs of NDM to states for 
further processing to acquire fortified fat-free fluid milk and 
macaroni and cheese for use in the National School Lunch Program 
(NSLP); 40 million lbs was fortified and instantized, placed into 
consumer-sized packages and made available in domestic feeding 
programs; 60 million lbs was bartered for 1% ultra high temperature 
(UTH) milk for use in the Emergency Food Assistance Program (TEFAP); 50 
million lbs were bartered for reduced fat and lite cheese for use in 
the NSLP and TEFAP; and 20 million were bartered for ready-to-eat, 
milk-based soups for use in TEFAP. In addition, 1 million lbs was 
offered for sale on a competitive basis for the production of casein 
and 1.5 million lbs were used to meet food assistance needs overseas.
3. Brief History
    DPPSP, established by the Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill), is the latest iteration of the milk price 
support program (MPSP) established by the Agricultural Act of 1949 
(1949 Act). The DPPSP requires the CCC to offer to purchase unlimited 
quantities, at fixed announced prices, of cheddar cheese, butter, and 
nonfat dry milk. Since most wholesale milk is priced based on the price 
of these three dairy products, providing a floor on these products 
provides a floor for the farm milk price. Many versions of the support 
to dairy have been tried since 1949 as the Federal Government has tried 
to balance the need for a stable milk supply with the cost of the 
support program. Some programs have tried to tie milk itself to a 
particular price through the use of secondary purchases. Sometimes the 
prices have been tied to parity or purchase levels. Other programs have 
included voluntary supply control schemes--milk diversion programs or 
herd buyouts. Still other programs to address dairy matters have 
included milk assessments; and many surplus dairy product disposal 
schemes.
    For a long time, dairy support was controlled by the basic 
provisions of the Agricultural Act of 1949, as amended, which required 
that the price of milk paid to producers be supported at a level 
between 75 and 90 percent parity to assure an adequate supply of milk, 
reflect changes in the cost of production, and assure a level of farm 
income to maintain productive capacity sufficient to meet future needs. 
However, after October 21, 1981, the support price was established by 
Congress either at specific price levels or by a formula related to 
expected surplus, rather than parity levels. The 2008 legislation takes 
a different approach and does not set a support price for milk, but 
rather sets purchases prices for products.
    The 1996 Federal Agriculture Improvement and Reform Act authorized 
the Milk Price Support Program (MPSP) through December 31, 1999. Due to 
low prices and concerns from the dairy industry, Congress extended the 
MPSP into 2000, 2001, and until May 31, 2002 through the Agriculture, 
Rural Development, Food and Drug Administration, and Related Agencies 
Appropriations Acts of 2000 and 2001. After June 1, 2002, the Farm 
Security and Rural Investment Act of 2002 (2002 Farm Bill) was passed 
authorizing the MPSP program through December 31, 2007 at a rate of 
$9.90 per hundredweight (cwt) for manufacturing milk. Under the old 
program, milk prices were supported through purchases by the government 
of dairy products. The Secretary could adjust the price of NDM or 
butter twice within the calendar year. The DPPSP minimum purchase 
prices in the 2008 Farm Bill were the dairy product prices USDA had 
established under the 2002 Farm Bill. Under the DPPSP, the minimum 
purchase prices can be lowered if CCC removals exceed certain levels.
4. Purpose/Goals
    The goal of the DPPSP is to support dairy products by providing a 
support price for those products. That support has beneficial effects 
for milk producers.
5. Success in Meeting Programmatic Purpose/Goals
    The DPPSP has been successful in providing economic support to 
dairy producers when economic conditions have been challenging. This 
program has kept some producers operating through times that would 
otherwise force them out of business thus making industry transition 
less dramatic. However, the industry does continue to adjust, with many 
small operations going out of business and their milk production being 
replaced by fewer and larger operations. Recently, significantly 
increasing feed costs have become a challenge for dairy producers. 
Dairy farm viability is determined by the margin between milk prices 
and feed costs, the dairy farms most significant variable cost. Since 
the DPPSP supports the price of products, and not the milk margin, 
producers have increased their participation in the dairy gross margin 
insurance program as a complement to the DPPSP.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
 
 
 
    Budget outlays are made the same year that budget authority is granted.
 


                                                        FY 2002 Through FY 2011 Budget Authority
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Price Support Related               $597,405    $650,102    $308,662     $29,315     $60,307      $2,389     $^2,211    $236,188    $153,011    $124,915
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
 
 
 
    Annual outlays averaged $216 million over the FY 2002-FY 2011 period, and included average outlays exceeding $600 million during FY 2002-03. Outlays
 for the DPPSP totaled $236.2 million in FY 2009 and $153 million in FY 2010. No purchases have been made in FY 2011.
 


                                                         FY 2002 Through FY 2011 Budget Outlays
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Price Support Related               $597,405    $650,102    $308,662     $29,315     $60,307      $2,389     $^2,211    $236,188    $153,011    $124,915
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
 
 
 
    Annual delivery cost is reported consistent with the President's 2012 Budget and USDA's Strategic Plan:
    Department Strategic Goal: Assist rural communities to create prosperity so they are self-sustaining, repopulating and economically thriving.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Commodity Operations
  Cotton User Marketing Payments           9,518               0               0               0               0
  ELS Cotton Competiveness                 1,103          29,839           9,630          27,866               0
   Payments
  Upland Cotton Economic                       0               0          74,661          75,635          65,504
   Adjustment Assistance
  Commodity Purchases and Sales          726,938       1,116,157       1,027,768         853,110       1,626,852
  Storage, Handling,                     133,213          36,329          67,740          73,100          77,475
   Transportation, Processing,
   and Packaging
  CCC Interest Expenditures               70,070          15,660           3,173             791           2,226
  Dairy Price Support                        101             319         226,894          40,597          17,250
    Administrative costs                  33,724          21,340          39,728          24,087          24,364
     (direct)
    Indirect costs                         2,153          49,458          33,697          18,728          18,943
                                 -------------------------------------------------------------------------------
      Total Costs                        976,820       1,269,102       1,483,291       1,113,914       1,832,614
      FTEs                                   458             254             263             256             256
 

9. Eligibility Criteria
    All cheddar cheese, butter, and nonfat dry milk made of cow's milk 
produced in the United States and which is located in the United States 
when offered and not previously owned by the CCC is eligible if it 
meets the standards for product quality and packaging as listed in the 
Dairy Product Price Support Program Purchase Announcement Dairy 7 \1\ 
(Dairy 7). Further, the dairy product must be manufactured in dairy 
plants in which USDA inspection and grading services are performed 
under 7 CFR Part 58--Grading and Inspection, General Specifications for 
Approved Plants and Standards for Grades of Dairy Products.
---------------------------------------------------------------------------
    \1\ The Dairy 7, issued November 17, 2010, provides specific 
contracting information for CCC price support purchases. This 
announcement along with the Dairy Invitations provides the information 
needed to offer and comply with the regulations. This includes 
eligibility, submissions, provisions, product specifications, 
instructions and compliance data.
---------------------------------------------------------------------------
10. Utilization (Participation) Data
    During FY 2004, the CCC purchased a total of 2.911 billion pounds 
of NDM, at costs totaling $2.7 billion or an annual average $536 
million. Stocks exceeded 1 billion pounds for most of 2002 and 2003. In 
2008 and 2009, net removals totaled 359 million pounds of NDM, 3 
million pounds of cheese, and 30 million pounds of butter.
11. Duplication or Overlap with Other Programs
    DPPSP supports prices received by dairy farmers through the 
purchase of unlimited quantities, at fixed announced prices, of cheddar 
cheese, butter, and nonfat dry milk. No other program supports the 
price of milk in this manner. The MILC program provides countercyclical 
support to dairy producers when the margin (difference between price 
and feed costs) falls below specified levels.
12. Waste, Fraud and Abuse
    There has been no waste, fraud, or abuse in the DPPSP that USDA is 
aware of. The Farm Service Agency reviews applicant eligibility when 
offers are made, and the Agriculture Marketing Service inspects all 
products offered under DPPSP to ensure that grade and other 
requirements of Dairy 7 are met before products are purchased.
13. Effect of Administrative PAYGO
    There has been no impact from Administrative PAYGO on the operation 
of DPPSP.
                                 ______
                                 
     House Committee on Agriculture Farm Bill Audit Questionnaire--
                     Agricultural Marketing Service
1. Program Name
    Dairy Product Mandatory Reporting.
2. Subprograms/Department Initiatives
    AMS Dairy Program.
3. Brief History
    The Dairy Product Mandatory Reporting Program was established on 
August 2, 2007, on an interim final basis, with final implementation 
effective June 22, 2008. The program: (1) requires persons engaged in 
manufacturing dairy products to provide to USDA certain information 
including the price, quantity, and moisture content, where applicable, 
for cheddar cheese, butter, dry whey, and nonfat dry milk (NFDM) sold 
by a manufacturer on a weekly basis; and (2) requires manufacturers and 
other persons storing dairy products to report to USDA information on 
the quantity of dairy products stored. Any manufacturer that processes 
and markets less than 1 million pounds of the applicable dairy products 
per calendar year is exempt from these reporting requirements.
    For the first requirement, the National Agricultural Statistics 
Service (NASS) currently collects and publishes information for the 
program. AMS provides verification and enforcement functions to ensure 
accuracy of the price information reported to NASS. The second 
requirement is solely a function of NASS. Prior to implementation of 
the Dairy Product Mandatory Reporting Program information was collected 
on a voluntary basis. NASS began publishing cheddar cheese sales 
information in 1997 and began publishing butter, NFDM, and dry whey 
sales information in 1998.
    AMS has established a verification program to verify that sales 
transactions match information reported to NASS and applicable sales 
transactions are not excluded. AMS currently visits larger entities 
accounting for 80 percent of yearly reported product volume of 
specified dairy products at least once annually. AMS visits \1/2\ of 
the entities accounting for the remaining 20 percent at least once 
every other year. During each visit, AMS reviews applicable sales 
transaction records for at least the 4 most recent weeks. In some 
cases, AMS may review sales records for periods of up to 2 years. AMS 
also conducts additional verification procedures on an as-needed basis 
when price information may be questioned.
    The 2008 Farm Bill requires that an electronic system be employed 
to collect information for the Dairy Product Mandatory Reporting 
Program on a more frequent basis subject to the availability of funds. 
The farm bill also requires quarterly audits of program information. 
Funds have not been made available for an electronic reporting system, 
more frequent collection of data, or quarterly audits.
    The Mandatory Price Reporting Act of 2010 requires that the 
Secretary establish an electronic reporting system for manufacturers of 
dairy products to report certain market information for the mandatory 
dairy product reporting program. The amendment further states that the 
Secretary shall publish the information obtained under this section for 
the preceding week not later than 3 p.m. Eastern Time on Wednesday of 
each week.
4. Purpose/Goals
    The purpose of the program is to provide accurate and timely market 
information for dairy industry participants. Widely available market 
information provides transparency to assist markets in operating 
competitively and fairly. Data collected through the program is used as 
the price discovery mechanism to establish minimum prices for the 
Federal Order system.
    The program will continue reporting dairy commodity sales 
information that is accurate but released a day and a half earlier. The 
electronic system will be designed to minimize the burden on reporting 
entities.
5. Success in Meeting Programmatic Purpose/Goals
    As required in the 2008 Farm Bill, AMS has successfully implemented 
a verification and enforcement program to ensure the accuracy of 
information provided to NASS for the required dairy product prices. Due 
to continual outreach and education, a significant decline has occurred 
in reporting errors. In 2007, 35 discrepancies were discovered by AMS 
on audit while to-date in 2011 only four discrepancies have been 
discovered by AMS. Since inception of the verification program, a total 
of 91 discrepancies have been found.
    A proposed rule was published on June 10, 2011, which included 
regulatory changes for implementing the provisions of the Mandatory 
Price Reporting Act of 2010 and for transferring data collection 
responsibilities from NASS to AMS. Seven comments were received by 
August 9, 2011, and a final rule is being prepared. Following beta-
testing, mandatory electronic collection of dairy product prices is 
expected to begin January 1, 2012.
6. Annual Budget Authority (FY 2002-FY 2011) ($ in Millions)
    Additional budget authority has not been authorized for this 
activity within the Dairy Marketing Agreements & Orders (MA&O) program. 
AMS prioritized the available resource for MA&O in order to allow for 
dairy price verification from 2007-2011. Additional one-time funding 
within current resources was provided in FY 2011 to modify the Agency's 
existing Livestock Mandatory Price Reporting System to accommodate 
selected dairy products. The following legislative timeline identifies 
the evolution of dairy mandatory reporting:

------------------------------------------------------------------------
 Fiscal Year                     Legislative Reference
------------------------------------------------------------------------
  2000-2001   Dairy Enhancement Act of 2000 (P.L. 106-532)--established
               mandatory reporting for dairy products
  2002-2007   2002 Farm Bill (P.L. 107-171)--amended above Act to modify
               the definition of products
  2008-2010   2008 Farm Bill (P.L. 110-246)--develop a system and
               conduct quarterly audits
       2011   2010 Mandatory Price Reporting Act (P.L. 111-239)--
               required electronic reporting system and established a
               publication schedule
------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                                     Annual Outlays
                                                                 FY 2002 Through FY 2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays                                   $0          $0          $0          $0          $0        $300        $300        $300        $300        $858
--------------------------------------------------------------------------------------------------------------------------------------------------------
(This includes verification expenses 2007-2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.)


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
                                                                  Annual Delivery Costs
                                                                 FY 2002 Through FY 2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Delivery Costs                     $0          $0          $0          $0          $0        $300        $300        $300        $300        $858
--------------------------------------------------------------------------------------------------------------------------------------------------------
(This includes verification expenses 2007-2011 plus 1x IT expense in 2011 to modify the LMR System for DY reporting.)

9. Eligibility Criteria
    As required by law, dairy manufacturers producing and selling 1 
million pounds or more of specific dairy products (cheddar cheese, 
butter, nonfat dry milk and/or dry whey) per calendar year, are 
required to participate in the weekly surveys.
10. Utilization (Participation) Data
    In 2010, there were 88 dairy product plants that were subject to 
mandatory reporting of sales data for one or more products. Fifty-two 
entities reported data for one or more plants.
11. Duplication or Overlap with Other Programs
    A final rule will implement the provisions of the Mandatory Price 
Reporting Act of 2010 transfer applicable data collection 
responsibilities from NASS to AMS. During voluntary software beta 
testing NASS and AMS will run parallel programs for about 2 months to 
ensure system is fully operation before eliminating NASS's 
responsibilities.
12. Waste, Fraud and Abuse
    Not applicable.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Dairy Import Assessment.
2. Subprograms/Department Initiatives
    AMS Dairy Program.
3. Brief History
    The U.S. Department of Agriculture has announced a Final Rule that 
amends the Dairy Promotion and Research Order (Dairy Order) and 
implements a dairy import assessment program as required by the Dairy 
Production Stabilization Act of 1983, as amended. The program 
implements the equivalent of 7.5 cents per hundredweight of milk 
assessment on imported dairy products; adds two importer members to the 
National Dairy Promotion and Research board; amends the term ``United 
States'' to mean all states (adding Alaska and Hawaii), the District of 
Columbia and the Commonwealth of Puerto Rico; and extends the mandatory 
15 cents per hundredweight of milk assessment to dairy farmers in 
Alaska, Hawaii, and the Commonwealth of Puerto Rico.
4. Purpose/Goals
    The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 
mandates that the Dairy Order be amended to implement an assessment on 
imported dairy products to fund promotion and research. The Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill) specifies a 
mandatory assessment rate of 7.5 cents per hundredweight of milk, or 
equivalent thereof, on dairy products imported into the United States.
5. Success in Meeting Programmatic Purpose/Goals
    All provisions were effective April 1, 2011, with the exception of 
those regarding importer assessments. Importer assessment provisions 
became effective on August 1, 2011. Importer payments are made directly 
to the U.S. Customs and Border Patrol and are forwarded to the Dairy 
Promotion and Research Board.
6. Annual Budget Authority (FY 2002-FY 2011)
    Not applicable.
7. Annual Outlays (FY 2002-FY 2011)
    Not applicable.
8. Annual Delivery Cost (FY 2002-FY 2011)
    Not applicable.
9. Eligibility Criteria
    An applicant must be an importer of dairy products into the United 
States as a principle or as an agent, broker, or consignee of any 
person who produces or handles dairy products outside of the United 
States, and who is listed as the importer of record for such dairy 
products. A producer is defined as any person engaged in the production 
of milk for commercial use.
10. Utilization (Participation) Data
    There are an estimated 2,600 dairy importers that are affected by 
the dairy import assessment and an estimated 350 producers in the added 
areas of Alaska, Hawaii, the District of Columbia and the Commonwealth 
of Puerto Rico.
11. Duplication or Overlap with Other Programs
    Not applicable.
12. Waste, Fraud and Abuse
    Not applicable.
13. Effect of Administrative PAYGO
    Not applicable.
                                 ______
                                 
1. Program Name
    Federal Milk Marketing Orders including Forward Contracting and the 
Formal Rulemaking Process.
2. Subprograms/Department Initiatives
    AMS Dairy Program.
3. Brief History
    Federal milk marketing orders (FMMO) are authorized by the 
Agricultural Marketing Agreement Act of 1937, as amended. There are 
currently 10 FMMO areas, impacting about 65 percent of all milk 
marketed in the U.S. These 10 orders are administered by 8 market 
administrators.
    FMMOs are initiated and amended through industry requests that are 
addressed through the formal rulemaking process. This includes 
hearings, briefings, recommended decisions, public comments, final 
decisions, farmer votes, and, ultimately, implementation by USDA. 
Changes in FMMOs are approved by an affirmative vote of \2/3\ of the 
eligible dairy farmers.
    The 2008 Farm Bill directed USDA to establish supplemental rules to 
define guidelines and timeframes to improve the timeliness of the 
Federal Milk Order hearing process. AMS published this final rule on 
August 20, 2008 (73 FR 49085).
    The 2008 Farm Bill also directed AMS to establish a Dairy Forward 
Pricing Program to allow milk producers and cooperative associations to 
voluntarily enter into forward price contracts with milk handlers for 
milk used for non-fluid purposes. The program exempts handlers 
regulated under the Federal Milk Order program from paying producers 
and cooperative associations the minimum Federal Order price for milk 
under a forward contract. AMS published this final rule on October 31, 
2008 (73 FR 64868).
4. Purpose/Goals
    The objectives of the FMMO system are to stabilize market 
conditions, to benefit producers and consumers by establishing and 
maintaining orderly marketing conditions, and to assure consumers of 
adequate supplies of pure and wholesome milk at all times. The FMMO 
program assures dairy farmers a minimum price for their milk while 
assuring that consumers have an adequate supply of milk to meet their 
needs throughout the year.
5. Success in Meeting Programmatic Purpose/Goals
    Forward Contracting--Handlers that enter into forward contracts 
with producers are required under 7 CFR Part 1145 to file a copy of the 
contract with a Market Administrator's office. Less than 100 dairy 
farmers have utilized the forward contracting program since 2008.
    Rulemaking Process--Only one hearing has been initiated and 
completed under the new timeframes outlined in the supplemental rules 
of practice for Milk Marketing Orders (see 7 CFR  900.20 through 
900.33). In June 2011, USDA received a request for a hearing to 
consider changes to the Mideast Marketing Area. USDA subsequently held 
a hearing on October 4-5, 2011, in Cincinnati, OH, to consider and take 
evidence on proposed changes to that order (76 FR 55608). The deadline 
for filling corrections to the transcript is October 31, 2011 and the 
deadline for filing post-hearing briefs is November 30, 2011.

                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                                 Annual Budget Authority
                                                                 FY 2002 Through FY 2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Budget Authority                      $5,132      $5,528      $5,434      $5,541      $5,736      $6,076      $6,131      $6,301      $6,965      $6,814
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
                                                                     Annual Outlays
                                                                 FY 2002 Through FY 2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlays                               $4,716      $4,663      $4,660      $5,204      $5,428      $5,546      $5,477      $5,837      $6,846      $6,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
Explanation: The budget authority may be different from outlays due to timing of payments and the accounting process.


                                                        8. Annual Delivery Cost (FY 2002-FY 2011)
                                                                  Annual Delivery Costs
                                                                 FY 2002 Through FY 2011
                                                                 (Dollars in thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    FY 2002     FY 2003     FY 2004     FY 2005     FY 2006     FY 2007     FY 2008     FY 2009     FY 2010     FY 2011
                                    Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual      Actual       Est.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Costs                          $4,275      $4,165      $4,454      $4,797      $4,699      $4,962      $5,202      $5,299      $5,799      $5,703
Indirect Costs                          $483        $453        $474        $474        $516        $527        $584        $599        $710        $697
                                 -----------------------------------------------------------------------------------------------------------------------
  Total Costs                         $4,758      $4,618      $4,928      $5,271      $5,215      $5,489      $5,786      $5,898      $6,509      $6,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
There have been no additional delivery costs in implementation of the expedited rulemaking process.
The costs associated with the forward contracting program are minimal due to the low participation rate.

9. Eligibility Criteria
    During 2010, nearly 127 billion pounds of milk was pooled from 
45,918 producers on Federal Milk Marketing Orders. This represents 
about 65 percent of all milk produced in the United States.
10. Utilization (Participation) Data
    Fewer than 100 farmers have utilized the forward contracting 
program.
11. Duplication or Overlap with Other Programs
    Not applicable.
12. Waste, Fraud and Abuse
    Not applicable.
13. Effect of Administrative PAYGO
    Not applicable.


                       AGRICULTURAL PROGRAM AUDIT

            (EXAMINATION OF USDA RURAL DEVELOPMENT PROGRAMS)

                              ----------                              


                      TUESDAY, SEPTEMBER 13, 2011

        Subcommittee on Rural Development, 
      Research, Biotechnology, and Foreign 
                               Agriculture,
                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 1300 of the Longworth House Office Building, Hon. Timothy 
V. Johnson [Chairman of the Subcommittee] presiding.
    Members present: Representatives Johnson, Thompson, 
Stutzman, Scott, Hartzler, Lucas (ex officio), Costa, Welch, 
Sewell, Kissell, and Peterson (ex officio).
    Staff present: Mike Dunlap, Tamara Hinton, DaNita Murray, 
Mary Nowak, Lauren Sturgeon, Suzanne Watson, Andy Baker, Liz 
Friedlander, John Konya, and Jamie Mitchell.

OPENING STATEMENT OF HON. TIMOTHY V. JOHNSON, A REPRESENTATIVE 
                   IN CONGRESS FROM ILLINOIS

    The Chairman. The Subcommittee on Rural Development, 
Research, Biotechnology, and Foreign Agriculture hearing, 
entitled Agricultural Program Audit: Examination of USDA Rural 
Development Programs, will come to order.
    Let us see. We have a quorum, so we are prepared to 
proceed.
    Welcome to this audit hearing of the USDA's Rural 
Development Programs. This is the third such hearing by this 
Subcommittee and the eleventh overall that the Agriculture 
Committee Subcommittees have held to closely review all the 
programs under our jurisdiction. The continuing discussions in 
Congress on spending, and the budget, will add impetus to what 
we will be discussing today. Through this series of hearings, 
we are assessing how USDA is utilizing the authorities provided 
through this Committee and where scarce resources are being 
allocated. As we approach the next farm bill, it is important 
that we have a clear idea of how programs are being implemented 
as we look for opportunities to streamline and improve those 
programs.
    Rural communities rely on a variety of industries, 
including mining, fishing, forestry, manufacturing, and of 
course farming. The programs we will be discussing today are 
designed to spur innovation and investment and, through the 
provision of farm credits, advancement. The goal of these 
programs is greater economic opportunity to help our rural 
communities to compete in the global market.
    Of particular interest to this Subcommittee is the 
Broadband Loan Program. Reauthorized in the 2008 Farm Bill, 
this program is intended to reach those rural areas without 
access to the economic, education, and healthcare opportunities 
which broadband access can bring rural America. Unfortunately, 
it was only this summer--nearly 3 years after the farm bill was 
signed into law--that USDA finally began accepting applications 
for loans. I hope that the Rural Utilities Service has an 
update for us on how the applications are progressing and what 
we might hope to learn from the program before we begin writing 
the next farm bill.
    The current farm bill also requires USDA to report on the 
various definitions of rural and how those definitions have 
impacted their programs. This report was due 2 years after the 
enactment of the farm bill, and yet we still haven't received 
the report. In February of this year, Deputy Under Secretary 
for Rural Development, Cheryl Cook assured the Committee that 
we would have a finished report in June of 2011, over 3 months 
ago. I hope the USDA can provide an explanation this morning as 
to why this report is not finished, and how long it is expected 
to be delayed.
    Almost a year ago, USDA was required to allocate all the 
remaining funds received through the stimulus bill. We hope the 
analysis provided by the testimony today will have a clear 
picture of how those funds have been disbursed. The stimulus 
bill was an imperfect approach to economic policy, which 
resulted in a mass expansion of government spending. I hope 
that in spite of the rush to spend taxpayer dollars, USDA can 
demonstrate that the benefits to rural communities have 
exceeded the cost.
    With tight budgets, it is incumbent upon our agencies to 
reduce costs and provide the maximum impact possible with 
limited dollars. This morning, we hope to hear how the agencies 
are already streamlining their mission areas and where we can 
work together to streamline our process.
    With us this morning are the Administrators of the USDA's 
three rural development agencies: Jonathan Adelstein with the 
Rural Utilities Service, Judith Canales with the Rural 
Business-Cooperative Service, and Tammye Trevino from the Rural 
Housing Service. I would like to thank each one of you for 
being here this morning. We look forward to your testimony.
    [The prepared statement of Mr. Johnson follows:]

  Prepared Statement of Hon. Timothy V. Johnson, a Representative in 
                         Congress from Illinois
    Good morning and welcome to this hearing to audit USDA's rural 
development programs. This is the third such hearing by this 
Subcommittee, and the eleventh overall that the Agriculture Committee 
has held to closely review all the programs under our jurisdiction.
    The continuing discussions in Congress on spending and the budget 
have added impetus to what we will be talking about today. Through this 
series of hearings we are assessing how USDA is utilizing the 
authorities provided through this Committee, and where scarce funds are 
being allocated. As we approach the next farm bill, it is important 
that we have a clear idea of how programs are being implemented as we 
look for opportunities to streamline and improve them.
    Rural communities rely on a variety of industries, including 
mining, fishing, forestry, manufacturing, and of course, farming. The 
programs we will be discussing today are designed to spur innovation 
and investment. Through the provision of credit and financing, the goal 
of these programs is greater economic opportunity and to help our rural 
communities compete in a global market.
    Of particular interest to this Subcommittee is the broadband loan 
program. Reauthorized in the 2008 Farm Bill, this program was intended 
to reach those rural areas without access to the economic, education, 
and healthcare opportunities which broadband access can bring to rural 
America. Unfortunately, it was only this summer, nearly 3 years after 
the farm bill was signed into law, that USDA finally began accepting 
applications for rural broadband loans. I hope that the Rural Utilities 
Service has an update for us on how the applications are progressing 
and what we might hope to learn from the program before we begin 
writing the next farm bill.
    The current farm bill also required USDA to report on the various 
definitions of `rural' and how those definitions have impacted our 
programs. This report was due 2 years after enactment of the farm bill, 
yet we still have not received the report. In February of this year, 
Deputy Under Secretary Cook assured the Committee that we would have 
the finished report in June 2011--over 3 months ago. I hope that USDA 
can provide an explanation this morning for why this report is still 
not finished and how long it is expected to be delayed.
    Almost a year ago USDA was required to obligate all the remaining 
funds received through the stimulus bill. We hope that in the analysis 
provided by the testimony today will have a clear picture for how those 
funds have been disbursed. The stimulus bill was an imperfect approach 
to economic policy which resulted in a massive expansion of government 
and spending. I hope that in spite of the rush to spend taxpayer 
dollars USDA can demonstrate that the benefits to rural communities 
have exceeded the cost.
    With tight budgets, it is incumbent upon our agencies to reduce 
costs and provide the maximum impact possible with the funds provided. 
This morning we hope to hear how the agencies are already accomplishing 
this mission, and where we can work together to streamline our 
programs.
    With us this morning are the Administrators from USDA's three Rural 
Development agencies: Jonathan Adelstein with the Rural Utilities 
Service, Judith Canales with the Rural Business-Cooperative Service, 
and Tammye Trevino from the Rural Housing Service. I would like to 
thank each of you for being here this morning, and we look forward to 
your testimony.

    The Chairman. I would turn the floor over to the 
distinguished Ranking Member, the gentleman from California, 
Mr. Costa.

   OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN 
                    CONGRESS FROM CALIFORNIA

    Mr. Costa. Thank you, Mr. Chairman, for calling this 
hearing today. It is the third and final hearing of the audits 
that this Subcommittee is doing to review the U.S. Department 
of Agriculture and setting the stage for the reauthorization of 
the 2012 Farm Bill. The audit hearings are an important 
opportunity for Members of the Subcommittee to reexamine what 
has worked to our satisfaction and, more importantly, what we 
think could be improved or hasn't worked, as we look at tight 
budgets and a farm bill that will be less than the 2008 bill.
    Today's topic, as you noted, is dealing with the Title VI 
of the farm bill. In one form or another, there has been a 
partnership between Washington and rural families and 
communities going back to the Great Depression for various 
purposes. Over the course of those 80 years, the landscape of 
rural America has dramatically changed. We have gone from, at 
the turn of the 19th, 20th century, more of an agrarian society 
to much more of an urbanized and suburbanized society. Yet, our 
rural areas are still, I believe, a vital component of America. 
Manufacturing and service sectors have replaced agriculture in 
many areas as the dominant economic force. As we look towards 
the 21st century with approximately 6.4 billion people on the 
planet and an estimation of over nine billion by the middle of 
this century, we want to maintain our ability to produce the 
food and fiber not only to serve our own domestic needs but 
also to be able to continue to be competitive--which we are--in 
agricultural markets.
    But as we keep those goals in mind, it is important to note 
that in fact there are changes that have occurred. Most of you 
probably think from a person that represents part of California 
that you think of Silicon Valley, you think of Hollywood, you 
think of aerospace, and all of those things are part and parcel 
of California's economy along with tourism. But, for 54 years, 
we have been the number one agricultural state in the nation, 
over $38 billion a year at the farm gate.
    And I have the great honor to serve, along with four of my 
other colleagues, the San Joaquin Valley, which is among the 
richest and most productive agricultural regions in the 
country. The number one agricultural county and number three 
are in my district: Fresno County and Kern County. And while by 
any plain evidence--and I hope to have colleagues of the 
Subcommittee there in my district--you would see it as rural. 
We don't qualify under a lot of our programs in Washington 
under the various rural definitions because we have larger 
urban cities within those Valley counties--the City of Fresno, 
City of Bakersfield, City of Modesto. If you go 45 minutes 
outside of Fresno it is very rural, services are very limited, 
and it is the land of many contrasts. There is a lot of poverty 
that exists in those communities.
    I think that all of our districts, whether you are in the 
Midwest, whether you are in the Northeast, whether you are in 
the South, have similar stories to tell. You have wonderful 
rural areas where Americans do their very best to work hard and 
to contribute, whether it is the agricultural community or 
whether it is other rural industries. But oftentimes, they are 
the part of America that is not well understood or taken into 
account with regards to some of these programs that are no 
longer applicable.
    I think that it is important that we consider, Mr. 
Chairman, as we look at the 2012 Farm Bill the definitions of 
rural and how they are applied to communities through all 
corners of the nation. I think everyone here, and our United 
States Department of Agriculture witnesses included, would be 
hard-pressed to come up with a singular definition that 
accurately portrays what rural is in each state. We think we 
know but we have the practical experience of living in our 
communities and having the honor to represent those 
communities.
    Recent farm bills have tweaked the definitions of rural, 
and so I look forward to hearing our witnesses' thoughts on 
whether or not further reforms should be considered in the next 
farm bill. We have looked at some notions as to whether or not 
we look at an application as opposed to counties' Census tracks 
so that it would take into account those of you who represent 
multiple counties. I know some of you represent 10, 20, and 30 
counties in your respective districts. I represent parts of two 
and one entire county. Our counties are different sizes and 
shapes throughout the country. But maybe we ought to consider 
thinking outside the box as we look toward the application of 
rural definitions. Would they be better served with a different 
set of criteria, different regionally based approach as it 
relates to some things we ought to consider, Mr. Chairman, in 
this Subcommittee for next year's farm bill? I would be 
interested in hearing that testimony.
    So I look forward to hearing our witnesses today from the 
Rural Development agencies, the different benefits that they 
provide, whether we are talking about housing, whether we are 
talking about outreach for rural development, whether we are 
talking about the other challenges that we face with regards to 
infrastructure.
    So with that, I thank you for my opportunity and look 
forward to hearing the witnesses testify this morning.
    The Chairman. Thank you, Congressman Costa. With that, we 
will proceed with the first witness.

            STATEMENT OF HON. JONATHAN S. ADELSTEIN,
          ADMINISTRATOR, RURAL UTILITIES SERVICE, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Mr. Adelstein. Thank you, Mr. Chairman, Ranking Member 
Costa, and Members of the Committee for the opportunity to 
testify this morning.
    USDA's Rural Utilities Service has a long-proven history of 
financing electric, water, and telecom infrastructure in rural 
America dating back to 75 years ago, when the RUS began. We 
have been a model of public-private partnerships, we have 
succeeding in bringing modern utilities to some of America's 
most remote and hard-to-serve areas. We have done so prudently 
while creating jobs and improving the rural quality of life. 
Meeting today's needs, a successful rural electrification model 
is working to provide access to 21st century broadband, 
telemedicine, distance learning, smart grid, renewable energy, 
and safe, clean water to areas that would otherwise be left 
being.
    The RUS programs represent true investments. Our limited 
grant dollars target those areas most in need, but most of what 
we do are loans, and the capital provided for loans are repaid 
by our borrowers. So a very small amount of budget authority 
leverages much greater lending authority to meet the massive 
unmet needs of rural America. For example, $1 budget authority 
could be stretched to $16 of loan investment or even more. Our 
U.S. loan programs have a repayment rate that any private 
banker would envy. Our U.S. portfolio is over $56 billion and 
the current delinquency rate is .21 percent.
    Our agency has achieved record levels of investment over 
the last couple of years. We have successfully obligated the 
Broadband and Water Projects under the Recovery Act, and at the 
same time, we have set consecutive records of investments in 
rural electric infrastructure. In March, the RUS published new 
regulations for the farm bill broadband program. Mr. Chairman, 
as you noted, the new regs streamline the application process 
and target funding toward the most rural areas. This marks the 
first time, under the current Administration, the program is 
open to new applications. We wanted to wait and make sure that 
we had it right. We learned the lessons from the Recovery Act 
program. The new regulations, along with additional steps we 
have taken, fully address concerns raised by USDA's Inspector 
General about the previous administration of the program.
    The traditional Telecommunications Loan Program, which 
originates back from 1949, has achieved enormous success in 
connecting rural America. While much has changed in 
telecommunications technology in the last 60 years, the need 
for a public-private partnership to spur investment in rural 
areas has not. The tremendous number of applications we 
received for the Recovery Act is a real testament to the hunger 
out there for bandwidth in rural areas. We are just as excited 
by the rapid technological change in the electric sector. We 
are working on renewable energy, smart grid technologies, 
energy conservation, as well as generating, transmitting, and 
distributing clean, reliable, affordable power. It makes our 
electric program every bit as relevant to America today as it 
was in the 1930s.
    With affordable financing from RUS, America's rural 
communities are at the forefront of the renewable energy 
movement. Renewable power is a new crop for rural America which 
can help feed the nation's need for clean, affordable, 
homegrown electricity. Due to the strong performance of our 
electric program, no budget authority or taxpayer dollars are 
necessary to deliver about $6 billion in funding annually. As a 
matter of fact, we generate for the taxpayers $100 million.
    The 2008 Farm Bill provided new authority for energy 
efficiency programs, renewable energy and direct lending 
authority for loans that we are now implementing. RUS set a 
goal to finance $250 million for grid modernization during this 
fiscal year. Smart grid technologies give consumers greater 
control to keep their electric bills low and help utilities 
better manage the grid to improve efficiencies.
    When it comes to rural quality of life, few things are as 
fundamental as water. Since 2009, RUS's Water and Waste 
Disposal Program has invested nearly $6 billion in 4,500 water 
and wastewater infrastructure loans and grants to safeguard the 
health of nearly nine million rural residents. These funds 
build upon the $11.5 billion portfolio of investments that we 
have made over the years to help rural communities replace 
aging infrastructure, make necessary repairs, and extend 
service to areas without access to public water and waste 
services.
    RUS's water program maintains a delinquency rate of .24 
percent. Facilitating reliable and affordable access to water 
is necessary for business development. It creates jobs and 
builds the economy. Our water program is the only one 
exclusively focused on rural needs. It safeguards the health of 
rural residents and the environment while ensuring that rural 
water systems can meet growing demands. Projects funding during 
FY 2010 will result in a 28 percent reduction in rural 
residents' exposure to water-borne illnesses.
    The RUS portfolio remains very strong. Thank you for your 
support. I thank the Committee today for the opportunity to 
testify, and I look forward to any questions or comments that 
you have.
    [The prepared statement of Mr. Adelstein follows:]

Prepared Statement of Hon. Jonathan S. Adelstein, Administrator, Rural 
  Utilities Service, U.S. Department of Agriculture, Washington, D.C.
    Chairman Johnson, Ranking Member Costa, and Members of the 
Subcommittee, thank you for the opportunity to provide to you a review 
and accomplishments of the Rural Development's (RD) Rural Utilities 
Service (RUS) authorized through the Food, Conservation, and Energy Act 
of 2008 (2008 Farm Bill).
Overview
    The Department of Agriculture's RUS is the only Federal agency that 
funds electric, telecommunications, and water and wastewater 
infrastructure for rural areas. Because of RUS investments, many rural 
communities nationwide have reliable, affordable electric power, safe 
water and wastewater facilities, essential telecommunications, and 
broadband capability.
    RUS investments provide more than basic infrastructure services. 
RUS is one of three RD agencies with a mission to facilitate rural 
economic development, foster sustainable job creation, and revitalize 
rural areas.
    RUS achieves its goals by funding projects to help rebuild 
America's infrastructure which is essential to stronger American 
economic growth. Beginning with the creation of the Rural 
Electrification Administration in 1935, RUS has and continues to be a 
prominent lender for rural utility investment.
    Today's RUS portfolio includes Federal financing for electric, 
telecommunications, broadband, and water and wastewater projects. These 
investments enhance community resources, including health care and 
education, and increase the need for skilled labor to meet the needs of 
growing and emerging industries in rural areas. We use the term 
``investment'' because the capital provided for loans is repaid and 
delivers additional returns in the form of jobs and the types of 
services with the capability of delivering more jobs in our nation's 
rural communities.
    The RUS portfolio is over $56 billion and the current delinquency 
rate is 0.21 percent. We are very proud of our customers' repayment 
history.
Broadband and Telecommunications Programs
    The broadband program, created under the Farm Security and Rural 
Investment Act of 2002 (2002 Farm Bill) and revised by the 2008 Farm 
Bill, has provided more than $1 billion in financing to improve 
telecommunications by delivering broadband services to rural areas for 
nearly a decade.
    Broadband availability allows business owners to increase 
distribution channels and enables a new generation of entrepreneurs to 
thrive in rural areas. Broadband helps America's farmers and ranchers 
monitor prices, obtain weather forecasts, and find new markets for 
their produce and livestock.
    New regulations published in March 2011 streamlined the application 
process and allowed the program to focus investment to reach rural 
areas with three or fewer broadband service providers. These new 
regulations, along with additional steps RUS has taken, fully address 
USDA's Office of Inspector General findings previously raised about the 
program. The Telecommunications Infrastructure Loan Program is 
authorized under the Rural Electrification Act of 1936, as amended 
(REA), and is the only Federal program that has funded 
telecommunications services for over 60 years. This program funds 
improvements to existing and new broadband infrastructure for rural 
telecommunications service providers or REA Title II borrowers.
    RUS Telecommunications Programs also administers the Community 
Connect Grant Program, which provides funding to establish broadband 
service in rural communities that currently do not have service. Awards 
of $13.4 million in available funding are expected to be announced by 
the end of FY 2011.
    RUS' Distance Learning and Telemedicine Program fund equipment to 
enhance educational and health care services in rural areas. RUS has 
$24.9 million available and expects to announce awards by the end of 
FY2011.
Electric Programs
    America`s rural communities are on the forefront of the renewable 
energy movement. By increasing the supply of home-grown renewable 
energy, we can meet the growing demands for renewable sources of both 
fuel and power.
    The RUS Electric Program portfolio has over 650 borrowers with an 
outstanding balance of over $41 billion. The Rural Electrification 
Direct and Guaranteed Loan and High Energy Cost Grant Programs are 
authorized under the Rural Electrification Act of 1936; however, the 
2008 Farm Bill provided new program authority, including authorization 
for energy efficiency programs, renewable energy, and direct lending 
authority for loans.
    RUS loan funds may be used to finance generating, transmission, and 
distribution facilities. RUS also finances environmental upgrades, 
energy efficiency, smart grid, demand management and energy 
conservation programs. In FY 2010, RUS approved over $313.3 million in 
loan guarantees for new projects for renewable electric generation.
    RUS has a goal to finance $250 million for grid modernization 
during FY2012. Smart grid technologies give consumers greater control 
over their electric costs and help utilities better manage the electric 
grid to improve operational efficiencies. These investments help rural 
utilities improve their delivery and storage of renewable energy to 
generate electricity and help ensure sustainable economic growth in 
rural communities. For example, in North Carolina and Tennessee, French 
Broad Electric Membership Corporation received a loan guarantee of $20 
million, of which more than $2.4 million is to be used for advanced 
meter infrastructure upgrades that can help utility providers better 
control the use and production of electric energy.
    The demand for electricity in rural areas is growing at two percent 
annually, according to the Energy Information Administration in the 
Department of Energy. During FY 2010, RUS funded $7.1 billion for 
electric system improvements for over nine million rural residents. The 
electric program serves 667 active rural borrowers and grantees in 46 
states, Puerto Rico, American Samoa, and the Republic of the Marshall 
Islands. No other agency funds rural electric infrastructure projects.
    Meeting the growth in demand for electric power generation is 
capital intensive and takes significant time from concept to 
completion. RUS will continue to work to ensure that our projects are 
good for the environment, good for the economy, and good for electric 
consumers.
Water and Wastewater Funding
    Since 2009, over $6.7 billion invested by the Obama Administration 
in 4,565 water and waste water community infrastructure loans and 
grants has helped safeguard the health of nearly nine million rural 
residents through access to a safe water supply and sanitary sewer 
system. The loans and grants are also expected to create or save 
143,507 jobs in the communities where projects are underway. Almost 4.8 
million customers are being helped through new or improved systems that 
will deliver safe, clean drinking water, or will clean up existing 
waste removal environmental hazards
    These funds will build upon the $11.5 billion portfolio of 
investments that help rural communities replace aging infrastructure, 
make necessary repairs and extend service to areas without access to 
public water and waste service.
    Facilitating reliable and affordable access to water is necessary 
for business development which in turn creates jobs and builds the 
economy. Lack of adequate water and wastewater facilities kept Turrell, 
Arkansas, from competing for a large retail distribution facility that 
would have brought jobs to the rural community. RUS is now working with 
Turrell to build a water and waste plant. Lack of jobs has caused their 
population to drop from 1,000 in 2,000 to 615 today.
    Reliable access to water is essential for rural communities to 
prosper. RUS water programs--the only program exclusively focused on 
rural needs--which safeguard the health of rural residents and the 
environment and ensure that rural water systems meet growing demands. 
Projects funded during FY 2010 will result in a nearly 28 percent 
reduction in rural residents' exposure to water-borne illness. RUS-
funded circuit riders responded to over 111,000 requests to assist 
rural water systems during FY 2010.
Conclusion
    The RUS loan portfolio remains very strong. We constantly strive to 
improve program delivery, working with local leaders to deliver funds 
to address critical infrastructure needs which are fundamental to the 
quality of life and economic future of rural America. In closing, I 
would like to thank the Committee for the opportunity to appear before 
you today and look forward to responding to your questions.

    The Chairman. Thank you. Now, we turn to Judith Canales.

 STATEMENT OF JUDITH A. CANALES, ADMINISTRATOR, RURAL BUSINESS-
     COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Ms. Canales. Thank you, Chairman Johnson, Ranking Member 
Costa, and Members of the Subcommittee for the opportunity to 
discuss the success of Rural Development's Rural Business-
Cooperative Service programs impacted by the 2008 Farm Bill.
    As you are well aware, the American people are facing 
challenging economic times. However, in the midst of these 
troubling conditions, since 2009, the programs and services of 
the Rural Business-Cooperative Service have or will create and 
save nearly 250,000 jobs, thus directly improving the economic 
climate of rural America.
    The mission of Rural Development's Rural Business-
Cooperative Service programs is to improve rural economies by 
providing financial and technical assistance to rural 
businesses and cooperatives. Through our national office, and 
our network of 47 state offices, and through our local offices 
located in the heartland of rural America, we have established 
strategic alliances and partnerships that leverage public, 
private, and cooperative resources to create jobs and stimulate 
rural economic activity.
    The Rural Business-Cooperative Service mission is unique in 
the Federal Government. There is no other Federal agency that 
focuses solely on rural businesses. The people who staff our 47 
state offices as well as our local offices live in these rural 
communities. This makes them uniquely qualified to support the 
most rural communities in America providing access to capital 
and credit in areas otherwise ignored.
    Rural Business-Cooperative Service is responsible for five 
Title VI programs that are designed to assist people in rural 
communities in addition to our four Title IX energy programs 
that have provided over $700 million in support since 2009. For 
example, in late 2010, southern Illinois Coal Belt received a 
Rural Microentrepreneur Assistance Program loan of $500,000. 
Since March of this year, they have made loans totaling 
$306,000 assisting seven microenterprises and creating 21 new 
jobs. Six of these seven businesses are startup businesses.
    The Guaranteed Business and Industry Loan Program is our 
flagship program. The B&I Program provides credit support to 
establish, expand, or modernize rural businesses. Since 2009, 
the B&I Program has provided $5.5 billion in loan guarantees to 
community banks at a cost of $3,000 per job and supporting over 
3,000 businesses.
    Rural Business Opportunity Grant Program was authorized 
under Title VI of the farm bill. This program provides training 
and technical assistance for business development, 
entrepreneurs, and assists with economic development planning. 
The Rural Microentrepreneur Assistance Program provides capital 
access and funding for business-based training and technical 
assistance to local micro-development organizations to support 
very small businesses with less than ten employees. The Value-
Added Producer Grant Program, the lead source in rural 
development for promoting local foods in rural America, 
provides funding for planning activities and working capital, 
for marketing value-added agriculture products, and for farm-
based renewable energy. We look forward to announcing awards 
very soon of $37 million.
    The Rural Development Cooperative Development Grant Program 
and the Small and Socially Disadvantaged Producer Grant Program 
provides funding to centers and cooperatives to develop new or 
improve existing cooperatives. These business cooperatives in 
turn grow and expand their operations in rural America.
    Mr. Chairman and Members of the Subcommittee, thank you for 
your time. The Rural Business-Cooperative Service is committed 
and, with your help, will continue to promote economic 
prosperity in rural America. Thank you.
    [The prepared statement of Ms. Canales follows:]

  Prepared Statement of Judith A. Canales, Rural Business-Cooperative 
       Service, U.S. Department of Agriculture, Washington, D.C.
    Chairman Johnson, Ranking Member Costa, and Members of the 
Subcommittee, thank you for the opportunity to provide a review and 
highlight the accomplishments of Rural Development's (RD) Rural 
Business-Cooperative Service (RBS) programs authorized through Title VI 
of the 2008 Farm Bill. We are still in challenging economic times but 
the programs and services of RBS, in partnership with other public and 
private sector funding, are improving the economic climate of rural 
areas. I appreciate the opportunity to discuss the successes of the 
business programs today.
Overview
    The mission of RBS programs is to create economic opportunities for 
rural Americans by supporting the creation and growth of viable 
businesses, including cooperatives, that can compete and prosper in the 
global marketplace.
    We meet these goals by investing financial resources and providing 
technical assistance to businesses and cooperatives located in rural 
communities, and establishing strategic alliances and partnerships that 
leverage public, private, and cooperative resources to create jobs and 
stimulate rural economic activity.
    RBS currently operates five programs authorized under the 
Consolidated Farm and Rural Development Act (CONACT) or the 
Agricultural Risk Protection Act of 2000 (ARPA) which were either added 
or amended by Title VI of the Food, Conservation, and Energy Act of 
2008 (2008 Farm Bill). These programs include: the new Rural 
Microentrepreneur Assistance Program (RMAP), Rural Business Opportunity 
Grants (RBOG), the Value-Added Producer Grant (VAPG) Program, the Rural 
Cooperative Development Grant (RCDG) Program, and the Small Socially-
Disadvantaged Producer Grant (SSDPG) Program. These programs are 
designed to assist people in rural communities and increase economic 
opportunities by improving community infrastructure, environmental 
health, and the sustainability of agricultural production.
    RBS also implements numerous other programs which provide job 
training and business development opportunities for rural residents, 
including cooperative business development, community economic 
development and strategic community planning and faith-based and self-
help initiatives. While these programs were not amended by the 2008 
Farm Bill they will be included in this testimony to provide the 
Committee a complete picture of the scope of RBS investment in the 
economic opportunities in rural America.
    The RBS mission is unique in the Federal Government. There is no 
other Federal agency that focuses only on promoting rural communities 
and businesses. Our field offices reach out to rural America, including 
the poorest, most rural counties in America, providing Federal support 
to businesses that find it impossible to receive financial aid from any 
other source.
Administration Priorities
    Secretary Vilsack has directed RBS to expand our reach in rural 
communities. USDA will continue to engage public and private partners 
to revitalize rural communities by expanding economic opportunities and 
creating jobs for rural residents. Administration priorities include: 
capital markets, local and regional food systems, and regional 
innovation.
Capital Markets
    To increase economic prosperity in rural communities, capital is 
needed to spur business expansion and promote new businesses. RBS 
administers several loan and grant programs that can be used to attract 
investment capital, including loan guarantee programs such as Business 
and Industry loans.
    Our employees are also key tools in creating capital markets, 
providing the skills and expertise to review business plans, identify 
tax incentives, and put together viable loan and grant combinations 
that can be used to spur capital investment in rural areas.
Local and Regional Food Systems
    RBS actively promotes local- and regionally-produced agricultural 
food products through existing authorities and programs. We have worked 
to elevate the visibility of local foods, identifying and utilizing 
2008 Farm Bill authority that can be used to support this important 
initiative through local and regional food projects, such as the five 
percent reserve in the Business and Industry Guaranteed Loan program 
for projects that support local and regional food systems. We have 
provided approximately $200 million of support for local and regional 
food projects in 2010.
Regional Innovation
    The key to creating economic growth for many communities is to 
encourage better collaboration on a regional scale. RBS looks for 
opportunities to assist rural communities in breaking down the barriers 
in accessing multi-jurisdictional opportunities and to cut across the 
bureaucratic silos that prevent investment in good ideas. This approach 
increases the prosperity of rural communities by supporting locally-
led, regional economic strategies. The focus creates strong local and 
regional economies in emerging opportunities such as food systems, 
renewable energy, broadband-based economies, rural recreation, and the 
creation and preservation of wealth in rural America.
Business Programs
    Business development and job creation are at the foundation of our 
agency mission. This foundation, along with the targeted programmatic 
approach of the Administration's Priorities, makes RBS programs an 
essential tool for rural America.
    In 2010, we invested about $3 billion to ensure America's rural 
businesses maintain a competitive edge in today's global marketplace. 
The vast majority of this funding was provided through guaranteed 
loans. These guarantees leverage funding provided by the commercial 
lending community along with other private sector funding.
    The remaining text discusses our RBS programs and how they impact 
rural America.
Guaranteed Business and Industry Loans (B&I)
    The B&I program, authorized under section 310B of the CONACT, is 
the largest of the RBS programs and provides protection against loan 
losses so that lenders are willing to extend credit to establish, 
expand, or modernize rural businesses.
    Capital is the lifeline of rural businesses to maintain and create 
rural jobs. The President's Fiscal Year (FY) 2012 Budget requests $53 
million in budget authority to support $823 million in loan guarantees 
for B&I. We will fund $1.387 billion in guarantees this fiscal year; we 
have already obligated $995.36 million though 373 loans. In FY 2010, we 
obligated 1,030 loans totaling over $2.9 billion.
    This program has had proven results and supports a holistic 
economic approach. For example, in 2010 the Brattleboro Food Co-op 
received a $4.2 million guarantee from the RBS B&I program. This 
cooperative has grown from a warehouse storefront in 1979 with a 
volunteer staff into a $17 million operation with 100 employees. The 
cooperative now supplies local and organic food choices to its 5,000 
members located throughout southeastern Vermont.
    To support its long term viability and expand choices for its 
growing consumer membership, the cooperative embarked upon an expansion 
plan. The cost of doubling its space in its downtown location would 
cost $8.8 million. The cooperative raised more than $1 million from its 
members and leveraged those funds with a $4.2 million B&I guaranteed 
loan from Peoples United Bank. The remaining financing came from 
nonprofit, private, and borrower equity. As a result, the cooperative 
is expanding from 17,200 square foot building into an energy efficient 
33,847 square foot building serving as an anchor business in downtown 
Brattleboro.
    The expanded store will add market capacity for the 146 local 
farmers and 46 food producers that it currently supports. Additionally, 
the project will develop 24 units of affordable housing that will be 
owned and operated by the Windham Housing Trust and Housing Vermont. 
The cutting edge, environmentally-friendly building will even recycle 
the grocery store's waste heat from its refrigeration and reuse it to 
heat water for the entire facility.
Rural Business Opportunity Grant (RBOG)
    Authorized under the CONACT, the 2008 Farm Bill extended the RBOG 
program through FY 2012. The RBOG program promotes sustainable economic 
development in rural communities with exceptional needs through 
provision of training and technical assistance for business 
development, entrepreneurs, and economic development officials and to 
assist with economic development planning. In FY 2010, the RBOG program 
provided funding to seven regions to develop plans focused on 
supporting local food systems, renewable energy, and the utilization of 
natural resources to promote economic development through regional 
planning among Federal, state, local, and private entities. By creating 
a regional focus and increasing collaboration with other Federal 
agencies, and other partners, our resources will have a larger impact, 
enabling greater wealth creation, quality of life improvements, and 
sustainability.
    Leveraging is an essential tool of the RBOG program. For example, 
Ecotrust in Oregon, was awarded a $249,340 grant in FY 2010. Using the 
RBOG funds along with over $1 million in leveraged funds, Ecotrust will 
be able to increase recruitment of producers and buyers in rural 
communities throughout the Pacific Northwest and provide the training 
and assistance necessary to ensure FoodHub, a project of Ecotrust, 
supports their business, procurement, and marketing goals.
    FoodHub (http://food-hub.org/) is an on-line directory and 
marketplace designed to help wholesale food buyers and sellers find 
each other, connect, and do business. FoodHub will help agri-producers 
tap into the consumer demand for local food, help forge more direct 
connections between food buyers and producers, and shorten the supply 
chain between producers and wholesalers. FoodHub has 550 members signed 
up as of June 2010, and schools, bakeries, restaurants, processed 
product manufacturers, hospitals, grocers and wholesalers have already 
reported success in finding new regional suppliers through FoodHub. We 
were pleased to see that Fast Company's included EcoTrust' FoodHub on 
their top ten list of innovative food companies.
Rural Microentrepreneur Assistance Program (RMAP)
    Newly created in the 2008 Farm Bill, RMAP is authorized under the 
CONACT. RMAP provides capital access, business-based training and 
technical assistance to the smallest of small businesses, employing 
less than ten people. The RMAP purpose is to support the development 
and ongoing success of rural microentrepreneurs and microenterprises. 
Direct loans and grants are made to approved Microenterprise 
Development Organizations (MDO's). The 2008 Farm Bill provided 
mandatory funding of $4 million per year for FY 2009-2011 and $3 
million for FY 2012. In addition, the 2008 Farm Bill authorized further 
discretionary appropriations of up to $40 million per year for FY 2009-
2012.
    In FY 2010, RBS utilized the mandatory funding available for FY 
2009-10 to provided 73 grants totaling $6.6 million for technical 
assistance. Additionally, 63 rural microloans were made totaling $24.9 
million. In FY 2011 the $4 million in mandatory funding provided by the 
2008 Farm Bill is expected to support 160 businesses through $10.7 
million in grants and loans. To further support this important program, 
the President's FY 2012 Budget requests $5.7 million in discretionary 
funds. This funding request is in addition to the $3.0 million in 
mandatory funds that was provided by the 2008 Farm Bill.
    Though new, this program is already showing results. The Valley 
Small Business Development Corporation located in Fresno, California, 
is preparing to close on their first RMAP loan. The recipient of the 
$50,000 loan will be a custom farm operator in Hanford, California. 
Loan funds will be used to purchase farm equipment and expand this 
micro business.
    Those eligible to apply are MDO's that are located in any area 
outside the boundaries of a city or town with a population of 50,000, 
or more, and the urbanized area contiguous and adjacent to such city or 
town.
Value-Added Producer Grant (VAPG) Program
    Authorized under ARPA, the VAPG program provides grants for 
planning activities and for working capital for marketing value-added 
agricultural products and for farm-based renewable energy. The program 
encourages farmers and ranchers to add value to the commodities and 
products they produce allowing them to capture a greater percentage of 
the consumer's dollar. Eligible applicants are independent producers, 
farmer and rancher cooperatives, agricultural producer groups, and 
majority-controlled producer-based business ventures. The grants can be 
used for two purposes. The first is for planning activities such as 
conducting feasibility studies and developing business plans. Or, 
grants can be used to establish working capital accounts to pay 
salaries, utilities and other operating costs; to finance inventories; 
and to purchase office equipment, computers, and supplies. The value-
added program is highly successful and has contributed to the creation 
of more jobs and business opportunities in rural America. The 
President's FY 2012 Budget requests funding VAPG at $20.4 million. This 
level of funding allows RBS to maintain this important program to 
encourage producers to refine or enhance their products thereby 
increasing their value and their returns to producers. During the last 
funding cycle, awards were made to 45 states and Puerto Rico, the 
broadest distribution of awards in the history of this nationally 
competitive program. On June, 28, 2011, $37 million in funds were 
announced through a Notice of Funding Availability which is scheduled 
to close on August 29, 2011. We estimate that this funding will support 
350 businesses.
    On February 23, 2011, a final rule was published in the Federal 
Register incorporating changes made by the 2008 Farm Bill and expanding 
the types of eligible applicants. The programmatic changes associated 
with the regulation provide additional opportunities to beginning and 
socially disadvantaged producers by helping owners of small and medium-
sized family farms sell their products in local and regional markets 
and reserving ten percent of the total funds available for projects to 
benefit beginning and socially disadvantaged farmers and mid-tier value 
chains.
    Those eligible to apply are independent agricultural producers, 
producer groups, agriculture cooperatives, or majority-controlled 
producer-based business ventures. The revised regulatory language 
reserves ten percent of funds for beginning and socially disadvantaged 
farmers and ten percent for projects that support the use of a mid-tier 
value chain. The eligible area is within the United States.
Rural Cooperatives
    Cooperatives are an important form of business model that is the 
cornerstone for business development in some rural communities. 
Cooperatives provide rural residents with new job opportunities, 
enhanced educational and healthcare services, and products that enable 
them to compete with their urban and suburban counterparts. 
Opportunities are created locally and revenues are maintained and re-
circulated locally. The RBS cooperative services staff conducts basic 
research on the cooperative form of business, collect statistics and 
financial data pertaining to cooperatives, and provides technical 
assistance to farmer groups interested in starting a cooperative or 
improve existing cooperatives. In addition, the cooperative services 
staff manage a number of RBS grant programs.
Rural Cooperative Development Grant (RCDG) Program
    The RCDG program assists nonprofit organizations and institutions 
of higher education to establish and operate cooperative development 
centers to start and establish cooperatives who improve the economic 
condition of rural areas. This program provides support to centers to 
develop new cooperatives and improve existing cooperatives. This 
program complements our national and state office technical assistance 
efforts by increasing outreach and developing feasibility studies and 
business plans for new cooperatives and assisting existing cooperatives 
in meeting the demands of today's ever-changing global economy. Those 
eligible to apply are nonprofit corporations or institutions of higher 
learning. The eligible area is rural areas of 50,000 or less in the 
United States.
Small Socially-Disadvantaged Producer Grant (SSDPG) Program
    The SSDPG program supports cooperatives or associations of 
cooperatives whose primary focus is to provide assistance to small, 
minority producers and whose governing board and/or membership is 
comprised of at least 75 percent small, socially disadvantaged 
producers. In 2010, awards were made to groups representing African 
American, Asian, Hispanic, Hmong, Native American, Native Hawaiian, 
Pacific Islander, and women producers.
    For example, the Hillside Farmers Co-op of Northfield, Minnesota, 
assists Latino farmers by partnering with established farmers who, 
together, are committed to producing sustainable foods and building 
healthier communities. The cooperative pairs immigrant families with 
established farmers in the area who rent out their land for gardening 
and poultry production. The SSDPG grant awarded in 2010 is helping the 
cooperative conduct a feasibility study, develop a business plan, 
provide training, and help pay for other related expenses in developing 
a coordinated network of local businesses in the free-range poultry 
industry.
    Those eligible to apply for the SSDPG are minority cooperatives or 
minority associations of cooperatives. Eligible areas include areas 
outside towns having a population greater than 50,000 and any adjacent 
urbanized area, or an urbanized area that is nevertheless rural in 
character.
Other RBS Programs
    In addition to the programs described above, RBS has a number of 
other programs that are not authorized under Title VI of the 2008 Farm 
Bill but are essential programs in the RBS portfolio. These programs 
include: the Intermediary Relending Program, the Rural Business 
Enterprise Grant Program, the Rural Economic Development Loan and Grant 
program, the Biorefinery Assistance program, the Repowering Assistance 
Program, the Advanced Biofuel Payment Program, and the Rural Energy for 
America Program.
Backlog
    Our RD programs are oversubscribed and in high demand. The B&I 
guaranteed loan program currently has 255 eligible pending 
applications/preapplications totaling $983 million that would receive 
funding if it were available.
    The RMAP program has currently received 78 eligible loan and grant 
applications totaling $12.4 million in funding requests but was only 
provided $4 million for FY 2011, which will support 160 businesses 
through $10.7 million in grants and loans.
    The Rural Business Opportunity Grant program had 424 eligible 
applications totaling $60 million apply in 2010. Only 27 awards could 
be funded totaling $2.6 million.
    The last time funding for the Value-Added Grant Program was 
announced, there were 300 eligible applicants requesting $32.7 million, 
but only 196 projects totaling $22.7 million were awarded.
Uniqueness
    All of the RBS programs are unique by virtue of their singular 
focus on rural America. Though some of the goals of these programs may 
be similar to SBA, the implementation, technical support, and outreach 
for the programs, eligibility requirements, loan limitations, and 
project expansion are tailored to support rural businesses and 
residents to expand their local economies. In Government Accountability 
Office comparisons of RD programs to the programs of other Federal 
agencies, they found that while similarities exist, RD is the only 
Federal agency with a broad experience base for implementing rural 
programs.
Unfunded Programs
    There were numerous programs included under Title VI of the 2008 
Farm Bill which no longer receive funding or never received funding. 
These programs include: the Appropriate Technology Transfer for Rural 
Areas program, the Rural Business Investment Program, the Rural 
Collaborative Investment Program, Grants for the Expansion of 
Employment Opportunities for Individuals with Disabilities in Rural 
Areas, and the Agriculture Innovation Center Demonstration Program.
Councils
    In addition to the RBS programs, we also work as liaisons along 
with the Rural Utilities Service and Rural Housing Service to support 
businesses in the following communities: Rural Economic Area 
partnership zones, Delta Regional Authority, and the Northern Great 
Plains Regional Authority.
Conclusion
    RBS is committed to promoting economic prosperity in rural 
communities through our grant, loan, and loan guarantee programs. In 
partnership with other public and private sector businesses, RBS 
continues to improve the economic climate of rural areas through the 
creation or preservation of sustainable business opportunities and jobs 
and by helping to close the gap in opportunity for the underserved 
rural areas and populations. With your help, we will continue working 
to bridge the opportunity gap between rural and urban areas. In 
closing, I would like to thank the Subcommittee for the opportunity to 
appear before you today and look forward to responding to your 
questions.

    The Chairman. Thank you for your comments.
    And last on the panel, we have Tammye Trevino of the Rural 
Housing Service. You can go ahead and proceed.

 STATEMENT OF TAMMYE H. TREVINO, ADMINISTRATOR, RURAL HOUSING 
                  SERVICE, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.

    Ms. Trevino. Good morning, Mr. Chairman, Ranking Member 
Costa, and Members of the Committee, it is a privilege to 
provide a brief overview of the United States Department of 
Agriculture's Rural Development Rural Housing Service 
activities.
    For over 60 years, the Rural Housing Service, part of the 
Department of Agriculture's Rural Development mission area, 
along with Rural Utilities Service and the Rural Business-
Cooperative Service has been working to help rural America 
thrive by supporting the housing needs of these communities. 
Rural Development is a collaborative agency. Our programs build 
upon one another ultimately creating efficiencies for the 
taxpayer and the communities that we serve. As part of the 
Rural Development mission area, Rural Housing Service provides 
Single-Family Homeownership Programs, Multi-Family Housing 
Programs, housing loans and grants for repair and 
rehabilitation, and community programs. All are integrated into 
a more holistic approach at rural community and economic 
development.
    We have exceptional staff in local offices across the rural 
landscape working closely with dedicated partners in the for-
profit and nonprofit sectors. This same staff delivers programs 
for all three agencies across the mission area. By being 
located in rural communities, we are able to cultivate 
important relationship with lenders, realtors, community-based 
organizations, redevelopment authorities, and others. Our 
efficiency is noted in the strategic centralization of a 
significant portion of core operations while leveraging the 
community knowledge of our field structure across all programs. 
For example, staff delivering Rural Housing Services Community 
Facilities Programs to eligible municipalities, tribes, and 
nonprofit organizations also work with these same partners on 
the Rural Utilities Service's Water and Waste Disposal Program. 
The importance of our local staffers cannot be overemphasized. 
They know the needs of their neighbors and their rural 
communities and provide critical support both effectively and 
efficiently.
    In the wake of natural disasters Rural Development programs 
have worked in concert to build communities from the ground up. 
No other department in the Federal family offers rural 
communities the range of financial services available from USDA 
Rural Development and the staff nearby to provide the technical 
assistance.
    At the Rural Housing Service, our mission is to help 
families, individuals, and businesses in rural communities 
thrive by ensuring access to capital for housing and community 
facilities. Utilizing a total budget authority of $1.03 
billion, the Rural Housing Service leveraged a program level of 
approximately $26.3 billion in loans, loan guarantees, grants, 
and technical assistance in Fiscal Year 2010. Our programs are 
provided through the Housing Act of 1949 in combination with 
the consolidated Farm and Rural Development Act.
    Rural Housing Service is a big part of Rural Development's 
overall success and effective program operations. Despite 
doubling our borrowers' numbers over the last 2 years, Rural 
Housing Service's direct and guaranteed loan portfolios 
continue to perform well thanks in large part to our state-of-
the-art call center, the Centralized Servicing Center in St. 
Louis, Missouri. Rural Housing Service also provides funding 
for essential community facilities. Since the Rural Community 
Programs were authorized by the CONACT in 1972, more than $12.7 
billion has been invested in facilities equipment for 
healthcare, education, public safety, and other services 
essential to the healthy economic and civic environment in 
rural America.
    For Fiscal Year 2012, the CF Direct Loan Program has a 
negative subsidy rate that enabled Rural Development to request 
zero budget authority for a program level of $1 billion, more 
than triple our current level. In the essence of saving time, 
information about delinquencies and accomplishments in the 
Rural Housing Service Program has been provided in written 
form. As stated in the CONACT, rural America has complex needs, 
and at Rural Development, we share an important commitment with 
you to meet those needs. We believe that the mission and 
delivery of programs that Rural Development affords us the 
flexibility to respond to current and changing needs across the 
rural landscape; and lead other public sector and private 
sector, for-profit and nonprofit partners to invest 
strategically in rural people and rural places, particularly 
those who are traditionally underserved by conventional 
financial models and at times where the private sector is 
unable to step in. Rural communities have a unique set of 
challenges that Rural Development is well-suited to address.
    Thank you for the opportunity to appear before you today, 
and I welcome any questions or comments.
    [The prepared statement of Ms. Trevino follows:]

 Prepared Statement of Tammye H. Trevino, Administrator, Rural Housing 
       Service, U.S. Department of Agriculture, Washington, D.C.
    Chairman Johnson, Ranking Member Costa, and Members of the 
Committee, it is my privilege today to provide to you a review of the 
United States Department of Agriculture (USDA) Rural Development's (RD) 
Rural Housing Service (RHS) programs and activities. The core mission 
of RHS is to create vibrant, thriving rural communities, a strong 
housing stock, access to safe, decent and affordable rental housing and 
access to high quality essential community infrastructure. RHS 
accomplishes its mission through a number of housing programs 
authorized under the Housing Act of 1949 and the Community Facilities 
(CF) programs authorized under the Consolidated Farm and Rural 
Development Act (CONACT) and amended through farm bill legislation. In 
addition, through the Rural Community Development Initiative (RCDI) RD 
provides technical assistance and training funds to qualified 
intermediary organizations to develop their capacity to undertake 
housing, community facilities, and community and economic development 
projects in rural areas.
Overview
    The RHS programs are a systematic part of RD's community and 
economic development structure which works to improve the quality of 
life in rural America. We work to improve infrastructure, sustain and 
create jobs, and create economic wealth in rural communities. RD 
programs are locally-led and they work together in a cohesive manner to 
provide all of the necessary services and activities to have 
sustainable and prosperous communities. Housing, community development, 
and technical assistance are at the foundation of our agency's mission. 
This foundation, along with the targeted programmatic approach, makes 
RHS programs an essential tool for rural America.
    In Fiscal Year (FY) 2010, utilizing budget authority of about $1 
billion, RHS supported a program level of approximately $26.3 billion 
in loans, loan guarantees, grants, and technical assistance. The budget 
targeted resources to programs that are most needed and most effective 
in rural communities. RHS programs continually assist USDA's efforts to 
help rural America out-build, out-educate, and out-innovate our global 
competitors while making the tough choices necessary to address 
responsibly the nation's budget deficit. In 2010, RHS assisted nearly 
161,000 rural American families to buy or repair their homes, provided 
safe, decent affordable rental housing to 460,000 individuals, and 
provided financing to assist over 1,000 small communities develop 
essential community buildings and equipment. The remaining text 
discusses our RHS programs, and how they impact rural America.
CF Program
    The CF program was authorized in 1972 under the CONACT to provide 
funding necessary for the installation or improvement of essential 
community facilities in rural America. Since that time, the CF program 
has provided over $12.7 billion in funding for health care, 
educational, public safety, and other essential community facilities 
and more than 40 percent of the CF program investments have been made 
in rural health care facilities. The local hospital, school system, or 
public safety district is often the largest employer in a rural 
community or region. By providing low-interest loan and grant funding 
for these organizations through the CF program, we directly support 
economic development and job creation.
    The current CF program portfolio consists of about $5.2 billion in 
outstanding loans and grants that have been made to 11,197 facilities 
that received either individually, or in combination, a direct loan, 
guaranteed loan, or grant. Since FY 2009, the CF programs have invested 
over $3.1 billion in 4,207 essential community facilities, estimated to 
directly create 9,996 jobs and save 22,384 jobs. Of that amount, over 
$1.66 billion was invested in 464 rural health care facilities and is 
estimated to create 4,124 jobs and save 10,319 jobs.
CF Loan Programs
    RHS offers both guaranteed and direct CF loan programs. Direct 
loans are available to those who are unable to obtain commercial 
financing. The maximum term for all loans is limited to the lesser of 
the useful life of the facility, any state law limitation on loan 
terms, or 40 years. Interest rates for direct loans are based on 
current market yields for municipal obligations, although loans for 
facilities impacting prime or unique farmland may require a slightly 
higher rate. Certain other direct loans may qualify for a lower 
interest rate, depending upon the median household income of the 
residents of the community to be served. Guaranteed loans are made and 
serviced by commercial lenders such as banks, savings and loans, 
mortgage companies which are part of bank holding companies, the Farm 
Credit System, or insurance companies. CF programs may guarantee up to 
90 percent of any loss of interest or principal on the loan. The 
entities eligible to apply for loans are public bodies, nonprofits, and 
federally-recognized Indian tribes. The eligible area for both direct 
and guaranteed loans is rural communities with a population up to 
20,000.
    The President's FY 2012 Budget proposes to fund the CF direct loan 
program at $1 billion, more than triple the historic funding level. In 
addition, the budget proposes to eliminate funding for the CF 
guaranteed loan program. The CF guaranteed loan program originated as 
an inexpensive alternative to the direct loan program, designed to 
stimulate additional assistance to moderate income communities in rural 
areas. However, the defaults in the CF guaranteed program have been 
much higher than originally projected, making it more expensive than 
the direct loan program. The CF direct loan program has a negative 
subsidy rate in FY 2012. This means that the $1 billion in CF direct 
loan assistance can be provided without the need to request subsidy 
budget authority. The proposed increase in the CF direct loan program 
will mitigate any effects of ending the guaranteed loan program. This 
is a win-win for taxpayers and rural residents working to strengthen 
their rural communities.
CF Grant Program
    The entities eligible to apply for grants are public bodies, 
nonprofits, and federally-recognized Indian tribes. The eligible area 
for the program is rural communities with a population up to 20,000. 
The amount of grant assistance depends upon the median household income 
and the population in the community where the project is located. Grant 
assistance may be available for up to 75 percent of project costs.
Housing Programs
    Title V of the Housing Act of 1949 authorizes loans and grants to 
assist rural families in becoming homeowners and to provide safe, 
decent and affordable rental housing. The major housing programs under 
this legislation are single family housing (Section 502), single family 
housing repair and rehabilitation (Section 504), rural rental housing 
(Section 515), and self-help technical assistance grants (Section 
523),. These programs were carried out by the Farmers Home 
Administration prior to reorganization of the Department in 1994 and 
creation of the Rural Housing Service.
    In 1968, an amendment to Title V of the Housing Act of 1949 
established the interest-credit housing loan program. It enabled some 
low-income families to pay as little as one percent interest and 
provided for subsidized loans to developers of low-priced rental 
housing for low-income families and senior citizens. New programs also 
were enacted in 1968 for rural homesite development loans and for 
grants toward support of ``self-help'' homebuilding group projects. 
Grants of up to 90 percent, as well as loans, were authorized for farm 
labor housing projects.
Single-Family Housing Programs
    The Single-Family Housing (SFH) programs provide homeownership 
opportunities for rural Americans with very low-to moderate incomes to 
purchase and improve homes through several loan, grant, and loan 
guarantee programs. The programs also make funding available to 
individuals to finance vital improvements necessary to make their homes 
decent, safe, and sanitary. Thus far in FY 2011, USDA through the RHS 
Single Family Housing programs has provided $11.7 billion in direct and 
guaranteed loans to assist 92,786 families to purchase or refinance a 
home, strengthening our rural communities and neighborhoods and helping 
families build equity in their future. In FY 2010, the SFH programs 
provided $18.9 billion to 150,693 families to purchase or refinance a 
home, helping boost rural economies and creating thousands of new jobs 
in rural communities.
    The 2012 budget proposed a $24 billion program level for the SFH 
Section 502 loan guarantees which is anticipated to fully meet demand. 
For FY 2011 and FY 2012, the program has a negative subsidy rate 
because of a low and stable default rate coupled with increased program 
fees. The 2012 fee structure will be a two percent up-front fee and an 
annual fee of 0.3 percent. Single-family housing direct loans and 
housing repair grants are both funded at reduced levels for 2012, 
reflecting the efforts of this Administration to ``tighten our belts''. 
The shift from direct loans and grants to guaranteed loans allows us to 
significantly increase our investment in rural America while 
simultaneously decreasing the burden on taxpayers. The $24 billion 
guaranteed loan level allows RHS to provide the highest level of 
assistance for single family housing in rural areas that has ever been 
provided--and without needing to request subsidy budget authority.
    The collapse in the housing market caused a reduction in lender 
confidence, which has increased demand for the SFH guaranteed program. 
Currently, approximately 2,000 lenders participate in the program. The 
low home mortgage interest rate environment has enabled the guaranteed 
rural housing program to serve low-income families who may have 
previously looked to our SFH direct loan program for assistance. 
However, recognizing that an unserved need may continue to exist for 
very low-income families, the single-family direct loan program's 
reduced funding level will be $211 million and will be targeted to very 
low-income applicants.
Multi-Family Housing Programs
    The Multi-Family Housing (MFH) budget continues RD's commitment to 
providing affordable housing options to the poorest of the poor in 
rural America. Our existing portfolio provides decent, safe, sanitary, 
and affordable residences for the 460,000 tenant households. The MFH 
Program offers Rural Rental Housing Loans to provide affordable multi-
family rental housing for very low-, low-, and moderate-income 
families; the elderly; and persons with disabilities. This is primarily 
a direct mortgage program, but funds may also be used to buy and 
improve land and to provide necessary facilities such as water and 
waste disposal systems. In addition, rental assistance is available to 
eligible families.
    The total program level request for MFH programs is $1.06 billion 
of which $907 million is allotted for the MFH Rental Assistance 
contract renewals. The requested rental assistance is sufficient to 
accommodate the renewal of 204,503 expiring rental assistance 
contracts. While the FY 2012 budget request proposes to terminate 
funding for the MFH Revitalization Demonstration Program, it proposes 
to increase the MFH direct loan program from a program level of $69.5 
million to $95 million, ensuring that more affordable rental housing 
opportunities are created for the very-low income tenant base in rural 
America. The direct loan program can be used for repair and 
rehabilitation as well as new construction. So the increase in funding 
should allow property owners to continue to finance revitalization 
efforts even without the demonstration program.
    The FY 2012 budget request proposes $16 million for the Rural 
Housing Voucher Program. The voucher funding will be used to offset 
some of the reductions in rental assistance. If a MFH property offering 
rental assistance leaves the portfolio, vouchers will be offered to all 
low-income tenants that presently receive rental assistance.
    The FY 2012 budget request for MFH Section 514/516 Farm Labor 
Housing is approximately $37.2 million in program level funding.
Farm Labor Housing
    Funding was not proposed for FY 2012 for the Farm Labor Housing 
program. The program provides loans and grants to build affordable 
rental housing and related facilities for both migrant and year-round 
farm workers. Units may be off-farm housing available to eligible farm 
workers of any farming operation or on-farm housing for farm employees. 
Funds for this program may also be used for repairs of existing program 
units.
Housing Loans and Grants for Rehabilitation and Repair
    The FY 2012 budget limits or eliminates funding to some very small 
loan and grant programs to allow the agency to focus on the programs 
that most effectively achieve USDA's housing goals through higher loan 
volumes. USDA will provide approximately 2,000 grants to very-low 
income, elderly, rural homeowners in order to make essential repairs to 
their homes to make them safe and to remove health hazards through the 
SFH Housing Repair grant program. This program is designed to help the 
most vulnerable residents in rural America.
    Smaller and more labor intensive programs that are not proposed for 
funding include housing repair loans, self-help housing grants, housing 
assistance grants, and loans to deal with inventory property referred 
to as ``credit sales.'' This shift in the focus of program delivery 
will make USDA leaner, more efficient and will help the agency 
streamline operations and deliver results at a lower cost for the 
American people.
Technical Assistance
    The RCDI provides technical assistance and training funds to 
qualified intermediary organizations to develop their capacity to 
undertake housing, community facilities, and community and economic 
development projects in rural areas.
    Technical assistance promotes partnerships at the local, regional, 
and state levels to assist communities in advancing their strategic or 
economic development plans. It also encourages coordinated planning 
among RD programs to address specific projects within the context of a 
community or regional strategic plan.
    The entities eligible to apply for RCDI funds are public bodies, 
for profits, private nonprofits and Indian Tribes. Eligible areas 
include outside the boundaries of a city with a population of 50,000 or 
more and its immediately adjacent urbanized area.
Conclusion
    RHS implements rural housing and CF programs to assist rural 
communities to create a healthy, safe, and prosperous place in which to 
live and work. Rural housing direct and guaranteed loans and grants 
assist rural families in becoming homeowners and provide safe, decent 
and affordable rental housing. CF direct and guaranteed loans and 
grants create jobs in rural America through the development of 
essential community facilities such as hospitals, libraries, day-care 
facilities, fire halls, community centers, and more. In closing, I 
would like to thank the Subcommittee for the opportunity to appear 
before you today and look forward to responding to your questions.

    The Chairman. Thanks to the three of you for your direct 
remarks. They are gratefully received by the Members of the 
Committee.
    Let me start with this question for all three of you. The 
existing farm bill, which we are in the course of actively 
working on a new version, required USDA to report on the 
various definitions of rural and how those definitions impact 
our programs. Obviously, as Ranking Member Costa alluded to in 
his opening remarks, and as I can tell you and Members of the 
Committee on both sides can tell you, this is a critical 
determination in terms of your services and the services to the 
agricultural sector. The report was due 2 years after the 
enactment of the farm bill, and we still haven't received the 
report. I believe in the second or third month of this year, 
Deputy Under Secretary Cook assured the Committee that we would 
have the finished report by June of 2011, over 3 months ago. We 
still haven't received it. Why not?
    Ms. Canales. Mr. Chairman and Ranking Member Costa, both of 
you have a strong interest and of course the entire 
Subcommittee, indeed Deputy Under Secretary Cook did make that 
statement. I do want to say to you that the report is at Rural 
Development. It is a report, as you can well imagine, given 
that the three agencies that are represented here all have 
different standards and different population limits and 
different criteria for how we operate, each one of the programs 
that we are responsible for, given the authorization language 
from these different agencies. So I will say to you that in 
response to your question that the report is being worked on. 
There is a draft. The Deputy did state to us that this is 
something that is very important to provide to the Congress.
    I do want to say to you that certainly within my agency, we 
have had a tremendous amount of experience utilizing the very 
specific criteria that you all authorized regarding the 
definitions of rural and characterizations, which were able to 
utilize them. And those were able to, therefore, gain more 
rural areas. That is a petition that a local community can make 
to Rural Development in order to get a review of their area. So 
the report----
    The Chairman. If I could--I appreciate it. Back to the 
question. I don't mean to be adversarial. I am just asking the 
question. But it has been 3 months and you indicated it is 
under review. Now, when can we expect that? Not generally, in 
the real near future, but specifically when can we expect that 
report. I know the Ranking Member, several others on this 
Committee, and I are going to be in a field hearing where that 
definition in terms of rural broadband has particular 
significance. That is actually in a couple weeks. We would love 
to be able to have some parameters for a variety of reasons so 
we know what way we are operating. Can you, between the three 
of you, give me a date? Like next week?
    Ms. Canales. I could not state that it will be next week. 
You know, we could give you a date----
    The Chairman. When could you say to us that it will be? And 
again I am not trying to be unkind. This is an important 
concept and it was promised a long time ago. I think we can 
legitimately ask the Department to give us a date. So can you 
give us a date? We need to know what we are operating with. Mr. 
Costa has pointed out the tremendous significance in his 
counties, likewise with mine and the Members of the Committee. 
You know, Congressman Schilling's district is very similar to 
mine in terms of limited access to facilities and how the 
definitions affect that. I mean rural America in many parts of 
the country is on the decline. This is critical, critical to 
maintaining or increasing the viability of rural America. And 
we can't just have generic promises. We need to know.
    Ms. Canales. Well, certainly, we agree with you in the 
sense of the need to focus on rural America and each one of our 
agencies has our own definitions that we utilize. But I mean I 
could not give you a date----
    The Chairman. Well, I am going to ask you to anyway. Let me 
ask each one of you to give me a date by which we can expect 
that report. You, sir?
    Mr. Adelstein. I have been told by the Under Secretary's 
office that the report is imminent. If it is possible if I 
could get back to you by the end of today with a date-certain 
that we can get that to you, we will do that.
    The Chairman. Yes, ma'am, you? No, I am asking you, Ms. 
Canales.
    Ms. Canales. The information that I have received in 
regards to the report is as my colleague stated that it is 
imminent, which I reported to you. And so we can respond back 
today and give you more certainty.
    The Chairman. Yes, ma'am?
    Ms. Trevino. I have nothing to add, Mr. Chairman.
    The Chairman. I think if the three members of the panel 
would be willing to communicate with the office of the Ranking 
Member and myself either in writing or otherwise to tell us--
rather than the end of the day, let's just do it by the end of 
the week, to give you time to deal with it more effectively, 
and give us a date by which we can expect that. I think we can 
make a lot of plans accordingly. But without reiterating the 
obvious, this is a really critical determination and it is a 
lynchpin to a lot of programs.
    Ms. Canales. Absolutely.
    Mr. Adelstein. We will do it, Mr. Chairman. One of the 
reasons that this is so difficult is the importance of it and 
the complexity of it. We have significant impact on communities 
we serve based on that definition.
    The Chairman. That I understand, but if it is difficult, 
then if we were told a year ago that it is difficult, so we 
would not be expecting it and have expectations built around 
June of this year. This isn't a partisan issue. This is just a 
government layer of bureaucracy issue and we need to uncover 
the layers. I think we would all agree with that. All right. 
And I now turn to the distinguished Ranking Member, the 
gentleman from California, Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman. I couldn't 
agree with you more. Ms. Canales, your response was nice but it 
was filled with a lot of ``bureaucratic-ese;'' and it is not to 
be necessarily a reflection on you or the United States 
Department of Agriculture. So much of what frustrates many of 
us and our constituents is the bureaucratic difficulty in 
responding in a fashion that seems to be clear cut and one that 
is expedited. Yes, it is difficult. As the gentleman who just 
responded, Mr. Adelstein, said, ``Look, we are working on this. 
It is taking more time than we thought. We are having problems 
in this area and that area.'' If it is difficult, then you owe 
the Subcommittee, the Members of the Committee a response. But 
I would hope that in the sense of cooperation and collaboration 
that you would get back to the Chairman and myself later today 
and give us a timeline that you think you can follow. And if 
there is a problem with it, let us know, because this is vital 
not only to the field hearing we are holding in 2 weeks in 
Illinois but to a lot of the work the Subcommittee is doing.
    So let me get into a couple questions here. I think it has 
been underlined enough I hope. I talked about the definition 
of, and flexibility to, address the nation's rural communities. 
After all, these are taxpayers' dollars in which our rural 
communities pay to Washington. We want to ensure that we get an 
appropriate share of those taxpayers dollars back to those 
rural communities. Have you thought about utilizing Census 
tracts, Ms. Canales or any of the other two witnesses, and 
would you care to comment as a way of redefining rural?
    Ms. Canales. Ranking Member Costa, absolutely. Census 
tracts has been a point that has been raised among our western 
state directors. You know, going back to----
    Mr. Costa. I have worked with them.
    Ms. Canales. Yes.
    Mr. Costa. Have you considered it?
    Ms. Canales. Yes.
    Mr. Costa. What are the details?
    Ms. Canales. The answer is yes.
    Mr. Costa. What do you think the problems are? Where are 
you on that?
    Ms. Canales. The answer is yes, we are considering Census 
tracts.
    Mr. Costa. Will you get that in terms of response in this 
report or will it not be included? Do you know?
    Ms. Canales. I believe that it will be included, yes, sir, 
as part of the report.
    Mr. Costa. Yes. There is also an announcement by the White 
House, an Executive Order for a Rural Council. I have been 
critical. In previous Administrations they have designated a 
person within the White House to handle rural areas. My friend 
who is on the mend right now, God bless him, Marion Barry from 
Arkansas played that role at the Clinton White House. What has 
happened with this Executive Order? Has the council been named? 
Do you know? Can you add some meat on that bone?
    Mr. Adelstein. The council has been named. The lead of the 
council is Secretary Vilsack. The council is working across the 
Federal Government family to meet the needs of rural America 
and to coordinate between different agencies. So it is similar 
to the function that was previously handled by staff in the 
White House, but now there has been a more formalized way of 
ensuring proper coordination across the Federal Government.
    Mr. Costa. Coordination is fine but stakeholders have to 
understand that they are playing a role and they are 
participating and their comments are going to be taken into 
account. I mean otherwise it just becomes another council for 
illustrative purposes. You have to get by it in a way that 
makes sense.
    Ms. Trevino, you talked about housing and I am very 
concerned. I think we all see the housing crisis around the 
country but it is just as serious in our rural areas. My 
colleague Congressman Cardoza has tried to get the 
Administration's attention on it. Notwithstanding the best of 
intentions, and your intentions are laudable, it seems most of 
the efforts have been ham-fisted and not successful. What about 
Section 502 Single-Family Housing Guaranteed Loan Programs? 
Many private lenders still aren't lending for reasons that we 
are aware of--regulatory means and other situations--can you 
comment on the success of that or where you are at on that?
    Ms. Trevino. Yes, thank you for the question, Congressman. 
The Rural Housing Section 502 Single-Family Guaranteed Program 
has been very successful. We have increased our numbers in the 
last 3 to 4 years by three and four times as much as we were 
producing years ago. Our portfolio has remained stable in terms 
of its performance on delinquencies and foreclosures and so we 
continue to monitor what the lenders are doing. Currently, 
those programs are not as high in terms of numbers as we had 
seen at this time last year in terms of demand, but we are 
continuing to work with our lenders and try to----
    Mr. Costa. My time has expired, but I would like to 
understand how you define success?
    Ms. Trevino. We measure ourselves with the private sector 
and other government-sponsored entities, and currently our 
delinquency and foreclosure rates are below other government-
sponsored entities.
    Mr. Costa. Thank you, Mr. Chairman, for your time.
    The Chairman. The gentleman from Georgia, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman and Ranking Member. To 
those of you on the panel I would just start with a comment. I 
am one of those that is a freshman in Congress and 8 months ago 
I was in the private business sector. I wonder what would have 
happened had I looked at a government agency and said it is 
important, it is complex, I don't know when I will get it to 
you even though it was due 2 years ago. I am not quite sure if 
they would have executed my business with a shotgun or a 
sledgehammer, but I feel quite confident, coming from the 
private sector, that dealing with a government agency had I 
been negligent in providing an audit or some other form or, God 
forbid, miss dotting an ``i'' or crossing a ``t,'' they would 
have been there to shut my business down.
    With that said, I want to go back to USDA Housing, and I 
understand that the President has proposed to move this to HUD. 
Is that correct, the housing aspect of USDA to HUD?
    Ms. Trevino. No, sir, that is not proposal by the 
President.
    Mr. Scott. Who is it a proposal by?
    Ms. Trevino. It is currently a draft discussion by the 
House Financial Services Subcommittee.
    Mr. Scott. What are your thoughts on that?
    Ms. Trevino. We strongly oppose that move.
    Mr. Scott. Okay.
    Ms. Trevino. At Rural Development, as I stated earlier, we 
are a collaborative effort. We believe that we need to look at 
the entire needs of rural America because they are very complex 
as you stated. And every rural American has interrelated needs. 
The communities have other needs, and for us to be able to 
address just the housing needs by moving over to HUD would 
negate all the work that we have done working in synergy with 
our other partners in Business and Utilities. We believe that 
we create efficiencies and cost-effectiveness because of the 
way we operate currently.
    Mr. Scott. Okay. Thank you for that. So it is the House 
Financial Services Committee, and I would just hope that you 
would continue to argue on behalf of the rural communities 
because I know that my housing authorities, even in my 
metropolitan areas, had suggested to me that HUD has indicated 
to them that if they have been run well and have actually 
accumulated reserves, some operating reserves, that HUD has 
some intent of having those housing authorities that are well-
run turn those monies back over so that they can be 
redistributed to other housing authorities that haven't been 
run as well. So certainly HUD is one of those agencies that I 
do not think is well run in Washington, and there is certainly 
a long list of those. But thank you for continuing to stand up 
for rural America.
    Administrator Adelstein, I would like to speak with you 
about the broadband briefly, and I have about 2 minutes left. 
But what steps are you doing to make sure that when we do 
expand the broadband that we are not overbuilding? In other 
words, are we giving loans to develop broadband in areas where 
there already is access to broadband versus making sure that 
the loans go to areas where there is no access to broadband? I 
would also like for you to speak to that in regard to the 
report that came out about how much money was spent to develop 
broadband to a select few families and whether or not you think 
that those investments going forward with satellite technology 
and other things that are going to make faster communications 
available in the rural areas or good use of taxpayers' dollars?
    Mr. Adelstein. Congressman, our goal is to serve the most 
remote rural areas, to get the funds to those places that have 
no service or inadequate service. And the 2008 Farm Bill is 
designed so we don't finance broadband in areas with service. 
But broadband doesn't always follow neat lines. It doesn't 
shape itself along lines, you can say we are going to serve 
here and not serve there. To bolster the financial feasibility 
of some of these proposals to serve the most difficult-to-serve 
areas, occasionally there is some overlap, but we do focus on 
ensuring that we close the digital divide between those 
underserved and unserved areas. The statute recognizes that.
    When it comes to satellite service, we are technologically 
neutral. We want rural businesses and residents to have first-
class broadband service no matter where it comes from. We did 
provide for satellite service as part of the Recovery Act, an 
initiative for those who didn't have broadband through any 
other of our awards, that they would have access to low-cost 
satellite service. For some businesses, they have issues that 
satellite is not adequate to their needs, so we try to maximize 
the amount of bandwidth that we can get to rural areas.
    Mr. Scott. My time has expired.
    The Chairman. Thank you, Mr. Scott. That is I guess a good 
segue for the fact that we do have the first field hearing of 
2011, Mr. Costa and I. Other Members of the Committee are 
invited. In fact, we have at least five coming already. I 
realize there are some conflicts along the schedule, but that 
is scheduled for Saturday, the 24th of this month, University 
of Illinois-Springfield specifically on the subject of rural 
broadband services and the future of rural America.
    Let me also mention to all three of you--because I have 
ascertained the names in the meantime--you had indicated you 
would by the end of the week let us know a date by which we can 
expect that definition. In Ranking Member Costa's office, the 
gentleman's name is Nick Choate, and in my office, the 
gentleman's name is Sam Pfister, and we would eagerly await 
your response and hope that you will get that to us and then 
obviously the implementation thereafter.
    I would recognize the distinguished gentlelady from 
Alabama, Ms. Sewell.
    Ms. Sewell. Thank you, Mr. Chairman. I would like to thank 
all of our panelists for being here today and for your 
testimony.
    My question is actually to Mr. Adelstein. I represent a 
very rural part of Alabama, and I, too, am very concerned about 
broadband and access to areas in my district that just don't 
have access. Frankly, my mother and father--they live in Selma, 
Alabama, and it was only last year that we got away from dial-
up. So it is really important that I reiterate what Congressman 
Scott said as well, that it is very, very important to get it 
to remote areas, broadband access.
    My question is many of the entities that you lend to are 
dealing with regulations and settlements under Federal law, 
including the Clean Air and Clean Water Acts. Have you seen an 
impact on systems that serve rural residents and their ability 
to deal with these regulations?
    Mr. Adelstein. Yes. First, on the broadband, I was thrilled 
we were able to get a Recovery Act award to your district, to 
Butler Telephone Company, and we will continue to work in rural 
Alabama and across the country to get broadband to the most 
remote areas. In terms of impact on our programs, yes, we have 
seen that certainly regulatory requirements do impose costs 
that we need to deal with, and we do deal with as part of our 
efforts to ensure that rural areas can meet requirements for 
the health and safety of their residents. I mean those are 
consistent with what we do. Rural areas do incur costs. The 
impact depends--in the Water Program, for example--on the size 
and type of the treatment facility, on the quality of water 
service and what the regulatory standard might be. It increases 
demand for RUS Loan and Grant Programs. Right now, we have a 
$3.2 billion backlog in our Water Program, and these 
requirements certainly do have an impact.
    We do work with our colleagues in other agencies of the 
government to make sure that they are aware of the impact on 
rural America of the different departments that they do have, 
but we will work with the communities affected to help them 
comply.
    Ms. Sewell. Very good. What programs have been most 
beneficial under your tenure in providing reliable and 
affordable electric power, water, broadband? What programs do 
you think have been the most effective under your agency and 
what programs have yielded disappointing results?
    Mr. Adelstein. Well, we have really been thrilled at the 
impact of our major flagship programs, the Electric Program, 
again $6 billion of investment this past year with no 
requirement of taxpayer dollars to get that done. We have had 
great success with our traditional telecommunications program, 
as well as the Recovery Act broadband programs and getting 
these rural systems up to date.
    I mentioned just briefly that the Water Program is 
oversubscribed. We have some $3 billion backlog attesting to 
the demand. That is after we did over $3 billion in new 
programs under the Recovery Act to deal with the backlog that 
we had.
    There are some small programs we don't think are that 
important. We have a Household Water Well Program that, for 
example, is very small and doesn't do that much. I mean it is 
for individuals to get their own wells improved and with a 
couple million dollars for the whole country, it doesn't really 
have the kind of global impact that our major Water 
Environmental Program has. So there are some programs that we 
can do without in this difficult budget environment, but the 
major programs have done a remarkable job of meeting the needs 
of rural America.
    Ms. Sewell. Thank you.
    The Chairman. I recognize the gentlelady from Missouri, 
Mrs. Hartzler.
    Mrs. Hartzler. Thank you, Mr. Chairman. I wanted to follow 
up some more on the broadband questions. How much total is 
dedicated right now to the broadband program?
    Mr. Adelstein. Right now, the traditional broadband program 
has been authorized by Congress to provide $690 million in 
loans, and we have sufficient funding under the broadband 
program for about $300 million in loans. And then we have a 
couple of smaller grant programs, the Distance Learning 
Telemedicine Program, around $25 million; and the Community 
Connect Grant Program, which provides grants to areas with no 
service, very small, remote, rural communities, about $13 
million.
    Mrs. Hartzler. Okay. Out of that total amount, how much is 
going to the end-of-the-line customers specifically to help 
people who don't have any other access or any other service to 
high-speed versus how much is going to people who already have 
service?
    Mr. Adelstein. Well, all of it is going to either improve 
or provide service to people that don't have it today. So 
generally speaking, we do focus, as I said, our resources on 
areas that have no service, but in many cases what we have, for 
example, in the Telecommunications Loan Program is our existing 
telephone company will be providing improvements to--they may 
be providing broadband to customers today, but they want to 
improve that. They want to, say, go from 1 megabyte per second 
or 768 kilobytes per second to fiber right to the home. So this 
would be the same provider that is upgrading its system. So 
they had broadband under one definition, but that 
telecommunications company, in order to meet the needs of the 
future to provide video, to provide all the current needs of 
rural consumers will upgrade. And again, that program is no 
cost to the taxpayer because they pay us back and our default 
rate is very low.
    Mrs. Hartzler. So do you have an indication of how much is 
upgrade versus how much is new?
    Mr. Adelstein. I don't have an exact number. I mean it is 
very hard to see because broadband doesn't follow neat lines. 
We have requirements in our broadband loan program, which we 
just created that ensures the funds go to the most rural areas 
that don't have adequate broadband as defined by the statute. 
We don't provide funds for overbuilding ourselves under the 
traditional, the $690 million program, but we are finding that 
many of those are upgrades. They are going from old, slow DSL 
to fiber to the farm or to the ranch, which is what a lot of 
rural consumers need, a lot of rural businesses need to compete 
in the 21st century.
    Mrs. Hartzler. How long have these grants been available, 
these loans, and what is the percentage of payback at this 
time?
    Mr. Adelstein. Well, the traditional program has been 
operating since 1949, so we have been doing this for 60 years.
    Mrs. Hartzler. Sure, but I am talking about broadband, not 
rural electric.
    Mr. Adelstein. The broadband program was initiated in the 
Farm Bill of 2002. There were some pilots that had been done 
before that, so over the last decade, we have invested about $1 
billion in broadband infrastructure through the broadband loan 
program, of which we are repaid the vast bulk of that. There is 
a very small default rate. Right now, the Office of Management 
and Budget is giving us a subsidy rate assuming defaults of 
2.58 percent I believe.
    Mrs. Hartzler. Okay, great. I want to switch gears real 
fast with the EPA. And Mr. Adelstein, they have placed a 
significant burden on a lot of small, rural communities with 
new and increasingly stringent regulations. I know I have a 
couple of towns in my district that we have been visiting with 
trying to help. Anyway, many of these cases, these communities 
are faced with no choice but to attempt to take on significant 
debt to finance new water and wastewater systems for homes 
which were previously served by wells, individual drain 
systems. In your view, is the EPA requiring too much from these 
small communities?
    Mr. Adelstein. Well, as I mentioned in the previous 
question, we do see that requirements do incur cost on rural 
systems and we are trying to meet those needs. Some of those 
requirements are for the health and safety of the community. 
For example, in your district I visited Gravois Mills--or 
actually it was Gravois Arm Sewer District----
    Mrs. Hartzler. Yes.
    Mr. Adelstein.--and you are probably familiar with the 
problem there. It is on the Lake of the Ozarks and people had 
built their own septic systems right along the lake and those 
were draining into the lake. And the lifeblood of that 
community, as you know better than I----
    Mrs. Hartzler. Yes.
    Mr. Adelstein.--is the tourism of that lake. And there was 
a time when it has been shut down from swimming and use.
    Mrs. Hartzler. Right.
    Mr. Adelstein. So we provided funding to improve that water 
system. Sometimes EPA will require that these communities come 
up to snuff and not be dumping sewage--sometimes raw sewage 
into a lake that is shared by the entire community like Lake of 
the Ozarks. But we work with the EPA in terms of those 
requirements to make sure that they are understanding what the 
impact is on our program and one of the reasons we have such a 
large backlog.
    Mrs. Hartzler. What is the backlog real quickly?
    Mr. Adelstein. It is $3.2 billion backlog for rural water 
applications.
    Mrs. Hartzler. Okay. My time has expired. Thank you, Mr. 
Chairman.
    The Chairman. The gentleman from Vermont, Mr. Welch.
    Mr. Welch. Thank you very much, Mr. Chairman. I appreciate 
being here. We are pretty proud of the work that you all do in 
Vermont. Molly Lambert has been in charge there and she has a 
lot of experience both in that job and other important jobs 
that she has had in Vermont. And we have had, as you know, this 
terrible flooding in Vermont that is the worst natural disaster 
that we have had since 1927. And roads and bridges, houses, 
small businesses have been destroyed. So we have an immense 
amount of rebuilding to do and we are really going to be 
needing some help to be able to do that. And I just wanted to 
ask a few questions.
    This challenge in Vermont is going to be a long-term 
challenge, and I just want to generally ask Ms. Trevino, is the 
USDA Office of Rural Development in a position to handle the 
long-term effects of the hurricane after FEMA leaves? I mean 
what we have been learning, of course, is that FEMA is there. 
They have been doing a fabulous job, incidentally. The Governor 
is very pleased; people are pleased. But FEMA is not the one-
stop shop that a lot of people who are under siege think it is. 
We really need you to provide the help that only you can 
provide.
    So this is an open-ended question about whether you have 
the resources you need, what additional resources either 
financial or in waivers or flexibility in order to do your job 
under emergency circumstances would be helpful? And, this would 
affect some of my colleagues, certainly Mr. Owens from New York 
where his folks have been similarly hit. So maybe you could 
respond to that.
    Ms. Trevino. Thank you very much. And we sympathize with 
all the natural disasters that you have had that have affected 
your area. We certainly are ready and prepared to help as much 
as we can. Ms. Lambert has been made aware of the areas that 
are designated as FEMA disaster areas. And once that 
designation is in place, we are able to come in and provide, 
for instance, moratoria on CF facilities and on housing 
homeownership that we currently have financed through our 
systems.
    In addition, we are getting towards the end of our fiscal 
year, so we are running across funding issues when it comes to 
rehabilitation and repair of affected homes, but in terms of 
refinancing and being able to use our Direct Program and 
Guarantee Program in Single-Family Housing, we still have funds 
available for that and we are ready to help wherever we can.
    Mr. Welch. Well, I appreciate that.
    Let me ask a little bit about homeownership. The Rural 
Development Guarantee Program has been extremely helpful in 
Vermont for low- and moderate-income homeownership 
opportunities. We think in Vermont it is crucial that the 
program be continued and fully authorized. The new fee 
structure, as you know, is intended to cover costs of the 
program, but I have heard from some Vermont lenders that it may 
be administratively very difficult for them to collect some of 
these fees. Do you have any thoughts on how we can address 
that? We don't want to make it a hassle for the folks that need 
to be our partners.
    Ms. Trevino. I understand and, again, it has been an issue 
that we have been working on for about a year. One of the 
things that we realized around January of this year was that 
our authority to collect in that front fee is 3.5 percent. In 
order to continue to have a program come October 1, our subsidy 
rate is going to 3.8 percent. Since we do not have the 
authority to go higher than 3.5 percent in an up-front fee, we 
have had to instigate an annual fee to make up the difference 
so that we can continue to have a program at all, because it is 
a subsidy-rate-neutral program----
    Mr. Welch. Yes.
    Ms. Trevino.--therefore, we do not get budget authority to 
run that guarantee.
    Mr. Welch. Okay. And there has been some discussion as 
well--thank you--that Rural Housing Programs could be moved out 
of the jurisdiction of USDA to management by HUD. I wonder 
whether given USDA's unique understanding of the rural issues, 
can you give us some information on how such a move would occur 
while preserving safeguards that are put in place to ensure 
that the rural nature of this program is preserved?
    Ms. Trevino. What I can tell you about the discussion draft 
is that it does not outline how it will do that. We certainly 
believe that it is not a good idea and we believe that it is a 
very premature discussion draft at this time. No studies have 
been made as to the cost-savings for such a move. Simply 
picking up a chess piece and moving it across the board is not 
going to give you a cost-savings. Some of the things that have 
not been considered are the IT needs. We at USDA Rural 
Development run on totally different information technology 
than does HUD, and so that would be, we believe, a significant 
investment. And it would, frankly, upset the synergy with how 
we offer programs in rural America. We are a collaborative 
agency and we work in tandem by looking at the holistic needs 
of the entire community, not just the business needs, not just 
residential needs.
    Mr. Welch. Thank you very much. I yield back.
    Ms. Trevino. You are welcome.
    The Chairman. Thank you, Mr. Welch. The gentleman from 
Indiana, Mr. Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman. And thank you to the 
panel for being here today.
    I would like to start with Mr. Adelstein, a question 
regarding broadband again. There is a wide range of definitions 
of what constitutes an area which is served by broadband 
access. These definitions can include everything from the 
advertised connection speed, the actual connection speed, 
consumer price, or simply proximity to the nearest connection. 
Could you please clarify for the Committee what you think the 
minimum connection speed should be to justify Federal 
investments, and then how are you monitoring providers to 
ensure the advertised speed matches actual connection speeds 
over these systems built with Federal dollars?
    Mr. Adelstein. Thank you, Congressman. Great question. We 
spent a lot of time considering that and we determined that 5 
megabytes per second combined was what was needed for rural 
economic development. That provides for video streaming. That 
would be, for example, 4 megabytes down, 1 megabyte up. We 
combine both down speed and up. That is one that we put in a 
flexible definition for in the Farm Bill Broadband Loan Program 
because we expect that will continue to go up. As urban areas 
see increases, we want rural areas to be able to keep pace.
    We are not looking at advertised speeds; we are looking at 
actual speeds. We want our borrowers to be able to deliver 
those speeds on the ground. The way we monitor that is we look 
at the application and we have engineers on staff that evaluate 
whether or not the proposed technology actually will deliver 
the actual speeds that are being promised in the application, 
and if they are not, we will not approve the application until 
such time as we are satisfied the technical requirements are 
satisfied. And then as the program is being built out, we have 
in the field general field representatives that are often 
engineers that watch the construction of the project. We have 
the contracts coming in being reviewed by engineers in 
Washington. So as they are building the project, we are 
evaluating them step-by-step, contract-by-contract to make sure 
that it complies with what they put in the loan application 
that it can deliver the levels of speed that they told us that 
they were going to provide.
    Mr. Stutzman. Thank you. I would like to switch gears a 
little bit. The EPA has placed a significant burden on small, 
rural communities with new and increasingly stringent 
regulations. In many cases, those communities are faced with 
very few choices, if any, but to attempt to take on significant 
debt to finance new water and sewer wastewater systems for 
homes which were previously served by wells and individual 
drain systems. In your view, is the EPA requiring too much from 
these small communities?
    Mr. Adelstein. Well, rural communities do incur costs as a 
result of EPA rules and the impact depends on the type and size 
of the treatment plant, the quality of the existing water 
source that they are dealing with depending on the regulatory 
standard. This certainly does increase demand for our programs 
and one of the reasons that we have, as I indicated, a $3.2 
billion backlog are these requirements. We do work with our 
colleagues in EPA and others. I met with EPA to make sure that 
they understand the impact of these proposals on rural areas. 
They are, of course, the expert agency on determining the 
health and safety needs of the public, and we defer to them. 
And in response, we have to deal with financing the 
improvements that are required to comply with EPA rules.
    Mr. Stutzman. What was the backlog number again for water 
and wastewater applications?
    Mr. Adelstein. For water and wastewater applications we 
have a backlog of around $3.2 billion.
    Mr. Stutzman. Billion with a ``b,'' okay.
    Mr. Adelstein. Right.
    Mr. Stutzman. Thank you. All right. And then with 1 minute 
left I would like to ask Ms. Trevino, could you elaborate on 
how funds through the Community Facilities Program are 
dispersed around the country? Just, for instance, if you 
received an application for first responders versus an 
application for a daycare center, how do you decide which to 
fund and which not?
    Ms. Trevino. That is a good question. Thank you, 
Congressman. We have eligibility criteria that is written by 
statute and reinforced in our regulation. We emphasize public 
safety, education, and healthcare. So those applications that 
address those three areas are weighted by score. The 
applications, when they are received in a state office, are 
then scored and funded based on that score. We do hold some 
reserve money in the national office, and at the end of the 
year, any applications that weren't funded in that state then 
are referred to the national office to compete for the reserve 
and we score them, again, the exact same way based on that 
criteria.
    Mr. Stutzman. Okay. Thank you. I yield back, Mr. Chairman.
    The Chairman. The gentleman from Pennsylvania, Mr. 
Thompson.
    Mr. Thompson. Thank you, Chairman. Thanks to the panelists 
for your testimony today.
    Ms. Trevino, I wanted to talk about housing specifically 
with USDA. It looks like a lot of good programs are out there 
that we do. Specifically, I was interested under the farm bill 
and the title that is there, I have a mixed blessing in my 
Congressional district because of the success of natural gas, 
which has been really good for the economy. Unemployment is 
down and prosperity is up for the first time in a very long 
time in parts of the district. We have an affordable housing 
crisis. It is not one that we are used to in rural America. 
Normally, we have plenty of places available and we don't have 
that today. Are there specific programs under the 2008 Farm 
Bill that would assist--as a result, we see property values 
being pushed up, people on a limited or fixed income can't 
afford the rent anymore. Their rent is being increased 
exponentially, which is great for the property owners. I have 
no criticism of that. So are there programs out there in the 
existing farm bill to assist in a situation like that in any 
way?
    Ms. Trevino. They don't currently exist--Congressman, thank 
you--in the CONACT they are given to us through the Housing Act 
of 1949. We have rental assistance for low-income individuals 
who can't find housing, and that rental assistance allows them 
to live in apartments that would be market-rent and we pay the 
difference, anything they pay based on their income. So as long 
as they don't contribute more than 30 percent of their income 
towards their housing needs, we pay the difference to make up 
for it. It is our largest-funded program, the Rental Assistance 
Program. I believe that in your communities what you are 
finding is an absence of housing and not just the market cost. 
Again, one of the things that we have tried to do is work with 
the communities and encourage them to take these companies and 
to ask them to partner with us and to invest in the communities 
either by building temporary housing or by taking existing 
structures and turning them into single-room occupancy homes. 
So we are trying to be creative in working with our state 
directors to determine how we can best meet any lack of the 
housing that we are seeing in those areas.
    Mr. Thompson. Very good. Thank you.
    Ms. Trevino. You are welcome.
    Mr. Thompson. And I look forward to talking more with you 
about that. And actually I put together a work group in the 
Congressional district to bring all the partners to the table, 
the industry and kind of a public-private partnership to 
address that.
    Ms. Trevino. I look forward to it.
    Mr. Thompson. You mention in your written testimony that 
the Community Facilities Program has provided over $12.7 
billion in funding for healthcare, education, public safety, 
and other essential community services, and more than 40 
percent of the Community Facilities Program investments have 
been made in rural healthcare facilities. Can you further 
elaborate on how these dollars have been spent specifically on 
rural healthcare?
    Ms. Trevino. Yes, sir. Mostly what we do is provide money 
for bricks and mortar and equipment. We do not provide money 
for operational cost, so one of the things that we have been 
very good at is collaborating with Health and Human Services 
and with the HRSA Programs in helping critical access hospitals 
access equipment that they need. So we fund their equipment and 
any type of buildings that they need.
    One of the mandates that HHS has right now is that all 
critical access hospitals in rural America must be tied to 
electronic medical records. And in rural America that is a huge 
need to be able to overhaul your IT needs. And we are providing 
the funding that is needed to partner with them.
    Mr. Thompson. All right. Thank you.
    Ms. Trevino. Yes.
    Mr. Thompson. Now, Mr. Adelstein, there was a lot of 
questions on broadband and it is obviously something everybody 
is very interested in. I appreciate the USDA and the agency's 
work in that area. I wasn't familiar with the numbers that we 
had spent a billion dollars, and frankly we have a billion 
dollars over a number of different funds looking to invest. And 
I know the approach that we are taking as sort of looking at 
different vendors who have different proposals, that type of 
thing. Was there ever any consideration of--because I looked at 
the broadband issue in rural America almost similar to the 
electrification of rural America, and the rural electric 
cooperatives are a great model. They are public-based because 
of the constituency that drives it, those volunteer board. Was 
there ever any consideration of perhaps taking that kind of an 
approach or even partnering with the rural electric 
cooperatives who, frankly, have right-of-ways to the end-user, 
the last mile? All those miles are covered with electricity and 
right-of-ways. Was that ever considered in our looking at how 
we address the broadband issue?
    Mr. Adelstein. Yes, we thought about that a lot. As a 
matter of fact, we went to the National Rural Electric 
Cooperative Association and encouraged them to apply for 
broadband. As a matter of fact, a number of them did when 
Consolidated Electric and Ohio's building--they are using smart 
grid, and down in New Mexico the Electric Cooperative, Kit 
Carson is using it. And again, when they do it, they provide 
smart grid also to their consumers. A number of our awardees 
are telephone cooperatives, real old telecommunications 
cooperatives that we have worked with many of them for 60 
years, 50 years that are some of our most reliable borrowers. 
They pay us back year after year, they know what they are 
doing, they are technically on top of it, and we love working 
with our cooperative borrowers because of their competence, 
their dedication to the community. The model really does work 
for rural America. I agree with you.
    Mr. Thompson. Glad to hear that. Thank you. Thank you, Mr. 
Chairman.
    The Chairman. The chair would recognize the distinguished 
Ranking Member, Mr. Costa, for follow-up questions.
    Mr. Costa. Thank you very much. Very quickly here, just to 
get back to that White House Rural Council and the Executive 
Order. Is it simply going to be Federal officials on this or 
are you going to give an opportunity for local and state 
officials and people of expertise to participate in this?
    Ms. Canales. Ranking Member Costa, the opportunity for 
stakeholders is already underway and also has been a strong 
aspect of the outreach that is occurring to date----
    Mr. Costa. Ma'am, I think the work product is going to be 
better if it is from the bottom up as opposed to the top down.
    Ms. Canales. As I was going to state----
    Mr. Costa. And I would like you to provide some information 
to the chair and myself and other Members of the Subcommittee 
on how that is going to take place, okay?
    Ms. Canales. We have held 100 rural roundtables, meaning 
100 locations throughout the United States with stakeholders 
and have reports based on that.
    Mr. Costa. Give a little brief summary on that. I am not 
talking about War and Peace. I would like a brief, two page 
memo, on what those 100 meetings have done, where they are 
around the country, and who has participated. I would like to 
know, for example, how many have taken place in California and 
whether any of them have taken place in the San Joaquin Valley. 
Somehow if that has taken place, it has missed me.
    [The information referred to is located on p. 1056.]
    Mr. Costa. Mr. Adelstein, you mentioned that the new 
authorization was provided in the farm bill for lending energy 
efficient programs as well as renewable energy. Now, this is a 
question not only of my own but Ranking Member Peterson has an 
interest in this. Can you tell what activities or agencies have 
been lending under for these authorities? And I have two other 
quick questions, so please be brief.
    Mr. Adelstein. Yes. Primarily, for retrofitting, we have an 
initiative that we are working on to have rural electric 
cooperatives work with their members to retrofit their homes to 
save electricity, and they----
    Mr. Costa. Could you give us some facts on that later on 
and submit that for Congressman Peterson and myself and other 
Members so that we know the specifics on it?
    Mr. Adelstein. Will do.
    Mr. Costa. Okay. Many of the entities that you lend to are 
dealing with regulations and settlements under various laws, 
and of course, this Administration and many of us have been 
critical of a lot of the regulations being burdensome and 
unnecessary. Those are included but not limited to the Clean 
Air and Clean Water Acts. Have you in your review seen the 
impact on these symptoms as they serve rural residents and 
their ability to deal with these regulatory requirements? And 
does it impact your ability to lend because of the repayment 
concerns?
    Mr. Adelstein. Well, certainly, both our water and electric 
programs have seen a number of regulatory requirements that 
have required compliance that have resulted in major loans 
being committed. Sometimes it is hard to see which upgrades 
they are doing and ones they are doing just for EPA 
requirements, for example, but they do impact our programs. 
They impact our borrowers.
    Mr. Costa. Well, maybe if you were to highlight those and 
suggest where those are problematic, maybe we might work 
together. Although, frankly, these are things that you don't 
need, I think in many cases, Congressional changes. You can do 
it administratively. I would hope there is a review going on 
there as to what is burdensome, what is working, what is not 
working, and why don't we change it?
    Mr. Adelstein. Well, we do work with our colleagues in 
other agencies on regulatory requirements and let them know 
what impact they are having on our programs. They do increase 
demand for our loan programs in both electric and water.
    Mr. Costa. On the electric, do you have any interactions 
with FERC or various ISOs that regulate the grid?
    Mr. Adelstein. Yes, we do. As a matter of fact, there is an 
interagency working group that we are a part of with the White 
House and the Council on Environmental Quality to accelerate 
citing of transmission and the agency has been very involved 
in----
    Mr. Costa. I know Congressman Peterson and I both have 
concerns--I suspect many of our other colleagues as we are 
looking toward generation of wind power and other types of 
energy production--whether or not landowner-controlled wind 
projects have access to transmission lines? Obviously, those 
are oftentimes opposed by utilities in terms of the generation 
of the electrical power in rural areas.
    Mr. Adelstein. Well, we would like to see distributed 
generation happen. You know, our rural electric co-ops are very 
open to it. Of course, they need to upgrade their systems to be 
capable of having the grids smarter in order to be able to take 
those inputs of electricity. I think it can be a really great 
domestic source of energy, something that we are eager to see 
and we have financed a lot of upgrades in the grid--and in 
smart grid that I think could eventually lead towards 
distributed generation.
    Mr. Costa. Is the Department proposing to make 
recommendations to the Congress on changes that might be made?
    Mr. Adelstein. Well, we are working on an interagency basis 
on this. We have worked on an interagency basis on the smart 
grid. There was a report that was issued by the White House on 
the smart grid that would enable distributed generation in 
terms of transmission and the delicate balance between state 
and local governments. Again, we are not the lead agency 
necessarily but we have been involved with DOI and DOE and FERC 
in these discussions in talking about how it impacts rural 
consumers. We want to make sure that USDA is the voice of these 
rural consumers and rural electric cooperatives in these 
interagency discussions.
    Mr. Costa. Thank you very much, Mr. Chairman, and look 
forward to your follow-through on that additional information I 
requested.
    Mr. Adelstein. Will do.
    The Chairman. One concluding question from the chair and 
then we will conclude the hearing. And thanks to all three of 
you and the Members of the Committee for being here.
    I don't remember which one of you made the estimate. 
Regardless, one of the three of you estimated that there have 
been a quarter of a million jobs created as a result of your 
programs. I guess my question is this. According to a recent 
report of the Government Accountability Office, your 
department, the USDA has indicated that agency staff is now 
required to count the actual numbers of jobs created through 
Rural Development Programs rather than the estimation methods 
that you previously used. When you came up with that specific 
figure for us that you created 250,000 jobs, which system did 
you use? The estimation system? Just try to give me a direct 
answer. I mean it is either one or the other. Or the new system 
that the GAO has indicated that your agency is going to be 
using?
    Ms. Canales. Yes, Mr. Chairman. First of all, I want to 
reaffirm with you created and saved. So saved means jobs 
retention. That is in my testimony.
    The Chairman. Again, that goes back to awfully difficult to 
know that, but regardless, that is a political debate we are 
not going to have.
    Ms. Canales. Okay.
    The Chairman. The issue is which of these two systems, the 
old system or the new system did you use in the save or create 
category?
    Ms. Canales. The system that we are using in regards to 
that is a system that is within every single application that--
it is based on our loan guarantees that we are making with the 
banks----
    The Chairman. Let me be very specific, okay. I am going to 
be as specific as I can be and if you could be specific with me 
in response, I would be really grateful for that. The GAO 
recently reported in their report on duplication among economic 
development programs, they cited a need to count job creation 
more precisely. In that regard, according to that report, the 
USDA indicated that agency staff is now required to count the 
actual number of jobs created--I guess or saved--through Rural 
Development Programs rather than the estimation methods 
previously used. My specific question is when you gave us that 
figure--\1/4\ of a million jobs created or saved--which system 
were you using? The estimation system or the required specific 
count.
    Ms. Canales. We used both.
    The Chairman. So you interpret the GAO's report and USDA's 
implementation to be that they are not required to use one 
versus the other? You continue to use both?
    Ms. Canales. When an application is made with a bank, you 
use both information. You use what is estimated to be created 
but then you also will have jobs that will be saved as well, 
too.
    The Chairman. I don't mean to be argumentative and I won't 
because I don't think it is the appropriate position of the 
chair, but if you would be willing to provide for us your 
specific area, your department, and USDA provide for Mr. 
Dunlap, who is the Subcommittee Staff Director and his 
counterpart on the Democratic side, let us know specifically 
how you came up with those figures and how that juxtaposes with 
the estimates versus the actuality count that I have made 
reference to and GAO made reference to. That would be very, 
very helpful to us.
    Ms. Canales. We will do so, Mr. Chairman.
    [The information referred to is located on p. 1055.]
    The Chairman. With that, I would invite all the Members of 
the Committee to our field hearing on the 24th of September 
focusing on rural broadband in Springfield, Illinois, at the 
University of Illinois. We have already had a number of Members 
say they are going to attend and we certainly welcome your 
attendance at that meeting.
    So under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive both 
opening statements and additional material and supplementary 
written responses from any witness to any questions posed by a 
Member. Therefore, this hearing of the Subcommittee on Rural 
Development, Research, Biotechnology, and Foreign Agriculture 
is adjourned. Thank you all for attending, and we appreciate 
your input.
    [Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
 Supplementary Material Submitted by Judith A. Canales, Administrator, 
   Rural Business-Cooperative Service, U.S. Department of Agriculture
    During the September 13, 2011 hearing entitled, Agricultural 
Program Audit: Examination of USDA Rural Development Programs, a 
request for information was made to Judith A. Canales, Administrator, 
Rural Business-Cooperative Service, U.S. Department of Agriculture. The 
following is the information submission for the record.
Insert
          The Chairman. Let me be very specific, okay. I am going to be 
        as specific as I can be and if you could be specific with me in 
        response, I would be really grateful for that. The GAO recently 
        reported in their report on duplication among economic 
        development programs, they cited a need to count job creation 
        more precisely. In that regard, according to that report, the 
        USDA indicated that agency staff is now required to count the 
        actual number of jobs created--I guess or saved--through Rural 
        Development Programs rather than the estimation methods 
        previously used. My specific question is when you gave us that 
        figure--\1/4\ of a million jobs created or saved--which system 
        were you using? The estimation system or the required specific 
        count.
          Ms. Canales. We used both.
          The Chairman. So you interpret the GAO's report and USDA's 
        implementation to be that they are not required to use one 
        versus the other? You continue to use both?
          Ms. Canales. When an application is made with a bank, you use 
        both information. You use what is estimated to be created but 
        then you also will have jobs that will be saved as well, too.
          The Chairman. I don't mean to be argumentative and I won't 
        because I don't think it is the appropriate position of the 
        chair, but if you would be willing to provide for us your 
        specific area, your department, and USDA provide for Mr. 
        Dunlap, who is the Subcommittee Staff Director and his 
        counterpart on the Democratic side, let us know specifically 
        how you came up with those figures and how that juxtaposes with 
        the estimates versus the actuality count that I have made 
        reference to and GAO made reference to. That would be very, 
        very helpful to us.
          Ms. Canales. We will do so, Mr. Chairman.

    Since 2009, the programs and services of the Rural Business-
Cooperative Service (RBS) have or will create or save nearly 250,000 
jobs. The Government Accountability Office (GAO) report, Efficiency and 
Effectiveness of Fragmented Economic Development Programs Are Unclear, 
GAO-11-477R, May 19, 2011, refers to two different methods for 
reporting jobs created/save. One method relies on determining actual 
jobs created/saved once an award has been made. The other method is an 
estimation method based on dollars invested.
    RBS is in the process of moving from the ``estimation'' method to 
the ``actual'' method. Because this transition has been occurring since 
2009 and is still underway, the number of jobs indicated in 
Administrator Canales' testimony represents a combination of these two 
different methods for reporting jobs created/saved.
    The ``estimation'' methodology utilized by RBS includes: (1) 
applying our professional judgment as to the number of jobs created or 
saved reported based on the specific project, including any 
observations during a site visit, (2) applying a formula that is based 
on the dollar amount of the project, and (3) applying a formula that 
estimates direct and indirect employment and other socioeconomic 
benefits.
    In the ``actual'' methodology: upon processing the award of a loan, 
grant, or loan guarantee the projected number of jobs to be created or 
saved is obtained from the applicant or borrower and recorded as actual 
jobs in the agency's database.
    RBS is implementing job verification processes to validate 
applicant or borrower job projections. After closing of the loan or 
grant, and completion of the project, the actual numbers of jobs 
created or saved by the business is verified by the agency and recorded 
in our database. Note that in some instances significant time can 
elapse between the job projections at the time of the award of a loan 
or grant and actual job verifications after the completion of the 
project, start-up or expansion of a business and ramp-up to full 
operations. Agency verifications can be 1-2 years after the loan or 
grant is awarded.
    RBS continues to implement and refine its verification process. 
With the exception of the Agency's Intermediary Relending Program RBS 
is using the ``actual'' methodology, described above, for the balance 
of its programs.
                                 ______
                                 
 Submitted Report by Judith A. Canales, Administrator, Rural Business-
          Cooperative Service, U.S. Department of Agriculture
White House Rural Council
Feedback from Rural America
Summer 2011
        ``. . . Getting out of Washington and meeting all of you, and 
        seeing how hard you're working, how creative you are, how 
        resourceful you are, how determined you are, that just makes me 
        that much more determined to serve you as best I can as 
        President of the United States.''

        --President Barack Obama
          August 16, 2011
          Peosta, Iowa
          White House Rural Economic Forum
Contents
  Letter from the Secretary of Agriculture
  Introduction
  A Note About the Numbers
  Most Important Issues
    Breakdown of Issues Discussed
    Rural Economic Forum--Peosta, Iowa
  List of Visits
  Additional Resources
Letter from the Secretary of Agriculture
    On June 9, 2011, President Obama signed an Executive Order 
establishing the White House Rural Council. Over the past few months, 
the Council has had the opportunity to hear from rural communities 
through roundtable discussions and visits across the country. By 
engaging in open dialogue, top Administration officials have been 
hearing about the most important issues on the minds of rural Americans 
and bringing that message back to Washington.
    Since the establishment of the White House Rural Council, President 
Obama, members of his Cabinet, and others senior Administration 
officials have made nearly 200 visits to rural communities. Through 
these visits, the Council has been listening to the voice of rural 
Americans--to their concerns and aspirations, to what they see as the 
challenges that lay ahead and the opportunities open to them.
    This report provides an overview of what we heard during these 
visits. I look forward to working with the Council on addressing these 
issues and ensuring that rural America moves toward a prosperous and 
thriving future.
    Finally, I would like to thank all of those who hosted and attended 
these visits. Your help and participation is truly appreciated as we 
all work together for rural America.
            Sincerely,

            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
Thomas J. Vilsack,
Secretary of Agriculture & Chair of the White House Rural Council.
Introduction
    On June 9, 2011, President Obama established the White House Rural 
Council to address challenges in rural America and to build on the 
administration's rural economic strategy. Since the establishment of 
the Council, administration officials have traveled to rural 
communities across the country to discuss the important issues facing 
rural Americans.
    Administration officials traveled to rural communities in 46 states 
and met with rural Americans to hear about the unique challenges they 
are facing and the ways in which the Council can most effectively focus 
its efforts. Officials reported back on what they heard during these 
visits and their feedback is shared in this report.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        President Barack Obama, accompanied by Agriculture Secretary 
        Tom Vilsack, holds a breakout session at the White House Rural 
        Economic Forum at Northeast Iowa Community College in Peosta, 
        Iowa, Aug. 16, 2011, as part of his three-day economic bus tour 
        of the Midwest. (Official White House Photo by Pete Souza)

    This report begins with a pie chart we developed based upon the 
information shared with us. It is not a scientific poll, but it 
provides a sense of the most important issues that rural Americans are 
facing.
A Note About the Numbers:
    These discussions and visits were designed as an opportunity to 
facilitate a candid and direct conversation between rural Americans and 
the Obama administration. The numbers presented here were all reported 
by administration officials moderating discussions and are not designed 
to reflect a scientific survey or poll. The numbers we have compiled 
are not designed to be reflective of all rural Americans--just those 
who participated in these conversations and visits. The views presented 
here are representative of those attending the events and do not 
constitute an endorsement by the White House or the President of the 
United States.
Map of the Rural Visit Locations

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Most Important Issues
    A breakdown of the issues discussed in our conversations in rural 
America:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Breakdown of Issues Discussed:
   Education

     Encourage vocational training

     Improve rural education

     Costs of higher education/improve financial assistance

     Focus on research

     Reform No Child Left Behind

     Brain-drain: educated individuals moving out of rural 
            communities

     Focus on science & technology

     Focus on education geared toward entrepreneurship

   Government programs and regulations

     Increase certainty and flexibility on regulations for 
            rural industry and small businesses

     More timely application processing for contracting

     Streamline reporting requirements and applications

     Increase technical assistance for loans and grants

   Infrastructure

     Improve broadband access in rural areas, including in 
            tribal communities

     Improve federal assistance in road infrastructure

     Support water storage projects, levees, rivers, locks, 
            and dams

     Support water and wastewater treatment facilities

   Access to capital/business incentives

     Improve access to capital for businesses

     Support small business tax credits and/or financial 
            support, including micro loan programs and financial 
            support for farmers

     Establish a Rural Community Development Fund where 
            rural areas can invest in their own communities and have 
            government match any private dollars

     Increased access to early stage and growth capital for 
            rural entrepreneurs

   Renewable Energy

     Support for biofuels, including woody biomass

     Encourage local wind energy development

     Streamline and ease regulations for green energy 
            development

   Economy & Workforce Concerns

     Focus more on domestic manufacturing

     Immigration and workforce concerns

     Rising cost of living and declining income

     Reform unemployment compensation

     Improve immigration policies to encourage highly-
            skilled students to stay in U.S.

     Focus on economic development opportunities in tribal 
            communities

   Agriculture

     Improve resources for new and beginning farmers

     Role of agriculture in our national security, 
            including natural disasters

   Healthcare

     Need solutions to lower current/projected costs and 
            burden on businesses/families

     Support broadband and telemedicine programs for rural 
            healthcare

     Targeted substance abuse policy to address challenges 
            of rural communities

   Trade

     Improve trade policy and make U.S. competitive in a 
            global market

   Quality of Life

     Improve quality of life in rural communities for 
            economic growth and job creation

     Continued support for rural public safety

   Conservation and Environmental Concerns

     Rewards for smart farming and land conservation

     Environmental quality of water sources Importance of 
            soil conservation

     Growing the outdoor recreation economy

     Collaboration in advancing sustainable natural 
            resource economies

   Other issues

     Farm Bill

     Government spending

     Housing market

     Tourism in rural America

     Auto-industry

     Regional cooperation in rural communities
Rural Economic Forum--Peosta, Iowa
August 16, 2011
    In August, President Obama embarked on a three-day, three state bus 
tour of the Midwest that included stops in five communities. The Rural 
Forum itself was held at the Northeast Iowa Community College in 
Peosta, Iowa on August 16, 2011. During the Forum, five breakout group 
discussions were moderated by Cabinet members focusing on key issues 
facing rural America. President Obama participated in the first two 
breakout sessions.

Growing Rural Small Business

  Moderated by Karen Mills, Administrator of the Small Business 
    Administration

Promoting Agricultural Innovation and Renewable Energy Jobs

  Moderated by Tom Vilsack, Secretary of Agriculture

Strengthening the Middle Class in Rural America

  Moderated by Shaun Donovan, Secretary of Housing and Urban 
        Development and Melody Barnes, Chair of the Domestic Policy 
        Council

Creating Jobs through Conservation, Outdoor Recreation, and Tourism

  Moderated by Ken Salazar, Secretary of Interior and Nancy Sutley, 
        Chair of the Council on Environmental Quality

Building Economic Opportunity for Rural Business through Infrastructure 
    Investments

  Moderated by Ray LaHood, Secretary of Transportation

    Key Themes and Issues:

   Importance of rural America in contributing to the economic 
        health of the country

   Need to attract capital and increase available credit for 
        rural communities

   Importance of small business support for rural communities

   Regional planning and development has been successful and 
        should continue to be supported

   Importance of continuing to support the innovation occurring 
        in renewable energy

   Increased certainty and flexibility on regulations

   Important to attract new, young farmers--reduce barriers to 
        getting into farming.

   Broadband is key to providing economic opportunities. The 
        ability to telecommute or have access to distance learning and 
        telemedicine is extremely important to rural communities.

   Need for increased opportunities and incentives for 
        physicians to provide service in rural areas

   Technical assistance on accessing Federal programs is 
        important to small, rural communities.

   Modernization of existing federal agriculture subsidies

   Importance of easements in mitigating future flood impacts 
        on both private and public lands

   Rewards and incentives for farmers that use good 
        conservation practices
List of Visits:
    Below is the full list of visits that Obama Administration 
officials made to rural America during the summer of 2011. These visits 
included tours of rural communities, businesses and farms as well as 
roundtable discussions with rural Americans.

June 9, SBA Regional Administrator John Shoraka, Clarksburg, West 
    Virginia

June 10, USDA State Directors Dan Steinkruger and Maxine Moul, Ceresco, 
    Nebraska

June 17, USDA Deputy Secretary Kathleen Merrigan, York, Pennsylvania

June 20, USDA Under Secretary Dallas Tonsager, Salt Lake City, Utah

June 22, USDA Deputy Under Secretary Cheryl Cook, Dubuque, Iowa

June 23, HUD Assistant Secretary Mercedes Marquez and USDA State 
    Director Vicki Walker, Redmond, Oregon

June 24, SBA Regional Administrator Dan Hannaher and USDA State 
    Director Derrel Carruth, Casper, Wyoming

June 26, USDA Under Secretary Ed Avalos, Denver, Colorado

June 27, White House ONDCP Director Gil Kerlikowske and ARC Co-Chair 
    Earl Gohl, Johnson City, Tennessee

June 28, GSA Regional Administrator Sue Damour, Lower Brule Sioux 
    Tribe, SD

June 29, SBA Regional Administrator Dan Hannaher, Fargo, North Dakota

June 30, SBA Regional Administrator Calvin Goings, Puyallup, Washington

July 5, VA Secretary Eric Shinseki, Bismarck, North Dakota

July 7, VA Secretary Eric Shinseki, Bozeman, Montana

July 7, VA Secretary Eric Shinseki, Helena, Montana

July 7, VA Secretary Eric Shinseki, Billings, Montana

July 8, VA Secretary Eric Shinseki, Billings, Montana

July 8, USDA Under Secretary Ed Avalos, Billings, Montana

July 11, USDA Deputy Secretary Kathleen Merrigan, Richmond, Virginia

July 11, ARC Co-Chair Earl Gohl, Kingsport, Tennessee

July 12, USDA Administrator Judy Canales, Hidalgo, Texas

July 12, USDA Under Secretary Michael Scuse, Springfield, Illinois

July 13, GSA Regional Administrator Sue Damour, Billings, Montana

July 14, DOI Secretary Ken Salazar, Madison, Wisconsin

July 14, SBA Administrator Karen Mills, Fairmont, West Virginia

July 15, DOI Secretary Ken Salazar, Crow Reservation, Montana

July 15, DOI Secretary Ken Salazar, Ovando, Montana

July 15, DOI Secretary Ken Salazar, Kalispell, Montana

July 18, ED Deputy Assistant Secretary John White, Greenville, 
    Tennessee

July 18, USDA Administrator Jonathan Adelstein, Nelsonville, Ohio

July 18, DOC Under Secretary David Kappos and USDA State Director 
    Virginia Manuel, Bangor, Maine

July 18, State Department Senior Advisor for Innovation Alec Ross, 
    Cumberland, Maryland

July 20, USDA Secretary Tom Vilsack, Annapolis, Maryland

July 22, ARC Co-Chair Earl Gohl, Oak Ridge, Tennessee

July 22, HHS Regional Director Joanne Grossi, Wise, Virginia

July 22, EPA Regional Administrator Jared Blumenfeld, Ibapah, Utah

July 23, ARC Co-Chair Earl Gohl, Abingdon, Virginia

July 25, DOE Secretary Steven Chu, Concord, North Carolina

July 25, GSA Regional Administrator Sue Damour, Jamestown, North Dakota

July 26, ARC Co-Chair Earl Gohl, Spartanburg, South Carolina

July 26, USDA Administrator Jonathan Adelstein, Charles City, Iowa

July 27, SBA Regional Administrator John Shoraka, Lancaster, 
    Pennsylvania

July 27, USDA Under Secretary Harris Sherman, Murfreesboro, Tennessee

July 28, ARC Co-Chair Earl Gohl and Commerce Deputy Under Secretary 
    Nancy Potok, Lewisburg, Pennsylvania

July 29, ARC Co-Chair Earl Gohl and USDA State Directors Bill Wehry and 
    Tom Williams, Williamsport, Pennsylvania

July 31, HHS Regional Director Herb Schultz, Flagstaff, Arizona

August 1, HHS Secretary Kathleen Sebelius, Aurora, Missouri

August 1, HHS Secretary Kathleen Sebelius, Joplin, Missouri

August 1, USDA Deputy Under Secretary Ann Mills, Thibodaux, Louisiana

August 1-3, EPA Regional Administrator Karl Brooks, Kansas

August 2, DOT Deputy Secretary John Porcari and USDA Under Secretary Ed 
    Avalos, Groves City, Ohio

August 2, GSA Regional Administrator Ann Kalayil, Princeton, IL

August 2, DOT Secretary John Porcari and USDA Under Secretary Ed 
    Avalos, Columbus, Ohio

August 2, HHS Regional Director Herb Schultz, Litchfield, Arizona

August 2, EPA Regional Administrator Jared Blumenfeld, Loleta, 
    California

August 3, USDA Under Secretary Michael Scuse, Berlin, Vermont

August 3, SBA Assistant Administrator Ana Harvey, Newton, Iowa

August 3, EPA Regional Administrator Al Armendariz, Irving, Texas

August 3, SBA Regional Administrator Calvin Goings and USDA State 
    Director Mario Villanueva, Elma, Washington

August 3, ARC Co-Chair Earl Gohl, Greeneville, Tennessee

August 3, DRA Federal-Chairman Chris Masingill and USDA State Director 
    Bobby Goode, Union City, Tennessee

August 3, EPA Administrator Lisa Jackson, Lititz, Pennsylvania

August 3, HHS Regional Director Joanne Grossi, Wheeling, West Virginia

August 3, HHS Regional Director Susan Johnson, Anchorage, Alaska

August 4, White House Senior Policy Advisor for Native American Affairs 
    Kimberly Teehee and federal agency colleagues, Washington, DC

August 4, HHS Regional Director Herb Schultz, Fresno, California

August 4, USDA Secretary Tom Vilsack, West Allis, Wisconsin

August 4, DOT Deputy Administrator Greg Nadeau, Wilmington, Ohio

August 4, HUD Assistant Secretary John Trasvina, Lampeter, Pennsylvania

August 4, ARC Co-Chair Earl Gohl, Morristown, Tennessee

August 4, DRA Federal-Chairman Chris Masingill, Mayfield, Kentucky

August 4, FCC Chairman Julius Genachowski, Jeffersonville, Indiana

August 5, GSA Regional Administrator George Northcroft, Ketchikan, 
    Alaska

August 5, White House OSTP Aneesh Kopra, Blacksburg, Virginia

August 6, HHS Regional Director Herb Schultz, Pomona, California

August 8, ED Linda Hall, Spokane, Washington

August 9, CEQ Chair Nancy Sutley, Grant County, Oregon

August 9, EPA Regional Administrator Judith Enck and USDA State 
    Director Paul Hlubik, Augusta, New Jersey

August 9, ARC Co-Chair Earl Gohl, London, Kentucky

August 9, GSA Administrator Sue Damour, Cheyenne, Wyoming

August 9, ED Linda Hall, Spokane, Washington

August 10, GSA Administrator Sue Damour, Salt Lake City, Utah

August 10, ED Secretary Arne Duncan, Nashville, Tennessee

August 10, HHS Regional Director Christie Hager, Dexter, Maine

August 10, HHS Regional Director Jaime Torres, Buffalo, New York

August 10, DOT Administrator Peter Appel, Ames, Iowa

August 10, CEQ Chair Nancy Sutley, Deschutes County, Oregon

August 10, ED Deputy Assistant Secretary John White, St. Peters, 
    Minnesota

August 10, SBA Regional Administrator Calvin Goings and USDA State 
    Directors Richard Rush and Wally Hedrick, Middleton, Idaho

August 11, HHS Regional Director Christie Hager, Machais, Maine

August 11, HHS Regional Director Christie Hager, Lubec, Maine

August 11, SBA Regional Administrator Calvin Goings, Boise, Idaho

August 11, DRA Federal-Chairman Chris Masingill and USDA State Director 
    Trina George, Clarksdale, Mississippi

August 11, DOT Administrator Peter Appel, Park City, Utah

August 11, EPA Regional Administrator Karl Brooks, St. Joseph, Missouri

August 11, HHS Regional Director Marguerite Salazar, Denver, Colorado

August 11, HHS Regional Director Herb Schultz, Fresno, California

August 12, ARC Co-Chair Earl Gohl, Sylva, North Carolina

August 12, USDA Deputy Under Secretary Karis Gutter, Helena, Arkansas

August 12, USDA Under Secretary Cathy Woteki, Wamego, Kansas

August 12, SBA Regional Administrator Jorge Silva-Puras, DOT 
    Administrator Karen Rae, USDA State Directors James Barber and Jill 
    Harvey, Troy, New York

August 12, DOT Administrator, David Strickland, Waxahatchie, Texas

August 12, HHS Regional Director Joanne Grossi, Huntington, West 
    Virginia

August 12, HHS Regional Director Herb Schultz, Petaluma, California

August 15, President Obama, Cannon Falls, Minnesota

August 15, President Obama, Decorah, Iowa

August 15, USDA Deputy Under Secretary Ann Wright and USDA Senior 
    Advisor Brandon Willis, Brainerd, Minnesota

August 15, USDA Administrator Judy Canales, Covington, Louisiana

August 15, USDA Deputy Under Secretary Janey Thornton, Frankfort, 
    Kentucky

August 16, President Obama, Peosta, Iowa

August 16, USDA Under Secretary Ed Avalos, Dothan, Alabama

August 16, USDA Administrator Judy Canales, Marianna, Florida

August 16, USDA Administrator Audrey Rowe, Newton, Georgia

August 16, SBA Regional Administrator Dan Hannaher and USDA State 
    Director Matt Jones, Kalispell, Montana

August 16, HHS Regional Director Susan Johnson, Squaxin, Washington

August 16, USDA Faith Based Director Max Finberg, Dubuque, Iowa

August 17, President Obama, Atkinson, Illinois

August 17, President Obama, Alpha, Illinois

August 17, ARC Co-Chair Earl Gohl, Florence, Alabama

August 17, VA Secretary Eric Shinseki, Las Vegas, Nevada

August 17, EPA Regional Administrator Karl Brooks, Des Moines, Iowa

August 17, EPA Regional Administrator Shawn Garvin and HUD Regional 
    Administrator Jane Vincent, Lincoln, Delaware

August 17, HHS Regional Director Joanne Grossi, Charleston, West 
    Virginia

August 18, ARC Co-Chair Earl Gohl, Walton, New York

August 18, HHS Regional Director Marjorie Petty, Albuquerque, New 
    Mexico

August 18, HHS Regional Director Marjorie Petty, Los Luna, New Mexico

August 18, HHS Regional Director Susan Johnson, Bethel, Alaska

August 18, USDA Under Secretary Dallas Tonsager, Howard, South Dakota

August 18, DRA Co-Chairman Chris Masingill, Selma, Alabama

August 18, USDA Administrator Judy Canales, Sedalia, Missouri

August 19, ARC Co-Chair Earl Gohl, Cortland, New York

August 19, ED Director Karen Cator, Mooresville, North Carolina

August 19, HHS Regional Director Marjorie Petty, Espanola, New Mexico

August 19, HHS Regional Director Marjorie Petty, Moriaty, New Mexico

August 19, DOI Assistant Secretary Marcilynn Burke, Fairbanks, Alaska

August 19, USDA Secretary Tom Vilsack, Des Moines, Iowa

August 19, DOC Under Secretary Jane Lubchenco, Morro Bay, California

August 19, EPA Regional Administrator Judith Enck, Sanarac Lake, New 
    York

August 19, GSA Regional Administrator Sue Damour, Rapid City, South 
    Dakota

August 19, DOT Secretary Ray LaHood, Springfield, Illinois

August 19, VA Secretary Eric Shinseki, Omaha, Nebraska

August 19, EPA Regional Administrator Jim Martin, Douglas, Wyoming

August 20, DOC Under Secretary Jane Lubchenco, Newport, Oregon

August 21, USDA Secretary Tom Vilsack, Brooklyn, Michigan

August 21, USDA Under Secretary Harris Sherman, Sitka, Alaska

August 22, USDA Secretary Tom Vilsack, Lansing, Michigan

August 22, USDA Secretary Tom Vilsack, Battle Creek, Michigan

August 22, USDA Secretary Tom Vilsack, Sparta, Michigan

August 22, DOI Assistant Secretary Gail Adams, Flat Rock, North 
    Carolina

August 22, HUD Secretary Shaun Donovan, Albuquerque, New Mexico

August 22, USDA Senior Advisor Janie Hipp, Oklahoma City, Oklahoma

August 22, DOI BLM Director Bob Abbey, Elko, Nevada

August 23, DOI Assistant Secretary Anne Castle and USDA State Director 
    Alan Stephens, Maricopa, Arizona

August 23, DOC Under Secretary Jane Lubchenco, Homer, Alaska

August 23, DOT Administrator David Strickland, Aiken, South Carolina

August 23, USDA Under Secretary Harris Sherman, Ketchikan, Alaska

August 23, EPA Regional Administrator Gwen Fleming, Pasco County, 
    Florida

August 23, SBA Regional Administrator John Shoraka, Lewisburg, West 
    Virginia

August 23, USDA Under Secretary Dallas Tonsager and SBA Regional 
    Administrator Patricia Brown-Dixon, Grinnell, Iowa

August 23, USDA State Director Bill Menning, West Union, Iowa

August 23, DRA Co-Chairman Chris Masingill and USDA Deputy Under 
    Secretary Doug O'Brien, Bastrop, Louisiana

August 23, USDA Under Secretary Cathy Woteki, Greenville, South 
    Carolina

August 23, SBA Regional Administrator Jeanne Hulit and USDA State 
    Director Donovan Todd, Orono, Maine

August 23, SBA Regional Administrator Dan Hannaher, Windsor, Colorado

August 23, GSA Regional Administrator Shyam Reddy, SBA Regional 
    Administrator Cassius Butts and USDA State Directors Vernita Dore 
    and Laurie Lawson, Columbia, South Carolina

August 24, GSA Regional Administrator Martha Johnson, Montpelier, 
    Vermont

August 24, USDA Administrator Jonathan Adelstein, Fairbanks, Alaska

August 24, SBA Regional Administrator Jeanne Hulit, Exeter, New 
    Hampshire

August 24, DRA Co-Chairman Chris Masingill, USDA Deputy Under Secretary 
    Doug O'Brien, DOC Assistant Secretary John Fernandez, Pine Bluff, 
    Arkansas

August 24, SBA Regional Administrator Elizabeth Echols, Fernley, Nevada

August 24, HHS Regional Director Joanne Grossi, Harrisburg, 
    Pennsylvania

August 25, HUD Chief of Staff Laurel Blatchford, Berkeley Springs, West 
    Virginia

August 25, ARC Co-Chair Earl Gohl, Holly Springs, Mississippi

August 25, EPA Regional Administrator Al Armendariz, Falcon Heights, 
    Minnesota

August 25, DOC Under Secretary Jane Lubchenco, Barrow, Alaska

August 25, DOC Under Secretary Jane Lubchenco, Wainwright, Alaska

August 26, HHS Regional Director Marguerite Salazar, Rifle, Colorado

August 27, HHS Regional Director Marguerite Salazar, Grand Junction, 
    Colorado

August 29, HHS Regional Director Anton Gunn, Marrianna, Florida

August 29, HHS Acting Regional Director James Galloway, Lawrence, 
    Michigan

August 29, SBA Regional Administrator Jorge Silva-Puras, Ponce, Puerto 
    Rico

August 30, SBA Regional Administrator Dan Hannaher, Dickinson, North 
    Dakota

August 30, DOT Administrator Anne Ferro, Bismarck, North Dakota

August 30, DOT Administrator David Strickland, East Liberty, Ohio

August 30-September 1, EPA Regional Administrator Curt Spaulding and 
    USDA State Director Virginia Manuel, Maine

August 30, GSA Regional Administrator Shyam Reddy, Oxford, Mississippi

August 31, VA Secretary Eric Shinseki, St. Paul, Minnesota

September 1, VA Secretary Eric Shinseki and USDA State Director John 
    Whitaker, Indianola, Iowa

September 1, EPA Regional Administrator Shawn Garvin, Timonium, 
    Maryland

September 1, EPA Regional Administrator Jim Martin, Utah

September 1, USDA Acting Deputy Under Secretary Rebecca Blue, Huron, 
    South Dakota

September 1, USDA Acting Deputy Under Secretary Rebecca Blue, 
    Brookings, South Dakota

September 1, HHS Regional Director Marguerite Salazar, Alamosa, 
    Colorado

September 6, EPA Regional Administrator Dennis McLerran, Yakima, 
    Washington

September 6, ARC Co-Chair Earl Gohl, Prestonsburg, Kentucky

September 8, EPA Regional Administrator Al Armendariz, Dallas, Texas

September 9, HHS Administrator Mary Wakefield HHS Administrator Judy 
    Baker and USDA State Director Bill Menner, Atlantic, Iowa

                         Department References:
 
 
 
ARC--Appalachian Regional            GSA--General Services
 Commission                           Administration
CEQ--Council on Environmental        HHS--Department of Health and Human
 Quality                              Services
DOC--Department of Commerce          HUD--Department of Housing and
                                      Urban Development
DOE--Department of Energy            ONDCP--White House Office of
DOI--Department of Interior           National Drug Control Policy
DOT--Department of Transportation    OSTP--White House Office of Science
DRA--Delta Regional Authority         and Technology Policy
ED--Department of Education          SBA--Small Business Administration
EPA--Environmental Protection        USDA--U.S. Department of
 Agency                               Agriculture
FCC--Federal Communications          VA--Veterans Affairs
 Commission
 

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            council

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        feedback

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            council/about/email
Rural America and the President's Jobs Plan:
   http://www.whitehouse.gov/blog/2011/09/09/rural-america-and-
        presidents-jobs-plan
President Obama's Rural Tour:
   http://www.whitehouse.gov/administration/eop/rural-council/
        rural-tour-2011
                                 ______
                                 
                          Submitted Questions
Response from Hon. Jonathan S. Adelstein, Administrator, Rural 
        Utilities Service, U.S. Department of Agriculture
Questions Submitted By Hon. Timothy V. Johnson, a Representative in 
        Congress from Illinois
    Question 1. Mr. Adelstein, you highlighted the Community Connect 
Grant Program which provides funding to establish broadband service 
where none exists. Why are you not focusing on completely un-served 
area in ALL of our programs?
    Answer. The Community Connect grant program has been highly 
successful in bringing broadband to single communities where no 
broadband exists. These communities are unserved because private 
companies are unable to make a business case to expand service into 
these areas.
    Our loan programs target such unserved areas, but even with lower 
interest rates, applicants generally cannot develop a business case 
based on the loan product alone. This is why the Recovery Act Broadband 
Initiatives Program (BIP) was so successful--the statute provided RUS 
with the authority to fund projects with grants, loans and loan/grant 
combinations. Through this flexibility, Rural Development could tailor 
a financing package that best serves the needs of the area. This model 
is successfully used in other Rural Development areas such as our Water 
and Environmental programs. This flexibility allows us to customize a 
financing package consistent with the needs and financial resources of 
the community.

    Question 2. Mr. Adelstein, there are several distinct programs 
mentioned today which provide broadband funding. In your view, are 
these programs utilized to achieve basically the same goal? What are 
the most common elements among the programs? How do they specifically 
differ?
    Answer. Our telecommunication programs have differing statutory 
mandates and goals. For example, Community Connect brings broadband to 
a single community that has no broadband service. Our Distance Learning 
and Telemedicine (DLT) finances end-user equipment in rural areas that 
already have broadband, but need assistance to expand education and 
health resources. Our traditional infrastructure loan program 
(authorized under Title II of the Rural Electrification Act) and the 
broadband program (authorized in the Farm Bill) do have similar goals; 
however, they have starkly different statutory requirements. Since the 
same staff administers both programs and shares forms, Information 
Technology (IT) systems, etc., the Agency has already streamlined 
processes to the extent possible.

    Question 3. Mr. Adelstein, would you agree that the importance of 
broadband is to create coverage for all un-served individuals in the 
United States? With the increased budget pressures we are facing, do 
you feel it is in good practice to continue to allow RUS to fund 
broadband services in areas that are already covered? Do you think it 
be more important to invest the tax-payers dollars into areas where 
broadband does not exist, as opposed to continuing to allow funding in 
places that have already achieved the primary goal of broadband access?
    Answer. I believe that rural America deserves the same quality of 
broadband service that is deployed in urban America. Broadband creates 
jobs today and builds the foundation for future economic development 
and job creation.
    The term broadband means different things to different people. Some 
define broadband to include any community with dial-up Internet 
service. Some say a community has broadband where it is available 
within the town limits, but not to the anchor institutions and families 
outside the community's corporate limits. Our broadband programs are 
designed to help communities access the quality of service that meets 
21st Century needs of modern businesses, health care providers, 
emergency responders, educational institutions and others.
    Rural America cannot afford a further deepening of the digital 
divides. Businesses and good-paying jobs will not grow in rural America 
without true high-speed broadband. Further, recent studies report that 
young Americans will leave communities that do not have access to 
broadband.
Questions Submitted By Hon. Glenn Thompson, a Representative in 
        Congress from Pennsylvania
    Question 1. Over the history of the REDLG program, how many total 
loans and grants have been made?
    Answer. Since inception of the program:

   494 REDLG loans totaling $235,205,564

   491 REDLG grants totaling $139,527,701

    Question 2. There are several eligible applicants for REDLG funds. 
To what types of organizations have those grants and loans been made, 
and what are the relative award totals in each category? What is the 
total amount awarded by state?
    Answer. Telephone and electric utilities that serve customers in 
rural areas and that are organized as not-for-profit cooperatives, for-
profit corporations and public bodies are eligible for Rural Economic 
Development Loans and Grants (REDLGs).
    Total number and amount of loans and grants by Category:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                                    Telephone
----------------------------------------------------------------------------------------------------------------
                                      Loans
                                      Grants
                                      Total
----------------------------------------------------------------------------------------------------------------
                              Number        Amount         Number        Amount         Number        Amount
----------------------------------------------------------------------------------------------------------------
Cooperatives                       50      $22,462,492          40       $9,974,099          90      $32,436,591
Corporations                       30      $12,032,806          22       $5,657,000          52      $17,689,806
Other                               3         $993,000           1         $300,000           4       $1,293,000
                          --------------------------------------------------------------------------------------
  Subtotal                         83      $35,488,298          63      $15,931,099         146      $51,419,397
----------------------------------------------------------------------------------------------------------------
                                                    Electric
----------------------------------------------------------------------------------------------------------------
Cooperatives                      300     $148,101,635         320      $94,270,299         620     $242,371,934
Corporations                       92      $44,078,944          85      $22,856,303         177      $66,935,247
Other                              16       $6,836,687          11       $3,020,000          27       $9,856,687
Public Body                         3         $700,000          12       $3,450,000          15       $4,150,000
  Subtotal                        411     $199,717,266         428     $123,596,602         839     $323,313,868
                          --------------------------------------------------------------------------------------
    Total                         494     $235,205,564         491     $139,527,701         985     $374,733,265
----------------------------------------------------------------------------------------------------------------

    The Total number and amount of loans and grants by State:

------------------------------------------------------------------------
          State                   Number                  Amount
------------------------------------------------------------------------
            Alabama                       41             $14,915,400
            Arizona                        7              $1,894,300
           Colorado                        6              $2,620,000
            Florida                        6              $1,801,660
            Georgia                       26             $13,710,000
             Hawaii                        3                $900,000
               Iowa                      193             $61,372,207
           Illinois                       20             $10,410,000
            Indiana                        4              $1,590,000
             Kansas                      104             $40,201,030
           Kentucky                       35             $15,076,469
                   Louisiana               3              $1,640,000
           Michigan                        8              $3,221,203
          Minnesota                      113             $39,599,568
           Missouri                       38             $16,916,100
        Mississippi                       21             $12,371,687
            Montana                       12              $4,294,805
     North Carolina                       36             $12,060,000
       North Dakota                       36             $12,341,850
           Nebraska                       20              $6,638,000
      New Hampshire                        1                $300,000
         New Mexico                       10              $3,950,000
           New York                        1                $281,666
               Ohio                        5              $1,316,600
           Oklahoma                       24              $6,745,537
             Oregon                        5              $2,000,000
       Pennsylvania                        6              $3,020,000
     South Carolina                       25             $14,732,360
       South Dakota                       64             $20,946,000
          Tennessee                       57             $23,356,481
              Texas                        4              $1,245,000
           Virginia                        7              $9,860,000
            Vermont                        1                $600,000
         Washington                        3                $604,000
          Wisconsin                       36             $11,101,342
            Wyoming                        4              $1,100,000
                         -----------------------------------------------
  Total.................                 985            $374,733,265
------------------------------------------------------------------------

Question Submitted By Hon. Randy Hultgren, a Representative in Congress 
        from Illinois
    Question. I understand that the RUS will not lend its money to 
overbuild an area where there is an existing RUS borrower because doing 
so would put the RUS' investment at risk. Doesn't that same logic apply 
to the use of RUS money to overbuild an existing broadband provider 
financed by a local bank? Should the government really be in the 
business of putting private investment at risk?
    Answer. Our goal at Rural Development is to finance broadband 
deployments that create jobs today and lay the foundation for economic 
development and job creation in the future. The last farm bill, enacted 
in 2008, required that 25 percent of the proposed service territory be 
unserved and the remaining 75 percent be served by not more than three 
competitors. The farm bill recognized that competition is healthy and 
often necessary to extend broadband to the most unserved areas in rural 
America. Our regulations implementing the 2008 Farm Bill codified these 
statutory requirements. Further, the new regulations allow for RUS to 
help an existing borrower expand services if the incumbent is not 
providing broadband at enough capacity or speed to meet the needs of 
business.
Questions Submitted By Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. You mentioned the new authorization that was provided 
in the 2008 Farm Bill to lend for energy efficiency programs as well as 
renewable energy. Can you tell us what activities your agency is 
lending for under these authorities?
    Answer. Our current obligations (under existing statute and 
regulation) for renewable energy in fiscal year 2011 total $294 million 
in new loans for electric generation and distribution and $7.28 million 
for energy efficiency improvements through RUS programs. This is in 
addition to the significant funding support for energy efficiency and 
renewable energy through Rural Development's suite of Business and 
Cooperative Programs.
    Though minor compared to RUS's total loan portfolio, RUS is working 
to support energy efficiency projects authorized under the 2008 Farm 
Bill. RUS has drafted a regulation proposing a comprehensive retail 
energy efficiency initiative. This regulation is in the final stages of 
internal clearance. The Agency anticipates implementation of this 
regulation in Fiscal Year 2012.
    Since the early 1980's the Rural Utilities Service has allowed 
borrowers (rural electric cooperatives) to defer principal payments for 
up to 84 months and use the funds to assist consumers in implementation 
of energy efficiency improvements to their homes. As of the end of 
August, 2011, 365 rural electric borrowers have used $206 million in 
deferred principal to assist their consumers.
    Last year in support the White House initiative on Recovery through 
Retrofit, USDA Rural Development created the Rural Economic Development 
Energy Efficiency Effort which combines the efforts of the Rural 
Utilities Service, Rural Business-Cooperative Service and the Rural 
Housing Service, working in concert with the electric cooperatives and 
using existing authorities and funding. Under this effort Rural 
Development makes a Rural Economic Development Loan to an electric 
utility, typically a cooperative, which in turn passes the funds to a 
for profit or nonprofit entity to use as working capital to assist 
consumers in making energy efficiency improvements.

    Question 2. Many of the entities that you lend to are dealing with 
regulations and settlements under various Federal laws, including the 
Clean Air and Clean Water Acts. Have you seen an impact on systems that 
serve rural residents, and their ability to deal with these regulatory 
requirements? Does it impact your ability to lend to them because of 
repayment concerns?
    Answer. When rural communities incur costs associated with 
compliance with new and existing regulatory standards, the level of 
financial impact depends on a number of factors.
    For the Water and Environmental Programs (WEP), these factors 
include the type and size of existing treatment facilities and 
infrastructure, the quality of the current water source and the 
regulatory standard itself. As most rural systems are operated on a 
not-for-profit basis by municipalities and water associations, many 
rural communities do not have the additional financial resources needed 
to fully address the systems' needs, including needs related to 
compliance.
    As a result, changes in regulatory standards can be one variable in 
the demand for RD funding. We do our best to work with applicants to 
find a loan/grant package that works for the community, makes the best 
use of RD and leveraged funds, and keeps payments affordable while 
addressing environmental and regulatory requirements.
    RD is also working with our colleagues in regulatory agencies to 
improve their understanding of the impact of new requirements on rural 
systems.

    Question 3. Do you have any interactions with FERC and the various 
ISOs that regulate the movement of electricity on to the grid? Do you 
feel that these entities could be doing more to ensure that distributed 
energy production such as landowner controlled wind projects have 
access to transmission lines as opposed to the large, often out of 
state, utilities?
    Answer. We have had discussions with FERC and serve on committees 
examining these issues. Constantly balancing supply and demand within a 
regional transmission system and attempting to integrate small, 
intermittent loads such as wind resources is challenging, but all 
parties are encouraged that it can be done as the capacity of the grid 
is improved and planning models become more sophisticated.
Response from Judith A. Canales, Administrator, Rural Business-
        Cooperative Service, U.S. Department of Agriculture

    Question 1. Ms. Canales, RBS administers Rural Cooperative 
Development Grants which are used to provide funds for value-added 
agricultural market development projects (VAPG), small and socially-
disadvantaged producer grants, and other subprograms and initiatives. 
For those grants which are primarily given to start or expand a 
business, are there other lending or re-lending programs which might be 
suitable to assist farmers? Do you think there may be some 
administrative savings in combining similar programs to reduce overhead 
and confusion among applicants?
    Answer. There are three grant programs funded under the Rural 
Cooperative Development Grant umbrella:

   Value-Added Producer Grant (VAPG),

   Rural Cooperative Development Grant (RCDG), and

   Small, Socially-Disadvantaged Producer Grant (SSDPG).

    VAPG is unique within USDA in that it awards grants to independent 
producers of agricultural commodities for planning activities, such as 
feasibility studies and business plans; and for working capital 
expenses, such as labor, inventory, and advertising. The planning 
grants often provide incentive for producers to find innovative ways to 
market value-added agricultural products and the working capital grants 
provide much-needed cash during the first few years of operation of a 
venture, helping to ensure the venture's success. This program has been 
instrumental in launching numerous new, and often innovative, rural 
businesses and assisting others with expansion. Since its inception, 
VAPG has funded 1,440 projects throughout rural America. In 2010, VAPG 
funded 196 projects across 45 states and Puerto Rico. Over 60 percent 
of awards made in 2010 were made beginning or socially-disadvantaged 
farmers or ranchers and small to medium-sized family farms. Awards for 
project planning activities--feasibility studies, business and 
marketing plans--were made to 72 applicants. Funding for working 
capital--operating costs associated with processing and marketing 
value-added products--was awarded to 124 applicants. Projects included 
local food initiatives linking farmers directly to consumers and local 
institutional buyers such as schools and hospitals; innovative 
technologies for on-farm generation of energy and by-products, as well 
as development of niche markets for specialty products which bring a 
larger share of the consumer dollar back to agricultural producers.
    RCDG and SSDPG are similar in that both focus on providing funding 
for technical assistance and training for rural producers and business, 
rather than direct financial assistance. Specifically, RCDG funds 
centers of cooperative development, which provide assistance related to 
the start-up, expansion and operational improvement of rural 
businesses, especially cooperatives and other mutually-owned 
businesses. The SSDPG program funds technical assistance and training 
specifically for socially-disadvantaged agricultural producers via 
existing cooperatives or associations of cooperatives.
    We do see complementary relationships with some of our lending and 
re-lending programs. Programs like VAPG, RCDG, and SSDPG emphasize 
financing and technical support during the initial stages of new 
business ventures begun by farmers (or other applicants). However, 
grantees cannot use awards made under the Rural Cooperative Grant 
umbrella for purchasing or improving buildings, facilities or 
equipment. Thus, they may need additional project capital as the 
business evolves or expands. Other RBS programs can provide capital for 
facilities and equipment to the applicant's new business venture. We 
strongly encourage all applicants to explore all potential funding 
opportunities available throughout Rural Development.
    RBS staff believes our continuing efforts to streamline programs 
provide the best opportunity to achieve administrative savings and 
deliver support to our stakeholders. If similar programs were combined, 
there may be an opportunity to achieve some incremental savings in 
overhead and administration for the combined programs. In addition, a 
combined program could reduce potential confusion that may exist with 
separate programs.

    Question 2. Ms. Canales, the Rural Micro-entrepreneur Assistance 
Program (RMAP) provides funds to organizations who then relend those 
funds to small businesses. Your supplemental testimony indicated that 
this and two other programs could be combined into existing authorities 
to gain administrative efficiencies. Could you elaborate on where you 
think these programs could be combined? Could you provide more details 
on what savings could be expected from such a move?
    Answer. Combining programs into one comprehensive program and 
regulation will benefit applicants and grantees who utilize more than 
one of the programs reducing their administrative cost as a result of 
time savings because they will not need to learn and understand 
different program regulations, program policies and reporting 
procedures
    The RMAP, Intermediary Relending Program (IRP), and revolving loan 
fund component of the Rural Business Enterprise Grant (RBEG) program 
could be combined into a comprehensive Intermediary program, while 
retaining the intended purposes of each through funds administration.
    By implementing one comprehensive revolving loan fund program 
rather than three separate ones, we would expect to realize incremental 
administrative efficiencies and savings. For example, training staff on 
one program rather than three marginally reduces training costs. 
Incremental savings may also be realized through the maintaining and 
updating of one set of regulations and utilization of fewer forms. Once 
a comprehensive Intermediary program is in place, such savings are 
expected to be relatively small and would be realized over a period of 
time.

    Question 3. Ms. Canales, the Rural Micro-entrepreneur Assistance 
Program (RMAP) provides training for small businesses. Could you give 
the Committee an idea of how many of the training grants have been 
utilized by community colleges and universities?
    Answer. Ten training grants were awarded in FY 2010 of which two 
were made to universities: Ohio State University and Saint Francis 
University, PA. An additional loan and grant was made to Lane Community 
College, OR, to provide microloans and technical assistance to 
borrowers. The FY 2011 awards are not finalized as of 09-20-2011.

    Question 4. Ms. Canales, your supplemental testimony indicated that 
more than $13 million, or 30 percent, for the Rural Micro-entrepreneur 
Assistance Program (RMAP) was not utilized in FY10. Do you have an 
explanation for why so little of the program was utilized in FY10? What 
is your estimate for participation in the program in FY11?
    Answer. RMAP is a new program. In order to get this program 
implemented, we had to (1) address administrative requirements, (2) 
address numerous and detailed public comments, including stakeholders, 
on the proposed rule, and (3) train our State office personnel and 
field staff. As soon as these requirements could be addressed, which 
took a substantial amount of time, the program was implemented in June 
2010 and stakeholders are now fully engaged in the program.
    Funding available in FY 2011 consisted of FY 2010 carryover and FY 
2011 funding, together totaling $7.5 million in budget authority for a 
program level of $20.2 million. We are projecting that $13.5 million in 
loans and $3.6 million in grants will be awarded in FY 2011.
Joint Response from Mr. Adelstein, Ms. Canales, and Ms. Trevino
Questions Submitted By Hon. Timothy V. Johnson, a Representative in 
        Congress from Illinois
    Question 1. Many counties and development organizations have 
highlighted regional coordination as a way to more effectively utilize 
Federal funds. Could you please describe what your agency is already 
doing to coordinate regional development efforts? What is the role of 
other agencies outside of USDA in your regional efforts?
    Answer. In order to provide better investments and coordination and 
alignment with other agencies, Rural Development is providing support 
to local communities who come together on a multi-county regional basis 
to develop a thoughtful regional economic development strategy. We are 
working to position our programs to support specific eligible project 
applications that are consistent with and supportive of the region's 
comprehensive strategy. This will allow us to direct our limited 
resources toward projects that will support the region's top priorities 
as delineated in its regional economic development strategy. We also 
encourage other Federal agencies to follow our lead in making 
investments in specific projects that will support each region's 
economic development strategy. To support rural regions, we are 
exploring how to better coordinate Rural Development's programs so that 
they can better support regional strategies. For example, we have 
amended NOFA's (including RBOG and RCDI) to make clear Rural 
Development's interest in innovative regional approaches. We are 
considering how to effectively review various grant and loan 
applications so that they can be viewed in light of regional 
strategies.
    As part of an Administration-wide effort, USDA is a supporting 
agency to the Jobs and Innovation Accelerator Challenge, a multi-agency 
effort to support regional innovation clusters. While USDA is not one 
of the funding agencies, we have worked closely with our rural 
constituencies to ensure they knew about the $34 million in funds 
available from the Departments of Commerce and Labor, as well as the 
Small Business Administration. Several of the 20 funded regions include 
substantial rural components (e.g., a regional cluster in northern 
Maine is focused on renewable energy and a cluster in the Finger Lakes 
region of upstate New York concentrates on food processing); USDA will 
support this work in some of these regions. In addition, USDA is 
partnering with the Economic Development Administration in developing a 
second round of the Jobs and Innovation Accelerator Challenge grants; 
this second round will target predominantly rural regions, enabling 
them to take viable economic clusters and make them stronger.
    USDA is also a supporting partner on another key Administration-
wide initiative: the Partnership for Sustainable Communities, which is 
a collaborative effort among the Departments of Transportation and 
Housing and Urban Development, as well as the Environmental Protection 
Agency. For instance, under this initiative, HUD has funded many 
regions with planning grants; some of these regions include rural 
areas; USDA may be in a good position to fund some projects that will 
be needed for successful plan implementation in such regions.
    In one more example of the work USDA is doing on regional 
strategies, Rural Development and the National Institute of Food and 
Agriculture are working jointly on a pilot initiative called the 
Stronger Economies Together (SET) program. USDA RD is working 
collaboratively with the Extension Service and the four Rural Regional 
Development Centers to design and deliver SET to 30+ regions across the 
country. Under SET, the participating multi-county regions engage in a 
several-month training program where each region explores its assets 
and comparative economic advantages prior to preparing a regional 
economic development strategy. A critical component of SET is the 
provision of expert economic analysis to describe the region's current 
and emerging economic clusters; this targeted information can be used 
by the region to help craft a practical economic development plan.
    USDA believes that the approach described here will help establish 
a locally-driven economic development framework that can enable more 
effective Federal investments, not only by RD, but by all Federal 
agencies.

    Question 2. Technical assistance is almost a necessity for 
applicants in many programs throughout Rural Development. In your view, 
could this be due to the complexity of the application process for 
grants and loans? Does your agency see a need to reorganize or rethink 
the process as a whole? Do you think consolidating and streamlining 
such application processes could address some of the overlap of 
programs within Rural Development?
    Answer. One of RD's major focus is to minimize burdens on 
individuals, businesses, and communities attempting to access programs 
that promote economic growth, create jobs, and protect the health and 
safety of the American people.
    We are developing creative ways to conduct business and make 
changes in structure, program delivery, staffing, or responsibilities 
to improve our efficiency or quality of service.
    Our application process may be challenging to applicants in rural 
areas, which often lack the resources commonly available in urban 
areas. Providing technical assistance to rural applicants has helped 
protect the taxpayers' investment while ensuring that rural utility 
systems are designed to provide affordable reliable service for rural 
residents and businesses.
    RD is interested in more flexible authorities that would provide us 
the ability to serve rural communities with the same types of 
assistance, but with much fewer than the forty programs we now have. We 
are considering merging some of our programs to reach better 
administrative efficiencies and reduce confusion for our customers.
    The following are some examples of our current efforts to 
streamline, simplify and improve program efficiencies, reduce 
administrative and operating costs, and reduce barriers for entry and 
access to USDA programs:

    Regulatory Program Review:

    Rural Development recently began a new retrospective review of 
existing regulations to determine whether any such regulations should 
be modified, streamlined, expanded, or repealed, as called for by 
President Obama in Executive Order 13563. The purpose of this review is 
to make the mission area's regulatory program more effective and 
efficient in order to enhance program administration and delivery.
    Rural Development analyzes and evaluates its existing rules based 
on review and input from internal and external customers, including 
National and State Office staff, lenders, Office of Inspector General 
(OIG), and other stakeholders and partners. Rural Development's 
existing oversight activities include conducting thorough reviews of 
program administration and delivery, and coordinating internal and 
external audits at both the National and State Offices. Through these 
efforts the mission area collects and analyzes data on overall program 
performance/effectiveness and regulatory compliance.
    Both the internal and external reviews provide information that the 
mission area uses when determining the regulatory changes that are 
necessary to minimize risk and enhance program utilization.

    Stakeholder Outreach:

    From July 2011 through September 2011, Rural Development hosted 
webinar based listening sessions and stakeholder meetings in rural 
areas.
    On July 7th, 2011, USEC hosted a webinar with 180 national 
stakeholders to receive public input on our mission area priorities for 
the upcoming fiscal year. Under Secretary Tonsager provided the opening 
presentation and the Administrators from Rural Business Services, Rural 
Housing Services, and Rural Utilities Services discussed their agency's 
role in achieving the objectives of President Obama's Executive Order.
    On July 21st, 2011, USEC hosted a webinar with 82 tribes and tribal 
leaders that included introduction and explanation of our regulatory 
priorities and opening remarks from the Under Secretary and all three 
administrators. There was a productive 90 minute discussion that took 
place that focused primarily on the need for more technical assistance 
and infrastructure challenges unique to tribes.
    On July 14th, 2011, Rural Development launched a website to inform 
stakeholders of the process and to give them the opportunity to submit 
comments. A separate e-mail box was created ([email protected]) to 
receive all public comments.
    State Directors hosted webinars and stakeholder meetings across the 
country. Rural Development has received over 100 written comments from 
a broad range of stakeholders, including individuals, regulated 
entities, and trade groups.
    Rural Development will review and reference the public comments 
received in the preamble of our regulations.

    Diversity Hiring and Recruiting:

    In response to the USDA Jackson Lewis study, RD is working to 
improve its hiring diversity. USDA awarded a competitive contract to 
the Jackson Lewis LLP Corporate Diversity Counseling Group to conduct 
an Independent Assessment of the USDA Delivery of Technical and 
Financial Assistance to all Americans. In order to respond to the 
ninety-four recommendations that pertain to RD, we are actively engaged 
with Department and other agencies to take action where appropriate.

    Comprehensive Loan Program (CLP):

    Rural Development continues to transition to a new computing 
environment that provides greater flexibility for management and 
business development. The CLP retires legacy accounting systems and 
replaces them with upgraded accounting systems that can be utilized to 
support business needs of today. Replacing these systems makes it 
easier to maintain, modify and meet new requirements, improves the use 
for internal and external customers, improves the integrity of the 
entire loan portfolio, and improves management reporting and analyzing 
capabilities. No new funding has been requested for this transition and 
all savings realized from reducing infrastructure costs are being used 
to continue the transition. The CLP will enable RD to implement new 
statutory or regulatory provisions in a more timely and effective 
manner

    Question 3. Due to the continuing budget constraints faced by 
Federal, state, and local governments and the consensus to reform and 
consolidate many programs, does your agency have the necessary 
authorities to streamline some of these programs. How is your agency 
working with stakeholders to address the needs of small rural 
communities while addressing budget realities?
    Answer. At USDA, we are focusing on actions to better coordinate 
and streamline Federal program efforts in rural America, and to better 
leverage Federal investments. The collaboration will result in better 
programs and services in rural communities and maximize the benefits of 
those programs.
    As stated earlier, RD is conducting a regulatory review of its 
regulations to determine which application procedures for Business 
Programs, Community Facilities Programs, Energy Programs, and Water and 
Environmental Programs can be streamlined and requirements 
synchronized. RD is approaching this exercise from the perspective of 
the people it serves, specifically by communicating with stakeholders 
on two common areas of regulation that would provide the basis of 
reform. This process will look to have similar requirements for 
programs that are focused on a similar applicant base, such as 
nonprofit, Native American Tribes, and public bodies such as Community 
Facilities and Water and Environmental programs will make an effort to 
have similar requirements.
    To the extent practicable, each reform effort will consist of a 
common application and uniform documentation requirements making it 
easier for constituency groups to apply for multiple programs. In 
addition, there will be associated regulations for each program that 
will contain information specific to each program.
    RD's State and national offices hosted a number of webinars with 
stakeholders from across the nation to discuss existing regulations and 
processes, and seek input on potential changes that would make them 
more customer-friendly and effective.
    We will continue to provide the best service possible to our 
stakeholders by seeking implementable efficiencies to meet this 
commitment and to ensure that awards are made to the highest priority 
projects for which we can obtain the best results for the funds 
expended.
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--Rural 
                           Utilities Service
1. Program Name
    Water and Environmental Programs (WEP).
2. Subprograms/Department Initiatives
    Rural Development's (RD) Rural Utilities Service (RUS) provides 
loans, grants, and loan guarantees for drinking water, sanitary sewer, 
solid waste, and storm drainage facilities in rural areas and cities 
and towns of 10,000 or less. Public bodies, nonprofit organizations, 
and federally-recognized Indian tribes may qualify for assistance. WEP 
also makes grants to nonprofit organizations to provide technical 
assistance and training to assist rural communities with their water, 
wastewater, and solid waste problems. WEP subprograms include:

------------------------------------------------------------------------
                         2008 Farm
      Subprograms           Bill      CONACT Section      U.S. Code 7
                          Section                            U.S.C.
------------------------------------------------------------------------
Water and Waste Loan           6001               306               1926
 and Grant Program
 (Direct)
Special Evaluation             6002         306(a)(2)          (a)(2)(C)
 Assistance for Rural
 Communities and
 Households Program
 (SEARCH)
Rural Water and                6006        306(a)(22)        1926(a)(22)
 Wastewater Circuit
 Rider Program
Water and Waste                            306(a)(24)               1926
 Disposal Programs
 Guaranteed Loans
Emergency Community            6008              306A            1926(a)
 Water Assistance
 Grants
Water Systems for              6009              306D            1926(d)
 Rural and Native
 Villages in Alaska
Household Water Well           6010              306E            1926(e)
 System (HWWS) Grant
 Program
Interest Rates for             6011         307(a)(3)         1927(a)(3)
 Water and Waste
 Disposal Facilities
 Loans (Direct)
------------------------------------------------------------------------

    WEP initiatives include:

------------------------------------------------------------------------
                         2008 Farm
      Subprograms           Bill      CONACT  Section     U.S. Code 7
                          Section                            U.S.C.
------------------------------------------------------------------------
Water, Waste Disposal,         6001  306(a)(2)(B)(vii  1926(a)(2)(B)(vii
 and Wastewater                                     )                  )
 Facility Grants
 (Revolving Funds for
 Financing Water and
 Wastewater Projects)
Technical Assistance           6001     306(a)(14)(A)        1926(a)(14)
 and Training Grant
 (TAT) Program
Water and Waste                6001              306C            1926(c)
 Facility Loans and
 Grants to Alleviate
 Health Risks (applied
 to Colonias and
 Native American
 tribes)
Solid Waste Management         6001           310B(b)            1932(b)
 Grant (SWM) Program
------------------------------------------------------------------------
Note: Initiatives are funded through set-asides in the annual
  appropriation for the Water and Waste Loan and Grant Program (Direct).

3. Brief History
    The origins of the Water and Environmental Programs date to the 
1937 Resettlement Administration. These provisions were later included 
in section 306 of the CONACT (Farm Bill), 7 U.S.C. 1926.
4. Purpose/Goals
    The purpose and goals of WEP's subprograms include:

    Water and Waste Disposal Direct Loans and Grants Program

    WEP provides loans, grants and loan guarantees for drinking water, 
sanitary sewer, solid waste and storm drainage facilities in rural 
areas and cities and towns with populations of 10,000 or less.

   Water, Waste Disposal, and Wastewater Facility Grants 
        (Revolving Funds for Financing Water and Wastewater Projects): 
        The WEP Revolving Fund Program (RFP) provides grants to private 
        nonprofit organizations to establish a lending program for 
        entities eligible under the Water and Waste Disposal Loans 
        (direct and guaranteed). As grant recipients, the nonprofit 
        organizations set up a revolving loan fund to provide loans to 
        finance predevelopment costs of water or wastewater projects, 
        or short-term small capital projects not part of the regular 
        operation and maintenance of current water and wastewater 
        systems.

   Technical Assistance and Training Grant (TAT) Program: The 
        TAT Program provides grants to nonprofit organizations to 
        provide technical assistance and/or training to associations on 
        a wide range of issues relating to delivery of water and waste 
        disposal service.

   Section 306C Water and Waste Facility Loans and Grants to 
        Alleviate Health Risks: Section 306C loans and grants provide 
        water and waste disposal facilities and services to low income 
        rural communities whose residents face significant health 
        risks. These funds have been set aside for eligible projects 
        that benefit members of Federally Recognized Native American 
        Tribes and the Colonias area.

   Solid Waste Management Grant (SWM) Program: SWM grants are 
        available to both public and private nonprofit organizations to 
        help communities identify threats to water resources and reduce 
        the solid waste stream. Communities receive assistance from 
        eligible organizations to reduce or eliminate pollution of 
        water resources, improve planning and management of solid waste 
        disposal facilities in rural areas, and enhance operator skills 
        in operations and maintenance.

    SEARCH Grants Program

    To provide grants to public bodies, nonprofits, and federally-
recognized Indian tribes for feasibility studies, design, technical and 
direct or guaranteed water and waste disposal loan application 
assistance. Grants are limited to financially-distressed communities in 
rural areas with populations of 2,500 or fewer inhabitants for water 
and waste disposal projects. Grants are limited to $30,000 per project.

    Circuit Rider--Technical Assistance for Rural Water Systems Program

    Providing technical assistance for the operations of rural water 
systems, RUS contracts with the National Rural Water Association (NRWA) 
to assist rural water systems with day-to-day operational, financial, 
and management support. The assistance may be requested by officials of 
rural water systems or RUS. The program complements RUS's loan 
supervision responsibilities. The NRWA's State Affiliates do the work 
in their states.

    Water and Waste Disposal Programs Guaranteed Loans

    The Water and Waste Disposal Programs Guaranteed Loans provide a 
loan guarantee for the construction or improvement of water and waste 
disposal projects serving the financially needy communities in rural 
areas. This purpose is achieved through bolstering the existing private 
credit structure through the guarantee of quality loans which will 
provide lasting benefits.

    Emergency Community Water Assistance Grants Program

    Assists rural communities that have experienced a significant 
decline in quantity or quality of drinking water due to an emergency or 
when such decline is considered imminent, to obtain or maintain 
adequate quantities of water that meets the standards set by the Safe 
Drinking Water Act. This emergency includes, for example, drought, 
earthquake, flood, tornado, hurricane, disease outbreak or chemical 
spill, leakage, or seepage.

    Section 306E Grants for the Construction, Refurbishment, and 
Servicing of Low or Moderate Income Individual Household Water Well 
Systems

    Provides funds to nonprofit organizations to assist them in 
establishing loan programs from which individuals may borrow money for 
household water well systems.
5. Success in Meeting Programmatic Purpose/Goals
    In Fiscal Year (FY) 2010, RD invested $1.67 billion in direct and 
guaranteed loans and grants to help rural communities develop water and 
waste disposal facilities.

 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Water and Environmental                               2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of program borrowers' subscribers        Target                          $557,000      $1,380,000      $1,418,000      $1,457,000      $1,394,000
 receiving new improved service from Agency's   Actual                        $1,332,063      $4,361,872      $3,388,089      $3,961,166      $4,292,318
 funded water facilities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Water and Environmental ARRA                             2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of program borrowers' subscribers        Target                               (1)             (1)            $1,900,000                       (1)
 receiving new improved service from Agency's
 funded water facilities.
                                                                                                         --------------------------------
                                                Actual                               (1)             (1)         769,559         949,646
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 ARRA funding was only available for FY 2009 and 2010.

    In addition to the regular appropriated funding, RD invested $300 
million in funding provided by the 2008 Farm Bill and a total of $1.8 
billion in American Recovery and Reinvestment Act (ARRA) funding for 
water and waste disposal infrastructure and technical assistance across 
Rural America in FY 2009 and FY 2010.
    The RUS WEP's:

   Brings modern, reliable and affordable water and waste 
        services to rural America. 

     5.7 million rural customers will benefit from RUS FY 
            2010 regular and ARRA investments in water and waste 
            disposal infrastructure.

     As a result, rural communities are able to provide 
            clean, reliable services at reasonable costs, more 
            efficiently manage how and how much water they use, and 
            reduce their impact on our nation's waterways through 
            improved compliance with regulatory requirements and 
            reduced discharge of waste byproducts.

   Reduces health risks to rural residents and protects our 
        nation's waterways.

     FY 2010 funded projects will result in a nearly 28 
            percent reduction in rural resident's exposure to water-
            borne illnesses.

     Provides access to a public water system to residents 
            who obtain their water from contaminated or unreliable 
            drinking water wells, or untreated surface sources improves 
            public health.

     Replacing failing individual septic tanks reduces 
            harmful discharges into lakes, rivers, and other waterways.

   Facilitates sustainable communities.

     With reliable water and waste infrastructure, the 
            establishment of core community services is made possible, 
            supporting existing residents and attracting new ones. USDA 
            helps to ensure the safety, health, and education of rural 
            residents by financing the construction of new and improved 
            hospitals, schools, fire stations, and other essential 
            community facilities--all of which rely on water and waste 
            services to operate.

      The presence of reliable water and waste infrastructure 
            facilitates business development in rural America, helps 
            create jobs, strengthen our nation's economy, and our 
            ability to compete in the global marketplace.

   Assists rural water and waste systems with technical issues 
        and emergency recovery.

     In FY 2010, circuit riders made more than 111,000 
            technical assistance calls to rural systems.

     RUS contract circuit riders provided critical support 
            and emergency equipment to rural operators in the aftermath 
            of the tornados across the south and the flooding along the 
            Missouri and Mississippi Rivers in 2011.

                                  6. Annual Budget Authority (FY 2007-FY 2011)
                               FY 2007 through FY 2011 Budget Authority (Enacted)
                                             (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
               Program                     2007            2008           2009           2010           2011
----------------------------------------------------------------------------------------------------------------
          Water and Environmental         $494,043        $538,767       $538,768       $551,230       $515,968
     Water and Environmental ARRA              (1)             (1)       $734,881       $655,675            (1)
----------------------------------------------------------------------------------------------------------------
1 ARRA funding was only available for FY 2009 and 2010.


                                       7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
            Account Name                2007 Actual    2008 Actual    2009 Actual    2010 Actual    2011 Actual
----------------------------------------------------------------------------------------------------------------
Water and Waste Disposal Program 1      2 $650,383        $604,033       $746,706       $980,000     $1,086,000
----------------------------------------------------------------------------------------------------------------
1 Outlays are not a one to one correlation with obligations. Programs disburse over numerous years. Undisbursed
  balances are carried forward for future year outlays.
2 Outlayed through RCAP.


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                                 2007 Amount  2008 Amount  2009 Amount  2010 Amount  2011 Amount
                    Program                         ($000)       ($000)       ($000)       ($000)       ($000)
----------------------------------------------------------------------------------------------------------------
     Direct Water & Waste Disposal Loans, Guaranteed Water & Waste Disposal Loans, Water & Disposal Grants,
    Individually-Owned Water Well System Grants, Grants for Water and Wastewater Revolving Funds, Solid Waste
                    Management Grants, and Emergency & Imminent Community Water Asst. Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                   $1,579,948   $1,822,949     $886,873   $1,660,647   $1,447,422
  Budget Authority                                  $564,174     $666,367     $411,792     $770,362     $551,230
  S&E                                                $59,323      $57,610      $21,716      $65,322      $65,322
                                                ----------------------------------------------------------------
    Total Costs                                     $549,721     $723,977     $433,508     $835,684     $616,552
    FTEs                                                 542          514          192          551          551
----------------------------------------------------------------------------------------------------------------
 Direct Water and Waste Disposal Loan 2008 Disasters Emer. Supp., Water and Waste Disp. Grants May 6, 2007 Emer.
  Supp., Water and Waste Disp. Grants 2008 Disasters Emergency Supplemental, Water and Waste Disp. Grants 2003/
2004 Hurricanes Emer. Supp., Water and Waste Disp. Grants 2005 Hurricanes Emer. Suppl., Emer. And Imminent Comm.
         Waster Asst. Grants--Emer. Supp., Emer. and Imminent Comm. Water Asst. Grants--2005 Hurricanes.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                      $13,010           $0      $34,203      $10,406           $0
  Budget Authority                                   $13,010           $0      $19,068       $7,054           $0
  S&E                                                     $0           $0           $0           $0           $0
                                                ----------------------------------------------------------------
    Total Costs                                      $13,010           $0      $19,068       $7,054           $0
    FTEs                                                   0            0            0            0            0
----------------------------------------------------------------------------------------------------------------
   Direct Water and Waste Disposal Loans--Stimulus, Water and Waste Disposal Grants--Stimulus, Circuit Rider--
                             Tech. Assist. Grants for Rural Water Systems--Stimulus.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                          N/A          N/A   $1,581,548   $1,828,627           $0
  Budget Authority                                       N/A          N/A     $734,881     $650,675           $0
  S&E                                                    N/A          N/A      $41,363           $0           $0
    Total Costs                                          N/A          N/A     $776,244     $650,675           $0
    FTEs                                                 N/A          N/A          364            0            0
----------------------------------------------------------------------------------------------------------------


                                                                 9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Eligible Areas                                      Funding Limits Per
          Program             Eligibility (Entities)          (Populations)             Eligible Purpose               Request              Loan Terms
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Disposal    Public body, not-for-       Rural areas and towns      Construct and improve      None                       40 years
 Direct Loans and Grants     profit organization, and    with a population of       water and waste
                             Indian tribes               10,000 or less.            facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Disposal    Public body, not-for-       Rural areas and towns      Construct and improve      None                       40 years
 Guaranteed Loans            profit organization, and    with a population of       water and waste
                             Indian tribes               10,000 or less.            facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technical Assistance and    Public, private, and        Rural areas and towns      Provide technical          Pre-determined             N/A
 Training Grant (TAT)        nonprofit organizations     with population of         assistance and training    percentages of annual
 Program                                                 10,000 or less.                                       allocation
Circuit Rider--Technical    Public, private, and        Rural areas and towns      Provide technical          No Cost                    N/A
 Assistance for Rural        nonprofit organizations     with population of         assistance and training
 Water Systems                                           10,000 or less.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Water and Waste Facility    Colonias and Native         Colonias and tribal lands  Construct or improve       $1 M--Native American      40 years for
 Loans and Grants to         American Indian tribes                                 water and waste            Indian tribes (none for    loans
 Alleviate Health Risks                                                             facilities                 Colonias)
 (applied to Colonias and
 Native American tribes)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Solid Waste Management      Public body, private        Rural areas and towns      Technical assistance to    None                       N/A
 Grant (SWM) Program         nonprofit organizations     with a population of       local and regional
                             and Indian tribes           10,000 or less.            governments for reducing
                                                                                    or eliminating water
                                                                                    pollution and planning
                                                                                    or mgmt of solid waste
                                                                                    disposal facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predevelopment and          Rural communities that do   Rural area must be either  Costs associated with the  $15,000 or 75 percent of   N/A
 Planning Grants             not have resources to pay   below the poverty line     development of a           the project costs
                             predevelopment expenses     or below 80 percent of     complete application       (whichever is smaller)
                                                         the statewide non-
                                                         metropolitan median
                                                         house-hold income.
--------------------------------------------------------------------------------------------------------------------------------------------------------
SEARCH Grants               Rural communities that do   Rural area must be either  Costs associated with the  $30,000 or 75 percent of   N/A
                             not have resources to pay   below the poverty line     development of a           the project costs
                             predevelopment expenses     or below 80 percent of     complete application       (whichever is smaller)
                                                         the statewide non-
                                                         metropolitan median
                                                         house-hold income.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emergency Community Water   Public body such as a       Rural areas with           To fund pre-development    May fund up to 100         N/A
 Assistance Grants           municipal, county,          population of 2,500 or     planning grants for        percent of eligible
                             district, authority,        fewer inhabitants and      feasibility studies,       costs, not to exceed
                             state or commonwealth,      must also be financially   design assistance & tech   $30,000
                             Not for profit              stressed as well as        assistance for water &
                             organization, and Native    rural                      waste disposal projects
                             American Tribe
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 306D Water and      State of Alaska for rural   Rural or native Alaskan    Development and            None, however 25 percent   N/A
 Waste system Grants for     or native villages          villages                   construction of water      in matching funds from
 Alaskan Villages, incl.                                                            and waste facilities to    State of Alaska from non-
 technical assistance                                                               improve health and         Federal sources
                                                                                    sanitation conditions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Section 306E Grants for     Private, nonprofit          Projects must be located   Development of revolving   Organization must          N/A
 the Construction,           organizations that are      in rural areas with        loan funds for             contribute ten percent
 Refurbishment and           tax exempt.                 population of 50,000 or    construction,              of grant amount to
 Servicing of Low or                                     less.                      refurbishing, and          capitalize the fund and
 Moderate Income Household                                                          servicing of individual    individual homeowner
 Water Well Systems                                                                 household water well       loans capped at $11,000
                                                                                    systems in eligible
                                                                                    rural areas.
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
    From 2007-present the Water and Waste Disposal Loan and Grant 
Program has obligated 9,152 loans and grants to rural communities in 
all 50 states.

------------------------------------------------------------------------
       Fiscal Year            Number of Loans        Number of Grants
------------------------------------------------------------------------
             2007                       810                     957
             2008                       895                     926
             2009                       909                   1,604
             2010                     1,045                   1,037
           2011 *                       498                     471
                         -----------------------------------------------
  Total.................              4,157                   4,995
------------------------------------------------------------------------
* As of July 29, 2011.

    Approximately 115 Circuit riders have been funded annually since 
2008 through the program and have made 311,509 technical assistance 
calls to rural water and waste systems.
11. Duplication or Overlap with Other Programs
    RD's Water and Waste Disposal Loan and Grant program provides 
funding for construction of water and waste facilities in rural 
communities of 10,000 or less in population.
    While the GAO report on duplicative programs did not specifically 
address water and waste funding at USDA, there are a number of Federal 
programs that provide financing for water and waste infrastructure.
    Other federally-funded programs that fund water and waste 
infrastructure in rural areas include:

   State Revolving Funds (Environmental Protection Agency (EPA) 
        pass-through funding-Clean Water State Revolving Fund and 
        Drinking Water State Revolving Fund);

   EPA (State and Tribal Assistance Grants, United States-
        Mexico border, Tribal);

   Department of Commerce--Economic Development Agency can 
        assist in financing infrastructure when tied to jobs and 
        economic development;

   Department of Housing and Urban Development community 
        development block grants (CDBG), Community Investment Funds 
        (CIF), Colonias, and Tribal);

   Appalachian Regional Commission (ARC) which is implemented 
        through RD;

   Indian Health Service; and

   Delta Regional Authority.

    What sets USDA Apart from other programs?

   WEP is the only program that is exclusively focused on rural 
        water and waste infrastructure needs, working only with rural 
        areas with populations of 10,000 or less.

   Most RD projects serve areas well below 10,000 in 
        population. The average RD project serves fewer than 2000 
        equivalent dwelling units.

     In FY 2010, 80 percent of funded projects served 
            populations of 5,000 or less;

     65 percent serve communities of 2,500 or less;

     51 percent serve populations below 1,500; and

     43 percent were for projects serving less than 1,000 
            people.

   Applicants must demonstrate that they need Federal 
        assistance because they cannot obtain credit from commercial 
        lenders or investors, and they have urgent needs for water or 
        wastewater improvements.

   The program is a needs-based program, where loan and grant 
        are combined based on strict underwriting process to keep rates 
        reasonable for rural residents.

   Other Federal programs serve both large and small systems. 
        Small rural communities must compete with larger projects for 
        limited funding.

     For example, in 2009, while 77 percent of the loans 
            made by EPA State Revolving Funds for wastewater 
            infrastructure upgrades went to communities less than 
            10,000 in population, those loans represented only 23 
            percent of the total funding available.

     State Administered HUD/CDBG grants are available to 
            communities of 50,000 or less population and counties up to 
            200,000.

   The program has been recognized by OMB as one of the most 
        effective lending programs in the Federal Government.

    Regarding Circuit Rider, there is no overlap with RD programs which 
provide support grants and loans for water and wastewater treatment, 
distribution, and collection systems.
12. Waste, Fraud and Abuse
    RD's Water and Waste Disposal Loan and Grant programs have 
standardized procedures and guidance, as well as strong internal 
controls to prevent fraud waste and abuse. Vulnerability Assessments 
are conducted annually. In addition, management control reviews and 
State Program reviews are conducted to identify and correct potential 
problem with underwriting and servicing activities. The regular program 
and ARRA funding have been audited twice over the last 2 years by the 
USDA's Office of Inspector General (OIG). No findings of fraud, waste 
or abuse were made in either audit.
    The September 2010 USDA OIG report (OIG Audit Report 09601-1-At, 
Rural Utilities Service Controls Over Water and Waste Disposal Loans 
and Grants) on program delivery stated, ``Generally, we found RUS' 
internal controls to be adequately designed and operating for the 
locations we reviewed.'' Where recommended by OIG, the program enhanced 
guidance to employees to better clarify program regulations.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Distance Learning, Telemedicine, and Broadband Program.
2. Subprograms/Department Initiatives

------------------------------------------------------------------------
                                            Federal
                           2008 Farm      Agricultural
       Description            Bill      Improvement and     U.S. Code 7
                            Section      Reform Act of        U.S.C.
                                          1996 Section
------------------------------------------------------------------------
Distance Learning and            6201                704  950aaa et seq.
 Telemedicine Loans
Distance Learning and            6201                704  950aaa et seq.
 Telemedicine Grant
 Program
Distance Learning and            6201                704  950aaa et seq.
 Telemedicine
 Combination Loan-Grant
 Program
Public Television                6014       CONACT 2005,    P.L. 108-447
 Digital Transition                            Title III
 Grant Program
Delta Health Care                6025      CONACT  379G           2008u
 Services Grant Program
Rural Broadband Access           6110       RE Act  601           950bb
 Loan and Loan Guarantee
 Program
Broadband Initiatives                               ARRA      P.L. 111-5
 Program (STIMULUS)
Weather Radio                    6021      CONACT  379B    P.L. 108-119
 Transmitter Grant
 Program
Community Connect Grant          6005                (*)
 Program
------------------------------------------------------------------------
Note: CONACT is the Consolidated Farm and Rural Development Act.
* Historically appeared as an annual earmark in appropriations bills.

3. Brief History
    The Rural Broadband Access Loan and Loan Guarantee Program was 
established by the 2002 Farm Bill; the Distance Learning and 
Telemedicine Programs were established by the Federal Agriculture 
Improvement Act of 1996. The farm bill has made changes to these 
provisions.
4. Purpose/Goals
    Community Connect Grant Program

    This program provides grants to rural communities with populations 
of 20,000 or less that do not currently have access to broadband 
services. The grant provides funding for a Community Center open to the 
public and broadband infrastructure provided to critical facilities in 
the community such as public safety, local government, and educational 
institutions.

    Public Television Digital Transition Grant Program

    This program provides grants to assist public television stations 
serving rural populations in transitioning to digital broadcast 
television transmission. Funds may be used to acquire and install 
facilities and software necessary for the transition. Grant funds may 
also be used for associated engineering and environmental studies.

    Weather Radio Transmitter Grant Program

    This program provides grant funds to finance the installation of 
new transmitters to extend the coverage of the National Oceanic and 
Atmospheric Administration's Weather Radio system (NOAA Weather Radio) 
in rural America. Grant funds are available to facilitate the expansion 
of NOAA Weather Radio system coverage into rural areas that are not 
covered or are poorly covered.

    Delta Health Care Services Grant Program

    The Delta Health Care Services Grant Program is authorized under 
Section 379G of the Consolidated Farm and Rural Development Act to 
provide financial assistance to address the continued unmet health 
needs in the Delta region through cooperation among health care 
professionals, institutions of higher education, research institutions, 
and other individuals and entities in the Delta Region. Grants are 
available to eligible entities in the Delta region serving communities 
of no more than 50,000 inhabitants.

    Rural Broadband Access Program

    This program is designed to provide loans for funding, on a 
technology neutral basis, for the costs of construction, improvement, 
and acquisition of facilities and equipment to provide broadband 
service to eligible rural communities.

    Distance Learning and Telemedicine Program (DLT)

    DLT is designed to bring educational and health care services to 
rural America. Through loans, grants, and loan/grant combinations, RUS 
provides financial assistance for end-user equipment to provide 
enhanced learning and health care opportunities for rural residents.

                                                    5. Success in Meeting Programmatic Purpose/Goals
 
 
 
    Performance measures have been developed for DLT and Farm Bill Broadband Programs as indicators of programmatic success.
 


 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Distance Learning and Telemedicine                          2007            2008            2009            2010            2011
                                                                         -------------------------------------------------------------------------------
                                                                                     Counties Served
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of counties served by entities           Target                               380             695             400             380             380
 receiving distance learning and telemedicine   Actual                               392             586             754             633             N/A
 funding
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Actual is from FY 2010 funds obligated in FY 2011.


 
 
 
    The 2008 Farm Bill required changes to the Rural Broadband Access loan program which was authorized under the 2002 Farm Bill, last revised in 2008.
 An Interim Rule was published on March 14, 2011. The Rural Broadband Access loan program provides funding for broadband infrastructure in communities
 with a population of 20,000 or less.
 


 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         Rural Broadband Access                                2007            2008            2009            2010            2011
                                                                         -------------------------------------------------------------------------------
                                                                              Borrowers' Subscribers Served
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of borrowers' subscribers receiving new  Target                           190,000         240,000         230,000         350,000         300,000
 or improved service                            Actual                           356,440         775,341         187,399         136,694             N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 Funding provided under ARRA was flexible (loans, grants and loan/grant combos) and therefore more conducive to bringing broadband to rural America;
  therefore, regular program loans funds were not requested during ARRA. Telecommunications Program data also includes broadband funding under
  traditional infrastructure program authorized by REA.


 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Rural Broadband Access ARRA                             2007            2008            2009            2010            2011
                                                                         -------------------------------------------------------------------------------
                                                                              Borrowers' Subscribers Served
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of borrowers' subscribers receiving new  Target                               (1)             (1)             (1)             N/A             (1)
 or improved service                            Actual                               (1)             (1)             (1)         847,239
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 ARRA funding was not available for these years.


 
 
 
    Note: See section at end with all REA Title II programs (Electric and Telecom).
 


                                  6. Annual Budget Authority (FY 2007-FY 2011)
----------------------------------------------------------------------------------------------------------------
               Program                     2007            2008           2009           2010           2011
----------------------------------------------------------------------------------------------------------------
                        Distance Learning a$44,486-medicine$54,565        $63,780        $84,691        $68,090
                     and Broadband
                   Broadband ARRA              (1)             (1)             $0     $2,423,536            (1)
----------------------------------------------------------------------------------------------------------------
1 ARRA funding was not available for these years.


 
 
 
    Note: See section at end with all REA Title II programs (Electric and Telecom).
 


                                       7. Annual Outlays (FY 2002-FY 2011)
                                             (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
                                           2007            2008           2009           2010           2011
----------------------------------------------------------------------------------------------------------------
                        Distance Learning a$46,428medicine $48,542       $134,694        $69,164       $305,143
                and Broadband Pro-
                             gram
----------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with obligations. Programs disburse over numerous years.
  Undisbursed balances are carried forward for future year outlays.


 
 
 
    Note: See section at end with all REA Title II programs (Electric and Telecom).
 


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                                 2007 Amount  2008 Amount  2009 Amount  2010 Amount  2011 Amount
                    Program                         ($000)       ($000)       ($000)       ($000)       ($000)
----------------------------------------------------------------------------------------------------------------
                  Treasury Distance Learning Loans, Distance Learning and Telemedicine Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                      $59,400      $43,242      $54,741           $0      $30,255
  Budget Authority                                   $27,691      $30,429      $33,366           $0      $30,255
  S&E                                                 $1,930       $1,875       $2,048       $2,125       $2,125
                                                ----------------------------------------------------------------
    Total Costs                                      $29,621      $32,304      $35,414       $2,125      $26,974
    FTEs                                                  17           17           18           18           18
----------------------------------------------------------------------------------------------------------------
                             Con Farm & RD Act, Sec 379G Health Care Services Grant.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                                                                  $0       $2,994
  Budget Authority                                                                               $0       $2,994
  S&E                                                                                            $0           $0
                                                ----------------------------------------------------------------
    Total Costs                                                                                  $0       $2,994
    FTEs                                                                                          0            0
----------------------------------------------------------------------------------------------------------------
              Broadband Telecommunication Loans and Grants, and Public Broadcasting System Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                     $266,252     $459,124     $425,069      $78,924     $343,533
  Budget Authority                                   $20,689      $30,076      $34,681      $10,006      $40,145
  S&E                                                 $7,618       $7,398        $8,85       $8,387       $8,387
                                                ----------------------------------------------------------------
    Total Costs                                      $28,307      $37,474      $42,766      $18,393      $48,532
    FTEs                                                  70           66           70           71           71
----------------------------------------------------------------------------------------------------------------
  Direct Broadband Telecommunications Loans--Treasury Rate--Stimulus, and Broadband Telecommunications Grants--
                                                    Stimulus.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                                                          $3,529,091           $0
  Budget Authority                                                                       $2,423,536           $0
  S&E                                                                                           (a)          (a)
                                                ----------------------------------------------------------------
    Total Costs                                                                          $2,423,536           $0
    FTEs                                                                                          0           0
----------------------------------------------------------------------------------------------------------------
a RUS is unable to provide a break out of S&E costs for Recovery Act implementation.


                                                                 9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Eligible Areas                                    Funding Limits Per         Loan Terms, if
         Program           Eligibility (Entities)         (Populations)           Eligible Purpose              Request                 Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and     Public body, Indian       Areas outside             In addition to the DLT    Minimum loan-grant       Loan interest rate is
 Telemedicine Loans        tribe, cooperative,       incorporated or           Combination Loan-Grant    amount: $50,000          the Treasury interest
                           nonprofit, limited        unincorporated cities     Program purposes, loans  Maximum amount: $10       rate at date of
                           dividend or mutual        with population over      may be used for certain   Million                  advance; up to 10 year
                           association,              20,000.                   broadcasting and                                   amortization,
                           municipality,                                       operational costs,                                 determined by useful
                           libraries, corporations                             except salaries and                                life of facilities
                           and other legally-                                  administrative expenses                            financed.
                           organized entities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and     Public body, Indian       Areas outside             To provide end-user       Minimum grant amount:    15 percent matching
 Telemedicine Grant        tribe, cooperative,       incorporated or           equipment and             $50,000.                 funds required.
 Program                   nonprofit, limited        unincorporated cities     programming that         Maximum grant amount:
                           dividend or mutual        with population over      delivers distance         $500,000.
                           association,              20,000.                   learning and
                           municipality,            Smaller communities        telemedicine services
                           libraries, corporations   receive more points.      into eligible areas.
                           and other legally-
                           organized entities.
                          RUS electric and
                           Telephone Loan
                           borrowers not eligible.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distance Learning and     Public body, Indian       Areas outside             In addition to the DLT    Minimum loan-grant       Loan interest rate is
 Telemedicine              tribe, cooperative,       incorporated or           Grant Program purposes,   amount: $50,000          the Treasury interest
 Combination Loan-Grant    nonprofit, limited        unincorporated cities     loans may provide DLT    Maximum amount: $10       rate at date of
 Program                   dividend or mutual        with population over      across a single           Million                  advance; up to 10 year
                           association,              20,000.                   facility, may provide                              amortization,
                           municipality,                                       new building space,                                determined by useful
                           libraries, corporations                             including land,                                    life of facilities
                           and other legally-                                  buildings, and building                            financed.
                           organized entities.                                 construction, and
                          RUS electric and                                     telecommunications
                           Telephone Loan                                      transmission
                           borrowers not eligible.                             facilities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Public Television         Public digital            Areas outside             Grant funds may be used   Maximum amount: $        N/A
 Digital Transition        television stations       incorporated or           to acquire, lease, and/   750,000 per applicant
 Grant Program             that serve rural areas    unincorporated cities     or install facilities     per year
                                                     with population over      and software necessary
                                                     20,000--station           for transition to
                                                     applicants must           digital signal
                                                     demonstrate core rural
                                                     coverage
--------------------------------------------------------------------------------------------------------------------------------------------------------
Delta Health Care         Consortium of regional    The distinct northwest    The development of        Minimum Grant amount:    N/A
 Services Grant Program    institutions of higher    section of the state of   health care services,     $50,000
                           education, academic       Mississippi, known as     health education
                           health and research       the Delta Region,         programs, health care
                           institutes and economic   consisting of 18          job training programs
                           development entities      counties                  and the development and
                           located in the Delta     Further limited to         expansion of public
                           region                    include only those        health-related
                                                     areas in the Delta        facilities
                                                     Region (a) not included
                                                     within the boundaries
                                                     of any incorporated or
                                                     unincorporated city,
                                                     village, or borough
                                                     having a population
                                                     greater than 50,000 and
                                                     (b) any urbanized area
                                                     contiguous and adjacent
                                                     to a city or town
                                                     described in (a).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Broadband Access    RUS makes broadband       An eligible rural area
 Loan and Loan Guarantee   loans and loan            means any area, as
 Program                   guarantees to legally     confirmed by the latest
and                        organized entities        decennial census of the
Broadband Initiative       providing, or proposing   Bureau of the Census,
 Program (Stimulus)        to provide, broadband     which is not located
                           services in eligible      within
                           rural communities.
                           Types of eligible
                           entities include:
                           cooperative, nonprofit,
                           limited dividend or
                           mutual associations,
                           limited liability
                           companies, Indian
                           tribes and tribal
                           organizations, and
                           commercial
                           organizations.
                           Individuals or
                           partnerships are not
                           eligible.
 
 
                                                                              Finance the               Maximum loan amount:     Interest rates:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Weather Radio             Public body; an Indian    A single community        To build broadband        Min. $50,000             N/A
 Transmitter Grant         tribe; a cooperative,     outside incorporated or   infrastructure and       Max. $1,000,000
 Program                   nonprofit, limited        unincorporated cities     establish a community    Amounts are published
                           dividend or mutual        with population over      center which offers       in NOFAs and may vary
                           association;              20,000 which does not     free public access to
                           municipality;             have broadband            broadband for 2 years.
                           corporations and other
                           legally organized
                           entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Community Connect Grant   Public body; an Indian    A single community        To build broadband        Min. $50,000             N/A
 Program                   tribe; a cooperative,     outside incorporated or   infrastructure and       Max. $1,000,000
                           nonprofit, limited        unincorporated cities     establish a community    Amounts are published
                           dividend or mutual        with population over      center which offers       in NOFAs and may vary
                           association;              20,000 which does not     free public access to
                           municipality;             have broadband            broadband for 2 years.
                           corporations and other
                           legally organized
                           entities
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
   DLT: As of September 30, 2010, there were 26 active 
        borrowers (no loan funds have been available).

   There are 115 public television digital transition grant 
        awardees.

   There have been no Delta Health grant awards to date. Awards 
        are expected September 2011.

   For the Broadband Loan and Loan Guarantee Program, as of 
        September 30, 2010, there were 71 active borrowers.

   There have been 217 NOAA Weather Radio grant awards.

   There have been 197 Community Connect broadband grant 
        awards.
11. Duplication or Overlap with Other Programs
    We are unaware of other Federal programs that fund distance 
learning and telemedicine services with the same requirements and 
eligibility as the USDA program.
    Funding for emergency communications may also be available from 
other agencies such as NOAA. USDA and NOAA work closely together.
    In 2009-2010, the Department of Commerce was authorized under ARRA 
to provide grant funding for broadband infrastructure. Extensive 
coordination occurred between both Agencies.
    Funding for DLT services may be available from other Federal 
agencies such as FCC and HHS RUS coordinates closely with the Agencies 
and we participate in each other's outreach events.
12. Waste, Fraud and Abuse
    RUS closely monitors loan performance to ensure that there is no 
fraud, waste, or abuse. If any is suspected, RUS officials work closely 
with the OIG to investigate and, if necessary, prosecute any offender. 
For example, Sequelle Communications, a pilot Broadband Loan Program 
borrower, was referred to the OIG for investigation by RUS. With the 
assistance of RUS, the former CEO of Sequelle was convicted of money 
laundering and conspiracy, sentenced to 18 months in prison, and 
required to pay approximately $848,000 in retribution. In addition, 
another officer of Sequelle and another company pled guilty to money 
laundering, received probation sentences, and were ordered to pay 
restitution of $549,000 and $1.5 million, respectively. RUS is 
beginning to receive some restitution payments and should continue to 
receive them over many years as the court did not impose any deadline 
for when the entire amount should be paid.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Electric Programs.
2. Subprograms/Department Initiatives
    Subprograms include:

------------------------------------------------------------------------
                           2008 Farm
       Description            Bill       RE Act Section     U.S. Code 7
                            Section                           U.S.C.
------------------------------------------------------------------------
Hardship (Direct) Loan           6102          305(c)(1)       935(c)(1)
 Program
Federal Financing Bank           6102                306             936
 Guaranteed Loan Program
Renewable Loan Program           6108                317          940(g)
High Energy Cost Grants
 & Loans Program:
 
   High Energy                                         918(a)(1)
   Cost Grants
 
   Denali                                              918(a)(2)
   Commission Grants
 
   State Bulk                                 19       918(a)(3)
   Fuel Revolving Fund
   Grants
 
Bond and Note Guarantee          6106               313A       940(c)(1)
 Program for Publicly
 Issued Securities
------------------------------------------------------------------------

3. Brief History
    The Rural Electrification Direct and Guaranteed Loan Programs and 
the High Energy Cost Grant Program have permanent authorizations under 
the Rural Electrification (RE) Act of 1936 (7 U.S.C. 901 et seq.) and 
are not authorized under the farm bill. However, the farm bill can and 
often does amend the permanent authorities. The bond and note guarantee 
program under section 313A of the RE Act was authorized under the 2008 
Farm Bill and is authorized through September 30, 2012.
    Subtitle B of Title VI of the 2008 Farm Bill modified and added new 
authority under the RE Act as follows:

   Section 6101, Energy Efficiency Programs, amended sections 2 
        and 4 of the RE Act to explicitly authorize loans to electric 
        borrowers to implement energy efficiency programs, codifying 
        long-standing USDA policy.

   Section 6102, Direct Electric Loan Authority, amended 
        section 4 of the RE Act reinstating direct lending authority 
        for hardship loans and other direct loans. It deleted language 
        requiring the Federal Financing Bank (FFB) to make loans to 
        electric borrowers under the section 306 guaranteed loan 
        program. Funding levels will be set by appropriations. FFB loan 
        guarantees are still available as provided by appropriations.

   Section 6103, Deferments for Energy Efficiency and Demand 
        Reduction, amended section 12 to allow electric borrowers to 
        defer principal and interest payments on direct loans for up to 
        60 months to make loans to residential, commercial, and 
        industrial customers for energy audits and installation of 
        energy efficiency, and/or demand reduction measures and 
        devices.

   Section 6104, Definition of Rural Area, amended the section 
        13 definition of a ``rural area'' for purposes of electric 
        loans eligibility by cross reference to section 343(a)(13)(C) 
        of the Consolidated Farm and Rural Development Act (7 U.S.C. 
        1991(a)(13)(C)) to mean any area that excludes a city or town 
        of 20,000 or more, or is an area within the service area of a 
        borrower with an outstanding loan under titles I through V of 
        the RE Act. This amendment expands eligibility for electric 
        loans for rural areas from the prior limit to non-urbanized 
        places of less than 2,500 and codifies the ``once rural, always 
        rural'' policy under the RE Act.

   Section 6105, Substantially Underserved Trust Areas, 
        provides new authority Secretary to adapt RUS loans and grants 
        requirements to facilitate the construction, acquisition, or 
        improvement of infrastructure projects in ``Substantially 
        underserved trust areas'' defined as Native American trust 
        lands where more than 20 percent of population does not have 
        electric, telecommunications, broadband, or water service.

   Section 6106, Guarantees for Bonds and Notes Issued for 
        Electrification or Telephone Purposes, amended section 313A to 
        extend authority to guarantee bonds and notes issued by 
        nonprofit cooperative lenders to September 30, 2012 at an 
        annual authorization of $1 billion.

   Section 6108, Electric Loans for Renewable Energy, added new 
        section 317 providing authority to make loans for electric 
        generation from renewable energy resources for resale to rural 
        and nonrural residents. Eligible renewable energy resources 
        include energy conversion systems fueled from solar, wind, 
        hydropower, biomass, or geothermal sources. The interest rate 
        for these loans is set at the average tax-exempt municipal bond 
        rate of similar maturities. Funding is dependent on 
        appropriations.

    Since 2005, the electric loan programs have approved over $34.4 
        billion in financing for rural electric systems. In 2010, the 
        program approved 174 loans totaling $7.1 billion. The funds 
        were used by rural utilities to construct new or improved 
        electric distribution, transmission and generation facilities 
        to provide electric service in rural areas, supporting economic 
        development and modernizing community infrastructure. The 
        investment of the electric loan funds creates and maintains 
        jobs in rural communities. Interest in financing renewable 
        energy and energy efficiency programs through the electric 
        programs is growing. In 2010, the program approved over $313.3 
        million in loan guarantees for new renewable electric 
        generation projects. The electric programs have adopted a 
        progressive management approach by enhancing use of automated 
        systems to support loan and grant management and innovating new 
        products and procedures to support renewable energy 
        initiatives. The program continues its commitment to, 
        maintaining a workplace that values employees, and provides 
        high-quality service to its customers.
4. Purpose/Goals
    The RE Act authorized assistance for rural electrification and for 
furnishing and improving electric service in rural areas, including the 
construction and operation of generating plants, electric transmission 
and distribution lines, and assisting electric borrowers to implement 
demand side management, energy efficiency and conservation programs, 
and on-grid and off-grid renewable energy systems.
    In support of this purpose, the RE Act authorizes a variety of 
loan, loan guarantee, and grant programs, including the rural 
electrification loan programs (RE Act, sections 4, 305 and 306), the 
nonprofit lender bond and note guarantee program (section 313A), the 
High Energy Cost Grant Program (section 19), and the Renewable Energy 
Loan Program (section 317).

                                                    5. Success in Meeting Programmatic Purpose/Goals
 
 
 
    The RUS electric loan programs have exceeded their targets from FY 2008 to FY 2010. In FY 2010, the electric programs approved 174 direct loans and
 loan guarantees totaling $7.1 billion. USDA approved 160 distribution loans totaling about $3.5 billion, 13 power supply (generation and transmission)
 Federal Financing Bank (FFB) loans totaling about $3.2 billion, and four direct hardship distribution loans totaling $100 million. In addition, USDA
 approved one nonprofit lender bond and note guarantee of $0.5 billion for relending for eligible electric and telephone purposes.
 


 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                Electric                                       2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of program borrowers' consumers          Target                         2,390,000       7,125,000       6,125,000       7,100,000       6,125,000
 receiving new or improved electric service     Actual                         8,000,000       7,130,000       7,100,000       9,420,832             N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                         Budget Authority (in thousands)
----------------------------------------------------------------------------------------------------------------
               Program                     2007            2008           2009           2010           2011
----------------------------------------------------------------------------------------------------------------
                        Electric Loans      $3,614          $119.2             $0             $0           $699
          High Energy Cost Grants          $25,740         $19,860        $17,500        $17,500        $11,976
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                      Account
           Account Name                Number    2007 Actual  2008 Actual  2009 Actual  2010 Actual  2011 Target
----------------------------------------------------------------------------------------------------------------
    Rural Electric and Telephone           1230     $160,070      $82,267     $799,017     $606,031     $400,013
                        Program 1
         High Energy Cost Grants           2042      $31,550      $16,422      $22,347      $17,376      $37,000
----------------------------------------------------------------------------------------------------------------
1 Outlays are reported under one account which includes both the Electric and Telephone programs.


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                                 2007 Amount  2008 Amount  2009 Amount  2010 Amount  2011 Amount
                    Program                         ($000)       ($000)       ($000)       ($000)       ($000)
----------------------------------------------------------------------------------------------------------------
    Direct Electric Loans, Treasury Electric Loans, Municipal Electric Loans, FFB Electric Loans, Guaranteed
                       Electric Loans and Electric Underwriting Loans for Bonds and Notes.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                   $3,889,764   $7,099,300   $6,600,000   $7,100,000   $6,600,000
  Budget Authority                                    $3,640         $119           $0           $0           $0
  S&E                                                $19,876      $19,300      $21,094      $21,886      $21,886
                                                ----------------------------------------------------------------
    Total Costs                                      $23,516      $19,419      $21,094      $21,886      $22,585
    FTEs                                                 182          171          185          185          185
----------------------------------------------------------------------------------------------------------------
                                             High Energy Cost Grants.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                      $19,687      $21,260      $37,000      $17,954      $11,976
  Budget Authority                                   $19,687      $21,260      $37,000      $17,954      $11,976
  S&E                                                    (a)          (a)          (a)          (a)          (a)
    Total Costs                                      $19,687      $21,260      $37,000      $17,954      $11,976
    FTEs                                                 (a)          (a)          (a)          (a)          (a)
----------------------------------------------------------------------------------------------------------------
a S&E funds associated with the High Energy Cost Grants program is included in the S&E section for the entire
  electric program.


                                                                 9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Eligible Areas                                    Funding Limits Per         Loan Terms, if
         Program           Eligibility (Entities)         (Populations)           Eligible Purpose              Request                 Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hardship Loan Program     Corporations, States,     Rural areas outside the   Electric distribution     Not Applicable           Up to 35 years, based
 (Section 305)             Territories, and          boundaries of a city or   and sub-transmission                               on the expected useful
                           Subdivisions and          town of more than         facilities                                         life of the facilities
                           Agencies,                 20,000 population and                                                        financed by the loan
                           Municipalities,           areas served by an
                           People's Utility          existing electric
                           Districts, and            borrower.
                           Distribution
                           Cooperatives, nonprofit
                           and limited-dividend,
                           Or Mutual Associations
--------------------------------------------------------------------------------------------------------------------------------------------------------
FFB Guaranteed Loan       Corporations, States,     Rural areas outside the   Electric distribution,    No limit.                Up to 35 years, based
 Program (Section 306)     Territories, and          boundaries of a city or   sub-transmission, bulk                             on the expected useful
                           Subdivisions and          town of more than         transmission, and                                  life of the facilities
                           Agencies,                 20,000 population and     generation facilities,                             financed by the loan
                           Municipalities,           areas served by an        energy efficiency
                           People's Utility          existing electric         investments, and
                           Districts, and            borrower.                 renewable energy
                           Cooperatives, nonprofit                             systems
                           and limited-dividend,
                           Or Mutual Associations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bond and Note Guarantee   Cooperative or other      None                      Proceeds to be used to    None                     20 years (by
 Program (Section 313A)    lenders organized on a                              make loans for eligible                            regulation)
                           nonprofit basis                                     electric or telephone                             Annual guarantee fee of
                                                                               purposes, excluding                                30 basis points
                                                                               electric generation, or                            supports the Rural
                                                                               to refinance bonds or                              Economic Development
                                                                               notes previously issued                            Loan and Grant
                                                                               for such purposes.                                 (REDLEG) program under
                                                                                                                                  section 313(b)(2)(A)
                                                                                                                                  of the RE Act.
--------------------------------------------------------------------------------------------------------------------------------------------------------
High Energy Cost Grants
 & Loans Programs:
 
  High Energy Cost        Persons, For Profit and   Extremely high energy     Energy distribution,      Administrative and       N/A
   Grants                  Not For Profit            cost communities with     transmission and          planning costs may not
                           Businesses, State &       annual average            generation facilities     exceed 4% of funds
                           Local Governments, and    residential energy        (including energy         provided
                           Federally-Recognized      expenditures is 275% of   efficiency & renewable
                           Indian Tribes & Tribal    national average.         energy) serving
                           entities                                            eligible communities
  Denali Commission       Denali Commission         Extremely high energy     Energy distribution,      Administrative and       N/A
   Grants                                            cost communities in       transmission and          planning costs may not
                                                     Alaska                    generation facilities     exceed 4% of funds
                                                                               (including energy         provided
                                                                               efficiency & renewable
                                                                               energy) serving
                                                                               eligible communities in
                                                                               Alaska.
  State Bulk Fuel         State Entity existing as  Rural areas where fuel    Establishment of Fuel     Administrative and       N/A
   Revolving Fund Grants   of 11/9/2000              cannot be shipped by      Purchase Revolving Fund   planning costs may not
                                                     surface means                                       exceed 4% of funds
                                                                                                         provided
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
    The electric programs services 667 active electric borrowers and 
grantees in 46 states, Puerto Rico, American Samoa, and the Republic of 
the Marshall Islands. During FY 2011, the Agency has approved more than 
$1.9 billion in loan guarantees.
    The High Energy Cost Grant Program's FY 2010 Notice of Funding 
Availability for $15.5 million in competitive grants received over 100 
applications from 18 states and eight eligible insular areas.
11. Duplication or Overlap with Other Programs
    The Rural Electrification Loan programs are the primary source of 
electric infrastructure financing for rural electric providers in 46 
states. All RUS loans must demonstrate financial feasibility, 
assurances of repayment, and adequate loan security. There is no 
overlap between the electric loan program and other USDA energy loan 
and grant programs because electric infrastructure is not an eligible 
purpose under those programs. The U.S. Department of Energy Loan 
Guarantee Programs are intended to provide incentives for high risk 
technology innovation, advanced nuclear power generation, and advanced 
clean energy technology projects, but does not support loans for 
traditional electric infrastructure.
    The High Energy Cost Grant Program differs from other USDA and 
Department of Energy grant programs in that it is targeted at extremely 
high cost rural communities, includes a broad range of eligible energy 
project activities, including traditional infrastructure, renewable 
energy and energy efficiency, and permits applications from tribes, 
tribal entities, state and local governments, school districts, and 
other for profit and not for profit entities, that are not eligible 
under other loan or grant programs.
12. Waste, Fraud and Abuse
    The Electric Programs does not have any outstanding issues with 
respect to overpayments, waste, fraud, or abuse identified by the 
Department or other government agency. There are no outstanding audits 
for these programs.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Telecommunications Program.
2. Subprograms/Department Initiatives

------------------------------------------------------------------------
                           2008 Farm
       Description            Bill       RE Act Section     U.S. Code 7
                            Section                           U.S.C.
------------------------------------------------------------------------
Telecom Hardship Loan             N/A                305       935(d)(1)
 Program (Direct)
Telecom Treasury Rate             N/A          305(d)(2)             935
 Loan Program
Telecom Guaranteed Loan           N/A                306             936
 Program (FFB)
------------------------------------------------------------------------

3. Brief History
    The Telecommunications Loan Program has permanent authorizations 
under the Rural Electrification Act (REA) of 1936.
4. Purpose/Goals
    The Telecommunications Program finances the improvement or 
extension of telecommunications service in rural areas through 
telecommunications borrowers. Borrowers can apply for direct (Treasury 
rate) loans at an interest rate which is tied to the government's cost 
of money. Borrowers can also request FFB loans and guaranteed loans. 
Loans at five percent are available to borrowers that further qualify 
under ``hardship'' conditions, which include subscriber density factors 
and net income projections of the borrowers.

                                                    5. Success in Meeting Programmatic Purpose/Goals
 
 
 
    In FY 2010, the telecommunications program approved $690 million in infrastructure program loans. This funding will allow rural telecommunications
 providers to deploy new or improved service to more than 136,694 rural subscribers. For the last 2 years, 90 percent of the loans financed have been
 for fiber-to-the-home projects to provide fiber-optic service to rural homes and businesses.
 


                                                                 (Dollars in thousands)
 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           Telecommunications                                  2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Number of borrowers' subscribers receiving new  Target                           194,699         194,931         180,000         171,000         120,000
 or improved service                            Actual                           155,135         182,174         175,416         136,694
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Telecommunications includes broadband data. Rural Broadband Access chart also includes broadband data.


                                  6. Annual Budget Authority (FY 2007-FY 2011)
                                         Budget Authority (in thousands)
----------------------------------------------------------------------------------------------------------------
                                           2007            2008           2009           2010           2011
----------------------------------------------------------------------------------------------------------------
                                              $605          $3,595           $525             $0             $0
----------------------------------------------------------------------------------------------------------------


                                       7. Annual Outlays (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                      Account
           Account Name                Number    2007 Actual  2008 Actual  2009 Actual  2010 Actual  2011 Target
----------------------------------------------------------------------------------------------------------------
    Rural Electric and Telephone           1230     $160,070      $82,267     $799,017     $606,031     $400,013
                        Program 1
----------------------------------------------------------------------------------------------------------------
1 Outlays are reported under one account which includes both the Electric and Telephone programs.


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                                 2007 Amount  2008 Amount  2009 Amount  2010 Amount  2011 Amount
                    Program                         ($000)       ($000)       ($000)       ($000)       ($000)
----------------------------------------------------------------------------------------------------------------
      Direct Telecommunications Loans, Treasury Telecommunications Loans, and FFB Telecommunications Loans.
----------------------------------------------------------------------------------------------------------------
Program Items:
  Program Level                                     $376,736     $685,170     $690,000     $690,000     $690,000
  Budget Authority                                      $392       $3,594         $525           $0           $0
  S&E                                                 $8,688       $8,431      $11,047       $9,567       $9,567
                                                ----------------------------------------------------------------
    Total Costs                                       $9,080      $12,026      $11,572       $9,567       $9,567
    FTEs                                                  80           80           97           81           81
----------------------------------------------------------------------------------------------------------------


                                                                 9. Eligibility Criteria
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Eligible Areas                                    Funding Limits Per         Loan Terms, if
         Program           Eligibility (Entities)         (Populations)           Eligible Purpose              Request                 Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Telecom Hardship Loan     For-profit and nonprofit  Areas outside             To build, acquire,        Minimum loan amount:     5 percent fixed
 Program (Direct)          corporations that do or   incorporated or           extend, improve and       $50,000                  interest rate; up to
                           will provide voice and    unincorporated cities     refinance telephone      Maximum loan amount:      35 year amortization,
                           data telecom service      with population over      infrastructure            None                     determined by the life
                                                     5,000                                                                        of facilities
                                                                                                                                  financed.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Telecom Treasury Rate     For-profit and nonprofit  Areas outside             To build, acquire,        Minimum loan amount:     Treasury interest rate
 Loan Program              corporations that do or   incorporated or           extend, improve and       $50,000                  at date of advance; up
                           will provide voice and    unincorporated cities     refinance telephone      Maximum loan amount:      to 35 year
                           data telecom service      with population over      infrastructure            None                     amortization,
                                                     5,000                                                                        determined by the life
                                                                                                                                  of facilities
                                                                                                                                  financed.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Telecom Guaranteed Loan   For-profit and nonprofit  Areas outside             To build, acquire,        Minimum loan amount:     Treasury interest rate
 Program (FFB)             corporations that do or   incorporated or           extend, improve and       $50,000                  plus \1/8\ percent; up
                           will provide voice and    unincorporated cities     refinance telephone      Maximum loan amount:      to 35 year
                           data telecom service      with population over      infrastructure.           None                     amortization,
                                                     5,000.                                                                       determined by useful
                                                                                                                                  life of facilities
                                                                                                                                  financed.
--------------------------------------------------------------------------------------------------------------------------------------------------------

10. Utilization (Participation) Data
    As of September 30, 2010, there were 481 active borrowers.
11. Duplication or Overlap with Other Programs
    We are not aware of other Federal programs that provide funding for 
broadband infrastructure with the same requirements and objectives as 
this program. In 2009-2010, the Department of Commerce was authorized 
under the American Recovery and Reinvestment Act to provide grant 
funding for broadband infrastructure. Additionally, funding is provided 
to RUS telecommunications borrowers from the Federal Communications 
Commission (FCC) through the universal service fund. These funds are 
used as revenue and are considered to be part of the RUS borrower's 
ability to repay Federal debt.
12. Waste, Fraud and Abuse
    We are not aware of any examples of waste, fraud or abuse under 
this program. All previous GAO and OIG recommendations have been 
completed. There are no outstanding audits for these programs.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--Rural 
                      Business-Cooperative Service
1. Program Name
    Rural Business Opportunity Grants (RBOG).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    RBOG was authorized by Section 306(a)(19)(C)(ii) of the 
Consolidated Farm and Rural Development Act (7 U.S.C. 
1926(a)(19)(C)(ii) and reauthorized by the Food, Conservation, and 
Energy Act of 2008 (2008 Farm Bill), Section 6003 (Pub. L. 110-246).
    In addition to a national pool of funds, the program has 
historically operated two Congressionally Mandated set-asides--one for 
Native Americans and another for Rural Economic Area Partnership (REAP) 
zones.
4. Purpose/Goals
    RBOG promotes sustainable economic development in rural communities 
with exceptional needs through provision of training and technical 
assistance for business development, entrepreneurs, and economic 
development officials and to assist with economic development planning.
    RBOG is primarily a training and technical assistance program. 
Funds may be provided for development of export markets; feasibility 
studies; development of long term trade strategies; community economic 
development planning; business training and business based technical 
assistance for rural entrepreneurs and business managers; establishment 
of rural business incubators; and assistance with technology based 
economic development. The types of projects that may be funded could 
include identification and analysis of business opportunities that will 
utilize local material and human resources; leadership development 
training to existing or prospective rural entrepreneurs and managers; 
business support centers; centers for training, technology and export 
trade; and, economic development planning.
5. Success in Meeting Programmatic Purpose/Goals
    In Fiscal Year (FY) 2010, the 27 grants awarded to residents and 
businesses in 17 states totaled $2.6 million and created or saved more 
than 990 jobs. A $249,340 grant was awarded to Ecotrust, an 
organization based in Portland, Oregon, that seeks to create economic 
opportunity, social equity and environmental well-being by 
demonstrating new business models based on economic, social and 
environmental principles, to support their FoodHub initiative, an 
online directory and marketplace that makes it easy for regional food 
buyers and sellers to find each other, connect and do business. The 
grant will aid Ecotrust in increasing recruitment of producers and 
buyers in rural communities and providing the training and assistance 
necessary to ensure FoodHub supports their goals.
6. Annual Budget Authority (FY 2002-FY 2011)
    RBOG budget authority includes:

                                                      RBOG
                                            (in millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                  2007              2008             2009             2010             2011
----------------------------------------------------------------------------------------------------------------
      Budget Authority              $2.97           $2.482           $2.483           $2.483           $2.478
----------------------------------------------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
    RBOG annual outlays included:

------------------------------------------------------------------------
                                             (in millions of dollars)
                                         -------------------------------
     Account Name        Account Number    2007    2008    2009    2010
                                          Actual  Actual  Actual  Actual
------------------------------------------------------------------------
      Rural Business    1902 (RBOG line     $3.1    $4.1    $4.4   $2.9M
          Program Ac-             item)
               count
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)
    RBOG annual delivery costs were:

                                                      RBOG
                                            (in millions of dollars)
----------------------------------------------------------------------------------------------------------------
                                  2007              2008             2009             2010             2011
----------------------------------------------------------------------------------------------------------------
              Program Level         $2.97           $2.482           $2.483           $2.483           $2.478
      Budget Authority              $2.97           $2.482           $2.483           $2.483           $2.478
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Rural public bodies, rural nonprofit corporations, rural Indian 
tribes, and cooperatives with primarily rural members that conduct 
activities for the mutual benefit of the membership are eligible 
provided they have sufficient financial strength and expertise to carry 
out the activity to be funded.
10. Utilization (Participation) Data
    The program is annually over-subscribed (applications received 
exceed available funding). Due to the limited amount of funding 
available, Rural Development has limited the number of applications 
individual states may submit and capped the maximum grant amount 
(applies to the national pool only). In 2010 USDA received 424 eligible 
applications totaling $60 million; only 27 awards totaling $2.6 million 
could be funded.
11. Duplication or Overlap with Other Programs
    The program is unique in that the focus is on provision of 
technical assistance to priority communities (e.g., persistent poverty 
and economic distress) as well as sponsoring best practices for 
economic development activities that are transferable.
    While the program objective is unique, RBOG complements multiple 
other Rural Development (RD) programs including the Rural Business 
Enterprise Grant, Community Facilities and Rural Community Development 
Initiative programs. Further, the RBOG project activities can be 
leveraged with other community development programs outside of the 
Department.
12. Waste, Fraud and Abuse
    There are no reports or audits from GAO and OIG on the RBOG 
program.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Rural Cooperative Development Grants (RCDG).
2. Subprograms/Department Initiatives
        Appropriate Technology Transfer for Rural Areas (ATTRA).
        Cooperative Research Agreements.
        The Small Socially-Disadvantaged Producer Grants (SSDPG).
        Value-Added Agricultural Market Development Grant Program 
        (VAPG).
        Agricultural Marketing Resource Center Grants (AgMRC).
3. Brief History
    RCDG was authorized by section 310B(e) of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1932(e)). Regulations are found in 7 
CFR part 4284, subparts A and F.
    ATTRA was authorized by P.L. 104-37 and amended by Section 6016 of 
the farm bill. It was first authorized by the 1985 Farm Bill and the 
Department received its first appropriation to start the project in FY 
1987. In FY 1990, ATTRA was transferred to the U.S. Fish and Wildlife 
Service and then in FY 1996 the authority to the Rural Business-
Cooperative Service (RBS) for administration. ATTRA is located on the 
University of Arkansas campus at Fayetteville, Arkansas, and functions 
as an information and technical assistance center staffed with 
sustainable agriculture specialists accessible nationally by toll-free 
telephone.
    Cooperative Research Agreements were authorized by the Cooperative 
Marketing Act of 1926, (7 U.S.C. 453).
    Formerly known as the Small Minority Producer Grant program, SSDPG 
was authorized by Public Law 109-97 under the rural cooperative 
development grants authorized under 310(b) of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1932). FY 2006 was the first year this 
program was administered.
    VAPG was authorized by the Agricultural Risk Protection Act of 2000 
and amended by the 2002 and 2008 Farm Bill.
    AgMRC was developed in 2001 and is operated by the Value-Added 
Agriculture Program at Iowa State University Extension and the Arthur 
Capper Cooperative Center at Kansas State University. AgMRC actively 
recruits other institutions, particularly land-grant institutions and 
USDA affiliated institutions for special grant projects or 
subcontracts. More than 22 states have partnered with AgMRC since 2002, 
and a map of those relationships is available.
4. Purpose/Goals
    The purpose of RCDG is to establish and operate centers for 
cooperative development to improve the economic condition of rural 
areas through the development of new cooperatives and improving 
operations of existing cooperatives. RCDG's improve the economic 
condition of rural areas by promoting a range of cooperative 
development activities.
    Grants are made to nonprofit corporations and institutions of 
higher education to operate centers for cooperative development. The 
centers address rural economic problems in two ways. First, a center 
brings together expertise in cooperative development and cooperative 
business operations that would otherwise be more difficult to obtain. 
Second, these experts in cooperative development facilitate new 
cooperative businesses and improve the operations of existing 
cooperatives through technical assistance and educational programs. 
Consequently, RCDG's promote the creation or retention of jobs in rural 
areas through the development of new rural cooperatives, value-added 
processing and other rural businesses.
    ATTRA provides information to farmers and other rural users on a 
variety of sustainable agricultural practices that include both crop 
and livestock operations. The program encourages agricultural producers 
to adopt sustainable agricultural practices, which allow for them to 
maintain or improve profits, produce high quality food and reduce 
adverse impacts to the environment.
    Cooperative Research Agreements Program is a partnership program 
with the nation's colleges and universities that leverage our financial 
and human resources to conduct research on the problems and 
opportunities for the cooperative form of business. Cooperative 
agreements are awarded to 1862 and 1890 Land-Grant Universities, other 
institutions of higher education, and to nonprofits. Cooperative 
agreements are used to encourage research on critical issues vital to 
the development and sustainability of cooperatives as a means of 
improving the quality of life in America's rural communities.
    SSDPG provides grants to assist small, minority agricultural 
producers in rural areas provides funding for cooperatives or 
associations of cooperatives whose primary focus is to provide 
assistance to such producers, and whose governing board and/or 
membership is comprised of at least 75 percent socially disadvantaged 
members. Grants may be used for developing business plans, conducting 
feasibility studies, or developing marketing plans for farmers, 
ranchers, loggers, agricultural harvesters, and fishermen.
    VAPG enable producers of agricultural commodities to participate in 
the economic returns found in the value-added market. Grants may be 
used to develop business plans and develop strategies for creating 
marketing opportunities. Grants may also be used for feasibility 
studies and to provide capital to establish alliances or business 
ventures allowing producers to better compete in domestic and 
international markets. These grants for expansion, modernization or 
start-up, enhance the local job market mix and improve the local tax 
base. As a result, the overall local rural economy is stimulated, jobs 
are created, and quality of life improves.
    AgMRC answers questions and provides information to media, 
investors, bankers, consultants and agricultural students on specific 
topics.

                                                    5. Success in Meeting Programmatic Purpose/Goals
 
 
 
    RCDG performance includes:
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Performance Measures                                 2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Cooperative Development Grants:
  Number of Cooperatives and prospective cooperative groups assisted                 200             225             195             300             300
  Program Dollars (in thousands)                                                  $6,217          $8,933          $8,765         $14,290         $14,487
Value-Added Producer Grants (discretionary):
  Proposed, new, or expanded Value-Added businesses assisted                         185             151             142               0             277
  Program Dollars (in thousands)                                                 $21,203         $23,801         $19,389              $0         $37,736
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      6. Annual Budget Authority (FY 2002-FY 2011)
 
 
 
    Annual budget authority was:
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
                 RBS Coop Grant Programs (in thousands)                        2007            2008            2009            2010            2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural Cooperative Development Grants, Appropriate Technology Transfer,            $6,218          $8,934          $8,769         $14,293         $14,487
 Cooperative Research Agreements, and Grants to Assist Minority
 Producers
Value-Added Agricultural Market Development Grant Program and                    $23,801         $20,333         $20,657         $17,367         $20,367
 Agricultural Marketing Resource Center Grants
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
 
 
 
    Annual outlays were:
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Account Name                        Account Number    2007 Actual     2008 Actual     2009 Actual     2010 Actual     2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cooperative Development Grants                                      1900         $31,488         $29,685         $26,955         $33,880         $31,732
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
 
    Annual obligations were:
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Account Name                        Account Number    2007 Actual     2008 Actual     2009 Actual     2010 Actual     2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cooperative Development Grants                                      1900         $29,875         $29,506         $32,399         $15,393         $48,589
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried
  forward for future year outlays.


                                    8. Annual Delivery Cost (FY 2002-FY 2011)
----------------------------------------------------------------------------------------------------------------
                                                     2007         2008         2009         2010         2011
----------------------------------------------------------------------------------------------------------------
   Rural Cooperative Development Grants, Appropriate Technology Transfer, Cooperative Research Agreements, and
                                      Grants to Assist Minority Producers.
----------------------------------------------------------------------------------------------------------------
Program Level                                         $6,218       $8,934       $8,769      $14,293      $14,487
Budget Authority                                      $6,218       $8,934       $8,769      $14,293      $14,487
Administrative Costs (Direct)                           $246         $214         $262         $157         $157
Administrative Costs (Indirect)                          N/A          N/A          N/A         $403         $403
                                                ----------------------------------------------------------------
  Total Costs                                         $6,464       $9,148       $9,031      $14,853      $15,047
    FTEs                                                   2            2            2            2            2
                                                ----------------------------------------------------------------
Performance measure: No. Groups assisted                 187          175          150          300          360
Cost per Measure (unit cost)                          $34.57       $52.27       $60.21       $49.51       $41.80
----------------------------------------------------------------------------------------------------------------
        Value-Added Agricultural Product Market Development Grants & Agricultural Mtng. Res. Center Grants
----------------------------------------------------------------------------------------------------------------
Program Level                                        $23,801      $20,333      $20,657      $17,367      $20,367
Budget Authority                                     $23,801      $20,333      $20,657      $17,367      $20,367
Administrative Costs (Direct)                         $1,167       $1,171       $1,311         $468         $468
Administrative Costs (Indirect)                                                              $1,205       $1,205
                                                ----------------------------------------------------------------
  Total Costs                                        $24,968      $21,504      $21,968      $19,040      $22,040
  FTEs                                                    11           10           11           11           11
                                                ----------------------------------------------------------------
Performance Measure: No. of businesses assisted          151          150          192          127          150
Cost per Measure (unit cost)                         $165.35      $143.36      $114.42      $149.92      $146.93
----------------------------------------------------------------------------------------------------------------

9. Eligibility Criteria
    Under RCDG, nonprofit corporations and institutions of higher 
education are eligible.
    For ATTRA, farmers and other rural users or anyone with a need for 
agricultural related information are eligible.
    Regarding Cooperative Research Agreements, research proposals are 
solicited from institutions of higher education or nonprofit 
organizations interested in applying for competitively awarded 
cooperative agreements for research related to agricultural and 
nonagricultural cooperatives serving rural communities.
    For the SSDPG, socially disadvantaged persons or 100 percent 
socially-disadvantaged producer-owned entities, including farmers, 
ranchers, loggers, agricultural harvesters, and fishermen, that have 
averaged $250,000 or less in annual gross sales of agricultural 
products in the last 3 years are eligible. A socially-disadvantaged 
producer for SSDPG purposes means individual agricultural producers who 
have been subjected to racial, ethnic or gender prejudice because of 
their identity as members of a group, without regard for their 
individual qualities.
    Under VAPG, eligible applicants are independent producers, farmer 
and rancher cooperatives, agricultural producer groups, and majority-
controlled producer-based business ventures.
    AgMRC services are available to independent producers, processors, 
and service providers with critical information to build successful 
value-added agricultural enterprises. In order to better serve our core 
audience, the AgMRC website just completed a reorganization and new 
graphical update, giving users a clean, contemporary design and giving 
clear organization to files.
10. Utilization (Participation) Data
    The last time funding for the Value-Added Grant Program was 
announced, there were 550 applicants requesting $56.4 million, but only 
196 projects totaling $22.7 million could be awarded.
11. Duplication or Overlap with Other Programs
    The purposes of these programs are unique. RCDG and SSDPG focus on 
providing technical assistance to existing, new, or developing 
cooperative businesses. RBS is the sole provider of research, 
information and technical assistance specifically targeted to support 
cooperatives.
    While these programs are unique, they can complement a number of 
other programs within USDA, most notably, programs administered by 
Agricultural Marketing Service (AMS). The AMS Federal-State Marketing 
Improvement Program (FSMIP), Farmers Market Promotion Program (FMPP) 
and Specialty Crop Block Grant programs can be used in conjunction with 
RCDG programs to enhance or expand the scope or scale of a project. 
Further, programs under RCDG can also compliment a number of other RD 
programs including, but not limited to, the Rural Business Enterprise 
Grant, Business and Industry Guaranteed Loan, Community Facilities, and 
Renewable Energy for America Program.
12. Waste, Fraud and Abuse
    There have been no reports of such problems with any of the 
programs included under RCDG.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Rural Economic Area Partnership (REAP) Zones.
2. Subprograms/Department Initiatives
    None.
3. Brief History
    Many rural areas face economic and community development issues of 
a very different character than communities whose needs are mainly 
defined by poverty. Often, the defining features are geographic 
isolation of communities separated by long distances, absence of large 
metropolitan centers, low-density settlement patterns, historic 
dependence on agriculture, continued population loss, out-migration, 
and economic upheaval or economic distress.
    To address these issues, USDA advocated a pilot concept for rural 
revitalization and community development called REAP Zones. The REAP 
Initiative was established to address critical issues related to 
constraints in economic activity and growth, low density settlement 
patterns, stagnant or declining employment, and isolation that has led 
to disconnection from markets, suppliers, and centers of information 
and finance.
    Memoranda of Agreement between the REAP Zones and USDA established 
the RD mission area as the lead Federal Agency to assist the zones in 
the implementation of their programs. In 1995, two REAP Zones in North 
Dakota were initially designated to participate.
    Subsequently, in 1999, two areas in upstate New York were added as 
the third and fourth REAP Zones. In 2000, an area in Vermont was 
designated as the fifth REAP Zone. The North Dakota Zones and the 
Vermont Zone are multi-county in size and the two REAP Zones in New 
York are, for the most part, single counties. Each REAP Zone developed 
a strategic plan for economic revitalization in their respective 
geographic areas.
    A Presidential Memorandum dated August 5, 1993; variously dated 
Memoranda of Agreement; Pub. L. No. 106-387, Agriculture, Rural 
Development, Food and Drug Administration, and Related Agencies 
Appropriations Act of 2001. 2008 Farm Bill, Section 6017 (J) extends 
the current REAP Zones to 2012.
4. Purpose/Goals
    This pilot project sets up a collaborative and citizen-led effort 
to enhance economic development in the REAP Zones. This effort will 
become the model for building a new rural economy for other rural areas 
with similar problems. The Department of Agriculture has provided 
modest amounts of money to REAP Zones for planning this program. This 
contribution has been augmented by USDA community development technical 
assistance across all areas of REAP Zone endeavor. Further, priority 
consideration is afforded for REAP Zone applications submitted for 
funding through RD.
    A summary of the REAP Zones' locations includes:

------------------------------------------------------------------------
                                                                 Status
        REAP Zone          State       Counties Included          Ends
------------------------------------------------------------------------
CONAC                         ND  McHenry, Bottineau,            9/30/12
                                   Rolette, Towner, Pierce
                                   and Benson; and the Indian
                                   reservations of the Turtle
                                   Mountain Chippewa and
                                   Spirit Lake Sioux
Southwest                     ND  Dunn, Stark, Hettinger,        9/30/12
                                   Adams, Bowman, Slope,
                                   Golden Valley, Billings,
                                   and part of the Fort
                                   Berthold Indian
                                   Reservation
Sullivan-Wawarsing            NY  Sullivan and the Town of       9/30/12
                                   Wawarsing
Tioga                         NY  Tioga                          9/30/12
Northeast Kingdom             VT  Caledonia, Essex, Orleans      9/30/12
------------------------------------------------------------------------

5. Success in Meeting Programmatic Purpose/Goals
    Each REAP Zone developed a strategic community & economic 
development plan with a variety of projects that have been completed or 
are in the process of being implemented. Given a modest amount of money 
to develop a strategic, each of the five REAP Zones have continued on 
in vary degrees with their economic development projects for better 
than 10 years, with the oldest two dating back to 1995.
    Leveraged funds from 1999-2011 include:

 
 
------------------------------------------------------------------------
As of: 4/1/2011
  Grant from Designation.................                     0
  State Government.......................           $62,302,055
  Nonprofit..............................            $8,494,877
  Local or Regional Gov't................           $12,053,461
  Federal Gov't..........................          $221,896,363
  Private Sector.........................           $48,184,764
  Tribal Gov't...........................            $6,086,699
  Other..................................            $4,502,286
  REAP Zones.............................                     5
                                          ------------------------------
    Total................................        $3,633,398,005
                                          ==============================
    Per Zone Average.....................           $72,704,101.00
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
    There is no direct budget authority for REAP Zones. Only funding 
references in the budget are specific dollar amounts set aside in three 
RD programs. If funding is not applied for by June 30, the funds are 
returned to the general pool. Set aside funding for REAPS was 
eliminated in FY 2011 for the Rural Business Enterprise and Rural 
Business Opportunity programs, with the only set aside being under the 
Intermediary Relending Program. This funding is in the form of loans.
7. Annual Outlays (FY 2002-FY 2011)
    There were no outlays for REAP Zones during FY 2007 through FT 
2011.
8. Annual Delivery Cost (FY 2002-FY 2011)
    There is no direct funding for REAP zones, thus we cannot provide 
delivery cost funding levels. Delivery costs are scattered throughout 
all of the RBS programs; depending on what programs provide funding to 
the areas in a given year.
9. Eligibility Criteria
    The REAP Initiative is a USDA pilot program targeting areas of 
economic distress not normally addressed by standard RD programs. In 
some cases this included high population loss, and others sharp 
economic downturns due to declining industries.
10. Utilization (Participation) Data
    The communities and residents of 19 counties and three Indian 
reservations in parts of three states: North Dakota, New York, and 
Vermont.
11. Duplication or Overlap with Other Programs
    Within RD, there are no other programs with similar purposes. 
Within USDA, there are few programs that promote strategic planning on 
a multi-community or multi-county basis. The closest program to the 
REAP Initiative would be the Resource, Conservation & Development 
Program. It also promotes multi-county strategic planning, but is 
focused on natural resources and resource-based economic development.
12. Waste, Fraud and Abuse
    Any actions in these areas around REAP Zones are covered by the 
specific programs the Zones may have participated in. There is not any 
direct USDA funding for REAP Zones. For the minimal initial planning 
grants each Zone received, there were not any instances of waste, 
fraud, and abuse.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Rural Business Programs.
2. Subprograms/Department Initiatives
        Guaranteed Business and Industry Loans.
        Guaranteed Business and Industry Loans 2008 Disasters Emergency 
        Supplemental.
        North American Development Bank Guaranteed Business and 
        Industry Loans.
        Guaranteed Business and Industry--Stimulus.
3. Brief History
    The mission of the guaranteed Business and Industry (B&I) loan 
program is to improve, develop, or finance business, industry, and 
employment and improve the economic and environmental climate in rural 
communities. This purpose is achieved by bolstering the existing 
private credit structure through the guarantee of quality loans which 
will provide lasting community benefits. USDA implements its part of 
the Community Adjustment Investment Program under the North American 
Development (NAD) Bank through the B&I Guaranteed Loan Program.
4. Purpose/Goals
    The B&I loan guarantee program is authorized by Section 310B of 
CONACT [7 U.S.C. 1921]. Access to capital is key to keeping and 
increasing the number and size of businesses operating in rural areas. 
The guaranteed loan program supports financing for business and 
industrial acquisition, construction, conversion, enlargement, repair 
or modernization outside a town or city with a population of less than 
50,000. Loan funds are used to finance the purchase and development of 
land, easements, rights-of-way, buildings, equipment, facilities, 
machinery, supplies and materials, and fund to pay startup costs and 
supply working capital. Individuals, as well as public, private, or 
cooperative organizations, Indian tribes, and corporations are 
eligible. The loan guarantee percentage drops from a maximum of 80 
percent for loans of up to $5 million to 60 percent for loans between 
$10 million and $40 million. The aggregate loan amount available to any 
one borrower under this program is limited to $25 million. An exception 
to the limit is for cooperative organizations when the facility is 
located in a rural area and the facility provides value-added 
processing of an agricultural commodity. The maximum amount in such 
cases is $40 million which must be approved by the Secretary.
5. Success in Meeting Programmatic Purpose/Goals
    The B&I loan program is RD's flagship job creation and capital 
expansion business program. Through $1.379 billion in annual 
appropriations and $1.561 billion appropriated through the ARRA, more 
than 55,000 jobs were created and saved and 1,332 rural businesses were 
impacted.
    For example, Medora Environmental, Inc. (MEI) and its operating 
company, SolarBee, Inc., manufacture the SolarBee, a solar powered high 
volume water circulating system. The companies received a B&I 
guaranteed loan for permanent working capital of $1,787,100 and 
existing debt refinance in the amount of $1,212,900. The permanent 
working capital allowed the business to supplement its cash needs on a 
contingency basis. This loan also refinanced term debt which will save 
the company approximately $6,700 each month to help retain 67 jobs 
paying wages of approximately $28 per hour.
    Another example is Ocean Classroom Foundation (OCF) which received 
a $2.2 million B&I guaranteed loan on February 1, 2010. This loan 
helped the organization restructure its debt and access much-needed 
working capital. The project also created and saved 14 jobs. OCF is 
located in Boothbay Harbor, Maine. The non-traditional school 
contributes to preserving the state's maritime heritage, while 
expanding students' horizons, by combining academic and nautical 
curriculums with experience at sea. Accredited programs are offered to 
teenaged and young-adult students as a means of providing academic and 
technical training, along with life experiences.
    The B&I Guaranteed Loan program helps create and maintain 
employment and improve the economic climate in rural communities. This 
is accomplished by providing loan guarantees to private lenders of up 
to 80 percent that can be used to fund business and industrial 
acquisition, construction, conversion, enlargement, repair or 
modernization. The number of jobs created or saved in rural communities 
is a key performance measure and a critical element in determining the 
viability of a project for funding.
    Performance data includes:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Performance Measures                              2007 Actual     2008 Actual     2009 Actual     2010 Actual     2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Performance Measure No. 1
 
  a. Jobs created/saved * total
 
Guaranteed Business and Industry:
 
  a. New or saved jobs                                                            12,343          18,703          17,602          21,328          11,705
  b. Program Dollars--Loans                                                     $830,525      $1,390,532        $949,010      $1,322,984        $813,824
 
Guaranteed Business and Industry Loans 2008 Disasters Emergency
 Supplemental:
 
  a. New or saved jobs                                                                 0               0               0               0
  b. Program Dollars--Loans                                                           $0              $0        $246,197              $0              $0
 
Guaranteed NadBank Business and Industry:
 
  a. New or saved jobs                                                                 0               0               0               0               0
  b. Program Dollars--Loans                                                       $3,490              $0              $0              $0              $0
 
Guaranteed Business and Industry--Stimulus:
 
  a. New or saved jobs                                                                 0               0               0               0               0
  b. Program Dollars--Loans                                                           $0              $0         $49,412              $0              $0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      6. Annual Budget Authority (FY 2002-FY 2011)
                                                                 (Dollars in Thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              Account Name                                  2007 Actual     2008 Actual     2009 Actual     2010 Actual     2011 Actual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guaranteed Business and Industry Loans:
  Budget Authority                                                               $36,211         $60,071         $49,350         $70,515         $41,179
  Subsidy Rate                                                                     4.36%           4.32%           4.35%           5.33%           5.06%
  Program Level                                                                 $830,525      $1,390,532        $949,010      $1,322,984        $813,824
Guaranteed NadBank Business and Industry:
  Budget Authority                                                                  $319              $0            $351              $0              $0
  Subsidy Rate                                                                     9.15%           7.69%          10.36%
  Program Level                                                                   $3,490              $0              $0              $0              $0
Guaranteed Business and Industry Loans 2008 Disasters Emergency
 Supplemental:
  Budget Authority                                                                    $0              $0         $19,400          $3,046              $0
  Subsidy Rate                                                                                                     4.35%           5.33%
  Program Level                                                                       $0              $0        $445,977         $57,157              $0
Guaranteed Business and Industry--Stimulus:
  Budget Authority                                                                    $0              $0         $26,100        $125,241              $0
  Subsidy Rate                                                                                                     4.35%           5.33%
  Program Level                                                                       $0              $0      $2,898,851      $1,557,725              $0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                           7. Annual Outlays (FY 2002-FY 2011)
 
 
 
    Annual outlays were:
 


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            2007 Actual     2008 Actual     2009 Actual     2010 Actual     2011 Actual
                              Account Name                                    ($000)          ($000)          ($000)          ($000)          ($000)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Guaranteed Business and Industry                                              * $100,400        $119,464        $133,671        $263,067        $244,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous years. Undisbursed balances are carried
  forward for future year outlays. Also, outlays reflect non-farm bill accounts as well.


                                                                 8. Annual Delivery Cost
 
 
 
                                                            Business and Cooperative Programs
                                                           Full Cost by Department Strategic Goal
 
    Strategic Goal: Assist Rural Communities to Create Prosperity so They Are Self-Sustaining, Repopulating and Economically Thriving.
 


 
                                  FY 2007 Amount  FY 2008 Amount  FY 2009 Amount  FY 2010 Amount  FY 2011 Amount
                                      ($000)          ($000)          ($000)          ($000)          ($000)
 
Program
             Program Items
 
Guaranteed Business and Industry
 Loans
  Program Level                         $830,525      $1,390,532        $949,010      $1,322,984        $813,824
  Budget Authority                       $36,211         $60,071         $41,282         $70,515         $41,179
  Admin Costs (Direct)                        --              --              --         $13,637         $12,982
  Admin Costs (Indirect)                      --              --              --         $35,066         $33,381
  Total Admin Costs                      $49,978         $43,523         $47,435         $48,703         $46,363
                                 -------------------------------------------------------------------------------
    Total Costs                          $86,189        $103,594         $88,717        $119,218         $87,542
                                 -------------------------------------------------------------------------------
Guaranteed NadBank Business and
 Industry Loans
  Program Level                           $3,490              $0              $0              $0              $0
  Budget Authority                          $319              $0            $351              $0              $0
  Admin Costs (Direct)                        $0              $0              $0              $0              $0
  Admin Costs (Indirect)                      $0              $0              $0              $0              $0
  S&E                                         $0              $0              $0              $0              $0
                                 -------------------------------------------------------------------------------
    Total Costs                             $319              $0            $351              $0              $0
                                 -------------------------------------------------------------------------------
Business and Industry Guaranteed
 Loans--Stimulus
  Program Level                               $0              $0      $2,898,851      $1,557,725              $0
  Budget Authority                            $0              $0        $126,100        $125,241              $0
  Admin Costs (Direct)                        $0              $0              $0              $0              $0
  Admin Costs (Indirect)                      $0              $0              $0              $0              $0
  S&E                                         $0              $0              $0              $0              $0
                                 -------------------------------------------------------------------------------
    Total Costs                               $0              $0        $126,100        $125,241              $0
                                 -------------------------------------------------------------------------------
Guaranteed Business and Industry
 Loans 2008 Disasters Emergency
 Supplemental
  Program Level                               $0              $0        $445,977         $57,157              $0
  Budget Authority                            $0              $0         $19,400          $3,046              $0
  Admin Costs (Direct)                        $0              $0              $0              $0              $0
  Admin Costs (Indirect)                      $0              $0              $0              $0              $0
  S&E                                         $0              $0              $0              $0              $0
                                 -------------------------------------------------------------------------------
    Total Costs                               $0              $0         $19,400          $3,046              $0
 

9. Eligibility Criteria
    In order to issue a guarantee on a particular project, there are 
various levels of eligibility that must be satisfied under the program.
    First, the project must be eligible. A list of eligible projects 
can be found in RD Instruction 4279-B, section 4279.113 and they range 
from small manufacturing plants and hotels to convenience stores and 
biofuels refineries. One of the major advantages of the program is the 
variety of projects that are considered eligible.
    Second, the project must have an eligible lender willing to offer 
financing. An eligible lender is any Federal or state chartered bank, 
Farm Credit Bank, other Farm Credit System institution with direct 
lending authority, Bank for Cooperatives, Savings and Loan Association, 
or mortgage company that is part of a bank-holding company. These 
entities must be subject to credit examination and supervision by 
either an agency of the United States or a state. Eligible lenders may 
also include credit unions provided, they are subject to credit 
examination and supervision by either the National Credit Union 
Administration or a state agency, and insurance companies provided they 
are regulated by a state or national insurance regulatory agency.
    Third, the project must have an eligible borrower. An eligible 
borrower is one that is a cooperative organization, corporation, 
partnership, or other legal entity organized and operated on a profit 
or nonprofit basis; an Indian tribe on a Federal or state reservation 
or other federally recognized tribal group; a public body; or an 
individual.
10. Utilization (Participation) Data
    Since the program's inception in 1974, the USDA B&I Guaranteed Loan 
Program has guaranteed over 16,000 loans, totaling approximately $24 
billion, promoting business activity and entrepreneurship in rural 
areas.
11. Duplication or Overlap with Other Programs
    A number of programs serve to stimulate economic development in 
rural communities. These include: the Small Business Administration's 
(SBA) 7(a) and Community Development (504) programs, the Economic 
Development Administration, the Tennessee Valley Authority's Economic 
Development Loan Fund, and other USDA programs that support business 
and community development. For example, an applicant from the 
Appalachian region may apply to programs administered by HUD, USDA, and 
ARC to obtain financing for building construction. In other cases, two 
agencies may explicitly have the same goals and serve similar 
applicants both SBA and USDA measure the number of jobs created. 
However, in some specific cases, programs can be differentiated. For 
example, SBA's 7(a) loan levels are limited to $5 million. Although 
there are a variety of state programs that serve a similar purpose, 
they also vary in degree of funding and rural availability.
12. Waste, Fraud and Abuse
    Though there have been only a few examples of waste, fraud and 
abuse. All cases are investigated by the Department's Office of the 
Inspector General, and if necessary, the Federal Bureau of 
Investigation.
    The guarantee is supported by the full faith and credit of the 
United States and is incontestable except under the circumstances of 
fraud or misrepresentation of which the lender has actual knowledge at 
the execution of the guarantee or of which the lender participates in 
or condones.
    In the event the state office becomes aware of willful lender 
noncompliance with any provision of the Loan Agreement, Lender's 
Agreement, Loan Note Guarantee, or other similar document, the lender 
is to be notified in writing of the Full Faith and Credit provisions as 
they relate to the enforceability of the Loan Note Guarantee, with a 
copy of the letter to be included in the case file.
    Some examples of the lender noncompliance include:
    Hermitage Tomato Cooperative--fraud and misrepresentation--a total 
of $9.6 million, 90 percent B&I Guaranteed Loans were made to the 
Hermitage Tomato Cooperative Association (Hermitage Tomato). The 
borrower defaulted on the loan payments, and the assets of the 
cooperative were liquidated in October 2002 by the lender, Farmers Bank 
of Hamburg (Farmers Bank). The Agency reduced the loss claim based on 
negligent serving and diversion of funds from the Cooperative.
    Catfish INT, Inc.--negligent servicing--On June 5, 1998, the Agency 
approved a $5 million, 70 percent B&I guaranteed loan for this borrower 
through its lender, Enterprise National Bank of Palm Beach. The lender 
foreclosed on the account on June 4, 2002. The borrower filed 
bankruptcy on May 19, 2000. The Agency discovered that the building 
construction was not to specs as in the Conditional Commitment. The 
Agency issued Adverse Decision Letter to reduce guarantee and OIG 
Investigation was initiated. NAD and Federal Court upheld Agency 
determination to reduce loss claim by $3,030,000.
    Bill Russell Oil--negligent servicing--on June 21, 2000, the Agency 
issued a $3 million Loan Note Guarantee to Business Loan Express, now 
known as Ciena Capital Corporation, for this borrower. The operation 
soon failed with the last payment received from this borrower in 
January 2001. On December 19, 2007, the U.S. Attorney sent a draft 
complaint asserting the False Claims Act and Financial Institution 
Reform Recovery and Enforcement Act. As a result the loss claim was 
reduced and a settlement in the amount of $2.5 million was paid.
    The National Office continues to remind the state offices through 
training sessions, webinars, monthly conference calls, etc., of their 
responsibility to monitor the lender's actions. The Agency will work 
with the Office of the Inspector General in those instances where 
fraud, misrepresentation, or negligent servicing is suspected in an 
attempt to collect from the lender.
    In addition, when the Agency suspects fraud and misrepresentation, 
the Agency consults with the Office of General Counsel and the U.S. 
Attorney's Office as appropriate to pursue matters for the best 
possible outcome for the government and taxpayer.
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
1. Program Name
    Rural Microentrepreneur Assistance Program (RMAP).
2. Subprograms/Department Initiatives
    None.
3. Brief History
    RMAP is authorized under section 379E of the Consolidated Farm and 
Rural Security Act, as amended by the Food, Conservation, and Energy 
Act of 2008 (2008 Farm Bill). The 2008 Farm Bill provided mandatory 
funding for this program totaling $15 million from FY 2009 through FY 
2012. An interim rule was published for RMAP on May 28, 2010 to 
implement the program. A Notice of Funding Availability (NOFA) was 
published on June 3, 2010, announcing $45.1 million in funding in FY 
2010 for direct loans and grants. This available program level includes 
mandatory and discretionary funding. No funding was provided in FY 2011 
through annual appropriations; however, $4 million in mandatory funding 
is available. The President's 2012 budget requests $5.7 million in 
budget authority for RMAP, in addition to $3 million in mandatory funds 
provided by the 2008 Farm Bill.
4. Purpose/Goals
    RMAP provides rural microentrepreneurs the opportunity to gain the 
skills necessary to establish new rural microenterprises, gain 
training, and receive continuing technical and financial assistance 
related to the successful operation of rural microenterprises. Loans 
and grants are made to qualified Microenterprise Development 
Organizations (MDO's) for the purposes of: (1) providing microloans to 
rural microentrepreneurs, and (2) providing training and technical 
assistance to current and/or potential micro entrepreneurs to establish 
new or sustain existing micro businesses in rural areas.
5. Success in Meeting Programmatic Purpose/Goals
    In FY 2010, USDA announced $45.1 million in program level in FY 
2010, this level of funding supported 63 loans and 74 grants; about 
$13.6 million of the announced amount was unutilized in FY 2010 and is 
available for use in FY 2011. RBS continues to accept and fund 
applications from the FY 2010 carryover funding. A NOFA for the FY 2011 
mandatory funding is under development. MDO's are projecting to assist 
574 microentrepreneurs and create or save 1,391 jobs.
6. Annual Budget Authority (FY 2002-FY 2011)

                    RMAP--Discretionary and Mandatory
                        (in millions of dollars)
------------------------------------------------------------------------
                          2007      2008      2009      2010      2011
------------------------------------------------------------------------
Budget Authority             N/A       N/A      $4.0      $4.0      $4.0
 (Mandatory)
Budget Authority             N/A       N/A        $0      $5.0        $0
 (Discretionary)
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)

                RMAP--Discretionary and Mandatory Outlays
                        (in millions of dollars)
------------------------------------------------------------------------
                          2007      2008      2009      2010      2011
------------------------------------------------------------------------
Outlays                      N/A       N/A        $0      $9.7      $7.3
------------------------------------------------------------------------

8. Annual Delivery Cost (FY 2002-FY 2011)

                    RMAP--Discretionary and Mandatory
                        (in thousands of dollars)
------------------------------------------------------------------------
                          2007      2008      2009      2010      2011
------------------------------------------------------------------------
Program Level                N/A       N/A       N/A   $31,628   $24,961
Budget Authority             N/A       N/A       N/A    $9,654    $7,346
Administrative Costs                                      $130      $130
 (Direct)
Administrative Costs                                      $333      $333
 (Indirect)
                       -------------------------------------------------
  Total Cost                                           $10,117    $7,809
  FTEs                                                       4         4
------------------------------------------------------------------------
Note: Annual delivery costs are presented consistent with the FY 2012
  Budget Explanatory Notes.

9. Eligibility Criteria
    Loans and grants are provided to MDOs who, in turn, assist rural 
micro enterprises and microentrepreneurs. RMAP applicants are nonprofit 
entities, Indian tribes, and public institutions of higher education 
that, for the benefit of rural microentrepreneurs and microenterprises, 
provides training and technical assistance, makes microloans or 
facilitates access to capital or another related service, and/or has 
demonstrated record of delivering, or an effective plan to develop a 
program to deliver such services.
10. Utilization (Participation) Data
    The RMAP program was implemented in FY 2010 and made 63 loans and 
74 grants. Applications are accepted throughout the year and to date 
165 loans and/or grants have been awarded.
11. Duplication or Overlap with Other Programs
    Small Business Administration administers a newly-implemented Micro 
Loan program, which is very similar in nature. As is the case with all 
of the programs operated by RD, RMAP is specifically designed to 
assistance microentrepreneurs in rural areas. The Rural Business 
Service also operates the intermediary relending program and the rural 
economic development program under similar intermediary concepts. While 
these programs utilize the same basic operational platform, each 
program is targeted to a specific group of applicants. Streamlining 
these activities within existing authorizes could generate savings from 
implementation activities.
12. Waste, Fraud and Abuse
    Not applicable as this is a newly-implemented program and has not 
yet undergone an audit or test of controls
13. Effect of Administrative PAYGO
    None.
                                 ______
                                 
  House Committee on Agriculture Farm Bill Audit Questionnaire--Rural 
                            Housing Service
1. Program Name
    Community Facilities (CF) Programs Direct and Guaranteed Loans and 
Grants.
2. Subprograms/Department Initiatives
        CF Direct Loans.
        CF Guaranteed Loans.
        CF Grants.
        CF Economic Impact Initiative Grants.
        CF Tribal College and University Grants.
3. Brief History
    USDA's CF Programs are implemented under Rural Development's Rural 
Housing Service (RHS). The programs provide access to capital for 
critical civic infrastructure investments primarily in the area of 
rural health care, public safety, and educational facilities. These 
investments are creating jobs and economic growth and are also funding 
technology and infrastructure such as health information technology 
that will lay the groundwork for future economic growth.
    In 1972, Congress amended the Consolidated Farm and Rural 
Development Act (CON Act) to authorize the CF direct loan program to 
address the need for an agency devoted to providing essential community 
facilities in rural areas. Other Federal agencies were located in 
metropolitan cities and historically most of their activities were 
within cities with populations far exceeding the size of rural 
communities. Authority to implement the CF Programs was delegated to 
the predecessor to RHS, the Farmers Home Administration, which had an 
established field staff based in rural communities with the capacity to 
address local rural issues and concerns, assist those communities in 
assembling applications and providing supervised credit.
    All applicants must demonstrate that they are unable to obtain 
credit from commercial sources at reasonable rates and terms. 
Applicants are required to be units of government, federally-recognized 
Indian tribes, or nonprofit entities with significant community support 
and ties to the local community, which helps to assure that the 
services are affordable for low- and moderate-income rural Americans.
    In 1990, the CF authority was expanded to include the capability to 
guarantee loans made by commercial lenders. Authority for the CF grant 
program was added in 1997. The direct and guaranteed loan repayment 
terms are limited to the useful life of the facility, state statute, or 
40 years, whichever is less.
    Since its inception, more than 40 percent of RD's CF Programs' 
portfolio is invested in rural health care facilities. Since 2009 to 
June 30, 2011, the CF direct and guaranteed loan and grant programs 
invested over $3.1 billion in 4,207 essential community facilities. 
These investments are estimated to directly create 9,996 jobs and save 
22,384 jobs. Of this amount over $1.66 billion has been invested in 464 
rural health care facilities which is estimated to create 4,124 jobs 
and save 10,319 jobs. The President's FY 2012 Budget proposes to fund 
the CF direct loan program at $1 billion, more than triple the historic 
funding level. In addition, the budget proposes to eliminate funding 
for the CF guaranteed loan program which has had higher defaults than 
projected, making it more expensive than the direct loan program. The 
proposed increase in the CF direct loan program will mitigate any 
effects of ending the guaranteed loan program. The CF direct loan 
program has a negative subsidy rate in FY 2012. This means that the $1 
billion in CF direct loan assistance can be provided without the need 
to request subsidy budget authority. This is a win-win for taxpayers 
and rural residents working to strengthen their rural communities.
4. Purpose/Goals
    CF Programs direct and guaranteed loans and grants provide 
financing to units of local government, nonprofit organizations, or 
federally-recognized Indian tribes for the development of essential 
community facilities in rural areas. Eligible purposes include:

   Health care facilities;

   Fire, rescue, and public safety buildings, vehicles, and 
        equipment;

   Educational and cultural facilities;

   Town halls, community centers, and libraries; and

   Adult and child day care facilities.

   Public buildings and civic infrastructure.
5. Success in Meeting Programmatic Purpose/Goals
    CF Programs' performance includes:

------------------------------------------------------------------------
                          2007      2008      2009      2010      2011
  Performance Measure    Actual    Actual    Actual    Actual    Actual
------------------------------------------------------------------------
Percentage of rural
 population with new
 or improved:
 
     Health          5.2       5.3       5.4       3.2       3.2
   Care
 
     Public          2.7       2.8       5.0       3.2       3.2
   Safety
 
     Education       N/A       N/A       3.5       3.8       3.0
   al facilities
 
Program Level (in         $755.0    $672.0    $639.3    $948.4    $488.3
 millions)
------------------------------------------------------------------------

6. Annual Budget Authority (FY 2002-FY 2011)
    Annual budget authority included:

           CF Programs Direct and Guaranteed Loans and Grants
                         (dollars in thousands)
------------------------------------------------------------------------
                          2007      2008      2009      2010      2011
------------------------------------------------------------------------
Direct CF Loans          $11,130   $16,369   $16,871    $3,864    $3,856
Guaranteed CF Loans         $322    $7,596    $6,358    $6,626    $6,613
CF Grants                $16,714   $20,373   $20,373   $20,373   $14,970
Rural Community           $8,021    $6,256    $6,256    $6,256    $4,990
 Development
 Initiative
Economic Impact          $17,123   $13,902   $10,000   $13,902    $6,986
 Initiative Grants
Tribal College and        $4,592    $3,972    $3,972    $3,972    $3,964
 University Grants
------------------------------------------------------------------------

7. Annual Outlays (FY 2002-FY 2011)
    Annual outlays included:

                                             (Dollars in thousands)
----------------------------------------------------------------------------------------------------------------
                                                Account                  2008       2009       2010       2011
                 Account Name                   Number   2007 Actual    Actual     Actual     Actual     Target
----------------------------------------------------------------------------------------------------------------
CF Program                                         1951   1 $112,098   $109,417   $235,410   $145,409   $175,000
----------------------------------------------------------------------------------------------------------------
1 Funded through RCAP.
Note: Outlays are not a one to one correlation with Budget Authority. Some programs disburse over numerous
  years. Undisbursed balances are carried forward for future year outlays. Also, outlays reflect non-farm bill
  accounts as well.

8. Annual Delivery Cost (FY 2002-FY 2011)
    Annual delivery costs included:

           CF Programs Direct and Guaranteed Loans and Grants
                         (dollars in thousands)
------------------------------------------------------------------------
                      2007       2008       2009       2010       2011
------------------------------------------------------------------------
Program Level       $609,103   $640,889   $435,502   $948,423   $488,266
Budget Authority     $77,397    $78,199    $56,921    $69,455    $41,379
S&E                 $114,578   $113,299   $117,408   $119,993   $119,993
                  ------------------------------------------------------
  Total Costs       $169,630   $191,498   $174,329   $189,448   $161,372
  FTE                  1,079      1,012        970      1,028      1,028
------------------------------------------------------------------------

9. Eligibility Criteria
    CF Programs can make and guarantee loans to develop essential 
community facilities in rural areas and towns of up to 20,000 in 
population. Loans and guaranteed loans are available to public entities 
such as municipalities, counties, and special-purpose districts, as 
well as to nonprofit corporations and tribal governments.
    CF Programs provide grants to assist in the development of 
essential community facilities in rural areas and towns of up to 20,000 
in population. Grants are authorized on a graduated scale. Applicants 
located in small communities with low populations and low incomes will 
receive a higher percentage of grants. Grants are available to public 
entities such as municipalities, counties, and special-purpose 
districts, as well as nonprofit corporations and tribal governments.
10. Utilization (Participation) Data
   Number of Loans and Grants

     FY 2011 to date--1,032;

     FY 2010--2,754;

     FY 2009--2,377

     FY 2008--1,840;

     FY 2007--1,766.
11. Duplication or Overlap with Other Programs
    There are a broad range of essential community facilities which may 
be financed through the CF Programs, and there are other agencies that 
finance some of the same types of community facilities within that 
range that could be located in rural areas. HUD's CDBG grant program is 
the main program that funds similar types of projects, albeit not 
through Federal loans or loan guarantees and not specifically for rural 
areas.
    The RD agencies were created by Congress specifically to serve 
rural communities. In those cases where there are shared interests, RD 
has developed partnerships. We have long standing partnerships with the 
Health Resources and Services Administration, the Economic Development 
Administration, and the Appalachian Regional Commission which have 
included Memoranda of Understanding that set forth the ways in which 
the agencies collaborate and leverage resources to improve access to 
critical health care, education, and public safety facilities.
    At the RD State Office level, we have extensive partnerships with 
the individual state's economic development, health, and water and 
sewage treatment agencies. RD has also developed partnerships over the 
years with organizations representing some of our major constituency 
groups, including lenders, fire fighters, and rural hospitals. Newer 
relationships include those with the Delta Regional Authority and the 
Federal Interagency Partnership on the Southwest Border Region.
12. Waste, Fraud and Abuse
    There are numerous reviews performed on the CF program, such as 
state internal reviews, management control reviews, improper payments 
risk assessment, OMB Circular A-123 assessment, project reviews and 
reviews by external agencies such as the Office of Inspector General 
and the General Accountability Office. Senior management is also 
required to provide an annual assurance statement which is senior 
management's judgment as to the overall adequacy and effectiveness of 
internal control within the agency. CF has had no significant findings 
in any of the reviews or assessments. Effective internal controls are 
one of the CF program's main objectives to achieve results through 
improved accountability and to ensure the overall success of the 
program.
    CF Programs have established internal controls to ensure that: (1) 
obligations and costs are in compliance will applicable law; (2) funds, 
property, and other assets are safeguarded against waste, loss, 
unauthorized use or misappropriation; and (3) revenues and expenditures 
applicable to agency operations are properly recorded and accounted for 
to permit the preparation of accounts and reliable financial and 
statistical reports and to maintain accountability over the assets. 
These controls are effective in guarding against overspending, 
operational failure, fraud, waste, abuse, or violations of law. They 
provide a reasonable assurance of effectiveness and efficiency of 
operations, reliability of financial reporting, and compliance with 
laws and regulations.
13. Effect of Administrative PAYGO
    None.

                                  
