[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
FORMULATION OF THE 2012 FARM BILL
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEES ON:
RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;
CONSERVATION, ENERGY, AND FORESTRY;
LIVESTOCK, DAIRY, AND POULTRY
NUTRITION AND HORTICULTURE;
DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;
AND
GENERAL FARM COMMODITIES AND RISK MANAGEMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
----------
APRIL 25, 26; MAY 8, 10, 16, 17, 18, 2012
----------
Serial No. 112-30
----------
Part 2 (Final)
----------
Printed for the use of the Committee on Agriculture
agriculture.house.gov
FORMULATION OF THE 2012 FARM BILL
----
PART 2 (FINAL)
FORMULATION OF THE 2012 FARM BILL
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEES ON:
RURAL DEVELOPMENT, RESEARCH, BIOTECHNOLOGY, AND FOREIGN AGRICULTURE;
CONSERVATION, ENERGY, AND FORESTRY;
LIVESTOCK, DAIRY, AND POULTRY
NUTRITION AND HORTICULTURE;
DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT;
AND
GENERAL FARM COMMODITIES AND RISK MANAGEMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
APRIL 25, 26; MAY 8, 10, 16, 17, 18, 2012
__________
Serial No. 112-30
__________
Part 2 (Final)
__________
Printed for the use of the Committee on Agriculture
agriculture.house.gov
U.S. GOVERNMENT PRINTING OFFICE
74-372 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
______
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
(ii)
?
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 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
______
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
______
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
(iii)
?
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
(iv)
C O N T E N T S
----------
Page
Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture, April 25, 2012
Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 1605
Prepared statement........................................... 1608
Johnson, Hon. Timothy V., a Representative in Congress from
Illinois, opening statement.................................... 1603
Prepared statement........................................... 1604
Witnesses
Conner, Hon. Charles F., President and Chief Executive Officer,
National Council of Farmer Cooperatives, Washington, D.C....... 1610
Prepared statement........................................... 1612
Submitted material........................................... 1667
Larson, Hon. Donald, Commissioner, Brookings County, South
Dakota; Chairman, Agriculture and Rural Affairs Steering
Committee, National Association of Counties, Brookings, SD..... 1615
Prepared statement........................................... 1617
Submitted questions.......................................... 1674
Mazer, Leanne, Executive Director, Tri-County Council for Western
Maryland, Frostburg, MD; on behalf of National Association of
Development Organizations...................................... 1622
Prepared statement........................................... 1624
Submitted questions.......................................... 1675
Dunmire, Frank, Executive Director, Illinois Rural Water
Association, Taylorville, IL; on behalf of National Rural Water
Association.................................................... 1635
Prepared statement........................................... 1636
Submitted questions.......................................... 1675
Stewart, Robert B., Executive Director, Rural Community
Assistance Partnership, Washington, D.C........................ 1638
Prepared statement........................................... 1640
Submitted questions.......................................... 1678
Rozzelle, David G., Executive Vice President, Suddenlink
Communications; Member, Rural and Small System Operator
Committee, National Cable Telecommunications Association, St.
Louis, MO...................................................... 1644
Prepared statement........................................... 1645
Submitted questions.......................................... 1681
Bahnson, Mark, Chief Executive Officer and General Manager,
Bloomingdale Communications, Bloomingdale, MI; on behalf of
National Telecommunications Cooperative Association;
Organization for the Promotion and Advancement of Small
Telecommunications Companies; Western Telecommunications
Alliance....................................................... 1651
Prepared statement........................................... 1653
Submitted questions.......................................... 1683
Submitted Material
McCormick, Jr., Walter B., President and Chief Executive Officer,
United States Telecom Association, submitted letter............ 1671
Subcommittee on Conservation, Energy, and Forestry, April 26, 2012
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 1690
Prepared statement........................................... 1692
Roby, Hon. Martha, a Representative in Congress from Alabama,
prepared statement............................................. 1693
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 1687
Prepared statement........................................... 1689
Witnesses
Schmidt, Gene, President, National Association of Conservation
Districts, Washington, D.C..................................... 1694
Prepared statement........................................... 1695
Submitted questions.......................................... 1784
Scholl, Jon, President, American Farmland Trust, Washington, D.C. 1697
Prepared statement........................................... 1698
Submitted questions.......................................... 1787
O'Toole, Patrick, President, Family Farm Alliance, Washington,
D.C............................................................ 1705
Prepared statement........................................... 1707
Nomsen, David E., Vice President of Governmental Affairs,
Pheasants Forever, Inc., St. Paul, MN.......................... 1717
Prepared statement........................................... 1719
Niemeyer, Garry, President, National Corn Growers Association,
Auburn, IL..................................................... 1723
Prepared statement........................................... 1724
Bell, David K., Executive Director, Wild Blueberry Commission of
Maine, Orono, ME; on behalf of Specialty Crop Farm Bill
Alliance....................................................... 1743
Prepared statement........................................... 1744
Gordon, Randall C., Acting President, National Grain and Feed
Association, Washington, D.C................................... 1746
Prepared statement........................................... 1748
Supplementary material....................................... 1792
Homan, Carl V., dairy producer, Homan Family Dairy Farms, Centre
Hall, PA; on behalf of National Sustainable Agriculture
Coalition...................................................... 1752
Prepared statement........................................... 1754
Hopper, Sara, Agricultural Policy Director, Environmental Defense
Fund, Washington, D.C.......................................... 1756
Prepared statement........................................... 1758
Petty, David D., cattle producer, Iowa River Ranch; Member,
Environmental Working Group, National Cattlemen's Beef
Association, Eldora, IA........................................ 1761
Prepared statement........................................... 1763
Submitted questions.......................................... 1788
Submitted Material
Hammer, Thomas A., President, National Oilseed Processors
Association, submitted statement............................... 1775
Sebert, Dan, Executive Director, National Watershed Coalition,
submitted statement............................................ 1779
Shay, Russ, Director of Public Policy; Lynne Sherrod, Western
Policy Manager, Land Trust Alliance, submitted letter.......... 1781
United States Department of Agriculture, submitted supplementary
material....................................................... 1789
Subcommittee on Livestock, Dairy, and Poultry, April 26, 2012
Cardoza, Hon. Dennis A., a Representative in Congress from
California, opening statement.................................. 1839
Prepared statement........................................... 1840
Ribble, Hon. Reid J., a Representative in Congress from
Wisconsin; statement and letter submitted on behalf of:
Etka, Steve, Coordinator, Midwest Dairy Coalition............ 1933
Fischer, Laurie, Executive Director, Dairy Business
Association of Wisconsin................................... 1935
Rooney, Hon. Thomas J., a Representative in Congress from
Florida, opening statement..................................... 1837
Prepared statement........................................... 1838
Witnesses
Brown, Ph.D., Scott, Assistant Research Professor, Integrated
Policy Group, Division of Applied Social Sciences, College of
Agriculture, Food and Natural Resources, University of
Missouri, Columbia, MO......................................... 1841
Prepared statement........................................... 1844
Supplementary material....................................... 1921
Wright, Patrick Joseph ``Joe'', V&W Farms, Inc.; President,
Southeast Milk Inc., Avon Park, FL............................. 1873
Prepared statement........................................... 1874
Barcellos, Tom, Owner/Operator, T-Bar Dairy; Board President,
Western United Dairymen, Porterville, CA....................... 1877
Prepared statement........................................... 1879
Davis, Jon, Chief Executive Officer, Davisco Foods International,
Inc., Le Sueur, MN; on behalf of International Dairy Foods
Association.................................................... 1881
Prepared statement........................................... 1883
Supplementary material....................................... 1922
Kozak, Jerome J., President and Chief Executive Officer, National
Milk Producers Federation, Arlington, VA....................... 1886
Prepared statement........................................... 1888
Subcommittee on Nutrition and Horticulture, May 8, 2012
Baca, Hon. Joe, a Representative in Congress from California,
prepared statement............................................. 1945
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 2021
Prepared statement........................................... 1944
Pingree, Hon. Chellie, a Representative in Congress from Maine,
opening statement.............................................. 1941
Prepared statement........................................... 1943
Sablan, Hon. Gregorio Kilili Camacho, a Delegate in Congress from
Northern Mariana Islands, prepared statement................... 1946
Schmidt, Hon. Jean, a Representative in Congress from Ohio,
opening statement.............................................. 1937
Prepared statement........................................... 1940
Southerland II, Hon. Steve, a Representative in Congress from
Florida, prepared statement.................................... 1944
Witnesses
Lee, Jerry, Environmental Services Manager, Monrovia Growers,
Cairo, GA...................................................... 1947
Prepared statement........................................... 1949
Jarrard, Michael, President and Chief Operating Officer, Mann
Packing Company, Salinas, CA................................... 1954
Prepared statement........................................... 1956
Schacht, Lisa L., Owner/Operator, Schacht Family Farm and Market;
President, Ohio Produce Growers & Marketers Association, Canal
Winchester, OH................................................. 1959
Prepared statement........................................... 1961
Libby, Russell W., Executive Director, Maine Organic Farmers and
Gardeners Association, Unity, ME............................... 1963
Prepared statement........................................... 1964
Richey, Daniel R., President and Chief Executive Officer,
Riverfront Packing Company; Member, Board of Directors, Florida
Fruit & Vegetable Association, Vero Beach, FL.................. 1967
Prepared statement........................................... 1969
Submitted questions.......................................... 2035
Bivens, Rodney W., Founder and Executive Director, Regional Food
Bank of Oklahoma, Oklahoma City, OK............................ 1986
Prepared statement........................................... 1987
Haskins, Ph.D., Ron, Senior Fellow, Economic Studies Program,
Brookings Institution; Co-Director, Center on Children and
Families, Washington, D.C...................................... 1991
Prepared statement........................................... 1993
Dean, Stacy, Vice President for Food Assistance Policy, Center on
Budget and Policy Priorities, Washington, D.C.................. 2002
Prepared statement........................................... 2003
Supplementary material....................................... 2029
Blalock, Philip A., Executive Director, National Association of
Farmers Market Nutrition Programs, Alexandria, VA.............. 2014
Prepared statement........................................... 2016
Submitted Material
Naasz, Kraig R., President & Chief Executive Officer, American
Frozen Food Institute, submitted statement..................... 2029
Share Our Strength, submitted statement.......................... 2033
Subcommittee on Department Operations, Oversight, and Credit, May 10,
2012
Baca, Hon. Joe, a Representative in Congress from California,
prepared statement............................................. 2042
Fortenberry, Hon. Jeff, a Representative in Congress from
Nebraska, opening statement.................................... 2039
Prepared statement........................................... 2040
Fudge, Hon. Marcia L., a Representative in Congress from Ohio,
opening statement.............................................. 2041
Prepared statement........................................... 2042
Witnesses
Frazee, Bob, President and Chief Executive Officer, MidAtlantic
Farm Credit, Westminster, MD; on behalf of Farm Credit Council. 2043
Prepared statement........................................... 2045
Gerhart, Jeffrey L., Chairman, Bank of Newman Grove; Chairman,
Independent Community Bankers of America, Newman Grove, NE..... 2049
Prepared statement........................................... 2050
Williams, Matthew H., Chairman and President, Gothenburg State
Bank; Chairman-Elect, American Bankers Association, Gothenburg,
NE............................................................. 2060
Prepared statement........................................... 2061
Walton, Michael G., urban farmer; Owner, Tunnel Vision Hoops; Co-
Founder, NEO Restoration Alliance, South Euclid, OH............ 2066
Prepared statement........................................... 2067
Doerr, Justin D., beginning farmer, Plainview, NE................ 2069
Prepared statement........................................... 2071
Submitted Material
Gerber, Michael A., President and Chief Executive Officer,
Federal Agricultural Mortgage Corporation (Farmer Mac),
submitted statement............................................ 2089
Niklas, David W., President, Clackamas Greenhouses Inc.; on
Behalf of Society of American Florists, submitted statement.... 2090
Spearman, Kenneth A., Chairman, Farm Credit System Insurance
Corporation, submitted letter.................................. 2094
Subcommittee on General Farm Commodities and Risk Management
May 16, 2012
Boswell, Hon. Leonard L., a Representative in Congress from Iowa,
opening statement.............................................. 2105
Prepared statement........................................... 2105
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 2097
Prepared statement........................................... 2099
Costa, Hon. Jim, a Representative in Congress from California;
submitted statement on behalf of:
Specialty Crop Insurance League.............................. 2339
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma
opening statement.............................................. 2103
Prepared statement........................................... 2104
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 2101
Prepared statement........................................... 2102
Witnesses
Outlaw, Ph.D., Joe L., Professor and Extension Economist-Farm
Management & Policy, Department of Agricultural Economics,
Texas A&M University; Co-Director, Agricultural and Food Policy
Center, College Station, TX.................................... 2106
Prepared statement........................................... 2108
Supplementary material....................................... 2305
Schnitkey, Ph.D., Gary D., Full and Associate Professor,
Department of Agricultural and Consumer Economics, University
of Illinois, Urbana, IL........................................ 2115
Prepared statement........................................... 2116
Submitted questions.......................................... 2347
Collins, Ph.D., Hon. Keith, Economic Advisor, National Crop
Insurance Services; Former USDA Chief Economist, Centreville,
VA............................................................. 2122
Prepared statement........................................... 2123
Bowling, Chip, Member, Board of Directors, National Corn Growers
Association, Newburg, MD....................................... 2146
Prepared statement........................................... 2147
Raun, Linda C., Chairwoman, USA Rice Producers' Group; Partner,
LR Farms, El Campo, TX; on behalf of USA Rice Federation; U.S.
Rice Producers Association..................................... 2158
Prepared statement........................................... 2160
Submitted questions.......................................... 2347
Stallman, Bob, President, American Farm Bureau Federation; rice
and cattle producer, Columbus, TX.............................. 2169
Prepared statement........................................... 2170
Vaughan, Dee, President, Southwest Council of Agribusiness,
Dumas, TX...................................................... 2176
Prepared statement........................................... 2177
Coley, C.B. ``Chuck'', Chairman, National Cotton Council;
President, Coley Gin and Fertilizer Company, Vienna, GA........ 2185
Prepared statement........................................... 2186
Brown, Scott W., President, National Barley Growers Association,
Soda Springs, ID............................................... 2193
Prepared statement........................................... 2195
May 17, 2012
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 2205
Witnesses
Younggren, Erik, President, National Association of Wheat
Growers, Hallock, MN........................................... 2206
Prepared statement........................................... 2207
Morris, Armond, Chairman, Southern Peanut Farmers Federation,
Irwinville, GA................................................. 2215
Prepared statement........................................... 2216
Johnson, Roger, President, National Farmers Union, Washington,
D.C............................................................ 2221
Prepared statement........................................... 2222
Stewart, J.B., Vice Chairman, National Sorghum Producers, Keyes,
OK............................................................. 2235
Prepared statement........................................... 2237
Wellman, Steve, President, American Soybean Association,
Syracuse, NE................................................... 2241
Prepared statement........................................... 2243
Submitted questions.......................................... 2348
Thompson, Jim, Chairman, USA Dry Pea and Lentil Council,
Farmington, WA................................................. 2244
Prepared statement........................................... 2246
Gerdes, Ruth, President, The Auburn Agency Crop Insurance, Inc.;
Chair, Regulatory Affairs Committee, Crop Insurance
Professionals Association, Auburn, NE.......................... 2270
Prepared statement........................................... 2272
McSherry, CIC, Brian M., President, McSherry Agency, Inc.;
Chairman, Crop Insurance Task Force, Independent Insurance
Agents and Brokers of America, Flanagan, IL.................... 2281
Prepared statement........................................... 2283
Weber, Tim, President, Crop Insurance Division, Great American
Insurance Company, Cincinnati, OH.............................. 2285
Prepared statement........................................... 2287
Submitted questions.......................................... 2349
Submitted Material
Pitts, Hon. Joseph R., Member of Congress; Davis, Hon. Danny K.,
Member of Congress, submitted joint statement.................. 2306
Cowan, Wade; Klint Forbes; David Dickerson, West Texas Guar,
Inc., submitted statement...................................... 2307
Graham, Larry, Chairman, Coalition for Sugar Reform, submitted
statement...................................................... 2308
Greig, Hon. George D., Secretary, Pennsylvania Department of
Agriculture, submitted statement............................... 2315
Smith, Garrett, President, American Pop Corn Company; on Behalf
of Popcorn Institute, submitted statement...................... 2316
American Sugar Alliance, submitted statement..................... 2322
United States Conference of Catholic Bishops; Catholic Relief
Services; National Catholic Rural Life Conference, submitted
joint statement................................................ 2341
Subcommittee on Conservation, Energy, and Forestry, May 18, 2012
Costa, Hon. Jim, a Representative in Congress from California,
submitted statement; on behalf of:
Wentworth, Rand, President, Land Trust Alliance; Ackelson,
Mark, President, Iowa Natural Heritage Foundation; Wayburn,
Laurie, President, Pacific Forest Trust; Difley, Jane A.,
President/Forester, Society for the Protection of New
Hampshire Forests; Livingston, Gil, President, Vermont Land
Trust...................................................... 2455
Holden, Hon. Tim, a Representative in Congress from Pennsylvania,
opening statement.............................................. 2355
Prepared statement........................................... 2355
Schrader, Hon. Kurt, a Representative in Congress from Oregon,
prepared statement............................................. 2356
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 2351
Prepared statement........................................... 2353
Witnesses
Greenwood, Hon. James C., President and Chief Executive Officer,
Biotechnology Industry Organization, Washington, D.C........... 2357
Prepared statement........................................... 2359
Stroschein, J.D., Ryan W., Co-Director, Agriculture Energy
Coalition, Washington, D.C..................................... 2378
Prepared statement........................................... 2380
Reinford, Steve, Owner/Operator, Reinford Farms Inc.,
Mifflintown, PA................................................ 2383
Prepared statement........................................... 2385
Taylor, Jr., Jerome ``Jerry'', President and Chief Executive
Officer, MFA Oil Company; Co-Founder, MFA Oil Biomass LLC,
Columbia, MO................................................... 2388
Prepared statement........................................... 2389
Haer, Gary L., Chairman, National Biodiesel Board; Vice
President, Sales and Marketing, Renewable Energy
Group', Inc., Washington, D.C....................... 2397
Prepared statement........................................... 2399
Burke III, John W., Chairman, Board of Trustees, American Forest
Foundation; tree farmer, Woodford, VA.......................... 2418
Prepared statement........................................... 2420
Dye, C. Randy, Forester, West Virginia Division of Forestry;
President, National Association of State Foresters, Charleston,
WV............................................................. 2424
Prepared statement........................................... 2426
Holmes, Charles A., Chairman, Forest Resource Policy Group,
National Association of Conservation Districts, Demopolis, AL.. 2429
Prepared statement........................................... 2430
Schwab, Richard W., Procurement Manager, M.A. Rigoni, Inc.,
Perry, FL; on behalf of American Loggers Council; Southeastern
Wood Producers Association..................................... 2433
Prepared statement........................................... 2435
Goergen, Jr., Michael T., Executive Vice President and Chief
Executive Officer, Society of American Foresters, Bethesda, MD. 2437
Prepared statement........................................... 2439
Supplementary material....................................... 2461
Submitted Material
Julia, Tom, President, Composite Panel Association, submitted
statement...................................................... 2461
Rigdon, Philip, President, Intertribal Timber Council, submitted
letter......................................................... 2463
Waslaski, Kevin, Chairman, U.S. Canola Association, submitted
statement...................................................... 2466
Wellman, Steve, President, American Soybean Association,
submitted statement............................................ 2467
Wood Fiber Coalition, submitted statement........................ 2468
FORMULATION OF THE 2012 FARM BILL
(RURAL DEVELOPMENT PROGRAMS)
----------
WEDNESDAY, APRIL 25, 2012
House of Representatives,
Subcommittee on Rural Development, Research,
Biotechnology, and Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:33 p.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, Hultgren, Hartzler, Schilling, Costa, Cuellar,
and Sewell.
Staff present: Mike Dunlap, Tamara Hinton, DaNita Murray,
Lauren Sturgeon, Suzanne Watson, Andy Baker, Liz Friedlander,
John Konya, Jamie Mitchell, and Caleb Crosswhite.
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
to assess rural development programs in advance of the 2012
Farm Bill will come to order. I have a brief opening
statement--not as brief as I would like but be what it is--to
read before we start, and I ask the Ranking Member, Mr. Costa,
to do likewise.
Good afternoon and welcome to this hearing to review the
rural development programs in advance of the 2012 Farm Bill.
This is the first of eight hearings which will be held by the
various Subcommittees to review Federal farm policy before we
begin drafting the reauthorization of ag programs. These
Subcommittee hearings are a continuation of the Committee's
work to gather information on farm policy. We have also
conducted 11 audits of farm programs--three of which were held
by this Subcommittee--and four field hearings to gather input
directly from producers across America.
Today, we are focusing on how the Federal Government makes
investments in rural communities. While the infrastructure
needs such as water, wastewater, and broadband access are
similar throughout every town and city in America, small, rural
towns that make up a good part of our districts face unique
challenges. Each farm bill seeks to address long-standing
challenges and adapt to new ones in the rural development
title.
Without a doubt, access to water, energy, and broadband
infrastructure plays a critical role in each community's
ability to create a competitive business environment. Even with
the right infrastructure in place, limited access to credit and
business training could impede the community's ability to
develop and start new enterprises.
And I might say parenthetically that at least three or four
of us were at a Subcommittee hearing in Springfield, Illinois,
where we specifically dealt and focused on the broadband issue,
it was very instructive and very helpful. Our staffs did a
great job and I hope we will be able to integrate some of the
input received and add that into a final product.
Today's discussion will take us across a wide range of
issues as we look at the range of programs offered by the USDA.
It is in part the sheer number of programs which makes it
difficult to gauge the effectiveness of current policy. Just a
few weeks ago, we heard testimony from GAO regarding the extent
of duplication and fragmentation among Federal agencies. As the
Committee considers how to reauthorize current programs, it
seems prudent to also seek ways to weed out activities and
authorities that are either redundant or ineffective and in
doing so, these programs would be made more accessible to
applicants, reduce USDA's administrative burden, and focus
program resources on core responsibilities. As Congress looks
at ways to address the deficit, scarce funds must be stretched
to accomplish more than ever.
Before us today are two panels comprised of organizations
that assist rural America in a variety of ways, but are
universally focused on developing the livelihoods and economies
of virtually every rural town and county. As partners and
implementers of USDA programs, our witnesses will be able to
provide an in-depth discussion of the farm bill and ways to
strengthen our approach to rural economic development.
Our first panel includes representatives of co-ops,
counties, and development organizations whose members are found
in every corner of the country. Among the issues we hope to
address with our first panel is the fragmentation of programs,
challenges of regional coordination, and ways to improve
program applications.
Our second panel will focus on infrastructure programs and
how our water, wastewater, and telecommunications programs are
functioning. Particularly in light of budget constraints, we
hope to receive additional feedback on how the programs can be
adjusted to reach more communities with the given resources.
We appreciate the time that each of the witnesses have
given us to prepare their testimony. The testimony received
today will be significant as we begin the process to
reauthorize the farm bill.
[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 review rural
development programs in advance of the 2012 Farm Bill. This is the
first of eight hearings which will be held by the various Subcommittees
to review Federal farm policy before we begin drafting the
reauthorization of agricultural programs. These Subcommittee hearings
are a continuation of the Committee's work to gather information on
farm policy. We've also conducted 11 audits of farm programs--three of
which were held by this Subcommittee--and four field hearings to gather
input directly from producers across America.
Today we are focusing on how the Federal Government makes
investments in rural communities. While the infrastructure needs such
as water, wastewater, and broadband access are similar throughout every
town and city in America, the small, rural towns that make up a good
part of our districts face unique challenges. Each farm bill seeks to
address long-standing challenges and adapt to new ones in the rural
development title.
Without a doubt, access to water, energy, and broadband
infrastructure plays a critical role in each community's ability to
create a competitive business environment. Even with the right
infrastructure in place, limited access to credit and business training
can impede a community's ability to develop and start new enterprises.
Today's discussion will take us across a wide range of issues as we
look at the range of programs offered by USDA. It is, in part, the
sheer number of programs which makes it difficult to gauge the
effectiveness of current policy. Just a few weeks ago, on March 21st,
we heard testimony from the Government Accountability Office (GAO)
regarding the extent of duplication and fragmentation among Federal
agencies.
As the Committee considers how to reauthorize current programs, it
seems prudent to also seek ways to weed out activities and authorities
that are either redundant or ineffective. In doing so, these programs
would be made more accessible to applicants, reduce USDA's
administrative burden, and focus program resources on core
responsibilities. As Congress seeks ways to address the deficit, scarce
funds must be stretched to accomplish more than ever.
Before us today are two panels comprised of organizations that
assist rural America in a variety of ways, but are universally focused
on developing the livelihoods and economies of virtually every rural
town and county. As partners and implementers of USDA programs, our
witnesses will be able to provide an in-depth discussion on the farm
bill and ways to strengthen our approach to rural economic development.
Our first panel includes representatives of cooperatives, counties,
and development organizations whose members are found in every corner
of the country. Among the issues we hope to address with our first
panel is the fragmentation of programs, challenges to regional
coordination, and ways to improve program applications.
Our second panel will focus on infrastructure programs, and how our
water, wastewater, and telecommunications programs are functioning.
Particularly in light of budget constraints, we hope to glean
additional feedback on how the programs can be adjusted to reach more
communities with the given resources.
We appreciate the time that each of our witnesses took to prepare
their testimony and travel to be here today. The testimony we receive
today will be invaluable as we begin the process to reauthorize the
farm bill.
The Chairman. With that, I would like to turn to my friend
and colleague from California, the Ranking Member, Mr. Costa,
for a statement as well.
OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA
Mr. Costa. Thank you very much, Mr. Chairman, for your
leadership and your comments. And let me take this opportunity
since this is the first Subcommittee hearing that we have held
since your announcement regretfully to make this your last term
in serving the people of Illinois as a distinguished Member of
the House; we appreciate all of the good work that you have
done over the years and the hard work that you have done on
behalf of your constituents, as well as a terrific Member of
the House Agriculture Committee. Your focus and your care are
well known and the sacrifices you and your family have made so
you could serve the people of our United States is truly
appreciated. So let me thank you again on behalf of all the
Members of the Subcommittee and our colleagues for a job well
done and we will look forward to continuing to work with you
before the end of this year is out.
The Chairman. Let me just say a very sincere thanks to you
for not only the comments but for the wonderful partnership
that we have created on this Subcommittee and the input and
role that you play, which is overwhelmingly appreciated and
your friendship is as well. So those comments are especially
important to me and thank you so much.
Mr. Costa. Well, thank you again, Mr. Chairman.
This hearing is important, as all the hearings that this
Subcommittee has held, as it relates to the rural development
title of the farm bill and the organizations that are going to
testify in terms of your input and as it relates to the United
States Department of Agriculture's rural development programs,
which I think, and Members of the Subcommittee believe, are
critical as we reauthorize the 2012 Farm Bill.
Rural America, as we all know, comprises \3/4\ of the
nation's land and is home to more than 50 million people. The
rural development programs in this title help their interests
and the prosperity of those communities that we represent.
These programs authorized by the rural development title of the
farm bill support an array of public facilities and services.
In addition, rural development programs have allowed
communities to apply for loans, loan guarantees, and grants,
which are critical throughout rural America.
Over the course of nearly 80 years, since the Great
Depression, the landscape of rural America has changed greatly.
Our nation's policy related to rural America has also changed.
And even as manufacturing and service sectors have replaced
some agricultural production as dominant economic forces in
some of rural America, we know that there are a lot of
commonalities that rural America share together, including the
bountiful harvest of American agriculture.
As we look at the reauthorization of the farm bill, it is
my belief that this Subcommittee and the full Committee should
look closely at what it means to be rural in the 21st century
and how increasingly limited Federal resources can be leveraged
to assist our rural communities.
In February 2011, we held a hearing of this Subcommittee
examining the definition of rural as it applies to the USDA
programs. However, to date, sadly, we still have not received
the report promised by the United States Department of
Agriculture clarifying that definition. Please, Secretary
Vilsack, if you are hearing this anywhere, members of the USDA,
if you are hearing this anywhere, we would like to get the
report.
In fact, my Congressional district is one of the most
productive agriculture regions in the country and many of our
communities not only are rural but many of my communities are
poor and disadvantaged. Despite the clear need, my district
struggles with eligibility requirements under the rural
development programs, as, for example, whether or not rural
housing help or essential community facilities can be included
largely because of the criteria used to define what rural
means. Establishing a nationwide definition of rural presents
challenges, I understand, regionally from the South to the
Northeast the Midwest to the West. However, it seems to me that
we ought to be able to work through this.
We have a very able state director with USDA who is here in
the audience today, Dr. Glenda Humiston, who I work with on a
regular basis. She just told me that in looking at the 2011
Census data, as an example, 98 communities in California will
no longer be deemed as falling under the definition of rural,
which more tragically or unsatisfying for many of my colleagues
represent 80 percent of their loan portfolio. So with the new
definition, because of population increases that are taking
place, 98 communities in California will no longer be
considered rural and that impacts 80 percent of the loan
portfolio as the state director just informed me. And by the
way, I want to thank Dr. Glenda Humiston for doing the terrific
job that she does.
I think everyone here, our witnesses included, would be
hard-pressed to come up with a singular definition. I know that
is tough--that accurately portrays what it means to be rural in
every state. There isn't a one-size-fits-all I do not believe.
Recent farm bills have updated the definition of rural, so I
look forward to hearing the witnesses' view on how we might
address this issue. If more of our rural communities can be
better served with a different set of criteria or a different
regionally based approach, then let's hear about it before we
reauthorize the 2012 Farm Bill.
That said, Mr. Chairman, I am particularly interested in
hearing from representatives of the telecommunications
organizations responsible for delivering broadband services to
consumers in rural communities connecting rural America to what
we know is a global economy. Whether it is in my home State of
California or anywhere between, Federal programs and private
service providers have made great strides in deploying
broadband. The hearing that you mentioned in Illinois that the
Subcommittee held last year brought that out in terms of the
access to broadband, and you had some very good witnesses that
testified.
I want to highlight a few California figures that
illustrate why the issue of rural broadband is so important not
just in my district but in states and communities all across
rural America. When you think of California--and I know that
people have a lot of different thoughts when they think of
California--but oftentimes it is Silicon Valley, its high-tech
sector are probably many things that come to mind. According to
a 2008 report, California Broadband Task Force, we are a
leading state in broadband penetration. However, that figure is
misleading. The same report found that 1.4 million rural
Californians lacked access to broadband and barely \1/2\ the
state's residents have broadband access at home. For these
households with annual incomes of $25,000 or less, many in my
district, the situation is even bleaker with less than \1/4\ of
the households subscribing to broadband.
What this shows me is despite relative success in putting
wires in the ground, the Federal Government and private sector
broadband providers, public institutions still have a lot of
work to do in bridging the divide between the haves and the
have-nots. And let me tell you why I think this is so
important, especially in rural America--because we are closely
reaching our ability to have access or capacity on broadband.
American agriculture is at the cutting edge around the world in
this broadband technology as it relates to irrigation
technologies, as it relates to tillage technologies. Broadband
is being used to make our farmers more efficient and more
effective. Yet when you limit their capacity or the broadband
capacity for American farmers, dairymen, and ranchers, it has
an economic impact in this global economy that they have to
compete in.
Finally, Mr. Chairman, research is an important task of the
Subcommittee and the separate title of the farm bill and I just
want to take a moment to speak on that. Research has been at
the core of the United States Department of Agriculture for
nearly 150 years since the Department of Agriculture was
created. Particularly, through our land-grant institutions--and
many of us represent land-grant institutions--research driven
by the United States Department of Agriculture has helped
ensure safe, abundant, and affordable food supply and fiber
that has not only made American farmers and farm households
thrive but be among the very best in the entire world.
Equally important to these efforts is the research
conducted by even many of our non-land-grant agricultural
schools such as my alma mater, Fresno State--go Bulldogs--which
is one of the premier ag schools in the West. I am sure it
comes as no surprise to many of my colleagues that of
particular interest is the research being conducted in
Specialty Crops Research Initiative that many of us fought very
hard for in the 2008 Farm Bill. It was created there for the
purpose of continuing to expand that. It expires this year.
Specialty crops represent approximately \1/2\--\1/2\--of the
United States agricultural exports without support in the farm
bill. So it is an assistance through technical programs such as
market access, such as Specialty Crops Research Initiative,
such as efforts for pest detection and eradication--I can get
it out I know I can--that help us thrive when we deal with
infestations.
So I look forward to the reauthorization and working
together on a bipartisan basis in the farm bill. It is
critically important that competitive research dollars remain
available to our institutions throughout the United States to
support American agriculture. I look forward to hearing from
the witnesses who participate in the rural development programs
and their views and their proposals about how we can maintain
and strengthen the United States Department of Agriculture's
largely successful rural development programs in a cost-saving
environment that we know that we are in as we reauthorize the
2012 Farm Bill.
Mr. Chairman, thank you. I spoke longer than I should have
but I had a lot to say this afternoon. Thank you.
[The prepared statement of Mr. Costa follows:]
Prepared Statement of Hon. Jim Costa, a Representative in Congress from
California
Thank you, Chairman Johnson, for calling today's hearing, to
discuss the rural development title in the farm bill and hear from
organizations that participate in the USDA rural development programs
in advance of the 2012 Farm Bill.
Rural America comprises \3/4\ of the nation's land area and is home
to more than 50 million people. The rural development programs under
this title help advance the interests and prosperity of these
communities.
The programs authorized through the rural development title of the
farm bill support an array of public facilities and services. In
addition, rural development programs allow communities to apply for
loans, loan guarantees, and grants, which provide much needed
assistance to help advance their farm or community.
In one form or another, the Federal Government has assisted rural
families and communities since the Great Depression.
Over the course of the nearly 80 years since that time, the
landscape of rural America has changed greatly, and our nation's
policies related to rural America have changed with it.
Even as the manufacturing and service sectors have replaced
agriculture production as the dominant economic force in much of rural
America, the common needs of our rural communities remain.
As we look to reauthorize the farm bill, it is my belief that this
Subcommittee and the full Committee must look closely at what it means
to be a rural community in the 21st century and how increasingly
limited Federal resources can be leveraged to position rural areas to
better compete in a global economy.
In February 2011, we held a hearing in this Subcommittee examining
the definition of rural as it applies to USDA programs. However, to
date, we have still not received the report promised to us by USDA
clarifying the definition.
The fact is, my Congressional district is one of the most
productive agricultural regions in the country and many of our
communities are not only rural, but also largely poor and
disadvantaged.
Despite the clear need, my district struggles with eligibility for
rural development programs, whether it is rural housing, health, or
essential community facilities, largely because of the criteria used to
define rural communities.
Establishing a nationwide definition of rural presents challenges
for communities in all corners of the country.
I think everyone here, our witnesses included, would be hard-
pressed to come up with a singular definition that accurately portrays
what it means to be rural in each and every state.
Recent farm bills have updated the definition of rural, so I look
forward to hearing our witnesses' thoughts on whether further reforms
should be considered in the next farm bill to more effectively and
efficiently operate rural development programs.
If more rural communities can be better served with a different set
of criteria or a different regionally-based approach to development,
then that is something this Committee should consider in this farm
bill.
That said Mr. Chairman, I am particularly interested in hearing
from the representatives from the telecommunications organizations
responsible to delivering broadband services to consumers in rural
communities and connecting rural America to the global economy.
Whether it's in my home State of California or anywhere in between,
Federal programs and private service providers have made great strides
in deploying broadband.
I want to highlight a few California figures that illustrate why
the issue of rural broadband is so important for my district, my state
and communities all across rural America.
When you think of California, Silicon Valley and our high-tech
sector are probably among the first things that come to mind. And
according to a 2008 report by the California Broadband Task Force,
California does lead the nation in broadband penetration, with 96
percent of Californians having access to the technology.
But this figure is also misleading. The same report found that 1.4
million rural Californians lack access to broadband and barely \1/2\ of
the state's residents have broadband access at home.
For those households with an annual income of less than $25,000--
many of which are in my district--the situation is even bleaker, with
less than \1/4\ of households subscribing to broadband.
What this shows me is that despite relative success in putting
wires in the ground the Federal Government, broadband providers and
public institutions still have a lot of work to do in bridging the
divide between the haves and have-nots when it comes to broadband,
particularly in rural America.
Finally Mr. Chairman, research is another important task of this
Subcommittee and a separate title of the farm bill, and I want to take
just a moment to speak on that.
Research has been a core mission of USDA for the nearly 150 years
since the Department was created.
Particularly through our land-grant institutions, the research
driven by USDA has helped ensure a safe, abundant and affordable supply
of food and fiber that has helped American farmers thrive.
Equally important to these efforts is the research conducted by our
non-land-grant agriculture schools, such as Fresno State University in
my district.
I'm sure it comes as no surprise by now to my colleagues that of
particular interest to me is the research being conducted through the
Specialty Crops Research Initiative, which was created in the 2008 Farm
Bill.
The mandatory funding for this program expires after Fiscal Year
2012.
Specialty crops represent approximately \1/2\ of the value of U.S.
agriculture without support from title I of the farm bill, so
assistance through technical programs such as the Market Access Program
and research programs like the Specialty Crops Research Initiative are
particularly important to help this vital sector thrive.
As we look toward reauthorization of the farm bill it is critically
important that competitive research dollars remain available to these
institutions to continue their good work on behalf of American
agriculture.
I look forward to hearing from our witnesses who participate in
USDA rural development programs and their views and proposals about how
we can maintain and strengthen USDA's largely successful rural
development programs in a cost-saving environment in the 2012 Farm
Bill.
Thank you again, Mr. Chairman, for calling this hearing. I yield
back my time.
The Chairman. Thank you, Mr. Costa. And no, you didn't
speak too long. In fact, your comments are right on point and I
really appreciate them.
Our first panel today is comprised of three individuals,
all of whom are highly regarded in their area. Mr. Chuck
Conner, my friend and President and CEO of the National Council
of Farmer Co-Ops; former Secretary of Agriculture, Mr. Don
Larson, Commissioner, Brookings County, South Dakota, on behalf
of the National Association of Counties; and Leanne Mazer, I
believe, the Executive Director of the Tri-County Council for
Western Maryland, Frostburg, Maryland, speaking on behalf of
the National Association of Development Organizations.
So with that, Mr. Conner, the floor is yours.
STATEMENT OF HON. CHARLES F. CONNER, PRESIDENT AND PRESIDENT
AND CHIEF EXECUTIVE OFFICER, NATIONAL COUNCIL OF FARMER
COOPERATIVES, WASHINGTON, D.C.
Mr. Conner. Chairman Johnson, Ranking Member Costa, and
Members of the Subcommittee, on behalf of the nearly 3,000
farmer-owned cooperatives and their producer members, we
appreciate the opportunity to testify today.
Rural development programs are intended to bolster rural
communities and position them to better compete in a global
environment. As such, it is important that USDA rural
development programs focus on agriculture and farmer co-ops as
the foundation for helping encourage and support rural
economies.
There are more than 88 programs administered by 16
different Federal agencies specifically targeted at rural
economic development. With a significant decrease in funding
for farm bill programs, coupled with declining USDA resources
to administer those very programs, it just makes sense to us to
consolidate the programs that all have the same objective. It
takes the same amount of staff time, Mr. Chairman, to
administer a million-dollar program as it takes to administer a
$100 million program.
At the same time, the requirements for applying for grants
have become overly complicated and too burdensome and have
spawned a cottage industry for consultants. Some feedback I
have received from my members is that while they are interested
in applying for a rural development grant, they don't have the
resources to navigate the process and the time and energy
required to apply isn't worth the amount of funds they would be
eligible for in the end. Simplifying the application process
would lead to more applications resulting in better projects.
That said, Mr. Chairman, the Value-Added Producer Grants
Program has been successfully utilized by farmer co-ops. I have
specific examples provided by several NCFC members that I would
ask at this point be submitted for the record. The program has
been instrumental in helping co-ops overcome many barriers
faced when developing new products for the marketplace, one of
which is working capital. This is particularly acute for
advanced planning that requires substantial capital investment
or commitment of resources up front.
The program has helped producers launch new agricultural
products through their co-ops both domestically and
internationally. Having access to Value-Added Producer Grants
allows co-ops to capitalize on new business opportunities that
would otherwise simply go unexplored. These successful products
have resulted in more stable income from the marketplace for
producers. The program is administered on a matching-fund
basis, thereby doubling the impact of such grants and helping
encourage investment and ventures that ultimately benefit all
of rural America.
Co-ops bring many producers, Mr. Chairman, together who
individually do not have the size, expertise, or resources to
take advantage of the value chain beyond their own farm gate
and gives them the opportunity to profit from those downstream
activities. NCFC strongly believes that co-ops, by spreading
the benefits of Value-Added Producer Grants among a large
number of producers can give the American taxpayers the
greatest bang for their buck.
In 2011, USDA made significant improvements to the program
rules that recognize those very benefits that I describe. NCFC
supports those changes and ask that they carry through in this
farm bill reauthorization process.
Another area of interest to many of my members is the
Cooperative Services Program. Over time, that program area has
lost many of its experienced professional staff. At one time,
the program housed well over 100 employees, but today, that
number is less than ten. We are not advocating for additional
staff but we do want to see the resources that exist better
spent.
For example, there are many research needs that Cooperative
Services could provide that would be specifically beneficial to
NCFC and our member cooperatives, but currently, much of that
research is simply not being done. We often hear from NCFC
members that are searching for timely and complete statistics
on farmer co-ops. There is an evident lack of complete and
timely research on the impact of farmer co-ops on rural
economies and those lacking items include number of farmer co-
ops and their location, number of employees, aggregate payroll
amounts, farmer co-op market share of various commodities, and
of course, the patroness dividends that we return to our farmer
owners.
In addition, we encourage Cooperative Services to revisit
and update the very useful legal and tax publications that have
been a cornerstone of cooperatives in the past. NCFC does seek
inclusion of report language better directing the focus of
USDA's Cooperative Services and looks forward to working with
this Committee in this regard.
So I thank you, Mr. Chairman, for the opportunity to
testify before your Subcommittee today and look forward to
answering questions at the appropriate time.
[The prepared statement of Mr. Conner follows:]
Prepared Statement of Hon. Charles F. Conner, President and Chief
Executive Officer, National Council of Farmer Cooperatives, Washington,
D.C.
Chairman Johnson, Ranking Member Costa, and Members of the
Subcommittee, thank you for the invitation to testify today on how the
2012 Farm Bill can best help rural America meet current and new
challenges, and specifically address issues as you look to write the
rural development title.
I am Chuck Conner, President and Chief Executive Officer of the
National Council of Farmer Cooperatives (NCFC). NCFC represents the
interests of America's farmer cooperatives. There are nearly 3,000
farmer cooperatives across the United States whose members include a
majority of our nation's more than two million farmers. These farmer
cooperatives allow individual farmers the ability to own and lead
organizations that are essential for the vitality of the agriculture
sector and rural communities. Earnings derived by farmer-owned
cooperatives are returned to their farmer-members on a patronage basis
thereby enhancing their overall farm income that directly supports and
keeps capital in the rural economy.
According to the U.S. Department of Agriculture (USDA), rural
America comprises \3/4\ of the nation's land area and is home to more
than 50 million people. USDA rural development programs play a vital
role in helping to ensure continued prosperity in these communities. We
appreciate the opportunity to highlight some of these programs, and
their impact on cooperatives and their farmer-owners.
These programs serve a variety of purposes including strengthening
farm income, fostering the incubation of business in areas that are
capital and financially challenged, and help rural America stay abreast
of changing technologies. Rural development programs are intended to
bolster rural communities and position them to better compete in a
global environment. As such, it is important that USDA rural
development programs continue to focus on agriculture and farmer
cooperatives as a foundation for helping encourage and support rural
economies.
Inasmuch as rural development programs have offered many benefits
to American farmers and rural economies, some are often criticized for
being unfocused and under-funded. It is worth noting that there are
more than 88 programs administered by 16 different Federal agencies
specifically targeted at rural economic development. USDA administers
most of the existing rural development programs and has the highest
average of program funds going directly to rural counties,
approximately 50 percent.
With a significant decrease in funding for farm bill programs,
coupled with declining USDA resources to administer those programs,
consolidation of programs, where feasible, is warranted. It takes the
same amount of staff time to write rules, review applications, and
administer a $1 million program as it does a $100 million program. It
is not an efficient use of limited staff resources to be administering
many programs that have differing application and administrative
requirements where the overall program objectives are generally
similar.
Conversely, the various requirements for applying for grants have
become complicated and difficult to figure out and thus spawned a
cottage industry for consultants to assist applicants through the
process. It would be beneficial to have a system to evaluate the merits
of a proposal aside from the professionally written content, and where
it is encouraged that participants write their own grant applications.
Samples of past grant applications together with work plans may be very
useful to applicants. While the level of assistance varies from one
state Rural Development office to the next, NCFC members have found
their local offices to be extremely helpful resources and USDA staff
willing to assist when questions arise.
NCFC supports streamlining the number of programs as well as the
application process--the result will be a more efficient, effective
agency, while providing for a more understandable, easier-to-navigate
application process for all entities.
Value-Added Producer Grants (VAPG)
A barrier that cooperatives often face is the capital necessary to
innovate and process new consumer products. This is particularly acute
for advance planning by cooperatives that requires substantial capital
investment or commitment of resources, such as planning for operating
and expansion expenses. Since its establishment, USDA's Value-Added
Producer Grants (VAPG) program has been a tremendous success in helping
cooperatives overcome those constraints. The program has helped
producers launch new agricultural products through their cooperatives,
both domestically and internationally. These value-added products
benefit both producers and consumers.
With VAPG funds, cooperatives are empowered to capitalize on new
value-added business opportunities that would otherwise go unexplored.
VAPG helps cooperatives differentiate and expand production, in turn
helping them improve the value of their products through processing and
marketing. The objective is to increase sales not by displacing other
products, but rather build and sustain a market where one previously
did not exist. Their successful, self-sustaining products have
translated into greater and more stable income for producers from the
marketplace. It also has served to promote economic development and
create jobs.
The program is administered on a matching-fund basis, thereby
doubling the impact of such grants and helping encourage investment in
ventures that ultimately benefit rural America. As a cost-share
program, it is as an excellent example of an effective public-private
partnership bringing a number of self-sustaining products to market.
Of the 298 recipients of Value-Added Producer Grants for 2012, 26
are farmer-owned cooperatives. NCFC strongly believes that cooperatives
efficiently spread the benefits of the VAPG among a larger number of
producers in the aggregate. Cooperatives by their nature bring many
producers together who individually do not have the size, expertise and
resources to take advantage of the value chain beyond the farm gate and
gives them the opportunity to profit from those down-stream activities.
Therefore, funds invested by USDA and the benefits of projects
generated by cooperatives through the VAPG are distributed to a wide
number of producers. Likewise, by investing in initiatives of
cooperatives, USDA lowers the overall costs to the government in
program administration per individual farmer that benefits.
In 2011, USDA made significant improvements to the program rules
that recognize those benefits. I urge you to also recognize those
principles and treat cooperatives as a priority in any direction you
may give USDA in administering the VAPG.
Loan Guarantee Programs
Rural Development loan guarantees are a cost-effective way to
leverage limited resources and funding. For example, communities in
rural America need access to capital to upgrade our nation's water
infrastructure. The water and water disposal guarantee loan programs
administrated by the Rural Utilities Service of USDA increases ability
to leverage all resources--public and private--to provide the financing
necessary for our nation's water systems. This program is a cost-
effective way to promote public-private partnerships that boost the
rural economy and enhance the quality of life in rural communities.
Energy
Cooperatives play a significant role in the development and
marketing of renewable energy. In addition to ethanol and biodiesel,
many cooperatives also are investigating opportunities for creating
renewable energy from biomass such as dairy cow manure through
anaerobic digestion. USDA programs also are being used more and more by
cooperatives to improve energy efficiency in their facilities. We
strongly support reauthorization of these important grant, loan and
related programs which research and promote the development and
advancement of biofuels and opportunities for biomass, as well as such
programs that assist in reaching energy efficiency goals.
USDA Cooperative Services Program
Over time, the Cooperative Services Program has lost many of its
experienced professional staff. This office was once the premier source
of information on cooperatives' role in various commodity sectors, and
on cooperative legal foundations, taxation, finance, member education/
information, governance, and board/management relations. There are many
areas in addition to these in which research by Cooperative Services
could provide especially beneficial information. We often hear from
NCFC member cooperatives that are searching for timely and complete
statistics on farmer cooperatives. There is an evident lack of
comprehensive and updated research on the impact of farmer cooperatives
on rural economies.
In addition to research on the economic impacts of farmer
cooperatives, Cooperative Services should re-visit very useful legal
and tax publications it has published in the past. These publications
are used frequently by farmer cooperatives. Materials and/or training
sessions for boards of directors would also be greatly beneficial.
Subjects such as financial decision-making, ethics, board make-up and
representation, and executive succession are all important to the
success of a cooperative. NCFC seeks inclusion of report language
better directing the focus of USDA's Cooperative Services, and looks
forward to working with the Committee in that regard.
In closing, maintaining a strong agriculture economy is essential
to the health of rural America. Some of the challenges faced by the
agricultural industry include dealing with immense regulatory pressure
and struggling to have access to a legal, stable workforce. While,
those issues clearly fall out of the jurisdiction of the USDA's rural
development programs, they are vital to a strong agricultural economy.
In addition, there are programs contained throughout the farm bill that
enhance opportunities for rural communities--from maintaining a
meaningful safety net for producers, to supporting agricultural
exports.
Thank you again for the opportunity to testify today before the
Subcommittee. We look forward to working with you to strengthen USDA's
Cooperatives Services, keep the VAPG Program viable and available to
farmer co-ops, and streamline other rural development programs and
applications. I am happy to answer any questions you may have.
About the National Council of Farmer Cooperatives
Since 1929, NCFC has been the voice of America's farmer
cooperatives. NCFC values farmer ownership and control in the
production and distribution chain; the economic viability of farmers
and the businesses they own; and vibrant rural communities. With an
extremely diverse membership, NCFC members span the country, supply
nearly every agricultural input imaginable, provide credit and related
financial services (including export financing), and market a wide
range of commodities and value-added products.
American agriculture is a modern-day success story. America's
farmers produce the world's safest, most abundant food supply for
consumers at prices far lower than the world average. Farmer
cooperatives are an important part of the success of American
agriculture. Cooperatives differ from other businesses because they are
member-owned and are operated for the shared benefit of their members.
Attachment
Value-Added Producer Grants
The purpose of the Value-Added Producer Grant program is to help
agricultural producers improve the value of their products through
processing and/or marketing. Grants can be used for feasibility
studies, developing business plans, working capital and for farm-based
renewable energy products. Planning grants are available for up to
$100,000; working capital grants for up to $300,000. The grants are
limited to 50 percent of project costs. Eligible applicants include
independent producers, agricultural cooperatives, producer groups and
majority-controlled producer-based business ventures.
Farmer-Owned Cooperatives: A Few Examples of VAPG Activities
Blue Diamond: In 2003, Blue Diamond developed a line of three
highly seasoned added value almond products. The goal was to attract
new users to improve the grower's return long-term by creating a
sustainable and meaningful source of revenue. The goals of the VAPG
were exceeded by an eightfold increase in sales projections and a
successful new line of almond products for consumers was launched that
continues to fuel additional demand for a crop that has tripled in the
last 10 years. Blue Diamond ``Bold'' sales were over $40.2 million in
2011, growing more than 18 percent compounded annually. ``Bold''
flavors have increased fourfold to 12 flavors in 2011.
In addition, the new line now accounts for almost 17 percent of
total Blue Diamond snack almond sales; Blue Diamond total snack almond
household penetration is now over 11 percent, up from 2.3 percent in
2003; the ``Bold'' line is distributed in over 35,000 of the nation's
largest retail stores.
Blue Diamond Growers is a farmer-owned cooperative headquartered in
Sacramento, CA. The co-op created a commercial California almond
industry when it organized in 1910. Today, it represents over half of
U.S. almond growers and is the leading global manufacturer of almonds.
Blue Diamond almond growers are small family farmers, averaging about
55 acres each.
Pacific Coast Producers: Beginning in April of 2003, Pacific Coast
Producers (PCP) has earned four separate Value-Added Grants. These
grants have assisted PCP Retail Sales, Operations, R&D and Marketing
groups in launching dozens of new items into the retail grocery trade
including, but not limited to a line of shelf stable, private brand
plastic fruit bowls, canned extra light syrup fruits, organic canned
tomatoes, fire roasted canned tomatoes and fortified canned fruits. A
new grant awarded in February 2012 will serve as a major enabler to
rebrand canned and shelf stable fruit and tomato products, making
canned food products more relevant in the future and increasingly
desired by new consumers.
With the assistance of the USDA Value-Added Grants since 2003,
Pacific Coast Producers was able to build our plastic fruit bowl
program into a 7,500,000 case per year industry juggernaut, added
approximately 240,000 cases per year to our canned fruit program in the
Extra Light Syrup sub-category, built an organic tomato program from
nonexistent to almost 450,000 cases per year and a fire roasted tomato
program of 440,000 cases per year, encompassing annual sales of
approximately $78 million dollars and growing. These sales do not
displace products from other manufacturers, but rather built and
sustained where no interest existed prior to the initial launch with
the assistance of the VAPG program. PCP expects each of the
aforementioned newly created sub-categories of shelf stable food to
continue their rapid growth and for the rebranding of canned items
through its Fresh as Fresh Can Be campaign, to permanently lift the
sustainability of its California Cooperative Farmers.
Sunsweet: In an effort to stimulate demand for its farmers'
production, Sunsweet has used the VAPG program to assist in launching
innovative products. ``Sunsweet Ones'' recast prunes as a ``candy
nutrient'' by individually wrapping moist prunes in cellophane, making
them a ``snack-on-the-go.'' In 2007, Sunsweet began marketing a light,
low-calorie version of its PlumSmart juice products which is made from
fresh prune plums which normally are less visually appealing than the
varieties grown for fresh markets. Because the PlumSmart line
represents prune-plums as snacks, nutrition-on-the-go, or food with
specific nutritional claims, it requires advertising to engage consumer
interest.
In addition, the VAPG assisted in launching other Sunsweet products
addressing consumers' preferences and expanding demand for their
farmers production. The ability for new product development and making
a market has been greatly enhanced due to USDA's VAPG.
Founded in 1917 as the California Prune and Apricot Growers
Association, the cooperative served as a marketing agent to offer the
crops of its members--under the brand name ``Sunsweet''--to consumers
at better prices than were offered by individual growers. Today,
Sunsweet processes and markets the dried fruit production of more than
300 grower-members.
The Chairman. Thank you, Mr. Conner.
Mr. Larson?
STATEMENT OF HON. DONALD LARSON, COMMISSIONER, BROOKINGS
COUNTY, SOUTH DAKOTA; CHAIRMAN,
AGRICULTURE AND RURAL AFFAIRS STEERING COMMITTEE, NATIONAL
ASSOCIATION OF COUNTIES, BROOKINGS, SD
Mr. Larson. Thank you, Chairman Johnson, Ranking Member
Costa, and Members of the Subcommittee, for our opportunity to
speak to you today. I am Don Larson. I am a County Commissioner
from Brookings County, South Dakota, and I serve as chair of
the National Association of Counties Agriculture and Rural
Affairs Steering Committee and I am honored to bring the
collective perspective of our nation's counties as I represent
NACo today.
A vast majority of our nation's 3,068 counties are rural;
therefore, our new farm bill with emphasis on rural development
is critical to our American counties. Today, we are talking
about America's food, fiber, and renewable energy fuels
producers and their local economies. Before I get into the
details of the testimony, I want to thank the leadership and
the membership of the House Agriculture Committee for your
commitment to passing the farm bill this year.
In my testimony, Mr. Chairman, I want to make three points,
which I lay out in more detail in the written comments
provided. First, the lack of sufficient and coordinated
infrastructure development and capital are two critical
obstacles to economic development and competitiveness in small
town and rural America. USDA's broad range of rural development
programs should be made a priority in the farm bill because
they are a critical source of grant and loan funding that is
leveraged by rural business, rural communities, and rural
people to overcome these challenges and create jobs.
The programs that assist communities with financing of
water infrastructure, community facilities, electric utilities,
and broadband deployment are the basic building blocks all
communities need to compete. Water and community facilities
programs are consistently ranked as the most critical. Rural
business programs all increase capital availability and help
counties play their important role as intermediaries and
technical assistant providers.
Most importantly, the rural development title helps rural
communities improve economic opportunity and quality of life.
The bipartisan Beginning Farmer and Rancher Opportunity Act,
H.R. 3236, provides a model that NACo supports for the kind of
initiatives necessary to invest in the next generation of
American producers. The rural development title also provides
critical support to new and beginning farmers through its
ability to finance the infrastructure necessary for local and
regional food systems. This growing sector will be enhanced by
the NACo-supported Local Farms, Food, and Jobs Act, H.R. 3286.
NACo supports maintaining the $150 million in mandatory funding
provided in the 2008 Farm Bill.
The second key point is that rural people, businesses, and
communities are increasingly operating in dynamic regional
economies and USDA rural development programs must be reshaped
to a more locally driven strategic regional approach. The
importance of Federal investments in regional planning and
project implementation is clear in eastern South Dakota. My
county, partnered with the City of Brookings, the County of
Brookings, South Dakota State University, our state created the
South Dakota State University Innovation Campus, the first one
in South Dakota. Our Innovation Campus provides a place where
people and ideas are coming together to enhance the economic
vitality of our region.
We use the ability of our First District Association of
Local Governments to develop a business plan and regional
strategy with Federal EDA funding. These planning investments
provided vital gap funding that helped make our regional vision
a reality. EDA got this project off the ground.
USDA, the main Federal partner in rural America, is not
structured to make this kind of success story happen.
Currently, USDA rural development programs all too often are
structured to serve individual communities rather than a larger
county and multi-jurisdictional facility and regional
strategies and goals. Funding decisions are based on the best-
written application as determined by Federal officials, not
state and local actors. We suggest the next farm bill direct
the Secretary of Agriculture to give priority to projects that
demonstrate collaboration and cooperation at the local and
regional level. Our towns, cities, and counties can no longer
afford to compete in a race to the bottom; rather, we are
learning that cooperation and collaboration best utilize
limited resources. Incentivizing projects that involve
collaboration across jurisdictions is smart policy and
supported by rural America.
Our last point is the Campaign for a Renewed Rural
Development is a collaboration of 35 national organizations
with a sincere interest in rural America's future that is
united in six key priorities for the next rural development
title. Those are mentioned in my previous report to you.
Ladies and gentlemen, we are here as your partner and we
want to work with you to recreate some of these things. And we
know if we keep doing what we are doing, we are going to get
what we got. Thank you, Mr. Chairman.
[The prepared statement of Mr. Larson follows:]
Prepared Statement of Hon. Donald Larson, Commissioner, Brookings
County, South Dakota; Chairman, Agriculture and Rural Affairs Steering
Committee, National Association of Counties, Brookings, SD
Thank you Chairman Johnson, Ranking Member Costa and Members of the
Subcommittee for the opportunity to testify today regarding an
assessment of rural development programs in advance of the 2012 Farm
Bill.
My name is Don Larson. I am a County Commissioner in Brookings
County, South Dakota and I serve as chair of the National Association
of Counties' (NACo) Agriculture and Rural Affairs Steering Committee.
Brookings County is located in the eastern corner of South Dakota and
has a population of around 32,000 people.
Before I get into the details of my testimony I want to start by
commending the leadership and membership of the House Agriculture
Committee for your commitment to passing a farm bill this year. NACo
supports you in that effort in partnership with a broad coalition of
groups that urged passage this year. NACo supports all titles in the
2012 reauthorization of the farm bill which is critical to all of our
nation's counties due to the important programs and policies that are
enacted for rural development, agriculture, nutrition, conservation,
research, forestry, energy and a host of other provisions. NACo calls
on Congress to place a particular emphasis on crafting a bill that
provides a robust and improved Rural Development title and is
appreciative of the focus on this topic in today's hearing.
My goal today in covering this important topic is to give you some
concrete examples from my county and region and I'm honored to also
bring the collective perspective of our nation's rural counties as I
represent NACo. NACo looks forward to working with as you consider ways
to improve USDA's Rural Development portfolio during the farm bill
reauthorization process. We share your deep commitment to rural America
and believe that through our working partnership, rural individuals,
communities, farmers, ranchers and all other rural businesses will be
given more flexibility to expand their economic potential and compete
in the global economy.
About the National Association of Counties
The National Association of Counties (NACo) is the only national
organization that represents county governments in the United States.
Founded in 1935, NACo provides essential services to the nation's 3,068
counties. NACo advances issues with a unified voice before the Federal
Government, improves the public's understanding of county government,
assists counties in finding and sharing innovative solutions through
education and research, and provides value-added services to save
counties and taxpayers money. For more information about NACo, visit
www.naco.org.
Overview
In my testimony, Mr. Chairman, I want to make three main points.
The lack of sufficient and coordinated infrastructure
development and capital are two critical obstacles to economic
development and competitiveness in small town and rural
America. USDA's broad range of Rural Development programs
should be made a priority in the next farm bill because they
are a critical source of grant and loan funding that is
leveraged by rural businesses, rural communities and rural
people to overcome these challenges in order to create jobs.
Rural people, businesses and communities are increasingly
operating in dynamic regional economies and USDA Rural
Development programs must be reshaped to promote and give
greater flexibility to these successful regional approaches and
local collaborations.
Rural Stakeholders are united in their support for Rural
Development programs and have provided a comprehensive list of
recommendations to improve these programs.
Making Rural Development a Priority
Our agricultural sector needs more investments in our rural
community infrastructure to remain competitive, both from a quality of
life perspective as well as the production, transport and safety of
agricultural food and energy crops. Rural Development in the farm bill
context shouldn't be viewed as a competitor, but as a complementary
component that should be robustly funded with mandatory and
discretionary dollars. The agricultural sector is a primary beneficiary
of just about every investment made by USDA Rural Development, whether
related to improved water and wastewater treatment facilities, improved
housing options for workers, more affordable access to business
financing, assistance for value-added production marketing or cheaper
and reliable services from rural electric, telephone and broadband
cooperatives.
Most importantly, the rural development title helps rural
communities improve economic opportunity and quality of life so that
the next generation of farmers is able to step forward. The percentage
of farmers who rely on off-farm income to survive is continuing to
accelerate and the average age of farmers and ranchers continues to
increase. New and beginning farmers depend on vibrant rural communities
to make their operations viable. NACo supports policies that ensure all
programs recognize that youth play a vital role in sustaining American
agriculture and rural communities. New programs and updates to ongoing
programs are needed so that it is possible for young and beginning
farmers to survive and thrive in the modern agricultural economy. The
bipartisan Beginning Farmer and Rancher Opportunity Act, H.R. 3236,
provides a model that NACo supports for the kind of initiatives
necessary to invest in the next generation of American producers. It is
a comprehensive marker bill with sound ideas for each title and
includes rural development programs such as the Value-Added Producer
Grants and assistance to entrepreneurial farm enterprises.
The Rural Development title also provides critical support to new
and beginning farmers through its ability to finance the infrastructure
necessary for local and regional food systems. Growing up we called
them truck farms, but today my fellow elected officials and I from
across the country are seeing more and more young people get their
start in agriculture through small farm to local market operations.
NACo supports investments in infrastructure, entrepreneurial programs
and facilities that process, distribute, and develop value-added
products using locally-grown commodities purchased from local farmers
to meet the demand for local, healthy food. The community facilities
program and business programs provide important sources of capital to
help these markets grow. These programs directly benefit new and
beginning farmers, local and regional food systems and the urban and
suburban consumers who are gaining access to fresh products. It is also
critical to point out that regional and local food systems are
bolstering urban--rural economic linkages and providing new economic
development opportunities in both.
This growing sector will be enhanced by the NACo supported Local
Farms, Food and Jobs Act, H.R. 3286. The bill provides important policy
suggestions for the farm bill that are intended to help farmers and
ranchers engaged in local and regional agriculture by addressing
production, aggregation, processing, marketing, and distribution needs
and will also assist consumers by improving access to healthy food and
direct retail markets. Local and regional agriculture is a major
economic driver in the farm economy. There are now more than 7,000
farmers markets throughout the United States--a 150 percent increase
since 2000, direct to consumer sales have accounted for more than $1.2
billion in annual revenues.
NACo and its municipal counterpart the National League of Cities
believe that this growing sector exemplifies the success of regional
collaborations as communities build upon partnerships to improve access
to healthy, local foods. Access to healthy food is increased when local
and regional food production, processing, distribution, and retail
enterprises work together to build stronger markets for healthy foods.
The regional food effort provides an important source of employment in
our communities, as it strengthens the viability of small and mid-scale
farms and other small businesses along the food chain.
USDA Rural Development also offers capital and infrastructure
financing that is critical to all sectors of the rural economy. The
programs that assist communities with financing for water
infrastructure, community facilities, electric utilities and broadband
deployment are the basic building blocks all communities need to
compete. The water and community facilities programs are especially
important to rural counties. For nearly 40 years, Rural Development has
successfully partnered with technical assistance (TA) providers to help
rural communities develop this vital infrastructure through various
programs, like water and wastewater, solid waste, and mutual self-help
housing. By partnering with TA providers, Rural Development is able to
maximize the return on every Federal dollar invested in these programs
and ensure that they are accessible to all rural communities. We
support the reauthorization of these programs due to their success in
leveraging outside resources, minimizing the risk of default on Rural
Development loans, and developing the capacity of local leaders to
manage large projects.
In addition, we urge you to authorize a technical assistance set-
aside for the Essential Community Facilities program to enable small
communities to provide vital services like public safety, health care,
business incubators and other vital services. We also urge you to
bolster Rural Development staff and TA providers' capacity to assist
rural communities and regions with comprehensive economic development
planning. Otherwise, USDA risks funding parallel initiatives that are
not coordinated with the current economic development plans of rural
communities and regions.
The Intermediary Relending Program (IRP), Rural Business Enterprise
Grant Program (RBEG), Rural Business Opportunity Grant Program (RBOG),
Business and Industry Loan Program and Rural Microentrepreneur
Assistance Program (RMAP) all increase capital availability to rural
businesses. Counties play an important role as intermediaries for
relending programs and as technical assistance providers through IRP,
RBEG and RBOG, but are ineligible to serve as the microenterprise
development organizations that assist microenterprises through RMAP.
Local governments should be made eligible for RMAP as they are often
the sole provider of economic development services in many communities.
Infrastructure development and access to capital remain the most
significant roadblocks to economic development and competitiveness in
small town and rural America. USDA Rural Development is effective at
helping communities overcome these roadblocks, but needs to receive
mandatory funding, maintain discretionary funding and be directed to be
more strategic with funding in the coming fiscal years in order to
overcome these obstacles.
Shifting USDA to a More Locally Driven, Strategic Regional Approach
The next farm bill offers a unique opportunity for Federal
policymakers to start pursuing new Federal policies for rural
development that ensure the Federal dollar gets stretched farther and
that rural localities and regions, not Washington, drive the funding
decisions.
At the local level I'm proud of our collaboration with the City of
Brookings on multiple joint projects, which are intended to create more
opportunities for our residents. NACo and the National League of Cities
are also united in many of our priorities at that national level. NACo
and NLC both support Federal policies that advance regional and multi-
jurisdictional approaches to planning and development. Many
communities--rural, urban, small and large--are partnering with various
levels of government, as well as public, private and nonprofit
organizations to pursue regional development opportunities that grow
the local economy. While county and city officials work to find
innovative solutions to revitalize our communities, current rural
development policy makes it difficult for local leaders to use the
available resources most efficiently.
Local jurisdictions pursue regional cooperation for many reasons,
including as a means to overcome limitations in accessing traditional
financing mechanisms that have grown overburdened or expensive as a
result of the current fiscal climate. We think Congress should work to
promote regional collaboration in rural development. First, rural
development programs can be oriented to give weight to applicants
demonstrating local and regional partnerships. Second, the definition
of regional partners should be broad enough to recognize a variety of
entities active in the life of a community, including nonprofit and
for-profit corporations, service providers and other governmental
groups, which help local governments achieve success. Third, programs
should incent and reward applicants that demonstrate cost savings and
avoid duplication of efforts.
Currently, USDA Rural Development programs all too often are
structured to serve individual communities rather than larger county
and multi-county regional strategies and goals. Funding decisions are
based on the best written application and not the level of
collaboration and cooperation that a project demonstrates. In today's
economy, our rural places are not served well by stove piped
programming, but rather need Federal investments to prioritize
strategic multi-jurisdictional plans that capitalize on the unique
economic assets and unique vision of people, businesses and
organizations in rural regions.
Rural people and places do not fit nicely into a box. I encourage
you to avoid getting bogged down in the regional fights that erupt when
definitions are considered. Instead, I encourage you to focus on
providing enhanced flexibility for USDA Rural Development's state
offices to provide assistance that fits the uniquely rural nature of
their states, by focusing on serving rural regions, both multi-town and
multi-county. USDA Rural Development funding should be directed towards
the prioritized assets and needs of rural communities and regions and
not well written applications written by a consultant in some far off
urban area.
The fiscal situation facing all levels of government--Federal,
state and local--is dire. Therefore, our investments must be based upon
the best economic research available. Historically, policymakers have
thought it was impossible for municipalities and unincorporated rural
areas to work together as one county or for multiple counties to work
together. The prevailing notion was that our interactions in economics
and football were the same. We met regularly, but only in competition
against each other.
I'm happy to report that this old notion is becoming less and less
prevalent. Our towns, cities and counties can no longer afford to
compete in a race to the bottom against each other in search of the
next big manufacturing plant. No, instead we are being forced to
consider new ways of governing in an era of limited government
resources. We are working together more efficiently and are
streamlining services. NACo pledges to work with you to improve USDA's
portfolio of rural development programs in order to assist with this
changing dynamic.
Incentivizing projects that involve collaboration across
jurisdictions and sectors of the rural economy does not have to
disadvantage remote rural communities or lead to more funding going to
larger rural cities and towns. Funding will still only flow to those
communities eligible under population criteria standards, but a new
priority for projects that demonstrate collaboration would allow the
broader regional strategies formulated jointly by urban, suburban and
rural areas to be factored into funding decisions as long as resources
are only going to eligible rural jurisdictions.
A model for incentivizing multi-jurisdictional and multi-sector
collaboration without leaving behind those communities that do not want
to or cannot collaborate is a funding bonus. An example is the U.S.
Economic Development Administration's (EDA) very small but effective
economic development district (EDD) planning program, which is the only
national program that requires rural communities to think and plan
regionally. The agency rewards local governments and grantees with a
ten percent Federal bonus within its public works and economic
adjustment assistance programs if they engage in multi-county planning
and development. Those that do not engage in this process are still
funded, but do not receive the bonus. USDA could be encouraged or
forced to do something similar in terms of providing a more attractive
grant/loan package to coordinated strategic projects. This model could
also be adapted to USDA Rural Development's clientele by providing
incentives for both multi-county planning and integrated planning among
municipalities and unincorporated areas within a single county.
In my County of Brookings, South Dakota, through regional planning
and innovative partnerships we created the South Dakota State
University Innovation Campus, the first research park developed in the
state of South Dakota. Sited on 125 acres, the Innovation Campus is
located next door to South Dakota State University (SDSU).
The SDSU Innovation Campus provides a place where people and ideas
come together in our region to combine the experience of university,
business, industry and government in an environment that uses
innovation and critical thinking to generate new ideas, promote
research, entrepreneurialism and business mentoring--providing
opportunities to keep our best and brightest in South Dakota.
The SDSU Innovation Campus is the product of the SDSU Growth
Partnership, a 501(c)(3) nonprofit corporation whose partners include
Brookings County, the City of Brookings, Brookings Economic Development
Corporation, South Dakota State University, the South Dakota State
Foundation and a State Representative. The county and city put up-front
money, and the First District Association of Local Governments helped
develop a business plan and grant application for EDA funding. These
planning investments provided vital gap funding that helped make our
regional vision a reality. The First District serves 11 counties and 75
communities within the counties of Brookings, Clark, Codington, Deuel,
Grant, Hamlin, Kingsbury, Lake, Miner, Moody, and Roberts.
The site includes retail and support services. Local private
developers have developed a 120 unit housing complex, the Innovation
Village, on property adjacent to the park. The campus has walking,
jogging and biking trails, and open green spaces, and is also
accessible via public transportation. All of the private development on
the innovation campus becomes a part of our local tax base.
The economic success story in Brookings County and our region,
along with our innovation campus, clearly demonstrate that rural
communities and institutions can make substantial progress by working
regionally to achieve economies of scale, technical expertise,
workforce pool and infrastructure financing to compete nationally and
globally. The project has helped Brookings County and our region
prosper. In fact, we enjoy one of the lowest unemployment rates in the
country at around four percent. Most importantly, we are seeing spin
off businesses from this innovation campus in the surrounding counties
that are even more rural than Brookings County.
However, rural unemployment in the nation has remained high
overall, despite the strong performance of the agricultural sector.
Other rural communities would like to start planning and implementing
regional strategies but do not have the funding to get started.
Reorienting USDA towards a regional approach would provide needed
resources to assist rural communities with seed money for planning, or
as in our case, additional funds to expand our regional development
efforts. In our region, we could expand the principles of the
innovation campus project to additional parts of our region. Our county
could also link to other efforts such as our regional farmers' market
initiative, our Seed Technology Laboratory, and our youth learning
center.
This new approach will save time and money for rural counties who
have trouble navigating the array of stove piped programs at USDA. The
vast majority of counties and municipalities in our nation lack the
financial, human and technical resources individually that are required
to compete with urban centers. These same rural communities lack the
expertise needed to navigate and apply for the alphabet soup of
excellent programs offered by USDA. These communities are not asking
for a free lunch. However, they do need a jump start. Federal
investments that encourage regional planning activities and provide
seed funding for implementation can help provide rural business and
community leaders with the leverage they need to begin something that
creates wealth and jobs.
Rural Stakeholders Are United in Support of Rural Development and Ideas
for Improvement of This Critical Agency
The Campaign for a Renewed Rural Development is a collaboration of
35 national organizations with a strong interest in the future of small
town and rural America. NACo chairs this campaign which works
collectively to support rural development programs and strategies that
promote rural prosperity. The members of the campaign represent a
diverse cross-section of rural and small town America. The campaign is
focused on advocating for a comprehensive rural development title, in
which Rural America will gain increased access to important seed
capital, infrastructure financing, professional expertise and support
services. A majority of the campaign came together to recommend six key
priorities that will strengthen USDA Rural Development investments. I
have summarized these points below.
Clarify Mission of USDA Rural Development--In addition to its
traditional and vital role as a lender of last resort helping rural
individuals and communities, the agency going forward should be viewed
as a crucial partner in forging new economic opportunities that help
rural people and places thrive.
Provide Flexibility and Incentives for Regional Collaboration--
Rural Development must be reoriented, through statutory language, to
give its programs greater flexibility to encourage the local and
regional partnerships that are currently encouraging innovation in
rural regions across the country.
Maintain Rural Development Investments--We recognize the extreme
fiscal challenges under which the farm bill will be written and the
pressure to cut mandatory funding. We urge Congress and the
Administration to work to ensure that rural investments, such as USDA
Rural Development, do not receive disproportionate cuts. Rather we urge
you to maintain mandatory funding for Rural Development in the 2012
Farm Bill.
Maintain and Improve Technical Assistance--We support the
reauthorization of technical assistance programs due to their success
in leveraging outside resources, minimizing the risk of default on
Rural Development loans, and developing the capacity of local leaders
to manage large projects. In addition, we urge you to authorize a
technical assistance set-aside for the Essential Community Facilities
program. We also urge you to bolster Rural Development staff and TA
providers' capacity to assist rural communities and regions with
comprehensive economic development planning.
Improve Metrics and Accountability--We urge Congress to require
USDA to increase its use of outcome-based evaluation metrics and to
evaluate the community and system wide impacts of its programs on the
economy of rural communities and regions.
Streamline Application and Reporting Processes--We urge Congress to
provide authorizing language that demands a culture of continuous
evaluation of current best practices that streamline application and
reporting processes. These processes should be adjusted to meet the
staffing and capacity challenges of all rural communities and
businesses, especially the most rural communities and businesses.
I'm excited to see this level of unity in rural America. We need it
if we are to overcome the economic challenges that face us. All the
panelists today represent stakeholders in rural America that are
critical to rural counties. I've already mentioned our multi-county
collaboration through the First District Association of Local
Governments, which is a regional development organization. I also am
proud of our work in eastern South Dakota to collaborate with our
business community, our farmer and ranchers, our cooperatives, our
nonprofits and churches, our colleges and universities and our
foundations, among many others.
In conclusion, it is clear that rural people and places are
increasingly operating in dynamic regional economies and USDA Rural
Development programs must be reshaped to promote and give greater
flexibility to these successful regional approaches and local
collaborations. Second, Congress and the Administration should work
together in a bipartisan manner to make rural development programs a
priority within farm bill reauthorization. NACo seeks to be your
partner in this endeavor. We promise to work with you to streamline and
improve existing programs so that investments in rural America pay even
bigger dividends in the future.
Thank you again, Chairman Johnson, Ranking Member Costa and Members
of the Subcommittee for the opportunity to testify this afternoon on
behalf of NACo on these critical rural development issues. I appreciate
your time and interest. I look forward to answering any questions.
The Chairman. Thank you, Mr. Larson.
Ms. Mazer?
STATEMENT OF LEANNE MAZER, EXECUTIVE DIRECTOR, TRI-COUNTY
COUNCIL FOR WESTERN MARYLAND, FROSTBURG, MD; ON BEHALF OF
NATIONAL ASSOCIATION OF
DEVELOPMENT ORGANIZATIONS
Ms. Mazer. Thank you, Chairman Johnson, Ranking Member
Costa, and Members of the Subcommittee, for the opportunity to
be here today. My name is Leanne Mazer, and I am the Executive
Director of Tri-County Council for Western Maryland, located in
Frostburg, Maryland. I would respectfully like to make three
points.
First, Mr. Chairman, the mission area of USDA Rural
Development is critical to our nation's rural and most
distressed areas as they work to develop the fundamental
building blocks necessary to be economically viable and
competitive. During challenging fiscal times, it is often easy
to forget the real impact of these programs like USDA Rural
Development. I would like to briefly tell you about a couple
examples of the work we have accomplished with these programs
in my region.
With the financing package that included a USDA loan, one
of our counties was able to construct a new water line that
opened up a new business park for advanced manufacturing. Very
soon thereafter, cabinet manufacturer American Woodmark moved
in immediately creating 120 new quality manufacturing jobs. The
company has continued to grow and now employs about 330 people.
In 2005, our agency assumed the management of an IRP fund
from another organization within our region. This offered us
one other financing tool to provide access to capital for our
business community. Recognizing that our region had a need for
professional hands-on business counseling and technical
assistance for our local entrepreneurs and businesses, we were
also successful in securing two USDA Rural Business Enterprise
Grants in the following 2 years. During the period of IRP
investments, our Council assisted 196 businesses and resulted
in $12.7 million in projects developed.
Tri-County Council's business counselor assisted one of
those companies in developing a business plan with financial
projections to support a much-needed manufacturing facility
expansion. The company's growth was limited by their existing
plant size. We helped that company successfully put together a
financing package that included $400,000 in gap financing from
our agency with a total project cost of just over $2 million.
The company continues to grow today and has been able to
increase their annual sales substantially.
Second, Mr. Chairman, our nation's rural communities are
facing enormous pressure from global competitors. Therefore, it
is imperative that USDA Rural Development has the policies,
program tools, and flexibility to assist rural communities and
regions. We believe that this can be achieved by USDA
facilitating regional collaboration and strategic investments
through existing regionally focused, locally driven frameworks
like the U.S. Economic Development Administration's
Comprehensive Economic Development Strategy, or CEDS, process.
Just last week, our region was pleased to see the
completion of a major project that could demonstrate how we use
our CEDS locally. The City of Frostburg utilized a USDA water
and waste disposal loan, along with other Federal, state, and
local programs and partners to complete a major water
distribution project that provides reliable clean water to over
5,300 homes and businesses. The project also included a
hydroelectric plant that now generates electric savings for the
city.
Because our region made this project a priority many years
ago during our CEDS and planning processes, all three of our
counties and all 24 municipalities were committed to its
success. Therefore, I would urge a greater recognition and
support of existing regional development strategies, including
the EDA CEDS that could assist the Rural Development in making
sound decisions with their investments.
Finally, Mr. Chairman, USDA rural development applications,
policies, and reporting requirements should be streamlined to
reflect the scale of the rural investments, emerging needs, and
opportunities in rural regions. Western Maryland is much like
other rural regions across America. Communities and small
businesses in our region often lack the staff capacity to apply
for and manage USDA rural development programs. This is
unfortunate since programs like USDA rural development were
established specifically for these communities.
Rural Development should consider a process to identify the
current concerns felt by their customers and enter into a
program of continuous evaluation and improvement for the
purposes of maximizing program impact. Rural Development should
also consider establishing stronger connections to entities
like regional development organizations and counties to provide
technical assistance to rural communities, small businesses and
entrepreneurs.
In closing, I urge your continued support of the USDA rural
development programs and funding in the 2012 Farm Bill. Thank
you again for the opportunity to be here today and I would
welcome any questions.
[The prepared statement of Ms. Mazer follows:]
Prepared Statement of Leanne Mazer, Executive Director, Tri-
County Council for Western Maryland, Frostburg, MD; on Behalf of
National Association of Development Organizations
Thank you, Chairman Johnson, Ranking Member Costa, and Members of
the Subcommittee, for the opportunity to testify today on the 2012 Farm
Bill's rural development title. Let me start by thanking you and the
Members of the Subcommittee for your leadership and interest in the
rural development mission area as part of the 2012 Farm Bill
reauthorization process. The broad portfolio of USDA Rural Development
programs for business development, infrastructure, housing, value-added
agriculture production and marketing, regional strategic planning, and
broadband deployment are essential to the long-term economic
competitiveness and quality of our nation's rural communities.
My name is Leanne Mazer. I am the Executive Director of the Tri-
County Council for Western Maryland, headquartered in Cumberland, and a
Past President and Board Member of the National Association of
Development Organizations (NADO). My background includes nearly 2
decades in regional and local economic development, including more than
twelve years in my current position.
The National Association of Development Organizations (NADO)
represents the national network of 540 regional development
organizations. As public-based organizations governed primarily by
local elected officials and other community leaders, the members of
NADO focus on improving the economic conditions and quality of life
across America's local communities through regional strategies,
partnerships and solutions. In addition, NADO is a member of the
Campaign for Renewed Rural Development, a broad-based coalition led by
our partners at the National Association of Counties.
The Tri-County Council for Western Maryland is a regional economic
development agency serving Allegany, Garrett, and Washington counties.
We provide a variety of programs and services within our region, and
serve as a regional planning and development organization under the
guidelines of both the Appalachian Regional Commission (ARC) and the
U.S. Economic Development Administration (EDA). In addition to our
professional and technical assistance programs for local governments,
businesses, and nonprofit entities, our organization operates several
small business development loan funds, serves as the state data center
affiliate for Western Maryland, and offers Geographic Information
System (GIS) services for our local communities and partners.
Mr. Chairman, I will focus my remarks today on three key areas
related to USDA Rural Development and the future of our rural regions
and communities:
1. The mission area of USDA Rural Development is critical to our
nation's rural and most distressed areas as they work to
develop the fundamental building blocks necessary to be
economically viable and competitive. This includes basic yet
essential investments for infrastructure and utilities, housing
and community facilities, and access to capital and technical
expertise for our businesses and entrepreneurs.
2. With rural regions now facing intense global competition, we
need to ensure USDA Rural Development has the policies, program
tools, and flexibility to assist rural communities with
cutting-edge, asset-based regional development strategies and
investments. This will take a new level of sophistication and
capacity within our rural regions and at USDA Rural
Development. Specifically, we need to foster stronger public-
private-nonprofit partnerships, prepare our rural workforce
with new skills, and develop modern infrastructure and
community facilities, which can be achieved more efficiently
and cost effectively by leveraging and investing in existing
regional development strategy processes such as the U.S.
Economic Development Administration's Comprehensive Economic
Development Strategy (CEDS) framework.
3. USDA Rural Development applications, policies, and reporting
requirements should be streamlined and broadened to reflect the
scale of rural investments, emerging needs and opportunities of
rural regions, and capacity of local organizations. While
retaining necessary financial and performance accountability
standards, Congress should ensure USDA Rural Development has a
modern set of policies, programs, and incentives to help rural
communities pursue regionally-based, locally-driven community
and economic development strategies.
First, Mr. Chairman, the mission area of USDA Rural Development is
critical to our nation's rural and most distressed areas as they work
to develop the fundamental building blocks necessary to be economically
viable and competitive. With USDA's assistance over the decades, rural
communities across the nation are now better positioned to pursue
regional asset-based and innovation-focused development strategies that
are resulting in new job and local wealth retention opportunities.
However, continued gains are increasingly at-risk due to Rural
Development funding cuts in recent years. Since FY 2010, the Budget
Authority for the USDA Rural Development mission area has been cut by
nearly $733 million, including reductions of $102.46 million in the
Rural Utilities Service, $333.93 million in the Rural Housing Service
and $75.52 million in the Rural Business-Cooperative Service. Over the
past 2 years, water and waste water grants have been cut $41.61
million, community facility grants are down 44 percent, and support for
rural microenterprise lending and technical assistance was eliminated
for the current fiscal year.
While some of these cuts have been masked by massive increases in
USDA's direct loan and loan guarantee program levels (especially due to
the historically low subsidy level for the community facilities
program), the reality remains that the most distressed rural
communities will struggle to make the improvements necessary to remain
economically viable. In addition, the programs hit hardest by recent
budget cuts include the agency's smaller, more flexible business and
community assistance programs, such as Rural Business Enterprise Grants
(RBEG), Rural Business Opportunity Grants (RBOG), and the Rural
Community Development Initiative (RCDI). Combined, these three
community and economic development programs have been cut more than $17
million, or 37 percent, over the past 2 years. The program level for
the Intermediary Relending Program (IRP), an important access to
capital resource for rural businesses and entrepreneurs, is also down
48 percent over the same period.
Other key Federal economic development programs that specifically
help small towns and rural communities are also facing substantial
cuts. Compared to FY 2001 levels, project funding for the U.S. Economic
Development Administration is down $181 million (42 percent reduction)
and HUD's Community Development Block Grant (CDBG) program is down
$1.46 billion (44 percent cut). This translates into nearly $620
million in reduced grant investments for vital community and economic
development infrastructure each year since half of EDA's investments
are typically in rural areas and 30 percent of HUD's CDBG money is
targeted, by law, to small cities and rural areas.
In the current budget climate, we understand that most of these
core programs for basic yet essential investments for infrastructure
and utilities, housing and community facilities, and access to capital
for rural communities are unlikely to be restored to their peak levels.
This makes USDA Rural Development programs and policies even more
essential. While we recognize this Committee is not directly
responsible for the annual appropriations for USDA Rural Development,
the Committee can ensure the remaining programs and resources are used
in a more strategic and performance-driven manner.
During challenging fiscal times, it is often easy to get caught up
in the numbers and forget the real impact Federal programs like USDA
Rural Development have on the communities and people across America. In
one of my counties, we recently completed a significant project of
regional importance that would have been impossible without assistance
from USDA Rural Development. With a USDA loan, Allegany County, working
with state and local partners, was able to construct a new water line
to the new Barton Business Park for Advanced Manufacturing, which was
developed to create manufacturing and technology jobs in an area where
the unemployment rates are consistently higher and the per capita
incomes are consistently lower than the national and state averages.
This project was essential to ready the facility for tenants and
soon thereafter, cabinet manufacturer American Woodmark moved in. The
company, readily positioned to expand its operations to address rising
product demand in the U.S. Northeast and Mid-Atlantic regions,
immediately created 120 new quality manufacturing jobs. They continue
to grow and now employ approximately 332 employees.
In 2005, our agency assumed the management of an IRP fund from
another organization within our region. While we are still working with
USDA and our clients to clean up and close out previous loans, we are
making progress in awarding newer loans and investments. Recognizing
that a pressing need in our region was more professional, hands-on
business counseling and technical assistance for our local
entrepreneurs and businesses, we also secured two USDA Rural Business
Enterprise Grants (RBEG) to assist our small business community,
particularly those that were potential or existing loan clients. During
the 2 year period with our RBEG investments, we assisted 196 businesses
with business counseling and other technical assistance. Among the
results, we invested more than $1.8 million in gap financing to help
our partners secure approximately $12.7 million in new lending and
investments. It is worth noting that we provided more than a 50 percent
local match for both these USDA awards.
One of the businesses that the Tri-County Council helped during
this time period was M&W Ventures, LLC, a Washington County small
business engaged in electric motor sales, repair, and installation,
whose growth was limited by the size of their existing plant. Our
organization assisted the company with a business plan to support the
expansion of the plant facility that was needed for overall growth and
increased sales. Our organization was able to provide $400,000 in gap
financing to support a total package of $2.1 million. The company
continues to grow, expanding their annual sales to $3.9 million.
Second, Mr. Chairman, our nation's rural communities are facing
enormous pressure from our global competitors. At the same time, our
rural regions have the assets and drive to compete and take advantage
of new opportunities. Therefore, it is imperative that USDA Rural
Development has the policies, program tools, and flexibility to assist
rural communities and regions with cutting-edge, asset-based regional
innovation strategies and investments.
To be successful in the modern economy, rural entrepreneurs and
communities must be connected to global and domestic markets--
digitally, institutionally, and physically. This will take a new level
of sophistication and capacity within our rural regions and at USDA
Rural Development. It will also mean improving Federal interagency
collaboration, fostering stronger public-private-nonprofit
partnerships, preparing our rural workforce for new challenges, and
developing more modern infrastructure and community facilities. We
believe this can be achieved more efficiently and cost effectively by
facilitating regional collaboration and strategic investments through
existing regionally focused, locally driven planning frameworks such as
the U.S. Economic Development Administration's Comprehensive Economic
Development Strategy (CEDS) process.
One of the many specific ways the Tri-County Council supports
regional development is through our long partnership with the U.S.
Economic Development Administration (EDA) and the Appalachian Regional
Commission. The EDA, through its national network of 380 economic
development districts, provides vital seed capital and matching funds
for local communities to craft and implement regional economic
development strategies. As such, the vast majority of rural America is
supported by a Comprehensive Economic Development Strategy (CEDS).
The CEDS is an invaluable framework for identifying the economic
conditions, shared development goals, and the regionally impactful
investments that will enhance the competitiveness of rural America.
Because they are regionally based, locally owned strategies, the CEDS
would provide USDA with an established system to help make more
strategic investments. In addition, USDA should be given additional
resources and authority to assist rural counties and regions with more
robust support for developing and implementing in-depth rural asset
mapping, key industry analysis, and regional innovation readiness
assessments that build upon the groundwork of the CEDS process.
In Maryland, we have been embarking on several regional projects
that demonstrate the importance and power of connecting often disparate
issue areas for the purposes of regional development. Last week, we
were pleased to see the completion of a major project that demonstrates
how we used our CEDS to examine existing assets, identify and
prioritize local needs, and successfully finish a project of regional
significance. The City of Frostburg, in partnership with other Federal,
state, and local partners, used a USDA Water and Waste Disposal loan
(combined with funding from the Appalachian Regional Commission) to
complete a major water distribution project that provides reliable,
clean and abundant water to over 5,300 homes and businesses.
The USDA loan was used for the replacement of raw water
transmission mains, which enabled the City to pump enough water to meet
the needs of the existing water service area. This allowed the
hydroelectric plant, which generates electricity to offset energy used,
to pump raw water from the Piney Dam source under the terms of a net
metering agreement with Potomac Edison. The hydroelectric plant, which
began production in December 2011, produces between 55 and 70 kW with a
current estimated annual value of $29,000. The new and larger raw water
transmission mains now provide the City with the capability to
efficiently pump more water and generate additional electrical savings.
This one water project was 30 years in the making and required
extensive relationship building and consensus across a spectrum of
often divergent stakeholders. Yet, because our region made this project
a priority many years ago through our CEDS process, all three counties
and 24 municipalities were committed to its success. Our hydroelectric
plant is now a key part of our region's economic development
infrastructure.
Our organization is also involved in a major initiative to bring
broadband to rural and under-served portions of the state through the
Maryland Broadband Cooperative. We assisted in creating the first
regional community foundation in our part of the state. In addition, we
helped facilitate improved communications and coordination among
various educational institutions within our region, with a major
emphasis on preparing our youth and students for today's economy.
With fewer Federal resources, including grant dollars and staffing,
it is becoming more essential for USDA Rural Development to make more
strategic and performance-based investments that are tied to regional
and local plans and priorities. Instead of public, private and
nonprofit sector leaders working together on our asset-based
opportunities and needs, we are often forced to fit our community and
economic development initiatives into USDA's program stovepipes and
funding priorities. I would urge a greater recognition and support of
existing regional development strategies, including the EDA CEDS, that
could assist Rural Development in making sound decisions regarding
their investments. This would also require making USDA's rural
development programs more flexible and geared toward addressing
regional and local priorities.
Finally, Mr. Chairman, USDA Rural Development applications,
policies, and reporting requirements should be streamlined and
broadened to reflect the scale of the rural investments, emerging needs
and opportunities of rural regions, and capacity of local
organizations. While retaining necessary financial and performance
accountability standards, Congress should ensure USDA Rural Development
has a modern set of policies, programs, and incentives to help small
towns and rural areas pursue community and economic development growth.
Western Maryland is much like other rural regions across America.
Communities and small businesses in this region often lack the staff
capacity to apply for, and manage, USDA Rural Development programs.
This is unfortunate since programs like USDA Rural Development were
established specifically for the purpose of assisting rural
communities, especially those with severe distress and poverty.
Every Federal program should be adjusted to meet not only the
needs, but the capacity of all rural communities and businesses. In
order to maximize access to the services and programs that rural
regions need to create conditions for job growth, Rural Development
should strongly consider a process to identify the current concerns
felt by their customers and enter into a program of continuous
evaluation and improvement for the purposes of maximizing program
impact. Rural Development should also strongly consider establishing
stronger connections to entities, such as regional development
organizations and counties, to provide technical assistance to rural
communities, small businesses and entrepreneurs.
In closing, I urge your continued support of USDA rural development
programs and funding in the 2012 Farm Bill, especially those built
around regional, asset-based development strategies and investments
that create conditions for quality job growth. USDA Rural Development
is an essential partner and funding source for rural people and places.
It is also a vital tool for regional development organizations, such as
the Tri-County Council, and our local government and community partners
as we strive to position our communities for the future.
Thank you again, Chairman Johnson, Ranking Member Costa, and
Members of the Subcommittee, for the opportunity to testify today. I
would welcome any questions.
The Chairman. There will be questions. I call on the
Ranking Member, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman.
Former-Secretary Conner, thank you for your service to our
country. And you talked about the Value-Added Producer Grant.
As I understand we have mandatory funding up until the Fiscal
Year 2017 if I am correct. I think it has been successful not
only in helping cooperatives overcome constraints on necessary
capital to innovate and process new commodities and product
packaging that we use to export around the world, but initially
you mentioned that cooperatives are in the best position to
efficiently spread the benefits to a larger number of
producers. However, I was looking at some of the numbers since
the 2008 Farm Bill and after 298 recipients of the Value-Added
Producer Grants, only 26 of them went to cooperatives. Why did
so few go to them if, according to your testimony, you are in
the best position to do them?
Mr. Conner. It is a great question, Mr. Costa, and let me
just say I think your numbers are accurate and I would further
add that I believe there was a period of time where 80 percent
of the Value-Added Producer Grants were being used by
cooperatives. So there is a substantial decline that has
occurred there over time. And as I said in my oral testimony, I
shared with you a firsthand experience we had where, when the
program funds were available, we notified our membership of
that process. And again, as I stated----
Mr. Costa. I know but I am just trying to get a sense of
why there has been the decline and what might be done because I
am a big supporter of cooperatives.
Mr. Conner. Yes.
Mr. Costa. I have a number of cooperatives, dairy and food
cooperatives that have been long--not only in California but
throughout the country. And I think value-added is very
important. That is why I would want to support the grants. I am
just trying to figure out what is going on.
Mr. Conner. Well, let me get right to the point, then. The
response from many when these funds became available was that
the application process required too many resources on their
part for a relatively small benefit----
Mr. Costa. All right----
Mr. Conner.--and it was not worth it for them----
Mr. Costa.--let me segue to the other comments I made in my
opening statement, and that is for all three of you, my
concerns about rural definitions. I wonder whether or not any
of the three of you would speak to ideas that you could suggest
to the USDA on how Congress could better define rural and
provide the agency flexibility it needs to address needs
throughout the nation in terms of rural communities because, as
I said, I don't think one-size-fits-all.
And in some areas, for example, again we all know our own
situation best but in California we have tried to encourage
smarter growth in our cities in part to protect our
agricultural lands. We have asked cities not to spread on some
of our prime ag land. And as a result of that, it has created
population densities under the definition of rural that now
then comes back and penalizes us. This has been something that
is not new, wresting with the definition of rural. Does the
gentleman from NACo and the other gentlelady have any comments
that you would like to make as it relates to a rural
definition?
Mr. Larson. Well, Ranking Member, I think we share the same
dilemma that you share. And we don't have at this moment a
better idea for the definition of rural, albeit we understand
and we appreciate fully the experience you have in your home
county and that you are not the only situation like that across
the country where you see some growth but rural areas are
attached. But the best I can say is that I share the dilemma at
this moment and I don't have the perfect answer because as we
approach the regionalization of our efforts to better expend
the Federal dollars that are available to us----
Mr. Costa. Okay.
Mr. Larson.--we take in more people----
Mr. Costa. Ms. Mazer, do you a comment, suggestion?
Ms. Mazer. Ranking Member Costa, NADO is a broad-based
organization, too, so I really can't comment as far as I am not
in a position to represent a definition, a population number to
define rural but I can talk about my----
Mr. Costa. I am just looking for ideas.
Ms. Mazer. I can talk about my region for a little bit. We
have three counties I mentioned, 24 municipalities and a total
population of about 250,000. Our smallest community is about 80
citizens and we have two cities that one is right at the
threshold at 21,000 for Community Facilities Grants, and our
other largest city is 37,000 in population. While we see the
struggles of our small towns, we also see the struggles in our
largest city. They are different struggles. And we use regional
planning and the process of continuous regional planning where
we bring our region's leaders together on a voluntary basis
several times a year every year on a continuous basis to try to
see how we can address those issues that they are all facing,
those struggles they are all facing from both ends of the
population spectrum.
I will tell you that being said, when we put those leaders
in the room, our elected officials, our chambers of commerce,
our business people, our education leaders, they will come to
consensus and they do look at how we can make the best progress
and the most progress for the region.
Mr. Costa. Yes, and I think your example is not unusual
compared to all the districts we represent. Thanks. My time has
expired but just for the Members' information, Fresno County is
the largest agricultural county in the nation, over $6 billion
a year. But the City of Fresno now has over half a million
people in it, so we are the fifth-largest city in the state,
and because of that fact, even though we are the number one
agricultural county in the nation in terms of farm gate
receipts, we are obviously very much handicapped by the 15
cities that surround different parts of Fresno County and the
small hamlets that are not incorporated. Anyway, that is part
of the dilemma we are dealing with.
The Chairman. Thank you, Mr. Costa.
The gentleman from Georgia, Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman. And Commissioner
Larson, I listened to what you said and, if we keep doing what
we are doing, we are going to get what we got. I guess my fear
is--and Members of Congress--if we keep doing what we are
doing, we might lose what we have in America. And I have just a
simple question. You are a county commissioner so you are out
there where the rubber meets the road with the American
citizen. Do you have to balance the budget in your county on an
annual basis?
Mr. Larson. Yes, we do.
Mr. Scott. What would happen if you didn't balance it on an
annual basis?
Mr. Larson. Well, obviously the answer would be that over a
continued time frame the ultimate route would be bankruptcy.
Mr. Scott. Yes, sir. I tell you, I have found that local
people like yourself do a much better job with managing tax
dollars than we do up here in Washington, so I want to thank
you for coming up here and testifying. And I do hope that, Mr.
Chairman, we are able to get more of these decisions made at
the local level where the rubber meets the road. Thank you for
what you are doing.
The Chairman. I thank you sincerely. Thank you.
Mr. Scott. I yield back the remainder of my time.
The Chairman. Thank you. The gentlelady from Alabama, Ms.
Sewell.
Ms. Sewell. Thank you, Mr. Chairman, Ranking Member Costa,
and Members of the Committee. I thank you witnesses for your
testimony.
The idea of promoting a regional approach to rural
development has been promoted by the USDA and encouraged by
Secretary Vilsack in his Regional Innovation Initiative which
sets aside significant funds across the rural development
programs for regional projects. I have the pleasure of
representing my home district, which includes a lot of rural
areas of Alabama and we are a big benefactor of the Delta
Regional Authority. I am very supportive of the regional
approach to better leveraging limited resources to better
impact both our rural communities directly as well as
infrastructure development that really helps the whole
communities as a whole.
However, one concern that is shared by some is how a more
regional approach will adversely impact those rural communities
that are not a part of, or cannot, or do not have the ability
to be a part of regional planning because of the dispersed
nature of those communities. Please elaborate on some of the
benefits and challenges associated with a more regional focus
on rural development. And how would you work to overcome any of
these identified challenges to a regional approach for
communities that are more spread out? And I open that up to all
three witnesses.
Mr. Larson. Well, ma'am, I approach it in our discussions
that the regional concept is a good way to go to involve
communities. And regions are about as difficult to define as
rural probably, but for a specific project you could have a
large region, another project is a smaller region meaning a
group of communities or citizens have to work together to
create the project, that the project is designed to create a
better quality of life for beyond just one small community
always understanding that in rural America we have remote
areas. And this type of cooperation and collaboration is
probably impossible. And those people should then have the same
opportunity to apply as a regional and be given the same type
of preference.
Ms. Sewell. Yes, sir. Any other comments?
Ms. Mazer. No, I would agree with that.
Ms. Sewell. When we are talking about limited resources,
rural development--and I know it is spearheaded by Doug O'Brien
for Secretary Vilsack and he does a remarkable job of being
attentive to rural communities. But I would be interested in
hearing your perspective as to what rural development programs
have proven the most effective and which programs have proven
least effective. In this kind of economic environment, it is
always important to listen to those people who are directly
impacted and actually try to use those programs directly. So I
would be interested in knowing which rural development programs
have been the most beneficial.
Mr. Conner. Congresswoman, in the material that I submitted
for the record I gave examples of three different co-ops that
have used the Value-Added Producer Grant Program, which is a
matching public-private program to bring about good things for
their farmer-owners. Probably the best example that we put
forward is one of Blue Diamond Almonds----
Ms. Sewell. Yes.
Mr. Conner.--where literally these funds are being used for
market development and this is an enormous growth industry in
the State of California. In a state where other industries are
not necessarily growing, this is a remarkable growth story. A
big part of it can be attributed to these value-added grants.
Ms. Sewell. Any suggestions as to programs that have been
less effective? And I would obviously love to hear from our
commissioner since you are on the frontlines of programs that
have been effective for rural development.
Mr. Larson. Well, ma'am, the programs that are most
effective and most needed in rural America--I speak
nationwide--are always references to water, wastewater,
broadband----
Ms. Sewell. Infrastructure----
Mr. Larson.--and, yes, infrastructure and then rural
facilities and specifically those to accommodate healthcare. In
rural areas we need a place that we can treat someone until the
emergency facilities are there whether it be helicopter,
ambulance, whatever----
Ms. Sewell. Absolutely----
Mr. Larson.--to--critical care.
Ms. Sewell. Yes.
Mr. Larson. And the broadband is going to have the impact
on rural America just like electricity did.
Ms. Sewell. Great. Well, thank you all. I yield back the
rest of my time.
The Chairman. Thank you. I might mention to the Members of
the Subcommittee it is my hope, goal, to make sure we get both
panels in and the Subcommittee hearing concluded before we go
to the Floor so we don't have to truncate the process. I am not
trying to speed anybody up. It is a lot more instructive I
think when we can go straight through.
With that, I call on the gentlelady from Missouri, Mrs.
Hartzler.
Mrs. Hartzler. Thank you, Mr. Chairman. And I would add my
comments to the Ranking Member thanking you for your service
and wishing you well and saying it has been an honor. It is an
honor to serve with you here.
I would like to start with Mr. Conner. Your testimony was
very interesting how you pointed out that there are 88 programs
administered by 16 different Federal agencies specifically
targeted at rural development and that consolidation is
warranted. I was just wondering do you have some examples of
some specific agencies or departments or programs that you
think would be a good thing to consolidate?
Mr. Conner. Well, Congresswoman Hartzler, let me just
answer your question this way. Obviously, we believe that the
U.S. Department of Agriculture Rural Development is the right
place and they are the people they have, if you will, boots on
the ground out in the field to actually successfully administer
these programs. And so in that process we would certainly
strongly encourage a continued relationship with that agency
that has the people out there who are in the rural communities,
know the projects, know who is behind them, know the quality of
those projects. And I am not sure that exists with all of the
agencies that I mentioned but we would certainly encourage
continued use of the people with boots on the ground.
Mrs. Hartzler. Can you give me an example of a program that
is in a different agency that is also in USDA that you think we
could pull back totally under USDA's jurisdiction?
Mr. Conner. Well, pulling back totally probably is farther
than what I am prepared----
Mrs. Hartzler. Consolidating.
Mr. Conner.--to give some good advice for you, but, this
Committee can explore a number of different opportunities in
the housing programs that I have mentioned with the Value-Added
Producer Grants. These are things that are occurring elsewhere
as well and we have found these programs again, we have offered
criticisms but yet, we want to continue to see them operated
and funded through USDA Rural Development.
Mrs. Hartzler. Great. Thank you very much.
Mr. Larson, several of you have mentioned the importance of
infrastructure grants and the loans to the rural communities.
And certainly as I travel around my district that is something
that is very important and is needed with wastewater and water
treatment facilities, especially as it relates to the EPA's
changing rules and specifications, older infrastructure,
whether it be sewer lines or water lines in these small towns,
and they rely on these loans.
I was just wondering do you have an idea of the amount of
need that is out there, dollar-wise, for this type of
infrastructure versus how much money is available currently for
these programs?
Mr. Larson. No, ma'am, I do not have a dollar estimate for
you but I can sympathize and agree with your comment, the fact
that there is a great need out there in rural America and there
is going to be a continuing need if we hope to grow and expand
the rural economy with value-added projects and so forth
because we need these other types of important infrastructure
to facilitate those communities that are fortunate enough to
have this type of economic development happen.
Mrs. Hartzler. Yes. These small towns just don't have the
money that it takes to upgrade their sewer plants or to do what
needs to be done according to the regulations. It is putting
them in a very difficult position. And so I was just wondering
if you had any thoughts on that. So I will withhold further
comments due to time, but thank you, Mr. Chairman. Thank you.
The Chairman. Looking at the panel here, I always wonder
what one-party rule would be like. Did you ever see the Woody
Allen movie?
I would then recognize the gentleman from Pennsylvania, Mr.
Thompson.
Mr. Thompson. Thank you, Mr. Chairman. And I join my
colleagues on also saying thanks for your leadership.
Ms. Mazer, you mentioned the importance of preparing our
workforce with new skills in your testimony. What specific farm
bill programs do you support and believe help with this?
Ms. Mazer. I am not sure of a specific answer to that as
far as workforce skills from actual Community Facilities. We
have used Community Facilities loans and grants in building one
of the first new high schools in our county in 50 years. We
could talk about it from the bricks-and-mortar and
infrastructure type of perspective but we could also talk about
the impact of regional planning and truly looking regionally.
And one of the examples that I can share from my region is,
again, we are a regional entity made up--our board is made up
of county commissioners, educators, chambers of commerce,
business leaders. Our educational institutions had for a long
time professional staff an association. There are 3 K-12
schools. There are three community colleges, a state
university, and then a University System of Maryland, and they
approached us because we were the regional platform. They were
struggling with maintaining staff so we took over the
management of the consortium. We now have a virtual educational
consortium where we can bring those leaders together to talk
about the educational needs. They can work together, they can
pursue joint opportunities, and it is also a direct link, then,
between economic development and education.
Mr. Thompson. So what is the tie then within your model
between--obviously it sounds like you are blessed with, for a
rural region you are blessed with different educational
entities----
Ms. Mazer. Yes.
Mr. Thompson. Is there a good solid tie back to the rural
employers so that their workforce needs are clearly understood,
constantly monitored, and that is kind of that need is what
drives what you do with that area?
Ms. Mazer. Yes, absolutely. There is a very close
connection. We work together very closely. We also have an
organization made up of private sector CEOs and in Allegheny
County in the center of our region it is called the Greater
Cumberland Committee. We have the Greater Hagerstown Committee
in Washington County. The Greater Cumberland Committee actually
has a program where they bring businesses and our educational
community together as well.
Mr. Thompson. All right. Thank you.
Now, Mr. Conner, can you discuss the success of the farm
cooperatives and what kind of benefits that they tend to
provide rural communities and American agriculture, how they
differ from other businesses? And with those cooperatives, I am
assuming these are strongly member-driven, and how do we make
sure that--I have heard a lot of discussion especially on the
dairy side of member concerns that are member-driven but they
feel like they don't have a lot of input. So how does that work
in terms of how can we assure that our farm cooperatives are
strongly member-driven?
Mr. Conner. Well, Congressman Thompson, let me just answer
the question this way if I could. I do believe our farmer-owned
cooperatives are member-driven because obviously those co-ops
are managed by a board of directors that for the most part is
elected by those farmer members of that cooperative. In my case
I have never observed a circumstance where those farmer leaders
were shy about making their views known if they thought the
direction of the co-op was headed different than what they
preferred. You know, things change pretty rapidly again because
the people that own the co-op, the people that vote on the
leadership, on the management of that co-op are indeed the very
farmer members who make up that co-op and that creates a system
that is very, very responsive to those farmer members.
Mr. Thompson. Okay, thank you.
Mr. Larson, which rural development program do you think in
your opinion has the best return on investment in terms of
putting Federal dollars through the farm bill into rural
economic development program? Which one do you think has the
best return on investment coming back for the taxpayers?
Mr. Larson. Well, I am glad that you review them as
investments because that is what they are.
Mr. Thompson. Sure.
Mr. Larson. They are an investment, not an expense. And I
would have to say that in my opinion that good water and
wastewater treatment facilities are very important to rural
America. And I don't mean just small towns but our rural water
systems that serve the rural areas.
Mr. Thompson. Thank you, sir.
Thank you, Mr. Chairman.
The Chairman. Thank you. And thanks for your comments here
on the panel. I really appreciated that.
With that, I don't believe there is any second round of
questions. I appreciate your being here, ladies and gentleman,
and look forward to seeing you again.
Mr. Larson. Thank you.
Ms. Mazer. Thank you.
The Chairman. Calling the second panel to come on forward,
and while they are doing that, I want to indicate that along
with the testimony that we are about to receive from the second
panel, I have a letter submitted by the U.S. Telecom
Association. Unless there is objection, I would ask that it be
made part of the record. So ordered.
[The information referred to is located on p. 1671.]
The Chairman. And so the second panel, as they are
assembling, is comprised of Frank Dunmire who is actually from
my part of the state, was actually in Taylorville a week ago
Saturday at the VFW. Mr. Dunmire is the Executive Director of
the Illinois Rural Water Association on behalf of the National
Rural Water Association; Mr. Robert Stewart, Executive Director
of Rural Community Assistance Partnership; Mr. David Rozzelle,
Executive Vice President of the Suddenlink Communications St.
Louis on behalf of the National Cable Telecommunications
Association; and Mark Bahnson, CEO and General Manager of
Bloomingdale Communications, Bloomingdale, Michigan, on behalf
of the National Telecommunications Cooperative Association.
With that, then, we ask that the panelists speak in the
order I recognized them. First, Mr. Dunmire.
STATEMENT OF FRANK DUNMIRE, EXECUTIVE DIRECTOR,
ILLINOIS RURAL WATER ASSOCIATION, TAYLORVILLE, IL; ON BEHALF OF
NATIONAL RURAL WATER ASSOCIATION
Mr. Dunmire. Thank you. Chairman Johnson, Ranking Member
Costa, and Members of the Subcommittee, thank you for holding
today's hearing. Like Mr. Chairman said, I am Frank Dunmire,
the Executive Director of Illinois Rural Water Association and
in the interest of time I will summarize my written statement.
But before I get too far along into my testimony, I would like
to thank Chairman Johnson for his service to Illinois. Since
the Chairman began his career in the public service in 1971, he
has been a champion of the farmers and the rural communities in
our state and we wish him well as he leaves the House of
Representatives and returns home to his family in Illinois.
Thank you, Tim.
The Illinois Rural Water Association is a member of the
National Rural Water Association on whose behalf I am
testifying this afternoon. NRWA represents over 28,000 small
rural water systems with which 1,100 of those are located in
Illinois. Every day, rural water helps communities properly
operate, maintain, and manage their water and wastewater
systems, ensure compliance with the Safe Drinking Water Act,
and when necessary, respond to natural disasters.
Last year, rural water provided over 155,000 hours of
onsite assistance to rural water and wastewater systems
throughout the country. Everyone realizes the importance of
water. It is not until you turn on the tap and nothing comes
out that you begin to understand how complicated life becomes
without easy access to water. Water quality and affordability
are important factors for businesses wanting to locate or
remain in a rural community. Many times, job creation is
directly tied to the availability of a good supply of potable
water.
An excellent example of this is located in southwestern
Illinois at the Prairie State Energy campus. This project
created over 3,000 construction jobs and it will create 500
permanent onsite jobs and 800 support sector jobs. But what
most people don't know is that all of the potable water supply
needs for this facility are being met by Washington County
Water Company, a water cooperative funded through Rural
Development.
As a lender of last resort, USDA provides critical
financing for water systems that are unable to secure
commercial credit. In Fiscal Year 2011, USDA obligated over
$1.3 billion in loans and grants to 695 water and wastewater
projects. Eighty-two percent of those funds were used for
projects in communities with populations of 5,000 or fewer. And
even though over the last 72 years USDA has made over $30
billion in water infrastructure loans to communities that
others would not, the lifetime default rate for this program is
a meager 1.02 percent.
In addition to infrastructure financing, USDA's water
programs also provides funding for technical assistance to
rural communities. This onsite assistance provided by circuit
riders and wastewater technicians is critical to ensuring that
the rural communities have sustainable water and wastewater
systems. We strongly encourage the Committee to reauthorize the
Circuit Rider Program.
We believe the farm bill should maintain the water programs
current policies, funding should be limited to rural
communities who are unable to find affordable credit elsewhere.
Funding should be targeted to rural communities with the
greatest economic need and environmental public health
challenges. And grants should be awarded based in proportion to
a community's economic need.
We are aware of discussions to expand USDA loan and grant
eligibility to more populous communities. We believe the water
programs current focus on communities with populations of
10,000 or less is working. Currently, 82 percent of USDA's
water infrastructure funding goes to communities with
populations of a few thousand or fewer. Even though funding has
been awarded to smaller and poorer communities, the current
backlog is still over $3 billion. We do not believe anything is
to be gained by increasing the pool of eligible communities for
water infrastructure loans and grants. In fact, we are
concerned this could result in few loans and grants for truly
needy rural communities and that the increase in applications
could place a substantial burden on a shrinking Rural
Development field staff, thereby delaying all loan and grant
approvals.
Mr. Chairman and Ranking Member Costa, this concludes my
testimony and I will be happy to answer any questions at the
appropriate time.
[The prepared statement of Mr. Dunmire follows:]
Prepared Statement of Frank Dunmire, Executive Director, Illinois Rural
Water Association, Taylorville, IL; on Behalf of National Rural Water
Association
Chairman Johnson, Ranking Member Costa and Members of the
Subcommittee, thank you for holding today's hearing. I am Frank
Dunmire, the Executive Director of the Illinois Rural Water
Association. Before I get too far along in my testimony, I would like
to thank Chairman Johnson for his service to Illinois. As many of you
know the Chairman, while still in law school, began his career in
public service by winning a seat on the Urbana City Council in 1971. In
1976 he was elected to the Illinois state legislature and served there
until he was elected in 2000 to represent the 15th district here in
Washington. He has been a champion of the farmers and rural communities
in our state during his time in Congress and we wish him well as he
leaves the House of Representatives and returns home to his family in
Illinois.
The Illinois Rural Water Association is a member of the National
Rural Water Association (NRWA), on whose behalf I am testifying this
afternoon. NRWA represents over 28,000 small rural water systems in all
50 states through its 49 rural water association members. Of those
28,000 member systems 1,100 are located in Illinois. Every day state
rural water associations are helping rural communities throughout the
country learn how to properly operate, maintain, and manage their water
and wastewater systems; how to best ensure compliance with the Safe
Drinking Water Act; how to protect their ground and surface water
sources; and when necessary responding to natural disasters. Rural
Water prides itself as being an organization that helps build capacity
in rural America. When a community has a problem with its water and/or
wastewater system, Rural Water assists the system operators in the
identification and repair of the problem. We do not do the work for the
community, but we help train their operators and teach them how to do
it. Last year Rural Water provided over 155,000 hours (or the
equivalent of over 17 years) of onsite assistance to rural water and
wastewater systems. Rural Water also provided 3,500 hours of wastewater
technician classroom training to nearly 15,000 individuals.
The rural development title of the farm bill historically has not
received as much focus as other policy matters such as: direct
payments, crop insurance, conservation, or nutrition. However, the
rural development programs authorized by this Subcommittee in the farm
bill will meaningfully impact the lives of millions of people--take
water for example. USDA's water infrastructure and technical assistance
programs are authorized in the farm bill. Everyone realizes the
importance of water, but it is very easy to take for granted. It is not
until you turn on the tap and nothing comes out, or your community is
under a boil order, that you begin to understand how complicated life
becomes without easy access to water. But the importance of access to
safe, affordable, and plentiful drinking water is not only important in
rural homes but also to rural businesses. Water quality and
affordability are important factors for businesses wanting to locate or
remain in a rural community. Many of the businesses related to
agriculture that are located in rural communities (think food
processing, meat packing, biofuel production, farm services facilities)
need high quality and affordable water supplies. Rural water is
important to the rural economy. Many times job creation is directly
tied to the availability of a good supply of potable water. An
excellent example of this is located in Southwestern Illinois at the
Prairie State Energy Campus. Chairman Johnson and possibly other
Committee Members are aware that this project alone created in excess
of 3000 construction jobs and will create approximately 500 permanent
on-site jobs. High paying jobs I might add. In addition to those 500
jobs it is estimated that an additional 800 support sector jobs will be
created as well. BUT, what most people don't know is that all of the
potable water supply needs for this facility are being met by
Washington County Water Company, a not-for-profit water cooperative
funded through Rural Development.
Perhaps as a representative of NRWA I am a little biased, but I
believe that USDA's water programs are the most important for rural
communities that this Subcommittee will address in the farm bill. As a
lender of last resort, USDA provides critical financing for water
systems that are unable to secure commercial credit. In FY2011, USDA
obligated $1.379 billion in loans and grants to 695 water and
wastewater projects. Eighty-two percent of these funds were used for
projects in communities with populations of 5,000 or fewer. And even
though over the last 72 years USDA has made over $30 billion in water
infrastructure loans to communities that others would not, the lifetime
default rate for this program is 1.02%. The metrics for this program
are impressive, as are the demands for its funds. According to USDA at
the end of FY 2011 there were 415 completed applications for which no
funding was then available. It would have required an additional $1.5
billion in loans and grants to fund these projects. There were also an
additional $3.3 billion in preliminary applications from rural
communities. Many of the completed applications will be funded with FY
2012 funding, but the fact remains that the backlog for loan and grant
funds currently exceeds $3 billion.
In addition to infrastructure financing, the USDA's water program
also provides funding for technical assistance to rural communities
that meet the eligibility requirements to be a borrower from Rural
Development. As I mentioned previously, as one of USDA's technical
assistance providers Rural Water provided over 155,000 hours of onsite
assistance to rural communities last year. This onsite assistance,
provided by circuit riders and wastewater technicians (and authorized
in Section 306(a)(22) and 306 (a)(14) of the Consolidated Farm and
Rural Development Act, respectively) is critical to ensuring that rural
communities have safe, affordable, healthy drinking water and
wastewater systems. The authority for the circuit rider program expires
at the end of the fiscal year. We strongly encourage the
reauthorization of the circuit rider program.
As the Committee considers whether changes to the authorizations
for the rural water programs are warranted, the NRWA would urge
caution. We believe the farm bill should maintain the water program's
current policies: funding should be limited to rural communities who
are unable to find credit elsewhere; funding should be targeted to
rural communities with the greatest economic need and environmental/
public health challenges; and grants should be awarded based in
proportion to a community's economic need.
We are aware of discussions to expand USDA loan and grant
eligibility to more populous communities. While there may be other
issues within the Rural Development mission area, we believe the water
program's current focus on communities with populations of 10,000 or
less is working. Currently, 82% of USDA's water infrastructure funding
goes to communities with populations of 5,000 or fewer, 64% goes to
communities with populations of 2,500 or fewer, 51% goes to communities
with populations of 1,500 or fewer, and 42% goes to communities with
populations of 1,000 or fewer. Even though funding has been awarded to
the smaller and poorer communities, as I mentioned earlier, there still
is $3 billion backlog. We do not believe anything is to be gained by
increasing the pool of eligible communities for water infrastructure
loans and grants. In fact, we are concerned this could result in fewer
loans and grants for truly needy rural communities and that the
increase in applications could place a substantial burden on a
shrinking Rural Development field office staff, thereby delaying all
loan and grant approvals.
We are also aware of proposals that would expand water
infrastructure grant eligibility for more affluent communities. Again,
we support the policies underlying the water program and believe the
current grant limitations are working.
Mr. Chairman, and Ranking Member Costa, this concludes my
testimony. I appreciate the opportunity to appear before you this
afternoon. I wish you luck in the days and weeks ahead as the Committee
develops a new farm bill. I would be happy to answer any questions you
may have. Thank you.
The Chairman. Thank you, Mr. Dunmire.
Mr. Stewart?
STATEMENT OF ROBERT B. STEWART, EXECUTIVE DIRECTOR, RURAL
COMMUNITY ASSISTANCE PARTNERSHIP,
WASHINGTON, D.C.
Mr. Stewart. Thank you, Chairman Johnson, Ranking Member
Costa, and Members of the Subcommittee, for allowing me the
opportunity today to discuss the importance of rural
development programs and the upcoming farm bill
reauthorization. My name is Robert Stewart and I am
representing the Rural Community Assistance Partnership, a
national nonprofit network of regional service providers that
for over 40 years have provided onsite technical assistance and
training services to rural communities in every state regarding
water and wastewater facilities, waste disposal, affordable
housing, and community economic development.
The importance of RD infrastructure programs to current
rural economies and for future economic development cannot be
overstated. In particular, rural water and wastewater utilities
are the critical foundation upon which rural communities and
families depend for their health, their livelihoods and their
prosperity. Virtually all economic activity in rural America,
whether it is farming, ranching, value-added commodity
processing, oil and gas production, mineral activities,
alternative energy pursuits, or tourism depend on sustainable
rural communities and utilities. It has been RD programs that
have provided rural America with vital infrastructure, business
development opportunities, and a range of technical assistance
programs that promote productive and sustainable economies.
RCAP works directly with RD staff in helping rural
communities funding application requirements, implement proper
management practices to ensure financial accountability and
provide operational assistance. Due to a limited customer base
and typically lower median income, many small rural communities
are unable to finance major infrastructure improvements without
some Federal assistance. Unlike larger communities that can
access the municipal bond market or other private financing
options, these small rural communities have turned to RD as a
lender of last resort.
RD has responded by providing over 18,000 active water and
sewer loans serving more than 19 million rural residents as
previously mentioned with basically a nonexistent default rate.
Although challenged by reductions in every state, RD staff
continue to provide services that respond to local needs.
Whatever the situation, rural community leaders benefit from
being able to turn to a local RD staffer, an RCAP technical
assistance provider, or a Rural Water Association circuit rider
that they know and trust who is familiar with their system.
To build on these successes, the farm bill should
reauthorize the Water and Wastewater Loan and Grant Programs,
the Technical Assistance and Training Grant Program, the
Essential Community Facilities Program, and the Water
Infrastructure Revolving Loan Program at or near the levels in
the current farm bill.
Despite RD's many successes, a substantial number of small
communities, towns, and counties have difficulty fully
accessing and complying with RD regulations. The application
process and eligibility requirements for each program are
slightly different and each poses unique challenges. Local
leaders, most often volunteers, find that meeting RD loan
requirements can be a complex and time-consuming process.
However, with help from an experienced technical assistance
provider, even communities with no paid staff and limited
planning resources can develop the local capacity to apply for
and manage needed infrastructure projects.
While there are many calls for reducing the requirements
for accessing loans, RCAP's experience is that these
requirements are for the most part necessary to ensure that the
Federal Government is making financial support available only
to the neediest communities while ensuring the security of the
Federal investment. The extremely low default rate on these
loans is a testament to the efficacy of existing requirements.
One area for improvement might be to have common
environmental review requirements among all Federally financed
infrastructure programs. Oftentimes, projects have multiple
funding sources with varying environmental review and
assessment requirements. The existing Technical Assistance and
Training Grant Program has been so successful that many state
RD offices and local community officials have repeatedly asked
RCAP to assist with other non-water-related RD-funded projects,
in particular, the Essential Community Facilities Program.
Community facilities constitute and important foundation for
rural community growth and job creation. A CF Technical
Assistance and Training Program can ensure that these
facilities are planned for, constructed, operated, and managed
in an efficient manner that benefits the entire community and
promotes economic development opportunities.
There has been an increasing emphasis on regionalization,
as we have already heard today, which RCAP supports and we
would propose that borrowers demonstrate to RD--this is
particularly on the water and the wastewater side--their
efforts towards regionalized service provision as part of the
application process. In addition, higher priorities should be
given to regional applications, especially those resulting in
consolidations or collaborative service delivery.
RCAP's experience, however, has been that regionalization
is most often successful when a technical assistance provider
is able to spend time with all the entities involved to offer
alternative approaches, assist in the evaluation of costs and
benefits, identify funding sources, prepare necessary
documentation, and promote public education and outreach.
There are some proposals being discussed, as we have heard
today, to standardize the definition of rural in all RD
programs. While this might seem reasonable, any effort to
increase the size of eligible borrowers under the water and
environment programs above a 10,000 population would severely
jeopardize what is basically the only source of Federal funding
for small community infrastructure needs. If the definition is
expanded, many of our nation's smallest communities will be
unable to compete for RD water infrastructure funds with much
larger towns placing them at a competitive disadvantage for the
one program that was designed especially for their unique
needs.
I will end my remarks here and hope that you will review my
written statement for additional information and ideas on the
RD title and the farm bill. And I appreciate the opportunity to
be here and would be happy to answer any questions.
[The prepared statement of Mr. Stewart follows:]
Prepared Statement of Robert B. Stewart, Executive Director, Rural
Community Assistance Partnership, Washington, D.C.
Thank you, Chairman Johnson, Ranking Member Costa, and Members of
the Subcommittee, for this opportunity to address the importance of
USDA Rural Development (RD) programs to rural America. In my over 25
years of work in the rural utility field, first in my home state of
Texas, and now managing a nation-wide rural community development
organization, I have experienced firsthand the vital role that RD's
water and sewer and community facilities programs play in improving the
quality of life in the rural communities that form the backbone of our
heartland.
My name is Robert Stewart, and I am the Executive Director of the
Rural Community Assistance Partnership (RCAP). RCAP is a nonprofit
national network of regional service providers that for nearly 40 years
has helped small, low-income, rural communities address water,
wastewater, and other community development needs in all 50 states,
Puerto Rico, and the Virgin Islands. Our staff of assistance providers
delivers onsite training and technical assistance to small water and
wastewater systems to help them meet regulatory requirements, finance
and manage capital improvement projects and to develop and sustain
technical, managerial, and financial capacities.
For many years, the RCAP network has partnered with USDA to bridge
the gap between RD and the communities they serve. RCAP assists rural
communities with funding applications and every phase of the project
planning and development process, as well as providing training and
technical assistance after construction is complete, helping
communities understand how to properly manage and operate their system
in a fiscally sustainable manner. We work to ensure that RD borrowers
are able to meet the terms of their Letters of Condition and that they
are able to repay their loans on time. Every year, the RCAP network
helps roughly 2,000 rural communities address their water and
wastewater needs.
Providing these basic services is a challenge for many rural
communities. Rural residents are three times more likely than their
urban counterparts to lack water and sanitation; they also typically
pay nearly three times the amount for water and sewer services. Due to
their limited customer base, small utilities lack the economies of
scale that reduce the costs of infrastructure construction, operation,
and maintenance to levels that are affordable to low-income residents.
Few rural communities can access the municipal bond market or find
banks that are willing to invest in such long-term, low-yield
transactions. So, many turn to RD as their lender of last resort.
USDA-RD Water and Wastewater Programs Have Been Enormously Successful
RD's water and wastewater programs are a key component of economic
development in rural America. Every water and wastewater construction
dollar generates nearly $15 of private investment and adds $14 to the
local property tax base. Without the basic infrastructure funded by
RD--clean drinking water for household needs, sufficient quantities of
water to support local industry, and sanitary sewers to remove sewage
and industrial byproducts to protect public health--local employers
will relocate or close factories and small businesses will decline and
eventually disappear. The entrepreneurs and small business owners who
are the engines of our economy won't open new businesses, shops or
restaurants on Main Street without basic services. Infrastructure is
the foundation of economic development, and to promote economic growth
in rural America, you need to ensure that businesses' and residents'
basic needs--like water and sewer services--are met. Opportunities for
continued economic growth in rural communities are substantial.
Agricultural production, oil and gas development, mining operations,
alternative energy pursuits, and tourism are all vibrant economic
sectors that depend on sustainable rural communities. RD programs play
a part in making available to rural communities water and wastewater
utilities, essential community facilities, affordable housing, and
broadband.
The Water and Environment Programs at RD have enjoyed tremendous
success over the past few decades. The agency boasts a portfolio of
more than 18,000 active water/sewer loans, more than 19 million rural
residents served, and a delinquency rate of just 0.18%.\1\ This success
is partly attributable to the field presence RD has historically
maintained in rural areas. With staff in field offices throughout the
country, RD is uniquely positioned to evaluate the credit-worthiness of
small utilities and can distribute Federal funds quickly and
efficiently to areas of need. In drought years, or after natural
disasters, community leaders benefit from being able to turn to a local
RD staffer whom they know and trust and who is familiar with their
system and its needs, though recent staff reductions in RD offices
nationally have started to hinder the ability of RD to serve rural
communities with these critical services. To build on the past
successes of the Water and Environment Programs, the farm bill should
reauthorize the water and wastewater loan and grant programs, the
technical assistance and training grant program, and the water
infrastructure revolving loan fund program at or near the levels in the
previous farm bill.
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\1\ United States. Dept. of Agriculture. Rural Development. Water
and Environmental Programs Annual Activity Report, Fiscal Year 2011.
Washington, D.C.: USDA, 2012.
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Technical Assistance is Key to Ensuring RD's and Rural Communities'
Success
Despite RD's many successes, a substantial number of small, low-
income towns and counties have difficulty accessing RD programs. The
application process and eligibility requirements for each program are
slightly different, and each poses unique challenges. Local leaders are
most often volunteers who lack professional staff and the resources to
find out what funding sources are available or the requirements for
funding eligibility. Their first look at the Letter of Conditions on an
RD loan can make the process seem overwhelming and discourage worthy
applications. With help from an experienced technical assistance
provider, however, even communities with no staff and limited planning
resources can develop the local leadership capacity to manage needed
infrastructure projects. Technical assistance plays a vital role in
ensuring that the programs serve the communities they were designed to
benefit in a cost-effective manner.
While there are many calls for reducing the requirements associated
with obtaining water and wastewater financing from RD, RCAP's opinion
is that these requirements are for the most part necessary to ensure
that the Federal Government is making financial support available to
the neediest communities while ensuring the security of the Federal
investment. The extremely low default rate on these loans is a
testament to the efficacy of existing requirements. Common
environmental review requirements among all Federal and state
infrastructure programs would be one area for improvement. Oftentimes
projects have multiple funding sources with varying environmental
review/assessment requirements, and standardizing them across Federal
programs would reduce the burden on applicants to conduct multiple
separate reviews.
Overall, the water and wastewater Technical Assistance and Training
Grant Program has been so successful that many state RD offices and
local community officials have asked the RCAP network to assist with
other, non-water-related RD-funded projects. While we try to work with
as many communities as we can by relying on non-Federal resources,
Congress can help by authorizing changes to existing farm bill
programs, specifically Rural Housing Service's Essential Community
Facilities (CF) Program, to allow for set-asides to fund technical
assistance. State RD Offices have repeatedly asked RCAP for assistance
with borrowers under the CF program. A CF technical assistance and
training program can provide much-needed support for the CF program as
has been the case with the water and wastewater programs. Under current
and projected economic environments, essential community facilities
constitute an important foundation for rural community growth. Having a
dedicated technical assistance program in this area will ensure that
these facilities are planned for, constructed, operated and managed in
an efficient manner that benefits the entire community and promotes
economic development opportunities.
As the success of the water and wastewater programs has shown,
technical assistance benefits both rural communities and the agency by
improving access to the programs and ensuring a positive return on
Federal investments. By expanding technical assistance to other
programs at RD, taxpayer dollars can go further while still providing
necessary services to rural communities. In addition, a broader
technical assistance program would help ensure a more coordinated
approach to economic development in rural communities. Experienced
planners who are familiar with the application processes for Federal
and state programs could help communities better coordinate the timing
of their development projects. This would help prevent communities from
tearing up Main Street 1 year to replace sewer pipes, then tearing it
up again the following year to install fiber optic cables, simply
because that's when the funding was available. A comprehensive Federal
approach to technical assistance among all RD programs would allow
local leaders to better plan and coordinate their construction
activities and eliminate such inefficiencies.
Regionalization Issues
Another way Congress can improve existing RD programs is to
encourage applicants to look for opportunities to regionalize. In order
to maximize limited resources, communities need to realistically
examine whether operating their own facilities is cost effective. With
respect to water and sewer infrastructure, at times clusters of small
towns can better and more affordably be served by having one large
treatment plant with pipes running to each town than by having a
separate treatment facility in each town. In areas where communities
are too far apart to run pipes, utilities could benefit from shared
management, operations, purchasing and other similar joint service
provisions. Regionalization may not be feasible in all cases,
especially in areas with long distances between communities. However,
RCAP recommends that potential borrowers demonstrate to RD their
efforts to employ regionalized service provision as part of the
application process.
Most states now require that new or expanding utilities provide
documentation regarding their efforts to regionalize prior to being
granted a license or certificate to serve an area. Priority should be
given to applications for regional service provision, especially in
cases where smaller or non-compliant systems are being consolidated to
more efficiently serve their customers. By giving a small priority to
projects in which the applicants can demonstrate that they have weighed
the costs and benefits of regionalization, RD can encourage regional
projects where appropriate without disqualifying communities that are
geographically isolated. Furthermore, RCAP's experience has been that
regionalization is most often successful when a technical assistance
provider is able to spend time with all entities involved to offer
alternative approaches, assist in the evaluation of costs and benefits,
identify funding sources, prepare necessary documentation, and assist
with public education and outreach.
Some consideration should also be paid to the current language
contained in 7 U.S.C. 1926(b) ``Curtailment or limitation of service
prohibited'' that allows water districts that are USDA borrowers to
veto any activity that impacts service provision in their area. The
need to protect the Federal investment is necessary and was the basis
for this provision. However, should Congress decide that regionalized
approaches to service delivery are appropriate in some cases, then a
re-examination of this provision is necessary to allow for a more
comprehensive and planned approach to regional development. As this
currently stands, the Federal protection afforded under 1926(b) can
prevent state and local governments from making their own decisions on
how best to provide utility services in local areas.
Reauthorize Revolving Funds for Financing Water and Wastewater Projects
7 U.S.C. 1926(a)(2)(B) authorizes a program for nonprofit
entities to capitalize revolving loan funds for the purposes of
financing eligible borrowers with pre-development or other short-term
capital costs (such as site acquisition or engineering costs or for
equipment replacement, small service extensions or emergency repairs).
RCAP would recommend that this program be maintained at currently
authorized levels and the maximum for eligible loans to small-system
borrowers be increased from $100,000 to $150,000, as costs for even the
smallest repairs have increased significantly. Both RCAP and the
National Rural Water Association have utilized this program to
capitalize revolving loan fund programs that have assisted small
communities to extend services, meet regulatory requirements, make
emergency repairs and fund pre-development costs associated with major
capital construction projects. These types of loans are typically not
available from RD or the State Revolving Funds, nor do small
communities have much hope of securing these loans from private
sources. Demand for these loans far surpasses amounts authorized and
appropriated for this purpose.
Changing the Definition of ``Rural''
There are some proposals being discussed to standardize the
definition of ``rural'' in all RD programs. While it might seem
reasonable to have a single definition of rural that encompasses the
utility, community facilities and business programs, any effort to
increase the size of eligible borrowers under the Water and
Environmental Programs above 10,000 would severely jeopardize what is
basically the only source of Federal funding for small, rural community
infrastructure needs. If the definition is expanded to, say, 50,000 and
under, many of our nation's smallest communities will be unable to
compete for RD water and sewer infrastructure funds with much larger
towns that have departments of full-time staff, engineers and grant
writers. The sheer number of community water systems serving
populations under 10,000--over 90% of the 53,000 community water
systems in this country--requires that limited RD funded be targeted to
those communities with the greatest need, and the greatest need is in
these smaller, rural communities.
Larger communities--even those in the 10,000-50,000 population
range--have access to the bond market, other state-funded programs and/
or bank financing at reasonable rates and terms. Larger communities
also benefit from greater numbers of customers over which to apportion
debt service costs. This allows larger systems to afford treatment and
service options, and to keep costs to customers reasonable, while
accessing non-Federal financing sources. If allowed access to RD
funding, many of these larger communities will instead turn to lower-
interest RD loans, which will leave the small communities that have no
other options out of the mix. Smaller rural communities should not be
placed at a competitive disadvantage for the one program that was
designed specifically to meet their unique needs. Many smaller,
economically distressed communities require the kind of grant/loan
packages provided by RD in order to make customer costs reasonable,
even if these costs are still typically much higher than what is found
in their larger or more urbanized neighboring communities.
Household Water Well Program: 7 U.S.C. 1926(E)
This section allows RD to make grants to nonprofit organizations to
loan money to individuals to finance the construction, refurbishing and
servicing of individually owned household water well systems in rural
areas. While this program, combined at times with state housing
programs, has benefited low-income families in isolated rural areas
that would otherwise be unable to obtain water except through a
household well, the farm bill should require that none of these loans
go to residences in areas where RD has funded or is considering funding
a community water system. Funding individual homeowner loans can
adversely impact small customer bases within areas funded by RD's
community water loans by reducing the potential number of customers who
are ultimately responsible for servicing the Federal debt. Furthermore,
encouraging multiple wells into potentially sensitive and increasingly
depleted aquifers can negatively impact other users from both a water
quality and water quantity perspective.
Conclusion
Solving the challenges facing rural communities requires a multi-
pronged approach that includes adequate funding, along with steps to
ensure that funding is available to all communities that truly need it,
and a comprehensive approach to technical assistance to maximize the
efficiency and effectiveness of RD's programs. It also includes an
emphasis on regional economic development and cost-effective
investments in infrastructure that provide maximum return on scarce
Federal, state, and local resources. The farm bill reauthorization is
an opportunity to replicate the success of the water/wastewater
technical assistance program and modify existing programs, such as
Essential Community Facilities, to encourage a regional approach to
rural development, while protecting taxpayer investment in our nation's
water and sewer infrastructure.
Thank you for considering my testimony on the importance of rural
development as you prepare for your farm bill deliberations. I welcome
any questions you may have at this time.
The Chairman. Mr. Rozzelle?
STATEMENT OF DAVID G. ROZZELLE, EXECUTIVE VICE
PRESIDENT, SUDDENLINK COMMUNICATIONS; MEMBER, RURAL AND SMALL
SYSTEM OPERATOR COMMITTEE,
NATIONAL CABLE TELECOMMUNICATIONS ASSOCIATION, ST. LOUIS, MO
Mr. Rozzelle. Chairman Johnson, Ranking Member Costa, and
Members of the Subcommittee, thank you for inviting me to
testify today. My name is Dave Rozzelle, and I am an Executive
Vice President with Suddenlink Communications. Suddenlink is a
leading provider of cable video services, high-speed Internet
access, wireless home networking, wireline phone, online video,
home security services for hundreds of communities,
approximately 1.4 million households and thousands of
commercial customers across 11 states. Suddenlink primarily
serves second-tier communities such as Lubbock, Texas;
Charleston, West Virginia; Jonesboro, Arkansas; Lake Charles,
Louisiana; and Greenville, North Carolina. However, we also
serve dozens of small rural communities, some with populations
below 500 people.
Since 2009, we have invested $350 million above and beyond
our normal capital spending levels to ensure that our customers
can enjoy cutting-edge services, including high-speed Internet
service, which we offer to substantially all of our customers.
Moreover, our investment in industry-leading DOCSIS 3.0
technology has enabled us to provide data transmission speeds
up to 107 megabits to a growing number of our residential
customers, some in small rural communities like Pomeroy, Ohio,
and Ripley, West Virginia.
I am also here today as a member of the Rural and Small
System Operator Committee of the National Cable and
Telecommunications Association. NCTA is the principal trade
association of the cable industry in the United States. Since
1996, the cable industry has invested over $185 billion to
upgrade and expand its networks to provide broadband access and
now offers high-speed Internet service to more than 93 percent
of U.S. households.
Suddenlink and NCTA strongly support the primary goals of
rural broadband funding. Broadband is a crucial driver of
economic recovery and global competitiveness and quality
broadband services should be available to all regions of the
country, including the least densely populated areas of the
country. Unfortunately, over the past 10 years, the
implementation of the rural broadband programs by the Rural
Utilities Service has not maintained that focus. The USDA
Inspector General issued critical reports in 2005 and 2009
which found that ``the overwhelming majority of communities, 77
percent, receiving service through the Broadband Program
already have access to the technology without the RUS Loan
Program.''
Misdirecting scarce government funds to areas that are
already being served means less support for areas without any
broadband. It also puts existing private providers in the
untenable position of having to compete against a government-
subsidized competitor. Though the 2008 Farm Bill made some
reforms, the RUS's new March 2011 rules still allow the RUS to
approve applications that are complete overbuilds without
reaching any new households which lack broadband service.
We respectfully submit that the new farm bill should take
strong steps to direct taxpayer dollars where they are most
needed. Specifically, as this Subcommittee considers
reauthorization of the legislation, we urge you to consider the
following four proposals:
First, limit funding to substantially unserved areas. To
ensure available funds are used effectively, the RUS Broadband
Support Loans, Loan Guarantees, or Grants should be limited to
areas where at least 75 percent of residential households lack
access to broadband service.
Second, seek additional information. To ensure compliance
with this proposed eligibility standards, the Secretary of
Agriculture should be required to give existing providers an
opportunity to voluntarily submit information about their
service areas that may overlap areas proposed to be served by
the applicant. This was done in the stimulus program.
Third, prioritize support to areas most in need of it. The
Secretary should continue to give priority to the RUS Broadband
Loans or Grants that will extend broadband service to areas
with the greatest proportion of unserved households.
Finally, increase accountability. Each entity receiving RUS
broadband support should be required to report quarterly on its
use of the funds and its progress and those reports should be
available online. That was done by the Department of Commerce
in the stimulus program.
Suddenlink and NCTA share your goal of bringing broadband
to every rural household. A well administered Broadband Loan
Program is an important part of reaching that goal. Including
our four proposals will help ensure that the program stays
focused and on track to do so.
Thank you for the opportunity to speak here today and I
appreciate your willingness to consider ways to ensure
broadband funds are spent in the most effective way possible
for all Americans. I look forward to taking your questions at
the appropriate time.
[The prepared statement of Mr. Rozzelle follows:]
Prepared Statement of David G. Rozzelle, Executive Vice President,
Suddenlink Communications; Member, Rural and Small System Operator
Committee, National Cable Telecommunications Association, St. Louis, MO
Good morning, and thank you for inviting me to testify today. My
name is Dave Rozzelle, and I am an Executive Vice President with
Suddenlink Communications. Suddenlink is a leading provider of cable
video services, high-speed Internet access (also known as broadband
access), wireless home networking, wireline phone, online video, and
home security services for communities primarily located in Texas, West
Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, Missouri and
Arizona.
Suddenlink provides service to hundreds of communities and
approximately 1.4 million households. Suddenlink primarily serves
second tier markets, such as Lubbock, TX; Charleston, WV; Jonesboro,
AR; Lake Charles, LA; and Greenville, NC. However, we also serve dozens
of small, rural communities, some with populations below 500 people.
Since 2009, we have invested over $350 million--above and beyond
our normal capital spending levels--to ensure that our customers can
enjoy cutting-edge services, including high-speed Internet service,
which we offer to substantially all of our subscribers. Moreover, our
investment in industry-leading DOCSIS 3.0 technology has enabled us to
provide data transmission speeds up to 107 Mbps to a growing number of
our residential customers, some in small communities like Pomeroy,
Ohio, and Ripley, West Virginia.
I am also here today as a member of the Rural and Small System
Operator Committee of the National Cable & Telecommunications
Association (``NCTA''). NCTA is the principal trade association of the
cable industry in the United States. NCTA represents cable operators
serving more than 90 percent of the nation's cable television
households and more than 200 cable program networks, as well as
equipment suppliers and providers of other services to the cable
industry. The cable industry has long been at the forefront of the
growth and deployment of broadband service. Since 1996, the cable
industry has invested over $185 billion to upgrade and expand its
networks to provide broadband access. The result of this investment is
that cable operators today offer high-speed Internet service to more
than 93 percent of U.S. households.
Suddenlink and NCTA strongly support the primary goals of rural
broadband funding. Quality broadband services should be available to
all regions of the country, including the least densely populated areas
of the country. Broadband is a crucial driver of economic recovery and
global competitiveness. Broadband links rural America to the rest of
the country and the world, creates jobs, improves educational
opportunities, and delivers health care more efficiently. While
Suddenlink has invested an incremental $350 million in recent years to
bring the most advanced services to its customers, we recognize that
there are still some rural consumers who lack access to broadband.
Rural broadband funding programs should focus on bringing broadband to
those rural consumers.
Unfortunately, over the past 10 years the implementation of the
rural broadband programs by the Rural Utilities Service (``RUS'') has
not maintained that focus. Time and again, the USDA's Inspector General
has found that taxpayer dollars were used to underwrite broadband
services in areas that already have broadband from providers that are
funded wholly by risk capital. Likewise, a study by Navigant Economics
concluded that RUS grants and loans were awarded to areas already
served by multiple broadband providers--at the cost of tens of
thousands of dollars or more for each unserved household. Misdirecting
funds to areas that are already being served means less support for
areas without any broadband--and it also puts existing providers in the
untenable position of having to compete against a government-subsidized
competitor.
Unlike water or electricity, the broadband market is highly
competitive in many areas, including in many rural areas of the
country. In the broadband context, misallocated funds not only waste
tax dollars, they undermine the goal of fair competition. Particularly
in the current budget situation, neither of these outcomes is
acceptable. As you consider whether and how to reauthorize the rural
broadband program, it is essential that you include clear direction to
the RUS to ensure that taxpayer dollars are put to work to extend
broadband to unserved areas rather than subsidize competition in
communities where service is already available, and that you include
mechanisms to ensure transparency and accountability with respect to
any projects that the RUS may fund.
My testimony today will address these points in a little more
detail, including some specific proposals for targeting rural broadband
funds.
Rural Broadband Support Programs Should Focus on Unserved Areas
Bringing service to unserved areas is an important and appropriate
objective for rural broadband programs. It is widely acknowledged that
broadband is a crucial driver of economic recovery and global
competitiveness. By facilitating economic development, broadband will
add jobs to the economy. Broadband is also central to improving
educational opportunities and delivering health care more efficiently,
important benefits that also contribute to economic growth.
As the Department of Agriculture has noted, ``broadband Internet
access is becoming essential for both businesses and households'' and
``many compare its evolution to other technologies now considered
common necessities . . .'' \1\ Broadband Internet access would benefit
businesses as well as provide ``rural residents access to goods and
services that may not otherwise be available locally or via dial-up
Internet.'' \2\
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\1\ U.S. Dep't. Of Agriculture, Economic Research Service, Rural
Broadband at a Glance, at 1 (Feb. 2009), available at http://
www.ers.usda.gov/Publications/EIB47/EIB47_SinglePages.pdf.
\2\ Id. at 4
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Unfortunately, these considerable benefits are still unavailable to
some rural and remote areas of our nation where market forces have
proved insufficient to encourage investment in broadband networks and
service. These are the areas that should be the focus of the rural
broadband loan program.
In recognition of this priority, Congress has tried to focus rural
broadband programs on unserved areas. For instance, in response to
findings that the broadband loan program enacted in the 2002 Farm Bill
included funding for suburban areas, Congress enacted reforms to the
program in 2008. The 2008 Farm Bill prioritized funds for unserved
areas and directed the Secretary of Agriculture to ``give the highest
priority to applicants that offer to provide broadband service to the
greatest proportion of households that, prior to the provision of the
broadband service, had no incumbent service provider.'' \3\
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\3\ Food, Conservation, and Energy Act of 2008, Pub. L. No. 110-
246, 601(c)(2) (2008) (``2008 Farm Bill''); see also Conf. Rep. No.
110-627, at 832 (2008). And the House Report indicated that eligibility
requirements were tightened for the broadband loan program in order
``to refocus on both rural and unserved areas of the country and
provide[] additional criteria to USDA to prevent entities from
receiving loans to serve only markets already sufficiently served with
high-speed and affordable broadband service.'' See House Rep. No. 110-
256, at 232 (2008).
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The 2008 Farm Bill also established revised project eligibility
standards, requiring, with certain exceptions, that at least 25% of the
households in the proposed service territory be unserved or served by
only one broadband provider, and that no portion of the proposed
service territory be served by three or more providers in order for a
project to be eligible for funding.\4\ The law also improved the
transparency of the loan process by directing the Secretary of
Agriculture to publish a notice for each loan or loan guarantee
application describing the content of the application, including the
identity of the applicant; each area proposed to be served by the
applicant; and the estimated number of households without terrestrial-
based broadband service in those areas.\5\
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\4\ 2008 Farm Bill, 601(d)(2)(A)(i)-(ii).
\5\ Id. 601(d)(5).
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Likewise, the American Recovery and Reinvestment Act (the
``Recovery Act'')--which included $7.2 billion to subsidize broadband
deployment, the largest Federal subsidies ever provided for broadband
construction in the U.S.-targeted funding to areas ``without sufficient
access to high speed broadband service to facilitate rural economic
development'' and gave priority to projects that provide service to the
highest proportion of rural residents that do not have access to
broadband service.\6\
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\6\ American Recovery and Reinvestment Act of 2009, Pub. L. No.
111-5, 123 Stat. 115, 118 (2009).
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RUS Has Consistently Failed To Keep Its Focus on Unserved Areas
Despite some successes and prior efforts at reform, however, RUS's
implementation of rural broadband programs has consistently fallen
short. In two separate reports, the USDA's Office of Inspector General
(``OIG'') criticized the RUS for failing to focus on unserved areas. In
2005, the OIG found that the rural broadband program enacted as part of
the 2002 Farm Bill had ``not maintained its focus on rural communities
without preexisting service'' and was instead subsidizing competition
in suburban areas and in communities already served by one or more
existing broadband providers.\7\
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\7\ OIG Audit Report 09601-4-Te, Rural Utilities Service Broadband
Grant and Loan Programs, U.S. Department of Agriculture, Office of
Inspector General, Southwest Region, at ii (Sept. 2005) (``OIG 2005
Report'').
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OIG ``question[ed] whether the government should be providing loans
to competing rural providers when many small communities might be hard
pressed to support even a single company. In these circumstances, the
RUS may be setting its own loans up to fail by encouraging competitive
service; it may also be creating an uneven playing field for
preexisting providers operating without government assistance.'' \8\
---------------------------------------------------------------------------
\8\ Id.
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In March 2009, OIG released a second report evaluating
implementation of the 2002 Farm Bill, concluding that ``the key
problems identified in our 2005 report--loans being issued to suburban
and exurban communities and loans being issued where other providers
already provide access--have not been resolved.'' \9\ It found that
despite OIG's 2005 initial findings, ``RUS continued to make loans to
providers in areas with preexisting service, sometimes in close
proximity to urban areas.'' \10\ Of ``37 applications approved by RUS
since September 2005, 34 were granted to applicants in areas where one
or more private broadband providers already offered service.'' \11\
---------------------------------------------------------------------------
\9\ OIG Audit Report No. 09601-8-Te, Rural Utilities Service
Broadband Loan and Loan Guarantee Program, Audit Report, U.S.
Department of Agriculture, Office of Inspector General, at 9 (Mar.
2009) (``OIG 2009 Report'').
\10\ Id. at 2.
\11\ Id. at 5 (emphasis added).
---------------------------------------------------------------------------
Although the 2008 Farm Bill did not explicitly prohibit granting
loans to preexisting service areas, OIG expressed its concern that
``the overwhelming majority of communities (77 percent) receiving
service through the broadband program already have access to the
technology, without the RUS's loan program. Moreover, the legal
ramifications of subsidizing some providers in a given area, but not
others, have proved problematic.'' \12\
---------------------------------------------------------------------------
\12\ Id. at 6.
---------------------------------------------------------------------------
The Inspector General also voiced concerns about the RUS's ability
to disburse Recovery Act funds going forward:
We remain concerned with RUS' current direction of the
Broadband program, particularly as they receive greater funding
under the [Recovery Act], including its provisions for
transparency and accountability. As structured, RUS' Broadband
program may not meet the Recovery Act's objective of awarding
funds to projects that provide service to the most rural
residents that do not have access to broadband service.\13\
---------------------------------------------------------------------------
\13\ Id. at 2.
OIG concluded that ``[w]e remain concerned that the majority of RUS'
program funds have not been utilized in expanding broadband service to
rural areas where no prior service exists.'' \14\
---------------------------------------------------------------------------
\14\ Id. at 10.
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At a February 2011 House Energy and Commerce Communications
Subcommittee hearing, the Inspector General reiterated her concerns
about the RUS Broadband Loan Program. In particular, she noted that:
The RUS had a history of ``not maintain[ing] its focus on
rural communities lacking preexisting service;''
The RUS had devoted ``significant portions of its resources
to funding competitive service in areas with preexisting
broadband access rather than expanding service to communities
without existing access;'' and
``RUS' decision to fund certain providers in rural
communities, but not
others . . . could create an unlevel playing field for
providers already operating without government subsidies.''
\15\
---------------------------------------------------------------------------
\15\ See Statement of the Honorable Phyllis K. Fong, Inspector
General, before the Subcommittee on Communications and Technology,
Committee on Energy and Commerce, U.S. House of Representatives, at 2-3
(Feb. 10, 2011), available at http://
democrats.energycommerce.house.gov/sites/default/ files/image_uploads/
Fong_Testimony.pdf.
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The RUS's New ``Interim Final'' Rules Perpetuate the Problems
Identified by OIG
Despite the RUS's persistent failure to focus on unserved areas,
confirmed by OIG, we were hopeful that the RUS would address these
problems through the adoption of rules to implement the reforms of the
2008 Farm Bill. Unfortunately, the RUS's new ``interim final'' rules
for the Broadband Loan Program, despite being 3 years in the making,
perpetuate the problems that have plagued the program from the outset.
The new rules still allow the agency to fund complete overbuilds
without reaching any households with no broadband service. They also
allow loans to be made in an area where two existing private providers
are already offering competing service, as long as 25% of the
households in the proposed service area are unserved or under-served
(defined to mean an area where service is offered by zero or one
incumbent providers). This means that a valid proposed service area
could already have two competing private providers offering service to
75% of the households and one provider offering service to 25% of the
households and still get a loan. An award could be made even though the
loan recipient would not be reaching a single household that lacked
broadband service.
In addition, the new rules allow the RUS to fund upgrades in areas
that are served, without regard to the number of households that do not
have service and without regard to whether the service area is already
served by any number of providers. (Loans for upgrades are restricted
in areas with multiple providers only if an applicant is eligible to
receive funding through another Rural Electrification Act funding
program.) This results in bringing new service to no new households
and, again, has the government subsidizing a competitor and picking
winners and losers in the market.
The Failure to Prioritize Unserved Areas Imposes Substantial Costs on
the Economy and Deters Private Investment
The impact of funding duplicative broadband networks has resulted
in an extremely high cost to reach a small number of unserved
households, all at taxpayer expense. According to an economic analysis
and three case studies of funding under the Recovery Act's Broadband
Initiatives Program, commissioned by NCTA and prepared by Jeffrey A.
Eisenach and Kevin W. Caves of Navigant Economics,\16\ that cost, if
imposed nationwide, would nearly triple the price of extending
broadband to every U.S. home.
---------------------------------------------------------------------------
\16\ Jeffrey A. Eisenach and Kevin W. Caves, ``Evaluating The Cost-
Effectiveness of RUS Broadband Subsidies: Three Case Studies'' (Apr.
13, 2011), available at http://www.ncta.com/DocumentBinary.aspx?id=966.
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Among the key findings in the study are the following:
Of the three projects analyzed, more than 85 percent of
households were already passed by existing broadband providers,
and in one project area, more than 98 percent of households
were already passed by at least one provider.\17\
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\17\ Id. at 4.
Based on the cost of the direct grants and subsidizing the
loans, the study estimated that the cost per unserved household
passed would be $30,104 if existing coverage by mobile
broadband providers is ignored, and $349,234 if mobile
---------------------------------------------------------------------------
broadband coverage is taken into account.
The RUS approach of funding duplicative coverage is directly
at odds with the National Broadband Plan's recommendations and
would massively increase the cost of extending broadband to all
unserved homes. The FCC's Omnibus Broadband Initiative
estimated that the cost of extending broadband to every
unserved household in the U.S. is approximately $23.5 billion,
so long as duplicative service is not funded. But funding
duplicative service--as the RUS did under BIP--increased the
cost of a nationwide build-out by $63.7 billion, to $87.2
billion.\18\
---------------------------------------------------------------------------
\18\ Id. at 16.
The Navigant study examined three large BIP subsidy awards which
totaled $231.7 million, or about seven percent of the total BIP $3.5
---------------------------------------------------------------------------
billion combined loan and grant program:
$101.2 million in northwestern Kansas;
$66.4 million for Lake and St. Louis counties in
northeastern Minnesota;
$64.1 million to cover a portion of Gallatin County in
southwest Montana.
In northwestern Kansas, the Rural Telephone Service Company
(``RTS'') and its wholly-owned subsidiary NexTech were awarded $101.2
million in loans and grants to deploy and upgrade broadband services.
Although the project area covered 4,247 square miles and contained
14,588 households, the majority of those households were in one city--
Hays, Kansas--which covers less than 8 square miles. Hays, however, was
already served by RTS, AT&T and Eagle Communications. Only 2,442
households in the entire project area were unserved using the RUS's
definition--and if 3G wireless broadband service was taken into
account, all but 25 households--0.2%--were already served. Indeed, the
majority of the unserved area was also uninhabited.
On average, across all the principal counties that comprise the
proposed service area, 95 percent of the households already had high-
speed broadband service. The taxpayer cost per unserved household for
this project--for which the RUS benchmark is $10,000 and the FCC
benchmark is $6,350--was $30,329 based on the RUS's definition. If
wireless 3G broadband was taken into account, the cost rose to
$2,954,920 per unserved household.\19\
---------------------------------------------------------------------------
\19\ Id. at 23-32.
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In northeastern Minnesota, the Lake County Fiber Network (``LCFN'')
was awarded $66.4 million in loans and grants to develop last mile FTTP
infrastructure in an area comprising Lake County and portions of
eastern St. Louis County. The proposed service area covered 2,675
square miles and included 11,637 households.\20\ Of those households,
only 2,669--about 23%--were unserved using the RUS's definition, and
only 421 households were unserved by any terrestrial broadband
provider--meaning that only 3.6 percent of households were unserved
when mobile broadband service is taken into account.
---------------------------------------------------------------------------
\20\ LCFN's proposal asserts a substantially greater number of
households passed, which appears to stem from its inclusion of
unoccupied housing units within the total. Id. at 33-34 n. 72.
---------------------------------------------------------------------------
As in Kansas, much of the area that was unserved was also
uninhabited. In the served areas, there were at least eight facilities-
based broadband providers, and the majority of households in the
proposed service area had a choice among multiple providers and 68% of
those households were served by three or more providers. The taxpayer
cost per unserved household for this project--against the RUS's
benchmark of $10,000 and the FCC benchmark of $6,250--was $13,746 based
on the RUS's definition. If wireless 3G broadband was taken into
account, the cost rose to $87,231 per unserved household.\21\
---------------------------------------------------------------------------
\21\ Id. at 33-39.
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In southwest Montana, Montana Opticom, LLC received $64.1 million
to deploy last mile FTTP infrastructure in Gallatin County, Montana.
The proposed service area covered 154 square miles and included 9,035
households--and was considered one of the most densely populated,
rapidly growing and prosperous counties in Montana, with more extensive
broadband coverage than most other areas of the state. Of the 9,035
households covered by the project, only 136--1.5%--were unserved using
the RUS's definition. Only 7 households--0.1%--were unserved when
mobile broadband service is taken into account.
As with the other two areas, much of the area that was unserved was
also uninhabited. In fact, none of the census blocks in the areas the
RUS claims were ``unserved'' contained more than a single occupied
housing unit. In the served areas, there were at least nine facilities-
based broadband providers, and 93% of those households already were
served by five or more broadband providers. Ninety-eight percent of
households had a choice among four or more broadband providers. The
taxpayer cost per unserved household for this project was $346,032
based on the RUS's definition. If wireless 3G broadband was taken into
account, the cost rose to $7,112,422 per unserved household.\22\
---------------------------------------------------------------------------
\22\ Id. at 17-23.
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Navigant concluded that ``[w]hile it may be too early for a
comprehensive assessment of the [Recovery Act]'s broadband programs, it
is not too early to conclude that, at least in some cases, millions of
dollars in grants and loans have been made in areas where a significant
majority of households already have broadband coverage, and the costs
per incremental home passed are therefore far higher than existing
evidence suggests should be necessary.'' \23\
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\23\ Id. at 6.
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This type of waste has a tremendous impact on broadband deployment
throughout our nation. Facing a government-subsidized competitor
creates tremendous difficulties for rural and smaller market companies,
and creates a disincentive for companies like ours to invest. As I
noted earlier, Suddenlink has invested over $350 million in private
capital in the last 3 years alone to bring cutting-edge broadband to
our communities. A robust broadband strategy inevitably depends on this
continued private investment--government subsidies cannot fund all the
broadband deployment needed for the country to become truly broadband-
accessible. But using scarce Federal resources to skew the playing
field will discourage and undermine this investment. It threatens the
jobs of employees of the private enterprises who live in the very
communities the awards are intended to benefit, offsetting new jobs
created by the project, and undermining one or more broadband providers
in the area to benefit another.\24\ Moreover, devoting funds to
already-served areas creates a greater risk that loans may not be
repaid because borrowers will face pre-existing competition.
---------------------------------------------------------------------------
\24\ See also id. at 16-17.
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Rural and smaller market operators like Suddenlink are ready and
willing to face competition from other providers. We have competed with
large corporations like DISH Network, AT&T, Verizon, and DIRECTV for
many years. That type of competition, however, differs from government-
backed investment in particular companies. Companies that have taken
the financial risk of serving a rural market, and serving it well,
without government assistance cannot realistically be expected to
continue to do so if they must face a government-subsidized competitor.
Moreover, wasting valuable dollars to overbuild well-served communities
at the expense of unserved residents does not make sense, particularly
in the current economic environment.
RUS Must Be Given Clear and Unambiguous Direction to Ensure That
Broadband Loan Dollars Are Appropriately Directed to Unserved
Areas
The new farm bill should take strong steps to direct taxpayer
dollars where they are most needed. Specifically, as this Subcommittee
considers reauthorization of the legislation, we respectfully urge you
to consider the following four proposals.
First, limit funding to substantially unserved areas. To ensure
available funds are used effectively, the RUS broadband support loans,
loan guarantees, or grants should be limited to areas where at least
75% of residential households lack access to broadband service of at
least 4 Mbps downstream and 1 Mbps upstream--the target basic access
speed defined in the Federal Communications Commission's National
Broadband Plan.
Second, seek additional information. To ensure compliance with this
proposed eligibility requirement for the RUS broadband support loan,
loan guarantees, or grant programs, the Secretary of Agriculture should
be required to give existing providers an opportunity to voluntarily
submit information about their service areas that may overlap areas
proposed to be served by the applicant, for subsequent due diligence
review by the RUS. Similar requirements were adopted by USDA and the
Department of Commerce in connection with BIP and the Broadband
Technology Opportunities Program (``BTOP'').
Third, prioritize support to areas most in need of it. To ensure
funds are used where they are most needed, the Secretary should
continue to give priority to the RUS broadband loans, loan guarantees,
or grants that will extend broadband service to areas with the greatest
proportion of households that do not currently have broadband at basic
access speeds available from any provider. This would simply extend a
provision in current law.
Finally, increase accountability. To ensure transparency and
accountability, each entity receiving RUS broadband support loans, loan
guarantees, or grants should be required to report quarterly on its use
of the funds and its progress in fulfilling the objectives for which
the funding was provided. The reports should be made available to the
public on the RUS website, along with a database of information about
each award made by an RUS broadband program. Congress adopted similar
requirements when it established the BTOP program under the Recovery
Act.
* * * * *
Suddenlink and NCTA share your goal of bringing broadband to every
rural household. A well-administered broadband loan program is an
important part of reaching that goal. Including our four proposals will
help ensure that the program stays focused and on track to do so. Thank
you for the opportunity to speak here today, and I appreciate your
willingness to consider ways to ensure that broadband funds are spent
in the most effective way possible for all Americans.
The Chairman. Thank you.
Mr. Bahnson?
STATEMENT OF MARK BAHNSON, CHIEF EXECUTIVE OFFICER AND GENERAL
MANAGER, BLOOMINGDALE
COMMUNICATIONS, BLOOMINGDALE, MI; ON BEHALF OF
NATIONAL TELECOMMUNICATIONS COOPERATIVE
ASSOCIATION; ORGANIZATION FOR THE PROMOTION AND ADVANCEMENT OF
SMALL TELECOMMUNICATIONS
COMPANIES; WESTERN TELECOMMUNICATIONS ALLIANCE
Mr. Bahnson. Thank you, Chairman Johnson, Ranking Member
Costa, and the rest of the Committee. I appreciate the
invitation to participate in today's discussion.
For the past 4 years, I have served as CEO/General Manager
of the Bloomingdale Telephone Company headquartered in
Bloomingdale, Michigan. My remarks today are on behalf of
Bloomingdale, as well as NTCA, OPASTCO, and WTA and their small
community-based members who have provided a variety of
communication services throughout the rural far reaches of the
nation.
America's 1,100 rural telecom providers serve only five
percent of the U.S. population located in approximately 40
percent of the nation's geographic landmass. Bloomingdale
employs 25 people and our 2011 annual operating revenue was
about $5.9 million. We offer 1.5 megabit broadband to 100
percent of our area with much faster speeds available to the
majority of our customers, currently up to 20 megabits.
Rural providers are community-focused. Bloomingdale's
partnership with RUS has produced countless opportunities
whether it is the fiber that we laid in Paw Paw, Michigan, an
exchange that can deliver 100 megabit Internet service to the
local schools and the county courthouse or the customer who no
longer has to travel over 8 hours a week to the University of
Michigan Hospital in Ann Arbor for his heart condition. He can
now have the tests over fiber done in his home.
Ever since Bloomingdale began this operation in 1904, we
have been proud to serve as the only provider to some of the
most rural areas of Michigan while the larger carriers chose to
serve only the most profitable and densely populated towns. The
American economy runs on broadband. In an area moving from no
broadband providers to three broadband providers during the
years 1999 through 2006, they realized a 6.4 percent employment
growth on average, yet only about \1/2\ of rural Americans
currently subscribe to broadband at home and half of the small
businesses are dissatisfied with their Internet speed.
USDA's Economic Research Service reports that over the past
decade, the rural population has grown at less than \1/2\ the
rate of metropolitan population. RUS rural development
programs, coupled with ongoing support, are essential to
delivering the broadband that will empower rural America to
reverse this trend.
Our U.S. telecommunication programs have been a success
story by providing reliable access to capital that helps
carriers deliver affordable voice and broadband service to
millions of Americans where it would not otherwise be
available. Unfortunately, the momentum and economic development
achieved in recent years with the help of RUS lending is being
put at risk as a direct result of the regulatory uncertainty
created by the FCC's ongoing Universal Service Fund and
intercarrier compensation reform proposals. RUS financing works
hand-in-hand with ongoing RUS support to meet the national
statutory mandate of quality, reliable telecom service in high-
cost rural areas where low customer density, vast distances,
and rugged terrain deter even the most optimistic business
cases. Removing or weakening one piece of that puzzle threatens
the provision of telecom service area in rural America and puts
millions of RUS loans at risk of default.
For example, Bloomingdale completed a $4.4 million RUS
broadband loan project in 2010. That project will net RUS
nearly $2.5 million in interest when we have completed the
repayment. RUS lending remains essential to broadband
deployment. Indeed, 14 million Americans still do not have 4
megabits broadband available. Only 79.2 percent of rural
Americans have access to speeds greater than 6 megabit and 70.8
percent are fortunate to have speeds greater than 10 megabits;
10 megabits would be what is commonly considered necessary for
rural areas to compete in a modern broadband world.
NTCA and its partners representing the rural telecom
industry welcome discussion about ways to improve RUS telecom
programs. In short, we are concerned about making further
changes to a broadband program that has been at a virtual
standstill for 4 years, especially if reforms are designed to
cut out lending to areas that still lack broadband. Further,
technology and neutrality dictates that the same data
transmission requirements must apply to wire and wireless
networks. Priority should be given to applicants proposing
scalable projects, meaning those that can be easily and
relatively inexpensively upgraded over time to reflect the
increased consumer demand for more bandwidth. We can't
accomplish our broadband goals without granting some discretion
to the Secretary who can then adjust based on the endless
variety of circumstances presented by applicants.
Serving every American is not a simple undertaking and RUS
lending should be the focus on ensuring that everyone has
access to robust, reliable broadband over the long term.
Regardless of whether consumers are focused on voice, video, or
data, they will require the underlying infrastructure to ensure
that their communications get to its destination. The rural
industry has long been a leader in deploying advanced
telecommunication services to America's rural areas and that
success is built upon a foundation of public-private
partnership and that has worked for decades.
Rural providers and their rural associations are eager to
continue to work with you to make broadband universally
available as envisioned by many and mandated by statute. Thank
you for your attention to this matter.
[The prepared statement of Mr. Bahnson follows:]
Prepared Statement of Mark Bahnson, Chief Executive Officer and General
Manager, Bloomingdale Communications, Bloomingdale, MI; on Behalf of
National Telecommunications Cooperative Association; Organization for
the Promotion and Advancement of Small Telecommunications Companies;
Western Telecommunications Alliance
I. Introduction
Thank you for the invitation to participate in today's discussion
on the successes of Federal investments in rural broadband and the
challenges that lie ahead. Broadband has quickly become an essential
service that plays a key role in creating and keeping jobs in rural
America. For the past 4 years I have served as CEO/General Manager of
Bloomingdale Telephone Company, which is headquartered in Bloomingdale,
MI. Prior to my current position, I served for 10 years as Office
Manager for Alliance Communications in Garretson, SD. I regularly work
with the National Telecommunications Cooperative Association (NTCA),
which represents small, community-based telecommunications cooperatives
and other small telecom providers in Washington, D.C. My remarks today
are on behalf of Bloomingdale Telephone Company, as well as NTCA, the
Organization for the Promotion and Advancement of Small
Telecommunication Companies (OPASTCO), and the Western
Telecommunications Alliance (WTA) and their collective several hundred
small community-based members that provide a variety of communications
services throughout the rural far reaches of the nation.
We believe our industry is uniquely qualified to participate in
today's discussion because we are consumer-centric small businesses
leading the way in deploying high-speed, sustainable broadband to rural
America. Bloomingdale, similar to about half of the nation's small,
community-based rural providers, is a commercial company--privately
held by 264 stockholders. Family or commercially-owned rural providers
are consumer-centric because they are locally owned and operated.
Likewise, in the cooperative structure that makes up the other half of
small rural providers, the consumers are also the owners, so every
choice is viewed from both an owner and a consumer perspective--the two
are truly one and the same.
Bloomingdale's top priority has always been to provide every one of
our consumers with the very best communications and customer service
possible at affordable rates that stimulate adoption. Bloomingdale has
several lines of business, including ILEC, CLEC, ISP and Cable TV. Make
no mistake--while our headquarters are in Bloomingdale, we in fact
serve over 2,500 customer lines across our 125 square mile rural
service area that is spread across the southwest corner of the State of
Michigan. This constitutes about 20 customers per square mile. We
employ a total of 25 people and in 2011 our annual operating revenue
was about $5.9 million. Our service area is rural and sparsely
populated, requiring great effort to get advanced services to our
customers. In our industry's parlance, as a small rural provider of
this size, Bloomingdale is a Tier 3 carrier.
Let me give you a quick snapshot of how Bloomingdale compares with
several other industry entities. Verizon, AT&T, and CenturyLink are
classified as large, or Tier I carriers, and also operate in multiple
states. Verizon has a workforce of nearly 194,000 and annual revenues
of $110 billion. AT&T has a workforce of 256,420 and annual revenues of
more than $126 billion. CenturyLink has a workforce of 47,500 and
operates in 37 states. Clearly with operations of this size, the
priorities, objectives, and sources of capital are generally far
different from Bloomingdale's community-based limited-scale approach to
doing business.
The entrepreneurial spirit of Bloomingdale is representative of our
approximately 1,100 small rural counterparts in the industry, who
together serve 5% percent of the U.S. population across approximately
40% of the nation's geographic land mass. Like the vast majority of our
rural colleagues, Bloomingdale has been an early adopter of new
technologies and services. In 2005, Bloomingdale upgraded its network
to ADSL2+ (Fiber-to-the-node). Bloomingdale currently has 1.5 Megabit
broadband service available to 100% of our ILEC service area, 3 Megabit
broadband available to 95% of our service area, and up to 15 Megabit
broadband available to 50% of our service area. We have many
residential customers with 20 Megabit service. The CLEC exchanges are
Fiber-to-the-Home. This fiber connection allows for nearly limitless
amounts of bandwidth. We know our customers will require more and more
bandwidth and have built a network that will supply it.
Time would fail me to tell of every opportunity created thanks to
our long partnership with RUS--whether it's the fiber we laid in the
Paw Paw, MI exchange that delivers 100 Megabit Internet service to the
local schools and county courthouse or the customer who no longer has
to travel over 8 hours a week to the hospital for his heart condition
because he can have his test done over the Internet via his fiber
connection. One 10 year old young man from Paw Paw began chemotherapy
last fall. To avoid falling behind in school he uses his new fiber
connection to Skype into his classroom and communicate with peers by
voice, video, and instant messaging. If only we could've completed a
recent RUS project faster. One family was planning to relocate from New
York to open a home-based business. At closing they discovered that
there was no broadband available and cancelled the purchase.
Bloomingdale is a carrier-of-last-resort and has always operated
under the premise that if someone wants service in our service area,
then we do whatever it takes to provide the would-be customer with that
service. Ever since Bloomingdale began operating in 1904 we've been
proud to serve as the only provider to some of the most rural areas of
Michigan while larger carriers avoided investments in such areas and
chose to serve only the most profitable and densely populated towns.
Because of such commitment, and with the aid of key rural development
programs and universal service support, rural Americans throughout
Bloomingdale's service area, and indeed throughout the markets of NTCA,
OPASTCO, and WTA members, are enjoying universal voice service, access
to mobile, video, and broadband Internet services, and enhanced
emergency preparedness.
II. The Benefits of Rural Carrier Investments and Operations Flow to
the Entire Economy
The American economy runs on broadband. As the Federal
Communications Commission (FCC) stated in its February 2011 Notice of
Proposed Rulemaking for Universal Service Fund (USF) and intercarrier
compensation (ICC) reform:
Ubiquitous broadband infrastructure has become crucial to our
nation's economic development and civic life. Businesses need
broadband to start and grow; adults need broadband to find
jobs; children need broadband to learn. Broadband enables
people with disabilities to participate more fully in society
and provides opportunity to Americans of all income levels.
Broadband also helps lower the costs and improve the quality of
health care. As important as these benefits are in America's
cities--where more than \2/3\ of residents have come to rely on
broadband--the distance--conquering benefits of broadband can
be even more important in America's more remote small towns,
rural and insular areas, and Tribal lands. Furthermore, the
benefits of broadband grow when all areas of the country are
connected. More users online means more information flowing,
larger markets for goods and services, and more rapid
innovation.\1\
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\1\ Connect America Fund, A National Broadband Plan for Our Future,
Establishing Just and Reasonable Rates for Local Exchange Carriers,
High-Cost Universal Service Support, Developing a Unified Intercarrier
Compensation Regime, Federal-State Joint Board on Universal Service,
Lifeline and Link-Up: Notice of Proposed Rulemaking and Further Notice
of Proposed Rulemaking, WC Docket No. 10-90, GN Docket No. 09-51, WC
Docket No. 07-135, WC Docket No. 05-337, CC Docket No. 01-92, CC Docket
No. 96-45, WC Docket No. 03-109, FCC 11-13, at para. 3 (2011) (NPRM).
The National Telecommunications and Information Administration's
November 2010 report titled ``Exploring the Digital Nation: Home
Broadband Adoption in the United States'' stated that home broadband
usage went from 51% in 2007 to 64% in 2009.\2\ Sixty-six percent of
urban (metropolitan) Americans subscribe to broadband at home, as
compared with 51% of rural (non-metropolitan) Americans. The numbers
demonstrate that broadband is being deployed to rural America. USDA's
National Agricultural Statistics Service's August 2011 report on Farm
Computer Usage and Ownership revealed that 62% of U.S. farms now have
Internet access.\3\ Broadband DSL is now utilized on 38% of U.S. farms.
Small, rural providers have made basic levels of broadband service
available to over 90% of rural consumers in their sparsely populated
service areas.
---------------------------------------------------------------------------
\2\ (n.d.). Retrieved from website: http://www.esa.doc.gov/sites/
default/files/reports/documents/report.pdf.
\3\ (n.d.). Retrieved from website: http://
usda01.library.cornell.edu/usda/current/FarmComp/FarmComp-08-12-
2011_new_format.pdf.
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At the same time, USDA's Economic Research Service reports that
over the course of the past decade the rural population has grown at
less than half the rate of the metropolitan population. And as Chairman
Johnson has stated in the past, many rural communities are experiencing
``more deaths than births.'' Broadband deployment and adoption in rural
America must increase at a faster rate in order to reverse the trend of
rural flight. As more and more commerce, government services, and
education moves over broadband, it will only become more important to
provide this service to rural areas to bolster economic activity that
will be necessary to attract and retain more Americans.
The job-creating benefits of broadband have been reported far and
wide. Recent studies conclude that every one percentage point increase
in broadband penetration in a state increases overall employment by
0.2% to 0.3% a year.\4\ Further, an area moving from no broadband
providers to one to three providers during the years 1999 through 2006
realized 6.4% employment growth on average.\5\
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\4\ (n.d.). Retrieved from website: http://www.brookings.edu/ /
media/Files/rc/papers/2007/06labor_crandall/06labor_crandall.pdf.
\5\ (n.d.). Retrieved from website: http://www.ppic.org/content/
pubs/report/R_110JKR.pdf.
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Small, rural community-based telecommunications providers alone
contributed $14.5 billion to the economies of the states in which they
operated in 2009.\6\ The rural telecommunications sector supported
70,700 jobs in 2009, both through its own employment and the employment
that its purchases of goods and services generated.
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\6\ Kuttner, H. Hudson Institute, (2011). The economic impact of
universal telecommunications: The greater gains.
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So, we know that a robust broadband infrastructure is critical to
economic development. We know from a technological standpoint that all
broadband networks, whether wireless or wired, ultimately rely upon the
wired network. And we know that wired networks provide the capacity to
support the type of applications that this nation critically needs:
telehealth, distance learning, civic participation, and interstate and
global commerce. But delivering such capabilities in rural areas is not
an easy task--the vast distance and sparse populations make the costs
of building broadband-capable networks in rural areas quite high.
This is why rural development programs, such as those administered
by the RUS, are essential to promote broadband deployment. But even if
such programs help promote the deployment of rural networks, those
networks are of no use if they cannot be maintained and upgraded, or if
the services offered over them are unaffordable to consumers because
the underlying costs of operating in rural areas as so high. This is
why it is so important to recognize the key role that other programs,
such as the statutorily-mandated USF, play in allowing rural consumers
to have access to reasonably comparable services at reasonably
comparable prices. In short, it takes an ongoing and sustainable
public-private partnership--one that recognizes the costs of both
building and maintaining networks--to enable access to affordable,
high-quality access in hard-to-serve corners of rural America.
III. The Rural Utilities Service (RUS) Programs
RUS telecommunication programs have been a great success story and
have helped provide voice and broadband service to millions of
Americans where it would not otherwise be available. These programs,
which have been lending for broadband capable plant since the early
1990s, have helped advance state-of-the-art networks to rural Americans
left behind by providers unable or unwilling to serve low population
density markets. Reliable access to capital helps rural carriers meet
the broadband needs of rural consumers at affordable rates. RUS
financing is often the only source of capital for our rural carriers
now that marketplace uncertainty has forced lenders to drastically
tighten their lending.
Unfortunately, the success, momentum, and economic development
achieved in recent years with the help of RUS telecommunication
programs have been put at risk as a direct result of the regulatory
uncertainty created by the FCC's ongoing USF and ICC reform proposals.
RUS lending, USF support, and ICC are inextricably linked (99.2% of RUS
Telecommunications Infrastructure borrowers receive high cost USF
support) and unwise changes to USF could put billions of RUS loans at
risk of default and in fact have already resulted in a dramatic
reduction in program applications and rural investment.
According to the FCC's National Broadband Plan, 14 million people
in seven million housing units do not have access to terrestrial
broadband capable of download speeds of 4 Mbps, and that such housing
units are more common in rural areas. Using the National Broadband
Map's Broadband Statistics Report, it has been pointed out that 98% of
rural Americans (100% urban) have access to ``broadband'' download
speeds greater than 786 kbps, and some claim the loan programs are
therefore no longer needed. However, the same report shows that only
79.2% of rural Americans (99% urban) have access to speeds greater than
6 Mbps and only 70.8% rural (97.6% urban) have access to speeds greater
than 10 Mbps, which are minimum download speeds more commonly
considered necessary for rural areas to compete in the modern broadband
world.\7\
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\7\ See Connect America Fund, WC Docket No. 10-90, A National
Broadband Plan for Our Future, GN Docket No. 09-51, Establishing Just
and Reasonable Rates for Local Exchange Carriers, WC Docket No. 07-135,
High-Cost Universal Service Support, WC Docket No. 05-337, Developing
an Unified Intercarrier Compensation Regime, CC Docket No. 01-92,
Federal-State Joint Board on Universal Service, CC Docket No. 96-45,
Lifeline and Link-Up, WC Docket No. 03-109, Universal Service--Mobility
Fund, WT Docket No. 10-208, Report and Order and Further Notice of
Proposed Rulemaking, FCC 11-161, at para. 108 (rel. Nov. 18, 2011)
(Final Order) (establishing a benchmark of 6 Mbps downstream and 1.5
Mbps upstream for broadband deployments in later years of CAF Phase
II).
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There can be no question regarding the essential nature of the RUS
Broadband Loan Program and the need to avoid reforms that might create
unintended consequences. However, NTCA and its partners representing
the rural telecom industry welcome discussion about ways to further
improve the RUS Broadband Loan Program and offer several suggestions
and observations below.
Interim rules, which were required by programmatic changes
to the Broadband Loan Program in the 2008 Farm Bill to better
target resources, were not put in place until March 2011
(during which time no new loans were approved). Since that
time, the FCC's adoption and ongoing consideration of changes
to USF have created regulatory uncertainty, dramatically
reducing both the number of new Broadband Loan Program
applications and RUS's ability to finalize rules and evaluate
and approve new loans. As a result, the Broadband Loan Program
has been at almost a complete standstill since 2008. With
virtually no new loan projects available to assess the results
of the 2008 Farm Bill's reforms, is now the time to place new
restrictions on the Broadband Loan Program? Though some
providers that don't typically serve rural areas want to
dramatically restrict the program, it was inoperable for its
first 3 years and has been frozen by regulatory uncertainty for
the past year.
Minimizing subsidized ``overbuilds'' in areas where
broadband already exists should remain a top goal for RUS.
However, the impact of certain reform proposals to further
restrict the Broadband Loan Program must be carefully
evaluated. One such proposal would encourage RUS to not provide
a loan for any area where more than 25% of households already
have access to broadband. Under such a scenario, a provider
wishing to receive a loan to serve a rural area where 74 out of
100 people do not have access to broadband would not qualify
for a loan. It should also be noted that in rural areas, such a
population could be spread over miles and miles. Is eliminating
the Broadband Loan Program as an option to help provide service
in such a situation the right answer for households and
businesses that remain unserved year after year and have no
prospect for broadband service in sight? The concerns expressed
around this issue have been loudly heard, and the Secretary of
Agriculture's discretion is an appropriate barometer for such
decision-making.
We support an efficient method by which existing providers
can be notified of submitted applications that may affect the
area(s) they serve without being required to check a website
periodically. One method may be to encourage existing providers
to register for an email alert system whereby they would
receive an electronic notice whenever an applicant seeks a loan
in the state or states that they serve.
We oppose a lesser speed standard for would-be borrowers who
seek to deploy wireless networks. In the interim rules, RUS
established the minimum rate of data transmission as 3 Mbps for
mobile broadband and 5 Mbps for fixed broadband. Attaching a
value and setting a lower data transmission requirement to
mobile service is contrary to the technology neutrality
statutory directive.
Priority should be given to applicants who are proposing
projects that feature scalability--meaning those that can be
easily and relatively inexpensively upgraded over time to
reflect increased consumer demand for more bandwidth, and thus
ensure optimal use of the network asset over the life of the
applicable broadband loan.
RUS programs are not duplicative of other Federal programs such as
USF. RUS telecommunication programs provide up-front capital to build
out to new customers and to upgrade networks. USF, by design, provides
for cost recovery for the ongoing operation of the network and
maintenance, and is at bottom intended to make sure that the prices
consumers pay for service in rural areas are affordable--that is,
``reasonably comparable'' to those in urban areas. Put another way, USF
helps make sure that consumers can afford to ``adopt'' service and make
continuing use of the network over time. Finally, it is worth noting
that RUS telecommunication loan program projects are paid back with
interest--creating a win/win situation for rural broadband consumers
and for taxpayers.
Some opponents of the RUS telecommunication programs and USF point
to their ability to provide broadband service without RUS loans or USF
cost recovery. However, it's important to note that these providers
often fail to provide service to the most high-cost ``last mile''
households and businesses, focusing instead on the concentrated areas
of a community or service area. On the other hand, rural telecom
providers often have carrier-of-last-resort obligations that require
them to serve all customers in their service territory--not just the
more densely populated, profitable towns and cities.
Without carriers-of-last-resort such as Bloomingdale reaching out
into the ``country'' outside the towns with the help of this public-
private partnership, we would have even more unserved consumers in
rural America--and the challenge of achieving universal broadband would
be greater than it already is. And if this public-private partnership
is undermined, then small rural telcos may have no choice but to
likewise abandon the ``countryside'' and retreat to serving just within
the ``in-town'' boundaries too. Last year, during debate on the FY 2012
Agriculture Appropriations Bill, the House of Representatives
recognized the value and continued importance of RUS funding to the
delivery of affordable communications throughout rural areas and voted
in favor of a floor amendment to continue funding the RUS Broadband
Loan Program.
IV. The USF & ICC Mechanisms Are Essential to Broadband Availability,
Service Quality, and Adoption in Rural Areas
USF and ICC have long played a role in connecting all of America by
supporting telecommunication services in rural areas. As Congress
recognized in the Telecommunications Act of 1996, these areas need
predictable, sufficient and specific support to ensure the availability
of affordable, high-quality services for all consumers. High-cost USF
is a program that enables providers to deploy and operate advanced
networks in places where low customer density, vast distances and
rugged terrain deter even the most optimistic business cases.
Without USF support to supplement customer revenues, rural
carriers, who serve an average of ten customers per square mile, would
be forced to drastically reduce service, exit the outlying parts of
rural markets, or charge retail prices that no consumer could
realistically afford. Such outcomes would be inconsistent with long-
standing national statutory policy. These networks connect rural
communities and outlying farms and ranches with the rest of America and
the world. Even if a wireless carrier were to operate in some portion
of a rural area, it could not deliver high-quality broadband without
the robust underlying capacity of the networks provided by these small
entrepreneurial community-based carriers.
With the help of USF and ICC, rural carriers provide near-universal
voice service to all Americans and have increased broadband penetration
to 92% of their consumers with only 3% growth per year in USF support
over the past several years. But in the majority of cases, the
broadband is only DSL speed and does not reach the speed--4 Mbps
downstream/1 Mbps upstream--that the FCC has now identified as a target
level of ``universal service.'' The time has come to update these
important network support mechanisms to ensure that everyone can
participate in the economy made possible by a nationwide integrated
advanced communications network.
The FCC released its USF/ICC reform order on November 18, 2011,
with the aim of transitioning the program to explicitly support
broadband service in rural America.\8\ At the urging of the FCC, the
rural carriers and larger providers reached agreement on a Consensus
Framework for reform last summer that would have kept the fund at its
current level while supporting faster broadband to more Americans.\9\
The parties to the Consensus Framework made many difficult compromises
to reach an agreement in the hope of achieving universal broadband
service and gaining some regulatory certainty. However, the FCC's
order: (1) failed to adopt any provisions specifically promoting
broadband service in rural carriers' service areas, (2) cut existing
cost recovery mechanisms for rural carriers retroactively, and (3)
proposed a further notice of rulemaking with the potential for more
cuts.
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\8\ See Final Order.
\9\ See Letter from Walter B. McCormick, Jr., United States Telecom
Association, et al., to Chairman Genachowski, FCC, WC Docket No. 10-90,
et al. (filed July 29, 2011).
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In sum, rural providers will be expected to do more in terms of
broadband deployment and service offering with less opportunity for
cost recovery, and we do not get regulatory certainty because the
additional cuts proposed within the further notice hinder lending and
investment. This ``regulatory overhang'' is undermining job creation,
network investment and the sustainable quality of broadband services in
wide swaths of rural America. By the FCC's own admission, three out of
ten carriers will lose more than 10% of their existing USF support
under the order, and more than half will lose some level of support.
And this is only in Year 1--the picture does not improve as the cuts
phase in and become deeper over time.
We believed that with all of the facts before them, the FCC would
have taken advantage of the opportunity to make bold recommendations,
including a call for a national commitment to invest in and maintain
state-of-the-art communications technologies throughout all of America.
Unfortunately, the agency's narrow focus on delivering broadband to
completely unserved areas fails to acknowledge that America's most
rural areas can only continue to be served with the help of ongoing
high cost support.
Rural providers sincerely hope that the FCC will respond to the
recent calls of more than 60 Members of Congress to expressly decline
to act on several aspects of its further notice and instead signal to
service providers, lenders, investors, and consumers that it will allow
adequate time for adjustment to the changes already made in its order.
Moreover, since carriers cannot ``undo'' loan commitments or ``tear
out'' existing networks, the FCC should make clear that any caps or
other limitations on cost recovery already adopted in its order will be
applied prospectively. As it has done for consumers in other areas, the
FCC should adopt a Connect America Fund that will provide additional
funding for broadband-capable deployment in areas served by rural
providers. Reforming USF and ICC properly is essential to achieving our
national goal of universal broadband access and to the livelihood of
thousands of job-creating small businesses that need broadband to
compete in a global economy.
V. Broadband Gains
We can all be proud of our nation's broadband progress over the
past decade and the opportunities that broadband creates for rural
America to compete and thrive. This success has only been possible due
to the unique cooperation that has existed between the industry, the
American people, and policymakers. Together, through a spirit of
entrepreneurship, a can-do attitude, and a deep national confidence,
the appropriate mix of programs and policies have been cultivated and
maintained to ensure widespread broadband deployment and adoption.
This commitment and partnership will be essential to America's
quest to secure and maintain a level of global broadband pre-eminence.
To underscore this assessment I draw the Committee's attention to a May
2009 U.S. Government Accountability Office (GAO) report that, among
other things, considers the Federal Government's approach to broadband
deployment.\10\ In the study's opening remarks it notes that according
to government officials, ``the Federal approach to broadband deployment
is focused on advancing universal access.''
---------------------------------------------------------------------------
\10\ (n.d.). Retrieved from website: http://www.gao.gov/new.items/
d09494.pdf.
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The GAO report goes on to state that historically the role of the
government in carrying out a market-driven policy has been to create
market incentives and remove barriers to competition, while the role of
the private sector has been to fund broadband deployment. It continues
that under this policy, broadband infrastructure has been deployed
extensively, yet doing so in rural areas is more difficult and in some
instances gaps remain, primarily due to the limited profit potential
associated with such initiatives. Industry stakeholders credit RUS and
USF with helping to increase broadband deployment and adoption, and
that to achieve universal access, support of this nature will be
essential in the future.
Despite the long history of success associated with these programs,
a small but vocal minority of voices exists that refuse to accept this
reality. Throughout this debate over the government's role in broadband
deployment, the rural sector of the industry has routinely been
directed to ``think outside the box'' in a search for more economical
solutions to communications infrastructure deployment. If I do nothing
else here today, it is my overarching desire to ensure that everyone
participating and listening to this discussion ultimately leaves with
the recognition and understanding that rural carriers always have and
always will ``think outside the box.'' Truly, they have no other
choice.
What segment of the industry was the first to completely convert to
digital switched systems? What segment of the industry was a pioneer in
providing wireless options to their hardest to reach customers? What
segment of the industry produced the first company to deploy an all-
fiber system? What segment of the industry was the first to offer
distance learning and telehealth applications? What segment of the
industry was an early leader in providing cable-based video, then
satellite video, and now IP video to their markets? What segment of the
industry quickly moved into Internet service provision in the early
stages of the Internet's public evolution? And what segment of the
industry continues to lead in the deployment of high-speed broadband
capable infrastructure?
In every instance the answer to those questions is the small rural
segment of the communications industry. Rural carriers are small
businesses dedicated to providing opportunities to other small
businesses and individuals that might otherwise have to compete on an
unlevel playing field. This is possible because cooperative and
commercially-structured systems are owned and operated by members of
the local community. Clearly, these are entrepreneurs who care about
their communities and their nation and are continually ``thinking
outside the box.''
VI. Conclusion
Regardless of whether consumers are focused on voice, video or data
in tomorrow's world of communications, they will require the underlying
infrastructure to ensure their communication gets to its destination.
America stands at a crossroads between a narrowband and broadband
world. The choice is clear. The rural industry has long been the leader
in deploying advanced telecommunications services to America's rural
areas, and that success is built upon a foundation of public-private
partnership that has worked for decades. To make sure this progress is
updated and remains relevant in a new era of communications, rural
providers and the rural associations are eager to continue working with
you to move forward aggressively to fulfill the national objective of
making broadband universally available as is envisioned by so many and
indeed mandated by statute. Thank you for your attention to this
matter.
The Chairman. Thank you. I am going to go out of order and
allow the Ranking Member, who has other legislative
commitments, to ask a couple questions and then we will take
the rest in order. Mr. Costa?
Mr. Costa. Thank you very much, Mr. Chairman.
Mr. Bahnson, I think you confirmed what I said in my
opening statement about the challenges of capacity for
broadband and the availability of broadband in our rural
communities. I have members here that said 95 percent of
households, it is available, but their take rate is only 60
percent. And instead of subsidizing competitors--because I
appreciate the public-private partnership that you spoke of in
your closing statement--in areas where broadband is already
available, shouldn't the money be better focused on providing
under-served areas, going forward, to provide access? And could
you also talk about bandwidth and access for agriculture for
blue technologies?
Mr. Bahnson. Well, the area I serve is very agricultural, a
lot of blueberry farmers, cherry farmers, peach farmers, apple
farmers, and they use our technology everywhere now. We are
talking about doing specific builds to packing plants for just
those purposes. So I would absolutely agree with you that it is
crucial for those areas. Getting that service to those areas is
extremely expensive, and without help from outside sources, it
is very difficult for us to do that. You just can't build a
business case to take facility to a place where there just
aren't a lot of people there to buy that service from you.
Mr. Costa. Dave Rozzelle do you want to comment on this or
not? You don't have to.
Mr. Rozzelle. In that case I will pass given the time
constraints.
Mr. Costa. Okay. I appreciate that. Finally, my last
question, Mr. Dunmire with NRWA, you talked about the
importance--and the previous witness did--of safe drinking
water and whether these grants and loans have provided a
positive role. And I have a number of communities like that but
I have a different question. And some of the communities in
terms of compliance with Federal regulations or regulatory
regimes under the Environmental Protection Agency not just with
this Administration but with previous Administrations--I mean
this has been a bipartisan problem--when you have naturally
occurring contaminants like arsenic or benzene. Thirty years
ago we could trace parts per million but now we developed an
ability to trace parts per billion and now parts per trillion,
it just seems to me that the amount of water you have to
consume to be impacted by parts per trillion is rather
unimaginable that it would impact your health.
And instead of zero risk--and there is no zero risk in
terms of protecting health and safety--I mean I have had
communities that have had to drill new wells at a million and a
half dollars--for a small community, that is a big price tag--
when the water has been that way for millions of years. I mean
in some cases we have contamination that we created with the
likes of DDT and other kinds of things with past practices. But
it just seems to be change in the regulatory regime would be
more helpful than trying to create some sort of a zero
tolerance.
Mr. Dunmire. Ranking Member Costa, you are preaching to the
choir. That has been our argument with primacy agency in
Illinois, which is IEPA. For years and years and years, they
approached it with a common-sense view and a number of years
ago they went through an audit from U.S. EPA. It was not a
pleasant audit. Our friends in Springfield at IEPA now are
forced to enforce the U.S. EPA regulations without any waivers,
no common sense to it. Like you have pointed out, there have
been countless systems, predominantly in north central Illinois
to northern Illinois that had the radon problems, arsenic
problems that have been forced to put in added treatment, very,
very expensive added treatment essentially doubling and
tripling the water rates of their customers.
Mr. Costa. Let me just close. And we, on a bipartisan
basis, need to figure out how to work this. Common sense tells
you that in any sort of risk assessment and risk management
regime that you have to assess the management of the risk
versus the assessment of how big of a risk that it is. And on a
cost-comparative basis--and this is the common sense that gets
lost--we never take into an evaluation the criteria on how do
we get the best bang for our buck whether it be Federal, state,
or local dollars on limiting the risk to our communities where
we have a responsibility to minimize the risk.
But certainly, we never look at it in a vacuum. When a
person gets in a car and backs out of their driveway, they are
much more likely to have a higher risk of an accident, God
forbid, that would result in injury. And we accept that risk
versus how much water you have to consume daily for 80 years on
tracing parts per billion of naturally occurring arsenic that
has been in the water forever.
So I will get off my soapbox but it is a challenge that we
have to address in some fashion.
The Chairman. Thank you, Mr. Costa. I will defer my
questions to the end.
Mr. Scott?
Mr. Scott. Thank you, Mr. Chairman.
And Mr. Rozzelle, I live in a small community that is very
close to a larger community, and you have been fairly critical
of the RUS loan program and one of the words you continue to
use is unserved. Would you give me the definition of unserved?
And specifically what I am getting at here is unserved versus
under-served.
Mr. Rozzelle. Congressman Scott, the National Broadband
Plan defined broadband as 4 megabits down, 1 megabit up.
Mr. Scott. Okay.
Mr. Rozzelle. If a household doesn't have that available to
it, passing it, then it would not have broadband under the
National Broadband plan definition.
Mr. Scott. Okay. Would you agree that there is much more
competition in metropolitan areas than there is in rural areas?
Mr. Rozzelle. I would agree that generally in larger
communities there are more carriers providing broadband service
than there are in rural communities, yes, sir. I would agree
with that.
Mr. Scott. And would you agree that in those competitive
markets that, because of the competition, the consumer pays
less for the same service than they do in the more under-served
areas of the state?
Mr. Rozzelle. Congressman Scott, I would say this in
relation to Suddenlink, with which I am obviously very
familiar, and that is that we spent a great deal of money to
bring very high-speed broadband as deeply as we could into our
footprint in terms of densities----
Mr. Scott. Yes.
Mr. Rozzelle.--and in our smaller communities which have
broadband some of those communities pay more on an equivalent
service basis than our larger communities and some pay less.
Mr. Scott. And I certainly believe you to be telling the
truth, but my experience has been that in the rural parts, I
paid significantly more than I paid at my business, for
example, which was actually in a competitive market and my home
was in the rural market. I did not have a choice in providers
at my home but I had a choice at the business. I paid
significantly less for the service.
Mr. Rozzelle. In most of our markets on the broadband side
we are competitive with the incumbent telephone company
generally and in a number of them we are also competing with
other providers who are present. And so with all due respect,
it really depends on the community as to the level of
competition that we face.
Mr. Scott. Where I am from I have seen a very serious
reluctance of major corporations to move into the more rural
parts. It seems to me that they, if you will, cherry pick the
more profitable areas and that may be part of their business
strategy where your local rural telephone company, which is
traditionally family-owned----
Mr. Rozzelle. Yes.
Mr. Scott.--is willing to serve in more community-
oriented----
Mr. Rozzelle. Suddenlink began life as a company that
served entirely rural communities and grew to be the company
that we are today. So I certainly understand what you are
saying. And I represent here a group of operators at NCTA, some
of which serve extremely small communities, and they are also
family-owned.
Mr. Scott. Thank you very much.
Mr. Bahnson, would you like to comment on the loan program
and the value it adds to bringing competition to the rural
markets or to the rural consumer?
Mr. Bahnson. To go back to your earlier question, I would
just say yes, it is cheaper when there is competition. There is
no doubt about it.
We couldn't do the things that we have done in my company
if we wouldn't have had RUS as a partner. It just wouldn't be
possible. You just can't make the money work. I need that kind
of help to serve the people we are trying to serve. And the
area I am in is extremely small. I mean the towns that those
others have talked about would be considered pretty good-sized
towns to the town I serve in.
Mr. Scott. Thank you, sir.
Mr. Chairman, I don't have any time remaining but I will
yield back to you.
The Chairman. Thank you.
Mrs. Hartzler?
Mrs. Hartzler. Thank you, Mr. Chairman.
I believe you were here with the first panel and heard my
questions about the needs for rural infrastructure, the
challenges we have there. In your testimony, Mr. Dunmire, I see
that you outline a little bit some of the demand and the amount
of money that was allocated for rural infrastructure projects
and as well outlined that at the end of 2011 and 415 completed
applications--which no funding was available--to address the
backlog you think we need $3 billion. Is that correct?
Mr. Dunmire. Yes, ma'am. That is the applications that were
in process total up to that $3 billion.
Mrs. Hartzler. Of those applications, could you give me a
rough estimate, kind of break down the causes for the need for
it? Some is just the aging of the infrastructure. The water
lines, the sewer lines were put in place in the 1950s and
1960s. Wouldn't you say part of it is just aging? I would
really want to know how much you think is due to the EPA's
ever-changing standards that are putting a new burden on our
rural communities and forcing them to have to upgrade their
sewer systems and their water systems. Could you give me some
sort of a breakdown in the costs for the needs of these
projects?
Mr. Dunmire. I wish I could give you an answer here today,
but unfortunately, I cannot. But I will promise you this: we
will check into that and we will get the information to you as
soon as possible. But it is a combination of all of the factors
that you have just mentioned.
Mrs. Hartzler. Yes. Certainly, we can't do anything about
the aging but the projects in my district, the ones that
frustrate the most is when you have a system that is working--
and Ranking Member Costa alluded to it--it is safe, it is
working, and then here the government comes in and says you
need to upgrade your sewer plan or you need to do this or you
need to do that, which costs millions of dollars which these
small towns don't have and then is forcing a burden on us as
the Federal Government to have to have the resources to help
supply that. And so if you could help provide us with some of
that information that gives us the tools we need to be able to
fight that here and try to push for commonsense regulations
that will ensure safety but yet also use our tax dollars
wisely. So I really appreciate that. I appreciate what all of
you are doing for rural America. As a farm girl from Archie,
Missouri, I appreciate all of what we can do for rural America.
Thank you.
Mr. Dunmire. Okay. If you would allow just 1 second----
Mrs. Hartzler. Well, sure.
Mr. Dunmire.--to respond, the water operators and
wastewater operators that I represent, there is nobody out
there that would want to step up to the plate and make sure the
water is more safe to drink----
Mrs. Hartzler. Sure.
Mr. Dunmire.--and the effluent of their wastewater plants
is not damaging the environment than the operators that I
represent. However, when it comes to the--and I use this term
not lightly--frivolous----
Mrs. Hartzler. Yes.
Mr. Dunmire.--regulations that seem to be coming our way,
it just gets to be too hard of a job for the small
municipalities out there.
Mrs. Hartzler. Absolutely. Thank you for your----
Mr. Dunmire. Now I will get off my soapbox.
The Chairman. Thank you, Mrs. Hartzler.
Mrs. Hartzler. Thank you.
The Chairman. And my friend from Illinois, Mr. Schilling.
Mr. Schilling. Thank you, Mr. Chairman. And I also want to
thank you for your great service not only to our state but also
to our country and you have been a great leader on the
Agriculture Committee.
So I would first like to address Mr. Dunmire. First, it is
great to see you again, sir, just want to thank you for the
great work you do for our rural communities. And I know that we
serve over 1,700 total is the amount throughout the state. So
thank you for that.
I think everyone in the room is aware of our fiscal
situation. We have cut our own budgets here in the House by 12
percent. I think the Agriculture Committee has really stepped
up to the plate when it comes to spending and saving debates.
So it is great.
But with that in mind, with the limited resources we have,
how would water applications fit into the regional concept
discussed today, particularly in the light of what we have
talked about is the $3 billion backlog?
Mr. Dunmire. Was that directed towards me?
Mr. Schilling. Yes, sir.
Mr. Dunmire. Okay. Well, I believe a little bit of a Band-
Aid approach has already been put in place. Back in August of
last year, USDA and EPA--U.S. EPA I should say--signed a
Memorandum of Agreement on improving sustainability of rural
water and wastewater systems. And a key component of that is
the promotion of system partnerships. As Mr. Costa pointed out
earlier, this isn't a one-size-fits-all. And there are
instances in the State of Illinois where we don't really call
it regionalization, more as a consolidation.
And sometimes it is more economically feasible to look at
your neighbors. If they are experiencing the same problems,
going to have to build a water treatment facility or a
wastewater treatment plant, it makes all the sense in the world
to build one a little bit bigger, more cost-effective. Not
always do they see eye to eye. And this is where Mr. Stewart
was alluding earlier that sometimes it takes somebody to take
them by the hand, lead them from cradle to grave, get them in
the same room together, get them talking. This isn't you
against me, this is a common goal that is going to ultimately
save both of our municipalities and our customers--if you
will--money.
Mr. Schilling. Very good. Thank you for that.
Mr. Bahnson and Mr. Rozzelle, we have several cable and
telephone cooperatives in our district, including McDonough
Telephone Cooperative and then Mid-Century Telephone
Cooperative that serve thousands of miles of rural area in
western Illinois. I meet with them quite regularly and it seems
every time I do, they constantly have a new rule or regulation
coming from the FCC that could potentially prevent broadband
expansion. This doesn't provide them for much certainty to
invest in new technology or to expand their broadband access.
How much of the reluctance for investment inferred by the
studies you mentioned in your testimony is actually due to the
FCC reforms?
Mr. Bahnson. I think probably the best example I can give
you is I was recently at a managers' meeting with small
telephone companies. There was probably 100+ managers there. As
we talked about what is going on, I think probably the common
thread is we don't know what is going on right now. We just
can't make investments. It is not a good idea for our company.
And that is pretty scary because we were talking earlier about
4 megs/1 megs in terms of those speeds. My consultants tell me
by 2015 consumers are going to want 100 megs at their house. I
don't know if that is true or not, but if it is, we have a huge
challenge in front of us and we are afraid to make the
investments to get there.
Mr. Schilling. Very good. With that, I yield back my time.
The Chairman. We thank you. I want to conclude I guess by
thanking this panel and the other panel for their testimony. I
would ask are there any members of the first panel still here?
I don't believe there are. Okay. All right. You can even feel
free, even though it is not in order, to respond to my
concluding question if you desire.
As I listen to the testimony today, first of all, I was
impressed by your breadth of understanding, your commitment to
the values that frankly most of the Members of this
Subcommittee on both sides share, and I am grateful for your
being here. What occurred to me is that we are here to talk
about the formulation of the 2012 Farm Bill rural development
programs, excellent testimony and I appreciate it, but we all
recognize--I do, you do, and every Member of this Subcommittee
does--that this Subcommittee and the other five Subcommittees
of the Agriculture Committee, as well as every committee in the
U.S. House and Senate is going to have to engage in what we
individually call shared sacrifice. We are not going to balance
the budget, we are not going to deal with the deficit and the
debt unless we all recognize that every single component of
what the Federal Government does has got to be reexamined.
And so my question for you is, as articulate as you have
been on advocating for programs that still cost money, if you
were in my position or in the position of anybody in Congress
or the President, where would you make cuts and save money to
engage in this whole process of shared sacrifice that is going
to be necessary in order for us to dig ourselves out of the
$16.5 trillion hole? Any thoughts? Yes, sir.
Mr. Larson. Well, Mr. Chairman, I am Mr. Larson of the
National Association of Counties and our association has no
specific policy on that so I speak personally to you as I think
your question probably was. But I think that the issues that we
have talked about today are so critical for the future of rural
America, particularly the broadband, the water and the
wastewater are the keys to our future success. And if we have
to do without, in all due respect, sir, we now have
profitability in American agriculture with commodity prices as
they have been for the last couple years and for probably the
near foreseeable future. I think we can take some of the
funding that have been used in that portion of the farm
subsidies and anything in those areas of the farm bill and
redirect them into the rural development portfolio and probably
have a much better impact and longer impact on rural America
than a one-time check to an individual farmer. Thank you.
The Chairman. Thank you for your thoughts. Anything else?
Mr. Dunmire. Thank you, Mr. Chairman.
Each of the individual panelists that presented up here, on
their programs they were always asked how do you justify who
gets money and who does not get money? You know, how do you
weigh the need that is out there? I submit that maybe Congress
should go back and look at what really is working and what does
not work and to add to the agricultural that Mr. Larson has
discussed, defense is another huge elephant in the room that
could probably be cut as the wars wind down.
Mr. Bahnson. I guess one thing I would just like to point
out is that my company fully intends to pay those loans back
and I am using your money right now but you are going to get it
back and on the one loan I talked about earlier, you are going
to get $2.5 million back. And to me that seems like a total
win-win situation. The people who live in my rural area getting
the services they need now and the government is going to get
their money back plus interest. That just seems like a win-win
to me.
The Chairman. Okay. Well, I appreciate it. I appreciate the
input. We have a tough task ahead of us. I think the Chairman
of the Committee has an obligation to remain judiciously
neutral in terms of what we are doing. I would only say,
speaking on behalf of this Subcommittee I believe and the whole
U.S. House, we are going to have to make some cuts, we are
going to have to make some savings, none of which are going to
be painless. We all need to engage in that process or we are
never going to deal with the issue that we have.
So with that I would thank the witnesses for their
testimony, excellent testimony today. I appreciate the great
job, as always, that our Majority staff--as well as the
Minority staff--do. And I don't have any concluding statement
to make. Mr. Costa is going into other let's say business and
so I would simply say 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 responses from
the witnesses to any question posed by a Member.
This hearing of the Rural Development, Research,
Biotechnology, and Foreign Agriculture Subcommittee is
adjourned.
[Whereupon, at 4:15 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Supplementary Material Submitted by Hon. Charles F. Conner, President
and Chief Executive Officer, National Council of Farmer Cooperatives
------------------------------------------------------------------------
Grant Type
Applicant Name State (Planning or Applicant Type Grant
Working Capital) Amount
------------------------------------------------------------------------
Thompson Farm & AL Working Capital ................ $40,050
Trucking
Ozan Vineyard and AL Working Capital ................ $49,698
Cellars
Cody Hopkins AR Planning ................ $98,500
Caballos y AZ Working Capital ................ $39,500
Companaros, Inc
Curds & Whey CA Working Capital ................ $48,000
Dairy
Pacific Coast CA Working Capital Farmer or $300,000
Producers Rancher
Cooperative
Farm Fresh CA Working Capital ................ $21,192
Solutions
Delta Blue CA Working Capital ................ $49,000
Blueberries
Rosa Brothers CA Working Capital ................ $300,000
Milk Company
Blue Diamond CA Working Capital Farmer or $300,000
Growers Rancher
Cooperative
Ingel Haven Ranch CA Planning ................ $44,000
California Dairy CA Planning ................ $100,000
Campaign
Sonoma County CA Working Capital ................ $300,000
Vintners
Hog Wild for CA Planning Capital ................ $67,500
Organic Pork
Bohemian Creamery CA Working Capital ................ $100,000
Top O' the Morn CA Working Capital ................ $300,000
Farms
Arburua CA Working Capital ................ $35,000
Enterprises, Inc
Nishimori Family CA Working Capital ................ $226,284
Farms, LLC
Sunsweet Growers CA Working Capital Farmer or $300,000
Rancher
Cooperative
Livermore Valley CA Working Capital ................ $208,504
Wine Country
Community CA Working Capital ................ $45,475
Alliance with
Family Farmers
Sweetgrass CO Working Capital Farmer or $226,000
Cooperative Rancher
Cooperative
Table Mountain CO Planning Grant ................ $41,550
Farms, LLC
Aaron Christopher CO Working Capital ................ $26,890
Rice
Paradise Farms FL Working Capital ................ $49,500
Organic
White Oak GA Working Capital ................ $300,000
Pastures, Inc.
Lil Mog. LLC d/b/ GA Working Capital ................ $295,231
a MSM Meats and
Country Store
Laurie-Jo's GA Working Capital ................ $300,000
Southern Style
Canning, LLC
Lane Packing, LLC GA Working Capital ................ $300,000
Hillside Orchard GA Working Capital ................ $300,000
Farms, Inc.
Flint River GA Working Capital Farmer or $300,000
Farmers Rancher
Cooperative Cooperative
Georgia Buffalo, GA Working Capital ................ $117,500
Inc.
Jubilee Organic GA Working Capital ................ $200,000
Creamery, Inc.
Cartecay GA Working Capital ................ $46,500
Vineyards--Lawre
nce E. Lykins,
owner
Marie-Laure HI Working Capital ................ $48,000
Ankaoua
Hawaii Cattle HI Working Capital Farmer or $58,180
Producers Rancher
Cooperative Cooperative
Association
Kimberly Ino HI Working Capital ................ $27,750
Kalapana HI Working Capital ................ $12,000
Organics, LLC
MV Farms Inc. dba HI Working Capital ................ $140,000
Naked Cow Dairy
Country View IA Working Capital ................ $86,826
Dairy, LLC
Grass Run Farms IA Working Capital ................ $49,847
Unruh Greenhouses IA Working Capital ................ $49,990
LLC
Iowa Hops Company IA Planning ................ $35,340
Farmer's All IA Working Capital ................ $280,000
Natural Creamery
Mark Hulsebus IA Working Capital ................ $13,000
Joseph Schafer IA Working Capital ................ $300,000
Hafner, Inc. IA Planning ................ $30,225
Two Saints Winery IA Working Capital ................ $26,680
Iowa Choice IA Working Capital ................ $255,284
Harvest, LLC
Joker's Wild IA Working Capital ................ $49,120
Value Added Beef
Colter's Creek ID Working Capital ................ $25,000
Winery
Moss Produce ID Working Capital ................ $300,000
3 Horse Ranch ID Planning ................ $30,000
Vineyards, LLC
Clover Leaf ID Working Capital ................ $300,000
Creamery
Idaho's Bounty ID Working Capital Farmer or $55,180
Rancher
Cooperative
Fish Processors ID Working Capital ................ $300,000
Inc.
Lime Rock Brown IL Working Capital ................ $49,990
Swiss Cheese,
LLC
Justin Kilgus IL Planning ................ $10,595
Living Water IL Working Capital ................ $300,000
Farms, Inc.
Marcoot Jersey IL Working Capital ................ $217,866
Farm, Inc.
Russell and IN Planning ................ $10,000
Elizabeth Kelsay
The Feel Good IN Planning ................ $11,295
Farm, LLC
Indiana Farmstead IN Planning ................ $38,000
Cheese
(Steckler)
Schmidt Farms, KS Working Capital ................ $49,714
Inc.
McCarty Family KS Working Capital ................ $300,000
Farms, LLC
Thayer Feed, LLC KS Working Capital ................ $46,945
Jerry Brown, KS Working Capital ................ $300,000
Brown Honey
Farms, Inc.
Johannes Farm KS Working Capital ................ $9,400
Stone Cross Farm KY Working Capital ................ $55,114
& Cloverdale
Creamery
KY Sheep and Goat KY Working Capital ................ $36,400
Development
Office
Horsehoe Bend KY Working Capital ................ $297,675
Vineyards
Evans Orchard KY Working Capital ................ $70,000
Kenny's Farmhouse KY Working Capital ................ $246,818
Cheese, Inc.
Kendal Clark KY Working Capital ................ $49,950
Farms
Ky Hydro Farms, KY Working Capital ................ $49,999
LLC
Kentucky KY Working Capital ................ $300,000
Freshwater Fish
Inc.
Meat Hook Butcher KY Planning ................ $67,397
Shop Steering
Committee c/o
Woodland Farm
Cajun Central, LA Working Capital ................ $298,054
LLC
Island Bee MA Working Capital ................ $13,000
Company
The Vineyards at MD Working Capital ................ $299,974
Dodon, LLC
Crow Vineyard and MD Working Capital ................ $48,600
Winery, LLC
Chapel's Country MD Working Capital ................ $187,000
Creamery
Boordy Vineyards MD Working Capital ................ $239,200
Chesapeake Bay MD Working Capital ................ $286,398
Dairy
Nancy S. and MD Planning ................ $40,455
Kevin D Brandt
Carole Morison, MD Planning ................ $15,756
Sole Proprietor
Knob Hall Winery MD Working Capital ................ $40,000
Basignani Winery MD Planning ................ $50,000
Ltd
David Lewis MD Working Capital ................ $49,950
Herbst
SuriPaco, LLC ME Planning ................ $27,450
Angela Mary MI Working Capital ................ $293,842
Sandy Acres, LLC MI Planning ................ $20,125
Berglund Farms MI Working Capital ................ $269,278
Michigan Sugar MI Working Capital Farmer or $300,000
Company Rancher
Cooperative
Uncle John's MI Working Capital ................ $42,024
Cider Mill
VanDenBerg Farms MI Working Capital ................ $298,788
Royal Farms Inc. MI Working Capital ................ $45,094
American Ag MN Planning ................ $100,000
Energy
Cedar Summit MN Working Capital ................ $300,000
Dairy, LLC
Clearbrook MN Working Capital Farmer or $300,000
Elevator Rancher
Association Cooperative
Duluth Farmers MN Planning ................ $18,986
Market
Pastures A Plenty MN Working Capital ................ $300,000
Company
Smude Enterprises MN Working Capital ................ $298,500
LLC
TFC Poultry MN Working Capital ................ $300,000
1Soy, Inc MO Planning Farmer or $100,000
Rancher
Cooperative
American Soy MO Working Capital ................ $300,000
Asia, LLC
Boeckmann Family MO Working Capital ................ $281,670
Farm
Janet Smith MO Planning ................ $28,000
Grove Dairy MO Planning ................ $50,000
Products, LLC
Hampton MO Working Capital ................ $210,000
Alternative
Energy Products,
LLC
Jowler Creek MO Working Capital ................ $18,363
Winery, Inc.
Becky & Tim Lavy MO Planning ................ $38,000
McKaskle Farms MO Planning ................ $40,000
MOF2, LLC MO Planning ................ $100,000
Nature Friendly MO Planning ................ $34,000
Conservation
Branded Beef
Ortiz Farms MO Planning ................ $78,795
Show Me Energy MO Planning Farmer or $100,000
Cooperative, LLC Rancher
Cooperative
Soy Labs, LLC MO Planning ................ $100,000
Tuscolo Hill MO Planning ................ $16,000
Vineyards
Brinson Farms, MO Planning ................ $49,000
LLC
Wildwood Gin Inc. MS Working Capital ................ $300,000
Forest Free MS Working Capital ................ $87,326
Range, LLC
Indian Springs MS Planning Farmer or $24,999
Farmers Rancher
Association AAL Cooperative
We Three Bees MS Working Capital ................ $21,500
Apiary
William & Marilyn MT Working Capital ................ $48,530
Hedstrom dba
Hedstrom Dairy
Leonard Bernard MT Planning ................ $55,000
Desmul
Little Red Hills, MT Working Capital ................ $150,000
LLC; Cooper
Burchenal
Sunburst Trout NC Working Capital ................ $283,884
Company LLC
Chaple Hill NC Working Capital ................ $180,000
Creamery, LLC
Nooherooka NC Working Capital ................ $130,000
Natural, LLC
Honey Mountain NC Working Capital ................ $120,000
Farm LLC--Chuck
Moore
Marketing NC Working Capital ................ $140,000
Specialty Beef
from Farm
Cottle Strawberry NC Working Capital ................ $300,000
Nursery
Sleepy Goat NC Planning ................ $22,500
Cheese LLC
Smoky Mountain NC Planning ................ $20,000
Native Plant
Association,
Inc.
Yamco LLC NC Planning ................ $100,000
Sullivan Estate NC Working Capital ................ $37,148
Vineyard &
Winery, L.L.C.
Dakota Pride ND Working Capital Farmer or $49,000
Cooperative Rancher
Cooperative
Bowdon Meat ND Working Capital Farmer or $49,500
Processing Rancher
Cooperative
Nebraska Waters, NE Working Capital ................ $300,000
LLC
Robinette Farms, NE Working Capital ................ $24,944
LLC
Feather River NE Working Capital ................ $49,998
Vineyards
Hollenbeck Farms NE Working Capital ................ $258,250
Knotted Wood NE Working Capital ................ $49,950
Distillery
Winery Ridge NH Working Capital ................ $41,350
Orchard
Springdale Farms, NH Working Capital ................ $105,750
Landaff Creamery
Miles Smith Farm, NH Working Capital ................ $293,599
Carole Soule and
Bruce Dawson
Salem Oak NJ Working Capital ................ $20,000
Vineyards LLC
Landisville NJ Working Capital Farmer or $49,975
Produce Rancher
Cooperative Cooperative
Association
Garden State Goat NJ Working Capital ................ $36,500
Farm
Outer Coastal NJ Planning ................ $33,332
Plain Vineyard
Association
First Field, LLC NJ Working Capital ................ $32,000
Peppadew Gold NJ Working Capital ................ $259,625
Peppers
Red Mesa Meats NM Planning ................ $12,500
Preferred NM Working Capital ................ $49,500
Produce, Inc.
Tracey Hamilton NM Working Capital ................ $49,500
B.W. Cox (Owner) NM Working Capital ................ $49,999
& Carl
Livingston
(Manager)
Edgwick Farm NY Working Capital ................ $120,000
Catskill Dudukju NY Working Capital ................ $49,000
LLC
New York Beef NY Planning Farmer or $36,500
Farmer's Rancher
Cooperative Cooperative
King Brothers NY Working Capital ................ $49,500
Dairy
Farmer Ground NY Working Capital ................ $75,000
Flour, LLC
North Country NY Working Capital ................ $180,638
Farms
Old Chautauqua NY Working Capital ................ $299,999
Vineyards, LLC
Kilcoyne Farms NY Working Capital ................ $261,077
NYAG, LLC NY Working Capital ................ $170,000
CELK Distilling, NY Working Capital ................ $150,000
LLC
Keuka Lake NY Working Capital ................ $37,301
Vineyards, LTD
Red Jacket NY Working Capital ................ $49,500
Orchards
Dagele Brothers NY Planning ................ $79,425
Produce;
Christopher
Dagele
North Country NY Working Capital ................ $59,950
Landscape &
Nursery, Inc.
DBA Tug Hill
Vineyards
Food Gems, LTD NY Working Capital ................ $35,004
Hosmer, Inc. NY Working Capital ................ $49,990
Guppy's Berry NY Working Capital ................ $3,650
Farm
Martin Sidor NY Working Capital ................ $49,990
Farms, Inc.
Spring Lake NY Working Capital ................ $49,500
Winery
Maple Shade Farm NY Working Capital ................ $49,750
Growers NY Working Capital Farmer or $45,000
Cooperative Rancher
Grape Juice Co., Cooperative
Inc.
Egg Tech Ltd. OH Working Capital ................ $300,000
Van Strohm Fiber OH Working Capital ................ $60,500
Processing Mill
Auburn Twin Oaks, OH Working Capital ................ $125,000
LLC
Commercialization OH Planning ................ $71,551
Roadmap for
Alternative
Aviation Fuel
Mercer Landmark-- OH Planning Farmer or $39,800
Louis McIntire Rancher
Cooperative
Tea Hills Gourmet OH Working Capital ................ $178,062
Chicken Products
Holder Brothers OK Working Capital ................ $300,000
Beef
Walnut Creek OK Working Capital ................ $40,850
Farms
Bogdan Caceu OR Planning ................ $12,125
Wrigley Family OR Working Capital ................ $49,999
Ventures
Fairview Farm LLC OR Working Capital ................ $49,264
Seely Family Farm OR Working Capital ................ $163,013
Zena Forest, LLC OR Working Capital ................ $130,750
Deadlus Cellars OR Working Capital ................ $49,005
Co.
Sokol Blosser, OR Working Capital ................ $49,999
Ltd.
Carman Ranch OR Planning ................ $18,050
Scott H. OR Working Capital ................ $49,999
McKenzie, et
al.; Seaview
Cranberries,
Inc.
Deck Family Farm OR Working Capital ................ $300,000
Coleman Vineyard OR Working Capital ................ $49,824
LLC
Cherry Country OR Working Capital ................ $49,999
Goldin Artisan OR Working Capital ................ $10,410
Cheese, LLC
Michael Steven OR Working Capital ................ $49,992
Mega
Oregon Coastal OR Working Capital ................ $100,000
Flowers
Champoeg Creek OR Working Capital ................ $49,990
Farm
Morale Orchards, OR Planning ................ $39,909
LLC
Stoller OR Working Capital ................ $49,792
Vineyards, Inc.
Tad Buford & OR Working Capital ................ $30,824
Karen Finley,
Queen Bee Honey
Company
Southern Oregon OR Planning Grant ................ $22,550
Winery
Association
(SOWA)
Wild Wines, LLC OR Working Capital ................ $93,572
Rainshadow OR Working Capital ................ $49,999
Organics
Wayne Hutchings OR Working Capital ................ $24,400
Brenda Carter PA Working Capital ................ $3,000
North Mountain PA Working Capital ................ $26,860
Pastures
Wholesome Dairy PA Working Capital ................ $49,990
Veterinary
Willow Brook PA Working Capital ................ $3,730
Farms, LLC
Glenn R. Cauffman PA Working Capital ................ $80,000
Keystone Beef PA Planning ................ $35,150
Marketing
Network
Endless Mountains PA Planning Farmer or $37,450
Farm Fresh Rancher
Cooperative Cooperative
Christian Klay PA Working Capital ................ $24,888
Winery
Fertile Grounds PA Working Capital ................ $300,000
Shade Mountain PA Working Capital ................ $49,999
Winery (SMW)
Roberto Atienza PR Working Capital ................ $300,000
DBA Hacienda San
Pedro
Carlos Gonzalez PR Working Capital ................ $150,000
dba Finca
Gonzalez
Apiarios PR Working Capital ................ $100,000
Caraballo, Corp.
JJJ Ranch, Inc. PR Working Capital ................ $300,000
Bananera Hermanos PR Working Capital ................ $250,000
Marrero, Inc
Esmerelda SC Planning ................ $100,000
Sandoval; Del
Valle Fresh,
Inc.
Jimmy Forrest SC Working Capital ................ $299,852
Farm Inc.
Hickory Bluff LLC SC Working Capital ................ $42,907
Jackson Winery SD Working Capital ................ $300,000
and Vineyards,
LLC
Wild Idea Buffalo SD Planning ................ $17,500
Company
Sarah Bellos TN Planning Capital ................ $39,600
Cumberland TN Working Capital ................ $43,276
Farmer's Market
(CFM)
The Fullen TN Planning ................ $95,000
Brothers Farm
Johnson Backyard TX Working Capital ................ $49,950
Garden
San Angelo TX Planning ................ $95,000
Bioenergy
Facility
Rangeland TX Working Capital ................ $300,000
Restoration
James Clinton TX Working Capital ................ $120,900
Hodges DBA
Sterling Lamb
Texas Daily TX Working Capital ................ $200,000
Harvest
Panhandle TX Planning ................ $62,630
Agricultural
Producers LLC
Herber Valley UT Working Capital ................ $300,000
Artisan Cheese
Scott G. Smith UT Working Capital ................ $22,319
Utah Pork UT Working Capital ................ $300,000
Producers
Association
Cornaby's LLC UT Working Capital ................ $239,412
Riley's Farm UT Working Capital ................ $22,328
Fresh LLC
The Homeplace VA Working Capital ................ $208,571
Vineyard, Inc.
Virginia Wineries VA Planning Farmer or $100,000
Association Rancher
Cooperative Cooperative
Rosemont of VA Working Capital ................ $300,000
Virginia, LLC
Virginia VA Working Capital ................ $149,125
Wineworks
Messick's Farm VA Planning ................ $60,000
Market
Dairy Energy Inc. VA Planning ................ $100,000
Springview Farm VA Working Capital ................ $37,250
LLC
Baker, Inc. VA Working Capital ................ $110,000
AgriBerry, LLC VA Working Capital ................ $300,000
Grayson Natural VA Working Capital ................ $280,735
Foods
Virginia Aqua- VA Working Capital Farmer or $300,000
farmers Network, Rancher
LLC Cooperative
Kingdom Creamery VT Working Capital ................ $300,000
Green Mountain VT Working Capital ................ $300,000
Organic
Creamery, LLC
The Success VT Planning ................ $15,480
Factor
Paul Lisai VT Working Capital ................ $47,869
Tamarack Tunis VT Working Capital ................ $49,999
Louisa Conrad VT Working Capital ................ $49,057
Hall Home Place, VT Working Capital ................ $24,389
LLC
Boston Post Dairy VT Working Capital ................ $38,201
Margorie and VT Working Capital ................ $32,547
Brett Urie
Gateway Milling WA Planning ................ $99,425
Little Farms, LLC WA Working Capital ................ $49,726
BellWood Acres WA Working Capital ................ $150,000
Distilling
Project
Northwest WA Working Capital ................ $300,000
Agriculture
Business Center
Tachira, LLC WA Working Capital ................ $300,000
Melissa Moeller WA Working Capital ................ $38,367
Skagit Fresh WA Working Capital ................ $49,900
Natural Beverage
Company
Knutzen Farms, LP WA Planning ................ $48,000
Sheperd Song WI Working Capital ................ $300,000
Farms LLC
Lost Lake Bound, WI Working Capital ................ $34,700
LLC
Kelley Country WI Working Capital ................ $300,000
Creamery
Richard L. WI Working Capital ................ $49,999
Walders
Wisconsin Sheep WI Planning Farmer or $17,865
Dairy Rancher
Cooperative Cooperative
Harmony Specialty WI Working Capital ................ $300,000
Dairy Foods, LLC
LaClare Farms WI Working Capital ................ $300,000
Specialties, LLC
Four Elements WI Working Capital ................ $283,948
Organic Herbals
LLC
Weber's Farm WI Working Capital ................ $300,000
Store, Inc.
JFBHayLLC WI Working Capital ................ $300,000
Tony Koyen WI Working Capital ................ $300,000
Farming Inc.
Wisconsin WI Working Capital Farmer or $300,000
Cranberry Rancher
Cooperative Cooperative
Jolivette Family WI Working Capital ................ $300,000
Farms Inc.
Gingerbread WI Working Capital ................ $300,000
Jersey LLC
Community WI Working Capital Farmer or $200,000
Farmers' Co-Op Rancher
(AKA CFC) Cooperative
Ellsworth WI Working Capital Farmer or $300,000
Cooperative Rancher
Creamery Cooperative
Marieke WI Working Capital ................ $300,000
Penterman,
Holland's Family
Cheese LLC
Lakeshore Forest WI Working Capital ................ $300,000
Products, Inc.
George R. Crave; WI Working Capital ................ $300,000
Crave Brothers
Farmstead
Cheese, LLC
Gensing and Herb WI Working Capital ................ $300,000
Co-op
Johnson Timber WI Working Capital ................ $300,000
Corporation
Westby WI Working Capital Farmer or $300,000
Cooperative Rancher
Cooperative Cooperative
African-Style WI Working Capital ................ $300,000
Dried Fish
Millet Supply, WI Working Capital ................ $300,000
LLC
MacFarlane WI Working Capital ................ $300,000
Pheasants, Inc.
Krueger Lumber WI Working Capital ................ $300,000
Company
Hsu's Ginseng WI Working Capital ................ $300,000
Enterprises,
Inc.
Bloomery WV Working Capital ................ $49,000
Plantation
Distillery, LLC
------------------------------------------------------------------------
______
Submitted Letter by Walter B. McCormick, Jr., President and Chief
Executive Officer, United States Telecom Association
April 24, 2012
Hon. Timothy V. Johnson, Hon. Jim Costa,
Chairman, Ranking Minority Member,
Subcommittee on Rural Development, Subcommittee on Rural Development,
Research, Biotechnology, and Research, Biotechnology, and
Foreign Agriculture, Foreign Agriculture,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Dear Chairman Johnson and Ranking Member Costa:
Thank you for the opportunity to provide the views of the United
States Telecom Association (USTelecom) in advance of the Subcommittee's
upcoming hearing on the telecom and broadband loan programs
administered by the Rural Utilities Service (RUS). As the Subcommittee
begins to craft the rural development component of the upcoming
reauthorization of farm programs, this is a particularly important and
timely hearing that allows supporters of RUS loan programs to explain
their continuing value to rural America and to dispel certain myths
disseminated by detractors of these programs.
USTelecom represents innovative broadband companies ranging from
some of the smallest rural telecoms in the nation to some of the
largest companies in the U.S. economy. Our members offer a wide range
of advanced broadband services, including voice, Internet access,
video, and data, on both a fixed and mobile basis. The vast majority of
our member companies are rural providers. Many are small businesses
serving small communities. They are proud members of these communities
and deeply committed to their future development. What unites our
diverse membership is our shared determination to deliver broadband
services to all Americans--regardless of their location.
USTelecom members appreciate the strong support the Agriculture
Committee has provided for RUS telecommunications programs since their
inception in 1949. RUS endures because it is a brilliantly conceived
public-private partnership in which the borrowers are the conduits for
the Federal benefits that flow to rural telecom customers--the true
program beneficiaries. The targeted assistance offered by the RUS
broadband and telecommunications loan programs remains essential to a
healthy and growing rural economy and contributes to the provision of
universal communications services comparable to those found in urban
areas. In fact, the perfect repayment record of borrowers from the
telecommunications loan program means these loans actually make money
for the government and contribute to deficit reduction.
RUS Broadband Loan Program
Attention has focused in recent years on the implementation of the
RUS Broadband Loan program. The program was created in the 2002 Farm
Bill to provide loans specifically for broadband deployment in unserved
areas. In May 2007, USTelecom appeared before this Subcommittee and
raised concerns with the implementation of the original program,
particularly about broadband loans being provided in urban areas and in
areas with multiple existing broadband providers.
USTelecom worked closely with this Subcommittee during development
of the 2008 Farm Bill, and as a result, Congress improved the targeting
of RUS Broadband Loan program funds by narrowing the definition of
``rural'' so that suburbs and subdivisions near cities no longer
qualify for loans, and by prioritizing lending to areas with little or
no existing broadband service. This means that top priority is given to
loan applicants who offer to provide broadband service to the greatest
proportion of households without service.
Since passage of the last farm bill in May 2008, USTelecom, like
many others, was distressed by the agency's delay in issuing the
regulations required to implement the changes in the program. RUS did
not release the interim-final rules implementing Congressional reforms
to the program until March 2011. Shortly after the release of those
interim-final rules it became clear that disbursements from the FCC's
High-Cost Universal Service program were going to be dramatically
reformed. As a result, RUS is now in the process of updating its
financial models to account for these coming changes, and rural
carriers are being asked to withhold applications until these financial
models are updated. Others that have already submitted applications,
but have not yet had their applications approved, are being asked by
RUS to resubmit their applications in light of the current and pending
changes in High-Cost Universal Service support. While we are certainly
frustrated by these delays, there remains a continuing need for the
Broadband Loan program, as we will explain in further detail below.
Unjustified Criticisms
We believe it is important for us to address head-on the
distortions being propagated by the program's detractors--many of whom,
we would hasten to add, typically have no desire to provide broadband
service beyond the denser populations found in rural town centers.
First, some detractors point to a 2009 Department of Agriculture
Inspector General (IG) review of the program as justification for its
termination. A closer reading of that report, though, shows it is a
review of the broadband loan program as it existed before the program
changes required by Congress in the 2008 Farm Bill. In fact, the IG
report acknowledges that Congressional reforms contained in the 2008
Farm Bill would have resulted in $862 million in loans issued by RUS
between the IG's initial 2005 report on the program and the passage of
the 2008 Farm Bill being ruled partially or completely ineligible for
funding.
Second, some critics have deliberately conflated entirely separate
programs to make their assertions. They often point to examples of
over-building of existing broadband networks funded from the $2.5
billion Broadband Initiatives Program (BIP), administered by RUS, and
created by the 2009 American Recovery and Reinvestment Act. A separate
program, BIP was not required to follow the program modifications to
the Broadband Loan program required by Congress in the 2008 Farm Bill.
To be clear about this point, in the period between passage of the 2008
Farm Bill and the release in March 2011 of the program's interim-final
rules, no loans were issued under the Broadband Loan program.
Third, certain detractors also suggest Congress failed in 2008 to
limit providers from receiving support for building out broadband in
areas where it is already available. To address this issue, they
propose to prohibit loans to build out broadband or upgrade facilities
in areas where it is already available at certain speeds to more than
25 percent of existing residential households. Actually, Congress did
address this issue and there is no evidence that the Congressional
policy changes are insufficient. In fact, such a proposal discriminates
against the hardest-to-serve households in rural areas and could
prevent consumers and businesses located in areas outside of a town
center from ever receiving broadband service.
Finally, some have suggested the RUS Broadband Loan program and the
High-Cost Universal Service program are duplicative. In fact, the two
programs are complementary--each an important element in deploying
cutting edge communications services to rural America. While the RUS
Broadband Loan program supports only one-time capital investments to
provide broadband in hard-to-serve rural areas, the Universal Service
program provides support to ensure that affordable and reasonably
comparable communications services are available to consumers and
businesses in high-cost rural areas.
Going Forward
As this Subcommittee is well aware, there are areas of our nation
that still lack access to broadband service. The recession that began
subsequent to the passage of the last farm bill has made it
increasingly difficult for small companies to obtain infrastructure
improvement loans through the private sector.
In addition, it would be premature to further amend the Broadband
Loan program at this time. RUS only issued the interim-final
regulations in March 2011 to account for the program changes required
by Congress in the 2008 Farm Bill, before the program was suspended
again due to pending changes in the FCC's High-Cost Universal Service
regulations. A reasonable period of time is required to reconcile the
changes brought about by both these developments.
The investment in the most modern and sophisticated equipment
available at the premises of businesses, schools, or clinics is wasted
if the local communications provider cannot afford to build the
facilities that quickly transport the large amounts of voice, video,
and data these entities generate. Further, the government's
contribution through these loan programs is leveraged by the equity,
technical expertise, and dedication of local telecom companies, as well
as the additional tax revenues generated by the jobs and economic
development resulting from the provision and upgrading of broadband
infrastructure via loans.
Again, thank you for the opportunity to provide our views on these
important programs. RUS telecom and broadband program participants take
seriously their obligations to their government, their nation, and
their subscribers. They will continue to invest in our rural
communities, use government loan funds carefully and judiciously, and
do their best to assure the continued affordability of advanced
communications services in rural America.
Sincerely,
Walter B. McCormick, Jr.
______
Submitted Questions
Response from Hon. Donald Larson, Commissioner, Brookings County, South
Dakota; Chairman, National Association of Counties, Agriculture
and Rural Affairs Steering Committee *
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* There was no response from the witness by the time this hearing
went to press.
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Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. You have requested that we give priority to
applications which are submitted through a regional plan. Why should
Congress authorize a regional plan to move ahead of an application from
an individual community which is just as much in need, but for a
variety of reasons may not be able to participate in a regional
collaboration?
Question 2. In your testimony you highlighted the local and
regional food programs. You also suggested that programs across the
farm bill should be on equal footing. In your view, why should there be
a specific program to devote funds to a narrow purpose, as opposed to
ensuring it is a qualified activity under the general business grant
and loan programs?
Question 3. Many programs were designed in the past when funding
was more available and the resources could be narrowly devoted to
certain activities. In this current budget environment, which programs
would you suggest should be cut or eliminated so the programs which
provide the true core economic development assistance can be focused
on?
Question 4. Your testimony discusses a great need for access to
healthy foods. But in the U.S. supply chains are among the strongest in
the world and food is the most available and affordable in the world.
Exactly what market failure are you suggesting needs to be addressed
with local and regional food chains as it relates to healthy food
access?
Question 5. You mentioned technical assistance and its importance
to ensuring the viability of projects over the life of the loan. Do you
believe every program needs to devote scarce resources to technical
assistance? What non-Federal resources could fill this need?
Question 6. You called for expanded authority in the Community
Facilities program to allow grants for technical assistance. How would
those funds be used, and why should it come out of funds that would
otherwise be available to fund additional critical community facilities
such as first-responder equipment? Which eligible activity would you
suggest be removed from the program to offset this new eligible
purpose?
Question 7. You call for a more locally-driven process at USDA. Is
USDA adequately staffed for such a shift? How would the programs be
overseen?
Question 8. You mentioned that you want local governments included
as eligible entities in the relending programs. How would conflicts of
interest be managed when governments are both the lender and regulator?
Are the same structures in place in every entity which would be made
eligible under this proposal? How would internal controls be verified
by USDA to prevent abuse?
Question 9. Your testimony listed a number of organizations you
feel should be eligible regional partners. Could you please clarify
which partners MUST be included, and which SHOULD be included if they
exist in the region?
Question 10. Your third suggestion for regional cooperation
mentions an additional priority for communities which demonstrate cost
savings and reduced duplication. How would you envision these savings
be demonstrated for USDA to evaluate?
Question 11. What prevents USDA from working with their state
partners each funding year to approve projects which fill in the gaps
of regional plans?
Question 12. How do you guarantee the strong urban and suburban
voices in regional discussions do not drown out the needs of rural
communities when regional plans are formed?
Question 13. You mentioned that technical assistance providers'
capacity needs to be strengthened; however, one of the qualifications
should already be that those providers have the capacity to justify
receiving Federal funds in the first place. Are you suggesting that
USDA should train people so that they then are eligible to receive
Federal funds?
Response from Leanne Mazer, Executive Director, Tri-County Council for
Western Maryland; on Behalf of National Association of
Development Organizations
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Regional plans are put in place for up to 5 years, yet
sometimes adjustments must be made. What recourse do small communities
have to adjust their priorities in a regional plan when leadership
changes or other factors justify such a revision?
Answer. As resources at the state and local level continue to
diminish, local communities across rural America like ours are joining
together to create comprehensive regional plans that examine their
region's existing assets and needs across multiple sectors including
comprehensive economic development, workforce, transportation,
healthcare, and pre-disaster mitigation.
These strategies are essential because they help rural regions to
prioritize their needs, ensure that locals coordinate and are vested in
the process and projects, and help leverage every possible asset and
dollar to improve economic conditions in their communities. These
regional strategies also encourage multiple rural communities to think
more strategically and creatively about how they use Federal, state,
and local dollars. Partnering regionally helps us to avoid duplication
of effort and we are able to better share our resources and determine
which projects will increase our communities' economic viability.
This type of coordination does not happen overnight and can be a
complex and arduous process to achieve agreement across multiple
jurisdictions. But during a time of increase scrutiny on Federal
investments, this type of vetting and coordinating process by local
public, private and nonprofit sector leaders should be encouraged by
USDA and across the Federal Government.
Although some of the existing planning frameworks like the U.S.
Economic Development Administration's Comprehensive Economic
Development Strategies (CEDS) are 5 year plans, they can be updated
annually based on changing needs and conditions. These strategies are
not meant to be restrictive or static plans, but are intended to be
living documents that help guide communities as they strive for growth.
Just as the U.S. military prepares strategic plans and U.S. private
companies create business plans, the regional economic development
plans can serve as a roadmap for communities like ours to achieve
shared goals. Routine plan updates can ensure that communities'
priorities are addressed and allow for course corrections as strategic
plans are implemented.
If a community determines to shift their priorities in a regional
plan, or if a community is not covered by a regional planning
framework, they should still be able to submit proposed projects for
consideration by USDA.
Under current law, there is no incentive for rural communities to
coordinate on USDA rural development projects. USDA should encourage
communities to work together to best use Federal dollars.
Question 2. If communities decide they would rather op-out of the
regional plan where they would otherwise be included, how would their
application be treated under what NADO has considered for regional
priorities if they decide to change their local priorities?
Answer. If a community decides to op-out of the regional plan, or
is not covered by a regional plan, they should be allowed to submit
their application for USDA consideration under the normal system. USDA
already makes decisions on where and how to invest public dollars.
Whether a community is part of a regional plan or not, they will still
have to compete against other projects. Communities that opt-out of a
regional plan or strategy should not be penalized, but at a time where
Federal dollars are increasingly scarce, USDA should encourage
communities to work together to determine how they can leverage
existing assets with Federal dollars.
E-Mail Submitted by Fitzhugh Elder, National Rural Water Association
May 17, 2012
Mike Dunlap,
Staff Director,
Subcommittee on Rural Development, Research, Biotechnology, and Foreign
Agriculture,
House Committee on Agriculture.
Mike,
I hope all is well. Frank's responses to the QFR's are attached.
Please let me know if you need anything else.
As you draft the farm bill, in addition to the circuit rider
language we have discussed, I would like to also request that you keep
7 U.S.C. 1926(b) as it is currently written. The purpose of 7 U.S.C.
1926(b) is to protect the integrity of the Federal Government's
outstanding loans by preventing any portion of a water system to be
forcibly annexed or cherry picked by another system or municipality.
Such annexation would result in the remaining customers being solely
responsible for repayment of the loan, with fewer customers to share
the burden--resulting in a higher cost per customer and greater risk of
default. This dilemma is of special concern because USDA loans are only
made available to low and moderate-income rural communities based on
household per capita income that cannot obtain commercial credit. It is
also important to remember that USDA provides both loan and grant to
systems based on their financial situation and proposed rate structure
at the time the application is processed. Any loss of projected revenue
caused by loss of territory jeopardizes this carefully constructed
financial arrangement. The 7 U.S.C. 1926(b) provision is an essential
stabilizing element and is one of the reasons that the program works so
well.
Please let me know if you have any questions or concerns. Thank
you.
Fitzhugh Elder,
National Rural Water Association.
Attached Response from Frank Dunmire, Executive Director, Illinois
Rural Water Association; on Behalf of the National Rural Water
Association
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Mr. Dunmire and Mr. Stewart, you both talked about the
repayment rates of water loans, using the lifetime default rate of
1.02% and a delinquency rate of 0.18% respectively. Just so we are
comparing the same numbers, could you both clarify whether you mean to
refer to the same rates, or if there is a reason you have described two
different aspects of the programs?
Answer. I believe Mr. Stewart and I were using two different
measurements of the water and waste loan programs to make a similar
point. The default rate is a measure of the nominal lifetime defaults
as a percentage of disbursements, while the delinquency rate is a
measure of the number of late payments as a percentage of the number of
loans. I believe that both numbers are demonstrative of a very well-
managed loan program. This is particularly true when considering that
USDA is a lender of last resort.
Question 2. If the current program limits require USDA focus on
towns of less than 10,000, and in reality the program focuses on towns
of less than 5,000; would there be any value in opening up the
eligibility definitions to larger cities?
Answer. No. In fact, I feel that it would have an adverse effect on
the smaller systems. The current trend that shows funding ``focusing''
on towns of less than 5,000 should be considered as an example of how
well the current limits are working. As a general rule of thumb larger
municipalities have larger project needs and consequently require
larger amounts of funding. To include larger municipalities in this
program, in my opinion, would only serve to dilute the RD funding pool.
Question 3. What are some of the current regulatory issues faced by
small towns as they work to provide clean water?
Answer. Below are a few examples of the regulatory requirements
small towns struggle with. Please note that this is not a comprehensive
list.
a. Reporting: For example, Consumer Confidence Reports--each year
suppliers are to supply their customers with a consumer
confidence report (CCR) that contains information about their
drinking water. Currently there are several ways to meet this
regulation (i.e., direct mail, publish in newspaper, or in the
case of really small systems less than 500--notify them of its
availability). What is not an acceptable means is posting on a
website. There is discussions within USEPA and legislation
introduced (H.R. 1340 & S. 1578) to repeal the mailing
requirement of the CCR rule.
b. Costly standards without flexible implementation for small
communities: For example, Arsenic--This is one of the many
``contaminants'' that Ranking Member Costa referred to in his
opening remarks. Here is a naturally occurring element that can
be found in water supplies throughout the country. When USEPA
lowered the allowable concentrations to 10 parts per billion it
put many systems into a state of non-compliance and they were
forced to put in treatment. The treatment that most opted for--
reverse osmosis--was not only expensive to install but is
expensive to run as well.
c. Complexity of Federal Regulations: For example, the Lead and
Copper rule--although the water system delivers lead/copper
free water to the end-user they are still being asked (or
forced) to take responsibility for what happens to the water
once it leaves the systems pipes.
Question 4. Can you offer any insight into the application process,
and how USDA might be able to coordinate with the EPA to streamline
applications and timing of engineering requirements in the process?
Answer. The answer is quite simple--communication. In Illinois the
predominant funding entities (Rural Development, IEPA, Department of
Commerce and Economic Opportunity, and the Illinois Finance Authority)
will meet on a quarterly basis. Also attending these meetings are
Illinois Rural Water Association and RCAP. The sole purpose of these
meetings is to coordinate project funding among the different agencies
and identify those systems that might benefit from technical assistance
visits.
Question 5. With the limited funds available, how would water
applications fit into the regional concept discussed at the hearing,
particularly in light of the over $3 billion backlog?
Answer. Obviously regionalization is a very good tool in lowering
overall costs of supplying water to an area or treating wastewater
generated in a region. However, getting municipalities or systems with
their own separate identities to ``buy into'' a regionalized concept is
very difficult. Illinois has met with some success in what we prefer to
call consolidation. In recent years several water treatment plants have
been constructed to serve a number of municipalities. In other words
they are wholesalers of water and the individual municipalities, co-
ops, etc. retain control over their distribution systems.
We support consolidation and regionalization. It has been one of
our core missions in expanding public drinking water systems to rural
communities. This has been a great benefit to rural households and
small communities. However the key principle in any successful
consolidation, is local support for the consolidation--and local
control on when and how they choose to consolidation. Rural Water has
led or assisted in more communities consolidating their water supplies
than any program, policy or organization. Again, when communities
believe consolidation will benefit them, they eagerly agree. However,
if communities are coerced to consolidate, one can almost guarantee
future controversy.
Question Submitted By Hon. Vicky Hartzler, a Representative in Congress
from Missouri
Question 1. With respect to the grant and loan applications for
water and wastewater systems, what are the primary needs for
communities which apply?
Answer. I can only speak to what I see here in Illinois but the
three top needs in Illinois are:
a. There are still large areas of rural Illinois that experience
either an inadequate supply of water or water of questionable
quality. Residents in these areas are forced to conserve as
much water as possible so the amount they have to haul from
town is kept to a minimum. A picture is worth a thousand words
and I would like to include this I downloaded from the Internet
that as a true example of how some rural Americans get their
drinking water--load it in a tank in the back of a pickup truck
and haul it home. You will find these municipal fill stations,
as they are called, are the busiest just before holidays and
any major forecasted storm. No one wants to run out of water at
those times.
b. As more regulations are passed by regulatory agencies, systems
that were once in compliance find they are no longer so and are
forced to determine the most cost effective way of satisfying
the new regulations. Some examples of this can be found above.
c. Replacing outdated system components. This can be anything from
a new water or wastewater treatment facility to any of the many
subcategories. Again, in Illinois, I have seen many systems
request funding that will replace water towers, water mains in
problem areas, treatment facility equipment, lift stations,
pump stations and the list goes on. Right now there seems to be
quite a need for new water towers as the ones built back in the
1930's begin to fail.
Question 2. What percentage of applications are addressing outdated
systems that are beyond their useful life?
Answer. According to USDA approximately 25% of applications
currently in the backlog are for renovation and replacement of water
systems.
Question 3. To what extent do new EPA regulations force communities
to upgrade their systems?
Answer. It has been my experience, that shortly after (and at times
even before) a new regulation is put in place communities will make
substantial requests for funding. Over the next few years that funding
``need'' is somewhat satisfied and then a whole new set of regulations
come along--resetting the cycle.
Question 4. Are new environmental challenges a factor?
Answer. New environmental challenges are a factor. For example,
current implementation of EPA nutrient reduction initiatives under the
Clean Water Act are requiring many communities to install costly new
treatment technologies.
Question 5. To what degree is need driven by growth of the
communities?
Answer. Certainly there are some projects that are being driven by
growth but for, the most part, they are the last to be funded through
RD.
Response from Robert B. Stewart, Executive Director, Rural Community
Assistance Partnership
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Your testimony seems to indicate that a small town very
much in need of a water system would not be disadvantaged if a priority
is given to a regional application. Could you please clarify how a
priority can be given to a project, but that in doing so another
project would not be disadvantaged?
Answer. The priority point system used by Rural Development ensures
that varying considerations are given weight when considering the merit
of a project application. Funding decisions are decided by a
combination of factors, any one of which can only influence the funding
decision to a small extent. RCAP proposes that the agency give a small
number of priority points for projects that can demonstrate that they
have analyzed options for regionalization. Regionalization is not
feasible for all water systems, so a system that awards points for
projects that can demonstrate that they have weighed the costs and
benefits of regionalization--even if they ultimately decide that a
regional project is not feasible--will encourage small towns to
consider all available options, including regionalization. The extent
to which this would impact other applicants is limited because it is
only one of many factors considered by the agency. Systems facing
public health risks or in need of emergency repairs would still be
getting priority points under the existing criteria and would therefore
continue to offer competitive applications. Those that would score high
under the existing criteria and consider regionalization as a solution,
however, would be given higher priority than those that would score
high under the existing criteria and do not consider regionalization as
a potential solution.
Question 2. USDA Rural Development has a strong track record
regarding its effectiveness at providing rural areas with electricity,
water, sewer, and community facilities. Would the Federal Government be
equally as effective providing economic planning and development as
versus infrastructure?
Answer. RCAP does not view infrastructure and economic development
as mutually exclusive. In order to support small businesses and
industry, towns need to meet their basic infrastructure needs. Those
infrastructure components form the foundation on which local economies
are built, and are an integral part of rural economic development. As
mentioned, Rural Development's programs have a strong track record in
those fields, which has helped to foster economic growth by providing
the foundational infrastructure necessary to support industry and
entrepreneurs. USDA Rural Development currently operates a variety of
economic development programs such the Business and Industry Guaranteed
Loan (B&I) Program; the Intermediary Relending Program (IRP); the Rural
Business Enterprise Grant (RBEG) Program; and the Rural Economic
Development Loan and Grant (REDLG) to name just a few. These programs
allow local, rural communities, nonprofit and for-profit organizations
to obtain financial assistance (mainly loans along with very modest
grant programs) to support development activities created by and for
these local communities. RD business programs are not directive in
regards to the initiatives selected by the local communities and
businesses and have operated successfully for many years.
Question 3. Your testimony suggested that a town of 10,000 or more
could seek funding in the bond market. What rates would a town of that
size expect to find in the bond market?
Answer. The likely bond rate for any municipality depends on a
variety of factors: population, property values, industrial customer
base, indebtedness of the town, and credit history, among others. As
such, the rates faced by towns from 10,000 to 50,000 in population
would vary depending on the characteristics and history of the
communities involved. Typically for these size communities that already
have some infrastructure developed and are looking to make improvements
or expansions to their services, the rates would be 4\1/2\% or less in
the open market for communities without a current bond rating. Smaller
communities and those without any current water and wastewater
infrastructure have no real options other than financing through RD or
SRFs. Also of note is the increased willingness of many local banks to
finance infrastructure projects for these mid-sized communities at
terms of up to 15 years with comparatively low rates and much reduced
processes costs.
Question 4. You mentioned the economic activity generated by each
dollar of Federal investment. Could you elaborate on how that is
calculated, and how the tax base is expanded after these investments?
Answer. The figures cited in my testimony--that every water and
wastewater construction dollar generates nearly $15 of private
investment and adds $14 to the local property tax base--come in part
from a study by Fagir S. Bagi, an economist from the Economic Research
Service at USDA that was published in the Winter 2002 issue of ``Rural
America'' (Vol. 17, Issue 4). Recent studies have reached similar
conclusions, including a report by the Cadmus Group for the U.S.
Conference of Mayors in 2008 that estimates that every $1 we invest in
water/sewer infrastructure increases GDP by $6.35 in the long term and
that every water utility construction dollar generates nearly $15 of
private investment and adds $14 to the local property tax base. I am
happy to provide copies of these reports at your request.
Question 5. You suggested that the Community Facilities program
should be opened up to planning grants. When budgets are already being
strained and the funds available to the program for critical community
investments are even more limited, how does it make sense to instead
use the money for planning and writing grants?
Answer. In my testimony, I suggested that the Community Facilities
(CF) program be opened to Technical Assistance grants, not planning
grants. Technical assistance (TA) involves helping both with the nuts
and bolts of facility construction and operation, and also in
developing local leadership capacity to handle the financial and
managerial side of project development. Allowing TA for the CF program
would enable nonprofit TA providers to work directly with communities
receiving RD loans and grants to get their finances in order and ensure
that the taxpayers' investment is repaid. Part of the technical
assistance provided may include planning, but the funding would be
available for a much broader slate of assistance, rather than simply
planning.
It makes sense to use a small portion of the limited funds for TA
because it expands the pool of available resources for communities and
ensures that taxpayer dollars that are loaned to communities are
repaid. Over the nearly 40 years that RCAP has provided TA in the
water/wastewater field, we have leveraged small amounts of Federal
dollars into millions of dollars of investment directly into rural
communities. Over the past 4 years (FY08-FY11), RCAP has helped Rural
Development water/wastewater project communities obtain over $360
million in project financing, a return of more than $15 for every
dollar we receive from the agency. By replicating the success of the
water/wastewater program, a CF TA program can stretch Federal dollars
by attracting resources and investment directly to CF projects and
developing the financial and managerial capacity of local officials to
ensure that both Federal and non-Federal loans are repaid in full.
Question 6. You talk about expanding technical assistance in
several parts of your testimony. Can you offer any empirical evidence
to substantiate your claim that diverting funds away from programs and
into technical assistance makes scare resources go even farther?
Answer. As mentioned in the answer to the previous question, over
the past 4 years, RCAP has leveraged over $15 of investment directly in
community projects for every dollar of funding we receive from Rural
Development. We acknowledge that it is easier to attract investment to
water infrastructure, because there are ratepayers, and thus a
guaranteed revenue stream, but even if TA providers are able to help CF
project communities attract only \1/2\ as much financing for every
Federal dollar ($7.50:1), the increased resources will help stretch
scarce Federal funds while providing critical community facilities that
support economic development and job creation in rural areas. TA
providers are able to foster relationships among small communities,
private lenders, state and local governments, and Federal agencies to
maximize the resources available to communities and attract non-Federal
capital to these projects that help expand the reach of Federal
programs.
Question 7. Could you describe in greater detail the comprehensive
Federal approach to Technical Assistance you mention in your testimony?
What is the difference between what you are suggesting and simply
ensuring USDA is doing their job?
Answer. By comprehensive technical assistance, I mean using the
success of the water/wastewater TA program as a model for TA programs
for the rural development programs that don't currently have one, such
as for Essential Community Facilities or the Broadband Initiatives
Program. For rural communities across America, simply making financing
programs available, whether its loans, loan guarantees or grants, is
not sufficient to implement meaningful development programs that
improve the quality of life and economic opportunities for rural
Americans. Nonprofit technical assistance organizations such as RCAP
have the on-the-ground experience and expertise to guide rural
communities towards those development programs that most closely
respond to their unique needs while ensuring that all Federal funding
is used in areas of greatest need and to affect the greatest economic
benefit for those communities.
Question 8. You mentioned that you have used pre-development loans
to assist communities. Of the over $3 billion in projects stuck in the
backlog at USDA, how many of those pending applications were put
together with pre-development loans?
Answer. Absent a detailed review of each state's applications it
would be difficult to accurately characterize the number of pending
applications that used pre-development loans. Notably RD applications
require a significant amount of work to be accomplished prior to a
commitment of funds by RD. The communities and their engineers are
therefore burdened with finding the funds for requirements such as the
preliminary engineering report, environmental assessment or site
acquisition. While some engineering firms can carry these costs
(sometimes for a year or longer) until the project is funded, many or
most cannot. For the smaller communities and for those that are
planning for first-time water or wastewater systems, this places a
major financial burden on the systems and can result in delays for
critical projects or an outright inability to proceed with the
application. For instance, in Texas the majority of current
applications were made possible by accessing pre-development loans
while in Mississippi the incidence of these loans is much smaller. The
Revolving Loan Fund authorized by the farm bill assists with meeting
this need, but only for a small percentage of applicants. Similar to
the response earlier on the question regarding bond financing,
communities without existing systems are unable to obtain pre-
development loans from traditional financial institutions and few of
these communities have the assets to pay for these costs up-front.
Question 9. Mr. Dunmire and Mr. Stewart, you both talked about the
repayment rates of water loans, using the lifetime default rate of
1.02% and a delinquency rate of 0.18% respectively. Just so we are
comparing the same numbers, could you both clarify whether you mean to
refer to the same rates, or if there is a reason you have described two
different aspects of the programs?
Answer. The delinquency rate I referenced is the figure reported by
USDA-RD Water and Environmental Programs at the release of their annual
activity report for fiscal year 2011. In the Annual Activity Report
itself, the agency writes that it ``[m]aintained a less than one
percent delinquency rate on the portfolio of more than 18,000 loans.''
In other words, of WEP's current portfolio, the agency reported that
only 0.18% of borrowers are delinquent. The lifetime default rate, as
cited by Mr. Dunmire, is a different statistic, though both show that
the program has been enormously successful and provide an example of
the efficacy of technical assistance programs.
Response from David G. Rozzelle, Executive Vice President, Suddenlink
Communications; Member, National Cable Telecommunications
Association, Rural and Small System Operator Committee
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. Could you describe how many of your members have
accepted the responsibility of being the carrier of last resort to
ensure every American has access to phone service which is now shifting
into access to broadband service? How many of your members participate
in the RUS broadband loan program?
Answer. State-imposed carrier of last resort obligations originated
decades ago to ensure that telephone companies in rural areas would
continue to offer basic voice connections to residents in those areas.
Carrier of last resort generally is not an option that companies are
free to accept or reject. Rather, it is a set of rights and obligations
imposed by states. Most states imposed these obligations on telephone
companies because they were monopoly providers and therefore were
expected to serve all customers, in some cases with the aid of Federal
subsidies. Conversely, most states have not imposed these obligations
on new entrants, including cable companies. In addition, because cable
operators generally do not receive Federal or state subsidies, there
may be some extremely high cost areas that telephone companies alone
are able to serve as a result of government subsidies.
Cable broadband connections also enable consumers to access online
voice-over-IP (VoIP) providers like Vonage--so consumers in areas
served by cable also have voice connectivity in this way. It is worth
noting that while many large and small cable operators have extended
voice and broadband service to many rural areas without the help of
government subsidies, the new FCC rules do not allow any opportunity
for competitive providers to obtain USF support in areas served by
rural telcos.
To my knowledge, only one of NCTA's members participates in the RUS
farm bill broadband loan program.
Question 2. In your testimony you suggested that USDA should
establish a speed threshold similar to that of the FCC. Do all your
members meet the 4 mega-bits per second threshold you mention in your
testimony at all times, even during times of peak usage, for all of
your customers?
Answer. On a customer specific basis, no provider, regardless of
technology, can meet a specified speed threshold at ``all times''--the
shared nature of mass market broadband services, and the Internet
itself does not allow such precision. In a recent report, however, the
FCC found that, on average, cable operators delivered 93 percent of
advertised download speeds and 108 percent of advertised upload speeds
during peak hours. Suddenlink monitors the performance of its network
closely to make certain we provide our customers with the experience we
have promised them.
While I can't vouch for each and every NCTA member, my
understanding is that NCTA's members as a group endorse the definition
of broadband contained in the FCC's National Broadband Plan, which is 4
Mbps downstream.
Question 3. Is there a need for rural broadband investments? How
are your members reaching the last, unserved portion of rural
households?
Answer. Suddenlink and NCTA strongly support the availability of
broadband funding for unserved rural areas. Quality broadband services
should be available to all regions of the country, including the least
densely populated areas of the country. Broadband is a crucial driver
of economic recovery and global competitiveness. Broadband links rural
America to the rest of the country and the world, creates jobs,
improves educational opportunities, and delivers health care more
efficiently. Rural broadband funding programs should focus on bringing
broadband to those rural consumers in areas where it is uneconomic to
serve.
Cable operators and other providers are investing millions of
dollars to bring the most advanced services to rural customers, and to
reach those unserved areas if they can with private investment dollars.
As I said in my direct testimony, in the past 3 years, Suddenlink has
invested $350 million above our normal capital spending levels to
improve our network and our services. As a result, we provide speeds up
to 107 Mbps to many of our customers, including customers in Ripley, WV
(2010 population 3,252) and Pomeroy, OH (2010 population 1,852).
Another cable operator, Sjoberg's Inc., has connected the schools in
the Thief River Falls, MN area (pop. 8400) with fiber links operated at
100 Mbps, as well as a 1 gb fiber-based network for the City of
Warroad, MN (pop. 1300) that ties together the City Hall, Fire
Department, Police Department and the Utility Department. Sjoberg's, in
fact, is building out to many low density areas within its footprint
(less than five homes per mile of plant) with fiber-to-the-home
technology and is providing 5, 8 and 11 Mbps speeds.
As noted above, we acknowledge that there are areas which remain
unserved, and where Federal and state subsidies may be needed to help
provide broadband service.
Question 4. Were the three studies referenced in your testimony
conducted by an independent group, or were they commissioned? How much
of the reluctance for investment in broadband inferred by those studies
is actually due to the uncertainties surrounding the FCC reform orders?
Answer. As noted in my testimony, the studies were commissioned by
NCTA but were conducted independently by Navigant Economics. The case
studies demonstrate that millions of dollars in grants and loans have
been directed to areas where a significant majority of households
already have broadband coverage. According to the Navigant report, this
has resulted in an exceedingly high cost of $30,104 per each
incremental home passed in the studies
The reluctance to serve remote areas is a function of economics,
not regulatory policy. Unserved areas nearly always have a sparse
population that is insufficient to support the costs of building and
operating broadband facilities. Targeted and efficient government
support is the most appropriate means of extending broadband to those
areas. For example, the FCC is currently working on the Connect America
Fund which targets USF support to help bring broadband to unserved
households. USF reform and extending broadband service to unserved
areas are fully compatible goals.
Question 5. Your testimony focuses on the issue of `overbuilding.'
Yet you do not distinguish whether the alleged existing service is
directly comparable across examples, to the competing project, or even
sufficient to meet the needs of the community. Could you please list
for us each of the projects you feel were simply installing the exact
type and speed of service on top of the same speed and area of service?
What percentage would these be of all the broadband projects funded
through RUS?
Answer. By ``overbuilding,'' we mean government funding of an area
where a wireline or terrestrial wireless provider already offers
broadband service that meets or exceeds the FCC's definition. Scarce
taxpayer dollars should be put to work to extend broadband to areas
that lack broadband service at those speeds, rather than subsidizing
the construction or upgrade of an additional provider in an area that
is already served.
Additionally, because of the lack of transparency in the RUS
Broadband Loan Program, we have a hard time determining the exact
details of any of the overbuild projects and, thus, cannot determine
what percentage of the RUS broadband projects primarily serve areas
already served. It should be noted, however, that the 2009 report by
the Department of Agriculture Inspector General found that 34 of 37
applications granted (95%) were for ``areas where one or more private
broadband providers already offered service.''
Question 6. This Committee also expressed reservations with the way
that the ARRA was implemented, though we hoped that rural America would
benefit in spite of the rushed process. In your testimony, do you mean
to compare the BIP projects funded under the ARRA directly to the loan
program authorized in the farm bill?
Answer. While BIP funding is separate from the loan program
authorized under the farm bill, they are both implemented by RUS. RUS's
stewardship of BIP, like its implementation of the farm bill program,
demonstrated a failure to target funding to unserved areas despite
explicit direction to do so. Under both programs, many millions of
dollars in grants and loans have been made in areas where a significant
majority of households already have broadband coverage from one or more
broadband providers. This ongoing failure across multiple programs is
why we believe that RUS must be given clear and unambiguous direction
to ensure that broadband loan dollars are appropriately directed to
areas that lack broadband service.
Question 7. You suggested that RUS borrowers post quarterly reports
online. What information are you seeking through this concept?
Answer. We believe that it is important to hold recipients of
government support accountable for meeting the goals for which support
was provided. There should be transparency after the RUS awards money
to an applicant. Quarterly progress reports should detail the use of
the funds (e.g., is the money actually being used to extend plant to
unserved areas, or is it being directed at areas that already have a
broadband provider; is the money being spent in the manner that was
approved in the application?); status of the project; next steps; and
timeframe of completion. If an entity accepts public funding, it should
reasonably expect to have to provide full information about how those
funds are being spent, even if such data would be considered
proprietary by a privately-funded provider. Moreover, if support is
targeted to unserved areas--as it should be--there should be few, if
any, competitive concerns with respect to such disclosure.
Response from Mark Bahnson, Chief Executive Officer and General
Manager, Bloomingdale Communications; on Behalf of National
Telecommunications Cooperative Association; Organization for
the Promotion and Advancement of Small Telecommunications
Companies; Western Telecommunications Alliance
Questions Submitted By Hon. Timothy V. Johnson, a Representative in
Congress from Illinois
Question 1. You highlighted the fact that not all providers have
the same focus, and in fact some cherry-pick the concentrated, easier
to serve, and more lucrative areas. Does this approach fit into the
model of ensuring broadband service is provided universally?
Answer. No. Some opponents of the RUS telecommunication programs
and USF point to their ability to provide broadband service without RUS
loans or USF cost recovery. However, it's important to note that these
providers often fail to provide service to the most high-cost ``last
mile'' households and businesses, focusing instead on the concentrated
areas of a community or service area. This method of service fails to
provide broadband ``universally.'' On the other hand, rural telecom
providers often have carrier-of-last-resort obligations that require
them to serve all customers in their service territory--not just the
more densely populated, profitable towns and cities.
Without carriers-of-last-resort reaching outside the towns with the
help of this public-private partnership, there would be even more
unserved consumers in rural America--and the challenge of achieving
universal broadband would be greater than it already is. And if this
public-private partnership is undermined, then small rural telcos may
have no choice but to likewise abandon the ``countryside'' and retreat
to serving just within the ``in-town'' boundaries too.
Question 2. There are several programs operated by USDA which can
be used to deploy broadband and build community facilities to provide
public access to the Internet. These include the Community Facilities
Program and the Distance Learning and Telemedicine Program. Do you
think that there is an opportunity in these programs to consolidate the
authorities so that rural towns do not have to spend a great deal of
time trying to sort through a maze of different programs? Are there
other programs which could also be consolidated to reduce the confusion
on where to apply?
Answer. The presence of multiple USDA telecommunication programs--
each offering unique features--ensures flexibility that might not
otherwise be available under a more ``one-size-fits-all'' approach. For
example, a remote, high-cost community with no broadband service might
be best served with a Community Connect Program grant that makes
available a community center with computer access points. However,
another community without direct access to medical care may better
benefit from Distance Learning and Telemedicine Program development
funds to enhance their emergency service capabilities through
telecommunications technology. For example, rural educational
opportunities in Bloomingdale's service territory have been greatly
expanded because of a RUS Distance Learning grant, a RUS loan that
supported high-speed Internet deployment to the school, and the USF E-
Rate program, which helps schools ensure students have access to the
Internet.
Question 3. Some of the testimony others presented seems to
indicate that insufficient changes were made in the 2008 Farm Bill,
although those assertions rely on older OIG reports from the previous,
2002 Farm Bill. Given that the farm bill loan program has been stalled,
do you believe there is sufficient information to make such a claim?
Answer. No. Interim rules, which were required by programmatic
changes to the Broadband Loan Program in the 2008 Farm Bill to better
target resources, were not put in place until March 2011 (during which
time no new loans were approved). Since that time, the FCC's adoption
and ongoing consideration of changes to USF have created regulatory
uncertainty, dramatically reducing both the number of new Broadband
Loan Program applications and RUS's ability to finalize rules and
evaluate and approve new loans. As a result, the Broadband Loan Program
has been at almost a complete standstill since 2008. With virtually no
new loan projects available to assess the results of the 2008 Farm
Bill's reforms, now is not the time to place new restrictions on the
Broadband Loan Program. Though some providers that don't typically
serve rural areas want to dramatically restrict the program, it was
inoperable for 3 years after the 2008 Farm Bill and has been frozen by
regulatory uncertainty for the past year. Restoring regulatory
certainty will enable this program to return to the successful track
record it had as a public-private partnership.
Question 4. Just to clarify one of the points in your testimony, is
it your view that putting a 75% threshold for unserved households would
completely eliminate RUS' ability to deploy broadband in our small,
rural communities?
Answer. Minimizing subsidized ``overbuilds'' in areas where
broadband already exists should remain a top goal for RUS. However, the
proposal to prevent RUS from loaning in any area where more than 25% of
households already have access to broadband would likely dramatically
reduce demand for the program and eliminate significant portions of the
country from eligibility. Under such a scenario, a provider wishing to
receive a loan to serve a rural area where 74 out of 100 people do not
have access to broadband would not qualify for a loan. It should also
be noted that in rural areas, such a population could be spread over
miles and miles. Put another way, such a system could leave three rural
residents ``unserved'' in near-perpetuity simply because one resident
located miles away happens to be fortunate enough to receive some level
of broadband.
Eliminating the Broadband Loan Program, which provides loans that
must be paid back to the Federal Government with interest, as an option
to help provide service in such a situation is not the answer for
households and businesses that remain unserved year after year and have
no prospect for broadband service in sight. The concerns expressed
around this issue have been loudly heard, and the Secretary of
Agriculture's discretion is an appropriate barometer for such decision
making.
Question 5. Some of the testimony presented suggested that USDA
adopt the FCC targets of 4 Mbps down and 1 Mbps up for broadband
service speed. In your view, how would such a universal requirement
affect USDA's ability to deploy broadband in rural America?
Answer. According to the FCC's National Broadband Plan, 14 million
people in seven million housing units do not have access to terrestrial
broadband capable of download speeds of 4 Mbps, and that such housing
units are more common in rural areas. Using the National Broadband
Map's Broadband Statistics Report, it has been pointed out that 98% of
rural Americans (100% urban) have access to ``broadband'' download
speeds greater than 786 kbps, and some claim the loan programs are
therefore no longer needed. However, the same report shows that only
79.2% of rural Americans (99% urban) have access to speeds greater than
6 Mbps and only 70.8% rural (97.6% urban) have access to speeds greater
than 10 Mbps, which are minimum download speeds more commonly
considered necessary for rural areas to compete in the modern broadband
world. Indeed, the FCC established a benchmark of 6 Mbps downstream and
1.5 Mbps upstream for broadband deployments in later years of CAF Phase
II in the Final Order for USF reform released Nov. 18, 2011.
RUS telecommunication programs provide up-front capital to build
out to new customers and to upgrade networks. USF, by design, provides
for cost recovery for the ongoing operation of the network and
maintenance, and is at bottom intended to make sure that the prices
consumers pay for service in rural areas are affordable--that is,
``reasonably comparable'' to those in urban areas. RUS programs are
also aimed at the efficient practice of ``building it right the first
time.'' Rather than dispatching construction crews multiple times over
many years at higher costs to handle repeated upgrades, the RUS
programs encourage an approach to minimize the need for repeat
construction efforts. Instead, these programs aim at ensuring that each
network deployed (which is collateral for the loans provided) will
retain the maximum value over its useable life.
USDA will play a crucial role in delivering faster broadband to
more rural Americans, but the job will not be completed unless USF is
targeted to provide the cost recovery essential to maintaining service.
As of now, it does not appear that USF reform will result in the kind
of support to small, rural providers that will be essential to
delivering faster speeds. The FCC has decided to direct incremental
support for broadband to the larger carriers that traditionally have
not delivered broadband to their rural service areas. If the agency
proceeds on this course and the gamble does not work, USDA lending
alone will be insufficient for addressing the resultant gaps in
service.
Question 6. You mentioned the maintenance and upgrading of systems.
To what extent do investments in upgrades allow you to expand your
coverage and service to unserved areas?
Answer. If broadband is worth deploying to high cost rural areas
then it is worth investing in upgrades to ensure that recipients are
able to fully utilize the Internet and participate in modern global
economy. Smart broadband deployments can help keep the cost of upgrades
down.
In order to provide broadband at a reasonable cost, the networks
deployed today must be easily scalable to meet the broadband needs of
tomorrow without significant additional investment. Much of the
infrastructure of a wireline broadband network is in buried or aerial
cable plant that has a twenty-year life, or longer. If a service
provider were to construct a network that fails to meet the customer's
needs after only a few years, the cost to provide broadband would be
considerably greater because a second network would have to be designed
and built before the first network had reached the end of its economic
life. In these instances, the network that appears to be the least
expensive initially may be more expensive in the end because of
upgrades or network replacements that must occur.
Deploying broadband networks in areas of low customer density
presents its own challenges, because the infrastructure cost per
customer can be up to ten times greater than in urban areas. In rural
areas it is especially important that the infrastructure deployed be
easily scalable to meet the customer's future broadband needs because
the replacement cost is so high.
Michael Copps (when he was the Acting FCC Chairman) recognized this
when he said, ``Bandwidth-intensive applications could very quickly
become the norm in the U.S.--even in rural areas. Technologies that
cannot be upgraded easily could make Internet applications less than 5
years from now look like the dial-up downloads of today.'' (Federal
Communications Commission, Bringing Broadband to Rural America: Report
on a Rural Broadband Strategy, Michael J. Copps, Acting Chairman, May
22, 2009)
Question 7. You mentioned the disparity in speeds set by RUS and
how that undermines the technology neutral responsibilities of RUS. Is
it your view that there should be a universal goal for broadband speed,
and should the actual speed match what providers advertise to
customers, particularly during times of peak usage?
Answer. We oppose a lesser speed standard for would-be borrowers
who seek to deploy wireless networks. In the interim rules, RUS
established the minimum rate of data transmission as 3 Mbps for mobile
broadband and 5 Mbps for fixed broadband. Attaching a value and setting
a lower data transmission requirement to mobile service is contrary to
the technology neutrality statutory directive. As mentioned previously,
if broadband is deployed in a scalable manner then the sky is the limit
for speed, which is crucial given that it is hard to know what will be
needed as more adopt broadband and use it for more complex applications
and tasks. It is important that we don't put a false ceiling on
broadband capability. It is difficult to predict what broadband speeds
will be required in the near future, but if the past is any guide,
speed requirements will continue to increase dramatically and support
mechanisms should reflect such networks demands. It is also important
that providers deliver what they advertise, especially at peak hours,
because anchor institutions, businesses, and individuals rely on
carriers advertised speeds and plan accordingly.
Question 8. Could you describe how many of your members have
accepted the responsibility of being the carrier of last resort to
ensure every American has access to phone service which is now shifting
into access to broadband service? How many of your members participate
in the RUS broadband loan program?
Answer. Nearly all of NTCA's 570 member cooperatives and commercial
companies utilize the Universal Service Fund and adhere to carrier-of-
last-resort responsibilities to serve every American who requests
service. Small, rural providers will continue this tradition of
deploying the most advanced services available to rural America as long
as support is available to help them recover reasonable costs of
service. The carrier-of-last-resort requirement has been successful and
is an essential piece of the puzzle that ensures customers in rural
telcos' service territories have advanced communication services.
Without such obligations to serve all customers, some providers will
continue to ``cherry-pick'' only the most profitable households and
businesses and leave less profitable areas behind. Many NTCA members
have participated in the RUS broadband loan program. The only Broadband
Loan recipient since the 2008 Farm Bill was an NTCA member.
FORMULATION OF THE 2012 FARM BILL
(CONSERVATION PROGRAMS)
----------
THURSDAY, APRIL 26, 2012
House of Representatives,
Subcommittee on Conservation, Energy, and Forestry,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 9:32 a.m., in
Room 1300, Longworth House Office Building, Hon. Glenn Thompson
[Chairman of the Subcommittee] presiding.
Members present: Representatives Thompson, Goodlatte,
Stutzman, Gibbs, Roby, Huelskamp, Hultgren, Ribble, Schrader,
Owens, McIntyre, Costa, Walz, Pingree, Sablan, and Peterson (ex
officio).
Staff present: Brent Blevins, Tamara Hinton, Josh Maxwell,
John Porter, Patricia Straughn, Lauren Sturgeon, Suzanne
Watson, John Konya, Merrick Munday, Anne Simmons, Jamie
Mitchell, and Caleb Crosswhite.
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 to discuss
the conservation programs in advance of the 2012 Farm Bill will
come to order. I will start out with my opening statement.
Once again, good morning and welcome. I want to welcome
everyone to this Conservation, Energy, and Forestry
Subcommittee hearing to examine the conservation programs in
the context of the 2012 Farm Bill. Now we began the information
gathering process for the next farm bill 2 years ago, and since
then, we have conducted 11 audit hearings, and four nationwide
field hearings to look for ways to improve agriculture programs
for farmers and increase efficiency.
In the audit hearing conducted by this Subcommittee, we
discussed more than 20 conservation programs administered by
USDA, and identified areas of duplication and overlap. In our
field hearings, we heard time and time again from farmers and
ranchers across the nation about the importance of conservation
programs to their livelihoods.
Now this week we began the next series of hearings on the
Subcommittee level to gather input from national agricultural
leaders and stakeholders. We know that voluntary conservation
programs are critical in assisting producers in land management
decisions and implementing conservation practices, and in many
cases, conservation programs are lifelines for farmers.
Our farmers and ranchers, through the assistance and
incentives provided by the farm bill conservation programs,
have voluntarily worked to reduce soil erosion, increase
wetlands, improve water quality, and preserve farmland and
wildlife habitat. The environmental gains that they have
achieved are a testament to our producers, who are truly the
most dedicated conservationists.
The conservation programs have grown significantly in size
and scope since the 1985 Farm Bill. The 2002 Farm Bill raised
conservation spending by $17 billion over 10 years, which was
an 80 percent increase. Congress increased the commitment to
important programs like the Conservation Reserve Program and
the Environmental Quality Incentives Program, while also
creating new programs like the Conservation Stewardship Program
to increase participation in conservation practices. Then the
2008 Farm Bill strengthened the conservation title with an
additional commitment of $4 billion over 10 years. It includes
new regional and cooperative partnership programs as well as
the reauthorization and increased spending of current programs.
Additionally, the 2008 Farm Bill created new conservation
programs aimed at enhancing cooperation among producers and
conservation organizations. Now these programs have helped
support conservation initiatives in areas such as the
Chesapeake Bay watershed, which has great importance to the
farmers and ranchers in Pennsylvania and throughout the Mid-
Atlantic region.
We had an easier time improving conservation programs in
our last two farm bills when we could afford to increase
spending. Today, this Committee is faced with a very different
budget situation. Last fall as a part of the proposed Deficit
Reduction Agreement, the House and Senate Agriculture
Committees worked together to develop a proposal for the Super
Committee. We put forward a proposal that streamlined program
delivery in many areas, and included the consolidation of
numerous programs, including several under the conservation
title. While the Super Committee failed to reach agreement, the
Agriculture Committees showed that they could work together to
do their part. I, for one, believe the agriculture community
deserves a farm bill that develops--that is developed through
regular order. Regular order provides a more thorough process
to really get it right when it comes to prioritizing
conservation programs that are working and streamlining any
programs with overlapping missions and goals.
Today, not only will the Agriculture Committee have to do
our part within the overall deficit situation, but as all of us
know, we have dozens of programs, including many under the
conservation title, with no baseline past 2012.
The Senate put forward its draft today, its proposal for
the farm bill last week, which is slated to be marked up today,
and it utilizes many of the ideas produced during the
Subcommittee process. It would reduce spending by approximately
$6.5 billion over 10 years. As we move forward, it is important
that when we find these savings, we must maintain our ability
to provide the same level of on the ground service to our
farmers and ranchers, and that is why we are here today, to
hear your perspective on various proposals being considered as
we move forward on the House side with reauthorization.
When it comes to the farm bill, which is really the most
significant piece in defining public policy to guide
agriculture, for me, it comes down to three principles that we
have enjoyed in this country and we need to make sure we
preserve into the future: that America always has the most
affordable, highest quality, and safest food supply anywhere in
the world.
Now I would like to thank all of our witnesses for being
here today. I want to extend a warm welcome to a resident of
Pennsylvania's 5th District who is going to be on our second
panel, Mr. Carl Homan, fifth generation dairy farmer from
Centre County, and I really appreciate, Mr. Homan, your
participation here today. He has extensive experience utilizing
Title II programs and will--certainly will offer his thoughts
on how we should move forward.
I look forward to the testimony of all the witnesses. My
sincere appreciation to each one of you coming and bringing
your expertise and your experience to help us in developing a
sound farm bill, going forward.
[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 this Conservation,
Energy, and Forestry Subcommittee hearing to examine farm bill
conservation programs.
We began the information gathering process for the next farm bill 2
years ago. Since then, we have conducted 11 audits of farm programs and
four nationwide field hearings.
In the audit hearing conducted by this Subcommittee, we discussed
more than 20 conservation programs administered by USDA and identified
areas of duplication and overlap.
In our field hearings, we heard time and again from farmers and
ranchers across the country about the importance of conservation
programs to their livelihoods.
Today, we're here to discuss how to move forward. We are eager to
hear your perspective on ways we can streamline and consolidate
conservation programs to better serve you.
We know that voluntary conservation programs work.
Our farmers and ranchers, through the assistance and incentives
provided by farm bill conservation programs, have voluntarily worked to
help reduce soil erosion, increase wetlands, improve water quality, and
preserve farmland and wildlife habitat.
The environmental gains they have achieved are a testament to our
producers, who truly are the most dedicated conservationists.
Conservation programs have grown significantly in size and scope
since the 1985 Farm Bill.
The 2002 Farm Bill raised conservation spending by $17 billion over
10 years, which was an 80% increase.
Congress increased the commitment to important programs like CRP
and EQIP while also creating new programs like CSP to increase
participation in conserving practices.
Then the 2008 Farm Bill strengthened the conservation title with an
additional commitment of $4 billion over 10 years.
It included new regional and cooperative partnership programs as
well as the reauthorization and increased spending of current programs.
Additionally, the 2008 Farm Bill created new conservation programs
aimed at enhancing cooperation among producers and conservation
organizations.
That helps target conservation initiatives in areas such as the
Chesapeake Bay watershed, which has great importance to the farmers and
ranchers in Pennsylvania.
We had an easier time improving conservation programs in our last
two farm bills, when we could afford to increase spending.
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 have dozens of
programs with no baselines, many under the umbrella of conservation.
This farm bill gives the Committee an excellent opportunity to
prioritize conservation programs that are working and streamline any
programs with overlapping missions and goals.
We, as a Committee, will examine how to consolidate the current
conservation programs so that conservation dollars can be utilized more
efficiently.
We started that effort last fall, when the House and Senate
Agriculture Committees worked together to develop a proposal for the
Super Committee.
Had the Super Committee succeeded, we would have put forward a
proposal that included the consolidation of several programs and
streamlined program delivery.
The Senate put forward its draft proposal last week, and it
utilizes many of the ideas produced during the Super Committee process.
It would reduce spending by approximately $6.5 billion over 10 years.
It's important that when we find these savings, we maintain our
ability to provide the same level of on-the-ground-service to our
farmers and ranchers.
I believe we are up to that task.
I'd like to thank all of our witnesses for being here today. I look
forward to hearing your thoughts on streamlining programs today.
I want to extend a warm welcome to a resident of Pennsylvania's 5th
district on the second panel.
Mr. Carl Homan is a fifth generation farmer from Centre County.
He has extensive experience utilizing Title II programs and will
offer his thoughts for how we should move forward.
I look forward to your testimony and thank you for driving down
here to share your experience.
The Chairman. And with this, I now yield to the Ranking
Member of the full Agriculture Committee, Mr. Peterson, for an
opening statement.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mr. Peterson. Thank you, Mr. Chairman, and I want to also
thank the witnesses and thank you for having this hearing
today.
The conservation provisions that we put in the Super
Committee bill, in spite of the fact that we had to reduce
spending, I think there is a general consensus that we did a
pretty good job in putting that together. It appears to be the
basis for what we are going to do here moving ahead. But I
would like to focus, if I could, on some issues that are
important to me, and that I think need to be focused on or
understood in the context of what we are doing here. A lot of
it revolves around the CRP program where I see a number of our
witnesses have testimony today about some of them completely
contrary to each other.
But first of all, we recognize, given what is going on in
the economics of agriculture and the way rental rates have gone
up, land prices have gone up, that land is going to come out of
CRP, and it is coming out of CRP. And I would argue that we are
doing a pretty good job of sorting out what should be out and
what should be in as we go through the process of these sign
ups. We hope half the acres that are coming out are going back
in. In other words, we are losing--6 million acres come out, we
are probably going to get 3 million acres back. So we are going
to end up at 25 million acres, which is what was in the Super
Committee bill at some point, here in the next few years.
You know, these land prices and rental rates, as Mr.
Greenspan said, we have some kind of exuberance going on in
agriculture. I don't think it is going to cause the kind of
bubble that we had at other times when it burst, but clearly,
these prices and rental rates are, in many cases you cannot
justify what is going on. But the neighbors are looking at the
people that are coming to them and offering them a lot of money
to break up their CRP. And so I drive around my district and I
cannot--I have never seen anything like what is going on right
now. The land that is being broke up--land that should not be
farmed is being broke up. All of the tree lines are being taken
out, all of the old homesteads are being bulldozed down. If you
don't think things are changing, they are, and this is going on
all over the country.
So I would argue that--and I have seen somebody in the
testimony said that we should freeze rental rates. I think we
should raise the rental rates. I think they are out of whack
from what reality is today, and the rental rates in CRP are
about 25 percent of what the rent is for farmland. Now the
Secretary moved to raise the rental rates on continuous, which
is fine, but you know, the pressure is on the big tract CRP.
And I worked very hard to get wildlife benefits as one of the
criteria for CRP, and I will guarantee you, if we lose this big
tract CRP, we are going to lose the wildlife benefits that we
have developed in this country. You know, you are not going to
raise the kind of ducks and pheasants and deer and turkeys on
just the filter strips. You need big tract CRP to spread out
these predators, give the wildlife a chance to survive, and
that has to be part of what we do, going forward.
So we have to focus on this as and get this right. With the
haying and grazing there have been some improvements there, but
frankly, this land needs to be managed. You know, there is no
reason that you can't run cattle on this land, and it does more
good for the wildlife and for the land than not running cattle
on it. You know, we still have penalties if you allow for
haying and grazing, which I don't think makes any sense.
Another thing that is still in the law that needs to be
focused on is a holdover from 1985, and at that time it was not
a conservation program. When CRP was started, it was to reduce
production, to get lands out of production. We had too much
production and the prices had collapsed, so it was about
getting land out of production. So there is still a prohibition
against being able to sign up CRP that it was not in the
program. And so we have a lot of land in my district that
should be in CRP that can't get in, that can't go into the
general sign up because it doesn't have base acres. You know,
that is something that needs to go away. It is no longer
relevant to what is going on in this day and age, and we are
keeping land out of CRP that should be in. I know of two tracts
that have been broken up so that they can plant them into
soybeans for 2 years so they can then get them into CRP. You
know, this is--these things we need to fix in this bill this
year.
The other thing we need to fix is what we tried to do in
2008, and that is the sod buster situation, and I am glad to
see there is an amendment in the Senate, or I guess it is in
the manager's amendment to include something very similar to
what we put in in the 2008 bill in the House on sodsaver. You
know, we need to get that done. We have land being broken up
that has never been broken. They are dragging up rocks bigger
than a house out of these things. This is land that should not
be farmed, and we are allowing the crop insurance system to
provide a backstop for these people to do this. They know they
can break up this land and the crop insurance is going to cover
them, even if they don't get a crop, and most of them know they
aren't going to get a crop.
So I hope that we can focus on some of these real issues
and not get off on this ideology about well, we have to take
every CRP acre in the country out so we can have cheap corn.
You know, that is a short-sighted policy, and you know, I
understand that people liked it when we had $2 corn. You know,
it made it easier for the livestock industry, but, we never had
$2 corn. There wasn't any farmer that could grow corn for $2.
The reason we had $2 corn was because we subsidized it, and
what really stuck out, is that we got blamed, our corn farmers,
for the subsidies, but actually the livestock people got the
benefit. So ethanol changed all that and now we have a more
market-driven system, but we shouldn't throw the baby out with
the bathwater. This thing is stabilizing. We are going to have
corn coming down in price over the next number of years. We
should not destroy this CRP system that we put together that
brought back the wildlife in this country, just because of some
short-term spike in corn prices.
So now that I have vented, I will yield back. I am sure I
don't have any time left. Thank you, Mr. Chairman.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good morning. Thank you Chairman Thompson and Ranking Member Holden
for holding today's hearing.
The current farm bill expires in September and I am pleased that
the Committee is continuing the reauthorization process with today's
hearing.
Conservation programs play an important role in preserving our
natural resources and provide producers with the necessary tools to
meet regulatory requirements. In this budget environment, it is
especially important to ensure that current conservation programs are
operating as efficiently as possible.
I do believe that there are some areas of the conservation title
that can be changed to both achieve savings and better reflect what's
needed on the ground. One example is helping to ensure that CRP lands
are available for grazing and other economic uses. This is what we
tried to achieve last fall through the Super Committee process and I am
pleased to see the Senate act in a similar fashion.
One issue that has recently been brought up is conservation
compliance. I think that simply re-linking compliance to crop insurance
could potentially cause more problems than it would solve. I'm
interested in hearing our witnesses' opinions on the issue,
particularly how we would administer the program because, given the
budget cuts the Department has been forced to take, I'm not sure RMA or
FSA or NRCS have the resources that would be needed to handle the
increased workload.
An issue that is of particular importance to me, that I'm hopeful
can be addressed in the next bill is regional flooding issues. I think
that there are conservation programs currently in place both within the
farm bill and outside of it that can be used to build up water
retention sites and address flood control problems in areas of the
country like the Red River Valley. Taking proactive steps now can save
taxpayers money down the road after flood damage occurs.
Again, I thank the Chair for holding today's hearing and look
forward to hearing from our witnesses.
The Chairman. I thank the Ranking Member. The chair would
like to request that other Members submit their opening
statements for the record so the witnesses may begin their
testimony and to ensure that there is ample time for questions.
Prepared Statement of Hon. Martha Roby, a Representative in Congress
from Alabama
Mr. Chairman. I want to first thank the witnesses for testifying
here today on the importance of conservation and offering changes to
the various programs. The conservation title of the farm bill has been
vital in assisting our farmers in being better stewards of their land--
helping with technical assistance and other financial assistance.
As many of you know, going into the next farm bill, we are faced
with extreme fiscal constraints. We on this Committee need to make very
difficult decisions in finding billions of dollars in savings while
ensuring the decisions we make are the most effective, efficient and
allows farmers do what they do best--farm.
Whether we are talking about nutrition, conservation or safety
nets, this Committee will need to make decisions with as much
information as possible and I thank all of the witnesses being here
today to help us in this process.
During my travels around my district and in meetings with my
Agriculture Advisory Board, I have heard concerns over the Conservation
Reserve Program. A significant portion of productive farmland in my
district is land rented by farmers. Over the years, these farmers--many
of them who themselves are or have enrolled in CRP and other
conservation programs--have seen landowners decide to enter their land
into CRP rather than continue renting the productive land to farmers.
This has been making it more difficult for the farmers to maintain
their farms, as well as, the ability for new and young farmers to find
productive land to rent for production.
Out of these conversations, last year I introduced H.R. 3454, the
Preserving Marginal Land and Protecting Farming Act. This legislation
would incrementally reduce the acres of land enrolled in CRP down from
the authorized 32 million acres to 24 million acres by 2017.
Additionally, it would make class I or class II land under the land
capability classification system no longer eligible to be enter into
CRP. Approximately 6.9 million acres of land enrolled in CRP is class
II land.
I am not up here to argue that CRP is not a valuable program. CRP
is an important program to ensure that marginal and highly erodible
land--some land that should probably never been farmed in the first
place--is taken out of farming. However, the intent of the program was
not to compete against a farmer for access to highly productive land.
At time that the Federal Government is looking for savings, one way is
to ensure that the land in CRP is the land that the program originally
intended to target.
My approach would save billions of dollars and ensure that the
program is going after environmentally sensitive land. I appreciate
that a number of the witnesses today have considered this and other
changes to CRP that would save billions in taxpayer dollars, ensure
that only the most sensitive land is protected, and that needed
productive farmland is available to farmers.
Chairman Thompson, thank you for holding this hearing and I look
forward to working with you in the future on this and other issues as
we move forward with drafting a farm bill.
The Chairman. Welcome to our first panel of witnesses who
are seated here. Before I do introductions and we get started,
just a reminder, the lighting system in front of you, we ask
you to limit your--we have your--be assured that each of us
have had in hand your written testimony, and so for your verbal
testimony please limit it to 5 minutes. The lights are meant as
a reminder of that. When you hit the yellow light, you will
have approximately 1 minute left. If you are like me, you need
that cue, and when it hits red, 5 minutes is complete and we
ask that you finish up at that point so we can leave lots of
time for great exchange with questions as we go forward.
I want to welcome our first panel. Joining us we have Mr.
Gene Schmidt, President of the National Association of
Conservation Districts. We have Mr. Jon Scholl, President of
the American Farmland Trust; Mr. Patrick O'Toole, President of
the Family Farm Alliance; Mr. David Nomsen, Vice President of
Pheasants Forever; Mr. Garry Niemeyer, President of the
National Corn Growers Association. Thank you all, and Mr.
Schmidt, please begin when you are ready.
STATEMENT OF GENE SCHMIDT, PRESIDENT, NATIONAL
ASSOCIATION OF CONSERVATION DISTRICTS, WASHINGTON, D.C.
Mr. Schmidt. Thank you, Chairman Thompson, Ranking Member
Peterson, and Members of the Committee, and special thank you,
Chairman Thompson, for your opening remarks on the benefits we
have made in conservation, but also the needs that we have
going into the future, and thank you for your perspective on
that. On behalf of the National Association of Conservation
Districts that has some 3,000 member districts across the
country, I thank you for the opportunity to be here today and
speak for them.
As you stated, I do currently serve as the President of the
National Association of Conservation Districts. My wife and I
own and operate a commercial seed business in northwest
Indiana, where we farm 1,500 acres of seed corn, beans, and
wheat. We use a variety of conservation practices on our farm,
including minimum till, strip till, no-till, cover crops,
stream buffers and windbreaks, and I truly know the firsthand
value of those conservation practices and necessity for strong
conservation on the land.
About 2 weeks ago, as you folks are aware, more than 100
tornadoes swept across the Plains. Within the last year, we
faced extreme flooding in the Mississippi and Missouri Rivers,
among others, affecting thousands of producers and private
landowners. We also, not so long ago, witnessed extreme
wildfires in Arizona, New Mexico, and Texas. Last year, the
Great Plains and the South suffered a record drought, requiring
emergency haying and grazing, as you mentioned, on CRP lands.
And although we experienced major weather conditions, extreme
weather conditions, we did not see the reoccurrence of the Dust
Bowl that we saw back in the 1930s. Why? Because we have
implemented many conservation practices, programs that help
mitigate the risks associated with these extreme weather
events.
Conservation programs provide a strong risk management
tool, mitigating many times the risks that are put on
producers, landowners, home owners, and local communities
throughout this country.
Conservation districts are the delivery system set up in
the 1930s to be the gatekeepers of private working lands.
Districts are the local authority to provide resource support
for delivery, to bring partnerships and coalitions together,
and in doing so, over the years we have helped to restore and
maintain the most precious resources.
While we understand the current economic climate, we must
also acknowledge the investing and putting conservation on the
ground. Investment in conservation simply makes sense.
Producers are already faced with the challenge of doing more
with less. Conservation is a tool that is available to every
producer. Not only do farm bill conservation programs play a
role in supporting clean air, clean water, and productive
soils, they also help producers implement conservation
practices through voluntary incentive-based methods, rather
than through a top down regulatory approach, as well as support
our nation's long-term economic and food security. These
programs can include developing a strong conservation plan for
better accountability for Federal dollars spent, and
streamlining the conservation program participation processes
to allow for quicker and easier accessibility for producers and
landowners.
That is why we support the Senate framework for Title II in
the 2012 Farm Bill. We fully recognize the need to get our
nation's financial house in order, and we understand that means
cuts to farm bill programs. We are extremely pleased the
Committee's leadership has come with a strong, balanced plan
that fairly recognizes the critical value of locally led
conservation on the landscape. We are in a situation where
additional cuts to conservation programs above the $6 billion
outlined in the Senate's version of Title II would put the very
viability of these programs at risk. Congress needs to
determine whether conservation and protection of our natural
resources of today is more important than the escalated costs
that we would receive as a repair of those conditions later. It
is an old adage that goes like this, ``An ounce of prevention
is worth a pound of cure.''
In light of the budget situation, NACD supports
consolidation of programs as an important goal of the
conservation title, and Chief White's delivery streamlining
system. Farm bill conservation programs should be resource
driven and locally led. The program delivery must be tailored
to the natural resource needs in the state and local areas.
Local conservation districts, local boards, and state technical
committees help provide for that asset.
As we look into consolidation, we must be careful not to
lose the critical functions that help complete the cycle of
resource needs on the land.
Further decreasing the funding, the implementation of the
farm bill programs would be an additional challenge. The
technical assistance is critical in ensuring farm bill programs
and for the implementation and accountability.
In conclusion, the farm bill programs show a track record
of success. Every dollar spent has seen return. Because of the
2008 Farm Bill and previous ones you stated, we have had
successes. As a producer, I use many of these programs in my
own operation and know firsthand the tremendous value and
return on investment that they bring to producers across this
country.
Thank you for the opportunity to address the folks on the
Committee.
[The prepared statement of Mr. Schmidt follows:]
Prepared Statement of Gene Schmidt, President, National Association of
Conservation Districts, Washington, D.C.
Good morning, Chairman Thompson, Ranking Member Holden, and Members
of the Subcommittee. On behalf of the National Association of
Conservation Districts and our 3,000 member districts across the
country, I thank you for the opportunity to be here today.
As you know, I currently serve as President of NACD. My wife and I
own a farm and seed business in Hanna, Indiana, where we farm 1,500
acres of seed corn, seed beans, and wheat. We use a variety of
conservation practices on our land, including minimum till, no-till,
cover crops, stream buffers and windbreaks. I know firsthand the
value--and the necessity--of strong conservation on the land.
Two weeks ago, more than 100 tornadoes swept across the plains.
Within the last year we have faced extreme flooding along the
Mississippi and Missouri Rivers--among others--affecting thousands of
producers and private landowners, and we also witnessed extreme
wildfires in Arizona, New Mexico, and Texas. Last year, the Great
Plains and South suffered a record drought, requiring emergency haying
and grazing on CRP land; and although we experienced extreme weather
conditions, we did not see a reoccurrence of the Dust Bowl. Why?
Because we have implemented many conservation practices that mitigate
the risks associated with extreme weather. Conservation programs
provide a strong risk management tool--mitigating risk for producers,
landowners, homeowners and local communities.
Conservation Districts are the delivery system set up in the 1930's
to be the gate keepers of private working lands. Districts are the
local authority to set work priorities, help producers implement
practices with accountability, provide resource support for delivery,
and bring partnerships and coalitions together. In doing so, we have
sustained our most precious resources.
While we understand the current economic climate, we must also
acknowledge the investment of putting conservation on the ground.
Investing in conservation simply makes sense. Producers are already
faced with the challenge of doing more with less, and conservation is a
tool that is available to every producer. Not only do farm bill
conservation programs play a key role in supporting clean air, clean
water and productive soils, they also help producers implement
conservation practices through voluntary, incentive-based methods--
rather than through a top-down regulatory approach--as well as support
our nation's long-term economic and food security. These programs can
include developing a strong conservation plan for better accountability
of Federal dollars spent and streamlining the conservation-program
participation processes to allow for quicker and easier accessibility
for producers and landowners.
That is why we support the Senate Framework for Title II in the
2012 Farm Bill. We fully recognize the need to get our nation's
financial house in order, and we understand that means cuts to farm
bill programs. We're extremely pleased that Committee leadership has
come up with a strong, balanced plan that fairly recognizes the
critical value of locally-led conservation at the landscape scale. We
are in a situation where additional cuts to conservation programs,
above the $6 billion outlined in the Senate's version of Title II, will
put the very viability of these programs at risk. Congress needs to
determine whether conservation and protection of natural resources
today is more important than the escalated costs of repair in the
future. It's as the old adage goes, an ounce of prevention is worth a
pound of cure.
In light of the budget situation, NACD supports consolidation of
programs as an important goal of the conservation title, and Chief
White's Conservation Delivery Streamlining Initiative in the field.
Individual, private landowners will benefit from streamlining when
programs are easier to access and manage. Farm bill conservation
programs should be resource-driven and locally-led with sufficient
flexibility to direct funding to local priorities and concerns. Program
delivery must be tailored to the natural resource needs in the states
and local areas. Local Conservation District Boards, Local Work Groups
and State Technical Committees must help identify local needs, apply
limited financial assistance, and maximize conservation benefits.
As we look at consolidation, we must be careful not to lose any of
the critical program functions that help complete the cycle of resource
needs on the land. For example, consolidation includes farm bill
easement programs. Easements retain working lands which over time
include the operation and maintenance components that fee simple
acquisitions do not. We must assure that the easement programs are
maintained to provide for protection of our farmland, wetlands, and
highly erodible soils. The easement programs provide a ``buffer
effect'' to land use change, which occur on many fronts of our society
as the population grows and more demand is put on our natural
resources. Thus, easements effectively secure the natural resources,
being protected by conservation practices, to achieve economic and
environmental benefits for future generations.
With any further decreases in funding, the implementation of farm
bill programs would be an additional challenge. Technical assistance is
critical to ensuring farm bill programs are implemented with
accountability. Technical assistance dollars will be more important
than ever to ensure we have adequate capabilities to get conservation
delivered. For example, we have completed successful work achieving
water quality in watersheds across the country, from the East in the
Chesapeake to the North in Lake Erie to the West in Oregon. By using
Technical Assistance, we help producers implement practices such as
using cover crops and conservation tillage to reduce soil erosion and
runoff. Having a conservation plan in place allows each producer to
look at his resource needs in order to address the bigger picture of
resource needs.
In conclusion, these farm bill programs show a track record of
success, and every dollar spent has seen a return. Because of the 2008
Farm Bill, we are better prepared to meet future resource needs, and we
must continue to fund these programs. As some have referenced, we think
the conservation title may be the hallmark of the 2012 Farm Bill. As a
producer, I have used many of these programs on my own operation and
know first-hand the tremendous value and return on investment they
bring to the producer and even more importantly, to society.
This concludes my testimony. Thank you, again, for allowing me the
opportunity to be here today. I am happy to answer any questions you
may have.
The Chairman. Thank you, Mr. Schmidt.
Mr. Scholl, go ahead and proceed when you are ready for 5
minutes.
STATEMENT OF JON SCHOLL, PRESIDENT, AMERICAN FARMLAND TRUST,
WASHINGTON, D.C.
Mr. Scholl. My name is Jon Scholl. I am the President of
the American Farmland Trust. We spent the last 30 years working
at the intersection of agriculture and the environment. We work
to protect farmland from unsound farming practices, and keep
farmers on the land. Before joining AFT, I had the privilege of
serving 4 years as the ag counselor to the EPA Administrator in
the last Bush Administration. Before that, I worked 25 years
for the Illinois Farm Bureau in a variety of capacities, but
throughout my entire career, I am very proud to say that I have
lived on and been a partner in a family farming operation in
McLean County, Illinois.
Our farmers and ranchers face great pressure to produce
food, fiber, and fuel while maintaining healthy soils,
protecting water quality, and providing wildlife habitat.
Rapidly rising world food demand creates incredible economic
opportunity for agriculture, but it also makes it even more
imperative for us to address the conservation challenges we
face here at home.
In light of these challenges, I offer five key points.
First, funding for conservation is critical. The need and
demand for assistance is so great that in any other situation,
I would be asking for more money for these programs, as I am
sure many of us would. Four out of every ten applications for
EQIP are rejected for lack of funding. The Farm and Ranch Land
Protection Program has a whole year of projects waiting to be
funded. But in spite of this and in light of the critical
budget challenges our nation faces, we believe effective
conservation solutions can still be provided with the $6
billion in cuts called for last fall by the Super Committee, as
well as the recently released proposal from Senators Stabenow
and Roberts.
Second, we urge support for our Farm and Ranch Land
Protection Easement Program. We have lost 23 million acres of
farmland to development between 1982 and 2007, an area the size
of Indiana, yet we are expected to produce more food than ever
before. Permanent conservation easements protect agricultural
land from development, safeguard local agriculture economies,
and help farmers and ranchers transition their land to the next
generation. We support the creation of a Consolidated Working
Lands Easement Program to take over the functions of the Farm
and Ranch Land Protection Program, and the Grasslands Reserve
Program. However, it is important that the working lands
easement option remain distinct from easements that seek to
retire fragile land from production. The Agricultural
Conservation Easement Program created in the Senate proposal is
an excellent model for this.
Third, we support the new Regional Conservation Partnership
Program contained in the Senate proposal. This program gives
local producers and conservationists a tool to come together to
address natural resource concerns. It is also competitive and
merit-based, which means that the resources will go where they
can do the most good. This model represents a huge leap forward
in how conservation is delivered, allowing us to be very
strategic in spending our limited conservation dollars.
Fourth, we believe that EQIP and CSP provide distinct
benefits and must remain separate programs. EQIP assists with
individual practices. CSP helps farmers and ranchers take
additional steps needed to achieve a high level of conservation
performance on the whole farm. We propose enhancing CSP by
increasing its focus on local conservation priorities,
tightening the eligibility requirements, and tying program
benefits to measurable conservation performance.
Fifth, we believe conservation compliance should continue
to be attached to the centerpiece of the farm safety net as it
has been in the past. Given the likely changes in the safety
net, this means reattaching it to the crop insurance premiums
support. The Economic Research Service has reported that in the
last 25 years, conservation compliance has reduced annual soil
erosion on our most vulnerable soils by 40 percent. Another ERS
analysis shows that if we act now, very few additional farmers
would come under the compliance provisions with their
reattachment to crop insurance. RMA and crop insurance agents
would not have new burdens. Compliance works. It needs to
remain an important component of the new farm safety net.
We must not lose ground, either on our farms and ranches,
or our farm policy. I applaud your efforts to craft a
conservation title that will help to assure our resource base
is protected and meet the growing need for food, fiber, fuel,
and in a time of tightening budget constraints. Your work is
important. We are prepared to help you meet our common
challenges.
Thank you.
[The prepared statement of Mr. Scholl follows:]
Prepared Statement of Jon Scholl, President, American Farmland Trust,
Washington, D.C.
Good morning,
Chairman Thompson, Ranking Member Holden and other Members of the
Committee, thank you for inviting me to testify today. My name is Jon
Scholl. I am the President of American Farmland Trust, which is
headquartered in Washington, DC. I am also a partner in a family farm
in McLean County, Illinois.
American Farmland Trust is an organization that has for the last
thirty years worked at the intersection of agriculture and the
environment. We work to protect farmland and promote sound stewardship
while keeping farms and ranches economically viable. Before joining
American Farmland Trust, I had the privilege of serving for 4 years as
the Agricultural Policy Counselor to the Administrator of the United
States Environmental Protection Agency during the Administration of
George W. Bush. Before that, I worked at the Illinois Farm Bureau for
25 years in a variety of capacities.
I want to start by thanking Chairman Lucas and Ranking Member
Peterson, as well as Subcommittee Chairman Thompson and Ranking Member
Holden, for taking the initiative to work on the farm bill this year in
the midst of all the partisanship and budget challenges here in
Washington. I look forward to working with you to pass a farm bill this
year, because we all know that the budget situation will likely be
worse if we are forced to wait a year.
As someone involved in my family's farm operation, a former EPA
agricultural appointee, and the President of American Farmland Trust, I
have seen the benefit of the farm bill conservation programs from many
different angles. These programs are critically important tools for
meeting the conservation challenges that we face.
Having spent my life in agriculture, I know that farmers and
ranchers across this country feel increasing environmental pressure as
concerns mount over threats to soil, water quality, air quality, and
wildlife. This pressure is coming not just from regulators, but from
citizens and, increasingly, the corporations to whom we sell our
products. At the same time, I know that farmers and ranchers have a
deep regard for the land and take their responsibility as stewards very
seriously. The farm bill conservation programs are the key bridge
between this stewardship ethic and the pressures that farmers face.
They are the ``fair deal'' between producers and the rest of society,
where both parties contribute resources and both benefit, whether from
greater resilience and efficiency on the farm or from abundant natural
resources and a cleaner environment. In a world where we try to solve
most environmental problems through regulations, these programs are
voluntary and incentive-based. They work for farmers, which means that
they also work for the environment.
Between the conservation programs, conservation compliance, and
independent efforts, farmers and ranchers have already made big
conservation gains. They reduced soil erosion by 40 percent between
1982 and 1997. They retired over 30 million of their most sensitive
acres, turning them over to native plantings that provide wildlife
habitat and build healthy soils. And they reduced losses of nitrogen
and phosphorous by a fifth to a half in the Upper Mississippi River
Basin and the Chesapeake Bay Region. Benefits in other areas of the
country will be disclosed in future USDA reports.
Nevertheless, there is much more work to be done. Indeed, the U.S.
Department of Agriculture indicates that the agriculture sector is the
largest source of nutrient loading in the country's impaired rivers and
lakes and a major source of air pollutants like ammonia, nitrous oxide,
and methane. Agriculture is also the source of seven percent of U.S.
greenhouse gas emissions. According to USDA, 62 percent of the cropped
acres in the Upper Mississippi River Basin require additional
conservation treatment, and 15 percent are ``critically under-
treated.'' In the Chesapeake Bay, 80 percent need treatment and 19
percent are critically under-treated. These numbers are not just
abstract figures; they are a threat to the strength and resilience of
American agriculture. Farm and ranch production depends on natural
resources like healthy soil and abundant, clean water.
At the same time, world food demand is exploding. By 2050, the
world will hold 2.3 billion more people. Incomes will rise, leading to
more demand for meat and dairy products. World consumers will require
over a billion more tons of grain and 200 million more tons of meat.
Overall, food production will have to increase by 70%. This astonishing
rise in demand represents an opportunity for agriculture as an
industry, but it will also intensify pressure on natural resources.
Clearly, if we are going to maintain a thriving agriculture sector,
continue to protect our natural resources, and provide the food
security that is so central to our national security, we must have a
strong conservation title in the next farm bill. We cannot lose ground.
This will be a challenge given the budget constraints that we face, but
we at American Farmland Trust have some proposals that can help achieve
that goal. We developed these proposals through workshops with farmers
and ranchers from across the United States and extensive research.
Funding
Adequate funding is critical to the success of the conservation
programs. However, given the budget environment, we believe that the
funding level established in the Agriculture Committees'
recommendations to the Super Committee is a fair deal. This proposal
limited the conservation title cut to roughly $6 billion, or ten
percent of the 10 year baseline, and the Senate's draft bill does the
same. I urge the House Agriculture Committee to hold the line on this
funding level.
The need and demand for the conservation programs is so great that
in any other situation I would be telling you that we need more money.
We have a great suite of conservation programs in place to deliver that
assistance, but the funding is never adequate to meet the demand.. For
example, four out of every ten applications for EQIP assistance had to
be rejected for lack of funding in FY 2010. The Farm and Ranch Land
Protection Program has a backlog of a whole year of projects waiting
for funding. Producers are waiting to enroll hundreds of thousands of
acres in the Wetlands Reserve Program and Grassland Reserve Program,
and millions of acres in the Conservation Stewardship Program. When
farmers and ranchers are lined up to do the right thing for their
operations and for the environment, and they are making a substantial
investment of their own money, Congress should be willing to help. I
know that you have difficult decisions to make, but I urge you to keep
these important factors in mind when making your funding decisions.
Farmland Protection
One of the most important functions the conservation title plays is
to protect farm and ranch land from development and ensure that it is
available for productive agriculture. The need is great. Our country
lost 23 million acres of farmland to development between 1982 and 2007,
an area the size of Indiana, yet we are expected to produce more food,
fiber and fuel than ever before. Every minute of every day, more than
an acre of farm and ranch land is lost to agriculture forever.
Luckily, there is a solution: the permanent protection of farm and
ranch land. As of July 2011, state and local government farmland
protection programs in 30 states had collectively protected over 2.5
million acres of agricultural land, with help from Federal programs. In
addition, this mechanism has been shown to help facilitate the transfer
of farms to the next generation within farm families, to enable
beginning farmers to access land at an affordable price, to support
local economic development activity and to encourage investments by
farm-based businesses in farm communities stabilized with protected
farmland.
Today, both the Farm and Ranch Land Protection Program (FRPP) and
the Grassland Reserve Program (GRP) contribute to the permanent
protection of farm and ranch land. Since its creation is 1996, FRPP has
helped state and local governments and private partners in the land
trust community protect over 810,000 acres of valuable agricultural
lands. Since FRPP works through local partnerships that leverage state,
local, and private funds, FRPP projects have leveraged nearly two non-
Federal dollars for every Federal dollar spent. In addition, the local
entities handle the lion's share of the administrative duties involved
in completing projects.
Given the budget situation and the call for simpler conservation
programs, we support the creation of a consolidated working lands
easement structure to take over the functions of FRPP and GRP. We
believe this will reduce bureaucracy and make the system easier for
farmers and ranchers to use. Both the Super Committee proposal and the
Senate draft bill include an Agricultural Land Easement (ALE) option
that would achieve this goal.
Any new consolidated easement structure must reflect the core
principles that American Farmland Trust has advocated for over many
years. We call them the Three P's: purpose, permanence and
partnerships. First, the purpose must be to protect working lands and
keep them working. Second, all easements must be permanent. And
finally, the easements must work through local partnerships that
provide flexibility and leverage non-Federal funds. As part of the
partnership structure, we feel it is important that local entities be
required to contribute some cash matching funds to ensure that they
have skin in the game. The draft Senate bill's ALE program embodies
these principles and I urge this Committee to follow this tried-and-
true formula as you put together your easement package.
The Three P's are noteworthy in part because they distinguish
working land easements from the other main easement program in the
conservation title, the Wetlands Reserve Program (WRP). WRP retires
land from production rather than protecting working lands, includes
term easements as well as permanent easements, and operates in a top-
down manner with the Natural Resources Conservation Service (NRCS)
executing the transaction directly with the landowner, rather than
through state and local partners. While we strongly support WRP and
recognize that there is a desire to consolidate all of the easement
options into one program, we believe that it is critical that any
consolidation proposal reflect these key differences. The Senate's
proposed Agricultural Conservation Easement Program achieves this
differentiation nicely.
Another feature that will help working land easements be efficient
and effective is a certification process for partners. This will allow
highly experienced partners to carry out farmland protection work with
fewer bureaucratic requirements from NRCS, including less frequent
updates of the partner's formal agreement with the agency. This process
reflects the reality that some state and local entities have been
engaged in farmland protection work longer than USDA and have
sophisticated programs that are tailored to local needs. Certification
ensures effective oversight with the minimum regulatory burden. Both
current law and the Senate's draft bill include a provision for a
certification process for partners, and I encourage the House to do the
same.
I urge the Committee to provide robust funding for a consolidated
working lands easement option in your final bill. In addition, if you
choose to consolidate working lands easements and wetlands easements
under one umbrella, there must be a firewall between the funding for
the two options. We support the structures in the Super Committee
proposal and the draft Senate bill, which achieved this firewall while
also allowing some level of flexibility within individual states.
Strategic Conservation
One of the best opportunities we have to advance conservation in
spite of tight budgets is to adopt what we call ``strategic
conservation.'' Historically, our conservation delivery system has been
designed to provide assistance to anyone who signed up as a cooperator.
This has done a great job getting a base of conservation on the land,
but when you measure it against the significant challenges we face as
an industry, it can amount to what NRCS Chief Dave White calls ``random
acts of conservation.'' Prior farm bills have started a move to more
strategic conservation through programs like the Cooperative
Conservation and Partnership Initiative (CCPI) and the Agricultural
Water Enhancement Program (AWEP). We need to continue that move in the
coming farm bill.
Strategic conservation is founded on the basic principle that all
acres are not created equal. Conservation challenges are concentrated
in particular parts of the landscape. For instance, some fields are
more prone to runoff than others, some watersheds have more acute water
quality problems, and some regions contain more threatened wildlife
habitat. We need to have a mechanism to concentrate our efforts in
these areas and get a critical mass of conservation on the ground. This
strategic approach will help us to really move the needle on our most
critical conservation challenges, which in turn will help stave off or
beat back regulation and demonstrate to the public that agriculture is
improving the environment.
Past efforts to focus on critical areas have been derailed when it
seemed that bureaucrats were making arbitrary decisions as to which
areas were important and which were not. This is why we support a
bottom-up model where local stakeholder partnerships identify a
conservation challenge and apply through a merit-based system to
receive NRCS assistance in addressing it.
One of the most important benefits of strategic conservation is
that producers can be involved in driving the effort. Farmers and
ranchers know best what works on their land and, with technical
assistance support, how to implement it most effectively. Involving
them up-front in a strategic initiative with a clearly defined goal can
help the initiative succeed by improving participation and developing
win-win solutions. For instance, the success of the NRCS Sage Grouse
Initiative is due in part to the leadership of local ranchers, who saw
the production benefits of improving wildlife habitat.
AFT has had success leading a CCPI project to reduce nitrogen
losses in the Upper Salt Fork Watershed in Champaign County, Illinois.
This project has significantly raised awareness of the issue and used
targeted approaches to increase adoption of innovative practices that
retain nitrogen fertilizer on farmland, including split fertilizer
applications. Local farmers and conservationists alike have praised the
partnership-based project structure.
Strategic conservation can do a lot for the cost-effectiveness of
conservation. For instance, according to USDA, conservation efforts in
the Upper Mississippi River Basin would be four-to-five times more
effective at stopping per-acre phosphorous, nitrogen and sediment
losses, if they were applied to the right acres. This shows in stark
terms just how effective it is to focus conservation efforts on
``critically under-treated acres.'' By conducting scientific
assessments at the beginning of the effort, strategic conservation
efforts can identify these critical acres and direct financial and
technical assistance to the producers who manage them. This
simultaneously helps the farmers who are most in need and maximizes
environmental benefits from our limited conservation dollars.
Finally, strategic conservation can strengthen the current
conservation delivery model by enabling partnerships among diverse
stakeholders. Partnerships are critical to the success of efforts that
involve a wide variety of interests and that cross political
jurisdictions, as many resource concerns do. They can improve outreach
and engagement, bring additional resources to the table, break down
administrative barriers that would otherwise exist, and extend the life
of the project beyond the day when the Federal funding dries up.
The 2012 Farm Bill must enshrine strategic conservation as an
essential tool in the conservation toolbox and outline standards and
procedures to ensure effectiveness and accountability. In order to be
most effective, individual projects should be able to draw on each of
the core conservation programs--working lands, easements, and land
retirement--so that they always have access to the right tool for the
job. To ensure that the strategic conservation model demonstrates its
worth and maintains the support of agricultural producers and taxpayers
alike, we propose that every project should be required to collect
outcomes data and provide public reports on their achievements. The
Super Committee proposal and the draft Senate bill both included a
Regional Conservation Partnership Program that fits this model, and I
urge this Committee to include a similar structure in your bill.
The potential benefits of strategic conservation are so great that
we would support devoting up to 20% of the mandatory funding for the
core conservation programs to this approach. This would reserve the
majority of conservation funding for producers across the landscape,
while making a bold investment to help solve the most vexing
conservation challenges that we face.
Conservation Stewardship Program
We strongly support the Conservation Stewardship Program (CSP)
because we believe it plays a unique role in the suite of conservation
programs. In light of budget constraints, CSP's distinctive aspects
must be accentuated to ensure that it complements the Environmental
Quality Incentives Program, and steps must be taken to ensure that CSP
is delivering the maximum additional benefits with every contract.
CSP's unique features include:
(1) Whole-Farm Systems: CSP requires producers to enroll their
entire operations and focuses on management-based conservation
systems that apply to the entire production system, not single
practices for individual areas of the farm.
(2) Five-to-Ten-Year Contracts: CSP contracts last for 5 years with
the possibility of renewal for another 5 years, as opposed to
EQIP contracts, which finish when the conservation practice has
been applied. This enables adoption of more complex
conservation systems.
(3) Baseline Performance: Producers must have attained a
``stewardship threshold'' of conservation for at least one
resource concern prior to enrolling in the program, which gives
producers an incentive to apply basic conservation, either
through EQIP or independently, in order to gain acceptance into
CSP.
(4) Minimum Performance Requirement: Producers must attain the
stewardship threshold for at least one priority resource
concern by the end of their contract term. This focuses the
program on the most important local problems and gives
producers a target to shoot for.
(5) Performance Measurement: Acceptance into the program and level
of payments are based on the additional conservation
performance that producers commit to achieve over the life of
their contract. This represents the beginning of a much-needed
paradigm shift in the conservation programs, from focusing on
the ``outputs'' that program can achieve, such as acres of
practices or miles of fence, to focusing on the actual
conservation ``outcomes'' that deliver real benefits for the
land.
Given these unique benefits of CSP, we believe that EQIP and CSP
must remain separate, rather than being merged. The distinctions
between them are too great. However, it is imperative that EQIP and CSP
be coordinated so that producers are not confused and each program can
specialize and excel in its own objectives. We believe that the
following proposed changes would make CSP both more distinct from EQIP
and more complementary of it. Our three main program changes--
strengthening the focus on priority micro-resource concerns, improving
additionality, and continuing the move towards pay-for-performance
conservation--make it clear that CSP is focused on helping farmers and
ranchers take additional steps to achieve a high level of conservation
performance on a whole-farm basis. EQIP remains the go-to program for
addressing discrete conservation challenges on an operation and
implementing a basic level of conservation.
First, we propose that the program ranking criteria be modified to
strengthen the focus on local conservation priorities. Currently, NRCS
State Conservationists select 3-5 priority macro-resource concerns, out
of a total of eight, to focus on in the different regions of their
state. These macro-resource concerns are relatively blunt instruments:
Soil Erosion, Soil Quality, Water Quantity, Water Quality, Air Quality,
Plants, Animals, and Energy. We recommend that State Conservationists
instead be required to select 5-6 priority micro-resource concerns out
of a total of 28. Micro-resource concerns are much more detailed.
Examples include gully erosion, soil salinity, insufficient water,
nutrient loss, airborne soil particulates, and terrestrial wildlife.
Prioritizing at this finer level would significantly strengthen the
program's focus on the most pressing concerns, yet allow flexibility as
priorities change from year to year. It would more precisely reflect
the challenges in each CSP sub-state ranking area and provide a greater
measure of local control.
Second, steps must be taken to increase the amount of additional
conservation performance producers are required to achieve during their
contracts. Most importantly, the eligibility requirements should be
modified. Currently, the eligibility requirements for initial contracts
only require producers to address one priority macro-resource concern
to the stewardship threshold by the end of the contract period. We
recommend that producers be required to achieve the threshold level for
two priority macro-resource concerns. In addition, the contract ranking
factors should be tweaked to ensure that new conservation performance
is weighted more highly than existing performance. Finally, eligibility
requirements for CSP contract renewals must be increased to ensure that
producers are providing significant additional conservation benefits
through their renewed contracts.
Finally, CSP must continue to advance toward measuring producers'
actual conservation performance. This presents a technical challenge
for NRCS, and must be balanced against concerns for user-friendliness,
but it would greatly improve the program's cost-effectiveness, allow
more sophisticated application ranking, and help demonstrate the
program's public benefits.
Conservation Reserve Program
The Conservation Reserve Program (CRP) has been the subject of much
debate recently, in light of high commodity and land prices. We do not
presume to know the right number of total acres for this program.
However, we do believe that it is possible to adapt the CRP for today's
circumstances. In a nutshell, we believe that CRP must be focused on
retiring the most fragile land. There are currently 6-7 million acres
of highly productive land in the program, mostly as a result of the
practice of enrolling whole fields. Going forward, we believe that
whole field parcels in diverse landscapes should be split in order to
enroll the more sensitive areas while allowing the productive areas to
be farmed. This would increase the overall benefits per CRP acre while
integrating it more seamlessly into the working agricultural landscape.
Conservation Loan
I want to briefly mention another powerful tool for stretching
conservation dollars: the Conservation Loan Program that was included
in the 2008 Farm Bill. While it is located in the credit title, this
provision must be considered as part of the suite of conservation
programs.
The Conservation Loan Program offers a huge bang for the buck. Its
budget cost is near zero yet it yields $150 million in loans for
implementing conservation practices based on an approved conservation
plan. These loans help producers access up-front capital for large
conservation investments and allow them to amortize the cost.
Conservation loans must be fully repaid.
This program could be strengthened by revising the current statute
to allow USDA to guarantee up to 90 percent of the loan principal
amount, rather than 75 percent. This would bring conservation loans in
line with other USDA loan programs. In addition, the program must
maintain its current balance between direct loans and guaranteed loans.
The vast majority of conservation loans currently are direct loans
through the Farm Services Agency. However, the Office of Management and
Budget is pushing to offer only guaranteed loans. We believe that
producers should have the option to either seek a guaranteed loan
through a private lending source or to apply for a direct loan through
USDA.
Technical assistance
One method of improving the cost-effectiveness of the conservation
programs that is often overlooked is to provide adequate technical
assistance (TA). TA is the science-based process of assessing resource
concerns, educating producers about options for addressing them, and
designing conservation plans that fit smoothly within a farm operation.
TA helps ensure that producers apply fully functioning conservation
practices, reducing the likelihood that a buffer strip erodes or an
animal waste lagoon leaks. Producers often cite TA as the most
important factor influencing their adoption of conservation measures.
In many cases, excellent TA can render financial assistance
unnecessary.
The growth of the conservation programs over the past few farm
bills has severely stretched NRCS's TA resources. We have three
proposals to address this concern:
(1) Align Mandatory TA funding with Producer Needs: Currently, the
funding for technical assistance from mandatory farm bill
programs is only available after a contract is signed. This is
too late in the planning process. The trigger for charging NRCS
technical assistance to mandatory conservation programs should
be earlier in the conservation planning process, if the
producer's statement of objectives includes obtaining farm bill
conservation program assistance.
(2) Leverage Private Resources: The use of third party technical
service providers can augment NRCS resources by providing
certified soil and water conservation professionals to assist
producers plan and implement conservation practices in
locations where the workload exceeds the capacity of local
field offices.
(3) Focus TA Resources on Critical Areas: NRCS must be enabled to
focus field staff to address high-priority resource concerns in
order to achieve more intensive planning, outreach and
implementation on those concerns.
Conservation Compliance
I have laid out a number of changes that we believe can strengthen
the conservation title programs and make them more cost-effective.
There is one additional conservation provision that is highly
effective, voluntary, and doesn't add to the Federal budget:
conservation compliance. Conservation compliance is an important good-
government provision. It ensures that we are not paying producers out
of one hand to take actions that will negatively impact natural
resources, while also paying them out of the other hand to implement
conservation practices. It only applies to producers who choose to
accept certain USDA program payments. Under conservation compliance,
these producers must agree to implement basic conservation measures
that protect soil on highly erodible lands and must refrain from
draining wetlands for crop production.
Our modest proposal is that this system, which has applied to
commodity support payments and other programs since 1985, and which
applied to the crop insurance premium subsidies until 1996, be
reattached to crop insurance premium subsidies going forward. This has
recently become a contentious issue. To my mind the controversy is
needless and shortsighted. I would like to offer three main points for
consideration on the subject.
First, conservation compliance is a highly effective tool in
protecting soil and wetlands. The USDA Economic Research Service has
reported that in the past 25 years, conservation compliance has reduced
annual erosion on our most vulnerable soils by 40%. That comes out to
295 million tons of soil saved annually--enough to cover the National
Mall from the steps of the Lincoln Memorial to the steps of the
Capitol, at twice the height of the Washington monument. In addition,
in that same time period we've gone from losing tens of thousands of
acres of wetlands on farms every year, to actually gaining wetlands.
Conservation compliance has been a major factor in achieving the goal
of no-net-loss of wetlands on farms. In short, compliance works.
Second, we are at risk of losing ground on compliance. It appears
that subsidized crop insurance is on track to become the centerpiece of
the farm safety net as Direct Payments go away. Since crop insurance is
not covered by conservation compliance, this may significantly reduce
the incentive for farmers to continue following their conservation
compliance plans--putting soil and wetlands in jeopardy. To be clear,
compliance would still apply to the conservation programs, disaster
payments, loans and the new Title I, but if it is not applied to the
core of the safety net, its effectiveness will be greatly diminished.
Third, conservation compliance should be integral to the new farm
safety net, no matter how it's configured. Since 1985, compliance has
been a successful part of farm policy, helping to justify spending
taxpayer dollars on commodity programs and giving farmers an additional
incentive to protect the long-term productive capacity of their land.
This arrangement needs to continue into the future. As crop insurance
becomes the focal point of the future safety net, we need to assure
that it carries the same responsibility farmers have become accustomed
to with farm programs of the past.
I believe compliance represents a covenant between farmers and
society. It is reasonable for society to expect a basic level of
stewardship to be applied in exchange for programs that help provide
some measure of economic stability on the farm. I know farmers know
it's the right thing to do, despite the political debate this issue
gets caught in here in Washington, D.C.
The good news is that if we make this change today, we will spare
farmers from difficult changes. They will not face new administrative
headaches. They will still be able to purchase their crop insurance,
get their bank loans, farm their land and receive crop insurance
indemnities, just like they do now. If a farmer is found to be out of
compliance at any point, and they exhaust the 1 year grace period
without coming back into compliance, they would merely lose eligibility
for the Federal crop insurance premium subsidy. Their crop insurance
coverage would not go away--and neither would their loans or their
indemnities--just the subsidy, and just until they come back into
compliance. And just to be very clear, no farmer will ever be kicked
out of compliance because of a big rainstorm--the program already has a
clear exemption for extreme weather.
If we act now, very few additional farmers would be subject to
conservation compliance. The impact would be limited to, at most, five
percent of wheat production, two percent of corn and soybean
production, and less than one percent of cotton and rice production.
The crop insurance industry also will not face major new headaches.
With better than 80% participation and a significant reinvestment in
the coming farm bill, crop insurance enrollments are not likely to be
in jeopardy. Crop insurance agents would not do any enforcement. NRCS
and FSA would spot-check and enforce just like they do now under farm
commodity programs.
Conservation compliance is a proven, effective conservation tool
and a key accountability measure to help ensure taxpayer support for
the farm safety net. It only makes sense that it should be attached to
the primary safety net program, as it has been in the past.
Conclusion
As the Members of this Committee well know, our country is richly
blessed with abundant natural resources, most of which are on private
farms and ranches. When producers and the public cooperate, we can do a
lot to safeguard the productive capacity of our farm and ranch land and
ensure abundant natural resources for all. The farm bill conservation
title is the opportunity for agricultural producers to come together
with their fellow taxpayers to address the challenges ahead and lay a
strong foundation for the future of agriculture. Again, we cannot
afford to lose ground.
The Agriculture Committees' recommendations to the Super Committee
and the draft Senate bill both contain many excellent conservation
provisions. I am confident that this Committee will be able to build on
these efforts to craft a robust conservation title, despite the budget
challenges.
Thank you, Mr. Chairman, for the opportunity to share our views on
these important issues. I would be happy to address any questions you
have.
* * * * *
American Farmland Trust is the nation's leading conservation
organization dedicated to saving America's farm and ranch land,
promoting environmentally sound farming practices and supporting a
sustainable future for farms. Since its founding in 1980 by a group of
farmers and citizens concerned about the rapid loss of farmland to
development, AFT has helped save millions of acres of farmland from
development and led the way for the adoption of conservation practices
on millions more.
The Chairman. Thank you, Mr. Scholl.
Mr. O'Toole, go ahead and proceed with your 5 minutes.
STATEMENT OF PATRICK O'TOOLE, PRESIDENT, FAMILY FARM ALLIANCE,
WASHINGTON, D.C.
Mr. O'Toole. Thank you, Mr. Chairman, Ranking Member
Peterson, and Members of the Committee. It is a great
opportunity for me to be here. I am President of the Family
Farm Alliance. We represent farmers and ranchers that irrigate
in the 16 western states.
Water is the bottom line for us. We work with the Bureau of
Reclamation. Bureau of Reclamation irrigators are our members.
We think that the conservation title of the farm bill is a
critical part of our future, and in the West, I appreciate the
comments of Mr. Peterson on what is working in his district,
and it is so interesting in this country how differentiated the
100th Meridian where rainfall is more prodigious than other
areas, but water is the bottom line for all of us. Whether it
be climate-driven, changes in how rainfall comes--last year we
had the wettest year in our history. In 1881 our ranch started.
We have been there 130 years. Last year was the wettest year we
ever had. This year is the driest.
What I will tell you in this farm bill, we are moving in a
future where there are clearly less dollars going to be
available to implement programs. You all know that. We know
that. What we need is flexibility. I use the word nimble. We
have to be able to understand that farmers are the ultimate
adjusters. We adjust ourselves, we--Family Farm Alliance wrote
a paper 6 years ago about climate. We were some of the first
ones to talk about the issue, and what we need is adaptability,
and we need a Federal Government that understands that
adaptability so that we can react to whatever that climate
reality is.
So I would tell you that Family Farm Alliance was involved
in the last farm bill. We worked on a program called AWEP, the
Agriculture Watershed Enhancement Program. There is magic going
on, I can tell you specifically, in the West. I call it the
Islands of Renaissance that are happening all over the western
part of the United States, and it is because farmers, ranchers,
conservationists have gotten together to understand the
critical needs of working together. We have a directive from
every part of the Federal Government, whether it be the State
Department or whether it be international agencies telling us
we have to produce more food. We have to do that in the context
of conservation.
Our ranch has sort of a motto that there is no intrinsic
contradiction between conservation and production if we are
smart enough to do both, yet it is going to be the programs
that come through with--in our minds and in the Family Farm
Alliance experience, much more on the ground relationships
where devolvement of some of the responsibilities that come out
of D.C. need be much more state-driven and much more local. So
I think that is our message.
One of the other messages that I was asked at a conference
recently, what are the things that make you wake up in the
middle of the night, and the number one priority for the Family
Farm Alliance is the fact that we do not have enough young
people in agriculture. I think this Committee is cognizant of
that, and we have to make a real effort to realize that we have
to have more young people. The numbers of eight percent of
farmers are under 36 years of age, that just isn't, in our
minds, sustainable.
I come from a district in southern Wyoming and northern
Colorado conservation district, and I don't know how Mr.
Schmidt ranks his membership of conservation districts, but we
think ours is one of the most successful. We have the largest
river restoration in the United States within our CS. We have a
project with Trout Unlimited on fish passage and endangered
species issues that is phenomenally successful. The message
that came to me as I came back here to talk to you was that it
is that local component, that ability to leverage dollars. And
what is happening in these Islands of Renaissance that I talk
about is not just the Federal dollars. The Federal dollars are
leveraged dollars for other dollars, and it is so critically
important and why we emphasize the AWEP program and that it be
done in a way so that entire irrigation districts, entire
conservation districts, can participate, leveraging the dollars
in a much more efficient way.
I thought on one other thing that is very recent in terms
of what wakes me up in the middle of the night, and we have had
such success with our river restoration. I call it the
integration of irrigation and fishery. I went out the other day
to check on some cows that we are calving, and I looked up over
this area that is filled with endangered fish, and there was a
whole rookery of great blue herons. Those herons are now
benefitting from the tremendous work we have done on the
fishery, maybe to the expense of some of the fishery. So,
everything is a balance, but what I would like to just express
to you one more time is that--make these programs as local as
possible and as flexible as possible, and give farmers the
chance--farmers and ranchers the chance to improvise on the
reality of the future that we are going to be looking at.
Thank you so much for this opportunity.
[The prepared statement of Mr. O'Toole follows:]
Prepared Statement of Patrick O'Toole, President, Family Farm Alliance,
Washington, D.C.
Good morning, Chairman Thompson, Ranking Member Holden, and Members
of the Committee. My name is Patrick O'Toole, and I serve as President
of the Family Farm Alliance (Alliance). I am honored to be here today
to discuss farm bill conservation programs and the challenges and
opportunities facing western farmers and ranchers who depend upon
adequate water supplies that irrigate the arid West.
The Alliance is a grassroots organization of family farmers,
ranchers, irrigation districts and allied industries in 16 western
states. The Alliance is focused on one mission: To ensure the
availability of reliable, affordable irrigation water supplies to
western farmers and ranchers. We are also committed to the fundamental
proposition that western irrigated agriculture must be preserved and
protected for a host of economic, sociological, environmental and
national security reasons--many of which are often overlooked in the
context of other Federal policy decisions.
Today, irrigated agriculture in the American west faces some of the
most vexing and complex challenges in addressing crucial water quantity
and quality issues. Water is the lifeblood of irrigated agriculture in
the West, and the ever growing competing demands for water many times
outstrips the available supply, setting up conflict between farmers and
cities, the environment and even between other farmers over limited and
uncertain irrigation water supplies. Given the increasing importance of
growing a safe, stable supply of abundant food for this nation and the
world, we must continue to manage and protect these limited water
supplies necessary to adequately and efficiently irrigate western crops
so important to meeting this goal. And, through the conservation
programs authorized by the farm bill, necessary water and natural
resource conservation and management tools and partnerships are made
available to farmers and ranchers that can help them to successfully
meet these challenges.
The future of American agriculture may very well hinge on policy
decisions your Subcommittee and the Committee on Agriculture will
address in the coming months. The Alliance believes that, by utilizing
the examples of successful American food and fiber producers, private
landowners, and on-the-ground conservation practitioners, your
Subcommittee has a unique opportunity to make farm bill title II
programs more effective, more efficient, and more user-friendly. This
is especially important now, with the tough budget times we are facing
and will continue to face in the near future.
The Alliance supports incentive-driven conservation programs, more
local and state control of the funding for those programs, increased
emphasis on deteriorating forested watersheds, and streamlined
implementation. We have specific recommendations on how to improve the
Agricultural Watershed Enhancement Program (AWEP). And we are concerned
that over half of today's active farmers and ranchers are between 45
and 64 years old. We must find ways to encourage young farmers and
ranchers to stay with agriculture, and farm bill conservation programs
that can be tailored to help achieve that goal.
We believe the practical experience of our membership, coupled with
the many agricultural water and natural resource policy issues our
organization has been involved with over the past several years gives
us a unique perspective to provide specific ideas on how conservation
programs can be delivered more efficiently and encourage more
participation from western farmers and ranchers. On behalf of the
Alliance, I urge you to consider the recommendations included in this
testimony to achieve this goal.
Introduction
The most important policy for keeping farms and ranches intact and
healthy, while providing the environmental protections sought by
society is a strong economy. Farm bill conservation programs fill an
essential niche in maintaining a strong quality of life in the rural
West. For more than 75 years, American taxpayers have invested in
conservation through the farm bill. These investments in private lands
and waters have delivered cost-effective benefits far beyond the
property lines of farmers and ranchers, extending robust returns for
every taxpayer who buys food at the market, enjoys fresh air and clean
water, and recreates in the great outdoors. These returns include
significantly improved fish and wildlife habitat, improved air, soil
and water quality, ensured long-term productivity of our agricultural
lands, increased outdoor recreational opportunities, and increased
financial returns for rural communities.
Rural America faces unprecedented challenges to its competitiveness
in crop production and its sustainability as a steward of natural
resources and wildlife habitat. Funding provided by Natural Resource
Conservation Service (NRCS) programs is leveraged many times over with
a multitude of private, state and other Federal funding sources--a
model of programmatic efficiency. Yet, the real power of farm bill
conservation programs has proven to be the ``boots on the ground''
ability to fully realize the potential for innovative and non-
traditional partnerships. Such partnerships have yielded measurable and
practical results shown to enhance competitiveness and bolster
sustainability.
``Western Water Management Case Studies''
The Family Farm Alliance played an active role in the development
of the last farm bill's conservation title. In particular, working with
a diverse coalition of commodity groups, conservation organizations,
and urban water users, we helped develop the framework that ultimately
became the Agricultural Water Enhancement Program (AWEP). In 2010, we
released a report (Western Water Management Case Studies) that
describes a dozen real-world examples of water conservation, water
transfers and markets, aging water management infrastructure problems,
and watershed restoration and enhancement projects. An important
objective of this report was to demonstrate that water managers,
ranchers and farmers are resourceful and creative individuals who
should play an active role in resolving the water conflicts of the
West. My testimony today incorporates some of the ``lessons learned''
from that report and touches on other matters critical to the future of
western farmers and ranchers' ability to provide food, fiber and energy
to our nation and the world.
Observations and Recommendations on Water Conservation Programs
In the western U.S., we need policies that encourage agricultural
producers to work together with each other and with many applicable
Federal and state agencies in a strategic, coordinated fashion. This is
especially true now more than ever before due to the limited financial
resources of the Federal Government and the need to continue to
effectively and efficiently protect our limited natural resources so
important to this nation's food productivity. We have prepared the
following observations and associated recommendations that we would
like to see incorporated into the next farm bill.
Concerns with AWEP
AWEP is a newly-established part of the Environmental Quality
Incentives Program (EQIP), a program administered by the Natural
Resources Conservation Service (NRCS). The main difference between
typical EQIP projects and AWEP projects is that applications for
project funding are made directly to the U.S. Secretary of Agriculture
from an organization on behalf of a group of agricultural producers who
intend to make water conservation improvements in a geographic area.
The Family Farm Alliance was part of a diverse coalition formed
during the crafting of the last farm bill that focused exclusively on
the development of the AWEP concept. Our primary motive for engaging in
this process was to provide additional funding opportunities for
irrigation districts and other agricultural water delivery and
management organizations to solve aging infrastructure and water
conservation challenges in a more coordinated and effective manner. The
original concept behind AWEP was to focus on cooperative approaches to
enhancing water quantity and/or quality on a regional scale. This new
program--in tandem with multiple conservation tools (including farmland
management practices, easement purchases, and ecosystem restoration
assistance)--was intended to provide flexibility to cooperative
nontraditional conservation partners to achieve improved water quantity
and quality goals.
Some of our members have witnessed firsthand the types of
challenges that AWEP advocates were trying to address. For example, the
2002 Farm Bill contained $50 million of EQIP funding to implement water
conservation measures in the Klamath Basin of northern California and
southern Oregon. These Federal funds were matched by $12.5 million of
local money from individual landowners. While the water conservation
measures undertaken undoubtedly contributed to improved water use
efficiency on individual farms, the EQIP program was not designed to
coordinate conservation benefits to meet specific regional goals, such
as conserving water for storage and future use. Irrigation districts
and other, larger conservation entities, which many times coordinate
conservation projects to maximize benefits, were not eligible to
compete for these funds to make the necessary improvements to the
delivery system to effectively capture this conserved water to meet
unmet demands. We believe this was an opportunity lost, one that could
have provided regional water supply solutions to some of the complex
problems experienced in Klamath.
Our interest in implementing AWEP, in part, was intended to address
these types of challenges. There is a need to fund projects that
provide water quality and/or water quantity improvements at a scale
that benefits more than just the individual participating producers. In
many instances, coordinated regional water conservation efforts can
lead to improved water quantities and quality that can only be
physically captured and managed by the water delivery organizations to
meet overall goals and objectives. We had hoped that AWEP would provide
substantial matching grant funding to irrigation districts or other
water agencies, which are already in a position to work with multiple
producers to achieve locally-generated, measurable objectives and
results. If consensus at a regional level can be reached on a
coordinated and integrated approach to conserving water to meet unmet
needs, there will be a better chance of positive community
participation and ultimately, a much larger return on the Federal
investment.
In our view, the original AWEP proposal was solid from a conceptual
standpoint, but by the time the concept made it through the legislative
and administrative process, the program that is now in place is not
being implemented in a manner consistent with the original vision. In
Arizona, for example, state NRCS local working groups came up with a
list of priorities and resource concerns at the request of NRCS
headquarters in Washington, D.C. While irrigation efficiency was one of
the highest priorities listed, local working groups noted that AWEP
simply was not being applied in a way that could maximize its potential
benefits. Rather than providing funds directly to irrigation districts,
the districts instead have been put in situation where they essentially
pass the phone number of the local NRCS office on to the individual
landowner, and NRCS takes over from there. In essence, this AWEP has
simply become an expansion of the existing EQIP program, which was
definitely not the intent when this concept was crafted 4 years ago.
We also have grave concerns regarding recent AWEP spending
priorities. Almost 50% of the $4.7 million in AWEP programs funded in
FY 2011 in seven western states emphasized ``focusing on the transition
of irrigated cropland to dryland agriculture use'' or to ``permanently
retire'' irrigated cropland. The original intent behind AWEP was to
find ways to help farmers and ranchers improve water conservation,
management, reuse and efficiency while keeping their operations viable.
Using farm bill conservation programs to eliminate irrigated
agricultural lands altogether at a time when worldwide demand for food
is growing every day defies common sense.
Recommendations to Improve AWEP
We must create opportunities within the new farm bill to further
improve upon AWEP's initial concept, such as:
Provisions should allow AWEP to provide direct payments to
irrigation districts to work directly with their landowner
member farmers on NRCS-approved coordinated water conservation
and management projects. While NRCS should still approve the
contracts, we believe more efficient results that provide
measurable, coordinated improvements on the ground will occur
if the irrigation districts distribute the funds and work with
the landowners directly. These districts can provide
opportunities for innovative solutions to water management
problems that currently cannot be achieved simply due to
bureaucratic barriers and narrowly focused programs.
Administrative expenses for such partners should be allowed,
but capped;
Irrigation districts and/or landowners should be allowed to
implement water conservation or water quality projects outside
of the normal projects funded under the EQIP program, given
that they can show improvements to either water quantity or
quality;
Irrigation districts or similar entities should be allowed
to be the basis for ``pooling'' arrangements, where the
benefits of a project which affects multiple landowners is
funded by ``pooling'' their individual AWEP interests into a
larger, coordinated project;
Direction must be provided to improve how NRCS program
administrators deliver timely and accurate information, provide
reliable and transparent processes, and set firm deadlines;
Administrative costs associated with any work performed by
the NRCS should be capped at a reasonable level;
The role of the Bureau of Reclamation in coordinating with
NRCS in the implementation of this program in western states
must be well defined, and should compliment the collaborative
philosophy (between the Departments of Agriculture and
Interior) embedded in the ``Bridging the Headgates'' initiative
endorsed by both the Bush and Clinton Administrations;
The program should provide assurances that the intent is not
to reallocate water away from agriculture, but to help stretch
limited water supplies for future regional beneficial use. We
do not believe AWEP monies should be used to retire farmland or
convert irrigated ground to dryland crops. It must also
recognize the traditional deference of Federal agencies to
state water laws and allocation systems;
The money obligated for these programs in the farm bill
needs to be ``no year'' money, so that it doesn't have to all
be obligated in the first year, with nothing left in later
years. This has proven to be real hindrance for projects that
take more than 1 year to build. Water managers have also
noticed that the NRCS funding levels fluctuate, and so they are
never sure what level of funding their farmers will receive.
During the application process to secure funding, NRCS should
agree how much a district is going to receive and ensure this
money will be there. To minimize administrative complications,
sharing some of the control over funds with the partnering
irrigation districts would simplify the responsibilities of the
NRCS. Districts could be held accountable through audits and
reports delivered to the NRCS. We would be happy to sit down
with Committee staff and NRCS leadership to help create a
workable and efficient solution to this challenge; and
We have previously shared proposed draft language with NRCS
that could address the issues concerning NRCS entering into
agreements with irrigation districts on AWEP activities in a
manner similar to how NRCS enters into EQIP agreements with
Tribes. We would be happy to share this with Committee staff to
gain additional thoughts on this matter.
We look forward to working with your Committee further to help
improve this vital program.
The Need to Support Local Efforts to Manage Western Watersheds: A Case
Study
We strongly believe that local, regional and state land managers
should be encouraged and provided the tools to lead watershed
enhancement efforts. The best decisions on natural resources issues
happen at the state and local level. The 2010 Family Farm Alliance case
study report includes one such example in the Little Snake River
watershed of Wyoming, where my family operates a sheep and cattle
ranch. Since 1991 numerous agencies, organizations, and NGO's have
recognized landowners and the local governmental natural resource
agency, the Little Snake River Conservation District (LSRCD), as
leaders in natural resource conservation. Numerous articles featuring
work conducted by the LSRCD, area land owners, and its partners have
been featured in popular publications like the Farm Journal, Beef
Today, Bugle Magazine, Wyoming Wildlife, and Range magazines as well as
peer reviewed journal publication in the Journal of Soil and Water
Conservation (2008) and the Journal of Rangeland Ecology (2009).
These successful efforts have all been locally-led. Conservation of
natural resources in the Little Snake River Basin integrated with
agrarian life style and perpetuation of this culture is the highest
priority for the local community in the Little Snake Basin. In Wyoming,
the local residents have passed a conservation property tax to carry on
this work. Since 1990 this tax has generated approximately $8 million
in local revenues. These funds have leveraged over $40 million dollars
in project money to implement conservation and development projects in
the Little Snake River Basin.
Today, the Little Snake River Basin hosts a myriad of wildlife and
robust natural resources while sustaining compatible agricultural uses
and natural resource-based recreation businesses. This was accomplished
through local leadership and commitment of the Little Snake River
Conservation District working collaboratively with over 30 different
partner organizations and agencies that have assisted in the
conservation of the Little Snake Basin, in a collaborative locally-led
process.
Innovation in Conservation Program Delivery
Direct funding to large umbrella organizations to implement
conservation on a landscape, district, or regional scale must be
included in the new farm bill. Excessive administration, expensive, and
time consuming delays are the norm under the current system, where
numerous individual contracts are held with individual land owners.
Significant administrative and financial savings could be realized
through single contracts with umbrella organizations such as
conservation districts, irrigation districts, watershed coalitions,
grazing associations, and other nongovernmental organizations that
could significantly decrease the cost of program delivery and increase
efficiency.
There are over fifty farm bill programs, including dozens under the
conservation title--CRP, WRP, EQIP, AWEP, etc. Some of these programs
should be consolidated. Also, under current policies, agency officials
in Washington, D.C. allocate these funds--based on Federal, national
priorities--and the states are handed down specific funding for each of
the individual programs. So, for example, one state may receive from
Washington, D.C. $6 million in WRP funds which may not even be needed
in that state, whereas EQIP programs which are in high demand in that
particular state are under-funded. Our members believe local farmers
and ranchers who are interested in implementing conservation projects
would be better served if the Federal NRCS puts all the conservation
money for a given state into just a handful of funding programs. Then--
let the states determine which programs get funded.
The present priority system places too much emphasis on whatever
national policy is driving current decision-making. In the past, the
states local priorities drove 50% of the decision-making criteria. Now,
it appears that projects are first evaluated on whether or not they
meet national priority, which accounts between 10-25% of the total
ranking. In essence, this ends up disqualifying meaningful local
projects, and by default drives funding towards those river basins
which have the most national political clout.
Local and state priorities should be the drivers of conservation.
One size does not fit all. Conservation needs of a rice farm in
Arkansas are much different than those of a rancher in Wyoming or a
coffee producer in Hawaii. Local control for identification of
conservation needs and allocation of funding must be restored. We
believe the national priority ranking criteria should be completely
eliminated, and instead, a block of conservation funds should be
provided to each state, where local and state priorities end up driving
how funds are spent on the ground, consistent with each program's
authorities and goals. States should be allowed to voluntarily assume
primacy for implementation of the conservation title of the farm bill
with block grants to the states. This would result in increased
efficiency and delivery of conservation needs within each state. Most
state have mirror agencies, Departments of Agriculture, Wildlife,
Natural Resources, and Engineers that have the capacity to implement
conservation programs. This type of approach is already in place for
portions of the Clean Water Act. Significant cost saving to the Federal
Government could be realized by reduction in duplicate effort with the
states.
Reorganization of USDA
Another concern expressed by many of our farmers and ranchers is
that, unlike the situation that occurred prior to the 2002 Farm Bill,
Farm Services Agency (FSA) and NRCS are both now staffed to provide
financial accounting services. Since inheriting the financial
administration of the conservation title in the 2002 Farm Bill, NRCS
has become increasingly a financial administrative agency, with the
Government Accounting Office (GAO) continually redirecting the agency
to move towards financial administrative compliance and accountability.
This has resulted in shifts in expenditures away from providing
conservation technical assistance to farmers and ranchers in addition
to changes in personnel within the agency from soil scientist and
agronomist to contract specialist and accountants. In a nutshell, this
can lead to both agencies using precious conservation dollars on
accounting duties, when those funds would be better served supporting
on-the-ground conservation projects.
We recommend that the next farm bill direct that accounting
services be placed back into the hands of FSA, where those duties were
competently performed prior to the 2002 Farm Bill. We want to see NRCS
doing what it does best, which is providing conservation technical
assistance to all producers. This could ultimately better position NRCS
at the local level by putting more emphasis and funding in support of
state and local conservation experts, instead of placing them in a
position where they have to crack the whip on program accounting.
Streamlining the functions of both agencies would also result in
significant savings while having no impact of delivery of the farm
bill. Savings would be realized in personnel, equipment, supplies,
transportation, and overall overhead expenditures.
Conservation Recommendations from Related Farm Bill Policy Forums
The Family Farm Alliance continues to build coalitions and create
alliances to advocate for constructive changes to the farm bill
conservation title that benefit irrigated agriculture. We are lead
partners in the Johnson Foundation national freshwater ``Call to
Action'', the Western Agriculture and Conservation Coalition, and the
2011 blue ribbon panel convened by the Natural Resources Conservation
Service. I also serve on the advisory committee for AGree, a new
national high-profile initiative to transform food and agriculture
policy. All of these forums will likely have an influence on the
emerging farm bill. I'd like to summarize below some of the key
recommendations derived from two these forums, which I believe fortify
the general philosophy contained in our above recommendations.
Recommendations of the Western Agriculture and Conservation Coalition
A western coalition of agricultural and conservation organizations
has come together to urge that Congress pass the farm bill this year
and maintain conservation program funding. As a member of the steering
committee for the Western Agriculture and Conservation Coalition, we
seek to advocate for balanced management of resources in the rural
West. Following the 2012 Family Farm Alliance annual conference in Las
Vegas last February, we met with representatives of the California Farm
Bureau Federation, Trout Unlimited, Wyoming Stock Growers Association,
The Nature Conservancy, Arizona Public Lands Council, Environmental
Defense Fund, Public Lands Council and the Irrigation Association and
announced the formation of this unique coalition, which seeks to
advocate for balanced management of resources in the rural west. The
goals of the Coalition are to support the common interests of
agriculture and conservation through targeted education, advocacy, and
outreach and to engage decision makers and resource managers in the
spirit of collaboration to further a shared vision for a rural west
that is economically and environmentally sustainable. For the 2012 Farm
Bill, this Coalition believes:
Priority Title II programs must receive sufficient funding
so that on-farm operational, resource conservation, local
economic, and rural sustainability goals are met;
Enhanced programmatic efficiencies can be achieved, which
will facilitate access to program funding, and lead to more
effective project implementation and fewer obstacles for
landowners and conservation partners. Improving the
Agricultural Water Enhancement Program is one such example;
Program delivery could be improved and yield broader
positive impacts if inter-agency cooperation among and between
resource management agencies and the USDA was better-defined;
and
Local, regional and state land managers should be encouraged
and provided the tools to lead watershed enhancement efforts at
the landscape level.
From a personal standpoint, working with this coalition has been
positive and rewarding, and a refreshing change from some of the tired
and worn messaging we constantly hear from more agenda-driven activist
groups who use the farm bill as a forum to actually denigrate farmers
and ranchers. This is unfortunate, because this sort of negativity does
not reflect what is truly happening on the ground. Our recent
involvement with the Coalition leads us to believe that policy makers
and the public appreciate the positive examples of how conservation
groups and farmers and ranchers can work collaboratively with
government agencies on ``win-win'' solutions that are good for
agriculture and the environment. We should be thinking of ways to
mobilize the public to act favorably on issues that are critical to
maintaining economically viable ranching and conservation of resources
and to demonstrate the important partnership between land stewards and
conservation interests.
The Coalition has emphasized that continued funding of Title II
priority programs produces results that are timely, effective, more
efficient and jobs-oriented. This coalition continues to urge Congress
to preserve funding for USDA conservation programs and to take steps to
provide farmers and ranchers with the resources necessary to continue
enhancing soil, water quality and wildlife on agricultural land. For
further detail on the Coalition's specific recommendations, please see
the copy of the Coalition's March 2, 2012 letter to Congressional
agriculture committees, which is attached to this testimony.
Recommendations of the Resource Conservation Act Blue Ribbon Panel
In late 2010, I was appointed to a Blue Ribbon Panel established to
support the development of the NRCS Program and Policy Statement. The
first meeting of the Panel occurred in early 2011 in Washington. Over
the next several months, I helped organize and spoke at three western
regional workshops and the National Agricultural Landscapes (NAL)
Forum, held here in Washington, D.C. Several other Family Farm Alliance
leaders were chosen to speak at the regional workshops, as well. In the
end, we supported the following major recommendations that emerged from
the NAL:
Improve Jurisdictional Flexibility and Share
Responsibility--Local state, tribal and regional directors must
be allowed to make resource decisions and to innovate based on
local conditions.
Improve Program Efficiency and Inter-Agency Cooperation--
Greater facilitation of inter-agency learning and cooperation
is required to improve conservation outcomes.
Target Regulations and Reduce Uncertainty--the U.S.
Department of Agriculture (USDA) must harmonize regulations to
avoid redundant requirements that do not enhance protection.
Leverage Program Assistance to Maximize Program
Effectiveness--Partnerships and leveraging state, local and
private funding are essential to achieving resource
conservation goals.
Expand Market-Based Solutions--Government can play a
supportive role in developing ecosystem market regulatory and
environmental quality standards.
We urge your Subcommittee to review the findings presented at the
NAL Forum and seek to incorporate these recommendations and this type
of philosophy to improve delivery of farm bill title II programs.
The Critical Need to Incentivize and Encourage Young Farmers
We are in danger of losing a generation of young farmers, and
productive farmlands and western agriculture's traditional water
supplies are transferred to other uses as multiple demands for water
increase. This is all happening at a time when the United Nations
projects that the world will need to produce 70 percent more food by
2050 to keep pace with world population growth and hunger. Nationally,
the median age of active farmers in America has never been higher, with
the percentage of farmers under 50 years old continuing to plummet.
More than half of today's farmers are between 45 and 64 years old, and
only six percent of our farmers are younger than 35.
While there is renewed interest among young people to enter farming
today, unfortunately the larger trend is an increase in the average age
of the American farmer. To reverse this course, our country must take
bold action to ensure that aspiring farmers have access to land, health
care, capital, education and training. Congress should invest now in a
farm bill that helps young Americans enter into and succeed in farming,
and that creates incentives for diversified and sustainable
agriculture.
The next farm bill should create policies that can attract and
retain young farmers to benefit the future of American agriculture, as
well as the stability of America's food supply. One specific action
that would help would be for Congress to reauthorize adequate funding
for the Beginning Farmer and Rancher Development Program (BFRDP). More
generally, another means of bringing new faces into agriculture and
keeping young people in the business is to create a more certain,
relaxed and reasonable regulatory environment. Increasingly, we hear
reports that level of Federal regulations affecting American
agriculture has reached such a magnitude that family farmers and
ranchers fear regulations more than most other stressors in their
profession. These conversations are often about the frustration they
feel over the amount of time they spend dealing with regulations and
bureaucracy in managing their business. All of these regulations hit
small family farmers the hardest, since they often do not have the
resources at their disposal to deal with the maze of the required
paperwork and regulatory record-keeping. These sometimes daunting
requirements could be moving young people to choose careers other than
farming, at a time when there aren't many young people left in this
line of work.
Today, our own western farmers and ranchers are being subjected to
potentially restrictive and duplicative Federal regulations on many
fronts. Many of these rules have cropped up in just the past 2 years.
The related uncertainty that comes with all of this increased
regulatory scrutiny will make it much harder for these farmers to
survive in such a harsh economy. Eliminating just a few of these
farmers could impart huge limitations on our future ability to feed our
country and the world.
Western family farmers and ranchers need to be shown--through
leadership and development of common sense agriculture and water policy
priorities--that what they do everyday really does matter to this
country. The Family Farm Alliance has spent much of the past decade
developing specific, common-sense recommendations for more effective
regulations that would protect the environment, human health and safety
in a more streamlined and effective manner. While we understand that
the focus of today's hearing is on the conservation title of the farm
bill, this issue is critically important to the future of western
irrigated agriculture. At the appropriate time, we would be happy to
share those recommendations with you and other Members of the Committee
on Agriculture.
Conclusion
Throughout the western United States, family farms and ranches have
facilitated the conservation and stewardship of the region's natural
resources while anchoring our rich cultural heritage and identity. It
is a landscape and a way of life that works for rural economies and
resource conservation. Here, private land stewardship is the key to
continued conservation innovation, resource and habitat enhancements,
and sustainable working land partnerships. It is a region in which
farmers and ranchers have been finding ways to successfully balance
resource stewardship and their bottom line, thanks in part to the
availability of farm bill conservation programs.
We need Federal land and water policies that are based on sound
science and that reward producers who care about the environment in
providing affordable food and fiber and bringing economic health to our
rural communities. We need to encourage young agricultural producers,
rather than litigious, anti-agriculture activist groups. Properly
managing watersheds and encouraging Federal agencies to work with the
agricultural community to solve local water problems are imperative.
Thousands of water and land conservation projects have been
completed across the western United States, and these efforts should
continue. We urge this Subcommittee and the Committee on Agriculture to
continue to make farm bill conservation programs a priority and to fund
these programs accordingly.
We stand ready to further assist you in your efforts to more
effectively utilize farm bill programs to the benefit of both
agricultural production and natural resource conservation results.
Thank you for this opportunity to provide testimony to you on this
matter, which is very important to the family farmers and ranchers of
our membership.
Attachment
March 2, 2012
Hon. Debbie Stabenow,
Chairwoman,
Senate Committee on Agriculture, Nutrition, and Forestry,
Washington, D.C.;
Hon. Pat Roberts,
Ranking Minority Member,
Senate Committee on Agriculture, Nutrition, and Forestry,
Washington, D.C.
Re: Farm bill conservation priorities for coalition of western
agriculture and conservation groups
Dear Chairwoman Stabenow and Ranking Member Roberts:
Throughout the western United States, family farms and ranches have
facilitated the conservation and stewardship of the region's natural
resources while anchoring the region's rich cultural heritage and
identity. It is a landscape and a way of life that works for rural
economies and resource conservation. Here, private land stewardship is
the key to continued conservation innovation, resource and habitat
enhancements, and sustainable working land partnerships. It is a region
in which farmers and ranchers have been finding ways to successfully
balance resource stewardship and their bottom line, thanks in part to
the availability of farm bill conservation programs. Managing water
quantity and quality is a key resource concern for the undersigned
groups.
Unfortunately, these constructive partnerships and the
environmental benefits they generate will disappear if we cannot find
ways to bring more farmers and ranchers into the fold and encourage
young farmers to stay in the business. Nationally, the median age of
active farmers and ranchers in America has never been higher, with the
percentage of farmers under 50 years old continuing to plummet. More
than \1/2\ of today's farmers are aged between 45 and 64, and only six
percent of our farmers are younger than 35. The next farm bill needs to
reflect a philosophy that can attract and retain young farmers for the
future of American agriculture, and the stability of America's food
supply.
The most important policy for keeping farms and ranches intact and
providing the environmental services sought by society is a strong
economy. Farm bill conservation programs also fill an essential niche
in maintaining a strong quality of life in the rural West. For more
than 75 years, American taxpayers have invested in conservation through
the farm bill. These investments in private lands and waters have
delivered cost-effective benefits far beyond the property lines of
farmers and ranchers, extending robust returns for every taxpayer.
These returns include significantly improved fish and wildlife habitat,
improved air, soil and water quality, ensured long-term productivity of
our agricultural lands, increased outdoor recreational opportunities,
reduced regulatory burdens on farmers and ranchers, and increased
financial returns for rural communities. Farm bill activity should be
enhanced by further encouraging the development of private markets that
reward landowners for good actions on the ground while creating
environmental benefit.
For these reasons, a western coalition of agricultural and
conservation organizations has come together to ask you to pass the
farm bill this year and maintain funding for conservation programs
important for the West.
This coalition urges Congress to preserve funding for USDA
conservation programs and to take steps necessary to provide farmers
and ranchers with the resources necessary to continue enhancing soil,
water quality and wildlife on agricultural land. With this letter, the
coalition outlines a set of principles that lawmakers should observe as
they seek ways to trim the Federal deficit and proceed with writing the
conservation title of the 2012 Farm Bill. While many of the undersigned
organizations have additional priorities for the 2012 Farm Bill, the
following recommendations represent the priorities on which we have
reached consensus.
1. Agriculture Water Enhancement Program, Cooperative Conservation
Partnership Initiative, Wildlife Habitat Incentive Program,
Farm and Ranch Lands Protection Program, Grassland Reserve
Program, Environmental Quality Incentive Program are
particularly important to achieving conservation and rural
economic and social goals in the West. These programs in Title
II must receive sufficient funding so that on-farm and on-ranch
operational, resource conservation, local economic, and rural
sustainability goals are met. Some specific policy changes to
consider:
Strengthen conservation programs to increase accessibility
and ensure they work better for more producers.
Maintain current funding levels for the priority programs.
Eliminate $50K payment limit for WHIP.
Allow third parties to hold GRP easements directly after
execution, without requiring the easements to first be held
by USDA.
Ensure that EQIP remains available for use across all land
ownerships.
2. Enhance programmatic efficiencies to facilitate easier access to
program funding, more effective project implementation and
fewer obstacles for landowners and conservation partners (for
example, improving the Agricultural Water Enhancement Program).
Specific recommendations include:
Strengthen NRCS Technical Assistance capacity for both
program implementation and non-farm bill conservation
planning.
Consolidation should enhance conservation outcomes.
Consolidation of conservation programs must be structured
appropriately so as to increase flexibility for USDA while
maintaining purposes of priority programs like EQIP, GRP
and WRP.
In AWEP and CCPI, allow qualifying partners to help
producers address resource issues in a more flexible and
efficient manner so they can maintain profitability and
avoid potential future environmental regulatory actions.
Maintain current provisions in AWEP and CCPI requiring
partners to commit resources to projects while providing
USDA with discretion to prioritize proposals from partners
who offer the most additional resources for project
implementation.
Continue and expand applicability of WRP Reserved Rights
Pilot Program where determined by the USDA to be consistent
with existing conservation plans and as a tool by which to
achieve resource conservation objectives.
Remove 7 year ownership requirement for WRP.
Changes to CRP to provide more flexibility for adjusting
grazing frequency so long as the ecological functions of
the land and water are maintained. Additionally, allow wild
horses owned by the Bureau of Land Management to graze CRP
acres consistently with maintaining ecological integrity.
BLM would make payments to landowners for this service.
Changes to WRP, GRP, and FRPP to allow increased
flexibility regarding third party involvement including
management of easements and meeting non-Federal matching
requirements.
3. Program delivery could be improved and yield broader positive
impacts if interagency cooperation is better defined.
Additional recommendations:
Throughout the conservation title, ensure that priority be
given to projects that address the greatest resource
concerns most effectively. Provide for greater interagency
coordination at Federal, state and local levels in the
development and delivery of conservation.
Ensure that the long tradition of partnerships among USDA,
private landowners, and conservation partners is continued,
encouraged and expanded.
4. Local, regional and state land managers should be encouraged and
provided the tools to lead watershed enhancement efforts.
NRCS at the state level should be encouraged and provided
the resources to more effectively engage with partners in
watershed planning, enhancement and restoration efforts.
Strengthen partnership-driven programs such as AWEP and
CCPI, which allow partners including local, regional and
state land managers to lead watershed enhancement efforts.
Provide for greater flexibility within such partnership
programs, including making the funding approved for such
projects ``no year'' money, thus enabling large and complex
watershed-scale conservation initiatives to be leveraged to
their greatest potential.
5. Support Beginning Farmers and Ranchers.
Reauthorize funding for the Beginning Farmer and Rancher
Development Program (BFRDP).
We appreciate your consideration of our interests and look forward
to working with you to put together the strongest conservation title
possible that is responsive to western as well as national interests.
Signed,
The Western Agriculture and Conservation Coalition Steering Committee:
Trout Unlimited
Family Farm Alliance
The Nature Conservancy
Public Lands Council
Environmental Defense Fund
California Farm Bureau
Arizona Public Lands Council
Wyoming Stock Growers Association
Irrigation Association
Affiliates:
The Freshwater Trust
Montana Stock Growers Association
CC:
Hon. Frank D. Lucas,
Chairman,
House Committee on Agriculture;
Hon. Collin C. Peterson,
Ranking Minority Member
House Committee on Agriculture.
The Chairman. Thank you, Mr. O'Toole. Now I yield to the
Ranking Member for the purpose of the introduction of our next
witness.
Mr. Peterson. Thank you, Mr. Chairman. Mr. Nomsen is a
constituent of mine, even though he works for a national
organization which I would say is the premiere group in terms
of providing wildlife habitat technical assistance and
benefits. He and I were at a Pheasants Forever banquet in my
district a couple of weeks ago, and that little chapter there
in Otter Tail County raised $3 million of private money to work
with what we are doing here in Congress. So Mr. Nomsen has been
the lead guy on the conservation issues in the last couple farm
bills for the wildlife interests, and we welcome him to the
Committee.
STATEMENT OF DAVID E. NOMSEN, VICE PRESIDENT OF
GOVERNMENTAL AFFAIRS, PHEASANTS FOREVER, INC., ST. PAUL, MN
Mr. Nomsen. Thank you, Mr. Chairman, Ranking Member
Peterson. You know, that Otter Tail chapter banquet that we
were at, Mr. Peterson, was Minnesota's leading chapter last
year and as you mentioned, they did $3 million worth of work
out there with our farmers and landowners in that area, a
tremendous success story for the Otter Tail chapter.
It is my pleasure to be here today also representing the
views of the Association of Fish and Wildlife Agencies, Ducks
Unlimited, the Izaak Walton League of America, Pheasants
Forever, the Theodore Roosevelt Conservation Partnership, the
Mule Deer Foundation, Masters of Foxhounds, the Campfire Club
of America, Wildlife Forever, the Archery Trade Association,
the Wildlife Management Institute, Hope and Young Club, Quail
Unlimited, the Boone and Crockett Club, the Dallas Safari Club,
the National Rifle Association, Orion the Hunter's Institute,
the Wild Sheep Foundation, Delta Water Fowl, the Catch a Dream
Foundation, and Whitetails Unlimited.
Clearly, farm bill conservation programs are of importance
to our nation's sportsmen and sportswomen, and of course,
support our nation's hunting heritage.
The farm bill conservation title is driven by proven
successful programs, and we certainly support programs like
Conservation Reserve and the Wetlands Reserve Program. The
Voluntary Public Access Habitat Incentive Program, or ``Open
Fields'' Program, was part of the 2008 Farm Bill, and while it
is relatively new, it has been a tremendous success. Access to
private lands is incredibly important to all of our members,
and farmers and landowners benefit from reduced liability in
these situations, so it has become a real win-win across the
country to complement conservation and lands that are open to
the public for hunting.
I would like to caution the Committee, however, about the
Conservation Reserve Program. I have lived in the prairie
region of the country, the northern plains for my entire life
and career. I have lived in Iowa, South Dakota, North Dakota,
and now in Minnesota, of course, and I too have never seen the
pressures that are on the landscape right now. You cannot drive
anywhere without coming across new rock piles that are out
there on native prairies, lands that have never, ever seen a
plow before, very shallow, thin soils in some cases, on very
steep slopes. Shelter belts being plowed up, CRP lands leaving
the landscape, and in some cases, these decisions just aren't
going to be sustainable, and I am very concerned about what is
happening out there right now.
I am glad we have the Conservation Reserve Program to help
with these issues. CRP now has a 25+ year history, becoming one
of USDA's flagship most successful conservation programs, and
it has evolved and it needs to continue to evolve to fit that
landscape and work with our nation's farmers and landowners.
You hear a lot about the targeting of the CRP Program, and I
would like to mention that in my view, when you talk about
targeting, you also talk about that mix of large tracts of CRP,
along with selective small areas. We cannot have a CRP that is
just buffer strips and small odd areas here and there. While
that may work for some species of wildlife that are edge
species and don't need those types of habitats, if we want to
have a CRP that works for the wildlife legacy that helped
reauthorize that program in the 1990s, we are talking about a
program that doubled and tripled pheasant populations, provided
several million more water fowl annually to the fall flight.
For those types of benefits to continue, we do need large
tracts of lands in CRP, planted to good covers, and managed
appropriately for wildlife and wildlife benefits.
CRP has many other benefits, of course, as well. I recall
testifying before this same Subcommittee a number of years ago.
One of the points in my testimony in the mid-1990s was the fact
that the CRP Program was providing the economic stability and
security to the point that 28 percent of North Dakota's farmers
were still on the farm because of CRP. Clearly, times have
changed, but it is a point that really talks about the strength
of that program over time, and it needs to continue as a
flagship program.
In 2007, commodity prices spiked somewhat and about 2\1/2\
million acres mostly left the CRP Program. Right now we are in
the middle of a general signup for CRP, and as others have
indicated, probably about 3 million acres or so is going to be
leaving the program as well, a majority of those lands likely
coming back into commodity production. My point is that the
farmers, the landowners, the contract holders are making those
decisions, and the program is working and it needs to continue
to work on a voluntary basis with those farmers and landowners
making their best decisions about what to do with those lands.
Last fall, as the leadership of the committees worked on
the Super Committee process and worked up a framework for the
farm bill, we were pleased that there was a lot of bipartisan
support from both sides, and like others before me, I am going
to support the Senate mark that is up this morning. I say that
reluctantly. We are going to take $6 billion away from
conservation programs. There are consequences to that in terms
of soil, water, and wildlife resources, and clearly, I am
concerned about the potential reductions, especially to the
Conservation Reserve Program. However, we have to find ways to
do more with less, and one of the things we are doing is
through our Farm Bill Biologists Program at Pheasants Forever,
helping farmers and landowners make good decisions about the
suite of resource conservation programs that are available.
Recently they helped with forums and workshops around the
country to provide CRP signup. They are doing a great job in
the West as sage grouse managers for the Sage Grouse Initiative
through NRCS as well.
Last, our groups support the continuation and the expansion
of conservation compliance. We are especially proud to support
the sodsaver provisions that were included in the Senate mark
this morning. It is a strong policy that will help complement
conservation programs that go forward at perhaps reduced
levels.
Thank you, Mr. Chairman, for the opportunity. I look
forward to the questions.
[The prepared statement of Mr. Nomsen follows:]
Prepared Statement of David E. Nomsen, Vice President of Governmental
Affairs, Pheasants Forever, Inc., St. Paul, MN
Mr. Chairman, Members of the Committee, my name is Dave Nomsen. I
am the Vice President of Governmental Affairs with St. Paul, MN based
Pheasants Forever and I reside in Garfield, MN. I am a professional
wildlife biologist with expertise in wildlife and farm bill
conservation policies and programs.
I am here today representing the 700 nationwide chapters of
Pheasants and Quail Forever and our 140,000 members. These chapters
complete on average more than 30,000 individual projects annually with
conservation minded farmers and ranchers on 300,000 acres. The vast
majority of these projects is completed on private lands and involves
grassland establishment and management. Projects involve the
establishment of nesting, brood rearing, and winter cover for
pheasants, quail, and a wide array of wildlife.
Collectively, our members and supporters represent a sizable cross-
section of our nations' citizenry, and we appreciate the increased role
and importance of conservation in agriculture and its role in private
land stewardship that has led to consensus and partnerships among
government and private interests, farm and commodity groups, individual
farmers and ranchers, and hunters and anglers.
I am pleased today to not only offer our views but also those of
the Association of Fish and Wildlife Agencies, Ducks Unlimited, Izaak
Walton League of America, Pheasants Forever, and the Theodore Roosevelt
Conservation Partnership.
While we all know that conservation programs protect the soil,
clean the water and create abundant wildlife habitat, what we often
overlook is the economic activity generated through conservation. For
example, hunters and anglers spend approximately $86.1 billion pursuing
their passions every year. Wildlife watchers spend roughly $51.3
billion each year. These expenditures include everything from rods and
reels, guns, ammunition, boats, decoys, bows and arrows and tree
stands, to hotel stays and dinners in small rural towns across the
country. Jobs related to these expenditures are important, especially
in the small, rural towns throughout America, and most importantly,
these are jobs that stay at home and cannot be exportable to other
countries. In South Dakota alone the total economic value of just
pheasant hunting has been estimated at $253 million dollars per year.
Adequately funded conservation title programs protect both the hunting
and angling economy as well as our agricultural and rural economy. It's
equally important to note that during these increasingly difficult
times, sportsmen spending generates $406 million in Federal taxes per
year and state and local taxes of $378 million per year. Conservation
programs like CRP and WRP help provide the backbone to support the
diversity of wildlife that drives this essential sector of our economy.
So, when you are weighing how much and which programs to cut in the
upcoming farm bill debate, and we all understand that that needs to be
done, remember, when you save money from reducing conservation
programs, there is a direct cost to the outdoor related sports industry
through loss of opportunities and loss of jobs in addition to lessened
levels of soil, water, and wildlife conservation on the landscape.
It is our view that even with possible cuts to conservation title
programs of up to nearly $6 billion as was outlined by Committee
leadership in last falls super committee process, that completing a
farm bill now is our top priority.
Sportsmen and sportswomen support a farm bill conservation title
that is driven by proven successful programs including the Conservation
(CRP) and Wetlands Reserve (WRP) programs, working lands programs
including the Environmental Quality Incentives Program (EQIP), the
Conservation Stewardship Program (CSP) and others. The Voluntary Public
Access Habitat Incentives Program (VPA-HIP) is a relatively new program
as part of the 2008 Farm Bill; however, this program has quickly become
a top priority program encouraging landowners to allow access to
private lands for hunting. Landowners are encouraged to incorporate
wildlife friendly management practices and landowners benefit from
reduced levels of liability. VPA-HIP supported state access programs
like the SD ``Open Fields'' or Nebraska's CRP-Managed Access Program
support strong rural communities as well as our nation's hunting
heritage. These are all examples of voluntary incentive-based programs
that help our nation's farmer and rancher stewards with projects and
practices that improve water quality, reduce soil erosion, and enhance
and protect wildlife habitat. All Americans benefit from a strong suite
of conservation programs.
Given the likelihood the successful CRP program will be reduced
further by several million acres, it's important to continue to target
remaining and new CRP lands to maximize benefits. We strongly support
continuation of the CRP-State Acres for Wildlife Enhancement (CRP-SAFE)
practices that are now in 36 states and more than 900,000 acres. SAFE
is an excellent example of CRP in harmony with existing farming and
ranching operations. I would caution the Committee, however, that
without continued efforts to keep CRP economically competitive and
viable, the program will continue to decline in areas of the country
like the northern plains. Additionally, we support language encouraging
maintaining the soil, water, and wildlife benefits from expired CRP
lands that exit the program. Some lands should be transferred to
easement programs like WRP and GRP, other lands should become priority
enrollment in working lands programs like EQIP and CSP. USDA should be
directed to maintain all possible acreages in various CCRP and CREP
programs to continue CRP's environmental and wildlife legacy.
We are strong supporters of the successful Wetlands Reserve Program
and urge the Committee to provide mandatory baseline funding for a WRP-
like program in the 2012 Farm Bill. The Wetlands Reserve Program (WRP)
has been instrumental in helping farmers find better uses for those
extremely difficult places to farm. WRP has enabled farmers and
ranchers to restore vital wetlands on their property, improving water
quality and providing vital wildlife habitat for not only waterfowl,
but threatened and endangered wildlife as well. Funds from WRP provides
a great tool for producers to invest in more and better tillable acres,
while deriving many other benefits from their WRP acres.
The Wildlife Habitat Incentives Program (WHIP) has also been a
proven successful program. As the Committee debates streamlining and
improving efficiencies, consider language supporting waivers for
certain participants and state lands that would benefit an agricultural
producer.
Farmers and ranchers, conservationists and sportsmen, and all
citizens have much to gain from successful, sustainable farming that
conserves soil, water and wildlife. The regional partnership program
developed in the Super Committee report is a great idea that needs to
find its way in this next farm bill. Regional partnerships fueled by
local diverse interest groups and supported by Federal, state and
private funders, are a key to accomplish watershed approaches and
solutions that will yield a good farm economy and a healthy sustainable
environment. I encourage the House Agricultural Committee to include
the Regional Partnership Program in this next farm bill. Following is a
current summary of the Pheasants Forever Farm Bill Biologist
partnership program:
Pheasants Forever (PF) and Quail Forever (QF) Farm Bill
Biologist (FBB) Program started in South Dakota in 2003 with
four positions; there are currently 98 partnership positions in
17 states. Since inception, these biologists have made over
70,000 landowner contacts impacting 2.2 Million acres.
Funding sources are diverse, and the effort would not be
possible without the financial support from State Fish and
Wildlife Agencies, USDA-NRCS (contribution agreements or
contracts), USFWS, Joint Ventures, Local PF/QF chapters,
watershed groups, foundations, and various other state and
local partners. FSA is also a key partner.
With the increasing wildlife focus as part of the farm bill
and various state initiatives (i.e., NRCS National Initiatives,
State Wildlife Action Plans), FBB's add wildlife technical
assistance capacity in USDA offices. They assist NRCS/FSA and
other conservation partners maximize the benefits conservation
practices provide on a landscape scale.
Our biologists may become involved in other opportunities
such as, expanding private land acres open to the public
through the USDA Voluntary Public Access and Habitat Incentive
Program (VPA-HIP), we currently host three positions in PA.
In August 2011, PF entered into an agreement with the
Intermountain West Joint Venture, USFWS, and NRCS to assist in
the delivering the NRCS Sage Grouse Initiative (SGI). PF will
host positions and provide administrative/financial assistance
for all SGI positions in 11 states. PF is also assisting with
the Lesser Prairie Chicken Initiative with three new positions
in TX, and one in NM.
------------------------------------------------------------------------
State Year Implemented Number of Biologists
------------------------------------------------------------------------
South Dakota 2003 8
Nebraska a 2004 16
Minnesota 2004 9
Ohio 2005 8
Wisconsin 2007 6
North Dakota 2008 5
Iowa 2009 12
Illinois 2010 2
Kansas 2010 8
Colorado 2010 3
Idaho 2010 5
Pennsylvania 2011 5
Missouri b 2005-2008, 2011 3
Washington 2011 2
Nevada 2011 2
Texas 2011 3
New Mexico 2011 1
-----------------------
Total................. 98
------------------------------------------------------------------------
a Nebraska also implemented a Coordinating Wildlife Biologist Program in
2007 that utilizes different partnerships to coordinate conservation
program delivery.
b Three year position, 2005-2008 that completed partnership agreement,
this became a permanent private lands position within the State
Wildlife Agency. Partnership was renewed in 2011 for three new
positions.
Mr. Chairman, it is the combination of both programs and policies
that is important as the overall funding levels from previous years are
decreased. We support continuing policies for sodbuster, swampbuster,
and conservation compliance. Conservation compliance provisions can
provide reasonable levels of support for soil and water resources and
we support tying these provisions to all forms of Federal support
including crop insurance. Copied below is a recent letter in support of
a strong sodsaver provision to help protect critical native prairie
resources. We recognize and appreciate this Committee's past efforts in
this area and hope that the 2012 Farm Bill will build upon those
efforts and strengthen provisions to help landowners make sound land-
use decisions.
Mr. Chairman, that concludes my testimony. Thank you for the
opportunity to appear before you today. I'd be happy to answer any
questions.
Attachment
American Fisheries Society * American Fly Fishing Tackle
Association * American Sportfishing Association * Archery Trade
Association * Association of Fish & Wildlife Agencies * Berkley
Conservation Institute * Boone & Crockett Club * Conservation Force *
Delta Waterfowl Foundation * Ducks Unlimited Izaak Walton League of
America * Mule Deer Foundation * National Shooting Sports Foundation *
Orion the Hunter's Institute * Pheasants Forever * Public Lands
Foundation * Quail Forever * Quality Deer Management Association * The
Nature Conservancy * The Wildlife Society * Theodore Roosevelt
Conservation Partnership * Trout Unlimited * Whitetails Unlimited *
Wild Sheep Foundation Wildlife Forever * Wildlife Management Institute
April 13, 2012
Hon. Debbie Stabenow,
Chairwoman,
Senate Committee on Agriculture, Nutrition, and Forestry
Washington, D.C.;
Hon. Pat Roberts,
Ranking Minority Member,
Senate Committee on Agriculture, Nutrition, and Forestry
Washington, D.C.
Dear Senators Stabenow and Roberts:
Our organizations represent millions of hunter and angler
conservationists, scientists, and outdoor enthusiasts who are closely
following the important debate over the upcoming farm bill
reauthorization. We appreciate your bipartisan cooperation last summer
in concluding draft farm bill recommendations for the so-called Super
Committee, and urge you to continue in that vein to support strong
conservation provisions robustly funded, as reauthorization proceeds
through regular order. We write you today to respectfully request that
you include a strong sodsaver provision in the next farm bill, modeled
on the provisions of the Senate floor-passed version of the farm bill
passed December 14, 2007, H.R. 2419, the Food and Energy Security Act
of 2007.
Farmers have long been some of the nation's foremost
conservationists. As you move forward to write a new farm bill, it will
be important to include effective economic support programs that will
allow farmers to continue farming in uncertain times and ensure that
farmland will not be developed for other uses that are incompatible
with conservation. At the same time, it will be equally important to
link those support programs to basic, sensible conservation provisions,
such as sodsaver, to encourage responsible stewardship of agricultural
land and direct program benefits to acreage that is most suited for
crop production. With budget pressure on existing USDA conservation
programs increasing, linking basic farm support programs to reasonable
conservation requirements makes sense.
In conclusion, we strongly believe it is vital that the farm bill
include effective economic support programs and that those programs be
coupled with a strong sodsaver provision. Doing so will promote
continued excellent stewardship of America's farmlands and foster
production of crops, clean water and abundant populations of fish and
wildlife. Thank you for your sincere consideration of our request, and
we look forward to working with you in the coming months to achieve
that goal.
The Chairman. Thank you, sir. I now recognize for 5 minutes
Mr.--is it Niemeyer?
Mr. Niemeyer. That is correct.
The Chairman. Mr. Niemeyer. It is good to see you again. I
think I saw you last in Springfield, Illinois----
Mr. Niemeyer. Absolutely.
The Chairman.--at a Subcommittee hearing there. So go
ahead, sir.
STATEMENT OF GARRY NIEMEYER, PRESIDENT, NATIONAL CORN GROWERS
ASSOCIATION, AUBURN, IL
Mr. Niemeyer. Chairman Thompson, Ranking Member Holden, and
Members of the House Agriculture Subcommittee on Conservation,
Energy, and Forestry, I appreciate the opportunity to testify
before you today on behalf of the National Corn Growers
Association regarding farm bill conservation programs. My name
is Garry Niemeyer. I currently serve as President of NCGA. My
wife Cheryl and I have been farming in Auburn, Illinois, for
the past 41 years, where we raise corn and soybeans. I am also
pleased to report that my testimony today has the full support
of American Farm Bureau Federation, American Soybean
Association, National Association of Wheat Growers, National
Cotton Council, National Farmers Union, and USA Rice
Federation. This broad consensus amongst farms groups is a
significant achievement and is the result of nearly a year of
discussions about how to structure conservation programs that
deliver environmental benefits, while also improving
productivity and reducing costs on the farm.
In light of the difficult fiscal and economic conditions
that our nation faces today, our groups recognize the
monumental task before this Committee to advance a new farm
bill that addresses a broad range of nutrition and agriculture
concerns across the country. Our growers also understand that
they must be part of the solution to address our nation's
budget deficits and are prepared to accept spending reductions
in farm programs. However, the size and scope of these cuts
must not jeopardize important program functions. We believe
there are opportunities in the conservation title to
consolidate or eliminate redundant programs in order to achieve
savings, while also working more effectively for producers.
Our organizations have expressed support for the Title II
framework in the 2012 Farm Bill that the Senate and House
Agriculture Committees began developing last fall. This
consolidates 23 conservation programs into 13, while
maintaining the same tools that were available to farmers in
the past. Our growers are seeking simplification, flexibility,
and consolidation in these programs, and we believe these goals
are achieved in the Senate Agriculture Committee's recent draft
language. As regulatory pressures on producers continue to
increase, working lands programs have become essential to
achieving environmental goals. The Environmental Quality
Incentives Program delivers conservation dollars to assist
landowners who face natural resources challenges on their land.
We support the continuation of a 60 percent carve out for
livestock producers and for the proposal to consolidate the
Wildlife Habitat Incentives Program into EQIP with a five
percent funding allocation.
The Conservation Stewardship Program was modified and
expanded in the 2008 Farm Bill, which has allowed a greater
number of producers to participate in recent years. CSP
prioritizes more complex management efforts by offering higher
payments. NRCS should be given greater flexibility in
determining the potential outcome of these practices for
farmers wishing to enroll.
The Conservation Reserve Program is the largest and one of
the most important USDA conservation programs, providing many
benefits, including wildlife habitat, water quality
improvements, and outdoor recreation. Considering current
budget constraints, our groups have been supportive of
gradually decreasing the CRP cap to 25 million acres to achieve
savings from Title II. However, environmentally sensitive or
fragile lands should be the program's priority, with the focus
on targeted enrollment and re-enrollment of field borders and
filters and buffer strips. As acreage leaves CRP, we believe it
is important that sound conservation practices be adopted for
those acres with an opportunity for landowners to enroll them
in the Working Lands Program. We also support conservation
cost-share work to be undertaken in the final year of the CRP
contract, as well as more flexibility on haying and grazing
options.
Farmers are exceptional stewards of the environment. Our
livelihoods depend on preserving land and water resources.
Voluntary conservation programs developed over the past 30
years help farmers and ranchers play a major role in improving
our environment, while also expanding their sources of income
and keeping them on the land. We hope this Committee will
choose to continue to invest in these programs through a robust
and efficient conservation title in the new farm bill.
Thank you for the opportunity to testify today on behalf of
NCGA and a number of other agriculture organizations, and we
hope--are hopeful that Congress can act swiftly to pass the
farm bill before the end of 2012. Thank you.
[The prepared statement of Mr. Niemeyer follows:]
Prepared Statement of Garry Niemeyer, President, National Corn Growers
Association, Auburn, IL
Chairman Thompson, Ranking Member Holden and Members of the House
Agriculture Subcommittee on Conservation, Energy, and Forestry, I
appreciate the opportunity to testify before you today on behalf of the
National Corn Growers Association (NCGA) regarding farm bill
conservation programs. My name is Garry Niemeyer, and I currently serve
as President of NCGA. My wife Cheryl and I have been farming in Auburn,
Illinois for the past 41 years where we raise corn and soybeans.
The National Corn Growers Association represents more than 37,000
corn farmers from 48 states. NCGA also represents more than 300,000
corn growers who contribute to check off programs and 27 affiliated
state corn organizations across the nation for the purpose of creating
new opportunities and markets for corn growers.
I am also pleased to report that my testimony today has the full
support of the American Farm Bureau Federation, American Soybean
Association, National Association of Wheat Growers, National Cotton
Council, National Farmers Union, and USA Rice Federation. This broad
consensus amongst farm groups is a significant achievement and is the
result of nearly a year of detailed discussions about how to structure
conservation programs that deliver environmental benefits while also
improving productivity and reducing costs on the farm.
As this Committee and the Congress consider legislation to
authorize a new farm bill, American farmers are preparing to take on an
even greater role in meeting the growing demands of world consumers.
The harsh reality is that billions of people in the world today remain
hungry and the numbers are rising, a trend the Food and Agriculture
Organization (FAO) of the United Nations reports will continue for
another 30 years. The FAO says this translates into needing to increase
agricultural production by 70 percent over this period. Others place it
at 100 percent. Many people cite these figures and discuss how
important it is that we reach these goals, although very few are taking
a critical and comprehensive look at our policy decisions today in
light of this objective. However, we are confident that with the right
mix of policies, U.S. agriculture will help the world to meet these
growing demands in a sustainable way, while at the same time remaining
a bright spot in our nation's economy and contributing to its recovery.
Our confidence comes from agriculture's ability, led by advances
here in the U.S., to generate and adopt technological innovations that
increase productivity and efficiency. Seed technologies, for example,
along with modern production and conservation practices have allowed us
to use far fewer resources while substantially increasing productivity.
We have become more sustainable, even while we help meet the pressing
need for an expanding food supply. In fact, the average bushels per
acre of corn increased from 114 in 1995 to 153 in 2010, a productivity
increase greater than 30 percent. These remarkable numbers and the
promise of new production technologies on the horizon translate into
U.S. farmers' ability to meet all our needs for food, feed, fuel and
fiber.
It is important to acknowledge that farm bill conservation programs
have had significant positive impacts over the past several decades,
which have led to lasting environmental improvements on agricultural
lands. The Field to Market initiative's 2009 report Environmental
Resource Indicators for Measuring Outcomes of On-Farm Agricultural
Production in the United States shows positive trends for all major
commodities in the U.S. A combination of technology adoption, improved
management practices, and voluntary conservation programs have resulted
in dramatic conservation benefits in U.S. corn production. Over a 20
year period from 1987-2007, soil erosion per bushel of corn decreased
69 percent, energy use per bushel of corn decreased 37 percent,
irrigation water per bushel of corn decreased 27 percent, greenhouse
gas emissions per bushel of corn decreased 30 percent, and land use per
bushel of corn decreased 37 percent.
In light of the extremely difficult fiscal and economic conditions
that our nation faces today, our groups recognize the monumental task
before this Committee to advance a new farm bill that addresses a broad
range of nutrition and agriculture concerns across the country. Our
growers also understand they must be part of the solution to address
our nation's budget deficits and are prepared to accept spending
reductions in farm programs. However, the size and scope of these cuts
must not jeopardize important program functions. Fortunately, we
believe there are opportunities in the conservation title to
consolidate or eliminate duplicative programs in order to achieve
savings, while also working more effectively for producers.
NCGA and the aforementioned agricultural organizations have
expressed support for the Title II framework in the 2012 Farm Bill that
the Senate and House Agriculture Committees began developing last fall,
which consolidates 23 conservation programs into 13 while maintaining
the same tools that were available to farmers in the past. Our growers
are seeking simplification, flexibility, and consolidation in these
programs, and we believe these goals are achieved in the Senate
Agriculture Committee's recent draft language.
As regulatory pressures on agricultural producers continue to
increase, working lands programs have become essential to achieving
environmental goals. The Environmental Quality Incentive Program (EQIP)
remains a popular program that delivers effective conservation dollars
to assist landowners who face natural resource challenges on their
land. Between 2009 and 2011, EQIP helped farmers and ranchers implement
conservation measures on more than 38 million acres. Above all, EQIP
should preserve the full flexibility needed to adjust the program over
time to focus on evolving issues and allow improvements to program
features based on national, state and local needs. We support the
continuation of a 60 percent carve-out for livestock producers, as well
as the proposal to consolidate the Wildlife Habitat Incentive Program
(WHIP) into EQIP with a five percent funding allocation.
The Conservation Stewardship Program (CSP) was modified and
expanded in the 2008 Farm Bill, which has allowed a greater number of
producers to participate in recent years. It is now one of the largest
USDA conservation programs, with nearly 38 million acres enrolled from
2009-2011. CSP prioritizes more complex management efforts, such as
advanced nutrient management, by offering higher payments. The Natural
Resources Conservation Service (NRCS) should be given greater
flexibility in determining the potential outcome of these practices for
farmers wishing to enroll in the program.
We support the creation of a consolidated easement program to
encompass the Wetlands Reserve Program (WRP), Grasslands Reserve
Program (GRP), and Farm and Ranch Lands Protection Program (FRPP). The
proposed changes would establish a more secure, longer term funding
source for these important programs rather than authorizing for the
duration of only one farm bill at a time.
The Conservation Reserve Program (CRP) is the largest and one of
the most important USDA conservation programs, providing many benefits
including wildlife habitat, water quality improvements, and outdoor
recreation. Considering current budget constraints, our groups have
been supportive of gradually decreasing the CRP cap to 25 million acres
to achieve savings from Title II. However, environmentally sensitive or
fragile lands should be the program's priority, with the focus on
targeted enrollment and reenrollment of field borders and filter and
buffer strips. As acreage leaves the CRP, we believe it is important
that sound conservation practices be adopted for those exiting acres
with an opportunity for landowners to enroll them in working lands
programs. We also support conservation cost-share work to be undertaken
in the final year of a CRP contract, as well as more flexibility for
haying and grazing options on CRP land.
Our groups support the creation of a Regional Conservation
Partnership Program by consolidating the Agricultural Water Enhancement
Program (AWEP), Cooperative Conservation Partnership Initiative (CCPI),
Chesapeake Bay Watershed Initiative (CBWI), and Great Lakes Restoration
Initiative (GLRI). This will allow USDA to leverage state, local, and
non-governmental organization funds to address targeted conservation
priorities.
The demand for technical assistance continues to increase, yet
funding for technical assistance has been relatively flat over the
years. We recommend that Congress provides adequate funding and
training for NRCS field staff to help address on-farm conservation
challenges. We encourage the Committee to look at a long-term view of
budgeting for technical assistance that balances national priorities
with local needs. In addition, the consolidation of programs should
result in the streamlining of the application processes to minimize
paperwork and ease implementation.
In certain regions of the country, weather patterns in recent years
have resulted in excess water and an increased desire to install
drainage management on fields. Farmers have requested certified
wetlands determinations from NRCS at a record pace, and currently,
there is a backlog of 13,000 requests over four states (North Dakota,
South Dakota, Minnesota, and Iowa). NRCS is working to accelerate the
process while also bringing more consistency to how the determinations
are made and ensuring mitigation options. Congress should provide
resources to ensure the backlog is dealt with as expeditiously as
possible.
One of the most important steps USDA took in the past decade was
the establishment of the Conservation Effects Assessment Program (CEAP)
in 2003 to develop a scientific understanding and method for estimating
the environmental effects of conservation practices on agricultural
landscapes at national, regional, and watershed scales. In the past 2
years, CEAP assessments have been completed for the Upper Mississippi
River Basin, Chesapeake Bay Region, Great Lakes Region, and Ohio-
Tennessee Basin. Using the survey work conducted by the National
Agricultural Statistics Service (NASS), CEAP is a highly efficient and
cost effective way to demonstrate the outcomes of the conservation
practices used by farmers and ranchers. CEAP also enhances NRCS's
ability to ensure that farmers and ranchers are focusing on top
resource challenges. Without the NASS-supplied survey data, CEAP would
not be able to provide its statistically valid and science-based
estimates of agriculture's conservation accomplishments and the
associated benefits for natural resources and the environment. This
Committee should ensure that CEAP and the underlying NASS survey
collection receives continued funding into the future.
Farmers are exceptional stewards of the environment because our
livelihoods depend on preserving land and water resources. We are
committed to leaving our environment in better shape than we found it
so resources can be passed on to the next generation to farm. Most
producers throughout America view protecting agricultural land as more
than a worthwhile goal. It is a lifelong commitment. Voluntary
conservation programs developed over the past 30 years help farmers and
ranchers play a major role in improving our environment while also
expanding their sources of income and keeping them on the land. We hope
this Committee will choose to continue to invest in these programs
through a robust and efficient conservation title in the new farm bill.
Thank you for the opportunity to testify today on behalf of NCGA
and a number of other agricultural organizations. We are hopeful that
Congress can act swiftly in the coming weeks and months to pass the
farm bill before the end of 2012.
Attachment
April 20, 2012
Hon. Debbie Stabenow,
Chairwoman,
Senate Committee on Agriculture, Nutrition, and Forestry,
Washington, D.C.
Dear Sen. Stabenow:
Farmers are exceptional stewards of their land and water resources.
They have to be. Their livelihood depends on preserving those
resources. Even more important for most producers is a desire to
conserve so that the resource can be passed on to the next generation
to farm. Most farmers throughout America view protecting agricultural
land as more than a worthwhile goal. It is a lifelong commitment. These
farmers not only lead by example on their own farms, but they actively
work to promote land stewardship elsewhere. Voluntary conservation
programs developed over the past 30 years help farmers and ranchers
play a major role in improving our environment while also expanding
their sources of income and keeping them on their land.
The undersigned groups urge you to oppose attaching conservation
compliance provisions to the crop insurance program. We fear this would
cause numerous unintended consequences, including the potential loss of
financing from our lenders, an undermining of the public-private
partnership between the Federal Government and crop insurance
companies, and a potentially unbalanced approach to a new mandate
(depending on whether such a program covers only program crop
commodities or is also applied to specialty crops).
The 1985 Farm Bill included two compliance provisions--highly
erodible land conservation (sodbuster) and wetland conservation
(swampbuster). The two provisions, collectively referred to as
conservation compliance, require that in exchange for certain U.S.
Department of Agriculture (USDA) program benefits, a producer agrees to
maintain a minimum level of conservation on highly erodible land and
not to convert wetlands to crop production.
Conservation compliance affects most USDA benefits administered by
the Farm Service Agency (FSA) and the Natural Resources Conservation
Service (NRCS). These benefits include commodity support payments,
disaster payments, farm loans and conservation program payments. If a
producer is found to be in violation of conservation compliance, a
number of penalties are enforced.
Some groups and individuals believe that crop insurance should be
added to the list of benefits that could be lost if a producer is found
to be out of compliance. Federal crop insurance premium assistance was
originally included as a benefit that could be denied under the
conservation compliance provisions; however, this was removed in the
1996 Farm Bill. This was due largely to the fact that Congress wanted
to encourage producers to purchase crop insurance and to do so at
higher levels of buy-up coverage so that ad hoc disaster assistance
became unnecessary.
Since elimination of direct payments appears inevitable and high
commodity prices have resulted in few or no countercyclical payments or
marketing loans, some are concerned there is no motivation for producer
compliance with conservation requirements. Such groups fail to
recognize that producers are the original conservationists and they
want to take care of their land. It will also still be required for
commodity support payments, disaster payments, farm loans and other
conservation benefits. Farm groups are willing to attach conservation
compliance to any new commodity programs encompassed in this farm bill,
but such linkage should not be required for crop insurance.
It is critical to maintain a workable crop insurance program.
Without it, many producers could not secure financing. In addition, if
there was a severe weather occurrence and producers became out of
compliance, serious issues could arise in their ability to secure
financing.
We believe it unwise to make any changes in this farm bill that
would dissuade producers from purchasing crop insurance. With
elimination of direct payments, crop insurance is an absolute necessity
for producers. If we do not have a workable crop insurance program and
a high level of participation in that program, we will invariably fall
back into the cycle of annual ad hoc disaster assistance programs.
It is also important to remember that implementing a crop
insurance/conservation compliance provision would not be simple, nor
are the details of such a proposal yet fleshed out. Who will enforce
these compliance provisions? With the FSA furloughing staff and
planning to close 130 offices, is there sufficient personnel? Will
compliance provisions be applied to owners of land or operators? Will
specialty crops be included under such a mandate or simply applied to
program crop commodities?
We appreciate your consideration of our views and urge you to
reject the linkage of crop insurance with conservation compliance
requirements.
Sincerely,
American Association of Crop Insurers
American Farm Bureau Federation
American Soybean Association
American Sugar Alliance
ARMtech Insurance Services, Inc.
CGB Diversified Services
Crop Insurance and Reinsurance Bureau
Crop Insurance Professionals Association
COUNTRY Mutual Insurance Company
Farm Credit Council
Farmers Mutual Hail Insurance Company of Iowa
Great American Insurance Company
Heartland Crop Insurance, Inc.
Independent Community Bankers of America
John Deere Insurance Company
NAU Country Insurance Company
National Association of Wheat Growers
National Barley Growers Association
National Corn Growers Association
National Council of Farmer Cooperatives
National Sorghum Producers
National Sunflower Association
Producers Ag Insurance Group, Inc.
Rain and Hail, LLC
Rural Community Insurance Services
Southwest Council of Agribusiness
United Fresh Produce Association
U.S. Canola Association
USA Dry Pea & Lentil Council
Western Growers
Western Peanut Growers Association
The Chairman. Thank you, Mr. Niemeyer. Thank you to all the
witnesses for your testimony.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority from Members
who were here at the start of the hearing, and after that,
Members will be recognized in order of arrival. I appreciate
Members understanding. I will proceed with the first 5 minutes
of questions.
I will start with Mr. Schmidt. Mr. Schmidt, you mentioned
in your testimony the importance of technical assistance in
administering conservation programs, and in fact, I couldn't
agree more. I think that is boots on the ground. Technical
assistance is incredibly important. In my opinion, the 2008
Farm Bill put more emphasis on administrative activities and
programs opposed to technical assistance and boots on the
ground. So I will start with you, sir. Would you agree with
this, and if so, how should we address this?
Mr. Schmidt. Thank you, Chairman Thompson, and that is so
critical. As Mr. Peterson spoke, we have dollars in agriculture
and we hope that atmosphere continues. We don't always know
that, but usually when there are dollars in agriculture, there
are individuals--producers looking for things to do the right
way. And that technical assistance, we know there are dollars
are--those kinds of things happening. We want to make sure that
those folks have the expertise to do whatever conservation
practice that they have in mind is done the right way.
Technical assistance is looked upon so strongly from that
initiative to help those folks who want to do the right thing,
how do they spend that money most wisely, most efficiently, and
we get the best impact of that conservation practice. So that
is why that TA is so important, that technical assistance is so
important, to help those producers, landowners try to do the
right thing with the right technical ability in their local
communities.
The Chairman. Thank you, sir.
Mr. Niemeyer, you stated that the demand for technical
assistance continues to increase, yet funding has remained
flat. Why specifically do you believe that has been the trend,
and what are your thoughts on the issue?
Mr. Niemeyer. Congressman, one of the things that I have in
my testimony is CEAP, Conservation Effects Assessment Program,
and this is where NRCS does assessments. We think that they
estimate the environmental benefits very effectively. We feel
that CEAP has been particularly important in the Chesapeake Bay
watershed and the Upper Mississippi River Basin to demonstrate
how farmers are doing conservation to the land.
As farmers face regulatory scrutiny, USDA needs a tool to
demonstrate where progress has been achieved and where
challenges still exist. It is always best to build on programs
around sound science and data so we can better understand where
to target future resources.
The Chairman. Thank you.
Mr. Scholl, you state in your testimony that in the
Chesapeake Bay, 80 percent of the lands need treatment, and 19
percent are critically under-treated. How can we help encourage
more farmers to enroll in these programs, especially the most
critically under-treated?
Mr. Scholl. Well, there are a number of things we can do.
One, a lot of the work that you are trying to do with this
Subcommittee that we have seen in some of the proposals
certainly help in terms of making sure that the programs we
have are understandable, they are easily accessible, and
relevant to the local needs of a local area, trying to direct
more program resources to opportunities where local people have
an opportunity to be able to develop partnerships and put
forward plans and ideas in terms of how they can effectively
deal with their local resource concerns are very important. And
of course there are going to be a number of issues or number of
opportunities as we see this bill continue to progress, to make
sure that there is adequate funding that can be strategically
placed in areas where we know we have significant challenges,
and clearly, the Chesapeake Bay is one. It also can be very
helpful in making sure the farmers, the producers have the
tools they need to be making the progress we want them to make.
The Chairman. Thank you. Mr. Scholl, you made it clear that
you believe that strategic conservation is a cornerstone in the
next farm bill. I want to get your opinion. Today the Senate is
marking up--and obviously it sounds like you have looked at
that. Do you believe that the Senate draft accomplishes this
goal?
Mr. Scholl. Yes, we do feel that it is a big step forward
in terms of making sure that the limited dollars we have
available will be put to strategic use. A number of the points
that I have raised in terms of developing local partnerships,
being able to target to local resource concerns, and frankly,
be able to compete for dollars to incentivize people to put
their best foot forward clearly is an approach that we think
can be successful. We have seen things like through the
Cooperative Conservation Partnership Initiative in the last
farm bill, that that kind of approach works and we think it
does probably hold the best promise in terms of making sure the
limited dollars we have available are going to get to the areas
where the greatest needs are.
The Chairman. Thank you. At the request of the Ranking
Member, I recognize Mr. Costa next, for 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman, and the
Ranking Member. I have another committee going on concurrently
and I need to get over there, but I do want to touch upon the
conservation title and its impact, because we have done a lot
of good work as a result of the 2008 Farm Bill that we all
worked on together that had terrific bipartisan support. It was
the only bill in that session of Congress that passed both
Houses, regular order, went through a Conference Committee, due
to the good leadership of Congressman Peterson and Goodlatte,
and hopefully we can repeat that.
Mr. O'Toole, you talked in your testimony about government
should be allowed to voluntary assume primacy on the
conservation title by using block grants to states, I believe.
Please walk me through how that would happen, and where would
the oversight be?
Mr. O'Toole. Well, our personal experience is that the
programs as they are designed right now, Idaho and Wyoming and
Colorado particularly, there is money turned back because it is
not an appropriate program for the state. There isn't enough
sign up, and it is our feeling that those decisions are much
better made at local--at a local level and at a state level.
Interestingly in Colorado and Wyoming, both states have
different matching capabilities. In Wyoming it is a wildlife
trust fund, and in Colorado it is----
Mr. Costa. Who would do the oversight of the block grants?
Mr. O'Toole. Who would do the oversight? I think that there
is a Federal role, but our family has done conservation
easements in both Colorado and Wyoming. There was an----
Mr. Costa. Would this create more work for NRCS or FSA?
Mr. O'Toole. Pardon?
Mr. Costa. Would this create more work for NRCS or FSA?
Mr. O'Toole. It is our perspective that it will create less
and it will be much more efficient by being more local. We have
had oversight, as I said, on the FRPP from D.C. and we found
that that process was not as effective as what was happening
locally with the various programs that occur within the states.
Mr. Costa. Mr. Nomsen, the EQIP program has been one of the
real highlights of the 2008 Farm Bill across the country, and
certainly in a host of efforts to conserve and focus on both
water and air resources efforts. It has been very successful in
the agricultural region in the Silicon Valley.
The focus on the Senate draft, I believe, incorporates, I
have been told, the Wildlife Habitat Incentives Program into
EQIP under wildlife habitat practices. I am wondering whether
or not you think that is an appropriate way to dovetail that in
and make it work. Frankly, our experience is probably true
across the country. It is oversubscribed and if we get a farm
bill out this year, we have to figure out ways to provide
greater support for it. Could you comment?
Mr. Nomsen. Thank you, Congressman. The EQIP program is a
tremendous program to help farmers and ranchers with working
lands, and I am very supportive of adding the element from the
WHIP program so we have wildlife incentive practices within
EQIP at at least five percent. You know, it is just a
tremendous program and we can do much more with it.
The current NRCS Sage Grouse Initiative is helping us put
range conservationists on the ground in many of the western
states, and it becomes a real win-win for ranchers and for
wildlife. The ranchers are benefitting from improved range
conditions, brush removal, prescribed burning, and some of
those efforts that can provide better range land for their
operations, and at the same time we are doing great things for
the sage grouse. It is a tremendous success story.
Mr. Costa. If you were ranking in terms of priorities
within the various titles within the farm bill, and you had
your druthers, what would you like to see in terms of us
focusing--in terms of the current funding that we have provided
for EQIP program? Would you like to see us increase it or what
changes would you offer?
Mr. Nomsen. Well, I would just offer that as difficult as
the discussions have been, I am very pleased that they have
been bipartisan on both sides. I mean, it has been a very
difficult job to talk about removing $6 billion from
conservation. If we didn't have to do that, it would be better,
but I do think that some of the policies across many of this
suite of programs will be beneficial into the future.
Mr. Costa. All right. Thank you very much, Mr. Chairman. I
thank the Ranking Member for your deference, and I will get to
my next committee.
The Chairman. I thank the gentleman, and I now recognize
the gentleman from Ohio, Mr. Gibbs, for 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman. First of all, I would
like to say the EQIP program has been a great program and a lot
of producers, including myself in the past, have taken
advantage of it.
I want to try to get a little handle--we talk about what
Mr. Peterson was talking about, the land that has been set
aside, and of course, back in the 1980s we actually had what,
ten percent set aside in addition to this CRP ground because of
the--what was happening with the surpluses of grain. But I
would like to--maybe Mr. Schmidt might be the best one to
answer this. The 32 million acres now capping at 25 million
acres, does anybody really have a handle on--since we have to
cut $6 billion, does anybody really have a handle of how many
acres should absolutely be protected. Also, how many acres
could be--should never be tilled but maybe should still be
protected but could be pastured. Where are we? I am just trying
to get a handle of what you think the acreage might be, or
maybe it is 25 million acres. I don't know, I am just--I don't
know. Mr. Schmidt might be the best one to----
Mr. Schmidt. Thank you, Congressman, and we have taken a
look at that aspect and in respect to Congressman Peterson's
remarks earlier on, one of the biggest concerns we had in the
acres coming out of CRP that we know back in the 1985 Farm Bill
that we had somewhat of a production reduction part of that
aspect. The acres that have come back out of the CRP, our
concern is that we know under some full block acreages that
went into CRP, there is probably some sensitive lands within
those blocks. We look at that acreage cutback to the 25 million
acres, we want to make sure that those sensitive lands are
protected by some kind of a conservation practice. We know
there are productive lands out there that are probably in a
Conservation Reserve Program that probably need to be back in
production, but we also realize that within that block, there
are probably sensitive lands. We want to make sure that we
maintain through a conservation plan or some mechanism that we
maintain the sensitivity from the water quality aspect, the
conservation aspect. Bringing some of those CRP acres back in
probably today is a little bit less of a concern because of the
cover crop activity you are seeing take over in the industry.
You know, I was taught as a youngster that the best way to
maintain soil health is have a live crop on a piece of land at
all times. That is where the cover crop aspect comes in. So
there are technologies that have changed, a lot of new
expertise in agriculture today that we didn't have back in 1985
that turn a tremendous aspect. But we see a pretty good
balance, given, when you talk wildlife, the wildlife habitat,
those kind of things. There are a lot of new conservation
practices that help us maintain the sensitivity of those lands
under the CRP acreage total that we think we can maintain a
true environmental benefit, even if we have to look at that 25
million.
Mr. Gibbs. Okay, and I guess that goes a little bit back to
Mr. Nomsen from Pheasants Forever. You made a comment about
wildlife habitat, not the blocks. Did you want to expound a
little bit further on that? If we have to actually cut some of
those blocks up, the impact or can we actually do it and maybe
pasture some of those non-sensitive areas and still protect
water quality and----
Mr. Nomsen. Congressman, that is a good point. You know,
one of the challenges that we have had is as we have talked
about reducing the overall size of the CRP is to make the
program a much more dynamic program and move acres through this
program. Let us help beginning farmers and ranchers with
expired CRP lands that have improved plans by leaving buffers
in place and moving into farming operations. Let us help
grazing operations do the same thing. Let us take some of the
sensitive lands and move them into more permanent and long-term
easement protection, and let us be more aggressive about
expiring CRP and buffers, leaving the buffers in place. Too
much of the CRP is leaving right now and it is ending up fence
row to fence row, ditch to ditch production, and that is just
going to cause more soil erosion and water quality problems.
So those are the types of policies that we are looking for
in the next farm bill that will help with the potential
reduction of the overall size of the program.
Mr. Gibbs. Is that--going back to Mr. O'Toole, flexibility,
that is what you were really asking for, the ability for the
locals to--and the farmers, the stakeholders to be able to look
at that and make some of those determinations, give them that
flexibility when they have to decide what is sensitive and what
can maybe be pasture and protected?
Mr. O'Toole. Yes, sir, and I was part of a group--
Congressionally mandated group that looked at the conservation
part of the farm bill hearings last year. I attended hearings
in Phoenix, Portland, and Ft. Collins, Colorado, and it was a
very consistent message. We need to get people out of the
offices and onto the ground. We need to make the system work
faster. If we, in fact, are going to have the driest and then
the wettest year behind each other, we have to be flexible
enough to be able to adjust to whatever those realities are. If
there is one message, it is that things are changing for a lot
of different reasons, a lot of market changes, a lot of
climatic realities that we are all dealing with, and I think
that the role of NRCS--and I will just tell you personally, it
is so frustrating to have good men in an office doing
administrative work when they need to be on the ground.
Mr. Gibbs. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. I now recognize the
gentleman from Oregon, Mr. Schrader, for 5 minutes of
questioning.
Mr. Schrader. Thank you very much, Mr. Chairman.
I am very interested in Mr. O'Toole's ending comments
there. I guess a question for each of the panelists, I would be
interested in your perspective on how you judge the outcomes of
the various programs that are out there. How do we as
legislators, not experts in wildlife biology or soil erosion or
in some cases, perhaps, some of us not being farmers--I am a
farmer--but how do you--how are we to judge whether or not a
particular CRP, CSP, EQIP easement program is actually working?
What sort of data, actual data is collected by NRCS or whoever?
Who are the boots on the ground actually collecting data out
there? Mr. Schmidt, we start with you.
Mr. Schmidt. Well thank you, Congressman. Just a little bit
of that background--and I appreciate it. Accountability is so
important, and as we experienced in a private project within
NRCS and the Chesapeake Bay, we went out and did some one-on-
one research with agriculture, making sure--the background
right now and the model data we have is based on conservation
practices. Somebody took some kind of monetary--a cost-share
program, whatever, from that scenario. We know there is
conservation on the land that would have been done voluntarily.
You know, I am, as you said, a farmer. I am driving down the
road, I look at my neighbor. It looks like he is doing a good
job. Sometimes I just copy him. I didn't go for cost-share.
Sometimes we don't have enough boots on the ground to get that
job done.
We want to make sure and we did that. We found that at the
Chesapeake Bay there was roughly about 30 percent more
conservation on the land than what is actually being accounted
for in the model data we had. So some mechanism--through a
conservation plan, some mechanism to truly get accountability
of the actual conservation plans out there so we can address
the needs as we see them, the flexibility to address that, but
we truly need some mechanism to account for more of that
conservation so we do have a mechanism, as you said, to measure
truly what is out there and the benefits of the programs that
you all provide and fund to help us maintain.
Mr. Scholl. I am sure there are a lot of folks with a lot
of degrees behind their name that would be very good at
answering that question. I don't pretend to be able to give you
a lot of specific details in terms of how you select the
appropriate outcomes and exactly what those outcomes should be,
but I do certainly concur with the intent of your question to
say they are critically important. One of the things I would
encourage this Committee to look at is efforts like the CEAP
program that USDA has that I think really is making steps
forward in terms of trying to identify what are the benefits in
real concrete terms that we get from the investment we make in
EQIP and all these other programs. Outcomes are in important,
particularly in a day and age when the public is very concerned
about accountability, and we want to make sure that dollars are
being used effectively. It is great to know how many miles of
terraces we have put in, but at the end of the day, we really
need to know, did it have the desired impact on water quality
or wildlife habitat or whatever the issue we are looking at.
And so I would encourage you to especially look at those
means that we can help empower those experts to be able to help
us better understand those outcomes, what we are getting from
the investment we are making, and if we are making progress
towards that mark.
Mr. O'Toole. If I were not here today I would be in Klamath
Falls in a meeting of a group called the Intermountain Joint
Venture, which is about migratory birds. You know, what I
talked about earlier, these Islands of Renaissance that are
happening all over, it is because coalitions of people are
coming together. We are working with Family Farm Alliance, with
Environmental Defense Fund, Nature Conservancy, Trout
Unlimited, as well as Wyoming Stock Growers Association, Farm
Bureau groups.
In reference to how we understand how this balance of
conservation and production happen, here is a number that
really struck me. The largest duck count since 1955 is now, and
one of the things that we are understanding from the
conservation side is the value of flight irrigation in terms of
habitat for migratory birds. We at NRCS and many people in
agriculture were being asked to do more efficiency, more
efficiency, more side rules, more pivots. That is good to a
point, but the reality is when you look at a watershed, a
watershed is a sponge that has all kinds of various benefits,
and to understand the balance of those benefits for birds and
wildlife and production is the future. And I would just tell
you that the criteria are because we are now partnering with
people that we were maybe considered adversaries a few years
ago. We now have a new look on how you do the critical parts of
production and maintain those other values.
Mr. Nomsen. Congressman, each fall I try and personally
measure the success of these conservation programs afield, and
I measure it by the number of birds in the bag. But maybe to
build on that a little bit, if you look, for example, at upland
bird hunting, it is a billion-dollar industry in this country.
Pheasant hunting in the State of South Dakota is averaged just
short of a $\1/4\ billion each year. That is a tremendous
economic driver for that small, rural state and a lot of those
rural economies. Motels are full, restaurants are full.
Conservation programs are a tremendous part of our hunting
heritage and our rural economy.
Mr. Niemeyer. Congressman, I have already spoke on the
effects of CEAP, and I think that is the way you determine on
sound science and data. However, I want to go back to something
in a different format.
You know, these voluntary programs do work. We have worked
with Field to Market on a report--in a report that came out in
2009. From 1987 to 2007, we found evidence of continuing
environmental improvements for corn production over the past
several years, and it has a lot to do with conservation
programs. Soil erosion per bushel of corn decreased 69 percent
in those 20 years. Energy use per bushel of corn decreased 37
percent in those 20 years. Irrigation use per bushel of corn
decreased 27 percent. Greenhouse gas emissions per bushel of
corn decreased 37 percent. We do have data to prove that all
these policies that we work with on a voluntary method have
worked very proactively.
Mr. Schrader. Just a final comment, Mr. Chairman. I know my
time has expired, but I just want to make it clear to the
Committee and to everyone out there, and hopefully to the--of
our next farm bill, that with limited dollars, it would really
be smart of us to use CEAP or some other program to decide
which of these programs is giving the biggest bang for the
buck. I know we all have favorites, but we cannot afford to do
everything all the time anymore, so we have to really figure
out which programs are giving us the biggest bang for the buck.
Thank you.
The Chairman. I thank the gentleman. I now recognize Mr.
Ribble of Wisconsin, for 5 minutes of questioning.
Mr. Ribble. Thank you, Mr. Chairman. I want to thank the
panel for taking some time with us this morning. Actually, we
will start and see how this goes time-wise with asking you all
to respond to this question.
Earlier in the year I had a town hall with about 130
farmers and landowners in Wisconsin. We talked specifically
about the farm bill, including the area of conservation. I am
wondering if each of you would tell me, what is the number one
guiding principle that this panel ought to be following as we
draft the farm bill? And then what is your number one priority?
Mr. Schmidt, we will start with you.
Mr. Schmidt. Thank you, Congressman. I think going back to
an earlier statement, probably the number one--when we look at
limited dollars and how do we get the most impact for the
dollars we have available, it is the flexibility that you folks
can look at in a program process that gives us that ability at
the local level to maximize either by matching funds, whatever,
the flexibility to utilize those dollars. I think above all,
even though we have a shrinking budget and the streamline
aspect to me is a priority. How do we make it more efficient
and easier for those farmers or producers to participate in,
but more importantly, when you have some voluntary--and
normally you do. People want to do the right thing. We don't
always provide the ability for those folks to do the right
thing, so that technical assistance aspect of helping those
folks make the right choice, right decision with the dollars
that are out there, whether it is Federal dollars or local
dollars, to get the best impact of those dollars that are out
there. I think that is key. That is a priority.
Mr. Ribble. Thank you.
Mr. Scholl. Number one principle, I would say engagement of
producers. I do very strongly believe that it is in our own
best interest as farmers to do the right thing by our natural
resource protection. I know the public is demanding that. I
think there is a lot of desire on the part of farmers to want
to apply the kind of practices and the like. Oftentimes we are
dealing with complex issues and the technical assistance and
the like is very important. But really trying to engage people
and have the tools and resources available is probably the
number one principle I would offer.
The number one priority, clearly, from my organization's
standpoint I would say maintaining and building a viable Farm
and Ranchland Protection Program. I cited statistics in terms
of the amount of land we have lost, and one of the points I
would make is that it is some of our best land that we have
lost. And when you look at the growing demands and the
pressures upon that land resource, there are many instances
where we regret that we have lost that land and that is even
going to become more acute into the future. So making sure we
keep a viable program to help protect land and keep it in
agricultural production would be our number one priority.
Mr. Ribble. Thank you.
Mr. O'Toole. Sir, a few years ago I had the opportunity to
spend an afternoon with Wendell Barry, and he is a fellow that
has written significant books on agriculture and farming. And
he said something to me that really stuck, and it is that if
you love the land, you have a responsibility to it. And in the
context of this hearing and this question and the issue of
conservation, farmers have to realize that just as much as when
we as a country said we want you to produce fuel as well as
food, we have to send the message out that conservation is an
integral part of food production.
My primary concern, number one concern, and I said it
earlier was how do we recruit another generation of people into
farming? And the message cannot be a negative message. The
message to young people is we need you. We need you to be
farmers to produce food, but we also want you to have that
conservation ethic that I referred to. If we use those as
guiding principles, it makes an awful lot of difference. The
messaging to young people is very critical right now as it
relates to how do we recruit new people into agriculture.
Mr. Ribble. Thank you.
Mr. Nomsen. Congressman, I would also talk about giving
producers an adequate safety net so that they can invest in
conservation programs, and the combination of conservation and
having strong partnerships with producers out there on the
landscape, that is the win-win for everybody. When we are doing
good things for soil and water conservation and for wildlife
and wildlife habitat--the mission of Pheasants Forever is all
about habitat. You know, there isn't a farmer or rancher out
there that isn't better off if they have some lands devoted to
conservation. Conservation practices help protect America's
production and our farm economy, and they have tremendous
benefits like the rural recreation benefits from sportsmen,
hunters, and fishers across the landscape and outdoor
recreationalists as well. So those would--I would offer those
as my principles to look at as you move forward on the farm
bill.
Mr. Niemeyer. I would agree with what Mr. Nomsen just said,
and also add that the Senate bill was carefully crafted. We
took 23 programs and took them down to 13, and it was a $6
billion hit. Now we all realize we have a deficit in the budget
we have to deal with, but no more, because we believe that any
steeper cuts to these programs would jeopardize the basic
functions and make them ineffective. And as a farmer and in
this farm bill, hopefully it will pass the Senate and pass the
House. We are very supportive of the proposal developed by
Chairman Debbie Stabenow and Ranking Member Roberts. And we
hope to have prompt action on this bill, and we urge the House
to pass the legislation in 2012 as well. Thank you.
Mr. Ribble. Thank you. Thank you, Mr. Chairman. I yield
back.
The Chairman. I thank the gentleman. I now recognize Mr.
Walz for 5 minutes.
Mr. Walz. Thank you, Mr. Chairman, and thank you for
putting together such a great panel. I very much appreciate
this.
Before I start, I would like to make note for my colleague
from Maine, Ms. Pingree had to leave, but she wanted me to note
that Mr. Walt Whitcomb is here today. He is the Maine
Agriculture Commissioner, and also a dairy farmer. So welcome,
Mr. Whitcomb, today.
Each of you, thank you. Thank you for clearly understanding
and articulating that agricultural production and economic
prosperity is not mutually exclusive from sound environmental
stewardship, articulating that in a way that I think the public
needs to hear us say more. Thanks also for understanding and
for the opportunities you create in rural America, for
understanding that our rural areas are not just undeveloped
urban areas, that there is a distinct difference and a reason
in the choice of lifestyle that is out there, and for
protecting our outdoor heritage. It is not just a hobby to go
out, it is a part of who we are, and understanding that that
all intertwines together, making those areas the place where we
choose to live. So I am very encouraged when I hear all of you.
I think the thoughtful responses and an understanding, and
trying to come with and deal with reality as it is with a
tightening budget situation, each of you really hit on
something very important. How do we measure and get the most
bang for the buck of getting those things there? I would also
say the interconnectedness of everything that we do--Mr.
Niemeyer, you brought up an incredibly valuable point that it
is hard to think about, because it takes a vision. There is
going to be an increasingly crowded and hungry world out there,
and for us to be able to fulfill the responsibility to our
people and to the world to feed and to clothe and to power
them--research dollars into ways that we can improve and get
more. I mean, it is hard for me to imagine that you see people
complaining about 180 bushel corn out there, that we can do
better than that. And we can. And this is going to be a part of
that, as we cut down, getting more off less land, getting more
in a smart manner. So I am very, very appreciative of what all
you are saying.
Mr. O'Toole, I am going to narrow in here on something that
struck at me on this, the Beginning Farmer and Rancher. It is a
program that--thanks with Ranking Member Peterson's guidance
for me, it is an issue that I came to understand how important
it is in my district, and putting in provisions to make sure we
are transitioning to our next generation, and making sure that
this is not only a profitable industry, but it is one where
they feel the same sense of pride and connection to the land.
So what we tried to do was put in some provisions that
targeted again, if you will, targeted and set aside for those
beginning farmers and ranchers. And I would like some of you
with any expertise or any interaction you have had with that
program to maybe comment a little bit on this. One of the
things was--and in the Senate bill I am glad to see includes
$25 million for the TIP program, transitioning those CRP acres
over to a beginning farmer and rancher. Is it a good start? Any
insight from any of you, if you just go right down the line,
and is this beginning farmer and rancher program working, and
is it a smart use of taxpayer dollars to target it to them?
With that, Mr. Niemeyer?
Mr. Niemeyer. Absolutely. In our community, the average age
of a farmer is 58 years of age. Unfortunately, my children do
not want to farm, and I feel bad about that. But I really think
that we need to get a new, younger generation involved in
farming.
In response to one of your other questions, a smaller CRP
means more competitive enrollment so that USDA can target
program dollars to the most sensitive lands, including buffer
strips and filter strips where maximum environmental benefits
can be achieved. But market forces often dictate planting
decisions, so what is important is that USDA--is that we have
an adequate Working Lands Program in place so the producers can
grow crops while continuing to address the conservation
concerns.
Mr. Nomsen. Congressman, this is an incredibly important
area because it does look to the future and the future land
stewards out there that are going to protect and preserve and
continue our strong ag economy in this country, and right now
some place on the Senate side this morning, Senator Klobuchar
is offering an amendment to CRP to talk about encouraging
beginning ranchers to implement grazing operations. And we
think that is also part of the future as CRP continues to
evolve and work for farmers and landowners.
Mr. O'Toole. Yes, sir. Actually my son and daughter are at
the ranch. That is one of the reasons that I am able to be here
today. They have both participated in purchase of livestock and
purchase of land through that specific program. I think it is
absolutely the right direction to be in, and critical, because
it is not only the dollars and the low interest rates, it is
the message. And the message is as important as anything. And I
know this Committee deals with a lot of other issues, like
forestry. Our operation is absolutely dependent on forest
permits, and Federal land. That is the way the West works. I
think that we need to be very aggressive, and when those
permits are available, there are people that talk about
retirement. That is absolutely the wrong direction. We should
be bringing young people into integrating their opportunities.
The same thing with water. There is a huge debate in the West
right now, should water go to growth? Water needs to maintain
itself on farms and ranches so that we can produce food. And
that debate is ongoing and the pressures are fairly
significant. But I can tell you that Mr. Vilsack has been very
aggressive in his articulation of how important it is, and I
can tell you that from our perspective at Family Farm Alliance,
it is our absolute number one issue of importance.
Mr. Walz. Well, I am very appreciative. Mr. Scholl, do you
have a comment on this? I was just going to also mention, Mr.
Schmidt, you brought up something good that is a portion of
this beginning farm and rancher, it is providing that technical
assistance that I can't--you have stressed it many times and I
think that is wise advice.
Mr. Scholl. Yes, I do have a comment. Clearly, the programs
you have cited, as I have traveled around the country talking
to folks, they are very popular and they do get a very critical
need, the human resource issue in agriculture is something that
we all are very concerned about and needs to be addressed.
Providing options for folks. One that hasn't been mentioned is
the Conservation Loan Program as another means by which
somebody that needs to do something to address resource
concerns has the ability to do that, especially the folks that
are just getting started.
But I would also take a step back and say that I am very
proud of the fact that my farming operation that we have two of
the next generation, even after my brother and I, involved in
it, and what you do overall in terms of the economic viability
of agriculture is so critical. The reasons those two from the
next generation are involved in my operation is because they
see a chance to have a good living, do something they really
enjoy, compared to when I was in college, I am sorry to say,
there was more of the attitude of, ``Gee, you can go to town
and have a lot better life.'' I think that has turned. That is
very positive and the decisions you make really helped
influence that.
Mr. Walz. Thank you. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. Now I am pleased to
recognize the full Committee Ranking Member, Mr. Peterson, for
5 minutes.
Mr. Peterson. Thank you, Mr. Chairman.
Mr. O'Toole, you mentioned that NRCS and FSA are both
writing checks, and this is something we talked about in the
2008 bill and weren't able to get anything done. But I don't
believe that Congress has actually ever picked a side in this
discussion about whether both the agencies should be writing
checks. And the staff tells me that the agency heads, during
the second Bush Administration, made this decision. So it
sounds to me like you feel the Committee should look into this
issue. I don't know if that is the case, and maybe--have you
discussed this with other groups or with Secretary Vilsack?
You know, I have talked out there with some of my folks and
if you want to get these NRCS people out on the ground, they
should not be sitting in the office filling out forms and
writing checks. I don't think, but----
Mr. O'Toole. It isn't just the writing of the check part of
it, Congressman. You know, my own personal experience--and we
live right on the state line and so we have double the
regulatory situation than most people do. You know, so we see
offices in both states, and maybe--I don't think this is out of
bounds, but I feel like there is almost a lack of trust of
farmers, and so----
Mr. Peterson. Lack of what?
Mr. O'Toole. Lack of trust. And the paperwork--we have
watched over a decade or 15 years. Guys that were out there
when you made a call to NRCS, there were out there with
measurement devices and getting their feet dirty and being with
you. That doesn't happen anymore. It doesn't happen at that
level anymore, and it is critically important as we go into a
much more restricted budget situation, we all know the budget
is going to be influential.
If you trust farmers, you are not going to have to do the
paperwork and the administrative stuff that has just--it just
seems like it has increased and increased and increased. So I
will tell you that it is based on my personal experience, it is
based on hearings that I did last year. I was shocked at the
number of farmers who participate in NRCS. It was not a big
enough number to achieve our goals, and a lot of that was
because the feeling that the process was just so unwieldy that
it wasn't working for them.
Mr. Peterson. Well, yes, I agree. We have been--as I said,
we tried to address this somewhat in the last bill but we got
pushed back from the time the conservation district supposedly
making any streamlining of that.
But, I would say a lot of that is actually caused by us, by
what we have put on the Department, and they are so afraid to
do anything anymore, and there are a lot of people in this
country that do not trust farmers, that are hostile to farmers.
They are suing people and driving up the cost of things and
telling farmers how to do things. They have no idea what they
are talking about. They want to interject themselves for
ideological reasons, or some of these groups created a job for
themselves by stirring up controversy. So there are a lot of
problems, and we would like to simplify this but, it is that I
just think that NRCS is not good at filling out forms and
writing checks, and there is no reason for that. That could be
done at FSA. They are better at that.
Mr. O'Toole. I couldn't agree more.
Mr. Peterson. If we get rid of direct payments, they are
going to have less to do at FSA, so shift some of that stuff
over there and get these NRCS people out there in the country.
Which leads me to the next issue that I probably shouldn't
even wade into, but this whole issue of the tying conservation
compliance to crop insurance. I have had discussions about
this, and I don't see how this can work without doing serious
damage to the crop insurance system. We made a conscious
decision in 1996 to separate these, and I, for the life of me,
cannot see how you are going to be able to comply with this or
make it work without damaging the system. Nobody has been able
to explain that to me.
The second thing, and some people advocate to have an all
or nothing deal, so if you have an NRCS agent that finds you
out of compliance, you are going to lose your entire subsidy.
It is too severe, and that is never going to happen. The
Congress is never going to support that. So if we are going to
do anything, it has to be more graduated.
Finally, I don't think there are people to do this. You
know, the NRCS doesn't have the people to do this. They can't
even file--get the 1026's. We have a backlog in our area of
thousands of 1026's they can't get to. How in the world are
they going to get out there, and who is going to make the crop
insurance agents, the people that are going to do the
conservation compliance? I don't think this is a realistic
idea. I am not necessarily against the idea of trying to have
some tie there, but nobody has been able to explain to me how
this would work, and frankly, I don't think there has been a
discussion between all the different groups to come to any kind
of middle ground that people could live with. The end result is
going to be it is not going to happen, but--I have gone over my
time, but I see a couple people want to respond. Mr. Scholl?
Mr. Scholl. Thank you for raising the issue. Obviously this
is one of the big unresolved issues or controversial issues out
there, and I do think it is important that we address it. You
know, how we do it, I guess I would suggest we do it the same
way we have been doing it with the commodity programs that we
had. We----
Mr. Peterson. If I could stop you right there. You know,
one of the other problems I was going to mention is that you
have completely different approach by NRCS in counties that are
right next to each other, so you have a situation where you
don't have the same kind of application of this situation. That
is another problem.
Mr. Scholl. And that is certainly an issue in some of the
hearings and the meetings we have had that has been raised, and
it needs to be addressed, but you don't need to have crop
insurance agents enforcing this thing. It is a matter of if
they have a subsidized policy that they are presenting, you
sign an affidavit saying you have a conservation plan if you
have highly erodible land, and then it goes into the system
that is currently used in USDA of spot checks and the like,
just like it is with other farm program payments. I think in
terms of what was done in 1996, I mean, I wasn't here but crop
insurance was certainly in a very different state at that point
than it is today. A lot of progress has been made in terms of
developing products.
Mr. Peterson. One of the main reasons we did it was to get
more people to take crop insurance. We still have a problem in
the South where they are not in the crop insurance system, and
that was why the decision was made was to make it more for
people to get into crop insurance so we wouldn't have all these
disaster problems and ad hoc disaster bills and all this other
stuff. So I just think we have to be careful about this,
because the way we are heading here there isn't going to be a
safety net anymore for farmers. And I frankly think that what
we are doing, what is going on in the Senate is a mistake
because when these prices go down, and they will, there is not
going to be any floor under them. And this happened in 1996
when we did Freedom to Farm and it collapsed, and 2 years
later, we spend more money than we ever spent in history
bailing people out. Well I just want to tell people that this
time when these prices go down, and they will, there isn't
going to be any money to bail anybody out. So people better be
careful about what they are doing here. It is all good to look
at this when the prices are good and everybody has been making
a lot of money, but I have been around long enough to know that
is going to go the other way.
Mr. Scholl. May I offer one more comment? I also want to
compliment the work that you have done over the years in
addressing the compliance issues, because you have put a lot of
provisions in the law that I think have helped address a lot of
the concerns you hear from producers as to why we may not want
to do this. I mean, the idea of giving an exemption for extreme
weather events is a good example, the idea of giving a person a
year to be able to come into compliance if they are out of
compliance. The goal of this is to get people in compliance to
make sure we protect our natural resources. It is not to build
a list of violators to play I got you, and you have really
helped craft a program that does much more specifically get at
if there is a problem, let us try to work with folks, give them
the time and the effort--or the resources they need to address
it. That program has evolved too, which makes a much more
attractive option, particularly when you look at the fact that
it has been pretty effective in terms of controlling erosion in
particular, as you look at these policy decisions you are going
to be making.
Mr. Peterson. Mr. Niemeyer, if you could give a quick
response and then we can go on to our second panel.
Mr. Niemeyer. Again, we have a difference of opinion. NCGA
supports title--compliance of all Title I programs, including
any new program established in the 2012 Farm Bill. Compliance
is already required for commodity support payments, disaster
payment loans, and other conservation benefits. We should not
create disincentives to purchase crop insurance, which is a
critical risk tool for all farmers. If the farmers do have a
more workable crop insurance program and a high level of
participation, we will likely fall back into the cycle of an
annual ad hoc disaster assistance program which you were
talking about, Congressman Peterson.
Linking conservation compliance to crop insurance could
risk the potential loss of financing from our lenders, which
would affect our very abilities to operate and compliance
could--would disrupt the important public-private partnership
between the crop insurance companies and USDA and create
concerns more over who acts as the regulator.
Thank you.
Mr. Peterson. I yield back.
The Chairman. I want to thank the witnesses in the first
panel for your testimony. It is greatly appreciated.
I would like to now welcome our second panel of witnesses
to the table joining us, so please come up and take your place.
We are joined on the second panel by Mr. David Bell, Executive
Director of the Wild Blueberry Commission of Maine, on behalf
of the Specialty Crop Farm Bill Alliance. We have Mr. Randall
C. Gordon, Acting President of National Grain and Feed
Association; Mr. Carl Homan, fifth generation dairy farmer,
Homan Family Dairy Farms, on behalf of the National Sustainable
Agriculture Coalition; Ms. Sara Hopper, Agricultural Policy
Director, Environmental Defense Fund; and Mr. David Petty,
cattle producer, representing the member--who is a member of
the National Cattlemen's Beef Association from Eldora, Iowa,
which is the new home of my oldest son and my daughter-in-law.
So I am looking forward to come visit you sometime.
All the witnesses are settled in. Let us begin. Mr. Bell,
please begin when you are ready.
STATEMENT OF DAVID K. BELL, EXECUTIVE DIRECTOR, WILD BLUEBERRY
COMMISSION OF MAINE, ORONO, ME; ON
BEHALF OF SPECIALTY CROP FARM BILL ALLIANCE
Mr. Bell. Thank you. Good morning, Chairman Thompson,
distinguished Committee Members. Thank you for the opportunity
to speak to farm bill conservation programs. I am David Bell,
the Executive Director of the Wild Blueberry Commission of
Maine, but today I come before you as a representative of the
Specialty Crop Farm Bill Alliance, a broad coalition of
specialty crop interests nationwide. We have over 300 different
crops or commodities as part of the Alliance, over 120 members,
and we were formed or got together to work specifically on the
2008 Farm Bill. We are grateful for the specialty crop focus
that did come out of the 2008 Farm Bill, and look forward to
working with you on ways to ensure that our industry is able to
continue to provide Americans with access to abundant,
affordable supply of nutritious fruits and vegetables, and
other specialty crops.
American consumers want an agricultural production system
that not only produces abundant, affordable, safe food and
fiber, but also conserves and enhances the natural resource
base and protects the environment. Unfortunately for producers,
investments in natural resource management and conservation are
rarely recouped in the global marketplace. Access to
conservation programs such as EQIP, WHIP, and CSP, we all know
the full names by now this morning, are critically important to
specialty crop producers and our U.S. citizens.
We do have some specific recommendations that we would like
to offer to Congress, and specifically regarding the EQIP
conservation practices. In certain parts of the country,
producers feel that the NRCS and conservation districts don't
necessarily market equitably to specialty crop producers. We
would ask Congress to consider, since we are roughly 25 percent
of the production value of the U.S. agriculture, that EQIP
funding be looked at accordingly.
Many specialty crop producers need irrigation water to meet
demands for crop quality, and in many parts of the country,
efforts to protect aquatic habitat will require producers to
develop alternative water sources. As part of EQIP, we ask that
you prioritize the sustainable use of ground and surface water
for irrigation as a national priority.
Regions of the country are also working to create air
quality regulations that will affect farmers, and again, we ask
you to consider creating an air quality program with dedicated
funding within EQIP.
We also face a lot of pest management challenges in
specialty crops, and these are becoming more acute and
complicated for a few key reasons. One, new invasive species,
also knowledge-based pest management systems, Integrated Pest
Management is becoming more complicated and we request that the
time limitations on Integrated Pest Management cost-share
programs be eliminated within EQIP. We also suggest that NRCS
should work more closely with land-grant universities and other
entities to develop models for using EQIP funds to enhance
pesticide stewardship.
Regarding WHIP, Congress should work directly--should
direct the WHIP program to allow for organizations to work with
multiple private landowners within a year. This would allow
organizations familiar with regulatory requirements of law,
such as the Endangered Species Act, to solve habitat
conservation concerns of multiple private landowners
efficiently.
Regarding CSP: better tailor it to local and regional
needs, and therefore make it more useful for specialty crop
producers, we suggest adding pest management as a priority area
that can qualify for participation in the CSP program.
I thank you for the opportunity to testify, and I look
forward to questions. Thank you.
[The prepared statement of Mr. Bell follows:]
Prepared Statement of David K. Bell, Executive Director, Wild Blueberry
Commission of Maine, Orono, ME; on Behalf of Specialty Crop Farm Bill
Alliance
Introduction
Thank you Chairman Thompson and Ranking Member Holden for holding
this hearing on the conservation title of the farm bill. I appreciate
the opportunity to speak to you today regarding the conservation
priorities of the specialty crop industry. As we all are aware, sound
conservation practices are of critical importance to the ability of
farmers to succeed and continue to provide an abundant supply of
healthy food, feed and fiber to America.
My name is David Bell and I serve as Executive Director of the Wild
Blueberry Commission of Maine, which is devoted to the mission of
assisting wild blueberry growers in developing sustainable practices
and competing in a global food market. However, today I am joining you
as a representative of the Specialty Crop Farm Bill Alliance (SCFBA), a
broad coalition of specialty crop interests nationwide. The Alliance,
which represents close to 300 different commodities and has nearly 120
members, was formed prior to the 2008 Farm Bill. As you know, with the
support of Members of this Committee, that farm bill contained a solid
investment in programs that are important to enhancing the
competitiveness of U.S. specialty crop farmers. We are grateful for
that focus on our sector and look forward to working with you on ways
to ensure that our industry is able to continue providing Americans
with access to an abundant, affordable supply of nutritious fruits and
vegetables and other specialty crops.
Today, United States consumers have affordable access to the most
abundant and diverse food supply in the world. However, aside from
market diversity and competitive prices, consumers demand that food be
held to very high quality standards. Likewise, consumers want an
agricultural production system that not only produces abundant,
affordable, safe food and fiber, but also conserves and enhances the
natural resource base and protects the environment.
Unfortunately for producers, investments in natural resource
management and conservation are rarely recouped in the global market
place. The short-term economic value for the farmer does not compare to
the long term ecological and fiscal benefits for the public and for
future generations. The increased benefits for the public come in the
form of a more stable and productive farm economy and an improved
environment. Protecting the environment and productivity today will
mean less cost for U.S. consumers in the future and will therefore
assist in ensuring sustainability in the years ahead.
Current conservation programs administered by the USDA Natural
Resources Conservation Service (NRCS) assists specialty crop farmers in
meeting the multiple challenges of addressing sustainability,
increasing environmental regulations while meeting U.S. consumer demand
for abundant, safe, and reasonably priced food all within the
competitive pressures of a global economy. Because of these factors,
access to conservation programs such as the Environmental Quality
Incentives Program (EQIP), Wildlife Habitat Incentives Program (WHIP),
Conservation Stewardship Program (CSP) are critically important to
specialty crop producers and U.S. citizens. Farmers' natural affinity
for the environment, coupled with technical assistance and the
resources necessary to implement conservation practices, results in
long term stability for the nation's food supply. Our specific concerns
and recommendations to strengthen current conservation programs
include:
Environmental Quality Incentives Program (EQIP)
Issue: For a variety of reasons, EQIP Conservation Practices are
not marketed to specialty crop producers equitably across the country.
Policy Recommendation: Since specialty crop producers account for
approximately 25% of the production value of U.S. agriculture, Congress
should apportion EQIP funding accordingly. This would set the
expectation for NRCS to meet specialty crop producer conservation needs
across the U.S.
Issue: Specialty crop producers need irrigation water when it is
dry to maintain quality standards of their crops. In many areas of the
country natural water bodies have limited ability to supply irrigation
water during dry periods and maintain necessary fish habitat. NRCS EQIP
sustainable water use practices and programs should be available to
specialty crop producers needing assistance to meet state or Federal
environmental or habitat objectives.
Policy Recommendation: As part of EQIP, prioritize the sustainable
use of ground and surface water for irrigation as a separate national
priority, rather than being included within the non-point pollution
category.
Issue: In many specialty crop growing areas, air quality concerns
and regulations related to agriculture are increasing.
Policy Recommendation: Congress should create an air quality
program under EQIP with dedicated funding.
Issue: Pest management challenges for specialty crop producers are
becoming more acute and complicated due to invasive species, phase out
of older effective control materials, new research on crop/pest
interactions and knowledge based management systems such as Integrated
Pest Management (IPM).
Policy Recommendation: Time limitations on Integrated Pest
Management (IPM) cost-share practices should be eliminated as pest
populations are dynamic over time and innovative IPM programs are
continually evolving to address ever changing pest complexes.
Policy Recommendation: NRCS should work with land-grant
universities and other entities to develop model programs for using
EQIP funds to enhance pesticide stewardship.
Wildlife Habitat Incentives Program (WHIP)
Issue: Increasingly, specialty crop producers need to meet state
and/or Federal habitat requirements as mandated by laws such as the
Endangered Species Act (ESA). Often navigating the complex rules
associated with these laws requires specific understanding and skills
farmers do not have. Models have been developed whereby nongovernmental
organizations assist private landowners such as farmers in meeting
``consultation requirements'' with agencies by serving as the landowner
agent. This is an efficient approach as each farmer does not have to
become an expert in the implementation of ESA policies. However, in the
2008 Farm Bill a limitation on an entity accessing WHIP funding
precludes an agent working with many landowners in a single year.
Policy Recommendation: Congress should direct the WHIP program to
allow for organizations to work with multiple private landowners within
a year.
Conservation Stewardship Program (CSP)
Issue: regarding the Conservation Stewardship Program, we believe
that this program is based on a sound premise, incentivizing producers
who adopt or maintain a wide range of conservation management practices
aimed at resources such as soil, water and wildlife management. As you
know, the CSP program addresses seven resource concerns: soil quality,
soil erosion, water quality, water quantity, air quality, plant
resources and animal resources.
Policy recommendation: In order to better tailor the program to
local and regional needs and therefore, make it more useful for
specialty crop producers, we suggest adding pest management as a
priority area that can qualify for participation in the CSP program.
This would add a resource concern to CSP's list of resource concerns. I
know the Members of this Committee are aware that states can focus on
three to five priority concerns.
Closing
Mr. Chairman and Ranking Member Holden, these are the highlights of
the results of the farm bill review which the Specialty Crop Farm Bill
Alliance (SCFBA) undertook over the course of the 18 months to assess
the various titles of the farm bill to determine their impact on the
specialty crop industry. As part of that review, I served as chair of
the SCFBA working group that examined the conservation title. As you
are well aware, the Senate Agriculture Committee has released their
version of the farm bill and we appreciate the work of Chairwoman
Stabenow and Ranking Member Roberts. We pledge to continue working with
them and you on these policy recommendations to ensure that specialty
crop producers can participate in meaningful and effective ways to
conserve and maintain resources needed for environmentally sound
agriculture production. Thank you again for this opportunity and I'll
be happy to answer questions.
The Chairman. Thank you, Mr. Bell.
Mr. Gordon, when you are ready you can proceed with your 5
minutes.
STATEMENT OF RANDALL C. GORDON, ACTING PRESIDENT, NATIONAL
GRAIN AND FEED ASSOCIATION, WASHINGTON, D.C.
Mr. Gordon. Thank you, Chairman Thompson, and we appreciate
you and commend you and this Subcommittee for holding this
hearing on the conservation provisions of the 2012 Farm Bill. I
am Randy Gordon, the acting President of the National Grain and
Feed Association. Our membership consists of more than 1,000
grain and feed, grain processing, biofuels, exporting, and
other grain-related companies that operate more than 7,000
facilities and handle more than 70 percent of the U.S. grain
and oilseed crop. Most of members, though, are country grain
elevators and feed manufacturers that are small businesses and
operate in rural communities throughout the nation.
The NGFA strongly supports efforts by this Congress and the
Administration to reduce, streamline, and better rationalize
the plethora of conservation programs that currently exist to
make them more efficient, understandable, and cost effective.
We in particular support conservation programs for working
farmlands, and the idling of cropland that is truly
environmentally sensitive, where it is necessary to protect
water quality, as currently is accomplished through various
components of the Conservation Reserve Program, particularly
the continuous sign up provisions.
But we do believe that the 2012 Farm Bill presents a
tremendous opportunity for Congress to reset the CRP to reflect
the reality of modern farming practices, including no-till and
other agronomic practices, and to ensure that it no longer
idles prime farmland. At the outset, we commend Congressman--
Congresswoman Roby and Congressman Stutzman for introducing
separate bills that we believe would move the CRP in decidedly
the right direction. We also commend Chairman Lucas and Ranking
Member Peterson for their efforts with the Super Committee to
try and reshape the CRP.
The 2007 Natural Resources Inventory Report prepared by
USDA, the most recent data publicly available, indicates that
more than 8.7 million acres enrolled in the CRP at that time
consisted of prime farmland. Freeing up those acres and other
non-environmentally sensitive acres will be essential if U.S.
agriculture is going to continue to grow and be a generator of
jobs to meet the strong demand for food, feed, biofuels, and
exports necessary to meet what the United Nations projects will
be a 70 percent increase in global demand for food by 2050. We
do believe the CRP can be structured in a way that enhances and
fosters U.S. agriculture's ability to supply competitively
priced corn and proteins to meet domestic and export demand,
particularly for our livestock and poultry producers, enhance
opportunities for beginning and tenant farmers to enter the
business, and further economic opportunity and the quality of
life in rural America. In this regard, a November 2011 survey
of farmers conducted by the National Young Farmers Coalition
found that 68 percent said access to land is the biggest single
challenge they face.
Protecting environmentally sensitive land and enhancing the
ability of U.S. farmers and ranchers to produce to meet growing
demand are mutually compatible goals, but to achieve those twin
goals, we respectfully recommend that Congress implement
several statutory changes in the 2012 Farm Bill to reform the
CRP and facilitate the return to production of idle land that
can be farmed in environmentally sustainable ways.
First and foremost, we do urge a significant reduction in
the current 32 million acre CRP cap. At a minimum, we think
land capability Classes I and II, which amount to about 7.1
million acres, generally should be prohibited from future
enrollments and reenrollments. Further, as mentioned
previously, a total of as many as 8.7 million acres of prime
farmland, inclusive of the 7.1 million acres I just mentioned,
should be phased out as USDA transitions to a smaller, more
targeted CRP. We also believe USDA should be directed to manage
any reenrollments this year of acres expiring on September 30,
2012, in a similar manner.
Second, we recommend eliminating the current discretion for
USDA to exceed this current 25 percent limit on CRP enrollments
in individual counties, because of the economic damage that
these heavy enrollments in certain states have caused to rural
communities. We also recommend that Congress strongly considers
requiring within that 25 percent cap a certain, say, five
percent allowance for the most environmentally sensitive land
eligible for continuous sign up enrollments.
Third, we encourage Congress to consider whether to provide
a specific percentage or acreage-based figure within the CRP
that should reserve--be reserved for the enrollment of the most
environmentally sensitive lands and wetlands. There are some
conservationists that argue that about 8 million acres of the
CRP potentially could be consumed by such truly environmentally
sensitive enrollments, which we do believe belong in the
program.
Fourth, we encourage Congress to include language
restricting enrollments of whole fields and whole farms by
requiring such land to meet a higher EBI scoring mechanism than
currently exists for partial field enrollments.
And finally, we do support allocating scarce conservation
funding for existing CRP Transition Incentive Programs, and
programs like that that benefit young farmers and socially
disadvantaged farmers. We also have some recommendations in our
testimony that would enhance the transparency of how USDA is
managing the CRP program which currently is fairly obscure and
obtrusive in the databases that we have been able to access.
Thanks for the opportunity and I look forward to your
questions.
[The prepared statement of Mr. Gordon follows:]
Prepared Statement of Randall C. Gordon, Acting President, National
Grain and Feed Association, Washington, D.C.
Chairman Thompson, Ranking Member Holden, and Members of the
Subcommittee, the National Grain and Feed Association (NGFA) commends
you for conducting this hearing on the conservation provisions of the
2012 Farm Bill, and appreciates this opportunity to testify.
I am Randy Gordon, Acting President of the NGFA. Our Association
was established in 1896, and consists of more than 1,000 grain, feed,
processing, exporting and other grain-related companies that operate
more than 7,000 facilities and handle more than 70 percent of all U.S.
grains and oilseeds. Our membership includes grain elevators, feed and
feed ingredient manufacturers, biofuels companies, grain and oilseed
processors and millers, exporters, livestock and poultry integrators,
and associated firms that provide goods and services to the nation's
grain, feed and processing industry. The NGFA also consists of 26
affiliated State and Regional Grain and Feed Associations, and has
strategic alliances with the North American Export Grain Association
and Pet Food Institute.
The United States is blessed to have the most abundant, most
affordable and safest food supply in the world. Our nation also still
is the engine that drives the production of key agricultural
commodities and products to feed an expanding world population. That
demand shows no sign of letting up. The United Nations currently
projects that feeding a rapidly growing global population of more than
nine billion in 2050 will require a 70 percent increase in global food
production. And while U.S. producers have harvested near record crops
in recent years, domestic demand also has increased--particularly for
U.S. corn to meet fuel ethanol demand resulting from the Renewable
Fuels Standard mandate and strong crude oil prices.
The long-standing commitment by the United States to free
enterprise, U.S. agricultural growth, and working lands conservation
programs are essential and critical components to meeting this demand
for food, feed, biofuels and exports--and doing so in an
environmentally sustainable way.
The NGFA strongly supports efforts by Congress and the
Administration to reduce, streamline and better rationalize the
plethora of existing conservation programs to make them more effective
and efficient. We also strongly support including provisions in the
2012 Farm Bill that encourage prudent conservation practices by
agricultural producers, which serve in their best interest in
protecting the viability of cropland for succeeding generations. The
NGFA in particular supports conservation programs for working
farmlands, and the continuation of programs that idle cropland that is
truly environmentally sensitive or necessary to protect water quality,
as is accomplished through such programs as the continuous signup
provisions of the Conservation Reserve Program (CRP).
However, we believe the 2012 Farm Bill presents a tremendous
opportunity to bring long-needed reforms to the CRP, on which I wish to
focus during the remainder of this testimony.
Today's farming practices are dramatically different than what
existed when the CRP was established a quarter century ago.
Advancements in insect-resistant and herbicide-tolerant seed varieties,
conservation and no-till farming, and other agronomic practices have
made it possible to farm more U.S. acreage in environmentally
sustainable ways. USDA's Economic Research Service, in a report issued
in 2011, found that of the world's row crop production grown using
conservation tillage practices to protect soil from wind and water
erosion, the United States accounted for nearly 75 percent of soybeans,
45 percent of corn and 40 percent of wheat. By contrast, as recently as
1990, only 26 percent of planted acres in the United States were farmed
using such conservation tillage practices. Further, because of the
introduction of new biotechnology-enhanced crops, farmers no longer
have to cultivate the soil several times a year to control weeds,
thereby reducing soil disturbance and improving water infiltration. The
NGFA strongly believes that current agronomic and technology practices
employed by U.S. farmers should guide decisions made by Congress as it
devises policies governing the size, scope and role of the CRP under
the 2012 and future farm bills.
But in fact, CRP policy under the farm bill and its implementation
by USDA has not kept pace with these changes in improved farm
production practices. There is strong evidence that millions of acres
of productive land suitable for row-crop production that can be farmed
in an environmentally sustainable way remain locked up in the CRP. The
2007 Natural Resources Inventory prepared by USDA's Natural Resources
Conservation Service (NRCS)--the most recent data publicly available--
indicates that more than 8.7 million acres of ``prime farmland'' \1\
were enrolled in the CRP at that time. Other considerations in
determining prime farmland include land use, frequency of flooding,
irrigation, the water table and wind ``erodibility.'' \2\ It includes
all land in Land Capability Classes I and II, and some land considered
to be Land Capability Class III.
---------------------------------------------------------------------------
\1\ NRCS defines ``prime farmland'' as ``land that has the best
combination of physical and chemical characteristics for producing food
feed, forage, fiber, and oilseed crops and that is available for these
uses. It has the combination of soil properties, growing season, and
moisture supply needed to produce sustained high yields of crops in an
economic manner if it is treated and managed according to acceptable
farming methods. In general, prime farmland has an adequate and
dependable water supply from precipitation or irrigation, a favorable
temperature and growing season, an acceptable level of acidity or
alkalinity, an acceptable content of salt or sodium, and few or no
rocks. Its soils are permeable to water and air. Prime farmland is not
excessively eroded or saturated with water for long periods of time,
and it either does not flood frequently during the growing season or is
protected from flooding.''
\2\ National Soil Survey Handbook Part 622, Natural Resources
Conservation Service website. Accessed 17.
---------------------------------------------------------------------------
While the NGFA believes fragile land that cannot be farmed in an
environmentally sustainable way belongs in the CRP, the idling of
productive resources through land-idling conservation programs costs
jobs, stymies growth and, in the case of land resources, has the
potential to impact negatively the cost and availability of food.
Further, the idling of these productive U.S. crop acres in the CRP
is contrary to world environmental protection because it encourages
shifts in agricultural production to South America and other countries
that do not have the type of environmental policies, regulations and
farming practices that encourage sustainable food production as exist
in the United States. Indeed, in the last decade the United States has
had zero growth in total planted acreage, while the rest of the world
has increased planted acreage by 152 million acres--about 60 percent of
the size of total U.S. plantings. Meanwhile, the CRP--in acreage
terms--still represents the fourth largest U.S. ``crop.'' Trends like
that not only undermine global environmental protection but also U.S.
agricultural competitiveness in world markets.
In short, we believe now is the opportune time for Congress to
implement meaningful reforms of the CRP, and focus scarce conservation
dollars on working farmlands and the idling of only truly
environmentally sensitive acres.
Damaging Impact of Idling Productive Farmland
The CRP is currently capped at 32 million acres under the Food,
Conservation and Energy Act of 2008. We hasten to add that this
statutory provision is a hard cap, but historically has been treated by
USDA in its implementation of CRP as a goal to attain. If, as we
believe, the goal of the CRP should be to maximize environmental
benefits of enrolled acreage, such an unconditional, over-arching
commitment to enroll a specific number of acres at or near the cap is
misguided. For instance, the rental rate associated with enrolling
acres eligible for the continuous signup provisions of the CRP--such as
filter strips along waterways--may be considerably more expensive on a
per-acre basis. But the resulting environmental benefits far exceed
those associated with enrolling flat land that can be farmed in
environmentally sustainable ways.
Continuation of the CRP at its current authorized level creates
significant challenges to U.S. agriculture's ability to: (1) adequately
meet growing domestic and export demand for grain, feed and grain
products; (2) provide opportunities for young farmers, ranchers and
tenant farmers to become involved in production agriculture; and (3)
increase economic opportunity and quality of life in rural communities.
Let me touch on each of these briefly:
b Adequately Supply Domestic Demand at Competitive Prices: While U.S.
producers have enhanced productive capacity for particularly
corn and soybean production, increases in domestic demand
continue--particularly for use as biofuels. Further, despite
near-record crop production, grain stocks on a world basis
remain comparatively tight. While U.S. corn yields have
increased by about 2.5 bushels per acre per year since 1996,
such yield growth generally has occurred during benign weather.
Further, U.S. carryover stocks of corn and other feed grains
are at historically low levels. Expansion of U.S. planted acres
could help offset yield variability resulting from weather
anomalies, particularly given tightening stocks-to-use ratios.
b Producing and Competing in Global Markets: As noted previously,
between now and 2050, the world's population is projected to
grow by more than 30 percent, resulting in an estimated 2.3
billion more consumers of food and agriculture products. Food
security--both physical and economic access to sufficient
food--is vital to helping preserve world peace and averting
shortages that have led to protests and riots in several
foreign countries, as witnessed a few short years ago.
Export markets for grain and grain-based products continue to
experience strong demand. In addition, export demand for beef,
pork and poultry has been one of the most dynamic growth
markets in the last 15 years. And new trade agreements being
implemented now with South Korea, Colombia and Panama are
projected to expand such demand even further. The United States
has the comparative advantage to grow this export business--and
do so in an environmentally sustainable way. But that will
happen only if our livestock and poultry producers have access
to competitively priced grain and protein supplies to fuel that
growth. Some U.S. operations already have imported feed
ingredients, and the economics of these businesses are shifting
investment toward South America. It is imperative that the
United States ensure that it has the capacity to meet the
demand of these U.S.-based enterprises that create jobs and
economic growth here, rather than overseas.
Further, there are increasing indications that more volatile
weather patterns may result in drier than normal conditions in
important grain-producing regions of the world, including
Russia, northern China, some portions of Canada and the U.S.
upper plains states, as well as some portions of South America,
particularly Argentina. Indeed, U.S. corn production dipped
each of the past 2 years because of weather anomalies.
Exacerbating this situation is the simple fact that there
currently are not enough arable acres of farmland globally to
satisfy the future demand for food. And where farmland is
available, the competition for acres between crops is intense.
The current size and management of the CRP run counter to both
the need and the opportunity to meet increasing global demand
for U.S. agricultural products.
b Continue to Provide Opportunities to Enter Production Agriculture
to Young Farmers, Ranchers and Tenant Farmers: Young and tenant
farmers and ranchers face economic barriers to enter production
agriculture, in part because they need to bid against the
government for available cropland. Sixty-eight percent of
farmers rank land access as the biggest challenge facing
beginning farmers, according to a November 2011 study released
by the National Young Farmer's Coalition. The same study found
that farmers younger 30 were significantly more likely to rent
land (70 percent) than those older than 30 (37 percent).
Research currently underway for the National Grain and Feed
Foundation has found that several states historically have
operated the CRP in a way that statewide rental rates closely
approximate average cropland rental rates as computed by USDA's
National Agricultural Statistics Service. Rather than rent or
sell, many landowners choose to harvest these CRP rental
payments, which is detrimental to young and tenant farmers
attempting to enter production agriculture or who are
struggling to expand and build economic-sized units for their
business operations. This is a particularly acute concern to
the future of U.S. production agriculture, given the aging
demographics of the nation's agricultural producers. A ``right-
sized'' CRP and programs like the Transition Incentives Program
(TIP) can help encourage future generations to enter the
farming profession, particularly young and small-scale tenant
farmers.
b Increase Economic Opportunity and Quality of Life in Rural America:
The negative impacts of idling productive farmland in the CRP
also manifest themselves at the local rural level. As
productive resources are idled, opportunities to make long-term
livable wages are drained from rural communities. The CRP, if
not right-sized and managed properly with a focus on the most
environmentally sensitive lands, slams the door on economic
activity that is the lifeblood of rural economies. Idle land
reduces economic activity generated by seed sales, tractor
sales and servicing, custom harvesting crews, fertilizer and
chemical dealers, and hired help. Land-idling programs that pit
the government against commercial farmers in bidding for land
cause more people to lose jobs and encourage a continued
population exodus from rural communities. And landowners who
often move away from their rural communities take the money
associated with CRP rental payments with them.
A March 6, 2011 article from The Spokesman-Review in Spokane,
Washington, is just one of many examples of this damaging
impact. The newspaper quotes Greg Partch, a county commissioner
in Washington State as saying: ``CRP is killing our towns. When
farmers take a conservation payment rather than plant a crop,
they don't buy fuel and fertilizer, they don't buy machinery
and seed, and they don't hire help for the harvest. In short,
the payments stifle the local economies by suppressing high
production agriculture in an area that boasts some of the best
wheat-growing conditions in the world.''
This is but one example of the real-world impact that heavy
acreage-idling in the CRP--in some cases exceeding 25 percent
Congressionally mandated maximum cap of the county's cropland--
is having on once-vibrant rural communities.
Recommendations for Change to CRP
The NGFA believes that the goals of protecting environmentally
sensitive land and enhancing the ability of U.S. farmers and ranchers
to produce to meet the world's growing demand for food, feed, biofuels
and exports are mutually compatible. But to accomplish those twin
goals, we believe it is necessary for Congress to reboot the CRP to
make it more responsive and right for the times.
As noted previously, the National Grain and Feed Foundation
currently is in the midst of a research project that is evaluating the
CRP. We anticipate that additional recommendations will flow from the
results of that study, which is projected to be completed in late May.
But based upon the findings thus far, the NGFA recommends that the
following legislative changes be included in the 2012 Farm Bill to
reform the CRP and facilitate the return to production idled land that
can be farmed in an environmentally sustainable way:
b First and foremost, we recommend that the current 32 million acre
maximum CRP cap be reduced significantly. At a minimum, Land
Capability Classes I and II (approximately 7.1 million acres)
should be prohibited from future enrollments and re-
enrollments. Further, as cited previously, a total of more than
8.7 million farmland acres (including some Land Capability
Class III acres) of ``prime farmland'' were enrolled in CRP as
of 2007 (the most current data available from NRCS). In the 30
states with the greatest CRP enrollments, approximately 8.5
million acres are considered to be prime farmland. Such good
quality land currently idled in the CRP is highly concentrated
in several major grain-production states like Kansas, North
Dakota, Minnesota, Missouri, Oklahoma and Texas. This land can
be can be farmed in an environmentally sustainable way to meet
growing food demand.
b Second, eliminate the discretion for USDA to exceed the 25 percent
limit on CRP enrollments in individual counties because of the
economic damage such enrollments have had on rural communities.
There are indications that USDA may be using outdated
cultivated cropland data in some counties when determining the
25 percent cap, which we believe Congress should require the
Department to recalculate. Further, we recommend that USDA be
required to reserve within the 25 percent county limit at least
a five percent allowance for acres enrolled in the wetlands
reserve and continuous sign-up process.
b Third, the NGFA urges that Congress direct that USDA transition to
a smaller CRP by reducing the number of ``prime farmland''
acres enrolled. In managing this transition, we support
requiring USDA to offer penalty-free early outs of Land
Capability Classes I, II and III enrolled in CRP, with
producers doing so required to implement prudent conservation
practices on such lands. We also believe USDA should carefully
manage any reenrollments of acres expiring on September 30,
2012 in a similar manner.
b Fourth, we encourage Congress to consider whether to provide a
specific percentage- or acreage-based figure within the CRP
reserved for the most environmentally sensitive lands. As of
April 2011, the CRP included 5 million acres enrolled under
continuous signup procedures. Some conservation leaders have
expressed concern that adequate CRP acreage should be reserved
each year to ensure that such environmentally sensitive lands
can be enrolled, with some suggesting that as many as 8 million
acres of the CRP should be reserved for such high-priority
enrollments. We believe this is an issue what warrants
Congress's attention as it considers the future of the CRP.
b Fifth, we encourage Congress to include legislative language that
would restrict whole-field and whole-farm enrollments in the
CRP by requiring such land to meet a more stringent
environmental benefits index (EBI) scoring threshold than
partial-field enrollments. During the early years of CRP
enrollments, whole farms and whole fields were enrolled, which
brought in land of varying quality.
b Sixth, the NGFA supports allocating additional available
conservation funding for the Transition Incentives Program,
currently authorized at $25 million, for transitioning expired
CRP acreage from retired or retiring landowners to beginning or
socially disadvantaged farmers. This program quickly reached
its capacity after being authorized as part of the 2008 Farm
Law, and needs additional resources.
In addition, the NGFA encourages Congress to include, as part of
the farm bill process, the following directives to USDA in its
implementation and administration of the CRP in the future:
b Direct USDA's Farm Service Agency and NRCS to compile a report
within 1 year of enactment, and updated biannually thereafter,
to bring increased transparency to how the CRP is being
managed. Among other things, we believe such a report should
include: (1) the quantity of acreage enrolled in CRP by Land
Capability Class; (2) a compilation of such Land Capability
Class acreage by county; and (3) the identity of counties that
are at or near the 25 percent enrollment cap. We also recommend
that USDA be required to post this report on its website. These
data will increase transparency and enable USDA and
stakeholders to better analyze the prudent management of the
CRP going forward.
b Consider either freezing CRP rental rates for 3 to 5 years or
implementing a percentage-based limit on rental rates paid for
CRP land compared to average county rental rates.
b Limit the number of CRP general sign-ups offered.
Conclusion
The NGFA believes it is important for future conservation policies
to focus on: (1) providing access to sufficient acres to meet demand
growth, without shorting supplies necessary to grow important demand
sectors, such as exports, feed, and domestic livestock and poultry
markets; (2) working farmlands, minimizing reliance on idling of
productive land resources and strengthening the economies of rural
communities while still achieving environmental and other policy goals;
(3) continuing to provide future opportunities for young farmers and
ranchers, as well as tenant farmers, to be involved in U.S. production
agriculture; and (4) minimizing the negative impacts of the CRP in
undermining jobs, local rural economies and depopulating rural
communities.
The NGFA recognizes the importance of, and supports, strong
conservation programs for working farmlands as part of any successful
farm policy, and encourages Congress to designate such programs as a
priority with scarce available funding.
Thank you for the opportunity to testify, and we look forward to
working with you as the Committee addresses these important issues in
the farm bill. I would be pleased to respond to any questions you may
have.
The Chairman. Thank you, Mr. Gordon.
I am pleased to once again welcome Mr. Homan. Mr. Homan, go
ahead and proceed with your 5 minutes of testimony.
STATEMENT OF CARL V. HOMAN, DAIRY PRODUCER, HOMAN FAMILY DAIRY
FARMS, CENTRE HALL, PA; ON BEHALF OF NATIONAL SUSTAINABLE
AGRICULTURE COALITION
Mr. Homan. Thank you, Chairman. I thank you, all the
Members of this Committee, for your service to me as a citizen
of the United States, and your government hours spent.
As this Subcommittee considers conservation, energy, and
forestry, thank you for the opportunity to speak to you how the
farm bill conservation programs have helped my farm, and how
important it is in the next farm bill to strengthen these
programs so that other farmers in Pennsylvania and across this
country also have the opportunity to improve their operations.
My wife Diane, my son Justin, and myself operate a 75 cow
dairy farm in Centre County near Centre Hall, Pennsylvania. We
own 275 acres and rent additional acres to produce crops for
our livestock. With our grandchildren on the property, this
Pennsylvania Century Farm has provided a home for seven
generations of families since 1906. Protecting and sustaining
the farm for our family, the community, and the nation is an
important value of my family, so I have been involved in
farmland preservation and formed an ag security area in our
township. I have served 6 years on the Centre County Ag Land
Preservation Board. In 2008, I was honored to be named the
year's Outstanding Farmer Conservationist by the Centre County,
Pennsylvania, Conservation District, so I can directly speak to
how the resources and technical assistance offered to farmers
by the USDA conservation programs protects the natural
resources of our community, improves the productivity and
profitability of our farm.
I would like to talk about the ways in which conservation
programs have been used on our farm. The CSP program
administered by the USDA Natural Resources Conservation
Service, our farm is enrolled in CSP through 2016. The cost-
share provided by the CSP has allowed us to incorporate what
are called conservation enhancements to the farm. Three years
ago, we started a pasture project in which increased grass
cover and legumes--and this produces the nitrogen for the crops
and produces a better crop, and more feed value in the pasture,
while also keeping the fields in grass longer than a standard
crop rotation. This improves the quality of our soil while also
reducing nutrient sediment runoff.
As for writing the next farm bill, I urge Members of this
Committee to maintain a strong funding base for Conservation
Stewardship Programs. That is one of my main concerns.
The EQIP program has been very important in helping to
protect the natural resources on our farm. For just one
example, we use EQIP funding to establish sod waterway to
prevent spring rains and snow melt from carrying sediment into
the nearby streams. EQIP is a very important part of the USDA's
conservation toolbox, providing cost-share payments for
structure practices, as well as initial cost sharing support to
farmers who want to begin to increase their level of
stewardship through management change. There are things we can
do to make the EQIP more useful to farmers, and I have included
a few of my own recommendations in my written testimony.
The CREP program is part of the larger program called CRP.
It is one of the most cost effective programs in the
Commonwealth of Pennsylvania for reducing pollution into our
local streams and into the Chesapeake Bay. On my farm, we have
enrolled 6.6 acres of wet pasture acreage along the stream in
CREP and created a forestry buffer. CREP has provided rental
payments to help offset the loss of this pasture acreage. These
measures not only improve water quality, but also improves the
health of our dairy herd and increases our ability to manage
the movement of the cattle.
I hope that I have given you some ideas of how important
the farm bill conservation programs are to farmers like myself.
We can and have implemented many improvements on our own, and
these improvements need to be recognized, but there are certain
improvements that will be out of reach economically for many
farmers without solid conservation support in the next farm
bill.
I appreciate the opportunity to be here today and share
with you my ideas, and I will be happy to try to answer any
questions that you might have.
[The prepared statement of Mr. Homan follows:]
Prepared Statement of Carl V. Homan, Dairy Producer, Homan Family Dairy
Farms, Centre Hall, PA; on Behalf of National Sustainable Agriculture
Coalition
Good morning, Chairman Thompson, Ranking Member Holden, and Members
of the Subcommittee on Conservation, Energy and Forestry. Thank you for
the opportunity to testify about the importance of the farm bill's
conservation programs from a farmer's perspective.
My wife Diane, my son Justin, and I operate a 75 cow dairy farm in
Centre County near Centre Hall, Pennsylvania. We also have 275 acres
and rent additional land on which we grow crops. With our grandchildren
now on the property, the farm has provided a home for seven generations
of our family. In 2007, the farm was designated a Pennsylvania Century
Farm.
Protecting and sustaining the farm for our family, the community,
and the nation is an important value to my family. In addition, I
helped form Centre County's first Agriculture Security Area in the
1990's to protect farmland from a highway bypass. And I have served for
6 years on the Centre County Agricultural Land Preservation Board.
In 2008, I was honored to be named that year's Outstanding Farmer
Conservationist by the Centre County Pennsylvania Conservation
District, and I remain a firm believer in the value of conservation to
our farm. The resources and technical assistance offered to farmers by
USDA's conservation programs protect the natural resources of our local
communities. Many conservation practices can also improve the
operations' bottom line.
In addition, our farm is in a watershed that ultimately drains into
the Chesapeake Bay. We know that how we and our neighbors manage our
farms affects water quality in Centre County and all the counties
downstream clear down to Virginia. The farm bill's conservation
programs serve a critically important role in controlling the loading
of nutrients and sediment into Pennsylvania's streams, and the
Chesapeake Bay itself.
We have used a no-till system for the past 10 years to keep soil in
place, reducing sediment and nutrient run off from our fields. We use a
complex resource-conserving rotation of corn, oats, wheat, alfalfa,
clover, timothy hay, soybeans, and rye cover crops that builds healthy
soils. We incorporated cover crops in the rotation 5 years ago, using
mostly rye and occasionally wheat But we also saw that we needed to
improve the conservation performance of our farm and turned to the farm
bill conservation programs for cost-share and technical assistance.
Conservation Stewardship Program (CSP)
The CSP is a whole farm and comprehensive working lands
conservation program administered by USDA's Natural Resources
Conservation Service (NRCS). CSP targets priority resource issues in
specific states and watersheds, paying farmers to adopt new
conservation enhancements and manage ongoing conservation activities to
help solve priority resource concerns. CSP payments are directly linked
to environmental benefits derived from particular practices and
conservation systems.
The program helps farmers use their management skills to maintain
and enhance the land and the food, fiber, and fuel that it produces. In
the first 3 enrollment years (2009, 2010, and 2011), CSP enrolled
30,197 farmers and ranchers operating nearly 38 million acres of farm
and ranchland that is now under 5 year, renewable CSP conservation
contracts. In each of those years, demand for the program exceeded
acreage available by about 2 to 1, resulting in very competitive
enrollments.
The 2012 sign-up for CSP is offering 37 conservation practices and
68 conservation enhancements as well as supplemental payments for
resource-conserving crop rotations. Conservation performance is tied to
how effectively the activities and enhancements address the priority
resource concerns for the state or region within a state, and payment
rates are calibrated directly to expected environmental benefits.
The enhancements are unique to CSP and help drive advanced
conservation. For instance, for cropland, some of the top ranking
enhancements include continuous cover cropping, using cover crops as
nitrogen sources, resource-conserving crop rotation, continuous no-
till, extension in the size and scope of riparian buffers and field
borders, transition to organic cropping systems, and advanced high
level integrated pest management. Top livestock enhancements include
intensive managed rotational grazing, rotation of feeding and
supplementation areas, and managing access to water bodies and streams.
Our farm is enrolled in the CSP through 2016. The cost-share
provided by CSP has allowed us to incorporate conservation enhancements
to the farm. Three years ago, we started a pasture project in which
increased grass cover and legumes are used to increase nitrogen value
and feed value to our pastures, while also keeping the fields in grass
longer than a standard crop rotation. This improves the quality of our
soil, while also reducing nutrient and sediment runoff.
As you write the next farm bill, I urge Members of this Committee
to maintain a strong funding base for the Conservation Stewardship
Program. That is my main recommendation.
Beyond enough funds, there are other changes that could be made to
increase the program's effectiveness and make it work better for
farmers and ranchers. These improvements should be made to CSP in the
next farm bill:
Simplify the program by ranking proposals solely according
to the environmental benefits score secured by the total
conservation system, including the new enhancements to be
adopted and the existing conservation baseline. Every aspect of
the CSP design, including payment formulations and ranking,
should keep the focus on conservation outcomes, adaptive
management, and continual improvement, not on the timing of
initial adoption.
Allow producers to renew their CSP contracts so long as they
have satisfied all previous contract obligations and increased
their conservation score since the previous renewal. Currently,
CSP contracts can only be renewed once. This creates a barrier
to fulfilling the purpose of the program, to advance ongoing
and adaptive land stewardship to maintain and improve
environmental performance. We have major resource challenges
and we need policy that sends the right long term signals to
farmers.
Environmental Quality Incentives Program (EQIP)
EQIP has played a key role in helping to protect and enhance
natural resources on the farm. We used EQIP funding to establish sod
waterways that prevent spring rains and snow melt from carrying
sediment to waterways. EQIP is an essential piece of USDA's
conservation toolbox, providing one-time cost-share payments for
structural practices as well as initial cost-share support to farmers
who want to begin to increase their level of stewardship through
management changes. But EQIP could be improved to make it more useful
to farmers.
First, EQIP, and in fact all the conservation programs, needs to
focus more on reducing nutrient losses. All over the world there are
streams, lakes and coastal areas that are suffering from low oxygen
because of excess nutrients. In the Chesapeake Bay watershed, we are
under a lot of pressure to put in more practices to reduce our nutrient
losses quickly. EQIP and other farm bill conservation programs need to
focus on that. The Chesapeake Bay Watershed Program that you created in
the last farm bill has helped Pennsylvania farmers a lot, and you ought
to continue that program.
Second, in order to ensure the program is achieving results and the
biggest bang for the buck, you should bring back progressive plannin