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




   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________

     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES
                    JACK KINGSTON, Georgia, Chairman

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

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
       Martin Delgado, Tom O'Brien, Betsy Bina, and Andrew Cooper,
                            Staff Assistants
                                ________

                                 PART 8

                        SECRETARY OF AGRICULTURE



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                ________

         Printed for the use of the Committee on Appropriations




   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2013

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION
                                ________

     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES
                    JACK KINGSTON, Georgia, Chairman

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


 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
       Martin Delgado, Tom O'Brien, Betsy Bina, and Andrew Cooper,
                            Staff Assistants
                                ________

                                 PART 8

                        SECRETARY OF AGRICULTURE



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                ________

         Printed for the use of the Committee on Appropriations

                     U.S. GOVERNMENT PRINTING OFFICE

 75-802                     WASHINGTON : 2012













                        COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

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

               William B. Inglee, Clerk and Staff Director

                                  (ii)

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2013

                              ----------                              

                                         Friday, February 17, 2012.

                UNITED STATES DEPARTMENT OF AGRICULTURE

                               WITNESSES

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

                       Introduction of Witnesses

    Mr. Kingston. The committee will come to order.
    First of all, I want to welcome back all of the committee 
members. This will be the first of 11 hearings under the 
President's fiscal year '13 budget. We look forward to each 
hearing. We always have good hearings, and certainly today's 
guest is a great person to get it started with and a great 
panel to get it started with.
    Last year, after completing the action on H.R. 1, the 
continuing resolution, we quickly shifted into fiscal year '12, 
the Agriculture Appropriations bill. We had a good subcommittee 
markup, and on the floor we spent 25 hours and had 62 
amendments, but we moved it rather quickly.
    And, unfortunately, our Senate counterparts moved at a 
slower calendar than we did, but we were ready to go in June. 
And I believe that that will be the chairman's intent this year 
on all the appropriation bills, and we are looking forward to 
working through that process.
    Welcome, Secretary Tom Vilsack, Deputy Secretary Kathleen 
Merrigan, Chief Economist Joe Glauber, and Mike Young, the 
USDA's budget director, to our first hearings. And I guess, Mr. 
Young, this will be your first of many, is that correct?
    Mr. Young. Yes.
    Mr. Kingston. We will invite the Secretary back in case he 
is feeling he needs a little more love or something. We can 
make that happen, Mr. Secretary.
    The USDA's portion of the request for this subcommittee 
totals just over $18 billion, which is a net increase when 
compared to fiscal year '12, but there is balance in it. And, 
unfortunately, of the approximately $140 billion budget, $122 
billion of it is mandatory spending, and that is something our 
committee does not have jurisdiction over, something that we 
hope the Budget Committee and the authorizing committees will 
do something about.
    You request about $932 million in increases but also 
request $470 million in decreases. So we think that you do have 
some balance to it. We are not in complete agreement with all 
of this, of course, but that is not unusual either.
    We are concerned, though, on the mandatory side there is a 
$5 billion increase. So regardless of what we do in this 
committee, if we scale back and trim and have a lot of hand 
wringing as we did last year, we are still going to go to the 
floor with a net increase.
    So, with that, we will have to hope that some of the other 
committees step up and do their part as we all try to wrestle 
with this budget and the big picture.
    Before I recognize you, Mr. Secretary, for an opening 
statement, I wanted to call on Mr. Farr, the distinguished 
gentleman from California, our ranking member.
    Mr. Farr.
    Mr. Farr. Thank you very much, Mr. Chairman; and thank you, 
Mr. Secretary, for being here and for Deputy Secretary Dr. 
Merrigan, also. I want to thank her for her leadership in 
Europe in getting the accords signed, and I really appreciate 
that.
    I think that it is nothing better than to start an 
appropriations hearing schedule this year by honoring the 
Department of Agriculture, because this year we are honoring 
150 years of service to this country. Many people don't know 
that this Department was created in 1862 by President Lincoln 
and essentially creating USDA as the Department to support the 
growth of America and the westward expansion and to teach 
people how to get into rural America and how to use and survive 
in the wilderness. And I think it is very fitting that we have 
incredible appreciation for the work done.
    For a century and a half USDA has been helping rural 
Americans, and the mission today is just as important as it was 
then. Rural America is suffering. I think the Secretary one 
time indicated that it has been in a depression. And to 
recapture we are going to have a rural strategy in America that 
is modern and progressive.
    We are also going to have to make sure that, as we have 
this incredible ability to process all kinds of fresh fruits 
and vegetables and get fruits and vegetables and other products 
from all over the world, that all of this is safe and that we--
not only nutritious but safe for people to eat.
    So I look forward to these hearings. It is always tough 
when you come in with a budget that isn't going to spend a lot 
of money. Congress likes to fix things that are broken, and 
usually if you do that it costs money. I think we appreciate 
the leadership the Secretary has given in looking at 
reorganization and looking at efficiencies within a big 
Department. I applaud him for that, those efforts.
    As we do these hearings, we will get into the minutiae, and 
maybe some of you will agree with it, some of you won't. But I 
think you are headed in the right direction, and I appreciate 
that.
    I just want to thank you, Mr. Chairman. Last year was a 
very bipartisan effort when we put together the final bill and 
actually bicameral. We worked well with the Senate, and I look 
forward to doing the same this year. Thank you for your 
leadership.
    Mr. Kingston. Well, thank you. And I think all the 
committee members should take a lot of pride in that our 
appropriation bill was not only one of the first ones passed in 
the House but one of the first ones to go to the President. So 
we did work well, and it was on a bipartisan basis.
    We are also joined today by the distinguished gentleman 
from Kentucky, Mr. Hal Rogers, Chairman of the Appropriations 
Committee.
    Mr. Rogers.
    Mr. Rogers. Thank you, Mr. Chairman; and let me add my 
congratulations to you and your colleagues and partner on your 
bill last year, Mr. Farr, for doing a great job. That was a 
tough, tough atmosphere to be in, and you delivered it, and I 
appreciate very much the good work that you all did.
    Mr. Secretary, thank you for being here, along with your 
associates. This bill is dear to the hearts of most of us and 
certainly my heart and the heart of my district.
    As you know, the ag appropriations bill contains several 
programs that are aimed at rural Kentuckians, obviously; and I 
know from traveling around southern and eastern Kentucky that 
rural America is struggling.
    And yet, as I interact with my constituents, I don't get 
the sense they want more government, more handouts, or more 
Federal mandates. They want jobs, and they want investment, and 
they want Washington to simply get out of the way of creating 
those jobs. They want Washington to get out of the way. And, 
unfortunately, our country's rising $16 trillion debt, 
including a record $5 trillion under this administration, is 
contributing to insecurity and uncertainty in the marketplace; 
and that is costing us jobs.
    Add to that a regulatory mess created by this 
administration. It is no wonder small businesses, the lifeblood 
and job creators in rural areas, are petrified and they are 
frozen in place.
    This committee has been on the front lines in the battle 
against out-of-control Washington spending, stopping the 
regulatory onslaught. We work to ensure that the programs we 
fund are effective and sustainable and that they support rural 
Americans and farm families.
    Last year, we succeeded in reducing discretionary spending 
by $95 billion compared to the fiscal '10 levels. But mandatory 
spending costs, which are the largest driver of our debt and 
are largely not under the purview of this committee, continue 
to skyrocket and put the future solvency of many programs in 
jeopardy. Some of these programs are run by USDA; and although 
that spending is on automatic pilot, it is our duty to this 
Nation to see that these programs do not escape tough scrutiny 
and oversight.
    This committee has also fought the steady stream of 
regulations, mandates, and fees that have been forced upon our 
farmers, our small businesses, and rural communities by this 
administration.
    While the goals of some regulations may be well 
intentioned, they seem to be implemented without regard to the 
burden they are placing on rural communities and small towns. 
Our communities are instead expected to march in lockstep, 
spending precious resources to meet Washington's ivory tower 
ideals. That has got to stop.
    These regulations have the combined effect of dampening 
economic prospects and preventing businesses from hiring, while 
also raising the ire of many Americans who feel that Washington 
is out of touch and is not looking out for them. These past 3 
years we have seen a disturbing trend, Mr. Secretary, and I 
hope we can correct that. This morning, we look forward to 
hearing from both you and the administration's plans for the 
'13 budget as well as how we can work to combat this 
overregulation in rural communities.
    Thank you, Mr. Chairman.
    Mr. Kingston. Thank you, Mr. Rogers.
    We have also been joined by the distinguished Ranking 
Member, Mr. Norman Dicks of Washington.
    Mr. Dicks, do you have an opening statement?
    Mr. Dicks. I have a very brief statement.
    Thank you, Mr. Secretary. We appreciate your good work, you 
and your staff. I am glad you are having the hearing today, and 
we are beginning the fiscal year 2013 budget process. The 
agriculture bill moved relatively smoothly through the House 
and the Senate last year, and I am hopeful it can do so again 
this year.
    Secretary Vilsack, good to see you again; and thank you for 
being here today to address the subcommittee's questions about 
the budget request. As far as the budget that is before us, I 
think the administration has submitted a balanced and 
responsible proposal, and particularly I am pleased to see the 
commitment to fully fund the WIC program.
    The increase for competitive research is also welcome, and 
I appreciate the effort that was made to maintain the 
investment in many programs in the rural development mission 
area. And I can tell you those rural development programs, even 
in areas of Washington State, everybody thinks it is all 
Seattle and Tacoma, but these rural areas really benefit from 
these programs.
    The funding for water and waste programs is critical to 
many smaller rural communities, many of which face a great 
hurdle in trying to maintain aging infrastructure, which I 
think is one of the most serious problems facing our country, 
that we have this incredible backlog. When Christine Todd 
Whitman was the head of EPA, she did a study and it was like 
$688 billion in wastewater treatment. Now some of that is taken 
care of by EPA, but the rural development program helps rural 
areas with these kinds of programs.
    I know we won't agree on every detail, no one ever does, 
but I hope we can find sufficient common ground to move this 
bill forward as quickly as possible.
    And I would want to bring up one item.
    Secretary Vilsack--and I don't expect you to respond to 
this--during last year's markup of this bill there was a lot of 
discussion about the cost of administering the WIC program. The 
House report for fiscal year '12 said: By the committee's 
estimation, administration costs of operating WIC are well 
above 40 percent.
    You sent us a letter in response to that report language, 
and you confirmed what we all knew, and that is the correct 
figure was 9 percent, not 40 percent. I would ask unanimous 
consent to include the Secretary's letter to the committee to 
make sure that everyone has the accurate facts. I think this 
added a lot of confusion. The program is very well 
administered, and 9 percent seems reasonable to me.
    Thank you, Mr. Chairman.
    Mr. Kingston. Thank you, Mr. Dicks.
    We will now proceed--but, Mr. Secretary, before I yield to 
you, I wanted to say to the members----
    Mr. Dicks. Do I get unanimous consent to put it in the 
record.
    Mr. Kingston. Yes.
    [The information follows:]


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    Mr. Kingston. What we will do is keep with the 5-minute 
rule, and we are going to have some votes, and so we will just 
do the best we can. But we will stick with the 5-minute rule. 
And if anyone in the room has a cell phone on, if you could 
please turn it off or silence it.
    Mr. Secretary.

                           Opening Statement

    Secretary Vilsack. Mr. Chairman and Representative Farr and 
members of the committee, thank you very much for the 
opportunity to appear today and specifically thank you for 
changing the schedule of this hearing to allow me to 
participate in an historic symposium with Chinese Agriculture 
Minister Han, as well as Vice President Xi.
    Yesterday, we were proud to see the signing and approval of 
a soybean contract for China that will generate more than $4 
billion of soybean sales. So we appreciate the committee's 
assistance in allowing me to participate in that symposium.
    Mr. Chairman, I think the time for all involved in the 
appropriations process as it relates to the USDA budget has to 
reflect a bit on what we have already done in terms of trying 
to get our budget under control and allow us the time to 
properly manage what changes have already been announced, to 
properly implement changes that we anticipate will take place 
over the course of the next year or two, and to continue to 
allow us to help provide assistance to farmers as a result of 
the record income they generated last year, and also to allow 
us to continue to reduce the unemployment rate in rural 
America.
    According to the Bureau of Labor Statistics, that rate was 
declining at a more rapid rate than anyplace else in the 
country. In essence, we want to continue to build the economy 
that President Obama has talked about, which is one that is 
built to last.
    I think it is important as we start this hearing to review 
briefly what we have done at USDA in terms of our discretionary 
budget and the operations budget for USDA.
    We have taken steps to reduce travel, supply purchases, 
conferences, as well as take a look at our workforce. We have 
lost roughly 7,100 of our more experienced workers as a result 
of normal attrition and an early retirement and early 
separation program with incentives that we announced.
    We have also engaged in a rather extensive process to 
internally review our operations, resulting in 379 
recommendations for change and commitment to steps we have 
already taken.
    We have also announced, as you well know, 259 office 
closings and lab closings as part of a consolidation effort.
    In addition to the reductions that we have seen in our 
operating budget, we have also made an effort on the mandatory 
side. As you well know, we have seen a reduced growth in the 
rate of our conservation programs at USDA, as well as a $4 
billion savings for crop insurance as a result of a 
renegotiated standard reinsurance agreement.
    So we see 2012 and 2013 as years in which we will continue 
to implement these changes but not compromise our capacity to 
help grow the economy in rural America.
    The discretionary budget that we propose is essentially a 
stable budget. Two significant increases which have already 
been mentioned, one is that we fully fund the Special 
Supplemental Nutrition Assistance Program for Women, Infants, 
and Children--WIC program--at a participation rate of 9.1 
million, as well as an increase in competitive grants for 
research, which we think are extraordinarily important to allow 
us to continue to increase agricultural productivity and the 
benefits that come from that.
    In addition, the mandatory budget, as the Chair indicated, 
does provide for an increase. But the primary reason for that 
increase, Mr. Chairman, is an increase in crop insurance 
payments, and that is a result of the 2008 Farm Bill, which 
requires us to essentially count twice various underwriting 
gains in this year. So it is somewhat of an aberration as a 
result of a shift in timing.
    As a result of this budget, if you take a look at the 
percentage of the budget that is attributed to farm programs 
and conservation, it represents 22 percent of the total budget. 
That is up from 19 percent last year.
    For our food assistance programs, we see a reduction of 75 
percent to 72 percent of the overall budget, primarily a result 
of a projection of a declining number of people participating 
in Supplemental Nutrition Assistance Program--SNAP--due to an 
improved economy.
    This budget will allow us to avoid furloughs and 
significant layoffs, which would be very disruptive to the 
services that are important to folks in rural America.
    It is also a budget that continues our commitment to 
exports. We had a record year in exports last year.
    It is a budget that allows us to continue the expansion of 
domestic markets, whether it is in biofuel and biobased economy 
or in local and regional food systems.
    It is a budget that will allow us to provide credit to 
29,000 farmers who are in need of ownership or operation loans, 
an opportunity for us to continue a strong commitment to the 
safety net through crop insurance and the funding of disaster 
programs.
    This budget will allow us to have a record number of acres 
enrolled in conservation, continue our commitment to food 
safety, and also our commitment to struggling families through 
the nutrition assistance programs.
    The Forest Service portion of this budget will allow us to 
promote fire suppression at a 10-year expense average and 
continue our integrated resource effort and a collaborative 
landscape effort as we work towards 3 billion board feet of 
timber that will be processed.
    We are excited about the opportunity in our rural 
development programs to assist up to 45,000 additional jobs in 
rural America.
    We think this budget will allow for 184,000 home loans, 
1,700 community facilities, and allow us to build on the over 
5,000 wastewater and water treatment programs that we have 
already funded the last 3 years.
    It will also provide assistance to our electric power 
companies, particularly a little flexibility in terms of 
allowing them to become more efficient and to embrace more 
renewable energy sources.
    Finally, this budget, as I said earlier, does make a 
commitment to research, which is extraordinarily important; and 
we hope that during the course of the questioning we have an 
opportunity to amplify on that.
    There are trade-offs, there are programs that are 
eliminated and reduced, but I am sure the questions will elicit 
a discussion of those items.
    So, Mr. Chairman, once again, thank you very much for the 
opportunity to appear before you today; and I look forward to 
the questions of the committee.
    Mr. Kingston. Thank you, Mr. Secretary.
    [The information follows:]


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                    ADMINISTRATIVE SOLUTIONS PROJECT

    Mr. Kingston. Of the 379 recommendations for change, you 
have listed some of them, but what I would like to know is how 
do those translate into dollars and what are some of the 
changes? Have they affected administrative functions? Has it 
been a problem for anybody?
    But I guess, more importantly, give us some examples and 
then what kinds of dollars have they saved.
    Secretary Vilsack. We anticipate that the first round of 
changes that we have announced, combined with the consolidation 
of offices, will net about a $60 million savings. Now, that is 
on an annual basis. That is in addition to the $90 million that 
we have saved as a result of reducing expenses in travel and 
supplies, et cetera. That includes just 27 recommendations for 
change of the roughly 240-some recommendations of proposed 
change. The 379 number includes 133 recommendations that 
basically maintains status quo.
    I will give you a couple of examples of things that we have 
done and that we are proposing to do.
    In the first 27 set of recommendations, we are taking a 
look at our vehicle maintenance and vehicle turnover. What we 
determined was that USDA was turning over its vehicles 
approximately every 2 years. I have asked the question of every 
USDA group that I have talked to how frequently they change 
their own personal vehicle over. I have had one individual 
raise their hand to tell me it is every 2 years.
    Why are we doing something that American families are not 
doing? So we are going to extend significantly the time period 
for turnover. We think that will save resources.
    We also found during this process that we had roughly 700 
cell phone contracts. We have reduced that to about 10; and, as 
a result, we obviously have greater leverage in terms of the 
contracting for those cell phones.
    There are a whole series of things that we are proposing to 
do, but we want to make sure that we do these in the right 
order. We want to make sure that we have the employees of USDA 
fully engaged and fully cooperative in these efforts.
    You will likely see, for example, in the future, that we 
will look towards a unified process for fingerprinting. You may 
think, well, what is the big deal there. Well, the reality is 
that sometimes some of our agencies use the Federal Bureau of 
Investigation--FBI--to process fingerprinting. That is $35 a 
person. We found that if we use the Office of Personnel 
Management it is $18 a person. So we are obviously going to 
transition to the lower-cost effort.
    We are going to strengthen the foreign visitor processing 
and vetting to streamline that. We are taking a look at the 
Information Technology--IT--help desk to provide more 
assistance in terms of technology. So, over the course of time, 
you are going to see us over this next year incorporate many of 
these changes.
    It allows us to respond to the $3 billion reduction in our 
operating budget that we have already experienced, and our hope 
is that it provides an opportunity for us to fit within the 
budget that this committee ultimately decides is appropriate 
for our operations.
    Mr. Kingston. Secretary Merrigan, are you the one in charge 
of implementing these?
    Ms. Merrigan. No.
    Secretary Vilsack. If I can--I am in charge.
    And the reason--we are a partnership, and the reason I say 
that is I think it is important. This is a very important 
point, that in order for this to work, people have to 
understand that people at the top of the work chart are engaged 
in this.
    Mr. Kingston. I think what we on the Subcommittee want to 
do is help you and embrace this. And I actually had the 
opportunity in a Defense Appropriation Committee on Walter Reed 
reorganization to bring up some of the good work that you are 
doing.
    But, at the same time, I want to be sure that we can track 
it, that, okay, these are the things that are being done; these 
are the things that will be done and these are the savings that 
are being realized; these are the savings that are being 
anticipated. So that we just want to help you, and sometimes we 
will help push with you. And I think we could be invaluable in 
that effort.
    Secretary Vilsack. We have a process that involves taking a 
look at how to finance these changes and where the savings will 
be realized, and also the statutory authorities or delegation 
of authorities has to be straight in terms of who does what.
    We are going to see a consolidation of some activities in 
centers of excellence. We are going to see shared service 
agreements between our various departments. So it is a little 
bit more complicated than most people would recognize.
    Mr. Kingston. Yes.
    Secretary Vilsack. So we appreciate your offer of 
assistance. We will make sure that the committee is fully aware 
of what we are doing and why we are doing it and what we think 
it would save.

                            OFFICE CLOSINGS

    Mr. Kingston. And, also, on the field office closings, we 
need to get the big number of what that will save. Because I 
know what is going to happen and you know what is going to 
happen, is everyone is going to give reasons why it can't be 
closed in their district--that one particular office times 435.
    So we want to work with you on that, but it would be good 
for us to get the number.
    I know I am out of time, though.
    Secretary Vilsack. In that respect, Mr. Chairman, we will 
supply you with our estimate in terms of cost savings that we 
have already done relative to the proposed consolidations and 
closings that we have announced.
    [The information follows:]


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    Mr. Kingston. Thank you.
    Mr. Farr.

                         CHANGING BUREAUCRACIES

    Mr. Farr. Well, thank you, Mr. Chairman.
    I echo the chairman's feelings about the ability for you to 
do these--sort of bureaucratic clean the house. I think all of 
us arriving in Washington are shocked about how big all of 
government is. And I know from your background as the Governor 
of a State and the mayor of a small town, they give an 
appreciation for trying to run things efficiently.
    It is very hard to change bureaucracies in this town, and I 
think this tough fiscal situation we are in is going to require 
every agency--and we see what the pushback we are getting from 
the Department of Defense is, you know, not wanting to accept 
the tough cuts.
    But I think it comes from really looking at everything you 
do. I mean, just small things like cell phone contracts, 700 of 
them, that is outrageous. I want to applaud you on being able 
to get the support of a huge agency to do these cutbacks, 
because, obviously, it affects somebody's workplace and 
lifestyle.
    And I also share that concern that we are going to get 
pounded the minute you announce which office is going to be 
closed or consolidated. We have all been through base closure 
processes, and we know how difficult it is to accept those 
recommendations.
    I also think we are going to have to really defend the fact 
that there are increases. There is poverty in America, and the 
jobless increase in people without jobs has put a lot of people 
on need of getting assistance. Your Department is the biggest 
feeder in the world of people of low income or no income. As 
you said, 72 percent of your whole Department goes to food 
assistance. So I think we have to realize how drastic this 
poverty and unemployment problem is on our social services.
    And we will defend the ability for people, particularly 
pregnant women, to get access to WIC programs and for people 
who need food to get on food stamps but also pushing the States 
like California, my State, which I think has a lot of 
bureaucratic problems that cost a lot of money that could be 
simplified with leadership from you as a Secretary.
    So I look forward to working with you. This is a good give-
and-take dialogue we are going to have in the next couple of 
months, and thank you very much.
    Secretary Vilsack. Mr. Chairman, if I could respond to the 
ranking member's comments, and I hope that this is not taken in 
the wrong way.
    As a small town mayor and as a former State senator and 
Governor of a State that has many, many small towns, there is 
obviously a concern when anyone is proposing an office closing 
or consolidation, because people perceive those tax-supported 
institutions and entities as reflective of their community.
    And I think what we really need to be able to do is to work 
with those small communities and have them recognize that their 
real long-term future is in attracting private-sector 
opportunities. It isn't necessarily maintaining at all costs a 
tax-supported entity. It really is about growing the economy 
that, in turn, will support those tax-supported institutions, 
whether it is a hospital, a school, or a post office.
    I think it is important for us to focus on recognizing 
these small communities are part of an economic region and 
giving us the flexibility within our programs to be able to 
tailor it--because what is going on in California may be 
fundamentally different than what is going on in Georgia or in 
Iowa--and giving us the capacity to be flexible enough to use 
these programs creatively, to leverage them, and to work to 
create great partnerships so that the private-sector activity 
is motivated and supported.
    Mr. Kingston. Mr. Rogers.

                     MANDATORY ENTITLEMENT SPENDING

    Mr. Rogers. Mr. Secretary, it is absolutely amazing to me, 
of your request for next year, $140.3 billion, 85 percent of 
that is mandatory spending, automatic pilot, of which you have 
no control, nor do we. Eighty-five percent of your budget is 
mandatory spending. Only 15 percent of your budget request is 
appropriated monies.
    That points out the larger problem. Of all Federal spending 
for everything, more than two-thirds of it is on automatic 
pilot, mandatory entitlement spending, more than two-thirds, 68 
percent to be exact, which leaves only 32 percent that the 
Congress appropriates. More than half of that is for defense, 
which can't be cut much, if at all, which leaves us with 
about--what--12, 13 percent of non-defense discretionary 
spending. That is all we appropriate for.
    If we abolished all the spending for everything in the 
government, zeroed out all discretionary spending, you would 
still be in the red for the year because of the entitlement, 
mandatory side of the budget.
    So if we cut out all discretionary spending it would not 
make a bit of difference on the deficit. We would still owe 
money for every year if we borrow 42 cents of every dollar we 
spend, mostly from China. And you present us a budget with 85 
percent mandatory. How can you justify that?
    Secretary Vilsack. Well, Mr. Chairman, I think there are 
several ways that that can be justified in the sense that 
Congress obviously has directed this, and we are just simply 
following the directions and instructions of Congress.
    Secondly, you know, there are some very significant 
programs that provide help and assistance to an awful lot of 
people.
    First of all, we have looked at our mandatory budget in the 
sense that we worked with our insurance companies on the crop 
insurance side to renegotiate the standard insurance agreement 
and took the profit margin that these companies were realizing 
and may be providing a better and fairer deal for taxpayers. 
That netted a $4 billion reduction in our mandatory spending 
that we used for deficit reduction.
    Secondly, when you look at some of the conservation 
programs that are critical and important, you realize that not 
only are they beneficial to the environment, but they are also 
job creators, and they are also providing some income source 
for farmers. They are one of the many, many reasons we have 
seen record income levels for farmers and allowing farmers to 
be extraordinarily more productive, do a better job of 
conservation, soil quality, and water quality.
    The food programs, there are many ways to look at these 
programs. And one of the things that your question provides me 
an opportunity to do is to educate people on precisely who is 
receiving these payments.
    I think a lot of people think that SNAP payments are going 
to folks on cash welfare. The reality is only 8 percent of the 
people receiving SNAP are on cash welfare. The other 92 percent 
are senior citizens, people with disabilities, children, and 
folks who are actually working. They may be working a part-time 
job or a full-time job, but it just does not give them the 
capacity to meet all the nutritional needs of their family.
    And so if you look at the impact, the economic extension 
impact of a SNAP program, what you determine is, for every 
dollar we invest, $1.80 of economic activity occurs.
    So we are going to continue to follow the prescriptions and 
directions of Congress. We will work with Congress to find ways 
to make sure that we are running these programs efficiently and 
effectively.
    I am proud to say that the error and fraud rate on SNAP are 
at their lowest points in the history of the program. We will 
continue to try to figure out ways in which we can do an even 
better job.
    Mr. Rogers. A lot of these programs, of course, are 
dependent on the rise and fall of the economy. Food stamps, for 
example, SNAP, and not only SNAP but other farm programs 
dependent on the economy. When you were making your 
recommendation, your request to us for your budget, what kind 
of outlook did you rely upon in the economics field to make 
those judgments?
    Secretary Vilsack. Well, I can tell you in the SNAP area we 
actually have seen a plateau and actually we are projecting a 
decline in the number of participants in SNAP during 2013 
because we are seeing an improved economy.
    We have also seen an uptick recently in the WIC program, 
which is why you see an increase there to increase 
participation.
    In terms of the farm programs, we are projecting a slight 
increase in direct payments; and, as I said, we are expressing 
a fairly significant increase in crop insurance, but that is 
because of an accounting process that we are directed to 
involve as a result of the 2008 Farm Bill.
    Mr. Chairman, one of the things that will actually drive 
that number in the future is what we do with the Farm Bill; 
and, obviously, we can have a conversation about that as well 
in terms of farm programs and what kind of adjustments we have 
to make, given the fact that we are seeing record income levels 
for farmers.
    Mr. Rogers. Well, thank you, Mr. Secretary. You have got a 
tough job.
    Mr. Kingston. Thank you, Mr. Rogers.
    Mr. Dicks.

                             SNAP BENEFITS

    Mr. Dicks. Well, on this subject, I find it interesting 
that executives from Wal-Mart--one news story quotes Wal-Mart 
senior vice president for store development talking about the 
rush of business in their stores on the first of every month 
when the SNAP EBT cards are loaded. She said, we bring in more 
staff to stock. We also make sure all of our registers are 
open.
    The CEO of Save-A-lot, which operates 1,280 supermarkets, 
also spoke about their customers who are making purchases with 
SNAP benefits and the rush at the beginning of each month. And 
that is why your statement that every dollar we spend creates 
$1.79 in economic activity--and we have got to take care of 
these people. That is the thing.
    And if the chairman wants to get people back to work, as I 
do, that is the best way. We have got to get people back to 
work; and then the cost of these programs will go down, both 
unemployment comp, food stamps, and all the other benefits that 
we have when we have a weak economy.
    That is why I think the President is correct when he says 
we want to make sure that we don't hurt the economy in the near 
term by making draconian cuts in programs that are there to 
help the recovery. And we have got to have an economic 
recovery. That is why we have to be very careful.
    Now, in the longer term, the next 5, 7 years after, say, 
2014, then you can really, you know, exercise restraint and 
austerity. But austerity right now would make these programs--
it puts more people on unemployment, has more people using food 
stamps. I mean, this is basic economics. And, you know, I am 
glad that we were able to prevent the draconian cuts that were 
proposed, because they would have done real damage to the 
economy.

                             RURAL ECONOMY

    Secretary Vilsack. One of the untold stories that I think 
does need to be emphasized is the success that we are seeing in 
agriculture in this country. I mentioned several times that we 
have seen a record level of income in agriculture, and one of 
the reasons is that we had a record level of export activity 
last year. We did $137 billion--$136 billion of exports.
    Every billion dollars of exports generates 8,400 jobs, 
which is why, Mr. Chairman, I started my comment by thanking 
you for giving me the capacity to be with the Chinese 
yesterday. Because when you deal with $4 billion worth of 
soybean sales, you can do the math, that is a number of jobs 
across the country.
    The fact that we are seeing a record income level in 
farmers, the fact that we are seeing expansion of domestic 
markets and exports, and the fact that we are seeing a record 
number of acres involved in conservation translates, I think, 
into a slightly healthier economy in rural areas than we have 
seen for a while. The unemployment rate, according to the 
Bureau of Labor Statistics, the last report I saw, is, in fact, 
coming down at a faster rate in rural America, and I think part 
of it is a result of the health of the agricultural economy. 
And I think there is a message there for the entire country.
    Farmers in the 1980s faced, as Representative Latham knows 
full well, faced a serious amount of debt. They got their debt 
under control, which we have to do, obviously, within this 
government. They invested money in technology and research and 
innovation and productivity, so agriculture has been the second 
most important aspect of our economy since 1980, and that gave 
us the opportunity to create new ways to use our agricultural 
production and also export opportunities.
    So that is why we are asking for more dollars in research. 
That is why we want to increase agricultural productivity. That 
is why we want to support exports. We want those private-sector 
jobs. Representative Dicks, you are absolutely right. That is 
what is going to drive down the need for many of these other 
programs.
    Mr. Dicks. You have got to put people back to work.
    Secretary Vilsack. That is true.
    Mr. Dicks. And it also reduces the deficit. This is the one 
thing that a lot of people don't understand, is that when you 
create economic activity it brings down the deficit. If you 
don't, if you cut and slash and burn all of these programs that 
are job creators, it is going to raise the deficit. It is 
counterproductive. It doesn't work.
    When you listen to Paul Krugman, when you listen to the top 
economists--Bernanke, Simpson-Bowles--they have all said you 
have got to be careful about how you do this.
    And so I mention this because we are at the start of 
another year, and I remain hopeful that we will have a 
reasonable budget here in the House of Representatives, not 
something that is going to require draconian cuts that will do 
more damage than good in the name of fiscal austerity.
    Thank you.
    Mr. Kingston. I thank the gentleman.
    Mr. Latham.
    Mr. Latham. Thank you very much, Mr. Chairman; and welcome, 
Mr. Secretary.
    I was stunned, I guess, in the President's State of the 
Union that he did not once mention anything about agriculture. 
I don't know, maybe you didn't have any input into the State of 
the Union, but not once did he say anything about agriculture.
    Secretary Vilsack. Well, I think he did.

                            FARM YOUTH LABOR

    Mr. Latham. I was curious--I would like to know how much 
input did you have with the Department of Labor with the rule 
about the farm youth? And I know you supported the original 
rule, and then they retracted it. But are you----
    Secretary Vilsack. Well, I want to make sure that we are 
clear about this. I contacted Secretary Solis during the 
Christmas holiday to express concerns and to make sure that she 
fully understood and appreciated what was at stake here. It was 
not just simply an issue of child safety, which we are all very 
interested in.
    Mr. Latham. Right.
    Secretary Vilsack. It was about making sure that there was 
an understanding of the value system that is at stake here, the 
fact that many values are transferred in the countryside 
through the work that is done on the farm. Youngsters learn the 
value of hard work, they learn the value of economic 
independence by virtue of that hard work, and that we wanted to 
make sure that whatever was done did not jeopardize that value 
system.
    And, as a result of those conversations, the Department 
made the decision to sort of pull back the proposal as it 
relates to the family farm section of it and to actually review 
the entire rule. So we are engaged with them, and we will 
continue to be engaged with them as they formulate this rule.
    Mr. Latham. On your blog in December you are saying the 
Department of Labor is not proposing any changes as to how a 
son or daughter can work on a family farm and that simply--
there were major changes.
    Secretary Vilsack. Well, that statement is actually true 
because of the exceptions that are contained in the law. The 
definition of family, that is actually true. But what was 
potentially at risk was other relatives, the niece and nephew, 
a second cousin and that type of thing. And that is what we 
tried to explain to them, that there are ways in which this--
the concern for safety can be translated. It doesn't 
necessarily jeopardize that value system.

                  FARM SERVICE AGENCY OFFICE CLOSURES

    Mr. Latham. The Farm Service Agency offices--if you could 
do a multiple question here, because Jack is going to put me 
out of time, but a couple of things. The criteria used as to 
which offices were going to be closed, I don't know whether 
there is workload or just the number of employees or distance 
from another office.
    And then I know I asked you last year, but you are not 
making any proposals as far as a new Farm Bill, and that 
obviously is going to be something that will be debated this 
year. Hopefully, it will get done.
    But there is a lot of talk about certainly doing away with 
direct payments, probably doing away with commodity programs, 
much less effect than what they currently have. If, in fact, 
that were the case, is there any discussion at USDA about the 
role then of the FSA offices? Are you talking about them doing 
other things or--I had some folks in last week from FSA offices 
talking about them taking over crop insurance. Is there any 
discussion about that?
    Secretary Vilsack. The criteria that was used, Congressman, 
was basically we looked at the guidelines and direction that 
Congress gave in the 2008 Farm Bill and suggested that if 
office closings were to be looked at that we needed to look at 
offices that had one or two employees that were located within 
20 miles or so of an existing FSA office.
    Based on our review, what we found was that there were 
actually 35 offices that didn't have any full-time employees at 
all and that the balance of what we proposed had one or two. So 
that is basically the guideline that was used.
    And, you know, if you think about an office with one 
person, there may be a disruption of service. If your child is 
playing in a State wrestling tournament or the State basketball 
tournament, which often happens in our State, basically what do 
you do, you shut the office down. So our thought was that we 
actually could provide better service and more effective 
service and strengthen service with a beefed-up office in the 
area but not necessarily one that had a single employee.

                               FARM BILL

    As it relates to the Farm Bill, we are working with members 
of the Agriculture--Ag Committee in terms of providing 
technical assistance and direction as they begin to think about 
what they would use in place of a direct payment system. 
Obviously, crop insurance will be key and important to that. 
What will supplement the crop insurance if you are faced with a 
fairly significant disaster where crop insurance just simply 
isn't enough to take care of your loss?
    We are working with them on the conservation title. Fewer 
programs, maybe greater flexibility in the conservation title, 
so we could better streamline activities in that area.
    Mr. Kingston. You guys could always catch up with each 
other back home, you know that, in the great State of Iowa. You 
could even run for President there, if you want.
    Mr. Latham. Could he, for the record, get some answer about 
any discussions going on at the Department or what the role 
will be going forward?
    Secretary Vilsack. It is difficult to answer that question 
with great specificity until we know what precisely the 
disaster programs may look like, if there are any disaster 
programs, what the Conservation Reserve Program--CRP--is going 
to look like in terms of any potential changes as well as what 
will replace direct payments.
    Let me just say, to my knowledge, there is no conversation 
that I have been engaged in about taking over the crop 
insurance program in terms of management.
    Mr. Latham. Okay. Thank you.
    Mr. Kingston. The gentleman's time has expired.
    Ms. DeLauro, the distinguished former chairman of this 
committee.
    Ms. DeLauro. Thank you very much, Mr. Chairman and ranking 
member.
    Let me welcome the Secretary and the Deputy Secretary and 
economist and budget officer here this morning. It is great to 
see you and thank you for the great effort that you make.
    I am sorry that Chairman Rogers isn't here. But--the first 
Commissioner of Agriculture under Grover Cleveland--except it 
is really like deja vu--who was never confirmed by the Senate. 
But, in any case, he took on the job in 1885. He went to New 
York to Kentucky and then to Missouri. And he was agriculture 
secretary in 1889 under--as I said, under President Cleveland, 
but he never got confirmed.
    So, you have a proud and wonderful tradition which you are 
upholding here today, Mr. Secretary, and I appreciate it.

                                  SNAP

    I wanted to say thank you to you for laying out the SNAP 
program, so I will just take a second on that and who, in fact, 
it benefits and particularly today with the economic conditions 
that we are witnessing, that we have seen the increase. But as 
it was intended to be when the economy gets better, the numbers 
begin to drop, and that is the safety net strength of what SNAP 
is about.
    And I would just also add one further thing.
    At a time which has really been somewhat of concern to me 
because this is a program that has enjoyed such bipartisan 
support--and I have great quotes which I won't go into from 
Ronald Reagan and others, who really thought we ought to expand 
this program to provide food and nutrition to young people--but 
it has been under attack, and it has been demonized, 
particularly used in the last several months as, you know, a 
mark of somehow failure that we have so many people who are on 
food stamps. It is the economic times that have driven people 
to food stamps, even though some--and in your testimony you say 
some who never thought they would have to be there.
    So I appreciate your words, laying it out, the accuracy 
rate, and all of those things which would allow us to try to 
move forward with the program.
    I want to ask you this. I would like to get--are we going 
to do a couple of rounds? Thank you.
    But with regard to the crop insurance program, I just want 
to lay out some particulars in which I would like to get some 
answers on crop insurance about subsidies, who they go to, 
whether it is the insurance companies, to the farmer, the 
accuracy rate, what the thresholds are, et cetera. But I will 
lay that out and try to get some answers for you.

                        NUTRITION STANDARDS RULE

    Let me talk about the school meal programs, if I can, and 
have you talk about that a little bit. Because I think it is a 
great success story.
    I will also just say to you that, as someone who knows this 
food very, very, well, I would just say flat out to you that 
pizza is not a vegetable. So I just want to make that clear. 
And, as I say, I think I have standing on this issue. Nor do I 
think we should have to deal with the issue of starch and 
potatoes in the same way. I think you guys are on the right 
track.
    But 32 million students around the country participate in 
the USDA school meal program, and kids consume anywhere from 30 
to 50 percent of their daily calories during the school day. 
The agency issued a rule to improve nutritional quality of 
school breakfasts and lunches, and it is for the first time in 
more than 15 years that the standards have been raised.
    So, we have got a challenge in this Nation of hunger and 
obesity. Over 20 percent of our kids struggling not to go 
hungry and 17 percent of our kids, more than triple the rate of 
one generation ago, obese.
    I was encouraged by the news of the rule, and can you tell 
me about how you expect the rule to be implemented, what it 
means for both the issue of defeating childhood hunger and the 
question of obesity?
    Secretary Vilsack. Representative, we obviously, in 
addition to trying to meet the dietary guidelines, also for the 
first time tried to align the caloric intake for youngsters 
based on an age-specific set of criteria. So our view is that 
we are going to have more nutritious meals and better meals for 
these youngsters, and our expectation is that it is going to 
help supplement what moms and dads are doing across the country 
in trying to make sure that their youngsters are healthy and 
happy.
    We will look forward to an implementation of this rule 
beginning in this upcoming school year, and over a period of 
time we will see additional rules pursuant to the Healthy 
Hunger-Free Kids Act. As it relates to competitive foods, as it 
relates to ways in which we can continue to support wellness 
and physical activity, it is calories in and calories out, as 
the First Lady often mentions in her Let's Move initiative. So 
it is a combination.
    I see my time is up. I am trying, Mr. Chairman. I am 
trying.
    Mr. Kingston. Thank you, Mr. Secretary.
    Well, we will have some other rounds.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Kingston. Mrs. Emerson.
    Mrs. Emerson. Thank you, Mr. Chairman. Thanks, Mr. 
Secretary for being here.
    Forgive me. I don't have much of a voice.

              CROP INSURANCE PROGRAM LEGISLATIVE PROPOSALS

    Can you go over in a little bit more detail--I know Rosa 
mentioned crop insurance. But, you know, for those of us who 
represent mid-South districts and where crop insurance works 
for most commodities but not all, I am a little concerned 
because of the proposed $7.7 billion of savings over the next 
10 years; and I would like you to outline actually what those 
are, especially given the fact that direct pay--we all know 
that direct payments is going to go away.
    Secretary Vilsack. There are four aspects of that savings.
    First of all, as a recalculation of how premiums are 
determined with catastrophic coverage, we think that there is 
several hundred million dollars that could potentially be saved 
by recalibration of the way in which those premiums are 
calculated. It wouldn't necessarily cost producers, but it 
would be a recalculation.
    Secondly, there is an effort to basically cap the 
administrative and operating expense aspect of the crop 
insurance, which is the money that basically goes to administer 
the program. There are savings incorporated in that.
    There is also an effort to take a look at the profit 
margin, if you will, from crop insurance. We did a study, 
suggested that this operation could be financially feasible and 
sustainable at a 12 percent return on investment. Right now, we 
calculate it is probably closer to 14 percent that is a return. 
So it would basically be moving it down from 14 to 12 percent. 
So it would still be a healthy profit margin but some savings 
to the government.
    And then, finally, it is working with the producers. In 
some cases, producers' premiums are subsidized at a rate 
greater than 50 percent. And what we would suggest is a 2 
percent reduction of that subsidy for those producers and only 
those producers that are already receiving more than a 50 
percent subsidy.

                          PAPERWORK REDUCTION

    Mrs. Emerson. Okay, I appreciate that.
    One of the things that I also might suggest you do, working 
with the industry, is to be able to eliminate duplication of 
paperwork. Because so much of what the insurance agents, 
information they need to get for purposes of determining what 
premiums might be, the FSA offices already have. I just think 
it could be more efficient in some cases, because you have got 
two different people going out getting the same information and 
not collaborating perhaps as much as could be done.
    Secretary Vilsack. We are working in that direction. It is 
part of what we are doing as instructed by the President to 
take a look at our regulations, sort of a look-back on our 
regulations. So that process is in place.
    We also worked to standardize reporting dates. We had 70 
different reporting dates between these various entities, and 
we now have 15 common dates that everybody agrees to. So that 
is going to substantially provide help and assistance in that 
area.
    Mrs. Emerson. Okay. Thank you very much.

                  ANIMAL DISEASE TRACEABILITY PROGRAM

    Now let me ask you another question about animal 
identification, if I could. I think you have got a request for 
a $5.6 million increase for the National Animal Identification 
System. This is not popular in my district, and I know it is 
not popular in a lot of areas across the country, and I 
actually do remain concerned about the requirements that are 
going to be placed on those operating in interstate commerce. 
Because in Missouri, for example, most all of our cow-calf 
operation, we are dealing with interstate commerce.
    So have you all experienced any similar push-back that I 
and some of my colleagues have, who are still going to be 
subject to mandatory participation?
    Secretary Vilsack. Well, let me just take you to a 
conversation I had with the Chinese agricultural minister about 
trying to reopen the beef trade to China. One of the concerns 
that they have is the inability of America to trace back, and 
that is one of the conditions that they have in terms of us 
opening up that market. So we have to have some kind of 
traceability system.
    Now we will argue about whether it has to go all the way 
back to the farm or whether it has to go to a State. But at the 
end of the day many of our customers are encouraging us to have 
this kind of system. So that is important to know.
    Secondly this trace-back system, I think, is much more 
conducive to respond to the concerns and criticisms of the 
previous trace-back system, which was not particularly well 
received and not utilized by very many producers.
    We have tried very hard to be collaborative, we have tried 
to listen, we have tried to adjust what our proposal is so we 
can adjust the issues involving brands, for example; and I 
think when this rule comes out, if we have the assistance, the 
financial assistance to ensure that producers are not 
overburdened with costs and that we manage this thing properly, 
I think it will help us. It will help us on animal health. It 
will also help us in trade.
    Mrs. Emerson. But you don't know at this time what 
additional burdens might be placed on the producers?
    Secretary Vilsack. We really don't anticipate a lot of 
burden, because we are basically looking at ways in which we 
could finance the cost of the technology which would be used to 
make the trace-back appropriate. And whether it is an ear tag 
or a brand, whatever it might be.
    Mrs. Emerson. All right. I will look forward to exploring 
that further with you. Thanks.
    Mr. Kingston. Mr. Bishop.
    Mr. Bishop. Thank you very much, Mr. Secretary.

                              IMMIGRATION

    I have a question on immigration in particular. The 
immigration issue is, of course, a primary concern in my State, 
in southwest Georgia. And, of course, very strident and extreme 
legislation has been passed in States, including Alabama, 
Arizona, and Georgia; and it has led to a great deal of 
uncertainty not only with our farmers but our traditional 
agricultural workforce.
    The proposals have created an even greater barrier to 
maintaining the workforce and has caused a great deal of 
financial harm to the economies of the States that have enacted 
the laws. Our fruit and vegetable producers in Georgia lost 
over $300 million due to migrant labor shortage last year. It 
is an industry which primarily is located in my district and 
the chairman's district, and it is estimated that our producers 
lost nearly a billion dollars.
    There have been several legislative proposals suggested, 
including the one sponsored by Chairman Kingston and myself, 
but what is the administration's position on this matter, 
particularly for farmers that are living in Alabama, Arizona, 
and Georgia? And is it possible to provide some kind of Federal 
waiver, other emergency relief for States like Georgia which 
could bring greater certainty to this segment of our economy, 
fruit and vegetable?
    Secretary Vilsack. Representative Bishop, I am not certain 
whether or not I have the capacity or the authority to grant 
the waiver that you have just suggested. I am more than happy 
to look into that.
    [The information follows:]

    The Department does not have the authority to grant the 
waiver or other emergency relief as suggested. The Department 
of Labor operates the temporary agricultural worker visa 
program.

    I would say that, as it relates to this particular issue, 
the view of the Department of Agriculture is that it is an 
issue of concern. We understand and appreciate that there are 
crops potentially not being processed or picked as a result of 
a lack of labor, and that is a deep concern to us.
    The answer is comprehensive immigration reform. Obviously, 
it focuses on border security, but it also includes some 
mechanism and process by which folks will be able to create 
some pathway to legitimacy--learning the language, paying a 
fine, paying their taxes, things of that nature.
    And, honestly, this issue is one that Congress really needs 
to address. It is not going to get any better. It is not going 
to solve itself. We are going to see an expansion of these 
concerns that you are seeing in your State and other States. 
And it is something we feel very strongly about. Comprehensive 
immigration reform is the answer.
    Mr. Bishop. Thank you, Mr. Secretary.

                       FSA LEGISLATIVE PROPOSALS

    Now, currently, the FSA county offices and their employees 
administer the direct payment program as well as other 
functions. And, in most offices, managing the direct payment 
program and related activities is their primary function.
    Should Congress agree with the administration's proposal to 
eliminate direct payments? How do you see--or what do you see 
the role of the FSA office personnel changing or being modified 
to become?
    Secretary Vilsack. Well, there are still going to be many 
responsibilities associated with the credit aspect of FSA's 
office. I mean, we are going to do 29,000 loans, operating 
loans. There is still going to be, we suspect, some mechanism 
for dealing with disasters which will have to be administered 
through FSA. Given the conversations taking place in the halls 
of Congress, the fact that direct payments may be eliminated 
doesn't mean that there might not be some other system or 
process that is put in its place, which obviously would be 
administered through FSA. So a lot of it has to deal with how 
this Congress deals with the Farm Bill, but I think there is 
going to be plenty of work.
    Having said that, the one thing that we do need to do is to 
continue to invest in the technology that will allow our folks 
to do their job more effectively and more quickly. That is why 
this budget does propose additional resources in MIDAS--
Modernize and Innovate the Delivery of Agricultural Systems--I 
think we are going to begin to see significant opportunities 
for improvements in our relationship with producers as a 
result.

              CROP INSURANCE PROGRAM LEGISLATIVE PROPOSALS

    Mr. Bishop. How does that coincide with the proposed 
changes in the crop insurance program? In your budget, you 
propose changes for crop insurance which would save 
approximately $3.3 billion over 10 years, and it would reduce 
the rate for participating crop insurance companies 14 percent, 
or thereabouts, and reimbursement rate for administrative and 
operating expenses by creating a cap.
    That is one of the proposals. But you also have not--or 
have you--do you have plans to offer comprehensive crop 
insurance proposals? And would the FSA offices be responsible, 
having more responsibility for that? Would you be cutting out 
the independent insurance agencies who are now performing that 
function? Or how is that going to work? Right now they have a 
choice of three.
    Secretary Vilsack. As I indicated, Representative, I have 
not had any specific conversations with anybody within my 
office on FSA's responsibility or taking over the 
responsibilities for insurance agents. I have not had that 
conversation. I don't expect to have that conversation. I think 
Bill Murphy, who runs the Risk Management Agency, has indicated 
that that is not likely to be something he would recommend to 
me.
    Secondly, we are constantly expanding crop insurance 
opportunities. In this administration, I think we have added 
several policies. Maybe as many as 139 new policies have been 
issued over the course of the last number of years. So there is 
going to be constant focus on crop insurance, and you are going 
to continue to have a crop insurance program, and it is central 
to the safety net that producers rely on.
    Congressman Bishop, we would like to be able to expand it 
to peanuts, but we will have a conversation about that at some 
point, I am sure.

                       BRAZILIAN COTTON CHALLENGE

    Mr. Bishop. What about the Brazilian cotton challenge?
    Secretary Vilsack. Well, that has to do with the guaranteed 
loan program, and it has to do with the way in which we are 
providing assistance. That is going to be answered in the farm 
bill.
    Mr. Kingston. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Secretary, for being here 
today.

                 AGRICULTURAL WATER ENHANCEMENT PROGRAM

    One question that I wanted to ask about was the 
Agricultural Water Enhancement Program. And I know that 
Congressman Everett, who was a former member of our delegation, 
had worked on this program when he was in Congress. And, of 
course, the intent was to draw water resources during the rainy 
season, store them, and then irrigate crops during the dry 
season.
    I just wanted to ask about the future of that program and 
if you could give us any update on that.
    Secretary Vilsack. Congressman, I can tell you that I would 
like the opportunity to give you a more detailed response in 
writing to that question.
    [The information follows:]

    The 2012 Agriculture Appropriations Act extended the 
authorization for the Agricultural Water Enhancement Program 
through fiscal year 2014. The 2013 President's Budget includes 
$60 million in funding for the program, which is the same level 
as enacted in 2012. With this funding, NRCS will continue to 
address serious surface and ground water shortages as well as 
water quality concerns in many agricultural areas.

    Mr. Aderholt. Sure.

                 SMALL WATERSHED REHABILITATION PROGRAM

    Secretary Vilsack. I will say that the only program that I 
know of that we are essentially eliminating, if you will, is 
the Small Watershed Rehabilitation Program. That focuses on 
projects that are primarily local and State in scope, and we 
believe it is probably more of a responsibility of those local 
and State governments to basically operate those projects. That 
is being eliminated.

                 AGRICULTURAL WATER ENHANCEMENT PROGRAM

    I can tell you that we have proposed in this budget $60 
million for the Agricultural Water Enhancement Program. That is 
a slight reduction, but it is still a commitment in that 
program.

                       CATFISH INSPECTION PROGRAM

    Mr. Aderholt. Also in the same regard--and, again, this may 
be something you need to check on--but I understand that USDA 
is looking to complete the development and implementation of 
the Catfish Inspection Program. Just, any information you can 
give us about the delay on that?
    Secretary Vilsack. Well, the proposed rule is, I believe, 
over at OMB. It is over at OMB. And we are working through it.
    We have asked for input on a couple of critical issues in 
terms of the definition of catfish. And we are securing that 
information, we are analyzing it, and as soon as we have 
completed that analysis, I suspect we will have a rule.

                         CONSERVATION PROGRAMS

    Mr. Aderholt. And then, also, I understand you have put 
emphasis on maintaining working lands in agriculture--that is, 
refocusing conservation efforts so that conservation is 
achieved but land doesn't have to be taken totally out of 
production. Can you speak to that a little bit?
    Secretary Vilsack. Sure. The budget that we are proposing 
would support roughly 360 million acres in conservation 
programs in one form or another: roughly 30 million acres in 
the CRP Program and 330 million acres in the balance of our 
conservation programs--Environmental Quality Incentives 
Program--EQIP, Conservation Stewardship Program--CSP--and the 
like. We think that there are tremendous environmental 
advantages to this, we think there are economic advantages to 
this, and we are going to continue to work with landowners.
    We are going to do a couple of things. We are going to try 
to see if we can create a process by which the private 
marketplace might be interested in investing in conservation so 
we can leverage and stretch our conservation dollars. The 
notion of ecosystem markets where a business or an enterprise 
that is regulated may need the result of conservation and may 
be willing to pay a farmer for that. I will give you an example 
in Ohio. There is a wastewater treatment facility that was 
confronted with having to upgrade their facility based on 
contaminants that they had to remove from the water. They 
determined that a less expensive way would be to work with 
farmers on conservation, so they are paying the farmers to 
prevent the contaminants from getting into the water to begin 
with. That is a leveraging concept.
    The other thing we are trying to do is to work with other 
regulatory agencies, like Environmental Protection Agency--
EPA--the Department of the Interior, to see whether we can give 
these farmers some degree of regulatory certainty that when 
they make these investments, in exchange for that, they 
essentially get assurances that they are not going to have to 
worry about the Endangered Species Act or they are not going to 
have to worry about other regulatory agencies coming in and 
saying, ``That is great, but now you have to do even more.'' We 
just signed an agreement with Minnesota. It is our first 
agreement with a State government, and we hope to be able to 
expand that program in a number of States.
    Mr. Aderholt. Okay. Thank you.
    Thank you, Mr. Chairman.
    Mr. Kingston. Ms. Kaptur.
    Ms. Kaptur. Mr. Secretary, welcome. Deputy Secretary 
Merrigan and also Dr. Glauber and Mr. Young, thank you so much 
for joining us today. Really happy to see you.
    I am going to focus questioning in more than one round here 
on the following topics: linking local food production to 
nutrient-short populations, with a particular focus on SNAP, 
WIC, our school food programs, and our urban farmers' markets 
and roadside stands; number two, energy independence and the 
Department's role; number three, urban farmers' markets; number 
four, Lake Erie and the algal blooms related to too much 
fertilizer going into the Western Basin; and, finally, ARS and 
the bio-based economy.

                       NUTRIENT-SHORT COMMUNITIES

    The first topic I would like to focus on in this first 
round has to do with linking local food production to nutrient-
short populations and how better the Department can organize 
itself to achieve this.
    As I read your testimony, on page 2 you note that American 
producers have earned record incomes. And we know that USDA's 
budget--about 16 percent of the budget is devoted to production 
agriculture. That is a great success. That is a great success 
story.
    But 72 percent of the budget is related to nutrition. And 
on page 12 of the testimony, it states that the prevalence of 
obesity among children tripled from 2007 to 2008 and doubled 
among adults. And then it talks about 2009-2010, which I would 
say statistically is not a reliable measure, and it says that 
the obesity rate has stopped increasing. Well, I think 
statistically one could argue with the nature of that 
particular time period.
    But my question really revolves around how better the 
Department can organize itself to deal with nutrient-short 
communities and hollow calories that are causing our hospitals 
to be dealing with hypertension, diabetes at epidemic levels 
and costing us an arm and a leg in every other account in this 
government, whether we are talking about Medicaid, our health 
programs, our private insurance programs.
    President Obama in his State of the Union mentioned a 
couple towns, and now I am going to get real parochial here. He 
talked about Cleveland, Toledo, and Detroit. And we heard him.
    And one of my questions to you is, could you put some legs 
under USDA's ability to focus on that particular set of 
communities that ring Lake Erie on the U.S. side and help us 
put a USDA task force together with our mayors and county 
executives in that region, working with foundations like the 
Cleveland Foundation, which has a very strong interest in this 
issue of nutrition and healthy living, and help us figure out 
how better to link USDA's programs so they really work in those 
communities to help us produce food close to nutrient-short 
populations in an area of the country that must transition to a 
new economic age; and also, within USDA, to better coordinate 
what you are doing in so many disparate ways inside the 
Department that it is almost hard to get your arms around it?
    So my question is, would you be willing to take a look at 
the President's State of the Union and help us organize our 
thinking about how better to serve nutrient-short populations 
that are consuming hollow calories, where food production has 
moved very far away, and where the normal instruments of 
distribution do not exist?
    We simply must produce food closer to where people live. 
And the schools--and I note you have some programs in here 
dealing with the school budgets. But the type of food that is 
offered in these schools is really, in many cases, disgusting. 
And we simply have to focus on these areas and better think 
through how to provide better nutrition in areas where it is 
obvious that the nutrition side of USDA and our local 
communities haven't got it right yet.
    Secretary Vilsack. Mr. Chairman, can I have just a minute 
more than my time allows to respond to that?
    Mr. Kingston. I would ask unanimous consent.
    Secretary Vilsack. Ms. Kaptur, I think we have done a 
fairly significant amount of work in this area. And I am just 
going to tick off a few things we have done.
    We have improved the WIC package to make it more 
nutritious. We have worked with Congress to pass the Healthy 
Hunger-Free Kids Act and implement that, which is going to 
address your concern about the importance of school meals. We 
have issued new dietary guidelines and we have simplified the 
food icons so that people can understand precisely what a 
healthy plate looks like. We have also made a major effort in 
Hispanic communities to make sure that they understand this 
because we see the high prevalence of obesity among Hispanic 
children.
    We have worked with the SNAP education program to provide 
healthy recipes. And we are working in Holyoke, Massachusetts, 
on an integrative effort to try to see if point-of-sale 
incentives will result in more fruit and vegetable purchases.
    We have worked with the city of Detroit and other cities to 
really focus on expansion of farmers' markets. We have seen an 
over 50 percent increase in the number of farmers' markets. We 
have increased the senior farmers' market effort in terms of 
being able to use SNAP benefits at farmers' markets and seniors 
being encouraged.
    Ms. Kaptur. I thank you for that.
    Secretary Vilsack. All of that has taken place.
    And we have also focused on food deserts in a very 
significant way. We have used many of the tools you all have 
given us to encourage grocery stores to locate in communities.
    Now, I am more than happy to sit down with----
    Ms. Kaptur. Good.
    Secretary Vilsack [continuing]. A group of folks from Ohio. 
You know, National Institute of Food and Agriculture--NIFA--
just awarded to Cleveland a fairly significant grant for a 
community garden project. I am more than happy to sit down to 
make sure that folks know all we have done.
    The last thing I would say is that the Deputy Secretary has 
been working very hard on a report about the Know Your Farmer, 
Know Your Food initiative. And I think when that is published 
you are going to see that there is very much coordination and 
consolidation within USDA on these programs and that there is 
integration, and I think that report will help clarify that.
    Ms. Kaptur. Could you just state, Mr. Secretary, where at 
USDA does that coordination occur?
    Secretary Vilsack. Well, it actually occurs at the 
Secretary and Deputy Secretary's office, because the Deputy is 
engaged in--and obviously she can speak for herself on this--
but she is engaged in regular meetings with every mission area 
that is impacting local foods and regional food systems.
    Ms. Kaptur. Thank you. And I will accept your offer to meet 
with the mayors and county executives in those areas, Mr. 
Secretary.
    Secretary Vilsack. Sure. Anytime.
    Ms. Kaptur. Thank you very much.
    Mr. Kingston. Mrs. Lummis.
    Mrs. Lummis. Well, thank you, Mr. Chairman.
    And thank you, Mr. Secretary and staff, for coming in.
    I am a little concerned, because of votes, that I might not 
get a second opportunity to ask questions, so I am going to ask 
my questions now and ask that you have folks follow up with me 
about the responses.

                      SNAP CATEGORICAL ELIGIBILITY

    My first question is about SNAP. And we know that 
categorical eligibility is used in 41 States, and it allows 
individuals who are eligible for Temporary Assistance for Needy 
Families--TANF--to also be eligible for SNAP without having to 
meet SNAP income and asset requirements.
    So my first question is, do you know what percentage of 
participants are eligible only through categorical eligibility? 
And do you know what percentage of SNAP growth is a result of 
categorical eligibility?
    [The information submitted by USDA follows:]

    In FY 2010, when 39 States had implemented broad-based 
categorical eligibility, only 2.9 percent of SNAP participants 
lived in households that exceeded the Federal income limits. 
Less than one percent of total benefits were received by these 
households. An additional number of SNAP participants exceed 
the Federal asset limits; data to determine this number is not 
available.
    While eligibility has expanded to some degree over the past 
decade, most notably through bipartisan Congressional action, 
the program maintains and enforces national standards for 
eligibility and benefits. The growth that we have seen in 
recent years reflects both the expansion of the population in 
need and our increasing success in reaching a higher proportion 
of those in need, Americans that are eligible for the program 
by virtue of their low incomes. Increased costs also reflect 
the fact that the poor not only grew in number, but got poorer, 
with the proportion of households receiving the maximum benefit 
level--because their income was particularly low--nearly 
doubling between 2001 and 2010, to 40 percent.

    And there is the bell for votes, but I will complete asking 
my questions.

   GOVERNMENT ACCOUNTABILITY OFFICE (GAO) DUPLICATIVE PROGRAMS REPORT

    The next question I have is about nutritional program 
duplication. The GAO report on duplicative programs recognizes 
18 domestic food and nutrition assistance programs across 3 
agencies. Now, several of them are at, of course, Department of 
Agriculture.
    So my question is, what is the USDA doing to address the 
GAO recommendations to reduce these overlapping nutrition 
programs? GAO also says that administrative costs account for 
one-tenth to one-quarter of the total costs of these programs. 
So how can we save money to address administrative 
inefficiencies in these programs?
    [The information submitted by USDA follows:]

    USDA shares an interest in preventing inefficiency and 
overlap in federal nutrition assistance programs, while at the 
same time ensuring that those who are eligible receive the 
assistance they need. The array of programs that Congress has 
authorized forms a nutrition safety net to prevent hunger and 
poor nutrition.
    In practice, relatively few households stack program on top 
of program: among those that participate in at least one of the 
four major programs (SNAP, WIC, NSLP, SBP), about 40 percent 
participate in only one and only six percent participate in all 
four. Nutrition assistance is one area where multiple programs 
reflect a diversity of need, not duplication of effort.
    It's also worth noting that administrative expenses for the 
major nutrition assistance programs are quite low. Federal 
funding for administrative costs accounts for about nine 
percent of Federal spending for WIC, four percent for SNAP and 
less than three percent for school meals. Over 90 percent of 
these administrative funds are distributed to States for use in 
delivering benefits and services, rather than used to support 
Federal staff.
    With both the program structure and administrative funding 
allocations primarily set in statute, fundamental change to 
nutrition assistance programs requires legislation to modify or 
eliminate the specific mandates for these programs. However, in 
order to maximize efficiencies within USDA's current authority, 
FNS promotes policy and operational changes that streamline the 
application and certification process; enforce rules that 
prevent simultaneous participation in programs with similar 
benefits or target audiences; and reviews and monitors program 
operations to minimize waste and error.

                  COMMODITY SUPPLEMENTAL FOOD PROGRAM

    My next question is, can the Commodity Supplemental Food 
Program be combined with other nutrition programs that have the 
same target population? For example, WIC could serve low-income 
women and children that the Commodity Supplemental Program is 
serving, thereby perhaps reducing the need for additional 
moneys in one or the other.
    [The information submitted by USDA follows:]

    The Commodity Supplemental Food Program (CSFP) serves low-
income pregnant and breastfeeding women, other women up to one 
year postpartum, infants, and children up to age six, and 
elderly persons at least 60 years of age. CSFP participants may 
participate in any other Federal domestic nutrition assistance 
program, if eligible, with the exception of the Special 
Supplemental Nutrition Program for Women, Infants, and Children 
(the WIC Program). However, CSFP and the WIC Program have 
slightly different eligibility criteria for women, infants, and 
children; therefore, individuals eligible for one program may 
not be eligible for the other. For example, CSFP serves 
children age five and women seven to twelve months postpartum, 
while the WIC Program does not. It should also be remembered 
that the majority of CSFP participants are now elderly 
(currently, almost 97 percent of CSFP participants are 
elderly), so a substantial portion of CSFP participants would 
not be eligible for WIC. Transitioning the relatively few CSFP 
participants that would qualify for WIC would result in minimal 
savings in CSFP and would result in increases in WIC.

                    GAO DUPLICATIVE PROGRAMS REPORT

    My next question is about economic program duplication. The 
GAO report on duplicative programs recognizes 80 different 
programs on economic development across USDA, Commerce, HUD, 
and SBA for economic development. Has the White House Rural 
Council, which I believe you chair, Mr. Secretary, discussed 
the GAO recommendations on these fragmented economic 
development programs? And is there a way to consolidate that 
duplication?
    [The information submitted by USDA follows:]

    The President is currently seeking authority from Congress 
to reorganize and consolidate Executive Branch agencies in 
order to streamline government to make it work better for the 
American people. To ensure that government reorganizations will 
result in a more efficient government, the President's proposal 
for the first time requires that any such proposal cut costs or 
reduce the number of government agencies. When the President 
requested this authority, he pointed out the sprawling 
authorities of the federal agencies that deal with commerce and 
trade, including the programs within the Rural Business and 
Cooperative Service. If and when the President is granted this 
streamlining authority, USDA looks forward to working with the 
Administration and Congress to ensure that commerce and trade 
programs are delivered in the most effective manner in rural 
communities.

                      DUPLICATIVE DATA COLLECTION

    My next question is on crop insurance statistics. The Risk 
Management Agency and the Farm Service Agency collects similar 
data on production and acreage, and it is used by, you know, 
insurance agents for crop insurance. Now, the duplication of 
these programs is estimated to cost $197 million. That is based 
off the FSA cost of acreage reports. So I have another 
question: Can we consolidate ag statistics into one collection 
under FSA rather than having three different statistics 
collection services within USDA?
    The fiscal year 2013 budget seeks to continue modernizing 
the FSA IT infrastructure, and I have heard from local 
employees that the program is not always compatible with the 
insurance agents. So is there a way that IT at USDA can be made 
more compatible with the crop insurance program so that 
statistical data can be easily shared across the agency?
    [The information submitted by USDA follows:]

    While there is considerable overlap, not all farmers and 
ranchers participating in the Federal crop insurance program 
administered by the Risk Management Agency (RMA) also 
participate in the farm programs administered by the Farm 
Service Agency (FSA). Accordingly, it is unlikely that we will 
ever be able to completely consolidate data collection under 
one agency. However, we are reducing the burden on producers by 
eliminating duplicate data collections and improving data 
sharing, not only between FSA and RNA, but across all of USDA.
    For example, RMA and FSA have been working on consolidating 
producers' information through the Comprehensive Information 
Management System (CIMS). CIMS was developed in accordance with 
section 10706 of the Farm Security and Rural Investment Act of 
2002. CIMS provides electronic access to a central source of 
common information, i.e., producer name, address, acreage, 
share and other key planting information. CIMS information has 
helped reduce costs associated with data collection, and 
identify data inconsistencies and reporting errors.
    Further, in July 2010, the USDA announced the Acreage Crop 
Reporting Streamlining Initiative (ACRSI)--a joint initiative 
to create a common USDA framework for producers to report 
information to participate in certain USDA programs. FSA and 
RMA have been working with the National Agricultural Statistics 
Service (NASS) and the Natural Resources Conservation Service 
(NRCS) on the common reporting process. Through ACRSI, the 
agencies developed common land and producer definitions. FSA 
and RMA will implement common acreage reporting dates starting 
in July 2012. This consolidation will reduce the number of 
times producers must report their information. This spring we 
hope to launch a pilot program under ACRSI which will allow 
participating producers to report program information on-line.
    These initiatives have helped standardize the use of data 
across the different organizations. CIMS information has been 
used by FSA to implement the Average Crop Revenue Election 
(ACRE) program. In the Supplemental Revenue Assistance Payments 
(SURE) program, RMA and FSA collaborated to share the insurance 
information necessary to compute the SURE payment.
    Finally, it is important to note that information 
technology modernization is absolutely necessary to get the 
full benefit from the CIMS and ACRSI initiatives. FSA's MIDAS 
project (Modernize and Innovate the Delivery of Agricultural 
Systems) and RNA's Information Technology Modernization (ITM) 
projects are implementing the ACRSI recommendations for 
standardizing different data requirements that will assist 
producers in filing acreage reports with RMA and FSA. When 
fully implemented, these technology and system improvements 
will allow producers to provide relevant program information at 
their first contact with USDA, be that FSA, NRCS, or their crop 
insurance agent, and have that information shared seamlessly 
across USDA.

                    MUTUAL SELF-HELP GRANT PROGRAMS

    My next question is, you have previously recommended 
eliminating the Mutual Self-Help Grant program, but in this 
budget you are proposing continuing spending in this program in 
the Rural Economic Area Partnership zones. So I am curious 
about what improvements were made in that program that caused 
you to want to keep it now when it was recommended to be closed 
earlier.
    [The information submitted by USDA follows:]

    The FY 2012 Budget did propose the elimination of the 
Mutual and Self Help (MSH) Housing grants in unison with a 
significant reduction in of the 502 Single Family Housing 
Direct (SFH-D) program. However, MSH grants were not eliminated 
in the 2012 Appropriations Act. The FY 2013 Budget reduces 
funding for MSH grants by $20 million, leaving a total of $10 
million. The MSH grants continue to provide assistance for very 
low- and low-income households to construct their own homes. 
The funding for this program is directly correlated to the 
financing provided through the SFH-D program. In FY 2013, the 
funding for the SFH-D program will be targeted, in part, to 
mutual and self-help grant recipients.
    The 2013 Budget does not propose funding for the rural 
economic area partnership zones as the authorization for this 
program expires in 2012.

                AGRICULTURE AND FOOD RESEARCH INITIATIVE

    And, finally, I have a question about the prioritization of 
grants that are in the Agriculture and Food Research Initiative 
competitive research program. We know that the prioritization 
of these grants is done by the agency, that the USDA announced 
it was providing $23 million in grants to improve sustainable 
food systems, $5 million to the University of Wisconsin to 
examine existing food systems, $5 million to Penn State to 
evaluate regional food systems. And yield and herd health is 
going ignored by research grants while all these food system 
delivery grants are being issued, so I am just curious about 
that, as well.
    [The information submitted by USDA follows:]

    The Agriculture and Food Research Initiative, or AFRI, 
supports research, education, and extension work by awarding 
grants that respond to key problems of national, regional, and 
multi-state importance in sustaining agriculture. In FY 2010, 
no less than $32.3 million was spent on research, education, 
and extension relevant to yield and herd health, or 
approximately 13 percent of awarded dollars. In contrast, AFRI 
supported food systems research at the level of $4.8 million.
    The agriculture and food sciences, which include the areas 
of yield and herd health, are represented by a balanced 
portfolio of fundamental and applied research. The AFRI 
Foundational program supports research on animal health and 
production. Those awards focus on improving animal nutrition 
and growth efficiency, reproduction, product quality, genetics/
breeding, and herd health. New and continuing projects will 
investigate novel strategies to help maintain the 
competitiveness of U.S. animal agriculture.
    AFRI supports integrated herd health awards by soliciting 
competitive proposals for multi-disciplinary, multi-
institutional Coordinated Agricultural Projects (CAPs) for high 
impact diseases. AFRI resources are heavily leveraged with 
other Federal and non-Federal dollars.

    Mr. Chairman, thank you.
    Those are my questions, and I will look forward to visiting 
with you, Mr. Secretary, about those.
    Mr. Kingston. Thank you.
    Mr. Nunnelee.
    Mr. Nunnelee. Do you want me to ask them now?
    Mr. Kingston. If you are coming back for the second round--
you have time for--it just depends on what you need to do.
    Mr. Nunnelee. I will come back for the second round, but I 
will start now and we will go.
    Mr. Kingston. You might want to yield to Mr. Graves. He has 
a real worried look on his face.
    Mr. Graves. No. I am going to submit questions for the 
record.
    Mr. Kingston. Do you want to submit any right now if Mr. 
Nunnelee would yield to you?
    Mr. Graves. No, I am fine. We are prepared to submit them.
    Mr. Kingston. Okay. All right.
    Mr. Dicks. Could he get a chance to respond to the 
questions?
    Mr. Kingston. He will when we come back.
    Mr. Dicks. Okay.
    Mr. Kingston. Mr. Nunnelee.
    Mr. Nunnelee. All right. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary, for being here.

                     SNAP AND ECONOMIC DEVELOPMENT

    I want to spend a little time talking about food stamps. 
This budget for food stamps has gone up. Your request is for 
$87.4 billion. That is over double what it was when this 
administration took office, a 120 percent increase.
    I guess I want to start with asking, we talked about the 
fact that the testimony is that for every dollar we spend on 
food stamps, it provides $1.80 of economic benefit. So does the 
administration see food stamps as economic development?
    Secretary Vilsack. Not as economic development, but as the 
fact that food stamp and SNAP payments basically get into the 
economy more quickly than just about any other assistance that 
government provides. By the end of 30 days, 97 percent of SNAP 
payments are in the economy circulating.
    And if you think about it, Congressman, it just makes 
sense. Obviously if people are in a position to buy more at a 
grocery store, somebody has to stock it, somebody has to shelve 
it, somebody has to transport it, somebody has to package it, 
somebody has to process it, and somebody has to produce it. All 
of those are opportunities along the supply chain.
    And that is why you will see Wal-Mart, for example, says 
roughly 24 percent of their business is SNAP beneficiaries. 
That is a big part of their business, and obviously they are a 
big business and they employ a lot of people.
    Mr. Nunnelee. All right. So we spend a dollar, it creates 
$1.80 of economic benefit. Of the dollar we are spending, about 
42 cents of that is borrowed money. Is it the position of the 
administration that we ought to borrow more money? If we spend 
a dollar and get back $1.80, should we borrow more money?
    Secretary Vilsack. I think it is the position of this 
administration that we still have a fragile recovery that we 
don't want to necessarily jeopardize. At the same time, we want 
to build the foundation for an economy, as the President says, 
that is built to last.
    He talks about getting America back in the business of 
making things, and I think agriculture grown in America is 
proof-point for the success of that theory. We are growing 
more. We are exporting more. We are using it more effectively, 
and unemployment is coming down in rural areas, at least based 
on the report I have seen from the Bureau of Labor Statistics, 
at a faster rate than it is anyplace else in the country.
    So I think the formula is right. We just have to make sure 
we don't jeopardize this fragile recovery.
    Ms. DeLauro. Will the gentleman yield for 1 second?
    Mr. Nunnelee. No, I won't.
    Ms. DeLauro. Thank you.
    Mr. Nunnelee. All right, so food stamps are part of the 
mandatory spending that Chairman Rogers talked about that is 
driving our budget and driving our deficit. We are going to be 
considering a new farm bill. Your budget request for food 
stamps is $87.4 billion.
    If the President called you in and said, let's see what we 
could do to get our budget for food stamps at $75 billion or 
$70 billion, what structural changes would you recommend that 
we enact to get that savings?
    Secretary Vilsack. Well, the first thing is to put people 
back to work and making sure that we have the tools and the 
resources in rural development to ensure that we actually 
continue to promote the job growth that we have seen. Our rural 
development programs helped to generate, save 266,000 jobs over 
the last 3 years. We obviously want to do more of that.
    Secondly, I think we want to make sure that we continue to 
focus on accuracy, which we have done. If you take a look at 
the accuracy rate and the fraud rate in this program, it is on 
a downward trend, and it needs to continue. And that would be a 
continued focus of this administration.
    Mr. Nunnelee. All right. As it relates to accuracy, my 
colleague, Scott DesJarlais, has introduced legislation that 
would stop paying bonuses for accuracy, that would stop paying 
people to do--paying bonuses for people to do the job that we 
are already asking them to do. Would the administration support 
that legislation?
    Secretary Vilsack. You know, as a former Governor, those 
incentives really work to focus people's attention on accuracy. 
And these programs obviously are administered in large part by 
States, and we want to encourage good practices and best 
practices among the States.
    So I am not sure that the small amount of money that we are 
paying in those bonuses--you know, I think we get a pretty good 
bang for that buck. I am always for incentivizing folks as 
opposed to penalizing them. So I don't know what the 
President's position would be on that, I have never asked him, 
but I would imagine he is probably for incentives.
    Mr. Nunnelee. All right. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Kingston. The gentleman's time has expired.
    And what I think we will do is adjourn, subject to the call 
of the chair. And, Mr. Farr, if it is okay with you, I think as 
soon as we can get me plus one Democrat, we can reconvene.
    And I know that the passion of everybody on this committee 
is to come back and ask questions. I am sure Ms. DeLauro has no 
other questions; I will try to come up with some suggestions.
    But if we could do that, Mr. Secretary, we will just vote, 
and come back as quickly as possible. We have two votes, 5 
minutes left in the first one, and then a journal vote.
    [Recess.]
    Mr. Kingston. The committee will come to order.
    Record timing, Mr. Secretary. It must be a reflection of 
your witness, because usually people say, ``I will be right 
back,'' and you never see anybody for a while.
    But I wanted to get back to a question of Ms. Kaptur on the 
obesity issue. You had said that you had changed the WIC menu.
    By the way, a side question. I know that you want some 
money reprogrammed on WIC. We need a letter that shows the 
numbers on that, the documentation. We don't have that. So we 
just need the backup of the--we have the request, but we don't 
have the backup documentation.
    But you have changed the menu on WIC, but on food stamps--
and you and I have talked about this before, and I know there 
are political sensitivities on all sides of the aisle. And if 
that Wal-Mart number is right--and, Mr. Dicks, was that your 
number?
    Secretary Vilsack. It was my number.
    Mr. Kingston. Your number.
    Mr. Dicks. It was the Secretary's, but he is accurate.
    Mr. Kingston. You know, the reality is, though, these 
stores are depending on a lot of that--did you say 28 percent 
of Wal-Mart's business?
    Secretary Vilsack. I think it is 24 percent.
    Mr. Kingston. Twenty-four percent. But on WIC you have a 
limited menu designed for nutrition, and on food stamps you can 
buy anything but tobacco and alcohol.
    And I think the State of New York was trying to do a pilot 
program, and there were some barriers to implementing that. But 
what would you say to a pilot program somewhere, where we take 
an area and we try to say, okay, you are going to have a really 
nutrition-based SNAP menu.
    And, politically, we would all get massacred, I understand 
that. But still, if we are going to talk about nutrition, it 
still appears to me that that is something we should be 
discussing.
    Secretary Vilsack. Mr. Chairman, when we were approached by 
the city of New York, one of the concerns we had was the 
difficulty of implementing what they were proposing. It is a 
lot more complex than a lot of people would recognize.
    Mr. Kingston. Uh-huh.
    Secretary Vilsack. And we suggested that we would be 
willing to work with them to try to figure out if there was 
another way to get to where they wanted to get to, which was 
having people make healthier and better choices. And we are 
still open to that, and I think we have begun the process of 
discussions.
    I think the first thing I would say in response to your 
question, and I don't want to be difficult about this, but I 
think it would be helpful for us to know the outcome of what we 
have done in Massachusetts on the point-of-sale incentive to 
see whether or not our theory is right that point-of-sale 
incentives--in other words, encouraging by providing discounts 
for certain items--that that will result in people purchasing 
those items more frequently, to see whether or not that is 
actually going to work.
    Mr. Kingston. How long has that been in effect?
    Secretary Vilsack. It is a 2-year study. It is very much 
research-based. It will conclude at the end of this year, and 
so we should have results relatively soon, by the end of this 
year. And I think we will learn a lot from that.
    If it turns out that point-of-sale incentives are not 
particularly effective, then I think we need to continue to 
look for ways to improve this program. But if it turns out that 
point-of-sale incentives do work, then we may be coming back to 
this committee asking for the capacity and the authority to do 
more of this, because it is a very limited program.
    Mr. Kingston. Let me yield.
    Mr. Dicks. Could you explain to us what a point of sale is?
    Secretary Vilsack. Sure. Essentially, Representative Dicks, 
what it means is that we have identified a number of fruits and 
vegetables that are healthy choices, and we have structured it 
in such a way that when you go into a grocery store in Holyoke, 
Massachusetts, as a SNAP beneficiary and you purchase one of 
those limited items, the grocer gets 100 percent of the 
purchase price but the SNAP card has been calibrated in such a 
way that it only registers maybe 80 percent of the cost. So the 
customer gets some kind of a discount.
    And we are basically monitoring the activities of those 
SNAP beneficiaries to see whether or not that makes a 
difference. You know, if they save 20 percent on apples, is 
that something that would encourage them to purchase more 
apples? Of course, they would all be from Washington, no doubt.
    Mr. Kingston. Where is Massachusetts, though, on the CDC 
obesity scale? Do you know offhand?
    Because it would appear to me that we may want to try that 
in States that have a higher frequency of obesity, if it is not 
one of them. But it might just be common sense to do it in more 
than one location.
    Secretary Vilsack. I think we had the resources to do it in 
one location, and I think it went through sort of a--not a 
bidding process, but sort of a study of the study to determine 
where it might work or where it might be easier to monitor. We 
would be more than happy to work with this committee on ways in 
which we could explore new and creative ways.
    You know, we all share the same goal, and the question is 
making sure that it is workable, making sure that it doesn't 
create an undue burden on the store owner and a system that 
doesn't work. We want it to work.
    Mr. Kingston. Thank you.
    Mr. Farr.
    Mr. Farr. I am going to follow up. This wasn't really what 
I was going to ask my question on, but I want to get into this.

                            SCHOOL NUTRITION

    You know, I am a big fan of school nutrition and worked 
hard on this school nutrition bill to make sure that we get 
fresh fruits and vegetables in every school. What I have 
learned along the process is essentially that the buying 
process is a bottoms-up. I mean, you give the money to the 
school districts, and then they buy according to the law.
    You have just come out with a new rule on nutrition, and I 
think we need to do more to use the carrot-stick to really make 
sure that they are buying that. As you know, there is a lot of 
ways of getting excess commodity stuff, sugars and peanut 
butter and things like that, in the schools, no offense to my 
friends from Georgia. But I represent 85 fresh crops, and, I 
mean, everything we grow is what you are supposed to eat. And 
we grow a good percentage, some 70 percent, of all the spinach 
in the United States, and broccoli, comes out of my district.
    What I have seen is that the manufacturers, the processors, 
really have learned to package in a way that will suit the 
customer. The schools have not engaged--and I would hope that 
maybe you could bring some of your expertise in this, to get 
the schools to engage with packagers on just how to do this.
    Because you know a lot of the big urban schools have 
centralized kitchens. They prepare all the food there, and then 
they take it out in warm trucks and warm trays and give it to 
kids. And you know what works; it is pizza and all of the fast 
foods. It is all the stuff that really doesn't allow you to get 
all these fresh fruits and vegetables in. We can package fresh 
fruits and vegetables and ship them with a good length of shelf 
time, but we just need to match up the consumer, which is that 
local school, with the producers.
    So that is an area that I have just seen in my district 
where there is no meeting of the minds, and I would hope that 
maybe you could lend some support in there and it will help you 
enforce your new regulations.
    Secretary Vilsack. Just very quickly, three things.
    Number one, there is the 6-cent reimbursement rate increase 
that is tied to schools meeting the guidelines.
    Secondly, this budget is suggesting giving us the capacity 
to take $35 million and incentivizing perhaps up to 10,000 
schools to focus on equipment that would allow them to prepare 
food more locally.
    And, finally, we do have an effort in Michigan and Florida, 
it is on a pilot basis, to see if there are ways in which we 
can better connect local producers of these fruits and 
vegetables with schools.
    Mr. Farr. Well, you know, when you were out in the district 
and we both were shocked because one of the school programs was 
serving strawberry shortcake, the shortcake was made out of 
cauliflower, and it tasted delicious. It was phenomenal. We 
were both shocked at how good it was. So----
    Mr. Kingston. I don't want that in the record. I think we 
are going to have to debate that.
    Mr. Farr. Now, wait a minute now.
    Mr. Kingston. If Ms. DeLauro and I are against you, Sam, 
you are really outnumbered here.
    Mr. Dicks. And I am with you, Mr. Chairman.
    Mr. Farr. The lumpy guys are different than the thin folks.

                            TRADE AGREEMENTS

    Anyway, I would like to also shift to something else, which 
is, in your testimony, you indicate that the success of our new 
trade agreements and how much export--and you mention in your 
testimony, ``The ratification of the trade agreements with 
South Korea, Columbia, and Panama increased the U.S. Farm 
exports by an additional $2.3 billion, supporting an additional 
20,000 jobs.''
    There is another side to it, and that is the imports. And 
one of my big issues in California is fresh-cut flowers and 
trying to compete with that. And what we are trying to do is 
create an ability to ship product, ship flowers, like we can 
ship lettuce and other things, which they consolidate into 
regional centers.
    I just wonder if, you know, in part of this economic 
development, that you are looking at ways in which we can 
ensure that our competitive agriculture can keep up with this 
flood of new imports that are incoming without duties and 
tariffs and so on.
    Secretary Vilsack. Well, as a practical matter, we still 
enjoy in agriculture a trade surplus, and it has been a fairly 
healthy surplus the last 3 or 4 years. In fact, the surplus 
last year was roughly $42 billion. Five years ago, it was less 
than $5 billion. So there is a trade surplus.
    Mr. Farr. But that doesn't satisfy the needs of a family 
whose father committed suicide because he was so wiped out by 
the imports that wiped out his family tradition of growing 
flowers. And, you know, I do think you have to zero in on 
product specificity here.
    Secretary Vilsack. Well, in order for us to enjoy the 
surplus, we have to make sure that we operate pursuant to rules 
and regulations that the international community has adopted 
and embraced. So, it is difficult to impose restrictions----
    Mr. Farr. I am not suggesting that. I am suggesting keeping 
American agriculture competitive by helping with the 
infrastructure, the rural development, things like that that 
you know are important to keep them competitive.

                          BUSINESS DEVELOPMENT

    Secretary Vilsack. I think we have done a pretty good job 
of that. We have a record number of grants and loans for 
business development in these last 3 years, a record number of 
home loans, a record number of community facilities have been 
improved, a record number of wastewater treatment facility 
projects that we funded.
    We are working very hard in terms of creating jobs. This 
budget, we think, can support 45,000 additional jobs if we are 
given the capacity and the tools. You know, I am happy with the 
work that our folks are doing, especially when you consider 
that the workforce has been reduced over time, and especially 
considering the fact that this has been a tough economy but an 
improving economy.
    So we are going to continue to work hard. And if there are 
opportunities in a particular industry that we need to be 
paying more attention to, then--obviously, you have addressed 
one--we will go back to the office and make sure folks are 
sensitive to that particular industry to see if there are ways 
in which we can provide assistance and help with greenhouse 
construction or ways in which we can encourage marketing.
    And, frankly, there are export market opportunities there, 
as well, that maybe we need to continue to explore. And that is 
why it is important to renew some of the specialty crop 
programs that are expiring under the 2008 Farm Bill.
    Mr. Kingston. Mr. Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman.

                         LEGISLATIVE PROPOSALS

    To get back, Chairman Rogers referenced the mandatory 
programs and the impact that those programs have on our budget 
and ultimately our deficit. Now, it is my understanding that 
the budget proposal proposes savings of $32 billion over 10 
years in mandatory farm programs.
    And let me just ask you to elaborate on those a little bit, 
specifically what impact they are going to have on crop 
insurance, on program payments, exports, and productivity.
    Secretary Vilsack. Well, there shouldn't be any impact on 
exports. The key export programs we are asking either be 
reauthorized or funded at very competitive levels, including 
the Market Access Program--MAP--program, which we are proposing 
to be funded at the same level as it has been for the past 
couple years.
    The proposal in terms of budget reduction focuses on an 
elimination of the direct payment program. It focuses on some 
savings in crop insurance. And those savings basically are 
focused on reducing the amount of profit insurance companies 
generate to a point where we think the industry can still be 
viable and still provide the scope of products, limiting the 
amount of administrative and operating expense that we pay to 
insurance agents to basically administer the program, and 
creating a more equitable partnership with some of the 
producers who are currently subsidized by more than 50 percent 
of the crop insurance premium from the government. And these 
are folks who are fairly large operations and they are getting 
maybe a 60 percent subsidy.
    So, at the same time, the administration is also proposing 
that we in some way, shape, or form continue some kind of 
disaster assistance or some program that will recognize that 
crop insurance by itself isn't enough, there needs to be 
something in addition to that. Because, given the high cost of 
inputs today, one bad year, even for the best operator, can 
potentially compromise the best operator. So it is important 
for us to make sure that there is crop insurance plus another 
mechanism.
    Mr. Nunnelee. And these are changes in mandatory programs 
that the administration will be supporting as part of the farm 
bill that will be taken up later on this year?
    Secretary Vilsack. That is correct, sir.

                              SNAP CHANGES

    Mr. Nunnelee. All right. Changes in mandatory savings--or 
changes in mandatory programs, in farm programs, I commend you 
for that. Now tell me about recommendations for changes in the 
mandatory food stamp program that the administration is 
supporting.
    Secretary Vilsack. Well, the President has been fairly 
clear that, as we try to get ourselves in a better fiscal 
condition and a better economic situation, that we have to have 
a delicate balance between not jeopardizing the fragile 
recovery, which these nutrition assistance programs are part of 
helping people get through a tough time, and at the same time 
building the foundation for economic growth, which is what we 
have just recently talked about in terms of rural development 
programs, and at the same time making sure that the people who 
are in the best position to bear and to step up for their 
country are able to do so.
    And, frankly, at this point in time, it seems as if the 
folks in the middle class and low-income folks have already 
paid a fairly serious and significant price in this difficult 
economy, because they have lost jobs, they have lost income, 
they have lost their homes. Which is why the President is 
proposing refinancing of homes and a whole series of other 
mechanisms to try to help and not provide more barriers for 
those folks.
    Mr. Nunnelee. So there are no recommendations for changes 
in the food stamp program?
    Secretary Vilsack. Other than we are going to continue to 
try to figure out ways in which we can do a better job of 
reducing the error rate and the fraud rate. There is an 
enhanced program on those areas.
    Mr. Nunnelee. So let me summarize where I see it, and you 
tell me where I am wrong. Of your budget request, there is $128 
billion of mandatory spending. Of that $128 billion, $87 
billion is food stamps. And you are recommending all of your 
mandatory changes come out of the balance. Is that right?
    Secretary Vilsack. I think that is, for the most part, 
pretty accurate. But the----
    Mr. Nunnelee. I thought I understood.
    Secretary Vilsack [continuing]. Budget that we are 
proposing actually reduces, as a percentage of the budget, what 
is going into nutrition assistance programs from 75 percent to 
72 percent, because we anticipate that SNAP beneficiaries, the 
numbers will go down as the economy improves.
    Mr. Nunnelee. All right. Thank you.
    Mr. Kingston. Mr. Dicks.
    Mr. Dicks. I know I missed a little of this crop insurance 
discussion. I understand that you are proposing reforms in crop 
insurance that would save nearly $7.6 billion over 10 years?
    Secretary Vilsack. I think that is correct.

                             SNAP OUTREACH

    Mr. Dicks. Yeah. One other statistic, for those people who 
think that this is a runaway program in food stamps, is that 
one-third of the eligible people aren't getting their food 
stamps, and I am told it is 50 percent in California.
    So what is the Department doing about trying to outreach to 
the people who are eligible but don't, for whatever reason, 
don't participate?
    Secretary Vilsack. I think, Representative, what you will 
find in this administration is that we have worked 
collaboratively with the State of California and the State of 
Texas, the State of Florida, the State of Louisiana, four 
States in particular that had significant members of the 
population that probably qualified but were not receiving the 
benefits of the program. Part of it is a focused effort on 
educating people about the awareness of the program. Part of it 
is making sure that States appreciate the need for better 
outreach, better education, more advertising.
    In California, in particular, we had a number of Spanish-
speaking ads that were run on television and radio to educate 
people about the availability of the program. In the State of 
Louisiana and the State of Texas, we worked with nonprofit 
entities to improve community outreach into communities that 
may not be fully aware of the benefits that they are eligible 
to do.
    We have obviously streamlined the process by which folks 
can qualify in a number of States to make it a little bit 
easier. And we continue to work with States to figure out best 
practices. But there are a number of States where the 
population--where the percentage of people eligible is--I don't 
know if it is 50 percent, but it may be 60 percent of those who 
are eligible are getting it.
    Mr. Dicks. Of some sub-group.
    Secretary Vilsack. Yeah.
    Mr. Dicks. Yeah. And that would be of concern, that they 
just didn't know or hadn't been aware of the program but were 
hungry.
    Secretary Vilsack. Well, and a lot of the people that are 
eligible that aren't taking advantage of the program are senior 
citizens. And that is a subset of the folks--when we think 
about SNAP, we don't think of senior citizens all that much. 
But the reality is, there are a lot of senior citizens living 
on very, very small fixed incomes. And they just--you know, it 
is an issue of concern or pride on their part in not signing up 
for programs.
    So, many of the people that we are talking about here--
maybe not many, but some of the people we are talking about 
here are senior citizens who have concerns.
    Mr. Dicks. And, as you said, the best way to reduce the 
SNAP program and unemployment and other things is to get people 
back to work. And we have to keep pushing on the economy, you 
know, to do the programs that are going to help grow the 
economy, and then these supplemental programs aren't necessary.
    Secretary Vilsack. Getting people back to work and making 
sure that the jobs we are creating are good-paying jobs. And I 
think the President's attitude about ``made in America'' is 
absolutely right, and American energy, absolutely right. Those 
are where we see opportunities for us. And, you know, we want 
to do our part at USDA.
    The bio-based economy is one thing I wish we could talk a 
little bit more about today. There are just tremendous 
opportunities for small-business development using what we 
grow, and a renewable source, to reduce our reliance on foreign 
oil and to create new opportunities, particularly in rural 
areas. There are tens of thousands of jobs, I think, in that 
area that we are going to try to continue to encourage at USDA.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.
    I am going to speak fast. I have two questions I want to 
get to. One is on poultry inspection, and one is on trade.

                           SNAP PARTICIPATION

    But just a couple of points. And I have mentioned this to 
Mr. Nunnelee as he went to vote, so it is nothing he hasn't 
heard. But the fact of the matter is, in Mississippi--and this 
is SNAP data as of December 2nd, 2011. At a time when there was 
in Mississippi 21 percent either unemployment or 
underemployment, 16.5 percent of the population was kept from 
going hungry because of the food stamp program.
    I might also indicate--I wish Mr. Rogers were here. This 
is, ``Where Americans most rely on government benefits,'' which 
is an article that appeared not too long ago in the press. 
Owsley County, which I believe is in Mr. Rogers' district, 
residents get more income support per person than any other 
place.
    I state these facts only essentially to say, we are in the 
most difficult economic times we have seen since the Great 
Depression. And to skate around that issue and not understand 
the value, the value of these programs which, in fact, are 
feeding people. One out of five kids in the United States--I am 
not talking about overseas--is at risk for being hungry and 
going to bed hungry every single night.
    We have an obligation and a responsibility because we are 
here and we have the program that can deal with these issues. 
And we should be--and an error rate that is at 3.8 percent, I 
defy most programs that we deal with in the Federal Government 
that have that kind of an error rate. So we should continue to 
do what we are doing in the food stamp area and make sure that 
the one out of four and those who are eligible are able to 
participate.

                           POULTRY INSPECTION

    Poultry inspection, Mr. Secretary. A dramatic change that 
was announced--in my view, a dramatic change. You know where I 
am on modernizing our food safety system--inspector 
flexibility, more efficiency. I will just say that I think that 
we can't do that at the expense of food safety or worker 
safety. Because I believe we should be protecting public 
health, and I, for one, would not support shifting to company-
based inspections. I read the proposal. I want to give the 
agency the benefit of the doubt. But I am concerned about this 
proposal and the whole issue of protecting the public health.
    I also was taken aback, though, by the emphasis on cost 
savings in the announcements of the proposed rule and am 
somewhat skeptical, you know, that that results in an immediate 
and dramatic decrease in inspectors and processing plants.
    The HACCP Based Inspection Models Project--HIMP--program 
has been a pilot program. GAO said--and they were highly 
critical of this program. Now we are going to implement the 
program across the country without an independent review of 
verifying that it improves food safety. This is a proposed 
rule, and I don't know how we can prejudge the outcome by 
assuming savings next year from it.
    I need you to walk me through the cost estimates that the 
agency has used and the number of illnesses you expect it to 
prevent. What will the impact on illnesses be, on 
Campylobacter? And can we strengthen the rule, make it similar 
to Salmonella Initiative Program--SIP--by requiring that each 
plant that decides to transition to HIMP allow Occupational 
Safety and Health Administration--OSHA--into the plant so we 
can track worker safety implications of the line speeds and 
other aspects of HIMP that you think we should allow?
    Will the National Institute for Occupational Safety and 
Health--NIOSH--report that the GAO recommended in 2005 finally 
begin? Will the openness to NIOSH employees be incorporated 
into the process for allowing facilities to opt in to HIMP?
    So I just think, if we are going that direction, given that 
we have reports that say that these inspectors were not allowed 
into the plants to track the data, that if you are going to do 
that, then we have to have the data on which to see whether or 
not this is moving.
    Ms. DeLauro. We know line safety. We have dealt with this 
issue over the years and how--you know, I don't have much time 
or you don't have much time to answer the question, big issue.
    And I hope we will have another round so I can ask about 
trade, Mr. Chairman.
    Secretary Vilsack. Fifty-two hundred illnesses, we believe, 
will be prevented. This process was peer reviewed; and, you 
know, we have confidence that there will be a safer product at 
the end of the day. The inspection that is to be forthcoming by 
the industry is really basically on the cosmetic side in terms 
of identifying bruises and things of that nature. It is going 
to allow us to transition roughly 1,500 people to more serious 
reviews of safety initiatives in the plants, which we think 
will actually result in safer food.
    Your point about worker safety is well taken, and obviously 
we are concerned about that, and that is why we will be 
conducting a sort of a review and study to ensure that the 
additional line speed is not going to create additional 
problems.
    Ms. DeLauro. This is 2005, Mr. Secretary. Health and Human 
Services--HHS--agreed that there was a need to study the 
relationship between line speed and musculoskeletal disorders 
and other injuries in the meat industry, stated that it would 
direct NIOSH to conduct such a study. The agency noted, 
however, the difficulty its staff have had in the past in 
gaining access to meat packing plants to conduct the research. 
And this study, as far as I know, has never been done.
    Secretary Vilsack. I think we are in the process, Madam 
Chair--I may be corrected on this. We are in the process of 
making sure that NIOSH is involved in this.
    Ms. DeLauro. We will continue to speak about it.
    My time has expired. Thank you.
    Mr. Kingston. Thank you, Ms. DeLauro.
    And I think what the chair wants to do is, rather than just 
go back and forth, let me do two of you all and one of us, 
because more of you came back, if that is all right.
    Ms. DeLauro. Sure. Thank you.

                         SNAP IMPROPER PAYMENTS

    Mr. Kingston. What I wanted to do, get back to the subject 
of food stamps, and something that maybe we can agree on, and 
that is the fraud. And while the error rate is low, the fraud 
rate is $5.4 billion, and that is according to the 2011--excuse 
me, improper payment, which has to do more with, I think, some 
of the end users and some of the store vendors, but it is $5.4 
billion. It is outlined on page 28 of the 2011 Annual 
Performance and Accountability Report. And the year before----
    Ms. DeLauro. Mr. Chairman, just for one second----
    Mr. Kingston. I will be glad to yield.
    Ms. DeLauro. Overpayment or underpayment as well? One has 
to think about overpayment and underpayment.
    Mr. Kingston. No, I believe overpayment and underpayment, 
though, is the error rate, and this is a different number. This 
is the fraud rate; is that correct?
    Secretary Vilsack. Yes. The fraud rate----
    Mr. Kingston. Okay, excuse me, it is improper payments. But 
it does have to do with fraud, correct?
    Secretary Vilsack. Not necessarily. We separate those two, 
Mr. Chairman.
    Mr. Kingston. Well, I will tell you who brought it to us is 
the Office of Inspector General--OIG.
    Secretary Vilsack. Well, what I can tell you is this--on 
the issue of overpayment and underpayment, we are continually 
improving our process and are continually improving the 
results. And that error rate has gone down substantially over 
the last decade and in this administration continues to go 
down. I think we are at 3.6 percent, if I am not mistaken, 3.6 
percent on the error rate.
    On the fraud, it is less than 1 percent. We have benefited 
from the Electronic Benefit Transfer--EBT program in terms of 
our alert system being able to identify problems with fraud.
    Last year, we did 840-some thousand reviews of individuals 
to determine whether or not they were misusing the program. 
Roughly 44,000 people were disqualified as a result of those 
reviews; and almost a thousand businesses, I think, were 
impacted in terms of their ability to continue doing business 
with SNAP as a result of those reviews.
    We have announced recently an accelerated effort, an 
improved effort on the Alert Program, which we hope will drive 
down that fraud rate even further.
    Mr. Kingston. I think what we would like to see--and this 
would be something that I think everybody on the committee 
would support--is if you have gone from $5 billion to $5.4 
billion and then this year your administration really hasn't--
this is probably the year that we see more of the results of 
your leadership. Then if that number goes down and you can show 
us what you are doing, I think that would be something that 
everybody would be very supportive of.
    Secretary Vilsack. Well, it has gone down, I think, the 
last 3 years.
    Mr. Kingston. Well, it is still 5 million--excuse me, 5 
billion in 2010 and then went to 5 point--yes.
    Ms. DeLauro. Would the gentleman yield for 1 second when 
you are done with your question?
    Mr. Dicks. Let's get this accurate.
    Mr. Kingston. Okay. Is that a USDA-wide figure and not just 
for SNAP? Or do you know? Is that for everything or just for 
SNAP? But it is on page 28 in your annual performance.
    Secretary Vilsack. The error rate, based on the 2011 
numbers was 3 point--on this document, it is 3.8 percent, but I 
think we had some refinement on this at 3.6. But that is the 
overall change.
    Mr. Kingston. In the error rate.
    Secretary Vilsack. And then the question is what percentage 
of households--households is 5.8 percent. So you may be talking 
about households, the number of households?
    Mr. Kingston. Actually, what I think it is is error plus 
fraud. Would that be correct, Dr. Merrigan?

                   IMPROPER PAYMENTS OF USDA PROGRAMS

    Ms. Merrigan. We also have a number in there that is across 
all of our programs for improper payments.
    Mr. Kingston. So that might be the across-the-board number, 
and that is 5.4.
    Mr. Dicks. That includes error. Are they separate? Error is 
one?
    Ms. Merrigan. When we report the improper payment rate for 
the SNAP, it includes both under and overpayment. So the 
underpayment, it is not fraud, but that is--the 30 percent is 
the underpayment that you are referencing.
    Ms. DeLauro. Yeah, can you yield for a second, Mr. 
Chairman?
    Mr. Kingston. Yes, absolutely.
    Ms. DeLauro. Because, on the issue of improper payment, you 
know, look, you want to find out where there are improper 
payments wherever you know they exist.
    Mr. Kingston. Yes, and that is the point----
    Ms. DeLauro. Correct. I understand.
    Mr. Kingston [continuing]. Is that one area where I think 
everybody can come together--and I know the Secretary and I 
have had lots of conversation about things like this. Wherever 
we can all agree, we need to agree.
    And one of the things that when he talked to me about his 
reorganization, you know, my reaction was we are on board. We 
want to work with you. And wherever we all, you know, can 
identify waste or something like that and there is good faith, 
then we should do it.
    Ms. DeLauro. I concur. That is why I think it is important, 
if I may comment on the error rate. The SNAP error rate is 
lower than many other programs at the USDA. And according to 
the chief financial officer at USDA, crop insurance has an 
error rate of 4.7 percent compared to the 3.8 or the 3.6 for 
SNAP; and they reported the overall improper payment rate at 
USDA as 5.4 percent, which is what you were mentioning before.
    But another recent report--this is one from the Office of 
the Inspector General at USDA--found that five programs--I can 
list the programs--operated by FSA had a combined error rate of 
13.9 percent. It is 3.5 times as high as the SNAP error rate. 
There is always a great focus, which is why I mentioned--and we 
ought to take a look at your error rates or what would that----
    Mr. Kingston. Which is the only thing that I am raising is 
that there are so many things in which we can agree that I am 
trying to get out of the territory of----
    Ms. DeLauro. Well, I appreciate that. Because the emphasis, 
quite frankly, historically, for the number of years that I 
have served on this committee, has been a prime focus on one 
that was called the food stamp program and now called the SNAP 
program and, quite, frankly a lot of good hard work was done--
--
    Mr. Kingston. Okay, then let me reclaim my time from my 
friend.
    Ms. DeLauro. Mr. Chairman, I appreciate that.
    Mr. Dicks. Mr. Chairman.
    Mr. Kingston. Let me yield Mr. Dicks time which has long 
expired.
    Mr. Dicks. I am done.
    Mr. Kingston. The point being is that I am trying to find 
common ground here, and I want to go after that 13 percent with 
you. Let me promise you that.
    Secretary Vilsack. Mr. Chairman.
    Mr. Kingston. Do you want to enter into this, Mr. 
Secretary--at your own risk?
    Secretary Vilsack. I do. I want to reassure the committee 
that we are very focused on trying to reduce error rates, fraud 
rates, underpayment, overpayment in all of our programs and 
see, I think, progress in most of these areas in this 
administration in terms of reducing those rates. We are 
committed to this, and we will continue to be committed to 
this.
    Mr. Kingston. Yes, and I think that that is what we want to 
do. We want to look at that OIG report.
    Mr. Dicks. Mr. Chairman, just briefly.
    Mr. Kingston. Mr. Dicks.
    Mr. Dicks. You mentioned 5.4 million.
    Mr. Kingston. Billion.
    Mr. Dicks. Billion. I want make sure to clarify what that 
number is.
    Mr. Kingston. Page 28 of the 2011 Annual Performance and 
Accountability Report, and it is improper payments for all 
payments.
    Mr. Dicks. It can't be $5.4 billion.
    Mr. Kingston. It is across the board.
    Do you guys have that? Mr. Young might have that number.
    Secretary Vilsack. Here, Mr. Chairman, let me give you 
this. This is the list that we have, and it is basically--it is 
5.37 percent, percent, of all of our programs. We take all of 
our programs and you ask the question what is the overall error 
rate.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Bishop. Not dollars, not dollars.
    Mr. Dicks. That is what I want to get straightened out.
    Mr. Kingston. I tell you what, let me double-check this; 
and in the meantime--but we are in general agreement that this 
is a good thing to discuss.
    And then I want to say, what I really believe, here in this 
town we need to use the same yardstick for everything; and 
there is a tendency of one group to support military and 
another group to support social spending and use elastic rulers 
on it.
    Secretary Vilsack. Mr. Chairman, 5.37 percent equals $5.4 
billion. That is all of our programs.
    Mr. Kingston. So you are all right. It is $5.4 billion.
    Mr. Dicks. I want to ensure it is all of the programs, not 
just some. Because we were all talking about food stamps.
    Mr. Kingston. Okay, we are all going over for vegetarian 
pizza at Rosa's tonight. She is buying.
    Ms. DeLauro. No, we don't do vegetarian pizza.
    Mr. Dicks. She is Italian.
    Mr. Kingston. Okay, Mr. Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman.

                        NIFA MANDATORY PROGRAMS

    I want to go to some of the research, education, and 
economics. There were five key grant programs that the 
administration didn't request any funds for that are housed in 
NIFA; and your budget for 2013 did not include those five key 
grant programs which focus on priorities for the President, 
including organic agriculture, specialty crops, biomass 
research, biodiesel fuel, and beginning farmers and ranchers.
    It is a combined total budget of $130 million in fiscal 
year '12 that was zeroed out in the request for 2013, and there 
was a note that these programs are subject to reauthorization 
in 2013, which obviously would suggest and underscore the need 
for a Farm Bill. But because you didn't request it, is that 
because those are no longer priorities by the administration?
    Secretary Vilsack. No, sir.
    Mr. Bishop. In September, if we don't have a Farm Bill, 
those programs will totally lapse. Is there another way that 
you will be able to continue funding for those? And wouldn't it 
be better if, rather than just zero those out, that they were 
reduced on a gradual basis, as opposed to one fell swoop?
    Secretary Vilsack. There are many areas of this budget that 
require reauthorization, and we want to remain somewhat 
consistent in terms of our approach.
    Obviously, if, for whatever reason, September 30 comes and 
goes, perhaps it would be addressed by a decision that you all 
would make in the budget, perhaps it would be addressed by what 
decisions you all make on the Farm Bill, or perhaps it would be 
some other vehicle that you would use. Or we would take a look 
at our current existing programs that are adequately funded and 
determine whether or not within those existing programs we 
could either carve out resources or ensure that in the 
competitive grant process awards were made in these particular 
areas.
    So I think we have lots of options here, but our preferred 
option would be for Congress to get us a Farm Bill. And I think 
that is the preferred option of folks out in the countryside, 
is that they would like to have some degree of certainty about 
what those rules are going to be, and hopefully this year 
rather than next year, because it is not going to get any 
easier to do this next year.
    Mr. Bishop. Thank you.

                FOOD AND AGRICULTURE DEFENSE INITIATIVE

    Again, with NIFA, you have, I guess over the last decade, 
really, supported the agriculture defense initiative which 
supports three programs--the National Plant Diagnostic Network, 
the National Animal Health Laboratory Network, and the 
Extension Disaster Education Network; and each of those 
programs--through those programs awards are made to various 
regions of the country. And, of course, the effectiveness is 
their ability to protect the Nation from the spread of 
pathogens and diseases and to deliver services to people that 
are affected by disasters. But it depends upon the quality and 
the comprehensiveness of the networks that they maintain.
    And I wanted to ask whether or not and to what extent the 
1890 land grant universities are participating members of these 
networks; and, to the extent that they are not, what efforts 
are under way to make sure that they are participating members 
of the networks? Because, obviously, that would enhance the 
performance.
    Secretary Vilsack. Mr. Bishop, I don't know that I can 
answer your question specifically in terms of their 
participation. We will be happy to provide that to you.
    [The information follows:]

    The National Plant Diagnostic Network and the National 
Animal Health Laboratory Network were developed, of necessity, 
from facilities and expertise already existing within state and 
university plant pathology and animal disease diagnostic 
laboratories. Few 1890 land-grant institutions had the 
necessary facilities or expertise to help support this national 
effort at the time the two networks were established, and the 
current scope of the Food and Agriculture Defense Initiative 
has precluded the development of new facilities at these 
institutions.
    However, there has been significant involvement of 1890 
land-grant colleges and universities and 1994 land-grant 
colleges in the Extension Disaster Education Network. This 
effort is conducted in partnership with Cooperative Extension 
and is focused on disaster prevention and preparedness. There 
is active involvement of minority-serving institutions in the 
Network's membership and in all of its disaster education 
programs. Two notable examples are the involvement of more than 
a dozen minority-serving institutions in the implementation of 
the nationwide program Strengthening Community Agrosecurity 
Planning, an on-going effort to help individual counties 
develop or improve their Agriculture Emergency Plans, and the 
six institutions participating in the pilot program of the 
Animal Health Network, an on-going effort to link disease 
communication networks with non-commercial farms.

    Secretary Vilsack. Let me just simply say that we are 
making every effort to include the minority serving 
institutions in a number of programs that in the past they have 
not necessarily taken full advantage of or participated in. 
Specifically, as it relates to the competitive grant process 
under NIFA, we are working hard to include more minority 
serving institutions in those grants, and I think you will find 
that we have done that in the last couple of years.
    Mr. Bishop. Okay. On the defense initiative and on the 
research, I mean, are you going to have enough funds--

                  BEGINNING FARMER AND RANCHER PROGRAM

    Oh, I know what it was I wanted to ask you about, the new 
farmer program, the young farmer program. Obviously, there is a 
difficulty because the average age of farmers has gone up. We 
are not replacing farmers as fast as we need to. And, of 
course, you have, I think, budgeted for outreach $19 million in 
grant funding for that purpose, and I wanted to ask you if that 
was enough.
    Secretary Vilsack. I think the key here is for us to 
understand the totality of what we need to do and what we can 
do. Outreach is part of it, making sure that we continue to 
work through FSA and the expansion of credit to beginning and 
socially disadvantaged farmers. Roughly, I think, 40 percent of 
our loans went to beginning farmers or socially disadvantaged 
farmers. It might even be a higher percentage than that in many 
areas of the country. That has to continue.
    As we look at the Farm Bill, I think more attention has to 
be paid to how we provide incentives and help for these folks, 
looking at our crop insurance programs and determining whether 
or not there needs to be an acknowledgment that it is a little 
different if you have been in the farming business for a year 
or two and you have a disaster versus somebody who has been in 
the business for 20 years.
    I also think you need to look outside the Farm Bill, 
outside this budget. I think you need take a look at the taxing 
structure and whether or not we can figure out ways in which it 
would encourage people to transfer and sell land, not having to 
wait for the stepped-up basis that you get within a safe tax 
situation but looking at ways in which----

                    SURPLUS EQUIPMENT AND FACILITIES

    Mr. Bishop. Can I just observe, follow up one bit?
    There are some proposals with the deficit reduction for the 
Federal government to reduce its inventory of property, of 
land; and I think a part of your small, disadvantaged, young 
farmer program would give priority to those categories for 
surplus USDA property and equipment.
    Mr. Kingston. And this is a really good discussion, but you 
are way over time.
    Secretary Vilsack. Could I just have 30 seconds on this? 
Because this is really important.
    Mr. Kingston. Sure. We are going to have another round.
    Secretary Vilsack. Okay. When we deal with closures of 
labs, there is a lot of land associated with that. There is a 
fairly restrictive set of steps we have to go through in terms 
of disposal of land that you all ought to be looking at to give 
us more flexibility so that we can use those resources to help 
give disadvantaged beginning farmer opportunities. Because 
there are thousands of acres here.
    But I will tell you we do not get the best bang for the 
buck in terms of that process; and this, I think, is a very 
important issue that this committee--we would be happy to work 
with you on.
    Mr. Kingston. I think we would be very interested in that, 
particularly with all these closures out there. Because I think 
most of the communities want to keep that space in production 
agriculture, at least green in terms of the use of it.
    Ms. Kaptur.
    Ms. Kaptur. Thank you very much. Thanks for the great job 
you all do. We love the Department of Agriculture.

                    SNAP BENEFITS AT FARMERS MARKETS

    I wanted to just mention we read where one of your key 
performance measures for 2013, Mr. Secretary, is to increase 
the amount of SNAP benefits redeemed at farmers markets, really 
happy to see that, and we will ask for the record how you 
intend to accomplish that. We won't ask you to reply now.
    [The information submitted by USDA follows:]

    It is a USDA priority to ensure that SNAP participants have 
access to the fresh and nutritious food available at farmers' 
markets. USDA looks for opportunities to embrace farmers' 
market participation, and to leverage their ability to reach 
potentially eligible clients, and to perform nutrition 
education activities. And we have met with success. Over the 
last three fiscal years:
     The number of direct marketing farmers and 
farmers' markets participating in SNAP has more than tripled. 
The number increased from 753 in FY 2008 to 2,445 in FY 2011.
     Total SNAP redemptions for farmers' markets and 
direct marketing farmers have quadrupled from $2,740,236 in FY 
2008 to $11,725,316 in FY 2011. This latter amount is 55 
percent more than in FY 2010 ($7,547,028).
    USDA has streamlined the waiver process that farmers' 
markets must pursue to implement a scrip or bonus incentive 
demonstration project. The scrip project allows markets to 
redeem benefits for all vendors at the market using only one 
point-of-sale device to issue scrip, token, or receipts. 
Incentive projects provide matching ``bonus'' dollars for 
purchases made with SNAP benefits. The incentives, funded 
largely by private foundations, non-profit organizations and 
local governments, are structured to improve the purchasing 
power of low-income families at farmers' markets. The 
streamlined waiver process not only simplifies the process for 
farmers' markets, but reduces the SNAP State agency 
requirements as well.
    The FY 2012 USDA appropriations include $4 million to 
support the purchase of wireless electronic benefit transfer 
(EBT) equipment for farmers' markets. Under regular SNAP rules, 
EBT equipment is provided free of charge and the expense is 
shared by the SNAP State agency and FNS; however, farmers' 
markets often cannot take advantage of such equipment because 
it requires electricity and a phone line. This funding will 
alleviate a major barrier to participation. This funding will 
also complement the Farmers' Market Promotion Program grants 
administered by USDA's Agricultural Marketing Service.

                            LOCAL FOOD SALES

    Ms. Kaptur. Also, the 2008 Agricultural Resource Management 
Survey showed that local food sales are highest in urban areas, 
and we will ask for the record does USDA plan to devote any 
resources to help connect local food producers to additional 
urban areas where sales are likely to be strong?
    [The information submitted by USDA follows:]

    USDA has a range of resources to help connect local food 
producers to urban areas, including farmers' markets, food 
hubs, and community supported agriculture. In 2011, 54 out of 
55 U.S. States and Territories requested AMS funding for 
projects related to local and regional foods through the 
Specialty Crop Block Grant (SCBG) program. With support from 
the FMPP, SCBG, the Federal-State Marketing Improvement Program 
grants, we have seen a 54 percent increase in the number of 
farmers markets since 2008, to 7,175 at the end of 2011. Over 
1,200 markets operate through the winter nationwide, an 
increase of nearly 40 percent since 2010. Winter markets help 
reduce some of the volatility in farmers' seasonal incomes 
while improving year-round access to local foods. Our Farm to 
School Team is another example of our efforts to link local and 
regional producers with school food assistance programs.

                    LOCAL AND REGIONAL FOOD SYSTEMS

    Ms. Kaptur. And then, finally, in terms of your budget 
requests for 2013, you call for increasing funding for the 
Agriculture and Food Research Initiative to $325 million, which 
is an increase of $60 million. And one of the areas that the 
funding would be used for is nutrition and health, specifically 
developing and increasing the consumption of healthy foods. 
Given that vegetables, fruits, and nuts account for 65 percent 
of local food sales, does the Department have any plans to help 
support local food sales should Congress increase funding for 
this initiative?
    Secretary Vilsack. Do you want me to answer those or----
    Ms. Kaptur. No. The first two you don't have to, I will ask 
for the record, but just the third one there.
    Then I have a question about Lake Erie.
    Secretary Vilsack. Well, we are working across the board in 
most of our programs to figure ways in which we can do a better 
job of creating local and regional food systems.
    And I think, again, to focus on the report that is 
forthcoming under the Know Your Farmer, Know Your Food 
Initiative, I think you will see that there has been quite a 
bit of work through many of our programs, through the specialty 
crop grant program, through the Farmers Market Promotion 
Program, through the community facility grant and loan program, 
through research initiatives, through NIFA, throughout the 
entire Department, we are engaged in this. Because it is 
another strategy for expanding domestic markets. It is another 
strategy for bringing vitality back into rural areas. And we 
are doing a better job of connecting institutional purchasers 
with those opportunities. Our farm to school program, for 
example, is an example of linkage between local production and 
local consumption. So there is a lot of work in this space.

                           URBAN FOOD DESERTS

    Ms. Kaptur. Does your Department encourage future farmers 
in urban food deserts? Is there any initiative that you have 
for the States and our land grants to really look at new 
farmers in places that have historically been ignored?
    Secretary Vilsack. Well, I mean, I think that is--I 
referred to earlier the NIFA grant that the city of Cleveland 
is receiving, and that is basically a fairly significant 
opportunity for community gardening, which is a form of urban 
farming.
    Ms. Kaptur. Yes.
    Secretary Vilsack. Our resources and our ability to utilize 
rural development resources in urban centers is somewhat 
constricted by a wide variety of rules and regulations, but we 
think that there are opportunities in aquaculture, for example, 
to take old factory buildings and to convert them into 
hydroponics. There are opportunities there as well.
    I think there are a number of cities, major cities, the 
city of Chicago--I talked to Mayor Emanuel about this. He is 
very interested in creating a center in Chicago. Obviously, we 
are doing work in Detroit, Cleveland. I think there is a lot of 
interest in this space.
    Ms. Kaptur. Yes, and I would just like to say, you know, 
for those of us who actually grew up in the civil rights era, 
it seems kind of unusual to me that production agriculture is 
doing very well in the countryside and yet what we leave urban 
dwellers with is stamps. You can't eat a stamp.
    And, yes, you can take it--in places like I live, you can 
take it to the beer dock at the corner and buy Doritos and 
candy bars. And then what they do is they sell you cigarettes 
that cost 25 cents apiece. It is illegal to sell them 
individually, but they do that.
    And so we have vast sectors of our community where, even 
though you have stamps, you can't eat those. And if there are 
no stores there or if there are just limited packaged processed 
stuff with high salt, high sugar, we have a self-fulfilling 
prophecy.
    So I would just like to raise the consciousness of the 
Department that food production should occur in many places. It 
used to be that way in America. We used to have truck farms 
right close to cities, and then it got pushed further and 
further away. And I think there--frankly, I think there is a 
real racial component to this.
    It isn't your fault, sir. I am just telling you the way the 
system has moved over the years, and we appreciate your 
consciousness and the President's and the First Lady's 
consciousness. You are leading us to a different America and a 
much better and healthier America.
    Secretary Vilsack. I appreciate that, Representative. We 
are financing--helping to finance grocery store construction as 
well as mobile units that will travel in rural areas and urban 
centers to provide healthier opportunities. And, again, we have 
seen a significant expansion of farmers markets, which I think 
are important.
    Ms. Kaptur. Yes, and I think you know our food banks. We 
should be handing out seeds at our food banks.
    We have developed in Toledo our urban growth systems where 
people in the neighborhoods, high Latino speaking, Spanish 
speaking neighborhoods come. They pick every pepper down to the 
ground when we plant these. And all these senior citizens--you 
mentioned that, Mr. Secretary--senior citizens on Social 
Security who qualify for SNAP. You know, there is a lot of 
hungry people out there in this economy.
    So I know what the regulations currently call for. But 
America has been a country, an ``I can'' Nation, adjusting to 
new realities; and the new reality is that we have large 
numbers of unhealthy and resource-strapped people living in 
these urban areas, trapped. And it almost seems to me like a 
prejudice that production agriculture is doing very well, but 
we have these vast pools of people in the Toledos, Detroits, 
Lorains, Sanduskies, Clevelands that the President talked about 
in his speech; and I appreciate the Department muscling up and 
seeing them. And we need to do better as a country.
    I represent both rural and urban, and it shouldn't be this 
tough in urban areas to get good lettuce, and it shouldn't be 
this tough to get good food into these school systems.
    So I thank you very much for listening; and I thank you, 
Mr. Chairman, for your endurance.
    Mr. Kingston. Mr. Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman.

                              FOOD DESERTS

    Mr. Secretary there has been some discussion about food 
deserts. Just, in general, what are the criteria to become a 
food desert?
    Secretary Vilsack. Well, it depends on whether you are 
talking about an urban or suburban area or a rural area, 
Congressman.
    In a city, if you are a mile or two away from a grocery 
store, that is a food desert. If you are in a rural area, you 
might be as much as 20 miles away from a grocery store that 
services you.
    On our website, we have a food desert locator, which gives 
you an indication of where those food deserts are currently 
located; and we are using our programs from the specialty crop 
block grant to the beginning farmer and development program and 
our research programs to try to address that along with Health 
and Human Services and the Treasury Department. The new market 
tax credit, for example, is being used to fulfill a need.
    And we have also reached out to grocery store chains and 
suggested that they need to rethink their whole notion of 
charitable contributions. Instead of providing a community a 
check, maybe it would make sense for them to locate a grocery 
store and maybe not operate it at a profit but operate it at 
break even opportunity.
    So there are a number of strategies that are being employed 
here.
    Mr. Nunnelee. Well, the only reason I ask, recently, 
Oxford, Mississippi, was labeled as a food desert. Oxford is a 
great town. I spent a lot of good afternoons and evenings 
there. But we had a newspaper headline that said, Oxford, 
Mississippi, a food desert, on what planet? And maybe we could 
just explore----
    Secretary Vilsack. Well, you can have--they are great 
cities that have wonderful opportunities, but there may be an 
area of that city or a neighborhood of that city where you are 
miles away from a grocery store, and that basically puts you in 
a position where you would be classified as a food desert.
    Mr. Nunnelee. Okay.

                  FARM SERVICE AGENCY OFFICE CLOSURES

    And then the chairman--shift gears--the chairman talked 
about the plan to restructure the Farm Service Agency. And I 
acknowledge you have got a tough job. We all want you to save 
money. We just don't want you to save money at home.
    And you are implementing what was charged to you under the 
'08 Farm Bill. We talked about how the '08 Farm Bill requires 
you to take into account the distance from existing facilities, 
take into account the number of employees. One area that I am 
concerned about are the decisions that are being made on FSA, 
do they take into account caseload and farm program enrollment 
in the offices that are being closed, and is that used as a 
criteria?
    Secretary Vilsack. The criteria is primarily the 2008 Farm 
Bill criteria. And our view is that the work is still going to 
get done. It is going to get done at an adjacent office or, as 
we invest more in our resources for technology, it is going to 
get done at home. And the goal here, obviously, is that at some 
point in time for farmers to have more convenient opportunities 
to access programs.
    Mr. Nunnelee. So my response in Mississippi, if FSA office 
A has a higher caseload and that is being closed and FSA office 
B has a lower caseload and it remains open, it is that you were 
utilizing the criteria that you were given in the 2008 Farm 
Bill.
    Secretary Vilsack. Right. And I would say in response to 
that, if that is the case, then you have got a circumstance 
where one office is being underutilized; and if we have more 
than two or three or four or five or six employees in an office 
that has less of a caseload then it makes sense to consolidate 
them so that you get better service for fewer dollars.

                     BIO-PREFERRED PRODUCT PROGRAM

    Mr. Nunnelee. Okay, and then one final question on leaf 
standards in forest products. The goal of the program, as I 
understand it, is to increase the purchase and use of bio-based 
products. The forest products in Mississippi are pretty 
important, and it looks to me like this criteria is leaving out 
traditional forest products. USDA is citing congressional 
intent to focus on new products, and it has led to the 
exclusion of most forest materials. And can you just give me 
some insight as to how USDA made that decision, and aren't you 
picking winners and losers in the forest product category?
    Secretary Vilsack. Well, the bio-preferred product program 
was primarily for new market opportunities and not necessarily 
for mature market opportunities. So that is essentially the 
reason.
    Having said that, you know, one of the things we have done 
in the Forest Service is promote a green building opportunity 
so all of our new construction is going to be embracing wood.
    We have also just recently announced a restoration 
initiative which is designed to do a better job of increasing 
board feet utilization. We want to get to 3 billion board feet, 
which will increase new opportunities for the timber industry.
    And then, finally, we are also working to try to create 
opportunities for woody biomass in terms of energy and fuel 
production.
    So, I mean, there is a lot of activity going on, but the 
biopreferred program was primarily for new market 
opportunities, not necessarily for what we would consider 
mature market opportunities. And that is based on our reading 
of what Congress wants us to do. If you all think it ought to 
be different, then I am sure you will tell us.
    Mr. Nunnelee. Thank you so much.
    Mr. Kingston. Mr. Farr.
    Mr. Farr. I have a couple of questions.

                             WIC SHORTFALL

    One on the WIC shortfall, the letter you sent us pointing 
out that States have indicated there is going to be a shortfall 
in the WIC funding and that we need to reprogram, I think, $400 
million into the WIC program. Two of the leading States in the 
shortfall are the chairman's State and my State of California, 
a $77 million shortfall.
    What would happen if these States start turning away 
eligible applicants if we don't get you that $400 million, and 
how soon do we have to get it to you?
    Secretary Vilsack. Representative, I don't know that I have 
a specific month or date, but I will be happy to get it to you.
    [The information follows:]

    According to information received from the States, both 
Georgia and California have indicated that they would need 
additional WIC funds by April 1 to avoid wait-listing new WIC 
participants.


    Secretary Vilsack. I will say this, that as numbers 
increase it is clear to us that we are going to face a point in 
time when waiting lists will occur, which we don't want. We 
think we can take money from this----
    Mr. Farr. How do you put pregnant women on a waiting list? 
You tell them to hold their baby?
    Secretary Vilsack. No, we are hopeful that you will take 
action to make it happen.
    Mr. Farr. So we don't know exactly when the waiting list 
starts.
    Secretary Vilsack. There is someone in our world who knows. 
The reality is we wouldn't be asking you for this if we didn't 
need it, and we wouldn't be identifying a source which we don't 
think will jeopardize the ability to feed hungry folks.
    Mr. Farr. Well, I guess the urgency of the transfer 
authority that the chairman has, how soon do you need it? I 
mean, is this----
    Secretary Vilsack. Well, we wouldn't be asking for it if we 
didn't need it right away. And the chairman has asked for 
supporting information. We will get that to him this week or 
next week, probably next week.
    Mr. Farr. Hopefully, we can move on that and get that 
material in.

                         LIGHT BROWN APPLE MOTH

    The other issue I would like to address is that, you know, 
we have these invasive species. One is called the light brown 
apple moth which originated in Australia and New Zealand. The 
United States made a big deal, not only in this country but 
throughout the world, that this was a bad pest that merited 
intense response and that we wouldn't allow any product from 
any country that had this without thorough review and analysis 
and treatment.
    So, lo and behold, the pest ends up in California. And the 
treatment we were going to do, the State proposed, was spraying 
with helicopters and all kinds of things that drove everybody 
mad. The State legislature took action. They have defunded the 
program. At the same time, the USDA has indicated this pest 
isn't--we are not going to go out and try to eradicate it in 
the ways that we have in the past. We are going to live with 
it.
    So the question is, what are you going to do to work with 
us in California? You have to ship that product to other States 
and to certainly to other countries to make sure that we can 
get those products in. I mean, here one time we tell everybody 
that they shouldn't even be accepting any products with this 
background and now we have got it.
    So you can't just defund and walk away from a program 
without changing the protocols and regulations that we have 
established. And I would appreciate any kind of super energy 
that you have got so that we can get our product to market.
    Secretary Vilsack. I am not sure it is correct to say we 
are defunding the program. We are asking for $9.4 million that 
would be used for the treatment of light brown apple moth. And 
in fiscal year 2010 we went to this system of basically trying 
to contain, as opposed to eradicate; and part of what we have 
done and what we will continue to do is establish quarantine 
areas so that we don't necessarily create trade issues.
    Mr. Farr. But will you abandon the production facilities 
where you were trying to breed sterile light brown moths?
    So it is a major change in position. The problem that 
growers have is knowing what the rules of the game are going to 
be in order to get their product in the market, and are they 
going to continue for the rest of their lives to have to go 
through this extra expensive protocol? They have to pay a lot 
for it, too. It is not just that we subsidize it all.
    Secretary Vilsack. Well, I am not sure that there has been 
a significant shift this year. I think that occurred several 
years ago.
    Mr. Farr. Well, then, also the State has defunded it. The 
legislature has just removed the monies.
    Secretary Vilsack. I got a hard enough time managing this 
Department without managing the State of California.
    Mr. Farr. Well, no, but the regulations--it is Federal 
regulations to drive this system, not State regulations. The 
listing of the light brown apple moth is a----
    Secretary Vilsack. The problem was the way in which it was 
being handled in the past was causing some serious issues with 
landowners, and so they came to us and said this whole spraying 
thing isn't going to work so we have to look at ways in which 
we can--you know, the folks at Animal and Plant Health 
Inspection Service--APHIS--look at ways in which they can 
contain something.
    Mr. Farr. No, I am totally involved in all of that, and you 
were very helpful in all of that. But I said what happens now 
is the State is changing its position, the Feds have changed 
their position. You still put at risk, as long as the label is 
out there, that this light brown apple moth is a bad creature, 
and you don't want any product from where it is, where it has 
been invasive.
    And we have got to start figuring out how to change those 
protocols if we are going to change our attitude on how we are 
going to respond to it in the infested areas where you are 
leaving the growers and the producer without any ability to 
respond. There has got to be an escape hatch here. I really 
need to have you work on that.
    Secretary Vilsack. Well, we are providing $9.4 million 
dollars of assistance, and that is just slightly less than what 
we provided last year--or proposing in this budget. So I am not 
quite sure what----
    Mr. Farr. So that is going to go mainly to inspection for 
the rest of our lives.
    Secretary Vilsack. Well, you know, I think you have to 
realize that at least according to what APHIS tells me, there 
are some things that you could spend a billion dollars on and 
you are not necessarily going to eradicate it. So you have got 
to find out ways in which you can contain it.
    Mr. Farr. But you also have within the science community of 
how destructive a pest this is and many of them feeling that it 
has been in California for a long, long time and it hasn't been 
a problem.
    So, I mean, we don't have time to do it all now. I am just 
telling you we have got a dilemma. Our law and our procedure at 
the Federal level is creating this dilemma that California 
can't respond to; and we need to work to figure out, think 
outside the box or change the regulations, to listen to new 
science.
    Secretary Vilsack. I think I understand your point, and it 
is a question of classification. If you can't eradicate it, why 
classify it.
    Mr. Farr. Yes, you have got it. Thank you.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                         TRADE AND FOOD SAFETY

    Mr. Secretary, I would like to ask a question on trade. 
This is about imported food, and roughly 15 percent of our food 
supply is imported. As you know, the products come from about a 
quarter million different international establishments, 
includes about 50 percent of fresh fruit, 20 percent fresh 
vegetables, and 80 percent of seafood. It also includes an 
increasing amount of beef, with cattle imports increasing from 
2009 to 2010.
    You noted in your opening statement that Congress recently 
approved the free trade agreements in Colombia, Korea, and 
Panama; and the administration is negotiating another right now 
with a number of Pacific nations. So I think we both know that 
it should take a great deal of work for processing plants from 
another country to export food to the United States.
    This critical work would, I assume, require additional 
resources at the agency, let alone the resources needed to 
enforce the safety standards. And can you tell me, looking 
ahead with the budget climate that we are in, how the agency 
will ensure that any meat or poultry products imported for 
Americans to purchase and consume are safe and that those 
imported products meet the same quality standards, for example, 
organic imports? How will you ensure that this work does not 
detract from what the agency needs to do domestically and will 
our ability to know about the risks of produce be affected by 
the elimination of the microbiological data program?
    This is not in your jurisdiction, but just this week we 
have seen raw sprouts contaminated with E. coli making at least 
12 people sick in five States. And raw sprouts are one of the 
produce varieties that are sampled by this critical program. 
Now that is an issue for, you know, FDA, but the data 
collection that the microbiological program does is of great 
value to both the FDA and CDC. So how do we ensure the safety 
of meat and poultry? How does it not take away from us 
domestically and the elimination of this program?
    Secretary Vilsack. The general response to your question, 
Representative, is that we are not going to allow something to 
come into the country until we are convinced that it does, in 
fact, have equal to or better protections for food safety; and, 
as you are well familiar, we are going through this process 
with poultry processed in China. And we are going through a 
very elaborate process of audits, of reviews, of visits to 
facilities, of assurance, of training mechanisms being 
appropriated in equal, of making sure that language is 
understood, and that there is a common understanding in terms 
of language.
    And so that equivalency determination is very, very 
important; and we are very focused on making sure that anything 
that comes into this country that we have responsibility for 
meets our own safety standards. And if it doesn't, it is not 
going to be allowed to come in.
    Ms. DeLauro. Well, I understand that, but it is about 
having the resources that are necessary to be able----
    Secretary Vilsack. I mean, I think if there is a concern 
there, I think it is less a concern about the equivalency than 
it is perhaps making sure that what we do at the border is 
appropriate and that we have adequately trained the appropriate 
resources at the border to do the secondary checks that are 
done.
    As you know, things are checked and then a certain 
percentage or sample is looked at very, very carefully. So I 
would caution all of us to make sure that we have sufficient 
resources at the border.
    Ms. DeLauro. Well, I do understand that. I also--and this 
is not anything that we haven't discussed in the past, but the 
whole issue of what equivalency is or what equal to is. And 
when one designates equivalency that, in fact, is based on the 
audits. And I am going to wait to see about the review, but we 
know that the review is based on three, four plants, et cetera. 
But once you grant that equivalency, the door is open to every 
plant that is engaged in that particular effort. It isn't just 
restricted to those two or three places that we have had 
audited and reviewed.
    So I will continue to be concerned about this issue, as you 
know that I am, and with regard--and I have not been one to be 
hesitant about providing resources, but we are in a different 
climate and we are in a different environment about the ability 
to do that.

                      MICROBIOLOGICAL DATA PROGRAM

    Let me ask you about the microbiological data program, 
which I think is a critical program. I have always believed 
that, and I have always advocated for it. But now it has been 
eliminated. If you could just answer that question, it would be 
great.
    Secretary Vilsack. It is just the question of where it is 
appropriately funded and where it is appropriately consistent 
with the mission--we don't think it is consistent with the 
mission of AMS, which is where it currently is housed, and that 
is the question. You know, as we take a look at our budget, we 
have got to take a look at our core competencies and what is 
directly linked to our mission, and that was the decision that 
was made.
    Ms. DeLauro. Well, I would just say this to you. I 
understand that, but I have taken a very hard look at the FDA 
budget, and that is not your responsibility. You have your own 
responsibilities. But let me just tell you about the FDA budget 
in terms of food safety.
    To be quite frank with you--and I have had conversations 
with Commissioner Hamburg, that it is a disgrace what has been 
proposed, $11 million for food safety; and that is a division 
between food safety and--safety, food and drug. So we are--just 
a budget that comes forward that talks about that for food 
safety, gives you some sense of the priority for food safety. 
Now, it hasn't to be housed in your jurisdiction. I understand 
that. Does it meet--you don't need it to move forward with your 
process. But FDA, CDC, sprouts that have hospitalized people 
just within the last week.
    Mr. Kingston. The gentlewoman's time has expired.
    Ms. DeLauro. I understand that.
    Mr. Kingston. We will be having another round.
    Ms. DeLauro. But this is questionable as to where our 
priority is on food safety.
    Thank you.

                           CATFISH INSPECTION

    Mr. Kingston. You know, along that line, catfish falls 
under FDA and USDA; and there has been a discussion of that. 
The President in his State of the Union brought up salmon 2 
years ago. How is that--is that cumbersome in terms of--are we 
getting anywhere with catfish?
    Ms. DeLauro. Mr. Chairman, just for one second. That was a 
mistake to remove--catfish was removed from the jurisdiction of 
the FDA----
    Mr. Kingston. It was actually done by the Senate. If the 
gentlewoman would----
    Ms. DeLauro. Well, we worked very hard here to keep it from 
moving from where it was, and now it winds up in the bailiwick 
of the USDA, and here we are without any determination of where 
it stands at the moment. It should have stayed at FDA.
    Mr. Kingston. I don't know if you want to comment on it or 
not. But that is still out there, isn't it?
    Secretary Vilsack. Yes, it is.
    And I want to correct the record. I misspoke. I suggested 
the rule was still at Office of Management and Budget--OMB--. 
It is still at our place. We are in the process of reviewing 
the comments on the question of what is a catfish.
    Mr. Kingston. Yes.
    Secretary Vilsack. There are 39 different varieties and how 
you make that call depends on how extensive or how narrow the 
rule is, and it has implications for a lot of folks in a lot of 
different places, so we want to be careful about this.
    As it relates to food safety, you know, I think what has 
happened--and I don't know the numbers, obviously, as well as 
Representative DeLauro knows them. But I will say that I now 
think we have some consistency in philosophy as a result of the 
Food Safety Modernization Act. I think we are all focused on 
better prevention, we have focused appropriate surveillance and 
more rapid response, and that is what we are trying to get to 
at USDA.
    Mr. Kingston. I want to talk a little bit about overseas. 
First of all, on my travels, whenever I can, I love to go see a 
P.L. 480 program or any other USDA program.
    And I have to say that the USDA employees that I have had 
the opportunity to meet with--and these are casual meetings, no 
power points, it is in the field--they are excellent. They are 
great employees, they are scientists, they know what they are 
doing, they have a great passion.
    And if any of the committee members haven't had that 
opportunity, I just tell you, it is just delightful to talk to 
them. So I applaud you on that workforce.

                             TRADE BARRIERS

    On that subject, India is a potentially $300 million 
poultry market. Mr. Bishop and I have a lot of interest in 
that. But, as you know, they have confused the high pathogen 
with the low pathogen and blocked us from exporting to them 
altogether. Is that a World Trade Organization--WTO/United 
States Trade Representative--USTR--issue? Can USDA be helpful 
on it? Or are you guys doing something?
    Secretary Vilsack. It is both, Mr. Chairman, in terms of 
how we go about approaching barriers.
    Let me just say that in the last 10 years the number of 
sanitary and phytosanitary barriers we have had to deal with 
has increased from roughly 650 to close to 1,500 last year. And 
the reality is when you are the number one country in terms of 
agriculture and agricultural production and exports, countries 
find a lot of different ways to make it more difficult for you. 
And that is why the Foreign Agricultural Service is important 
and why USTR is important, is making sure that we knock those 
barriers down. We have a lot of them that we have to knock down 
every year.
    And some of them are easier. Some countries are more 
willing to look at the scientific information. Other countries 
will have a multitude of reasons why they don't think your 
science is right or why they think their approach is correct. 
It is very complicated and very frustrating, and we are dealing 
with some of these issues that have been outstanding for years 
and years.
    The issue of dairy in India is another issue. There is a 
tremendous market there, but we are just not able to get over 
the cultural and religious issue in terms of our dairy products 
and the production of our dairy products and what is being fed 
to our cattle and how it impacts their view of our dairy 
products.
    Mr. Kingston. Well, going back to our mutual interest on 
trade and also finding common ground in which we can all come 
together on that, I think that we would be interested wherever 
we can be helpful on those barriers. I had no idea with the 
1,500, but, you know, it is such a great economic opportunity 
for everybody.
    Secretary Vilsack. It is, and you would think it would be a 
relatively simple thing since you are in the WTO, so why don't 
we use the power? But it is very complicated to put a case 
together, to prosecute the case. And even if you get a 
favorable response, people can string you out in terms of 
reaction on a favorable determination.
    And the USTR has very limited resources, and they are the 
primary mover of these cases. So they have to pick and choose 
where they draw the battle line.
    Mr. Kingston. Well, since I can control this one better, I 
am not going to ask a question, but, Dr. Glauber, I do want to 
talk to you about the National Agricultural Statistics 
Services--NASS--when we have another round and that February 6 
Wall Street Journal article.
    Mr. Glauber. Sure.
    Mr. Kingston. What are the issues and problems? And so we 
can just start there when I get another round.
    Mr. Bishop.
    Mr. Bishop. Thank you very much. I have just, I think, one 
question for the Secretary.

                           ETHANOL PRODUCTION

    In your fiscal year '13 budget, you provide approximately 
$6.1 billion in direct loans to support the transformation from 
fossil fuels to cleaner technologies. I think that is a great 
investment, but I do have some concerns regarding the future of 
the ethanol production in the United States as a viable 
alternative fuel source.
    The ethanol plant in my district, which you visited a 
couple years ago, continues to face financial difficulty. But, 
of course, that story is similar to many others around the 
country. And I believe, as you do, that ethanol is one of 
several alternative fuel sources that we need in order to help 
ourselves become energy independent.
    What are the administration's plans to support and to 
strengthen this fledgling industry, particularly given the 
political and the financial pressure that it is facing?
    Secretary Vilsack. Well, there are a couple things.
    First of all, increasing the blend rate from E10 to E15 and 
making sure that we are properly dispensing that fuel.
    Mr. Bishop. We appreciate that, too.
    Secretary Vilsack. That is one step in the right direction. 
We want to make sure that is done.
    Encouraging a more convenient supply available to consumers 
through a distribution system that allows you to sort of dial 
up whatever percentage of fuel you need through a blender pump 
or flex fuel pump, which is one of the reasons why----
    Mr. Bishop. How do you encourage that, though?
    Secretary Vilsack. Well, we use the Rural Energy for 
America Program--REAP--programs to provide resources and 
incentives for convenience stores and petroleum marketers to be 
able to put the infrastructure in place to allow them to do 
that.
    Third is making sure that we work with ethanol producers to 
find out more efficient ways to produce ethanol using less 
energy, less water, and greater efficiencies. There is a lot of 
research that is being done in that area.

                           BIO-BASED PRODUCTS

    We are also expanding beyond traditional corn-based ethanol 
to looking at a variety of other feedstocks that might be more 
even efficient and better. We have programs under way looking 
at algae, switchgrass, woody biomass, municipal waste, citrus 
waste, agricultural waste, municipal waste. These are all 
projects that we are helping to fund.
    And I think it is important to also understand that there 
are coproducts and byproducts that result from ethanol 
production, which we want to continue to support.
    There is, obviously, a livestock piece to this, but there 
are also chemicals and enzymes that can be created from this 
that create new opportunities. In Iowa, there is a facility 
that is taking the heat, the water, and the protein from 
ethanol and converting it into algae which, in turn, creates a 
whole new series of opportunities for cosmetics, for fuel, for 
animal feed as well.
    So part of our rural development program is designed to 
provide opportunities for those bio-based facilities. Part of 
our research program is devoted to that and working with sister 
agencies to create new opportunities, whether it is blend rate 
increases or distribution of fuel more conveniently. There are 
just a whole series of things.
    And what we are doing, I think, is working to the extent 
that ethanol does two things. One, it provides consumer choice. 
Were it not for ethanol, we all would be paying somewhere 
between $0.90 and $1.10 more a gallon for gasoline.
    And then, secondly, of course, it is a job creator. Some 
have suggested that maybe as many as 400,000 jobs are directly 
or indirectly connected to this industry. And as we move 
towards the 36 billion gallon threshold under the renewable 
fuel standard, we could get as many as a million jobs, 
according to the industry.
    So, I mean, there are a lot of benefits, and we are 
reducing our reliance on foreign oil. We have gone from 62 
percent of our oil being imported to less than 50 percent today 
in just the last 3 years.
    Mr. Bishop. Thank you.
    Mr. Kingston. Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman.

                          ORGANIC AGRICULTURE

    I want to shift to one of my favorite areas, organic 
agriculture. I am the proud author of the California Organic 
Act, and I am very proud that you have hired Kathleen Merrigan 
to be your Deputy Secretary, because she just was able to 
negotiate the organic trade equivalency standards in Europe, 
which is going to open up even greater markets for organic.
    It is growing at about 23 percent a year, it is over a $30 
billion industry now, and yet the administration seems to be 
flat-funding organic. Organic, like the rest of agriculture, 
has to have strong support in data collection and publication, 
has to have research money, has to have access to other kinds 
of programs that agriculture has. Because we know the benefit 
is expanding rural economies and creating jobs in the rural 
areas. You just pointed that out.
    So my question is, why is it so flat-funded? Why haven't 
you supported the Organic Data Initiative? And the question 
that comes out of that, will that initiative then be in the 
agricultural census? Because there are no requests for funding 
to at least earmark for the organic data collection. Or is it 
going to be in there and you don't need to have some requests? 
I want to know where that will be. And, also, needing funding 
for the Organic Data Initiative through the National 
Agricultural Statistics Service or Economic Research Service, 
it seems that those indicators aren't including the data.
    So I would just like to see now--I am surprised to see that 
the whole program was flat-funded when it has had such 
incredible success in increasing market share and jobs in this 
country.
    Secretary Vilsack. In this environment, with substantial 
reductions, to a certain extent if you can maintain funding, 
that is an indication of a priority.
    You know, we would love to have more money to work with on 
a lot of programs, but we are faced with the economic reality 
that we have to get our fiscal house in order, which means we 
have to make tough choices. So the fact that this is funded at 
a relatively stable level I think is an indication of support, 
as opposed to an indication of a lack of support.
    Mr. Farr. What I am asking, is that it is not--there is no 
increased funding for research, although the demand is there. 
And there is no increased funding for the data----
    Secretary Vilsack. Well, the Economic Research Service--
ERS--number for organic agriculture is up by $4,000, and the 
Agricultural Research Service--ARS--number is down a little 
bit. NASS is about the same. It is an economic reality that we 
are trying to deal with a tight budget, and we tried to 
maintain a response to the fiscal condition that we find 
ourselves in.
    Again, it is not an indication we don't think this is a 
terrific program. The reality is this administration has put an 
awful lot more money into organics. It has put more money into 
Natural Resources Conservation Service--NRCS--for assistance 
under EQIP. It has funded the Integrated Organic Program at a 
fairly significant amount the last couple of years. It has----
    Mr. Farr. Are you going to put it in the agriculture 
census, where it would be a regular part of that?
    Secretary Vilsack. Go ahead.
    Ms. Merrigan. We are continuing with additional data 
gathering in NASS in the Census.
    We also are doing a lot of different things that aren't 
even budgetary. For example, you started by talking about the 
equivalency agreement that we are all very excited about with 
the European Union--EU. One of the things that we found when we 
were trying to figure out what does that really mean for 
America's farmers and ranchers is that we don't really have 
good data in terms of what is imported and exported on organic. 
And so our internal USDA organic working group realized that, 
and they worked with the International Trade Commission to get 
import-export codes so we could better track that market flow.
    So there is the budget here, and some of the things that we 
like in organics, including the organic agricultural research 
and education initiatives--the Farm Bill is not authorized 
right now, it is expiring. But we have level funding, and then 
we have all these additional management activities to try to 
get the most out of the programs that we have.
    Mr. Farr. So when do you think you will have enough in your 
data collection to be able to give this the legitimacy that it 
certainly has earned in the agricultural world, I mean, a 23 
percent increase, $30 billion industry in the United States?
    Secretary Vilsack. Well, in an addition to the EU 
equivalency agreement, we also negotiated an equivalency 
agreement with Canada, which was important. That was the first 
equivalency agreement.
    And, secondly, we have not talked about the fact we have 
strengthened the organic brand through a regulatory process and 
a clarification of rules. I mean, there has been a lot of work 
done in this area, and I don't want to leave this hearing with 
the suggestion that we are not paying attention to this area, 
because we are.
    Mr. Farr. I guess--and I will end with this--is the 
statistics is the issue. Are they going to get treated like 
other parts--and I don't know how all this agricultural economy 
is reported, but are they an equal partner or equal player in 
being able to be reported like all other commodities and other 
activities in agriculture? They are not a footnote anymore.
    Secretary Vilsack. No. The actions of this administration 
in this area should not suggest that they are a footnote. We 
see this as a very significant part of not just responding to 
market but also an opportunity to reclaim additional 
entrepreneurship and opportunity in rural America. We see this 
as a strategy for expanding job opportunities in rural America.
    Mr. Kingston. The gentleman's time has expired.

                     INTERNATIONAL ORGANIC STANDARD

    Dr. Merrigan, in your international negotiations and 
things, that stamp that says ``organic,'' that is an 
international standard now? Is that correct?
    Ms. Merrigan. It is between the EU countries and the United 
States. So, starting June 1st of this year, if the European 
Union is saying it is organic by their standards and through 
their checking system to make sure that the standards are being 
followed, then it can be sold freely in the United States as 
organic, and vice versa, with a couple of exceptions.
    Mr. Kingston. Well, what about non-EU countries?
    Ms. Merrigan. No, it does not include non-EU countries.
    Mr. Kingston. So if you import coffee that says 
``organic,'' it might not be?
    Ms. Merrigan. Well, no, we have a whole process of checking 
in different ways----
    Mr. Kingston. Using that stamp.
    Ms. Merrigan [continuing]. For other countries to get their 
products into the United States. But of the three different 
routes to do it, the one that everyone dreams of is having an 
equivalency partnership, because it reduces--farmers and small 
businesses particularly are very attracted to this--it reduces 
their paperwork and all the fees that they have to pay. They 
don't have to do double certification. It really helps the 
market grow.
    Mr. Kingston. Now, on the ``fair trade'' stamp, is that a 
similar type process?
    Ms. Merrigan. I don't--no, we do not have a program at USDA 
that oversees fair trade.
    Mr. Kingston. Okay. There is another stamp, it is an 
ecology stamp. What is the name of that one that has a little 
frog on it?
    Ms. Merrigan. I don't know, sir. I am sorry.
    Mr. Kingston. But I have been told that that is one of the 
things, particularly in the importation of coffee, that is kind 
of a rising brand, if you will. It is not a brand, but it is a 
rising mark.

                            NASS CROP REPORT

    Dr. Glauber, on that February 6th article, it said that the 
latest crop report stunned traders and sent prices on another 
wild ride. And so my question is, in terms of the National 
Agricultural Statistics Service crop reports, what is going on 
with it? Because it also said that eventually the USDA report 
might be ignored, that it is not accurate. But I don't--you 
know, I just wanted you to respond to that article.
    Mr. Glauber. It is a great question. And, of course, there 
have been a lot of news reports; that is not the only one. And 
there has been a lot of concern expressed over the reports.
    A number of the reports this year and last year have 
generated limit moves in the futures markets following that. I 
might add, having just looked back over a lot of the data, they 
are not the only things that cause limit moves. You know, the 
news on the sovereign debt crisis in Europe, the value of the 
dollar, China, which of course has become such a huge partner 
of ours--news on those things would cause limit moves, as well. 
So it is not the only thing.
    And it is true there are a lot of changes that have 
occurred in the markets over the last few years, particularly 
for corn because of the growth of ethanol. So you have--what 
you see in things like grain stocks reports is a higher and 
higher proportion of stocks are held off the farm. Because corn 
is very attractive relative to other commodities, we are seeing 
a lot more corn being grown in the South now, as I am sure many 
of you know. And so, that comes in at different times during 
the year.
    NASS tries to take into consideration those factors. But in 
going through it, what some of the discrepancies have been is 
when analysts do their balance sheets, they will look and see 
some changes in the numbers and try to account for things, and 
they come up with slightly different estimates prior to the 
release of the reports.
    I do think there is still a lot of uncertainty. We have a 
very changing feed market because less corn is going directly 
toward feed. More of it is going indirectly toward the 
distillery dried grains going into the feed report. We don't 
have a lot of great data on feed, which is part of the issue 
here, is it is a big residual. And so my economists make 
estimates about that, trade analysts make estimates about that, 
and our estimates are what we base our own forecast of what 
those stocks are. When NASS comes out with a stock report, in 
some cases that has been a surprise.
    Mr. Kingston. Does the budget give you what you need for 
timely and accurate reports? And are you using a tremendous 
amount of technology to get them real-time, or how is that 
working?
    Mr. Glauber. Well, we do use a lot of technology. The 
stocks report is a pretty much on-the-ground type of effort. 
You can't do satellites or anything like that, obviously, for 
that.
    Mr. Kingston. Yeah.
    Mr. Glauber. I will say this. It is made even more 
complicated by the fact that areas that you don't have 
jurisdiction over, but the Department of Commerce, for example, 
has cut out several key industrial reports that we got soybean 
crush numbers from, we got wheat milling numbers from, and when 
we don't have good numbers on that, we have to make estimates. 
And so there are a lot of uncertainties there.
    I do think NASS is aware of a lot of the changes that have 
been going on in the markets. They are, particularly on the 
production side, trying to utilize better technology, utilize 
what they have learned from previous harvests, et cetera.
    But I would just end with--the other major thing here is 
that, when the NASS report and, say, the market trade 
expectations are different by 150 million bushels of corn, that 
is a big number, but it is a very big number when it is a 1.6 
billion-bushel carryout; it is a huge number when it is only a 
500 million-bushel carryout. And the fact is we have been in a 
very, very tight stock situation for the last couple of years, 
which means almost any little piece of information that hits 
the market has a reaction, and a big reaction in some cases.
    Mr. Kingston. Thank you.
    Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                      MICROBIOLOGICAL DATA PROGRAM

    Just a couple of points on the microbiological data 
approach. This is, as I understand, about a $4.3 million 
program. In the scheme of things, what we deal with here, not a 
lot of money.
    But just this past summer, USDA's Microbiological Data 
Program was the agency that ordered cilantro and bagged spinach 
that had tested positive for salmonella to be removed from 
grocery store shelves. It also forced a recall of lettuce that 
had tested positive for E. coli and started testing cantaloupe 
regularly for Listeria after an outbreak that left 13 people 
dead.
    This is a quote from Mike Doyle, director of the University 
of Georgia's Center for Food Safety. ``It is the radar gun that 
keeps the industry honest. And if it is eliminated, we don't 
have a program that will keep the industry in check.''
    Now, a USDA spokeswoman said that, while food safety is a 
vitally important part of successfully marketing produce and 
other agricultural products, other Federal and State public 
health agencies are better equipped to perform this function. 
That is beyond belief. They don't--talk about resources. You go 
to any State effort, there are no resources there.
    It just seems to me that given what this program has done 
and what it can do, you have--CDC said that the information can 
help pinpoint foods tied to illness outbreaks; would not easily 
be replaced by companies' internal tests or more modest Federal 
sampling programs.
    I would like to get your commitment, Secretary, on that 
$4.3 million program. We are not talking billions of dollars, 
the numbers that get thrown around this institution, you know, 
for other things that don't have the same kind of ability to 
save lives. And I just think, is this a program that is going 
to fall through the cracks, that no one is going to pick it up, 
that it will just wither on the vine and nobody is going to 
take responsibility?
    You know, I wish we would figure out how to take programs 
that work and make a real difference and say that that is worth 
saving. And I would like to have, you know, your assurance 
that, you know, you are going to find someplace to deal with 
this and keep it going or find a willing partner here to pick 
up the $4.3 million. It winds up being budget dust in the way 
that we throw around numbers in this institution.
    Secretary Vilsack. Representative, I would be more than 
happy to see the FDA budget increased by $4 million to do this. 
Let me just simply say----
    Ms. DeLauro. I told you about the FDA number.
    Secretary Vilsack. Well, but, you see, that----
    Ms. DeLauro. It is $11 million. I don't know what else you 
have in your budget. You know, I have been through it, you 
know, looking at it, but I don't know the details or the 
granular nature of this, where we can find $4.3 million to have 
a program that has proven in the most recent time. How many 
people died of Listeria in the cantaloupe?
    Secretary Vilsack. Wouldn't you agree it is more 
appropriate with FDA?
    Ms. DeLauro. You know what?
    Secretary Vilsack. I mean, based on the mission, wouldn't 
you agree?
    Ms. DeLauro. Yeah. Hey----
    Secretary Vilsack. Okay.
    Ms. DeLauro [continuing]. I could agree to a lot of things, 
but--so, okay. So we wash our hands of it.
    Secretary Vilsack. No. We just simply----
    Ms. DeLauro. We wash our hands of it.
    Secretary Vilsack. Here is the----
    Ms. DeLauro. Do you think we are going to increase $11 
million for FDA?
    Secretary Vilsack. Here is the larger question, and that is 
there is a lot of conversation and discussion around the 
country about reductions, and everyone likes to say, well, 
there is waste, fraud, and abuse. But the reality is, you are 
now at a point where you have people like me having to make 
very difficult decisions in terms of priorities and in terms of 
core competencies. This is an important point you raise.
    Ms. DeLauro. I will tell you what. Let me conclude this. I 
will look through and provide you with some suggestions as to 
where we might be able to deal with this. I will look through 
your budget.
    I will just tell you, it was--and I have to get to my women 
farmers, too, here. But I am just telling you that there is a 
budget that has come forward on FDA. This is not what has been 
proposed here. It is $11 million. Now, you have nothing to do 
with that, but I am telling you that it is not going to happen 
at FDA.
    I will work with you. I will go through your budget. I will 
find a place where we can get $4.3 million to potentially save 
lives. That is what this piece does.
    If I can, I would just----
    Mr. Kingston. Rosa, you know, that----

                   WOMEN FARMERS DISCRIMINATION SUITS

    Ms. DeLauro. My time is up. I will put it in for the 
record, on women farmers. I don't understand how we are going 
to get through this claims process. I know what your commitment 
is here. I understand it 100 percent, how you want to just try 
to deal with these discrimination suits.
    But I don't even know if--if I don't need a lawyer to 
successfully complete any portion of this proposal, how will I 
complete the form? What supporting documentation do I need as a 
woman farmer who has been discriminated against and the 
evidence of that? How are we going to notify people that the 
process is under way so that women and Hispanic farmers can, 
you know, be helped out?
    And we can have that as a further conversation. Let me put 
it on the record here, and we can talk further about it.
    Sorry, Mr. Chairman.
    Mr. Kingston. Well, I was just going to get you to yield to 
me. But I wanted to say, getting back to that overpayment 
issue, that is why that $5.4 billion is relevant to everybody. 
And so, you know, implementing some of the OIG's 
recommendations I think would be something that we all ought to 
be able to get together on. Because it is not, you know, 
finger-pointing; it is a matter of, well, let's get in there 
and, you know, roll up our sleeves and find things like that 
that we can agree on. So I wanted to bring that up.

                         ADMINISTRATIVE FUNDING

    Now, also, Mr. Secretary, Congress has--or, actually, the 
Appropriations Committee has cut its own budget 9 percent, and 
we are all dealing with fewer employees in each office. Your 
office, though, you have a request in here of a $5 million 
increase under the administration portion. Is that correct?
    Secretary Vilsack. And it is primarily a result of the 
underfunding for an extended period of time in the Office of 
General Counsel. And the reality is, if you don't have enough 
folks in that general counsel's office, then you see 
substantial delays in getting rules and regulations through the 
process.
    Mr. Kingston. Okay. And that all comes through your office?
    Secretary Vilsack. Well, it is part of the overall.
    Mr. Kingston. All right, we might have some follow-up 
questions on that.

                        LOAN GUARANTEE DEFAULTS

    On some of the loan guarantees that have been in the paper 
recently, and USDA has a few of them that have gone bad--and I 
certainly agree that you are going to make some loans where 
they go bad. Have we tightened down after some of these 
failures?
    Secretary Vilsack. Well, we have over----
    Mr. Kingston. And I would not expect you to have 100 
percent. I mean, you know, that is----
    Secretary Vilsack. We have over 900,000 loans in our 
portfolio at USDA, and the default rate and problem rate for 
the entire portfolio is less than 5 percent, which is not bad.
    We have a very--with our guaranteed loan program, we 
obviously have a partner in the underwriting. Our direct loan 
programs, I think you will see that the default rate is very 
competitive with the commercial banking industry. In fact, I 
think it is even better, in most cases, than the commercial 
banking industry.
    So we are constantly looking at ways in which we can do a 
better job. You know, there are concerns about staffing levels 
and making sure--that is why we have made some of the 
suggestions and proposals relative to housing, so that we have 
adequate resources to be able to do the job to properly 
underwrite the housing loans we have.
    But I think if you look at our overall portfolio, you are 
going to find that there are obviously going to be 
circumstances and situations where things don't work out, but I 
honestly think it is actually less than what Congress expected 
it to be at the time these programs were created or at the time 
the Recovery Act was created.
    Mr. Kingston. Okay.

                       GRANT RESEARCH DUPLICATION

    Also, on grant research, some of the concern I have is the 
duplication. Under the Agriculture and Food Research 
Initiative, the AFRI, there is a $23 million grant to improve 
sustainable food systems and reduce hunger. One of them went--
$1.1 million went to the University of Alaska. Another $4.9 
million went to Pennsylvania State to evaluate regional food 
systems in the Northeast; $4.9 million to the University of 
Wyoming to identify, develop, and evaluate community organizing 
strategies for food systems; and then a $25 million grant for 
the University of Nebraska for E. coli research; and $10 
million to North Carolina State for food safety research.
    The concern that I have is, these are all areas in which we 
already have research going on, in most cases. And one of the 
great criticisms that we get as stewards of the tax dollars is 
that, well, there are too many duplications in Federal 
Government. And while I think it is useful for a scientist in 
one university to study the same thing another scientist has, 
because they might come to different conclusions and it is 
important that there is a little bit of, you know, maybe 
intellectual or scientific competition or perspective, whatever 
you want to call it, but these do seem like pretty mainstream 
things which the USDA already has probably millions and 
millions of dollars looking at.
    And so what my concern is, in terms of our research 
priorities, what are they? And how are we making sure that we 
are not just doing one more study on food safety or whatever?
    And I might point out, Rosa is looking for money for food 
safety, and that was one of the grants that would cover this. 
This was $10 million for North Carolina State University for 
food safety research.
    Secretary Vilsack. I am not familiar, obviously, with the 
individual aspects of each one of those research grants, but I 
would be willing to bet, at least as it relates to the local 
and regional food system, that there are distinguishing 
characteristics in terms of that research.
    Discussing local and regional food systems in Alaska, by 
the very nature of that State and the very nature of its 
population, is fundamentally different than what may take place 
in the northeastern part of our country or in the mid-Atlantic 
States in our country or, for that matter, in the western part. 
I mean, I think there are different issues.
    Then there is a question of, was the research focused on 
the production? Was the research focused on the retail sale? 
Was the research focused on the aggregation of sufficient and 
adequate resources to be able to meet institutional demands? I 
mean, there is a whole series of complicated steps when you are 
setting up a local and regional food system.
    So I don't know those individual grants. There may be 
duplication. There ought not to be. And I would hope and I 
believe that our folks are very attuned to that in terms of the 
grants that they make.
    On food safety, this is a very complicated area. We learn 
every single day more about pathogens, more about the science 
of food safety. So it may very well be that this is not--it may 
appear to be duplicative because the topic matter of food 
safety is one that is fairly broad, but my guess is that the 
individual research projects that you have mentioned--and we 
will be happy to get the details of those individual projects 
so that you can be satisfied that they are not duplicative. And 
if they are, then I stand corrected.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                              AFRI GRANTS

    Mr. Kingston. Because these are pretty big numbers. Getting 
back to Mr. Farr's point about the light brown apple moth $9 
million number, and here is $4.9 million going to the 
University of Wyoming to develop and identify and evaluate 
community organizing strategies for sustainable food systems, 
it seems like one of those hokey grants that, you know, we all 
get criticized on.
    Secretary Vilsack. Well, I am going to let the Deputy 
comment on this, but I would also say, I don't know this, but 
it is possible that it is not just one university that is 
involved.
    Mr. Kingston. Yeah, and I don't know it either. I am just 
saying that we need to make sure these things have been 
filtered and filtered before they are awarded.
    Secretary Vilsack. The reason why we went to a competitive 
grant process and the reason why we are encouraging more 
competitive grant processes is for the very reason that we want 
to leverage these resources and we want to make sure, you know, 
that we are not duplicating efforts. When you use the formula, 
you don't really now what you--I mean, you know you are funding 
land grant universities. You don't have as much----
    Mr. Kingston. And I guess, thinking from Mr. Farr's point 
of view on these AFRI grants, would a study of the light brown 
apple moth fall into a category of eligibility? And would that 
not be something where you could enhance the knowledge of that 
by, you know, making sure that they are applying for it and 
that they know about an AFRI grant?
    Ms. Merrigan. I asked the Secretary for an opportunity to 
speak on this because I am a survivor of academia. And, you 
know, when you are a professor and you are a research 
professor, you spend so much of your time writing these grant 
proposals as opposed to doing the research. And so one of the 
things that we focused on in this administration was larger 
grants that went for a longer period of time. So you see bigger 
numbers, but in all cases they are multi-institutional grants. 
And so that is also our effort to improve collaboration in the 
scientific enterprise.
    In all cases, these grants are peer-reviewed. And if you 
are going forward and you are putting your grant proposal 
forward, you should have all the latest research cited and show 
how you are going to be advancing knowledge from that last 
place.
    Mr. Kingston. Yeah, but let me say this as the son of a 
college professor and a brother of one. When you say peer-
reviewed, it is not really the gold standard, because it is in 
their interests, mutually, to make sure, ``Oh, yeah, no, that 
is a good grant.'' You know, I mean, to keep those Federal 
dollars flowing, ``Yeah, you all did a good job on that.''
    Secretary Vilsack. Well, but that process is designed to 
make sure that we are doing the best job of providing resources 
to grants that matter the most. Just to give you a sense of----
    Mr. Kingston. And let me say this. There is nothing that I 
like better than going to a university and talking to the 
scientist in the lab who is doing this research. So I think it 
is extremely important to do the research and let the scientist 
not be worried about the grant application and so forth. But I 
am also just leery of, you know--I don't know what they are 
doing in----
    Secretary Vilsack. I don't mean to be facetious on this, 
Mr. Chairman, but Representative Farr asked me about research 
and assistance for horticulture. We are reallocating resources 
in that particular area of roughly $4 million. When you get 
into difficult budget times, you get into having to make 
choices. Seventy percent of our research money goes into 
production livestock; crops, including floral-nursery; or 
environmental stewardship. Twenty-six percent goals into 
product quality, value added, and food safety.
    These are very difficult sets of questions and issues that 
you have to decide. And when you have all the money in the 
world, it is easy to make these decisions. When you are limited 
in resources, you have to make choices. And that is really the 
world that we live in.
    I have been trying to tell folks at USDA, this is a 
different world than you have ever lived in before. You are 
going to have to make choices; you are going to have to make 
tough calls. And those calls, you know, all of them can be 
questioned, because everyone has a different set of priorities. 
And USDA has such a large and wide portfolio that it is very 
difficult at times to get everybody satisfied.
    Mr. Kingston. Well, the other thing that you and I have 
talked about in the past is that, regardless of your philosophy 
in this budget environment, the budget is going to be under a 
lot more scrutiny and it is going to be a lot tighter. And 
wherever we can save and particularly find the common ground on 
which we can, you know, let's go ahead and move on that--and 
that is why I wanted to bring up the grant stuff because--and 
would this moth--does AFRI--is this for land grant only?
    Ms. Merrigan. No.
    Secretary Vilsack. It is for anybody.
    Ms. Merrigan. The best science wins.
    Mr. Kingston. Okay.
    Mr. Farr.
    Mr. Farr. Jack, I would submit that after defense earmarks, 
probably the most abused earmark of all was congressional 
earmarks for agricultural research projects. And using it 
competitively is a smart way to go so that the most important 
things are getting addressed with the limited amount of money.
    But let me shift to--first of all, thank you, Mr. 
Secretary, and thank you for all the staff. You have been here 
for almost 4 hours. Thank you, Mr. Chairman, for allowing us to 
have such a grueling dialogue here. It just goes to show the 
incredible number of and diversity of issues that this 
department has. And I was just thinking that Abraham Lincoln 
would be very proud of the way you are handling this hearing 
today and be amazed at how this department is still involved 
with the cutting-edge issues of rural America and the 
developing international market.

                  MUTUAL AND SELF-HELP HOUSING PROGRAM

    One of the programs that you have in your department is a 
housing program. And most people don't think the Department of 
Agriculture does that, and I think some people would suggest 
that maybe they shouldn't. But I am involved as a former county 
supervisor and somebody who has carried a lot of legislation 
and developed a lot of development in this country in 
California, am very concerned about the ability for people of 
low and moderate income to get into housing.
    Of all the housing programs that HUD has, none of them are 
as good as the program you have, the 523 Self-Help Housing 
Program. I have watched it and been involved with it. I think 
it is the most effective, interesting program. Essentially, you 
let all the people who are going to qualify--and I just watched 
the dedication of 25 families, all came together. Lots were all 
laid out. They are going to get to move into three- and four-
bedroom houses, and they are going to have energy efficiency 
and photovoltaic systems, and they are going to have 
essentially no-cost energy.
    They all have to build them all, and they all build them. 
They know which lot is theirs. By the time the houses are 
built, they all know each other, the children are all good 
friends. You have built an incredible community of support 
systems that is unlike any other community I have ever been in. 
The quality of the units is phenomenal. In fact, out of that, 
another type housing in the same town, two members of those 
housing projects were elected to city council and one is the 
mayor of the town.
    So this Self-Help project is incredible. And I understand 
that you have about 50,000 families in America that are on the 
waiting list. But your budget cuts the Self-Help housing grants 
by 67 percent, from $30 million to $10 million. I think that is 
tragic. If you are going to really do the rural strategy that 
you were talking about, this seems to me one that ought to be 
the priority.
    In addition to that, the ability for rural America to get 
grants and be eligible for rural housing assistance is all 
based on what we define as ``rural.'' And the definition now is 
based on that, prior to the 1990 census, you had to be under 
25,000 in population. And then what we are doing is we 
grandfathered in a lot of those communities. That all expires. 
And I understand there are 500 communities in the United States 
that will be excluded as rural communities and won't be 
eligible for these grants. Eighty of those are in California, 
of which about five of them are in my district.
    We need to change that. It is our job in the legislature. 
And what I am asking you is to use your staff to help us draft 
the legislation for allowing the eligibility for rural housing 
programs to continue. I mean, in a lot of areas--in our area, 
we are very proud. We don't allow housing to go into the rural 
areas. We have to go into the communities, because the rural 
area is where we grow things and we process the food. And so 
you have a city like Salinas, 150,000 people, just surrounded 
by agriculture. The people that harvest all that, a very labor-
intensive agriculture, very hands-on and processing and 
shipping, they all live in town, because there are not houses 
on the fields. And yet they can't be defined as a rural 
community, and for all intents and purposes they are.
    So I need to continue to help those communities, and I 
would like to have your help in drafting the next legislation. 
But, most of all, I would also like to know why the heck you 
are cutting the most successful housing program in the United 
States by 67 percent.
    Secretary Vilsack. First of all, let me indicate a desire 
on our part to work with you on the issue of ``rural'' 
definition. As you know, there are multiple definitions of 
``rural'' in the law. And really, to the extent that we can 
create greater consistency and greater flexibility in that 
definition, we think that is in the best interest of everyone. 
So we would be more than happy to work with you and the 
committee on that.
    You know, our focus primarily in the housing area has been 
on a rather significant expansion of the guaranteed program. We 
have seen a $20 billion expansion in that program, and we think 
we are going to be able to deal with 184,000 housing units as a 
result, which is a substantial number of opportunities.
    We are going to continue to work hard with limited 
resources to provide as many housing opportunities as we can. I 
think we have done 456,000 loans or grants of one form or 
another to put people in decent housing.
    We are also deeply concerned about the aging nature of our 
housing stock, particularly multifamily. So we are proposing 
and suggesting a slightly different approach as it relates to 
where those moneys go for multifamily to basically rebuild 
structures that were built in the 1980s and 1990s and repair 
them.

                             BUDGET CHOICES

    This is just a matter of choices and a matter of having 
limited resources. So if you want us to take money from the 
direct loan program to fund Self-Help, obviously we can do 
that. But then the question is, what about those poor people 
that can't afford to get--they are not in Habitat for Humanity, 
they just simply want to go to the local bank, they can't get a 
loan, they need a direct loan.
    These are tough choices. These are very tough choices. And 
when you all start getting into the details of this, you are 
going to find out how tough these choices are.
    We have worked really hard at USDA to manage the change, 
but it is difficult. And it is particularly difficult in this 
area because we are seeing a reduction in workforce. And with a 
reduction in workforce, that raises the possibility that we may 
not oversee these loans as well as we have in the past, which 
would then cause you to ask questions of why we have more 
delinquencies or why we have more difficulties with these 
loans.
    There are just only so many dollars, Representative, and it 
is a matter of choices. And right now our focus is on making 
sure we have sufficient guarantees, because that is where most 
of the action and most of the activity is.
    Mr. Farr. Well, I appreciate your willingness to work on 
this, and I am going to zero in on trying to improve the 
things. I just hope my colleagues who are on the other 
subcommittee who are hearing from another Secretary about how 
they can't--we can't accept the cuts, and yet we are hearing 
these other committees that sort of have to accept the cuts.
    Mr. Chairman, I think that our committee, the 
Appropriations Committee, is in a really tough spot. We can't, 
sort of, single out and say there is one agency in the Federal 
Government that we don't cut, and we take care of defense, but 
we don't take care of anybody else.
    Secretary Vilsack. Well, the point I tried to make at the 
beginning is----
    Mr. Farr. National security depends on the wellbeing and 
quality of life of people in America. That is the first line of 
national security.
    Secretary Vilsack. The point I tried to make at the 
beginning of this is that I think USDA has stepped up. And I 
can't speak for other departments, but I think we have. And we 
will continue to try to do a better job of marshalling limited 
resources, but other folks have to step up, too.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Mr. Chairman, I have no further questions. I 
want to say thank you to the Secretary, Deputy Secretary, and 
the staff.
    I just have one comment. I turned around to look at that 
picture up there.
    Mr. Kingston. Yeah.
    Ms. DeLauro. Mr. Chairman, can you do me a favor? Can we 
get another picture?
    Mr. Kingston. Absolutely not.
    Ms. DeLauro. This is a snakepit here, Mr. Chairman. Was 
this your choice? Was this your choice of photographs?
    Mr. Kingston. It wasn't, but it would have been. However, I 
understand we get these photos from USDA, and I would love to 
have one from Connecticut.
    Ms. DeLauro. We have the Secretary here. Can we get a 
better photograph than two snakes?
    Secretary Vilsack. If the chair is happy with that 
picture----
    Mr. Kingston. We will work with you.
    Ms. DeLauro. We can find common ground.
    Mr. Kingston. Yeah, we can definitely find common ground.
    I did actually have one last question.
    Mr. Farr. It is the Congress in action. It is self-help.

                          AFGHANISTAN AND IRAQ

    Mr. Kingston. What I was wondering is--and this is my last 
question--how are you doing in Afghanistan and Iraq in terms 
of--I met with some of the USDA people in Afghanistan about a 
year and a half ago. And how is it looking?
    Secretary Vilsack. We have roughly 60 people in 
Afghanistan, and they are focusing on a couple of key areas. 
One of them is food safety. One of them is working with the 
Agricultural Ministry to make sure that that ministry knows how 
to do the job of being a ministry. They are also working on 
extension. And they are working on some credit opportunities in 
some of the larger projects. There is a water project that they 
are also involved in.
    So we continue to work. You know, it is a small 
contingency, but we are also working with the National Guard 
and providing training for these National Guard units to go 
over and also do agriculture. That is the great thing about our 
military, is that we have this great National Guard. These 
folks have enormous capabilities, multi capabilities, and they 
are using them to embrace better agriculture.
    I don't want to mislead you. This is a long, long process 
of creating an agricultural economy that isn't solely related 
and dependent upon poppy production. What those folks are doing 
in poppy production makes all the sense in the world if you 
look at the fact that there is very little risk, there is a 
ready market, there is no transportation expense, none of the 
problems that are associated with traditional agriculture.
    So we are trying to address those issues. And we are making 
progress. But it is going to be a while before you see 
pomegranates easily traded.
    The other issue is, even if they want to trade and their 
market is in India, the question is, how do they travel over 
Pakistan to get to India? And will Pakistan give them the 
flexibility and the permission to do it? That is not an easy 
negotiation discussion. That has been going on for a couple 
years.
    Mr. Kingston. Uh-huh.
    Secretary Vilsack. So, I think it is worth the money we are 
spending, and I wish we could do more of it. But I think we are 
going to have to, in terms of that kind of support and 
assistance, we are going to be there for a while.
    Mr. Kingston. When I met with them, I was struck by how 
much their hands are tied by factors that are way beyond USDA.
    How about Iraq?
    Secretary Vilsack. Our presence there has been reduced. We 
have just a handful of people there. Their agriculture is a bit 
more sophisticated and a bit more advanced than in Afghanistan, 
so they don't need quite as much assistance and help. It is 
about, sort of, rebuilding as opposed to creating.
    I mean, we are literally creating an agricultural economy 
in Afghanistan. I mean, it is an amazing story, and I think 10, 
20 years down the road it is going to be truly amazing, because 
they are going to be the breadbasket of that part of Asia.

                    FOREIGN AGRICULTURAL ASSISTANCE

    Ms. DeLauro. If the chairman would just yield for a second, 
because you talked about Iraq and Afghanistan. The whole issue 
of--and it may be more State Department, Mr. Secretary, than 
USDA--but the whole emphasis--I mean, we have provided 
emergency aid, and I know McGovern-Dole is level-funded, and 
there has been a slight decrease in the Food for Peace Program.
    But the issue of the agricultural expertise to other parts 
of the world so that, in fact, what we are doing is utilizing 
resources to have better crop yields, more productivity, even 
with a program with the Borlaug Fellowships, that--what are our 
opportunities there in these areas?
    And I understand Iraq and Afghanistan, they are places 
where we have, you know, military. But there is somewhat of an 
imperative to look at where we are impacting the rest of the 
globe in terms of these issues of agriculture and productivity, 
women farmers, all of this area.
    Secretary Vilsack. What we have done in an effort to try to 
leverage and extend our resources--you mentioned the Borlaug-
Cochran Fellowships, which we will continue to do. We will 
continue to work with USAID. But we have come up with an idea 
in which, as people retire from the Foreign Agricultural 
Service, as people retire from NRCS or whatever, we are asking 
them the question as they are leaving, would they be interested 
potentially in volunteering their time? If a foundation or 
corporation would be willing to pay their travel expense and, 
you know, their room and board--no salary, you have a 
retirement income that you get--would you be willing to go to a 
country in sub-Saharan Africa and spend 3 months, 6 months, a 
year? We have received several hundred indications from the 
most recent group of retirees that they would be interested in 
considering this.
    So now what we have done is we have gone to the Clinton 
Foundation and we have said, you know, where could these people 
be best used? They have gone back to the countries that they 
are currently involved in, and they came back and said, ``Here 
are the counties that are in the best position to use these 
folks, and here specifically are areas that we need the most 
help with.'' Now what we are going to try to do is match up the 
retirees who have expressed an interest with where the demand 
could be and create sort of a--you know, not a Peace Corps, but 
something akin to that.
    Ms. DeLauro. Uh-huh.
    Secretary Vilsack. So that is something I am pretty excited 
about.
    Ms. DeLauro. That is very exciting.
    Secretary Vilsack. I think it is creative and it is 
innovative, and it is not going to cost the government money. 
And it is going to take these people who still have a lot to 
give, and it is going to give them a chance to give it.
    Ms. DeLauro. I would just commend to you, because I had the 
opportunity to speak to--Save the Children brought a group of 
people together to talk specifically about these issues, and I 
spoke this week to them. And I will tell them, you know, your 
ideas, but it would be an interesting, you know, connection. 
Because what you are doing is ferreting out the folks. They are 
looking at foundations, they are looking at a whole variety of 
entities. And maybe there is some way in which to collaborate.
    Secretary Vilsack. Lona Stoll in our office is sort of 
headlining this, or dealing with it, and she would be the 
person that your staff could reach.
    Ms. DeLauro. Okay. Thank you. Thank you for your time.
    Mr. Kingston. Mr. Secretary, we thank you. We have enjoyed 
working with you. We are certainly not going to always agree on 
things, but I think we both realize how big the challenge is in 
front of us. So we look forward to this year and having the 
rest of your department in for hearings. And so, thanks for 
kicking us off with a good tone for the next 10.
    Secretary Vilsack. Mr. Chairman, thank you.
    Mr. Kingston. And, with that, we stand adjourned.


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                               I N D E X

                              ----------                              --
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                        Secretary of Agriculture

                                                                   Page
Administrative Efficiencies....................................221, 244
Administrative Funding...........................................    86
Administrative Solutions Project.................................    27
Advisory Committees..............................................   147
Afghanistan and Iraq.............................................    95
Agricultural Water Enhancement Program...........................    42
Agriculture and Food Research Initiative....................49, 91, 231
Agriculture in the Classroom Program.............................   225
Agriculture Statistics...........................................   230
Animal Disease Traceability Program..............................    39
Beginning Farmer and Rancher Program.............................    67
Bio-Based Products...............................................    79
Bio-Preferred Product Program...................................72, 217
    Forestry Industry..........................................238, 256
Blueprint for Stronger Service...................................   227
    Realized Savings.............................................   241
Bonuses and Awards...............................................   199
Brazilian Cotton Challenge.......................................    42
Budget Choices...................................................    94
Budget Object Class Analysis.....................................   244
Budget Reduction Scenario Request................................   235
Business Development.............................................    55
Buyout/Early-Out Authority.......................................   155
Catfish Inspection Program.......................................42, 77
CCC:
    Section 11...................................................   158
    Transfers....................................................   207
Changing Bureaucracies...........................................    30
Codex Alimentarius...............................................   155
Commodity Purchase System........................................   208
Commodity Supplemental Food Program.............................47, 230
Common Computing Environment.....................................   162
Community Gardens................................................   258
Congressional Directives.........................................   176
Congressional Relations..........................................   121
Conservation Program.............................................    43
Conservation Reserve Program.....................................   254
Country of Origin Labeling.......................................   219
Crop Insurance Savings Applied to Deficit Reduction..............   238
Direct Loan Write-Offs...........................................   127
Discrimination Suits:
    Settlement for Women and Hispanic Farmers....................   249
    Women Farmers................................................    86
Duplicative Data Collection......................................    48
Early Outs and Buyouts...........................................   153
Electric Program Funding.........................................   224
Ethanol Production...............................................    79
Evaluating Vital Roles of USDA...................................   236
EWP and ECP Funding for Disaster Recovery........................   225
Farm Bill.......................................................35, 211
Farm Labor Regulation............................................   227
Farm Loans.......................................................   273
Farm Youth Labor.................................................    34
Farmers' Markets.................................................   260
Federal Pay Increases..........................................175, 248
Financial Management Modernization Initiative....................   168
Food and Agriculture Defense Initiative..........................    66
Food Deserts.....................................................    71
    Urban........................................................    69
Food Labeling Initiative.........................................    99
Food Nutrition and Consumer Services.............................   104
    Cost and Participation.......................................   112
    Error Rates and Improper Payments............................   109
Food Safety......................................................   205
Foreign Agricultural Assistance..................................    96
GAO Duplicative Programs Report..................................46, 47
    Economic Development Program Duplication.....................   230
    Nutrition Program Duplication................................   229
Grant Research Duplication.......................................    87
Great Lakes......................................................   258
Headquarters Employment..........................................   171
Healthy Hunger-Free Kids Act.....................................   222
Herd Destruction Alternatives....................................   218
Homeland Security................................................   170
Human Nutrition Education........................................   166
Immigration......................................................    40
Improper Payments of USDA Programs...............................    62
International Organic Standard...................................    82
Interns, USDA....................................................   198
Introduction of Witnesses........................................     1
Know Your Farmer Know Your Food Initiative.......................   263
Legislative Proposals............................................    56
    Crop Insurance Program.......................................38, 41
    Farm Service Agency..........................................    40
Letters to and from Congressman Graves on the Budget.............   233
Light Brown Apple Moth...........................................    73
Livestock Warranty Program.......................................   217
Loan Guarantee Programs..........................................   244
    Defaults.....................................................    86
Local and Regional Food Systems..................................    69
Local Foods......................................................   261
    Sales........................................................    68
Mandatory Entitlement Spending...................................    31
Methyl Bromide...................................................   157
Microbiological Data Program.....................................76, 84
Mutual Self-Help Housing Programs...........................49, 92, 231
NASS Crop Report.................................................    83
NIFA Mandatory Programs..........................................    65
Nutrient-Short Communities.......................................    44
Nutrition Assistance Program in the Commonwealth of the Northern 
  Mariana Islands................................................   251
Nutrition Standards Rule.........................................    37
Office Closings..................................................    28
    Farm Service Agency.....................................35, 71, 222
Office of Advocacy and Outreach..................................   264
OGC:
    Ongoing Litigation...........................................   212
    Reorganization...............................................   213
Opening Statements:
    Mr. Dicks....................................................     4
    Mr. Kingston.................................................     1
    Mr. Rogers...................................................     3
    Secretary Vilsack............................................     8
Operating Plans..................................................   176
Organic Agriculture..............................................    80
OSEC Staffing....................................................   130
Outside Counsel..................................................   150
Paperwork Reduction..............................................    38
Pest and Disease Prevention/Eradication..........................   207
Poultry Inspection...............................................    59
Public Affairs...................................................   117
Public-Private Partnerships......................................   219
Questions for the Record:
    Mr. Aderholt.................................................   227
    Mr. Bishop...................................................   254
    Mr. Graves...................................................   235
    Mr. Kingston.................................................    98
    Mr. Rogers...................................................   222
    Ms. DeLauro..................................................   249
    Ms. Emerson..................................................   225
    Ms. Kaptur...................................................   257
    Ms. Lummis...................................................   229
Reconstruction and Stabilization.................................   103
Rural Energy for America Program.................................   264
Rural Economy....................................................    33
School Lunch Program.............................................   255
School Nutrition.................................................    53
Single Family and Multi-Family Housing Programs..................   257
Single Food Safety Agency........................................    98
Small Watershed Rehabilitation Program...........................    42
SNAP.............................................................    36
    Benefits....................................................32, 116
    Benefits at Farmers Markets..................................    68
    Categorical Eligibility......................................    46
    Changes......................................................    56
    Economic Development.........................................    50
    Eligibility..................................................   229
    Improper Payments............................................    60
    Outreach.....................................................    57
    Participation................................................    59
    Participation Initiatives....................................   106
    Pilot Program................................................    52
SNAP and CSFP Participation......................................   105
Sugar Support....................................................   255
Surplus Equipment and Facilities.................................    67
Trade:
    Agreements...................................................    54
    Agricultural Trade/Exports...................................   101
    Barriers.....................................................    78
    Enforcement..................................................   103
    Food Safety..................................................    75
    Free Trade Agreements with South Korea, Panama and Colombia..   101
Urban Farmers and Processors.....................................   268
US Schools Challenge/Let's Move Initiatives......................    99
Unauthorized Programs............................................   163
Vulnerability of the Food Supply to a Bioterrorist Attack........   168
WIC:
    Electronic Benefits Transfer.................................   114
    Letter.......................................................     6
    Nutrition Service Administrative Costs.......................   115
    Participation, Food Inflation and NSA Costs..................   105
    Shortfall....................................................    72
Witness Statement of Secretary Vilsack...........................    11
Working Capital Fund/Greenbook Charges...........................   173

                                  
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