[Senate Hearing 112-282]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-282
 
                   THE STATE OF LIVESTOCK IN AMERICA

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


                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,

                         NUTRITION AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION


                               __________

                             JUNE 28, 2011

                               __________

                       Printed for the use of the
            Committee on Agriculture, Nutrition and Forestry


        Available via the World Wide Web: http://www.fdsys.gov/




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            COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY



                 DEBBIE STABENOW, Michigan, Chairwoman

PATRICK J. LEAHY, Vermont            PAT ROBERTS, Kansas
TOM HARKIN, Iowa                     RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
SHERROD BROWN, Ohio                  MIKE JOHANNS, Nebraska
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BOOZMAN, Arkansas
AMY KLOBUCHAR, Minnesota             CHARLES E. GRASSLEY, Iowa
MICHAEL BENNET, Colorado             JOHN THUNE, South Dakota
KIRSTEN GILLIBRAND, New York         JOHN HOEVEN, North Dakota

             Christopher J. Adamo, Majority Staff Director

              Jonathan W. Coppess, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

              Michael J. Seyfert, Minority Staff Director

                Anne C. Hazlett, Minority Chief Counsel

                                  (ii)



                          C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

The State of Livestock in America................................     1

                              ----------                              

                         Tuesday, June 28, 2011
                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, 
  Chairwoman, Committee on Agriculture, Nutrition and Forestry...     1
Roberts, Hon. Pat, U.S. Senator from the State of Kansas.........     2

                                Panel I

Almanza, Alfred V., Administrator, Food Safety and Inspection 
  Service, U.S. Department of Agriculture, Washington, DC........     7
Glauber, Joe, Ph.D., Chief Economist, U.S. Department of 
  Agriculture, Washington, DC....................................     4
Parham, Greg, Ph.D., Administrator, Animal and Plant Health 
  Inspection Service, U.S. Department of Agriculture, Washington, 
  DC.............................................................     6
White, Dave, Chief, Natural Resources Conservation Service, U.S. 
  Department of Agriculture, Washington, DC......................     9

                                Panel II

Harper, Frank, President-Elect, Kansas Livestock Association, 
  Sedgwick, KS...................................................    35
Hunt, Steven D., CEO, U.S. Premium Beef, LLC, Kansas City, MO....    33
Jones, Dennis O., Pork Producer, South Dakota Farmers Union, 
  Bath, SD.......................................................    32
McPherson, Hans, Rancher and Member, Montana Farm Bureau, 
  Stevensville, MT...............................................    38
Sietsema, Rick, Farmer, Sietsema Farms, Allendale, MI............    30
Welch, Michael, President and CEO, Harrison Poultry, Inc., 
  Bethlehem, GA..................................................    36
                              ----------                              

                                APPENDIX

Prepared Statements:
    Boozeman, Hon. John..........................................    50
    Chambliss, Hon. Saxby........................................    52
    Harper, Frank................................................    54
    Hunt, Steven D...............................................    63
    Jones, Dennis O..............................................    70
    Mcpherson, Hans..............................................    85
    Sietsema, Rick...............................................    90
    Welch, Michael...............................................   101
Testimony was Submitted Collectively from USDA for the Following 
  Witnessess:
    Alfred V. Almanza, Joe Glauber, Joe, Greg Parham, Dave White.   120
Question and Answer:
Hon. Debbie Stabenow:
    Written questions to Alfred V. Almanza.......................   136
    Written questions to Joe Glauber.............................   141
    Written questions to Frank Harper:...........................   157
    Written questions to Steven D. Hunt:.........................   160
    Written questions to Dennis O. Jones:........................   162
    Written questions to Hans Mcpherson:.........................   166
    Written questions to Greg Parham.............................   168
    Written questions to Rick Sietsema:..........................   176
    Written questions to Michael Welch:..........................   181
    Written questions to David White.............................   184
Baucus, Hon. Max:
    Written questions to Alfred V. Almanza.......................   138
    Written questions to Greg Parham.............................   172
Chambliss, Hon. Saxby:
    Written questions to Alfred V. Almanza.......................   139
    Written questions to Joe Glauber.............................   151
Conrad, Hon. Kent:
    Written questions to David White.............................   190
Gillibrand, Hon. Kirsten:
    Written questions to Alfred V. Almanza.......................   138
Harkin, Hon. Tom:
    Written questions to Joe Glauber.............................   150
Lugar, Hon. Richard G.:
    Written questions to Joe Glauber.............................   153
    Written questions to Greg Parham.............................   174
Almanza, Alfred V.:
    Written response to questions from Hon. Debbie Stabenow......   136
    Written response to questions from Hon. Max Baucus...........   138
    Written response to questions from Hon. Kirsten Gillibrand...   138
    Written response to questions from Hon. Saxby Chambliss......   139
Glauber, Joe:
    Written response to questions from Hon. Debbie Stabenow......   141
    Written response to questions from Hon. Tom Harkin...........   150
    Written response to questions from Hon. Saxby Chambliss......   151
    Written response to questions from Hon. Richard G. Lugar.....   153
Harper, Frank:
    Written response to questions from Hon. Debbie Stabenow......   157
Hunt, Steven D.:
    Written response to questions from Hon. Debbie Stabenow......   160
Jones, Dennis O.:
    Written response to questions from Hon. Debbie Stabenow......   162
Mcpherson, Hans:
    Written response to questions from Hon. Debbie Stabenow......   166
Parham, Greg:
    Written response to questions from Hon. Debbie Stabenow......   168
    Written response to questions from Hon. Max Baucus...........   172
    Written response to questions from Hon. Richard G. Lugar.....   174
Sietsema, Rick:
    Written response to questions from Hon. Debbie Stabenow......   176
Welch, Michael:
    Written response to questions from Hon. Debbie Stabenow......   181
White, Dave:
    Written response to questions from Hon. Debbie Stabenow......   184
    Written response to questions from Hon. Kent Conrad..........   190
USDA:
    Written response to questions from Hon. Debbie Stabenow......   193


                   THE STATE OF LIVESTOCK IN AMERICA

                              ----------                              


                         Tuesday, June 28, 2011

                              United States Senate,
          Committee on Agriculture, Nutrition and Forestry,
                                                     Washington, DC
    The Committee met, pursuant to notice, at 2:48 p.m., in 
Room 106, Dirksen Senate Office Building, Hon. Debbie Stabenow, 
Chairwoman of the Committee, presiding.
    Present: Senators Stabenow, Baucus, Klobuchar, Roberts, 
Cochran, Johanns, Boozman, Grassley and Thune.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
 OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION 
                          AND FORESTRY

    Chairwoman Stabenow. Good afternoon and welcome to the
    Committee on Agriculture, Nutrition and Forestry. We very 
much appreciate all of our witnesses. We have two excellent 
panels today, and we very much look forward to your testimony, 
and we thank you for being here.
    Today, we will hear about some of the exciting and 
innovative things happening in the livestock industry, many of 
which I have seen for myself back in Michigan. The livestock 
industry represents a $250 billion industry which supports 
nearly 2 million jobs nationwide and 40,000 jobs in my State of 
Michigan. I continue to talk about the Farm Bill as a jobs bill 
because that is exactly what it is, and today we are talking 
about a very important part of our industry.
    We have two great panels of witnesses today to talk about 
the state of the livestock industry. On the first panel, we 
have senior officials from the Department of Agriculture who 
will cover the overall economic outlook for the industry, 
animal health and food safety issues, as well as conservation 
efforts. On our second panel, we will hear from producers and a 
packer about a number of issues including export opportunities, 
the proposed GIPSA rule, ethanol and the permanent disaster 
programs for livestock that we have added in the 2008 Farm 
Bill.
    One of those producers we will hear from is Rick Sietsema. 
He has an excellent story to tell. I am very proud to have him 
here, representing the State of Michigan.
    And in fact, producers all across Michigan are taking an 
innovative and responsible approach, thanks in part to a 
voluntary certification process we have in Michigan called the 
Michigan Agricultural Environmental Assurance Program, or 
MAEAP, which helps livestock producers adopt practices that 
manage animal waste and nutrient runoff. A central piece of 
this program is assessing Farm Bill conservation programs like 
the Environmental Quality Incentives Program, EQIP, and the 
Conservation Stewardship Program.
    And because of the work we have done in Michigan, MAEAP and 
conservation programs are helping farmers find regulatory 
certain for the larger livestock operations. I think MAEAP is a 
great illustration of how we can work together with producers 
to find creative solutions to challenges that they are facing.
    Throughout the hearing today we will hear more examples of 
how we can work with producers to find effective solutions to 
the challenges we face. For example, the Department of 
Agriculture has worked hard to develop a great new working 
relationship with the industry to ensure a safe supply of food 
for consumers. The Department has also worked closely with the 
industry to develop a plan to trace disease outbreaks and 
provide assurance to the countries who buy our meat products.
    And I know there are many people who have concerns with the 
proposed GIPSA rule. I am looking forward to hearing from our 
witnesses about that today. I appreciate and understand the 
complexity of this issue, especially as it relates to different 
geographical regions, market structures and species. That said, 
I will be watching and working closely with the USDA, with my 
friend and Ranking Member, Senator Roberts, and will continue 
to work with stakeholders to find a workable solution that does 
not hinder economic development and innovation.
    So again, welcome to the hearing. I would now like to turn 
to my friend and Ranking Member, Senator Roberts, for his 
opening remarks.

 STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF 
                             KANSAS

    Senator Roberts. Madam Chairwoman, I appreciate your 
calling this hearing today which focuses on the center of 
America's dinner plate and the 860,000 folks that make up this 
nation's 100-plus billion livestock industry.
    The livestock sector is a driver of the agriculture 
economy, also a major reason agriculture has had a substantial 
success in the export market. Unfortunately, despite this 
unmatched success, the livestock industry has been under 
regulatory attack--those are harsh words; I intend them to be--
from both the EPA and the Department of Agriculture. This is 
especially true of the USDA as it applies to the proposed GIPSA 
rule.
    During the last Farm Bill, we had a very strong, spirited 
debate on many of the exact proposals that are included in the 
proposed rule, and we rejected them all during that Farm Bill 
debate, in some cases by a very substantial vote margin.
    Let me repeat that: The exact proposals that are included 
in the proposed rule, and we rejected them all, in some cases 
by a substantial vote margin. So much for congressional intent.
    Despite the strong, clear bipartisan congressional 
statements and intent on this topic, the Administration went 
forward in direct opposition to these congressional actions.
    I do not want to call into question anyone's motives. Let 
me make that clear. But I must say that the actions of the USDA 
on this rule and the past activities of GIPSA Administrator J. 
Dudley Butler as a lawyer in the private sector call into 
question the Department's impartiality on this issue.
    Frankly, Secretary Vilsack was not here for the last Farm 
Bill debate. He did not know all of the history behind the 
congressional intent on this topic, and I do not think he got 
the full story from Mr. Butler or others who developed this 
rule.
    Mr. Butler made a career out of suing many in the livestock 
and processing sectors. To be perfectly blunt, the rule as 
proposed looked like a trial lawyer's full employment act. 
Better yet, I will read a quote from the Administrator, 
Administrator Butler, regarding the core of the material in the 
rule. His quote: ``That is a lawyer's dream, a plaintiff 
lawyer's dream.'' He was a plaintiff lawyer.
    I understand that part of government service is that folks 
with diverse backgrounds and experience will fill these 
political positions, and that is usually a good thing. We need 
people with real-world experience, helping to run our 
government. The problem is that when those serving seem to have 
trouble checking their past agendas at the door.
    In this instance, since we are talking about livestock, it 
seems like the fox is guarding the henhouse and we are missing 
a few hens. As a result, we are looking at a proposed rule that 
is undoubtedly major in its economic impact and which threatens 
to undo years of livestock marketing arrangements that have 
benefitted both livestock producers and consumers.
    At a time when many talk about how agriculture is going to 
help lead the rebound for our economic recovery, it makes no 
sense to me why we would try to hamstring this industry and 
take away marketing tools that will have far-reaching 
implications in both the domestic and international 
marketplace.
    I am disappointed that Mr. Butler is not here today. I do 
know, however, that the USDA Chief Economist, Dr. Joe Glauber, 
is a straight shooter. He is here, and he will give us honest 
answers to our questions.
    I think that probably Secretary Vilsack, my suggestion to 
him would be to put Mr. Butler in the witness protection 
program, under the circumstances.
    I look forward to hearing from Dr. Glauber along with many 
of our witnesses about the very real-world impact of this 
proposed rule.
    I thank the Chairwoman for holding this hearing.
    Chairwoman Stabenow. Thank you very much, Senator Roberts.
    And again, we welcome our first panel. And we realize that 
we have your written testimony. It has been submitted for the 
record. We will ask you to keep your remarks to five minutes. 
Also, in the interest of time today, to make sure we have ample 
opportunity for our second panel, I will ask colleagues to 
stick to our five-minute rule as will I attempt to do my best 
to do that as well this afternoon.
    So I am pleased to introduce our panelists. First, we have 
Dr. Joe Glauber. Dr. Glauber is the Chief Economist at the 
USDA. Dr. Glauber served as Deputy Chief Economist at USDA from 
1992 to 2007. In 2007, he was named the Special Doha 
Agricultural Envoy and continues to serve as Chief Agricultural 
Negotiator in the Doha talks.
    Second, we have Dr. Greg Parham, and we welcome you. Dr. 
Parham is the Administrator for USDA's Animal and Plant Health 
Inspection Service. Dr. Parham began his career with APHIS in 
2006 as the agency's Chief Information Officer and since then 
has held appointments as Deputy Administrator for Marketing and 
Regulatory Programs and Associate Administrator until becoming 
Administrator of APHIS in April of this year.
    Next, we have Mr. Al Almanza, who is the Administrator for 
the Food Safety and Inspection Service. Mr. Almanza's career 
began in 1978 as a food inspector in a small slaughter plant in 
Dalhart, Texas. Since then, he has served through the agency as 
Deputy District Manager, as a Labor-Management Relations 
Specialist and Processing Inspector. We welcome you as well.
    And Chief White is with us--Chief Dave White, Chief of 
USDA's Natural Resources Conservation Service. Chief White 
began his career with the Natural Resources Conservation 
Service over 32 years ago, was named Chief in March of 2009. 
Chief White has been active in the Farm Bill process, having 
worked both the 2002 and 2008 Farm Bill, both time as detailees 
with our Committee. And so, it is good to have you back.
    We thank all of you for joining us, and we will ask Dr. 
Glauber to proceed.

STATEMENT OF DR. JOE GLAUBER, CHIEF ECONOMIST, U.S. DEPARTMENT 
                         OF AGRICULTURE

    Mr. Glauber. Thanks very much, Chairwoman Stabenow, Ranking 
Member Roberts and other members of the Committee. Thanks for 
the invitation to discuss current issues and developments in 
the livestock industry.
    Let me begin with my presentation, at least to give you a 
brief overview of the livestock economy and what has been going 
on over the last six months and looking forward.
    As we enter the second half of 2011, livestock prices are 
generally higher, supported by strong U.S. agricultural exports 
and very modest increases in production. However, livestock 
margins remain under pressure as weather events and strong 
demand have pushed prices for feed and other inputs to record 
levels. Economic growth, especially in less developed 
countries, and the reduced value of the dollar continue to 
support global demand and U.S. prices for livestock and dairy 
products.
    Turning to the export picture, USDA's forecast for U.S. 
agricultural exports for fiscal 2011, as you may know, is a 
record high of a $137 billion, up from $108.7 billion last year 
and the previous record almost $115 billion in fiscal 2008.
    U.S. exports of livestock, poultry and dairy products are 
forecast to reach a record $26.5 billion in fiscal 2011, up $5 
billion from the previous year.
    U.S. beef exports for 2011 are forecast at 2.59 billion 
pounds. I note this is the first time that our exports for beef 
have exceeded the level, pre-BSE levels. So after a long time, 
we finally climbed back so that at least our exports for 2011 
are forecast above the pre-BSE levels. We are expecting a 
slight decline for 2012 although that still, I think, reflects 
the fact we are anticipating stronger national demand, but 
total beef supplies will likely be about 4 percent lower.
    U.S. pork exports are forecast to increase to 4.9 billion 
pounds in 2011. That is an increase of 15 percent from 2010. 
U.S. exports to South Korea, up 195 percent during the first 
quarter, are expected to abate later this year as domestic 
production begins to rebound from recent foot and mouth disease 
outbreaks there. U.S. pork exports in 2012 are expected to 
decline slightly to 4.8 billion pounds as exports to South 
Korea decline, as pork production recovers in that country.
    For broilers, broiler exports are forecast to decline from 
6.77 billion pounds in 2010 to 6.48 billion pounds due 
primarily to lower exports from Russia and China. Broiler 
exports in 2012 are expected to total 6.7 billion, again up 3.4 
percent from the 2011 forecast.
    One of the bigger issues facing livestock producers has 
been the higher feed costs. For the 2011-2012 marketing year, 
global demand is forecast to exceed global production, causing 
global stocks of grains and oil seeds as a percent of use to 
fall and crop prices to rise.
    As many of you know, on Thursday, NASS will release its 
acreage report. This has been much anticipated by the market 
because of the interest in how planting delays and flooding 
have affected corn, wheat and soybean plantings.
    Our current estimates for total corn supplies are down 230 
million bushels from last year. Lower beginning stocks more 
than offset the projected increase in corn production. All this 
contributes to lower corn ending stocks for 2011-2012, 
projected at 695 million bushels, or 35 million bushels lower 
than beginning stocks, and that has pushed the farm price for 
corn to a record $6 to $7 per bushel, up from this year's 
current record of $5.30.
    And I might add the prices for other feed stuffs are 
projected to remain high. Soybean prices, for example, we are 
now forecasting those at $13 to $14 per bushel for 2011-2012 
compared to this year's record of $11.40. And that means 
soybean yield prices projected at $375 to $405 per ton, again 
up from 2010 levels.
    And lastly wheat prices, and we are seeing some feeding of 
wheat now for livestock because of its competitiveness with 
corn. But it too, of course, is looking at record prices. We 
are forecasting those at $7 to about $8.40.
    I will close here, but I think the takeaway from this is 
that feed prices have kept margins quite tight. And this has in 
fact meant for livestock, where we would normally see with the 
high prices that we have seen in beef, pork and poultry, where 
we might expect more expansion, we just have not seen the 
expansion, and that is largely because of the pressures the 
producers have been under, because of these tight margins. And 
given the tightness in the markets and these low prices, or 
these low stock levels, I think the tightness will continue for 
some time.
    And with that, let me conclude. Thanks.
    [The prepared statement of the USDA can be found on page 
120 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Dr. Parham, welcome.

 STATEMENT OF DR. GREG PARHAM, ADMINISTRATOR, ANIMAL AND PLANT 
   HEALTH INSPECTION SERVICE, U.S. DEPARTMENT OF AGRICULTURE

    Dr. Parham. Thank you, Madam Chairwoman and members of the 
Committee.
    My name is Dr. Gregory Parham, and I was recently appointed 
the Administrator to USDA's Animal and Plant Health Inspection 
Service. Although I am new to this role, I am not new to this 
agency or to USDA. As you heard, I have been with APHIS since 
2006 and with USDA since 1982.
    My father, a veterinarian like me, spent his entire career 
with APHIS and its predecessor agencies. From him, I learned 
the value of public service and especially the importance of 
safeguarding agriculture. It is with that spirit that I am so 
proud to be here before you today.
    I am also joined today by Dr. John Clifford, the U.S. Chief 
Veterinary Officer and also the Deputy Administrator for 
Veterinary Services within our agency, and he too shares a 
strong commitment to agriculture and APHIS's critical mission 
of safeguarding animal health.
    While much of USDA's focus is on preventing disease, we 
must also be prepared should a foreign animal disease be 
detected in our country. We must be ready to minimize the 
potentially devastating effects on livestock and livelihoods of 
producers. Key to those efforts is an effective animal disease 
traceability system. We want to be able to identify sick or 
potentially exposed animals, see where they have been and 
identify other animals with which they have been in contact. We 
could then isolate and treat effectively affected animals, 
securing animal health and helping ensure that markets for 
healthy animals stay open domestically and around the world.
    We are also developing a proposed rule which will provide 
states and tribal nations with enough flexibility to use the 
methods that work best for their producers. What works best in 
Michigan might not be the best for Montana. The system we are 
designing recognizes that fact. If two states in the West, for 
example, want to recognize each other's brands, that is 
acceptable under our system.
    This flexible approach will help us hold down the costs of 
the overall system. We plan to provide those who choose to use 
them with low-cost ear tags which all States will recognize. 
These tags have been an effective part of our successful 
disease eradication programs over the years.
    Aside from flexibility, the other hallmark of our approach 
is transparency. We have made it a priority to listen to what 
producers all around the country have to say, incorporating 
their suggestions on what an effective animal disease 
traceability approach should look like. At every step of the 
way, we have and will continue to listen to producers and the 
public. We want to ensure that we have as much stakeholder 
support as possible because participation is central to an 
effective and successful system.
    Our commitment to listening to and responding to the needs 
of our producers has been key to another APHIS initiative--
improving our brucellosis and tuberculosis programs. Together 
with our producer and State partners, we have made great 
strides in reducing the incidents of both diseases, but in 
today's animal health landscape we can continue to strengthen 
these programs while effectively addressing challenges like the 
prevalence of disease in wildlife populations.
    So we have reached out to our partners for their ideas. We 
published concept papers on new directions for both programs 
and reviewed the many public comments we received. We followed 
up with State meetings, industry meetings, just to get their 
input on our proposal and what is needed.
    For tuberculosis, we have issued a Federal order in April 
2010 that provides greater options for dealing with TB-affected 
herds, and on brucellosis we issued an interim rule in December 
of last year that allows us to focus the program on high-risk 
areas. In both cases, we now have more flexibility to maintain 
a State's status when an infected herd is not depopulated. This 
saves producers time and money because they no longer have to 
comply with additional testing requirements because of 
downgraded State status, and as we move forward we will 
continue to review these programs with our partners and 
stakeholders.
    Madam Chairwoman, I again thank you for the opportunity to 
testify today, and I look forward to working with you and 
members of this Committee as we protect America's agriculture 
and natural resources. Thank you very much.
    Chairwoman Stabenow. Thank you very much.
    Mr. Almanza, welcome.

STATEMENT OF ALFRED V. ALMANZA, ADMINISTRATOR, FOOD SAFETY AND 
       INSPECTION SERVICE, U.S. DEPARTMENT OF AGRICULTURE

    Mr. Almanza. Thank you, Madam Chairwoman, Ranking Member 
Roberts and members of the Committee. I appreciate the 
invitation to appear before you today to discuss FSIS and the 
ways we are improving public health through food safety and 
encouraging businesses to produce the safest products possible.
    FSIS is the public health regulatory agency of the United 
States Department of Agriculture responsible for ensuring that 
our nation's domestic and imported commercial supply of meat, 
poultry and processed egg products is safe, secure, wholesome, 
accurately labeled and packaged. Our inspection program 
personnel are the backbone of FSIS's public health 
infrastructure, and domestic processing and slaughter 
establishments, laboratories and import houses across the 
country. In fiscal year 2010, we employed more than 9,800 
personnel, including more than 8,000 in-plant and other front-
line personnel protecting public health in approximately 6,200 
federally inspected establishments nationwide.
    As someone who began working on the slaughter line in a 
beef establishment more than 30 years ago, I know firsthand 
that our employees are our greatest asset and our greatest 
strength. We are united, one team with one purpose, to protect 
consumers from food-bourne illness.
    During fiscal year 2010, our inspection program personnel 
ensured public health requirements were met in establishments 
that slaughter and/or process 147 million head of livestock and 
9 billion poultry carcasses. FSIS inspection personnel also 
conducted 8 million food safety and food defense procedures to 
verify that the systems at all Federal establishments met food 
safety and wholesomeness requirements. In addition, during 
fiscal year 2010, inspection program personnel condemned more 
than 451 million pounds of poultry and more than 493,000 head 
of livestock during antemortem and postmortem inspection.
    Protecting public health and the consumer is our mission. 
As a regulatory agency, we live this mission every day and in 
every way, from our inspectors doing the fundamental work of 
the agency and inspecting the products on the line to policy 
staff working together to ensure that FSIS's policy is up to 
date and meeting the demands of the present food safety system.
    Even so, we understand the importance of working with 
industry to ensure that establishments produce safe products. 
Moreover, we make an extra effort through our outreach and 
guidance to help small and very small slaughter processing 
establishments to ensure that they comply with FSIS 
regulations. Establishments with 500 or fewer employees 
represent more than 90 percent of the FSIS regulated 
establishments.
    We understand the importance of working together and 
providing them with the information and tools they need in 
order to be successful. In fiscal year 2010, we launched our 
small plant help desk which responded to 2,277 inquiries during 
the fiscal year. FSIS also distributed 24,000 copies of our 
Proposed Hazard Analysis and Critical Control Point Validation 
Guidance and the FSIS General Food Defense Plan. We also 
developed 12 new podcasts on food safety issues for small and 
very small operators, and conducted exhibits at 23 industry 
events to share outreach materials with small and very small 
operators. Through our efforts, we reached about 55,225 
industry operators in fiscal year 2010.
    In addition, we provide information and offer mobile 
slaughter facilities for small livestock and poultry producers 
in rural areas as well as provide the opportunity for State-
inspected meat and poultry establishments with 25 or fewer 
employees to join a new interstate shipment program.
    As previously mentioned, I began working at FSIS on the 
slaughter line at a beef facility. This experience in the field 
has given me the insight and understanding of the importance of 
small and very small businesses to America's rural economies. 
Small and very small businesses are the foundation of our rural 
economies and are tangible by providing jobs, direct and 
indirect, to those in rural America that may otherwise not have 
such opportunities.
    Ensuring that our employees have the proper tools and 
FSIS's updated policies to prevent food-bourne illness has been 
a priority for me since being named Administrator. It is not 
our intention to impose rules that hinder small and very small 
businesses from realizing their potential. Rather, we work hard 
to provide the necessary tools and policies to ensure that 
businesses produce the safest products possible. FSIS can 
protect consumers without placing unnecessary burdens on 
businesses.
    Madam Chairwoman, Ranking Member Roberts and members of 
this Committee, thank you for your help in ensuring the safety 
of meat, poultry and processed egg products and for the 
opportunity to testify before you today.
    Chairwoman Stabenow. Thank you very much.
    Chief White, welcome.

STATEMENT OF DAVE WHITE, CHIEF, NATURAL RESOURCES CONSERVATION 
            SERVICE, U.S. DEPARTMENT OF AGRICULTURE

    Mr. White. Greetings. It is grand to be here. It is much 
more comfortable sitting back there though.
    I would like to take just a few minutes to talk to you 
about three areas where conservation is really making a 
critical difference in the livestock sector.
    First is in programs. You all, through the 2002 Farm Bill 
and the 2008 Farm Bill, have really given us the tools to 
assist livestock producers. The big boy on the block is the 
Environmental Quality Incentives Program, which you mentioned. 
If you look at just the last I think it is since fiscal year 
2005, 150,000 contracts with livestock producers from 2005 to 
2010, huge amounts of interest out there. It is the workhorse. 
It is the bricks and mortar program.
    But it has also been joined by another program which was 
created in the 2008 Farm Bill--the Conservation Stewardship 
Program. As you know, we can enroll 12.7 million acres a year 
in that. We are in our third year of enrollment. It is going on 
right now. As of yesterday, we had about 34 million acres in 
that program. About 17 million, about half, was livestock 
related. It is grass and pastures, mostly rangeland. So it has 
gone over huge with the ranching community.
    I will just mention two other programs briefly. They are 
long-term easement programs--the Grassland Reserve and the Farm 
and Ranchland Protection, for those producers who want to hand 
it down to their kids. I was the State director in Montana. I 
thought man, these guys are not going to like easement 
programs, but I was stunned because they want--I am talking 
ranchers who could have sold out and become instant 
multimillionaires, but they really wanted to leave it to their 
kids. And this provides a mechanism for them to do this, as 
well as programs like the Wetland Reserve.
    And I would be remiss and be kicked out of the club if I 
did not mention good ole conservation operations technical 
assistance, these two books right here. This is the technical 
plans for a large confined animal feeding operation that meets 
all of the requirements for the State of Montana's Department 
of Environmental Quality.
    This right here is a simple little solar panel for a 
livestock watering facility that precludes the need to string 
wires five miles back. This is a 5.3 mile stockwater system in 
Utah. This is 2,900 dairy head. This is the plans where you 
were going to line a pond, put another separator in there. This 
meets all the Utah Department of Environmental Quality 
requirements.
    This is the kind of stuff that we do every day with 
producers.
    The second item is technology. We are doing some cool 
things. In EQIP, we have this Conservation Innovation Grant. My 
predecessors have used it. We are using it now, doing stuff 
with Washington State University. Some of the most incredible 
feed management stuff is coming out of there.
    There is a company called Coaltec. They are working with a 
producer in West Virginia, a poultry producer, gasifying the 
chicken litter. He is burning it to heat his houses, and his 
byproduct is biochar. He is selling it, and he is making more 
money selling biochar than he is off his chickens now. In fact, 
this guy was featured in USA Today a few months ago.
    Wisconsin Department of Ag has done some incredible work on 
advancing us in odor control, particularly around dairy 
operations.
    And then there is Great Lakes Energy Company that has-- we 
are working with them on four constructed wetlands. They are 
taking all the affluent off of a dairy, and by the time it is 
coming out it is dang near drinkable. And they are using some 
kind of algae to really help clean it up.
    So the technology is coming along, especially as you look 
at stuff like precision ag. It is just amazing.
    Third area, risk reduction. And Mr. Roberts, I am just 
going to tell you right now; NRCS is in the Department of 
Agriculture, not EPA, not the Corps, not Fish and Wildlife 
Service, and you all have given us the requirement.
    In the Environmental Quality Incentives Program, one of our 
missions is to help producers beat or avoid regulation. I kind 
of look on NRCS as being kind of the shield arm between 
producers and the regulating community. Now whether it is the 
Clean Water Act, the Clean Air Act, the Endangered Species Act 
or even new areas, Madam Chair, like the Bovine Tuberculosis 
Project in Michigan, we are trying to keep farmers on the land.
    The reason this is important: Nine billion people coming in 
the next four decades are going to require huge increases in 
production, and it is up to us to get up early, stay up late 
and work like a dog in between to keep our producers on the 
land because we are going to need them.
    Thank you very much, ma'am.
    Chairwoman Stabenow. Well, thank you very much to each of 
you. We very much appreciate your service, and we appreciate 
your being here.
    Let me just start off, Chief White, by thanking you. You 
mentioned the bovine TB situation in Michigan, which has gone 
way too long and is serious, but I want to thank you for your 
wonderful leadership in working with us on creative ways to 
support our producers.
    I was on a farm not long ago, near Alpena, Michigan and 
watching what they have been able to do, partnering with USDA 
and moving their feed operations and managing their animal 
waste, and so on, in a different way that is going to allow 
them to protect the herd and be able to keep the farm. And so, 
I want to thank you very much for that.
    And recently, because of the increased efforts in Michigan, 
we have received 73 EQIP applications for the TB initiative, as 
you know. Sixty percent of those are first-time NRCS customers, 
folks that are involved in conservation for the first time. And 
I was really pleased to see that 15 of the producers are new 
and beginning farmers. So I thought that was also something 
that was very, very positive.
    So thank you very much for that.
    And Dr. Parham as well, thank you for your focus on 
prevention, when you mention prevention, as well as eradication 
because we have got a lot of work to do in this area.
    So I want to thank both of you.
    Let me talk about more about conservation because as you 
mentioned, Chief White, back in the 2002 Farm Bill, with 
Senator Harkin as Chair and Senator Lugar as Ranking Member 
working closely together, Congress made really an unprecedented 
investment in conservation at the time. One of these was EQIP, 
to help producers comply with increased regulations on the 
farms. At the time, livestock producers were facing increased 
Clean Water Act total maximum daily load requirements, CAFO 
permitting requirements and Clean Water Act requirements, and 
we listened to producers and created a 60 percent set-aside for 
the livestock industry.
    I wonder if you might speak a little bit more in terms of 
how that is going. And do you see as you talk to livestock 
producers, as you know, as I know you do every day, are their 
conservation needs changing? Is it more of the same? Are 
compliance-related issues still their primary concern?
    What should we be looking at in terms of the next Farm 
Bill?
    Mr. White. Some things have not changed since 2002. There 
is still a huge concern on the part of our farmers and ranchers 
on regulatory issues.
    You mentioned the Clean Water Act. Since the 2002 bill, we 
have written something like 50,000 comprehensive nutrient 
management plans. About 81 percent of them are implemented. In 
2008, EPA bought off on accepting these comprehensive nutrient 
plans as meeting the requirements for their non-point discharge 
system, with a couple modifications. So there has been huge 
work there.
    Of course, Chesapeake Bay, that is really a canary in the 
coal mine that we are looking at on regulation.
    I think the emerging issue, particularly out West, is the 
Endangered Species Act. Some of you up here remember the 
spotted owl. That was parts of Washington and Oregon, two 
States. The sage grouse is a candidate species. It has the same 
potential as the spotted owl, but it covers 10 times the 
geographic area, and it could disrupt ranching throughout the 
West because of the checkerboarded ownership pattern, the 
Federal-private.
    So we are putting tremendous resources into trying to keep 
that bird from being listed and working. It is a partnership 
effort with the governors out there. I just got a really great 
memo from the Governor of Wyoming. He loves it. The ranchers 
love it. The conservation groups love it. We have good support 
from Fish and Wildlife Service.
    So I think the concern of regulation is still there, but 
you all have given us such a gift through these programs that 
we are able to--I just wonder if we would have had these same 
programs in Bush I, before the spotted owl got listed, could 
things have been different.
    And our commitment you is try and use these programs, 
strategically array those forces, to make sure that our owners 
and operators can continue to produce the food and fiber we 
need.
    Chairwoman Stabenow. Great. Well, thank you very much.
    I am looking here at my time. Thank you very much.
    Mr. White. Sorry.
    Chairwoman Stabenow. Senator Roberts.
    Senator Roberts. Dr. Glauber, I have eight questions, five 
minutes. You ready?
    Mr. Glauber. Let's go.
    Senator Roberts. I was especially pleased to hear the 
Secretary has put you in charge of the economic analysis of the 
proposed GIPSA rule. The entire livestock industry was 
especially glad to hear that.
    Where is the Office of Chief Economist in terms of an in-
depth cost-benefit analysis of this proposed rule?
    Have you identified economic benefit to producers, the 
livestock industry or to consumers?
    Mr. Glauber. Thanks very much, Senator. Yes, as you are 
aware, the Secretary did put my office of doing cost-benefit 
analysis for this rule.
    I might add it is a difficult analysis. It is not like the 
typical sort of analysis that my office would do, looking at, 
say, an increase of a loan rate or something like that. The 
direct costs of any rule, they are typically pretty easy to 
calculate. I mean all things considered-- things like putting 
on regulations to say we will gather more data or more 
supporting evidence. Those things, one can make some 
calculations on.
    I think much more difficult and particularly in the case of 
this rule are the effects of the regulation itself on behavior 
by packers and integrators, et cetera. That is how they might--
the regulations could--potentially affect the way they do 
business. A lot of----
    Senator Roberts. Let me interrupt you on that point----
    Mr. Glauber. Yes, please.
    Senator Roberts. --because I have a question that pertains 
to that.
    The GIPSA Administrator, who is not here, argues that the 
rule will not prevent customized marketing agreements because 
the rule does not call for an across-the-board ban, but what he 
fails to acknowledge is that the legal risks associated with 
this rule's competitive injury provisions will, without 
question, have a chilling effect on the use of marketing 
agreements. Will your cost-benefit analysis study the effect on 
the industry, the chilling effect of the use of marketing 
arrangements due to expected litigation?
    And I have another one that follows up on that if the 
answer is yes.
    Mr. Glauber. Okay. The answer will be yes, we are reviewing 
the cost, a lot of the comments that were received. This was a 
very big issue that figured in a lot of the comments that were 
raised by reviewers. So we are looking at that.
    Senator Roberts. The Administrator said that the new rule 
will be a plaintiff lawyer's dream. That is his quote. If the 
rule really only expands opportunities for trial lawyers to 
sue, why in the heck are we doing this?
    You do not have to answer that. But will your economic 
analysis attempt to calculate the cost of significant 
additional litigation on the industry?
    Mr. Glauber. Again, Senator, I think the one thing I can 
assure you is that our office is spending a lot of time with 
the comments that have been raised. We have been looking at lot 
at the Informa study, the study, the RTI study that was done 
two or three years ago. We also are looking at a lot of the 
comments by those who favor this rule.
    Senator Roberts. Those will be counted. I am talking about 
the private sector studies--you just mentioned Informa--that 
say this proposed rule is going to be a disaster. Are these 
studies accurate? What role do they play in your analysis?
    And I am sorry I interrupted you again.
    Mr. Glauber. No. We are looking at how these--we are 
looking at these analyses very carefully. I think a lot of it 
does hinge on what the perceived risk of litigation is and if 
that in fact affects behavior. We know from the RTI study the 
large benefits that come from alternative marketing 
arrangements, et cetera. And I think that is what my office now 
is, in a very real sense, trying to gauge and looking at.
    Senator Roberts. Well, let me give you an example. Are you 
aware the State of Missouri, the Show Me State, has enacted a 
law similar to the proposed GIPSA rule. I also understand the 
governor called a special session to repeal that law. Will you 
study the Missouri precedent in your cost-benefit analysis?
    Mr. Glauber. I have not looked at the Missouri law in 
particular. I am aware of it. I should not say that it has not 
figured in on the comments. We are aware of it, and I have 
looked at articles that have discussed that law, yes.
    Senator Roberts. But you will.
    Will your economic analysis be published for public 
comment?
    Mr. Glauber. I believe all I have been asked by the 
Secretary is to perform the economic analysis and to present it 
with the rule. So I will do that.
    Senator Roberts. We can talk to the Secretary about that.
    Has the Department finally changed its mind and declared 
this rule economically significant in terms of the 
Administrative Procedures Act?
    Mr. Glauber. I can yes to that. I think there is no doubt, 
particularly with the comments that have been raised, would 
suggest that the rule has a larger impact than $100 million. 
Thank you.
    Senator Roberts. Reports in the media have leaked that the 
United States has not been successful in defending Canada's and 
Mexico's WTO case against our mandatory country of origin 
labeling law. If this is indeed accurate, what does this mean 
for the section of the Farm Bill as we prepare for the upcoming 
Farm Bill discussion?
    Mr. Glauber. I would----
    Chairwoman Stabenow. I would just ask you to be brief.
    Mr. Glauber. Okay. I would love to comment on that. We have 
seen a preliminary analysis of that, but the actual decision 
comes out, I believe, tomorrow. And I would be greatly 
chastised by USTR and others if I were to discuss the contents.
    Senator Roberts. Well, you can respond to that in writing.
    Mr. Glauber. Okay. Thank you.
    Senator Roberts. Okay. Thank you.
    Chairwoman Stabenow. Thank you very much.
    Senator Cochran.
    Senator Cochran. Madam Chairman, thank you very much for 
convening the hearing. It comes at a time when producers in my 
State are very concerned about marketing prospects and the 
failure of the Administration to make early decisions about 
what they are going to do to respond to a possible breakdown in 
marketing.
    I am told that in 2010 alone, in my State, poultry totaled 
$22.47 billion in the value of our production, more than double 
the value of the second largest agriculture industry, but that 
economic prospects in our State are terribly disturbing. Feed 
costs have reached record highs. Exports to countries like 
Russia and China have seen huge declines in purchasing. Poultry 
growers face a great deal of challenge in just maintaining 
their operations and continuing to try to make a living in this 
important industry. And that is just one example though of why 
it is necessary for Congress to take action.
    We are hoping that we can cooperate with the 
Administration. We have to figure out a way to expand into new 
markets if the old markets are drying up and to stimulate 
demand for U.S. livestock products. This may be a broader 
problem than many of us had realized. So the convening of this 
hearing is really important, and I hope something specific can 
come from the Administration in terms of a commitment to join 
with the producers and find a way to restore profitability and 
predictability to the production and marketing of U.S. 
agriculture products.
    I guess that is the end of my statement. I did not want to 
delay the panelists, but we wanted to hear what you are 
proposing, what you are recommending. Is there a recommendation 
or an initiative from the Administration to deal with the 
serious challenge that our producers are facing?
    Mr. Glauber. Well, let me just say a couple of things. One, 
you are absolutely right about the poultry industry. It has 
been suffering from very weak margins because of the high feed 
costs. And I think this is true across species, but I think in 
particular for poultry recently.
    And some of this, poultry also has suffered from a loss of 
some critical export markets. Russia has been one, as you 
mentioned; China, because of the countervailing and antidumping 
case against China. Those two have fallen.
    And to give you some idea, and I know you know these 
numbers, but exports now over this last decade have been 
between 15 and 20 percent of production--so very, very 
important for the industry. I think opening up those markets 
and improving there is a very critical activity.
    I think we have been working hard. I know Jim Miller, when 
he was Under Secretary, spent a lot of frequent flyer miles 
going to Russia to try to open that, get chicken flowing back 
to Russia. But I think, unfortunately, the economics of high 
feed costs, I think, are going to be around for a little while.
    What we really need is for some stock rebuilding through 
higher production. I think one good news is I think a lot of 
the big increase in demand for corn use for ethanol will slow 
now as we start approaching the 15 billion gallon mark under 
the RFS. So I think that we should, with productivity gains, 
see some increases there.
    But I cannot promise anything on the economic side, at 
least on the feed costs side, that could give you something to 
take home over the next few months for sure.
    Senator Cochran. One of the suggestions from livestock 
producers in my State is the need for a warranty program to be 
implemented, but they say that their efforts to communicate 
with and establish a dialogue with USDA has not been 
productive. There does not seem to be an interest. We have got 
to move away from herd destruction orders and rely more on some 
preventive measures, early detection procedures, and they are 
not getting any help from Washington.
    Dr. Parham. Senator Cochran, if I could respond to that, 
thank you for the question. And I am aware that Dr. Clifford's 
team is aware of this particular proposal, and it is my 
understanding that they have now had some contact, and there is 
an expectation of a meeting within the next several weeks. 
Okay?
    Please be assured that we are interested in any innovative 
ideas that will allow us to continue to manage the risk 
associated with these programs and looking at ways other than 
just depopulation every time we have an issue. So yes, we are 
aware of it, and we will be meeting with the company in the 
coming weeks.
    Senator Cochran. Is there any other witness who can tell us 
something encouraging?
    Mr. White. Do you want to hear about conservation?
    Chairwoman Stabenow. And I will ask you to be brief. Thank 
you.
    Mr. White. I do not know if it directly addresses this, but 
we are trying to work with agriculture in a way where we can 
get dual value. Like in your part of the world last year, when 
the oil spill was going on, we did that migratory bird habitat 
with rice producers, cotton farmers, where they agreed to flood 
their land. This was working land that produced rice and corn 
and cotton in the summer, and it produced environmental 
benefits for these animals in the winter. And if we can figure 
out a way to do that more in a working land program, I think it 
would be economically beneficial to agriculture.
    Senator Cochran. Well, I hope you will work with our staff 
and see if we can put something together that really provides 
some meaningful benefits and provides relief to farmers who 
really do need it.
    Thank you, Madam Chairman.
    Chairwoman Stabenow. Thank you very much.
    Senator Grassley.
    Senator Grassley. Thank you, Madam Chairman.
    I have three questions, one for each of three of you. I 
will start with Dr. Glauber.
    While there are certain provisions of the GIPSA rules that 
I support, there are other issues that cause me some concern. 
One of those areas is a restriction on livestock dealers, 
requiring them to only buy livestock for one packer. There is 
real concern that this could have a very negative impact on 
small packers who cannot afford to have their own buyer, and 
some packers may elect to not go to certain sale barns if it 
proves too costly to send a dealer only on their behalf rather 
than sharing a dealer.
    So, a question. I guess really two questions for you, but I 
am going to ask both of them at the same time. Has GIPSA 
considered what may be the unintended consequences to this part 
of the proposed rule?
    This part of the rule may actually decrease competition at 
some sale barns. Has GIPSA considered that, and what does GIPSA 
plan to do to respond to these concerns in the proposed rules?
    Mr. Glauber. Well, let me--certainly, with the first, in 
regards to the unintended consequences, I think this has been 
pointed out by many of the comments that were submitted to 
GIPSA. Certainly in my review of the comments, that comes up 
quite frequently. And you are absolutely right; that is one 
thing that is mentioned is the adverse effect potential on 
small firms.
    They are certainly aware of the rule as they are going 
through the rule and reviewing these comments. I know from my 
standpoint on the economic side that is something that we 
certainly are taking into account.
    Senator Grassley. Well, what about the decreased 
competition? Do you think there would be decreased competition 
maybe if this rule goes into effect where I know your motive is 
to increase competition?
    Mr. Glauber. Yes.
    Senator Grassley. And I applaud that motive.
    Mr. Glauber. That was what I was alluding to.
    Senator Grassley. Okay.
    Mr. Glauber. I think is the fact that a lot of the comments 
have brought that point to bear. That is that this could 
potentially decrease competition rather than increase 
competition.
    Senator Grassley. Mr. Almanza, last year there was a 
petition for rulemaking filed with the Department of 
Agriculture regarding the treatment of nonambulatory hogs at 
packing plants. Under current law, nonambulatory hogs are still 
slaughtered, but they are separated from the hogs that are able 
to walk. The petition filed with the USDA asks that 
nonambulatory hogs be euthanized. USDA has not responded to the 
petition.
    I am not aware of any data or study that show euthanized 
downed pigs and not allowing them, that meat, to enter the food 
chain will increase food safety. In fact, it is my 
understanding that most fatigued hogs are able to walk again 
after they are able to rest for short periods.
    And I suppose there are plenty of reasons that you can have 
downed hogs. But I remember when I worked at the Rath Packing 
Company back in the 1950s for 6 or 7 years they would be 
overheated from the hot weather coming in, and you know, they 
would be like down and out, but you let them rest for a while 
and get their breath back and their heat, temperature down, 
they would get up and be okay.
    So what is the status of USDA's position on this matter, 
and can you shed any light on what health concerns USDA would 
be addressing if it changes the current law and treatment of 
downed pigs at packing plants?
    Mr. Almanza. Yes, sir, and thank you for the question.
    We are still reviewing that proposal. But you are 
absolutely right; the concerns with swine are totally different 
than with downed beef animals. And so there are some different 
concerns that we are looking at, and we certainly will be 
addressing that in the near future.
    Senator Grassley. Do you have any science at this point 
that tells you that the meat may not be as safe as for a hog 
that is not downed?
    Mr. Almanza. No, sir, not that I am aware of.
    Senator Grassley. Okay. I would like to ask Dr. Parham. 
Market research suggests that overseas markets are more 
important than ever for American meat producers. U.S. producers 
need access to foreign markets, but we are hearing rumblings 
that the U.S.'s lack of a comprehensive BSE rule is being used 
by some countries as a barrier for U.S. beef.
    It is my understanding that USDA has indicated it is 
working on a comprehensive rule. So Dr. Parham, would you agree 
that the U.S. needs a comprehensive BSE rule, and if so, when 
could we expect it to be issued?
    Dr. Parham. Thank you, Senator Grassley, and yes, indeed we 
do believe that we do need a comprehensive rule. One of the 
things that we have done is actually combined two previous 
rules into one that would be comprehensive, that would also 
give us then compliance on the world markets, and we are 
working on that. It is in the process of clearance right now. 
While I do not want to give a specific date, certainly we have 
that as one of our top priorities, and we do expect to get a 
rule out certainly I would say within fiscal year 2012.
    Senator Grassley. Okay.
    Chairwoman Stabenow. Thank you very much.
    Senator Grassley. Thank you.
    Chairwoman Stabenow. Thank you.
    Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Madam Chairman. 
Thank you for holding this hearing.
    Livestock producers are really the original value-added 
agricultural product. They are key in my State. We are first in 
turkeys, third in pork and sixth in dairy production, and our 
livestock industry produces over $6 billion worth of products 
and also accounts for nearly 40 percent of the value of our 
State's agricultural production. The producers also support 
prices for our grain farmers and create thousands of jobs at 
processing plants like Hormel, Gold'n Plump and Jennie-O.
    My first question really is one of the things that I have 
seen some improvement with some of our plants and our producers 
is just because of some of the markets opening up. And we 
continue to see, however, frivolous barriers to trade, like 
when China decided to ban American pork products because of the 
H1N1 virus or because of numerous Russian trade barriers to our 
poultry products.
    Mr. Glauber, I guess I would ask this of you. How do you 
think we should proactively address this issue to better 
protect our producers from unfair and unscientific agriculture 
trade barriers?
    Mr. Glauber. Well, again, I would just stress how important 
these markets are for U.S. livestock and poultry producers 
because as opposed to, say, 30 years ago where we were 
exporting very little, now these are very big, big markets.
    And you are right; I think if we look at two of our larger 
markets--China and Russia--we have had some fairly major issues 
that we are trying to resolve, poultry being a big one in 
Russia.
    But as you mentioned, in China of course we have had 
problems with beef, getting any beef in there, because of-- we 
have had a number of discussions with USTR and USDA, have gone 
and met with counterparts in China.
    On the H1N1, thankfully, there, it looks that we are seeing 
some reopening of the market for pork, but for poultry we still 
have problems because of the antidumping and countervailing 
duties on U.S. chicken products, which were of course grossly--
we had a very strong market for poultry in China, but that 
dropped by 75 percent last year.
    I think what we need is again strong bilateral engagement. 
You know. To the degree that there may be improper imposition 
of duties, et cetera, then there is always recourse through the 
WTO. But again, at least for China. Of course, not for Russia. 
But in the meantime, I think bilateral work.
    And we are sending teams, preparing to send teams.
    Senator Klobuchar. Okay. Thank you. I have more questions.
    Mr. Glauber. Thanks.
    Senator Klobuchar. Conservation programs, permanent 
livestock disaster programs--the House bill passed by the Ryan 
budget would actually cut commodity programs by $30 billion and 
conservation programs by $18 billion over 10 years.
    Dr. Glauber, how would these drastic cuts affect the health 
of rural communities and the abilities of producers to rebound 
after natural disasters like those we just saw over the weekend 
in North Dakota, as well as what we have seen with tornados and 
historic droughts?
    Mr. Glauber. Well, I may let Chief White chime in here on 
the conservation programs.
    Certainly, just the magnitude of those programs in terms of 
dollars are income to producers and to rural communities. And 
to the extent that those may hit some regions 
disproportionately, we have not yet done an analysis of how 
those impacts might be felt, but they are considerable sums.
    Senator Klobuchar. Okay.
    Mr. White. Thanks, Senator. I hope I do not see what the 
underside of the bus looks like here in answering this.
    With less money, we are going to reach fewer farmers; there 
will be less conservation applied to the land. So our task will 
be to manage whatever you all allocate, and we will do that in 
the most effective way we can, to hopefully do a better job of 
spending the money so it does the best use for conservation.
    Senator Klobuchar. Okay. Thank you.
    Dr. Parham, on food safety, does the USDA believe that the 
program to track and minimize livestock diseases will improve 
our ability to keep our markets open and protect producers with 
healthy animals from financial ruin?
    Dr. Parham. Yes, Senator Klobuchar. I believe you are 
speaking about animal disease traceability and our ability then 
to be able to trace these animals, yes?
    Senator Klobuchar. Yes.
    Dr. Parham. What we have done with that particular program 
is really go back to the drawing board, so to speak, and build 
on the strengths of what was done before, to look at where some 
gaps were and to really hear from States, from partners, from 
tribal nations as to what would work best.
    As I stated in my testimony, we believe that transparency 
and flexibility are the keystones of our approach now, and our 
intent is indeed to make sure that we are able to protect 
healthy animals as well as to be able to trace those that are 
diseased because, again, we believe it is not only a matter of 
prevention, but in the event of an outbreak we want to be able 
to trace those animals as quickly as possible and to take the 
appropriate measures when we do.
    Senator Klobuchar. Thank you.
    Chairwoman Stabenow. Thank you.
    Senator Klobuchar. One last, just I can ask it later. Dr. 
White, I just want to give you a heads-up from some dairy 
producers in the southern part of my State that are concerned 
about some of the compliance measures. This is energy from 
livestock issues, the livestock waste, and they really want to 
get it going, but there are some red-tape issues with 
technologies. And I will simply put it in writing, and you can 
answer it.
    Thank you.
    Chairwoman Stabenow. And we will be happy--we are actually 
going to give everybody one second round on a question, and so 
you can wait and hold it then if you would like to do it as 
well.
    Senator Boozman.
    Senator Boozman. Thank you, Madam Chair. I have a statement 
that I would ask unanimous consent that we put in the record.
    Chairwoman Stabenow. Without objection.
    [The the following information can be found on page 50 in 
the appendix.]
    Senator Boozman. Thank you very much for having the 
hearing, and I appreciate all of you all being here and really 
do appreciate the hard work that you do on behalf of our 
Agriculture Committee.
    Dr. Glauber, you mentioned that there were a number of 
factors--the flooding. This has been such an unusual year. You 
have got flooding. You have got drought--that have affected the 
corn production.
    And you also mentioned the ethanol. How much does ethanol 
affect the price of corn?
    Mr. Glauber. Well, I think there is no question that it has 
an impact on corn prices. You know, I think if we were talking 
about corn exports increasing by 2 billion bushels, I do not 
think anybody would have--there would not be a debate. We would 
say, yes, it definitely has an impact.
    Certainly, if you look over the last few years where most 
of that demand has been met has been through increased supply. 
We have increased corn area planted, and we have increased--and 
yields have increased. Also, remember that from--there is also 
significant increase in distillers dried grains and the 
byproducts of ethanol that go into feed production.
    The impact on food prices, on the other hand, I think is 
much smaller, and that is for a number of reasons. The impact, 
of course, is carried through by higher feed costs which cause 
smaller production than would normally occur. And because of 
that, the farm value of retail food in general is pretty small, 
but we know that that is how it passes through. And so, the 
overall impact on food prices, I think, has probably been 
fairly small.
    Over time, I think the impact--the good news is I think the 
impact will be lessened. One is that corn used for ethanol 
begins to flatten out certainly in our projections because of 
the fact the cap on the amount of corn-based ethanol that can 
be applied towards the renewable fuel standard is capped at 15 
billion gallons. And then I think that over time, if we look at 
yield increases, which we anticipate to be about 1 percent per 
year, fairly conservative, but that we should see some stock 
rebuilding, and I think some alleviation of this tight stock 
situation we see right now.
    Senator Boozman. Thank you.
    The other thing I would just comment; we really do not have 
an energy policy right now. We are not using the resources that 
we have been given. And as a result, with these very increased 
energy costs, certainly that is going to have a major impact. 
And I guess you can comment on that in a second, and again, 
that truly is going to be a major factor.
    I am an optometrist, an eye doctor, and we used to measure 
a lot of things just like you are measuring. And your 
statistics are very good. I guess if I came home at the end of 
the year and told my wife that I had seen 4,500 patients this 
year and only seen 4,000 last year, she would say: Great, but 
how are we doing? You know. What is our income?
    So your numbers are good.
    I guess the question I have got; you know, this is the 
state of the community. Are farmers, is their income going up? 
Is it staying the same or are they losing money?
    And then in light of the absence of trade deals, in light 
of the high corn prices for whatever reason, and in light of 
the high energy prices, and the list goes on and on, what is 
your forecast for the future, dollar-wise, percentage-wise?
    Mr. Glauber. Yes. Certainly for net cash income, which is 
an aggregate measure for the sector, we are forecasting that at 
a nominal record. Now if you adjust for inflation, you can go 
back a few years and find higher things. That is for the 
sector, and I think there is probably a good optometrist 
analogy here.
    But as one goes into the details and you see that the crop 
side of the ledger is doing very, very well, the livestock side 
of the ledger is doing better than it was doing certainly in 
2009 when we saw very negative margins for hogs and dairy in 
particular, but it still is a very tight situation in terms of 
profit margins.
    Senator Boozman. So, not so great. The trade deals that we 
are trying to work would help that?
    Mr. Glauber. Absolutely. If you look at the benefits for 
Korea, I think something, are estimated at something like $1.9 
billion. Beef is about half of that. And even Colombia, which 
is of course much smaller, still we are looking at 30 to 40 
percent increases, projected increases for livestock products. 
So I think these are very important particularly for the future 
as we look out over the next 10 years.
    Senator Boozman. And then having an energy policy where we 
lower the price, long-term, would be helpful, I guess? 
Certainly?
    Mr. Glauber. As you said, certainly energy prices play a 
number of roles here. One is I think that for all the talk 
about energy, a number of things on the ethanol side, do not 
forget that high energy prices have made ethanol production 
very, very profitable. So I think that is a very important 
component.
    And if you look at food inflation, energy plays a very 
major role there as well.
    Senator Boozman. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    Senator Johanns.
    Senator Johanns. Thank you, Madam Chairman.
    Let me start out and use my perch on the Senate Ag 
Committee and express my appreciation to all the folks at USDA. 
I look out. I see familiar faces. That is always reassuring. I 
cannot tell you how much respect I have for the career people 
that are there, including you, Dr. Glauber. My temptation is to 
call you Joe, after traveling the world, but I will show you 
the respect that I think you have richly earned and refer to 
you as Doctor.
    I want to focus, if I could, on the GIPSA rule to start out 
with at least. The proposed rule, as you know, in its inception 
was not deemed economically significant. Knowing the arduous 
process that a rule typically goes through at USDA and knowing 
the many discussions that we have had about the need for 
economic analysis in rulemaking, I cannot imagine, Dr. Glauber, 
that you would have agreed with that assessment. Am I right 
about that?
    Mr. Glauber. Senator, as you do remember I am sure, what 
happens in this process is an agency, when it is doing its work 
plan for OMB in terms of here is the regulatory stream that we 
foresee for the year, they will give--they will list the rules 
that they intend to promulgate and then give a designation of 
what that rule should be.
    This rule was deemed by the agency as significant, and it 
went to OMB as such, and OMB agreed that it was a significant 
rule. It was not deemed economically significant.
    I think from my standpoint, in looking at certainly the 
costs, that you certainly you see this in the comments in 
particular that have been raised by a number of the people who 
have written, show significant costs on the order of billions 
of dollars. So I think there is no question, and I think the 
designation on this rule will be changed to economically 
significant.
    Senator Johanns. Yes, that is the kind of answer I would 
expect from you, and I appreciate your candor about that.
    Now I want to take even a further step backwards. I cannot 
even remember or count the number of times where somebody from 
the legal department would be in my office and we would be 
talking about a course of action for the USDA and the advice I 
would get was: Look, as much as you might want to do this, Mr. 
Secretary, you cannot because you do not have a grant of 
authority from Congress.
    And that pretty well stopped the debate. Why? Because I had 
a lot of respect for these folks.
    I happen to be on this side of the dais now and I know the 
process by which you get here, and it is not easy. And I am 
very mindful of the fact that policy gets made here.
    So I look down through the grant of authority given to the 
USDA by the 2008 Farm Bill, and in item after item it says 
establish criteria, establish criteria, establish criteria, and 
I do not see a grant of authority, to be very blunt, for a fair 
amount of what is in that proposed rule. And again, I think I 
know USDA well enough to know that there has to be a raging 
debate going on about whether USDA is exceeding its authority.
    Let me just ask you, Doctor, where do you fall on that 
debate? Do you feel this proposed rule has exceed the authority 
we have granted to the USDA, number one?
    And then number two, and equally as important, would it be 
possible as this rule progresses to pull out those areas where 
you have exceeded the grant from Congress and stay within the 
limitations of our grant of authority?
    Mr. Glauber. Senator, the only thing I can say is that I am 
pretty good when it comes to the economic questions. I think 
asking me about the law, and asking me about how extensive this 
is and whether or not it exceeded it, frankly, I am less good 
there, and I would defer to legal counsel. I am not trying to 
duck this. I would just--that is not something I answer or can 
answer as well as I can an economic question.
    Senator Johanns. I can see your uneasiness, and I think I 
understand it. USDA has gone beyond its authority here, has it 
not?
    Mr. Glauber. Well again, Senator, I think that again the 
agency certainly in putting forward the rules did not feel so, 
and that is what I can tell you. I have not been involved in 
legal discussions on this bill.
    Senator Johanns. I see everybody behind you very 
uncomfortable by this line of questioning.
    Thank you, Madam Chair.
    Chairwoman Stabenow. You are welcome. Thank you very much.
    Senator Thune.
    Senator Thune. Thank you, Madam Chairwoman, and I 
appreciate our panel being with us today and thank you for 
convening this hearing along with the Senator from Kansas.
    It is an important subject as we get into the next Farm 
Bill. And like every segment of agricultural production, the 
livestock industry is facing multiple challenges, including 
this year, natural disasters resulting in record-setting 
flooding in some areas of the country and record-setting 
drought in others.
    And I would suggest, Madam Chair, as we begin the debate, 
the upcoming Farm Bill, that along with drafting a bill that 
provides assistance for each sector of the agriculture 
community we need to look at the overall landscape of crop, 
livestock, energy and conservation programs to make certain 
that Federal farm program policies do not result in inequitable 
treatment within agriculture or distort commodity and livestock 
prices and markets.
    And I appreciate the discussion on the GIPSA rule. That is 
something, of course, that has generated a lot of discussion in 
the livestock industry in my state and something that as USDA 
moves forward I hope that they will seriously consider the 
unique comments received on this rule, perform its own economic 
analysis of the impacts of the rule and work with those on both 
sides of the issue surrounding it, the rule, to come up with a 
final rule, and obviously one that it is not going to please 
everybody, but hopefully is workable and does not create 
administrative burdens or result in a lot of unnecessary 
litigation and the loss of livestock industry jobs.
    Mr. Glauber, if I could, I wanted to ask you a question to 
come back to biofuels. I appreciate that in your testimony you 
mentioned the dried distillers grains, which is byproduct of 
ethanol, can be substituted for corn and other feed grain 
ingredients in livestock rations.
    In my opening statement for today's hearing, I mentioned 
just previously here that all sectors of the ag community need 
to be treated equitably by Federal farm policy. Would you agree 
that in this whole food versus fuel debate that goes on around 
the country, that USDA could and should be taking a stronger 
stand and publicizing the fact that 17 pounds of DDGs derived 
from each bushel of corn made into ethanol significantly offset 
the corn usage dedicated to ethanol production?
    Mr. Glauber. Senator, there is no question that the 
distillers dried grains and other byproducts have been very, 
very important additions to the feed market, and this has 
evolved. Certainly, we have seen this rapid increase in corn 
use for ethanol and as a consequence a rapid increase in 
distillers dried grains.
    I think the market has taken a little bit of time to 
adjust. You might remember initially most of this was being 
exported just because it just was not showing up in feeds. Now 
certainly, it does better with beef and hogs, but we are seeing 
it now where we are seeing it show up in feeds pretty much 
everywhere in the country now and is a very, very important 
component.
    And we do--you know. I think it was mentioned in my 
testimony about the importance of the DDGs. I know the Economic 
Research Service puts out a table every year on feed, various 
feed stuffs as well.
    Senator Thune. I raise that point simply because critics of 
corn ethanol claim that 38 percent of corn usage is dedicated 
to ethanol production, which is not necessary accurate due to 
the amount of DDGs that are consumed as livestock feed.
    Most would agree that the so-called ethanol push began back 
in 2002. Since 2002, according to the USDA, corn harvested 
acres increased from 76.5 million acres in 2002 to 87 million 
acres in 2010, which is an increase of 10.5 million acres, a 
production increase from 9 billion bushels in 2002 to 12.4 
billion bushels in 2010, which is an increase of 3.4 billion 
bushels of corn. How much of this increased corn acreage would 
you attribute to the growth in the use of ethanol.
    Mr. Glauber. Well, I think the question that I just 
answered a little earlier; I think that most of that increase 
has certainly been due to ethanol production. We have seen 
again the increase from ethanol use from about 1 billion 
bushels for corn use for ethanol, from 1 billion to the current 
5. If you look at that, most of that increase has come through 
both increased area and increased yields.
    Senator Thune. What is the average according to your 
estimations, bushels per acre, today?
    Mr. Glauber. In terms of yields?
    Senator Thune. Yes.
    Mr. Glauber. If we are looking at trend yields, somewhere, 
162 or so.
    Senator Thune. Where do you think that number is 10 years 
from now?
    Mr. Glauber. Well, again, if we are looking at--I should 
look behind me to see my friend who has the baseline here. But 
we are looking at roughly a 20 bushel per acre increase. 
Essentially, our baseline has an increase, again a most 
increase, of around 1 percent or so, 2 percent. We are looking 
at about a 2 bushel increase per year.
    Senator Thune. But you think that yields are going to 
continue to increase and technology is going to continue to 
improve?
    Mr. Glauber. Right.
    Senator Thune. And production in this country.
    Mr. Glauber. Right.
    Senator Thune. Yes, I do not disagree with that. I think 
that much of the success that we have seen in the last 30 or 40 
years in agriculture. We have been able to become much more 
efficient and get a lot more production for what we invest in 
it. So I suspect that that is going to continue, and I think 
that the issues that we have today, this food versus fuel 
debate, probably 20 years from now are going to look a lot 
different because of that.
    But I see my time has expired. Madam Chairman, I thank you.
    Chairwoman Stabenow. Thank you very much.
    Because of the interest on the Committee and the members, 
we are going to do a second round of just two minutes if anyone 
wants to ask an additional question.
    And let me just ask one question, Mr. Glauber, and that 
relates to trade, and trade barriers more specifically, because 
I am very concerned that we continue to have many countries 
that have unscientific trade restrictions on livestock 
exports--Taiwan and beef, as we know; China and beef; Russia 
and pork. And the USTR's 2011 report on SPS measures facing 
U.S. producers and products is over 100 pages long.
    So in your view, what countries with unscientific SPS 
restrictions present the greatest potential for U.S. livestock 
exports in the future, and what is the USDA doing to help our 
livestock producers gain access to those markets?
    Mr. Glauber. I think in general, and I will try to be brief 
here, certainly the growth markets have been Asia, and I think 
that in particular markets like China, Korea, Taiwan, Japan. I 
mean that is where we have seen the growth. Japan, less so now, 
of course, because it is a developed country.
    But also, I think people in a long run look at countries 
like India as potential, certainly for poultry, and let me 
bring in another livestock product--dairy.
    But I think that what is needed is engagement, bilateral, 
as it takes a lot of work, and then through multilateral. I 
think trade agreements are very important things here. Now 
again, it is one thing to work on a tariff and lower a tariff. 
That is helpful, but it does not help you if you still have 
some SPS barrier or something like that or a technical barrier 
to trade. And that best can be done I think bilaterally, and 
that just takes a lot of work.
    Chairwoman Stabenow. I agree with that. I also would just 
say we need to keep pushing on those trade barriers as we are 
moving forward and looking more broadly at trade.
    Senator Roberts.
    Senator Roberts. Dr. Glauber, I know that you are an 
economist, and thank you for your contribution.
    Thanks to all of you, and your dedication and your hard 
work.
    I want to follow up on the commentary by Senator Johanns. 
It troubles me. In April, there was a meeting, and Joe, you 
were there and the Office of General Counsel, others, and the 
question was raised in regards to the GIPSA rule as reflecting 
just precisely what the Congress did not want in regards to 
congressional intent. And I think we were told at that 
particular that the face of the statute was such that 
congressional intent did not matter. Now that is the case.
    I guess my question to all of you, and I am not going to 
have you answer this because it is not within your purview and 
not your pasture. But if that is the case, do conferences 
matter between the House and Senate? Do amendments matter? Do 
these hearings matter? Do we matter? Do votes matter in regards 
to what was passed, what was defeated?
    For the life of me, I do not understand the Office of 
General Counsel or whoever spoke at that particular meeting, or 
whatever group of lawyers spoke at that particular time, 
telling us that we do not matter in regards to congressional 
intent because the face of the statute was such that we did not 
matter. I tell you the face of the statute is an ugly statute.
    Now I do not know if any one of you want to try that one. 
That is just a speech by me with about 23 seconds left to go, 
but that makes me hot. And we got enough lawyers down there 
that we can at least have some maybe come up and visit with us 
personally, but perhaps in a hearing, to explain to me why 
GIPSA rules are passed that are not in terms of congressional 
intent, and the congressional intent, we are told and staff is 
told that we do not matter. That is not right.
    I think I will leave it at that.
    Chairwoman Stabenow. Thank you very much.
    We will turn to Senator Grassley.
    Senator Grassley. I do not want to ask a question, but I 
think more take advantage of an opportunity to comment on 
something that Senator Thune just brought up, and not to find 
any fault with any of the answers that were given, but to 
follow on and say that 38 percent that Senator Thune talked 
about really becomes about 20 or 23 percent of the corn crop 
that is actually used for ethanol.
    And that brings me to some comments that the next panel is 
going to give. I read here about people that still think corn 
prices in 2006 ought to be $2.50 because by 2008 it costs the 
industry $1 billion more to feed them. But I just wonder if the 
people coming up on the next panel realize you cannot raise 
corn for $2.50 a bushel. You know. Do you want corn or do you 
not want corn? It costs about $4 or a little bit more to raise 
corn.
    Then I wonder if they realize only about 3 percent of the 
coarse grain worldwide is used for ethanol, just 3 percent. And 
we are in a worldwide market of grain, I hope everybody 
understands. There has got to be some realism brought to this.
    And then finally, there is a statement made that finally we 
have to realize that ethanol is dividing rural America. You 
know, dividing farmers. Well, it is people like this that do 
not know the facts about ethanol that are really dividing rural 
America.
    So I want the record to show that I take great exception to 
the testimony that badmouths ethanol when, quite frankly, you 
have got a choice between having ethanol and having higher 
grain prices because the more market for corn, or maybe you 
want to pay out billions and billions of dollars for farmers in 
the safety net for the farm program.
    Thank you.
    Chairwoman Stabenow. Thank you very much, Senator Grassley.
    Senator Baucus, welcome and you are welcome to--we are 
doing a two-minute round, but you are certainly welcome to take 
five minutes if you would like to do that.
    Senator Baucus. Thank you, Madam Chairman.
    Basically, I am most concerned about the availability of 
brands. Can States, if they want to use brands as a system to 
identify the cattle, use brands? Will that be recognized by 
USDA and by other States?
    We have a very steep history of brands in our State, in 
Montana. I come from a family ranch. Our ranch brand is Bar O 
Wine Glass. That is Bar Over Wine Glass. And we also have 
Flying V.
    We are a state that pretty much utilizes brands. 
Agriculture is our number one industry still, and the livestock 
side drives much more revenue even than the grain side. So can 
somebody answer my question as to the degree to which Montana 
will be able to use brands as an international ID system?
    Dr. Parham. Thank you, Senator Baucus. And indeed, Montana 
will, and you specifically will be able to, continue to use 
your brand.
    What we have done with the new traceability rule is look at 
what some States were doing traditionally. With the flexibility 
and the transparency we have going forward there are, I 
believe, 14 States that currently use the brand that will still 
be able to use that brand going forward, particularly if those 
States can agree for any animals that are moving in interstate 
commerce, they will be permitted to use that brand.
    Senator Baucus. Is there going to be any concern about 
that? Is that going to be clear? Is there any ambiguity?
    Dr. Parham. We do not believe there is any ambiguity, and 
we have taken great strides to educate through the various 
meetings that we have had with producers, with States, with 
tribes, to make it very clear because they are giving us much 
of the input that we are using to go forward with the 
traceability rule. And we believe that it will be very, very 
clear, abundantly clear, that brands will be permitted as we 
move forward.
    Senator Baucus. Good.
    Thank you, Madam Chairman. I have lots of questions, but 
frankly, I am more interested in the next panel. So, thank you 
very much.
    Chairwoman Stabenow. Thank you very much.
    Senator Boozman?
    Senator Johanns?
    You are passing to Senator Johanns?
    Senator Johanns. I will go next?
    Senator Boozman. No. Well, I will go and then----
    Chairwoman Stabenow. Okay. Terrific.
    Senator Johanns. Is that all right, Madam Chair?
    Chairwoman Stabenow. That is absolutely fine.
    Senator Johanns. Dr. Glauber, as you know, the issues that 
are being analyzed in the GIPSA rule, in the proposed GIPSA 
rule, have been studied on many occasions by the USDA. In fact, 
at least in one area, there was a very a very extensive study 
that came out right about the time that I went back home to run 
for the Senate. Are those studies being factored into your 
analysis, your economic analysis on the GIPSA rule?
    Mr. Glauber. Yes, absolutely. The study in particular that 
you are mentioning was often called the RTI study. It was a 
multimillion dollar study. As you remember, it was contracted 
out to 30-some odd researchers, extensive work done on beef, 
pork and lamb, if I am not mistaken. We have looked at--we have 
been spending a lot of time with that study to look at the 
economic value of alternative marketing arrangements, which was 
one of the focal points of that study.
    Senator Johanns. Let me ask you again just a really direct 
question. My preference always is to be direct. At the end of 
all of this, let's say you do your economic analysis and it is 
contrary to the position that you have heard from the cage, do 
you feel you will have the ability to lay that down and 
articulate your position on that rule?
    Mr. Glauber. Senator, the Secretary said to me he wanted me 
to have--he was having a hands-off policy, that he was going to 
allow me to do the analysis, and that is what I intend to do.
    Senator Johanns. Good for you.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    And now we will return to Senator Boozman.
    Senator Boozman. Thank you, Madam Chair.
    I think the lesson that we have learned today is if you 
want to not have to answer a lot of questions and be safe with 
your testimony you need to be up here with Dr. Glauber in the 
future.
    [Laughter.]
    Senator Boozman. I would just like to add, and you can 
comment, Dr. Glauber. But as an economist, the GIPSA rule, you 
know we are seeing so much uncertainty in the economy right 
now. People really do not know what the rules are going to be, 
regardless of the profession that you are in. I am in health 
care. You know, it is just up in the air.
    I guess I would say that with this rule, the proposed rule, 
potentially being so far-reaching. We have established that our 
producers, our processors, they are not doing great. They are 
trying to hold, to tread water. With the high costs that are 
going to come up in feed stock--you name it--the energy costs, 
all of these things that are pounding away on them besides the 
flooding, the drought, and this and that. It just seems like 
that the idea of putting such a far-reaching thing, creating 
more uncertainty for the producers, the processors, that that 
is going to be bad for them down the line, as far as the 
uncertainty.
    Can you comment as to what that will do, short-term, to the 
economy of that group because of that? I mean is that a 
reasonable----
    Mr. Glauber. What I would say, and it addresses your point, 
is I think that certainly you look for regulations to provide 
clarity so that the environment in which you are going to do 
your economic dealings, et cetera, are very clear, how to work 
through this. And I think that is the challenge of a regulation 
like this is to provide that.
    A lot of the comments, in particular for those who oppose 
the rule, opposed it because of the regulatory uncertainty. 
That is the risk of litigation, et cetera, that they thought 
the rule might impose. Certainly, we are looking at those 
comments as we do these analyses.
    Senator Boozman. Thank you, Madam Chair.
    Chairwoman Stabenow. You are welcome.
    And thank you very much to each of you. We appreciate your 
service.
    Senator Baucus. Madam Chair, if I might just be brief.
    Chairwoman Stabenow. Yes, Senator Baucus.
    Senator Baucus. I want to recognize Chief White with NRCS, 
from Montana. He spent several years in Montana, where he was a 
State conservationist and did a great job.
    I think, Chief, are you involved in our efforts in Montana 
to protect the sage grouse so it is not listed?
    Mr. White. Yes, sir, deeply.
    Senator Baucus. Okay. Thank you very much.
    I might say that we have a lot of sage grouse in Montana, 
but like a lot of the Endangered Species Act, it is quite 
controversial. But thank you for your efforts. I think we have 
got it managed up to this point, but I want to thank you.
    Thank you.
    Chairwoman Stabenow. Thank you very much. And again, thank 
you to each. We will follow up with any questions that members 
have in writing, and we would ask our second panel to join us 
at this time. Thank you.
    Welcome. We appreciate all of your joining us today for 
this very important topic. We have your written testimony. We 
will ask you to keep your testimony to five minutes as an 
opening statement so we have enough time to ask questions.
    And I want to start by introducing our first panelist, Rick 
Sietsema. We are so pleased to have you here, Rick, of Sietsema 
Farms in Allendale, Michigan. Rick and his brother, Harley, 
operate a turkey and swine farm, along with a feeding/
manufacturing facility. The Sietsema Farm family raises 1.2 
million turkeys and over 700,000 hogs annually. The farm was 
also instrumental in creating the Michigan Turkey Producers 
which is a local co-op in Michigan.
    So, welcome. Glad to have you here.
    And then secondly, our second panelist is Mr. Dennis Jones. 
Mr. Dennis Jones is a fourth generation farmer who operates 
Jones Farms in Bath, South Dakota. Mr. Jones is part of the 
James Valley Pork Cooperative as well as a member of the South 
Dakota Farmers Union. He has also been on the Board of 
Directors of the National Corn Growers Association, CoBank and 
the South Dakota Wheat Cooperative.
    And I am going to turn to Senator Roberts for our next two 
introductions.
    Senator Roberts. Well, thank you, Madam Chairwoman.
    It is a pleasure to welcome Steve Hunt, the CEO of U.S. 
Premium Beef back to the Committee. He was one of the founders 
of U.S. Premium Beef way back in 1996, which today is one of 
the great success stories of the beef industry. The USPB 
producer membership is the majority owner of National Beef 
Packing Company, the nation's fourth largest beef processor, 
headquartered in Kansas City with operations in Dodge City.
    So, welcome back, Steve. Thank you for your partnership in 
agriculture, all of your suggestions and your counsel.
    I would also like to welcome Frank Harper. Frank is a 
farmer and beef producer from Sedgwick, Kansas. He is one of 
our what we call up-and-coming leaders in Kansas. He will be 
the President of the all-powerful Kansas Livestock Association 
next year.
    Welcome, Frank. When you are riding point on that outfit, 
always make sure you check over your shoulder just to make sure 
they are still there.
    Chairwoman Stabenow. Okay. And we would also like to 
welcome Mr. Michael Welch. Mr. Welch is the President and CEO 
of Harrison Poultry. Mr. Welch has served on the National 
Chicken Council's Board of Directors since 2002, was elected 
Chairman of the National Chicken Council in October, 2007, 
serves as Chairman and Director of the Georgia Poultry 
Improvement Association and was Director of the U.S. Poultry 
and Ag Export Council International Poultry Development 
Program.
    So we welcome you as well.
    And I will turn to Senator Baucus for the last introduction
    Senator Baucus. Thank you, Madam Chairwoman.
    Last, but not least, Hans McPherson is from Stevensville, 
Montana. For those of you who do not know, Stevensville is in 
the beautiful Ravalli County. A lot of people move to 
Stevensville and throughout Ravalli County. In fact, a lot of 
Californians move to Ravalli County, matter of fact.
    It is diversified farm that Hans has operated since 1953, 
and a long list of accomplishments, and I will just name a 
few--many years, Vice Chairman of the Ravalli County Service 
Agency, over the years 2006 to 2009, Chairman of the Board of 
Directors of the Supply Ditch Association in his home town, and 
Hans is currently serving on the Board of Directors with the 
Montana Farm Bureau and Montana's Farm Service Agency State 
Committee.
    We bumped into each other at the airport. What is today? 
Tuesday. Yesterday morning, and had a little chat in Bozeman, 
Montana.
    It is good to see you, Hans, and thank you very much for 
taking the time.
    Chairwoman Stabenow. Well, thank you very much to each of 
you, and we will start with Mr. Sietsema. Welcome again.

STATEMENT OF RICK SIETSEMA, FARMER, SIETSEMA FARMS, ALLENDALE, 
                               MI

    Mr. Sietsema. Thank you. Good afternoon, Chairwoman 
Stabenow, Ranking Member Roberts and the members of the 
Committee. I am Rick Sietsema, Partner and CFO of Sietsema 
Farms and our related businesses of Allendale, Michigan. I want 
to thank the Committee for inviting me to discuss the state of 
the U.S. livestock industry, and today I will be speaking on 
behalf of Sietsema Farms and the National Turkey Federation. 
The National Swine Producers are also in support of my 
testimony.
    Sietsema Farms production facilities are located in West 
and Central Michigan. We are a multigenerational family-owned 
business that has its roots deeply embedded in agriculture. As 
a member of the Michigan Turkey Producers Co-Op, we raise 
nearly a quarter of 4.6 million turkeys produced and marketed 
both domestically and internationally. As a whole, Michigan 
Turkey Producers has an economic impact in Michigan of over 
$120 million.
    Sietsema Farms and partners are also involved in the swine 
industry as a genetic producer of Newsham Genetics and supplier 
of Newsham Genetics across the Midwest. The economic impact of 
Michigan and neighboring States and Ontario exceeds $135 
million, plus that of many, upwards of 100 family-owned and 
operated farms which we contractually grow and finish swine 
with.
    With our agricultural focus at Sietsema Farms, we have been 
proactively working with NRCS and environmental programs. We 
have enrolled our 1,500 acres and additional conservation 
practices in the Conservation Security Program, and an 
additional 13 acres in field buffer strips in the Conservation 
Reserve Program, and in the EQIP program we have utilized funds 
to construct several manure storage facilities.
    In the near future, our turkey litter will be delivered to 
our new state-of-the-art biomass gasification facility. With 
this facility, the turkey production will be a closed 
environmental loop, generating our electric and gas needs for 
our feed production and our feed mill, and greatly reducing our 
carbon footprint.
    USDA Rural Development has been a significant resource 
contributing to our ability to invest into agriculture. When 
our market for turkeys closed in the late 1990s, USDA Rural 
Development loan guarantees made it possible for us to get 
access to capital to facilitated the construction of both a 
turkey processing plant and a further processing and cook 
plant. USDA Rural Development was also significant in our 
ability to fund the gasifier facility mentioned earlier, which 
will be the first of its kind in the world.
    One challenge currently facing our livestock industry is 
production costs, as mentioned earlier by USDA. Feed is the 
most important of these. With the current runup in grains due 
to the short supply caused by both production and by the 
ethanol mandate, that has put us in uncertain terms for the 
livestock industry.
    Our biggest reason for the industry not being more 
optimistic, facing some of the stronger prices that we are 
currently seeing with the increase in turkey and pork supply, 
is to these uncertain input costs. Corn and other feed 
ingredients have risen to new levels, corn going from $4, 
$4.50, $5 to $7 in barely a year, and in this past month 
surpassing the $7 mark. What the livestock industry is looking 
for is reform in the existing ethanol policy, a safety net that 
ensures proper corn prices and availability, with less 
volatility in the future.
    Another challenge today is the marketing rule proposed last 
summer by USDA's GIPSA. First is the competitive injury 
position, which will make it easier to sue for regulatory 
action against livestock and poultry processors. Second is the 
provision that requires processors to virtually guarantee 
growers can recoup an 80 percent of any capital investments. 
The third is a series of provisions that would discourage 
competitive contracts in which growers can receive premiums or 
deductions based upon the performance of the livestock in their 
care.
    Studies have shown the negative impacts of this GIPSA rule 
in excess of $360 million annually in the turkey industry and 
more than $400 million in the pork industry. A study conducted 
by John Dunham and Associates showed job losses of 104,000 and 
a reduction in national gross domestic product by $14 billion 
annually.
    How can government help? Though most people in the 
livestock industry prefer minimal government involvement, there 
are ways that you have been helping and there are ways that you 
can continue to ensure the economic viability of our industry.
    Continued funding of EQIP is imperative for our industry's 
ability to implement many conservation practices. We are 
pleased that the 2008 Farm Bill kept 60 percent of these funds 
for animal agriculture and would hope that these funds would 
continue in the next Farm Bill.
    Flexibility to the existing EQIP program for innovative 
environmental stewardship programs and projects would be a 
positive development, making it easier for livestock and 
poultry farmers to access these funds. Farms should not be 
restricted to the access of these resources based upon size, 
financial benchmarks or animal units.
    As a farmer and as American farmers trying to supply food 
stuffs for the world population as we move forward, we need to 
have these tools available to us.
    In Michigan, we have a MAEAP program of which more than 
1,000 farms have been MAEAP-verified and another 10,000 are in 
the process. Through that process, in the seven years Sietsema 
Farms has been involved in the MAEAP program, we have 
implemented many projects with NRCS and MAEAP, including field 
buffer strips, filter strips, grass waterways, conservation 
tillage and residue management, shallow water wildlife 
projects, nutrient management, irrigation management, manure 
storage facilities and fuel security.
    Thank you for the opportunity to discuss this with you as a 
Committee, and I will look forward to your further questions.
    [The prepared statement of Mr. Sietsema can be found on 
page 90 in the appendix.]
    Chairwoman Stabenow. Thank you very much for coming.
    Mr. Jones.

   STATEMENT OF DENNIS O. JONES, PORK PRODUCER, SOUTH DAKOTA 
                    FARMERS UNION, BATH, SD

    Mr. Jones. Chairwoman Stabenow, Ranking Member Roberts and 
members of the Senate Committee on Agriculture, thank you for 
inviting me to testify today.
    I am a fourth generation cattle and hog operation in South 
Dakota. Our farm is also part of James Valley Pork, a 
cooperative. Our cooperative finishes 40,000 hogs annually. By 
being part of a larger group of producers, we had hoped to find 
power in numbers to get better prices for our hogs. We found 
that the collective marketing power of 40,000 hogs was not 
enough to get a fair price.
    Rural America has lost more than 1.1 million livestock 
farms in the last 30 years. In 1980, there were approximately 
1.3 million beef cattle operations across the country, but in 
2010 there were only 742,000. This is a decline of 
approximately 42 percent.
    In swine, the reduction has been even more dramatic. In 
1980, there were 660,000 hog farms, but in 2010 there were only 
about 67,000 left. That is a 90 percent drop.
    As more and more farms and ranches have closed, 
concentration among livestock producers has become a huge 
issue, not just for prices but for food safety as well as 
security. Today, there are few large buyers of livestock. The 
top 4 packers have control of 81 percent of the cattle for 
slaughter in the U.S. The top 4 swine producers control about 
65 percent of the hog sales. These statistics make it clear 
that concentration is on the rise in the livestock marketplace 
and competition is declining.
    A year ago, USDA proposed rules to address related anti-
competitive practice in the livestock industry. GIPSA has 
received approximately 60,000 comments on the proposed rule. 
The USDA is still reviewing these comments and conducting an 
economic study before issuing the final rule.
    The GIPSA rule will help ensure farmers transparency, 
protection and bargaining rights for producers. This will help 
restore at least a degree of competition in agricultural 
markets. A lack of market power is just one of the reasons 
there are fewer livestock farmers and ranchers.
    The reforms in the GIPSA rule are long overdue. They 
respond to the criticism that has come from the farm groups, 
the Government Accountability Office, the USDA Inspector 
General, about the lack of enforcement of the PSA. The rule is 
more important today than 80 years ago. The proposed rule 
defines and clarifies terms in the PSA in order to make 
enforcement more effective and to provide clarity to all 
players in the livestock market.
    Critics of the proposed rule argue that its definition of 
unfair preference is too broad and therefore will prohibit 
buyers from paying a premium to livestock producers who produce 
a premium product. This is not the case. The rule simply 
requires that packers or processors explain why they provide 
special pricing and contract terms to certain producers.
    The GIPSA rule will reduce litigation in the industry by 
clarifying the PSA. The GIPSA rule, also known as the Farmers' 
and Ranchers' Bill of Rights, needs to be implemented without 
further delay.
    The 2008 Farm Bill made a critical and greatly appreciated 
investment in conservation programs. One program that is 
popular with livestock producers is the Environmental Quality 
Incentive Program, or EQIP. Through EQIP, the Natural Resources 
Conservation Service provides low-cost share of financial and 
technical assistance to farmers and ranchers to install and 
maintain conservation practices. Conservation practices like 
EQIP give farmers and ranchers the tools necessary to sustain 
the natural resources we depend on.
    While producers face many challenges in today's economy, 
they also have many opportunities to benefit. This hearing is 
an opportunity for all aspects of the livestock sector to be 
reviewed. As such, I urge the Committee to consider the 
possibility of incorporating a grain buffer stocks program, 
also known as a reserve, in the next Farm Bill. Livestock 
producers ought to be especially interested in a mechanism to 
better control the volatility of feed costs. That would make 
livestock production more conducive to longer-term investment. 
It would help the next generation of farmers and ranchers get 
started.
    Thank you for the opportunity to visit with you and share 
my concerns. Please refer to my written testimony for further 
detailed information, and I welcome any questions.
    [The prepared statement of Mr. Jones can be found on page 
70 in the appendix.]
    Chairwoman Stabenow. Thank you very much, Mr. Jones.
    Mr. Hunt.

  STATEMENT OF STEVEN D. HUNT, CHIEF EXECUTIVE OFFICER, U.S. 
               PREMIUM BEEF, LLC, KANSAS CITY, MO

    Mr. Hunt. Chairwoman Stabenow, Ranking Member Roberts, 
members of the Committee, I am Steve Hunt, CEO of U.S. Premium 
Beef.
    Formed in 1996, our company is the producer and majority 
owner of National Beef Packing Company. The intent of our 
founding members was to create a company that would link 
producers and consumers through ownership of meat processing 
and marketing. Over 21 producers from 36 States have marketed 
cattle through our company. We have paid more than $183 million 
in premiums to those producers. Those premiums came as value-
based premiums through our many programs.
    I would like to address two issues that are critical to the 
U.S. beef industry--trade and the GIPSA rule.
    Much of the success in 2010 and in the future can be tied 
to our export markets. Last year, the industry set a record for 
the value of beef exports of $4 billion. That equated to $153 
per head.
    Given the international consumer demand for our products, 
it is critically important that Congress pass free trade 
agreements with South Korea, Colombia and Panama as soon as 
possible. Yearly exports of U.S. beef to South Korea could 
increase to as much $1.8 billion if this agreement is fully 
implemented. Without the FTA, our access to their 49 million 
consumers will decline as South Korea increases trade with 
other countries with FTAs.
    It is equally important that we continue to work with 
getting Japan to move from accepting cattle of less than 21 
months of age to at least 30 months of age, which could add $1 
billion to our exports.
    Next, I would like to talk about the proposed GIPSA rule. 
First, the proposed rule calls on USDA to scrutinize 
transactions where producers are paid more than an average 
price. Due to our value-based strategy, every lot of our cattle 
will fall under this scrutiny. A burdensome requirement to 
present private profit and loss information to a government 
agency on every single lot of cattle sold will be very 
burdensome.
    As a result, variable pricing necessary to attract cattle 
to fit our value-based programs--those are programs such as 
natural cattle, age and source-verified and branded--will be 
replaced with potentially a single-price commodity bid. The 
method used by USDA to administer such practices is critical, 
but to date unclear.
    We believe the unintended consequences would be especially 
harmful to small producers the rule is purported to support. 
Our records show that producers of all sizes benefit from our 
value-added programs. However, it is our smallest producers 
that have earned the largest premiums.
    Here are the facts: Through 2010, we have purchased more 
than 8 million head of cattle through our program. In analyzing 
the top 25 percent of those cattle delivered since we began, 
the group of producers by segment that delivered the highest 
premiums were those that delivered less than 250 cattle per 
year, at an average premium of $63.48 per head. The second 
highest, those that delivered less than 100 cattle a year 
earned the second highest premium.
    Based on our experience, I believe this rule will burden 
the small producers who rely on these value-based programs to 
compete with the economies of scale that large producers enjoy.
    The second issue is lowering the legal threshold 
requirement from proving harm to the marketplace to harming an 
individual. Proponents of this proposed rule believe that if a 
deal is not reached in the marketplace between a cattle 
producer and processor the producer should have the right to 
sue the processor instead of the current threshold, which holds 
substantial legal precedent that the processor is liable if the 
actions were actually harmful to the entire marketplace. In 
other words, if negotiations fail between a buyer and seller, 
the producer could make a claim against the processor under 
this proposed rule.
    The broad and general nature of the rule opens the door for 
frivolous lawsuits. If a single producer can sue based on their 
thoughts of what is unfair, it is likely that price differences 
based on value-added characteristics will continue and we will 
return to a commodity one-price-fits-all system. If that 
happens, both producers and consumers, who by the way have 
demanded these programs, will lose.
    Proponents to the rule responded to these concerns by 
asserting well, you know, processors get their chance to defend 
themselves in court.
    Well, Madam Chairwoman, that is just simply not acceptable. 
When we are sued, our employees do not sleep, our bankers do 
not sleep, our investors do not sleep and I do not sleep. But 
more importantly, our customers do not sleep. They depend on us 
to supply products to their shelves at night, so when they open 
their doors in the morning they are open for business.
    The increased threat of frivolous lawsuits that this 
proposed rule will create is a risk no business can withstand.
    And by the way, this will change our behavior, in answer to 
the question earlier.
    In closing, I urge the Committee to insist on another 
comment period once the pending economic analysis is completed. 
This allows additional input on the rule to identify changes 
that will minimize the damage.
    I would encourage the Committee to make sure we put 
ourselves in a position to compete for export business. At the 
same time, I would ask you to scrutinize proposed government 
regulations that will result in rolling back the vast 
improvements that have helped make U.S. beef the product of 
choice, not only in the United States but around the world.
    Thank you.
    [The prepared statement of Mr. Hunt can be found on page 63 
in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. Harper.

 STATEMENT OF FRANK HARPER, PRESIDENT-ELECT, KANSAS LIVESTOCK 
                   ASSOCIATION, SEDGWICK, KS

    Mr. Harper. Madam Chairman, Senator Roberts and members of 
the Committee, my name is Frank Harper, and I have a cow-calf 
and cattle backgrounding and a farming operation near Sedgwick, 
Kansas. I am President-elect of the Kansas Livestock 
Association. I serve on the Board of Directors of the National 
Cattlemen's Beef Association, of which KLA is an affiliate. I 
am very pleased to be here today.
    KLA is a trade organization representing nearly 5,500 
members on legislative and regulatory issues. KLA members are 
involved in many aspects of the livestock industry, including 
seed stock, cow-calf and stocker production, cattle feeding, 
dairy production, grazing land management and diversified 
farming operations. The beef industry is a key segment of the 
Kansas economy, and the Kansas beef industry is a major piece 
of the U.S. beef industry.
    KLA members believe the livestock industry is best served 
by the process of free enterprise and free trade. Even with its 
imperfections, free trade is relatively more equitable than 
regulated and subsidized markets that tend to retard innovation 
and distort production and market signals. KLA members oppose 
attempts to narrow the business options or limit the individual 
freedom of livestock producers to innovate in the management 
and marketing of their production.
    KLA and NCBA continue to strongly oppose the proposed 
regulation commonly referred to as the GIPSA rule issued by the 
Grain Inspection, Packers and Stockyards Administration last 
year. In short, U.S. producers are concerned the GIPSA rule 
would greatly expand the role of government in marketing 
livestock and eliminate producers' ability to market livestock, 
to capture the benefits of their efforts to improve the quality 
of their livestock.
    Over the years, I have invested in genetics that have 
helped me improve the quality and consistency of the calves I 
produce. To capitalize on this investment, I retain ownership 
of the majority of my calves and feed them in a commercial feed 
yard. This allows me to market my calves through U.S. Premium 
Beef as certified Angus beef and other programs that allow me 
to earn premiums for my high quality cattle.
    The GIPSA rule would require purchasers of my cattle to 
justify paying more than a standard price for my livestock. If 
my competitors do not agree with the justification the packer 
offers for paying me more than the standard price, the packer 
may be sued.
    Common business sense tells me it would not be long before 
the packer no longer would be interested in our agreement. This 
means I will be back to selling cattle for the same average 
price as everyone else. My investment in superior genetics 
would be lost.
    It is clear to us the proposed rule will make forward 
contracting and other alternative marketing arrangements 
subject to so many regulatory hurdles and legal risks that the 
effect, whether intended or not, is the elimination of these 
marketing options. Without the consistent supply provided by 
these arrangements, processors likely will be forced to reduce 
or eliminate branded and natural beef programs that have helped 
lead a resurgence in beef demand.
    The rule also goes far beyond the intent of Congress. 
Members of this Committee will recall several of the proposals 
contained in this rule were either defeated or withdrawn during 
consideration of the last Farm Bill. We strongly urge you to 
take action to prevent the implementation of this rule.
    Another area of concern is country of origin labeling. 
Recent reports indicate the World Trade Organization will rule 
in favor of Canada and Mexico in their complaint against the 
U.S. mandatory COOL program. It is in the interest of the U.S. 
beef industry to resolve this dispute before retaliatory action 
is taken. KLA strongly encourages the inclusion of language in 
the next Farm Bill to address the WTO finding.
    For additional issues, including comments regarding the 
next Farm Bill, I would refer you to my written comments.
    Again, thank you for the opportunity to testify here today, 
and I welcome any questions when the time is appropriate. Thank 
you.
    [The prepared statement of Mr. Harper can be found on page 
54 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. Welch.

    STATEMENT OF MICHAEL WELCH, PRESIDENT AND CEO, HARRISON 
                  POULTRY, INC., BETHLEHEM, GA

    Mr. Welch. Good afternoon, Chairman Stabenow, Senator 
Roberts and members of the Committee. Thank you for the 
opportunity to participate in this important and timely hearing 
on the issues impacting the state of livestock and poultry and 
on behalf of the National Chicken Council. My name is Michael 
Welch, and I am President and Chief Executive Officer of 
Harrison Poultry in Bethlehem, Georgia. I have been President 
of Harrison Poultry since 1992.
    Harrison Poultry is a small, privately held, 52-year-old 
company operating 1 slaughter plant, producing a variety of 
products with more than 1,000 outstanding employees. Over 125 
family farmers contract to grow broilers, and an additional 40 
family farmers contract to produce hatching eggs for the 
company-owned hatchery. Each week, Harrison Poultry processes 
more than 6 million pounds of broilers on a live-weight basis. 
Some of Harrison Poultry growers have been growing broilers 
since Harrison Poultry became vertically integrated more than 
40 years ago, even though the company contract is considered a 
flock-to-flock arrangement.
    Madam Chairman and Committee members, as you can 
appreciate, there are many issues impacting the state of the 
chicken industry as I speak to you today. The main issues of 
concern to the poultry industry:
    Number one is the corn-based ethanol policies and rules 
need realignment. The policies and rules of the game for corn-
based ethanol must be rebalanced and the playing field must be 
leveled to permit chicken producers and other animal 
agriculture producers to more fairly compete for the very 
limited supplies of corn this year and most likely for the next 
few years. For more than 30 years the ethanol industry has had 
an opportunity to learn how to compete in the marketplace. It 
is now time, actually well beyond a reasonable time, for 
ethanol manufacturers to move beyond government subsidies, 
federally mandated usage and market protection from foreign 
competition.
    Broiler companies since last October, when the sudden, 
unexpected runup in corn and other feed ingredient costs 
incurred, have tried to weather the storm of very high, 
volatile corn prices, but now companies can no longer withstand 
the storm. Companies are trimming their production plans which 
means growers will receive fewer chicks to grow into market-
ready broilers and processing plant work shifts are being 
reduced or even eliminated. With less work time, more and more 
workers are being laid off.
    A broiler company in Georgia just announced 300 workers 
will no longer be needed.
    Also, this month a fourth generation family broiler company 
in Delaware filed for bankruptcy protection while it works to 
secure another owner for its assets.
    Further, another company in Arkansas last week announced 
plans to consolidate two processing plant operations into one 
location and will similarly combine two hatcheries into a 
single facility. This consolidation will result in 223 jobs 
being eliminated. The company, in its announcement, indicated 
that eliminating these jobs will give it a better chance to 
survive.
    Earlier this year, a third generation broiler company with 
a complex in North Carolina and another complex in Arkansas 
succumbed to the financial stress of high feed costs. The 
result in this case is that its complex in North Carolina is 
now owned by a foreign company and the Arkansas complex is now 
owned by another broiler company that not only had the 
borrowing capacity to purchase the assets but reserves that 
will undoubtedly be necessary to carry financial losses until 
the broiler market improves to at least a break-even point.
    Banks and other lending institutions are telling these 
companies enough is enough, meaning sell your assets and repay 
your outstanding debt. I receive inquiries weekly, if not more 
often, from financial firms, broiler companies and others 
inquiring about my company's interest in acquiring troubled 
assets in the broiler industry. What some analysts say about 
the broiler industry of 10 companies in 10 years may become a 
reality and perhaps sooner than in a decade.
    Although the Volumetric Ethanol Excise Tax Credit for corn-
based ethanol is scheduled to sunset at the end of this 
calendar year, along with the import duty on ethanol, a sunset 
not so far on the horizon would be prudent. An Iowa State 
University study determined that VEETC results in 4 percent 
more ethanol, or 500 million gallons, this year. This means 
that the VEETC costs about $11 per gallon for that additional 
ethanol.
    The provision of the Energy Independence and Security Act 
of 2007 that generates the real demand for corn-based ethanol 
is the Renewable Fuels Standard. The RFS is essentially an 
immovable object even when there is an irresistible force. That 
is when the shortfall in corn supplies, as is in the current 
situation, RFS continues to be immune to the crisis in poultry 
and livestock. A more realistic trigger mechanism is needed to 
adjust the RFS.
    Madam Chairwoman, that is our number one issue.
    Our number two issue is the GIPSA that has been well stated 
here already in terms of the reasonable step to call a timeout 
and take over as the intent of the Congress we do not feel has 
been met by the agency, and then the three pending free trade 
agreements we would hope that Congress would take action.
    The National Chicken Council appreciates the chance to 
present here, and improving the state of the poultry industry 
not only helps poultry companies and poultry farmers, but more 
importantly will allow consumers of poultry products to 
continue to enjoy an ongoing adequate supply, appropriately 
priced, of animal protein at reasonable prices.
    [The prepared statement of Mr. Welch can be found on page 
101 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. McPherson.

 STATEMENT OF HANS MCPHERSON, RANCHER AND MEMBER, MONTANA FARM 
                    BUREAU, STEVENSVILLE, MT

    Mr. McPherson. Thank you, Madam Chairwoman Stabenow and 
Ranking Member Roberts and members of the Committee for
    the opportunity to travel to Washington, D.C. today and 
participate in this hearing and voice my concerns about 
agriculture. I would also like to thank the man all Montanans 
know simply as Max for the invitation to come here.
    Mr. Baucus. Thank you, Hans. Appreciate that.
    Mr. McPherson. You are welcome.
    I would like to ask you to look at my face. I want you to 
see the face of a 58-year-old American family farmer. I am the 
median age of the American family farmer.
    I am, by no means, rich. I do not own a trophy ranch. I do 
not live in a trophy house or drive a trophy pick-up. I feel I 
am a pretty typical family farmer.
    I get out of bed each day with more to do than I will ever 
get done and often have to figure out how to do more with less, 
prioritizing what can wait and what needs to be done right now.
    I go to bed at night without the aid of sleeping pills but 
with a prayer and a belief that better days are ahead. Many 
people want to refer to the good old days. I have never been 
more optimistic about the future of farming. That is why I came 
here today to testify and to answer your questions.
    When Senator Baucus's staffer, Alexis Taylor, called and 
extended the invitation to me, I did not immediately jump for 
joy and say oh, yes, I will hurry right over. I first had to 
figure out how I would pay for the trip, and did I feel, did I 
really feel that I would make an impact on you. My wife and I 
decided that it was worth the investment of time and money to 
give you the opportunity to hear from a real down-to-earth 
Bitterroot farmer.
    I feel that even though you hear from highly polished 
lobbyists with very elegant speeches on a daily basis, in 
reality, you probably are not much different from me and many 
other Americans who are tired of the lobbyists and activists. I 
do not want to totally downplay the importance of lobbyists 
because, in reality, organizations like the Farm Bureau and 
others are often the single voice of thousands of American 
farmers like myself, banded together to be heard.
    While I am very passionate about the future of agriculture, 
I also realize in reality that rural America is under attack by 
people who often have little understanding about the life and 
struggles on the farm. With issues like animal rights, horse 
slaughter, farm labor, banking, the American family farm needs 
your help. I also realize that there is great need to trim 
budgets. So as you and your staff, Senators, take the task of 
writing a new Farm Bill, it is with my hope that you will be 
able to protect those of us who provide the American people 
with the most abundant, safest and affordable food in the 
world.
    I hope that you have weighed my testimony and gave my 
thoughts careful consideration. It was written by me, not by a 
staff of researchers.
    Again, I want to thank you for your time and consideration 
today. I hope that you understand what I am trying to say, and 
I have to tell you it sounded a lot better on the tractor seat.
    [Laughter.]
    Mr. McPherson. Thank you.
    [The prepared statement of Mr. McPherson can be found on 
page 85 in the appendix.]
    Chairwoman Stabenow. Well, thank you, Mr. McPherson. We 
really appreciate your being here, and everyone that is here 
and took the time, Mr. Sietsema as well, each of you, to be a 
part of this because this ultimately is about how we support 
all of your and how does the Farm Bill, how does it work for 
each of you. You are literally right where the rubber meets the 
road, and that is why we have these hearings, and that is why 
we very much appreciate your coming in.
    I want to take a moment just to ask each of you as we look 
at the future, as we look at economic opportunity, and ask each 
of you what you think is the biggest opportunity for economic 
growth. Where is the opportunity?
    Mr. McPherson, you said you were optimistic. And maybe I 
will just start here and go this way across the panel.
    I also want, Mr. Sietsema, for you to talk about some of 
the innovations on your farm because it is really a tribute to 
you and your family, and what you have been able to do in the 
vast potential within the livestock sector to diversify and 
create value-added opportunities.
    But Mr. McPherson, let me start with you. You said you are 
optimistic about the future. What is the number one 
opportunity, do you think, that there is as it relates 
particularly to the livestock industry for economic growth?
    Mr. McPherson. Well, I am optimistic----
    Chairwoman Stabenow. You might need to push the button.
    Mr. McPherson. Okay. I am optimistic about the future of 
farming and the future of livestock. We run a small cow-calf 
operation. We have about 250 mother cows. We sell the calves 
off of those cows in the fall and run about 500 yearlings. So 
we buy about 500 yearlings each fall and feed them over the 
winter and run them on grass, and then we send them back to the 
Midwest to one of these other gentlemen's States to finish 
them.
    The thing that gives me the most optimism about the future 
is the amount of people in the world that are hungry and that 
have money. And they are in developing countries, and they want 
to eat, and they want to eat American--well, I hope they all 
want to eat Montana beef, but they want to eat American beef 
and pork and chicken.
    I believe that the other area that gives me lots of hope is 
the research that has been done and the research that continues 
to be done, the crops that are being raised. In Eastern 
Montana, we have many sugar beet farmers, and their production 
with Roundup Ready sugar beets has raised their yields 
considerably, oftentimes making it more economical for them to 
stay in the sugar beet business. That is just one area of 
research.
    Chairwoman Stabenow. Well thank you. I appreciate that. So, 
research and global markets.
    I am going to ask just quickly before my time is up.
    Mr. McPherson. Sure.
    Chairwoman Stabenow. Mr. Welch, if you were to name an 
economic opportunity for the future, related to livestock, what 
would it be?
    Mr. Welch. Well, the condition of the poultry industry 
right now is survival at the moment, but the evidence of 
history proves that in the last 25 years the chicken industry 
has doubled its production and head count from 80 million 
chickens a week to now about 160 million chickens a week, at 
the same time improved the--increased the live weight from 4 
pounds average per bird to almost 6 pounds now.
    So if you take the head count and the weight increase, in a 
mere 25 years we have tripled the production of broilers in the 
United States, which is a testimony to the animal itself and 
technology and genetics that a chicken now can--we can make a 
live chicken with a little bit less than two pounds of feed to 
make a pound of live weight, which is incredible, efficient and 
cost effective. I would expect those situations to continue if 
we can get through this economic distress.
    Not only agriculture is one of our country's proudest 
industries, and not only feed our own population. The effect we 
have had on feeding the world, we honestly hope that our task 
can continue in that.
    Chairwoman Stabenow. Absolutely.
    Mr. Harper?
    Mr. Harper. Well, I see probably the biggest opportunity is 
meeting the challenge of providing food for a growing world. I 
think we have the opportunity to do our best to meet that 
demand, I think, and we can do that by not only utilizing but 
protecting our natural resources in the process. I think we 
have been blessed here in the United States with an abundance 
of natural resources.
    And I think some of the comments previously. I think we 
have been able to produce more with less, and I think that will 
continue to be what we strive to do, specifically in the beef 
industry, and we have to do that by the help of you folks up 
here in Washington kind of somewhat keeping your hands off and 
letting us do business the way we know how to do it best.
    Chairwoman Stabenow. Okay. Great.
    And I am going to ask that Mr. Hunt take just a moment to 
answer the same question.
    Mr. Hunt. Well, at the risk of being redundant, certainly 
the opportunities in Southeast Asia in our export markets are 
tremendous. As we see a growing middle class, they are going to 
want to upgrade their diets. And we in the Midwest in the 
United States, I am just so optimistic with the potential of 
agriculture producers, whether it be livestock or grain.
    I think we need to be cautious of laws like COOL that are 
counterproductive to those export markets, and we need to pass 
FTA.
    Chairwoman Stabenow. Thanks.
    Mr. Jones?
    Mr. Jones. I think technology----
    Chairwoman Stabenow. You want to push the button there.
    Mr. Jones. I pushed the button the last time.
    I think technology is going to be one of the leaders in 
agriculture today that is going to make us competitive.
    The question is though who is going to be there to share 
that? When you look at the trends of less producers across 
America, it is a trend you cannot deny.
    So who is going to be there to be in the sharing of that? 
It is going to be the fewer and the bigger and the more 
concentrated. That is what bothers me.
    But as far as growth and demand, it is going to be there, 
but it is who is going to share that.
    Chairwoman Stabenow. Thank you very much.
    And finally, Mr. Sietsema, again, I appreciate your 
testimony and your innovation on your farm. What would you say 
is the biggest?
    Mr. Sietsema. Sure. Opportunities I see also are the global 
marketplace. It was talked earlier today by USDA about trying 
to find these markets, create these markets. Well, in my 
opinion, markets will find us because we create, we produce the 
highest quality meat products in the world.
    But we have to do it at a reasonable cost. Regulations and 
the GIPSA rule only are counteractive to reducing our costs of 
production, plain and simple.
    The other opportunities are if you as a Committee are to 
move away from conservation reserve type programs in natural 
resources to conservation practices and programs for working 
lands. That would be similar to what we use the REAP program 
for, which is Rural Energy for America, for a gasification 
facility that we have put up for our turkey program, as well as 
rural development funds and availability for loan guarantees to 
allow our co-op to exist.
    Chairwoman Stabenow. Thank you very much.
    I have gone over, so I am going to add two minutes to 
Senator Roberts and Senator Baucus since I took an additional 
two minutes in that. Thank you.
    Senator Roberts. Max, I think your witness ought to be from 
Dodge City. I do not know----
    Senator Baucus. It could be any place in America.
    Senator Roberts. Let the record show there is one 
optimistic farmer from Montana.
    Senator Baucus. We are upbeat.
    Senator Roberts. We are going to have to pass the hat for 
him to get back and farm, but at any rate.
    I am just happy to hear one, two, three, four, five, six 
optimistic producers here, from many sizes, segments, and some 
opinions of agriculture, which is very encouraging.
    Steve, my understanding that although the GIPSA rule does 
not explicitly ban the more than 50 grid-pricing formula, 
pricing or alternative marketing arrangements used by the beef 
industry, there are others that assert that the actual effect, 
the practical effect here of this proposed rule will cause 
these arrangements to be reduced down to 2 or 3. So from your 
viewpoint, how does this rule impact these marketing 
arrangements?
    Mr. Hunt. Senator, again, thank you for the kind 
introduction earlier.
    By the way, I am not attorney, but I believe you are right. 
I do not believe anywhere in the rule does it explicitly say 
that these value-based opportunities are eliminated.
    I think many of us on the panel have alluded to this, but 
the plain and simple facts are for those of us that have worked 
hard, with the direction of our consumers and the requests of 
the producers, have come to processors and say let's develop 
these value-added programs, our costs will go up and our risks 
will go up.
    Now it does not take a very smart person to say if that is 
the case what will happen over time is to eliminate that risk 
and protect the investment that we have. We have to narrow that 
band and width of price differentiation.
    And how narrow that band gets is how aggressive the 
proponents are of this rule in their litigation and taking 
advantage of the gate swinging wide open. If it is real 
aggressive, they will be eliminated. We cannot stand the risk. 
We cannot stand the costs to protect our investment.
    Senator Roberts. Well, we certainly hope that does not 
happen.
    Let me ask a real quick follow-up. Did we not actually see 
this happen--I referred to it earlier--in Missouri in 1999?
    Mr. Hunt. Yes, Senator.
    Senator Roberts. By the way, I think Kansas State beat 
Missouri in 1999, but I just want to throw that out.
    Mr. Hunt. Well, as one with my money in Missouri and my 
heart in Kansas today, that may be true.
    Missouri did in 2001. The legislature passed a law that had 
many of the same aspects of the GIPSA rule.
    And I think it is Professor Ron Plain of the University of 
Missouri will recognize that, Senator.
    Senator Roberts. Right.
    Mr. Hunt. He indicated that this was a horrible action on 
the part of the legislature and cost the producers $1 million 
per month while it was enacted. They called a special 
legislative session later on that fall and reversed that 
decision and repealed that law.
    So you know, history is a pretty good indicator of future 
action, and I think history tells us we should learn from that, 
that this could have a devastating impact.
    Senator Roberts. Frank, let me just ask you this question. 
If these alternative marketing arrangements go away, does it 
change your business model and the type of cattle you raise?
    Mr. Harper. Oh, absolutely. I have been retaining ownership 
I think since around 1996, and basically by doing that I have 
learned, number one, what my cattle were at that time. And by 
getting the information back that I have received from 
participating in these arrangements, in these marketing 
arrangements and getting the premiums that the market has 
offered, I have been able to modify my genetics, and that is 
the way I base my business model.
    If those options were eliminated or even somewhat 
compromised, I think that definitely would lend me to 
completely looking differently at how I would move forward with 
my cow-calf operation.
    Senator Roberts. What is your priority list of items that 
would need to be in the Farm Bill, and I am specifically asking 
do we need a livestock title in the next Farm Bill?
    Mr. Harper. Well, I think that is a very fair question. And 
my concern with the livestock title is based on what might come 
out of that. And when we see things like GIPSA and the 
mandatory COOL, I think that makes us in the beef cattle 
industry pretty nervous about a livestock title in the upcoming 
Farm Bill. So I do not know if that answers your question.
    You know, we like to see some of the--we would like to see 
a robust conservation title and a robust research title, but 
the livestock title is the one that we move forward with, with 
some caution.
    Senator Roberts. I think the Chairwoman and I are big 
supporters, without question, of EQIP.
    Chairwoman Stabenow. Yes.
    Senator Roberts. We are going to take a good hard look at 
that and see if we cannot be helpful there, if we can ever get 
to a Farm Bill with the way things are going.
    I want to thank all the panelists, and I am going to quite 
with two minutes ahead.
    Chairwoman Stabenow. All right. Thank you very much.
    Senator Baucus.
    Senator Baucus. Thank you, Madam Chairwoman.
    I am heartened that so many of you talked about the need to 
increase our beef export market and also the free trade 
agreements that need to be passed. Several hours ago, I 
announced that the Finance Committee is going to mark up the 
free trade agreements on Thursday to get them all rolling, get 
things going here, because we have been delaying this a bit too 
long.
    And they will help us export more beef; there is no 
question. Certainly, the Korean agreement will help export more 
beef. My goal is to then put more pressure on other Asian 
countries, especially China and Japan, so they eventually--not 
eventually, very soon--take all ages, all cuts because that is 
a huge opportunity for the American producer.
    I urge you though when you talk about these FTAs--the 
Korean and Colombian and the Panama--to also recognize that 
they will pass only if trade adjustment assistance is also 
passed, and they are all together. And we are not going to get 
the FTAs, whether it is Korea or any of the other two, unless 
trade adjustment assistance is also passed. It is all or 
nothing, and my judgment is it is a package that is worth 
pursuing.
    So I urge all of you when you are talking to your 
colleagues and your friends and the industry, and so forth, 
just you might advise them that heck, if we are going to get 
these FTAs, part of the deal is we also have trade adjustment 
assistance as part of it. Then I think we can start putting 
more pressure on these other countries.
    I must tell you it was hard getting the extra beef 
provisions in the Korean bill. It was very hard. I ran into a 
lot of resistance in different quarters, but we got some bump-
up in Korea. So that is a good precedent I hope for future 
agreements.
    I would just like to know, standing back a little bit. We 
talked about the Ag Bill, and for some of you, the livestock 
title. What other factors really affect your viability?
    I mean there are going to be tax issues, I am sure. We 
talked about trade. I am just curious. When you think about 
your operation, you think about your family, you think about 
your future, how much of it is just cost, the cost of 
production?
    How much of it is tax provisions, including the Federal and 
State tax?
    How much of it is marketing opportunities overseas?
    Just what about the sense of space?
    In my State, in Montana, we Montanans do what we can to 
keep farms and ranches operating mostly for the operators and 
the owners and the producers, but also we in Montana like the 
space. We like all that land that people can drive through and 
drive around rather than having it subdivided.
    So when you think, I am just curious what some of the 
thoughts are and do you prioritize them?
    Mr. Hunt?
    Mr. Hunt. Senator, one thing I would mention related to 
tax, I do not know how many members understand that many of our 
ag companies are formed in pass-through entities.
    Senator Baucus. Right.
    Mr. Hunt. These are entities that the owners pay the tax, 
not the company. So when we think about corporate America and 
paying corporate taxes and so on, and personal income taxes, 
actually for many companies like ours, our producer-owners are 
actually paying the tax for the company. So when you talk about 
raising personal income taxes, that is actually raising the 
taxes on the owners of these business.
    Senator Baucus. Okay. Other thoughts?
    Hans, you have some ideas about that? And thank you for 
coming
    Mr. McPherson. Yes, thank you, Senator.
    Senator Baucus. Your testimony sounded just as good here as 
it did in your tractor, believe me.
    Mr. McPherson. Okay. Thank you.
    I think one of the things that affects our operation is 
new--and it was in the last Farm Bill, and it is just you Chief 
White talk about it here earlier--was the CSP program. The 
Conservation Stewardship Program is a program that really 
benefits livestock producers. We were able to take advantage of 
that.
    Programs like CRP got tweaked back in, I think, 2002 to 
allow some rotational grazing and some rotational hay on it. 
That helps livestock producers. In our State right now, with 
the flooding, CRP ground has been able to be used for some 
calving and to move calves, or the cows, off the lower ground 
where it is flooded. So I think that is a good program.
    But for my personal operation, the CSP program has been 
very, very beneficial, and it has helped us.
    Senator Baucus. Do you use EQIP?
    Mr. McPherson. Yes, we have used EQIP?
    Senator Baucus. That has been helpful too?
    Mr. McPherson. Absolutely.
    The other livestock disaster programs, I stated in my 
written testimony that I feel very fortunate that I do not have 
very much experience in the livestock disaster programs. So 
that is personal experience.
    I have seen it in my experience with the county FSA office 
and with the State FSA committee, to where these livestock 
disaster programs have made the matter of whether a family eats 
this summer or not over some disaster with livestock.
    Senator Baucus. I would just be interested in your thoughts 
in addition to what you just said because when we wrote the 
last Farm Bill, frankly, I insisted on a disaster section of 
the bill, so we have a permanent agriculture disaster 
assistance program. The thought being that we have got to get 
away from the ad hoc. You know, some years we get disaster 
assistance, some years we do not, and it just waiting for 
Congress to act, and so on and so forth.
    Now nothing is perfect, but just your honest assessment of 
whether the provisions that are currently in the Farm Bill with 
respect to livestock indemnity or forage, or what not, do they 
tend to work or not? Would you suggest improvements?
    Mr. McPherson. Well, I believe they work very, very well. 
And prior to 2008, it seemed to me like all the Farm Bills were 
written for the corn and soybean producers and wheat producers. 
I will not win many friends with them guys today, but it is 
nice to have something in the Farm Bill that is for the 
livestock producer or the diversified farmer.
    Senator Baucus. So you find that it is better than earlier 
practice where sometimes Congress acted and sometimes Congress 
did not act?
    Mr. McPherson. I believe that is true, yes.
    Senator Baucus. Okay. What about others? I am curious what 
others think about the disaster provisions in the Farm Bill.
    Mr. Sietsema. I would go along with the personal tax issue 
that was brought up earlier. Our entities also are pass-through 
entities. With increasing personal tax rates, there can be 
large profits in an organization of different sizes, and they 
are not realized cash profits. They are corn in a bin or they 
are livestock in a feed operation. They have not turned into 
cash yet. But with the current volatility in the markets these 
past few years, you could have a substantial profit on December 
31 and have it all vaporize by April 1st of the following year, 
but you paid a tax liability on that dead date of December 
31st.
    Senator Baucus. My time is expiring, but I would just be 
curious. Are all of you organized as pass-through companies? 
Are any of you C corporations? Are you pass-throughs? I am just 
curious how you all are organized from a business tax 
perspective.
    Mr. Hunt. LLC.
    Senator Baucus. LLC, so you are pass-through.
    Mr. Sietsema. And the other would be the estate tax issue.
    Senator Baucus. Okay. Are any of you C corps?
    So you are all pass-throughs. Sub-chapter S, another pass-
through. Okay.
    Mr. Sietsema. And the estate tax issue. We have got three 
generations working in our farm operation, shoulder to 
shoulder. And as we continue to grow and expand our operations 
it is going to be more and more difficult to maintain those 
operations without having to sell a chunk off to send 
Washington a check so that I can maintain the balance of my 
operation for myself and my next generation.
    Senator Baucus. There was a change in the State and Federal 
estate tax law last year, last December. Have you looked at 
that? It was a big change in your favor.
    Mr. Sietsema. Yes, in our favor, but there are still some 
areas there that----
    Senator Baucus. I am just curious.
    Mr. Sietsema. --it is amazing how large a farm can be 
valued today also.
    Senator Baucus. Yes. Right. Okay. Thank you very much.
    Chairwoman Stabenow. All right. Well, thank you.
    Senator Baucus. Thank you.
    Chairwoman Stabenow. Thank you very much to all of you for 
coming forward. This certainly is not the last time we are 
going to be talking about the importance of the livestock 
industry and the issues that you are facing. We appreciate your 
raising all the issues you face.
    And as we go forward in the Farm Bill we want to make sure 
that we are doing the right thing to be able to be your 
partners, to be able to make sure that you have every 
opportunity to continue to be successful and move forward. We 
are looking--whether it is GIPSA or other issues that affect 
the industry we talked about today, we are going to continue to 
be involved and engaged in the discussions with the Department.
    And I would just say in closing that we need to remember 
again that the livestock industry supports two million jobs 
nationally, and we need to make sure that each of you and the 
people you represent have the tools and the support to be 
successful because it is important for all of us.
    So, thank you very much.
    The meeting is adjourned.
    [Whereupon, at 5:19 p.m, the hearing was adjourned.]
      
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                            A P P E N D I X

                             JUNE 28, 2011




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                         QUESTIONS AND ANSWERS

                             JUNE 28, 2011



      
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