[Senate Hearing 112-690]
[From the U.S. Government Publishing Office]
S. Hrg. 112-690
ENERGY AND ECONOMIC GROWTH
FOR RURAL AMERICA
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
FEBRUARY 15, 2012
__________
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Committee on Agriculture, Nutrition and Forestry
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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
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Page
Hearing(s):
Energy and Economic Growth for Rural America..................... 1
----------
Wednesday, February 15, 2012
STATEMENTS PRESENTED BY SENATORS
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan,
Chairwoman, Committee on Agriculture, Nutrition and Forestry,
Washington, DC................................................. 1
Roberts, Hon. Pat, U.S. Senator from the State of Kansas......... 2
Panel I
Vilsack, Hon. Tom, Secretary, United States Department of
Agriculture, Washington, DC.................................... 4
Panel II
Fluharty, Charles, President and CEO, Rural Policy Research
Institute; Research Professor, Truman School of Public Affairs,
Columbia, MO................................................... 42
McCauley, Mathias J., Director of Regional Planning and Community
Development, Northwest Michigan Council of Governments,
Traverse City, MI.............................................. 37
Raitano, Florine P., Immediate Past President, Rural Community
Assistance Corp., Dillon, CO................................... 39
Rembert, Mark, Executive Director, Energize Clinton County (and
Wilmington-Clinton County Chamber of Commerce), Wilmington, OH. 41
Panel III
Edwards, Lee, President and CEO, Virent, Inc., Madison, WI....... 52
Flick, Steve, Chairman of the Board, Show Me Energy Cooperative,
Centerview, MO................................................. 51
Greving, William, Sorghum Farmer, Prairie View, KS............... 49
Hutchins, Bennie, Energy Program Coordinator, Ag Energy
Resources, LLC, Brookhaven, MS................................. 54
----------
APPENDIX
Prepared Statements:
Grassley, Hon. Charles....................................... 62
Lugar, Hon. Richard G........................................ 63
Thune, Hon. John............................................. 65
Edwards, Lee................................................. 67
Flick, Steve................................................. 73
Fluharty, Charles............................................ 86
Greving, William............................................. 96
Hutchins, Bennie............................................. 100
McCauley, Mathias J.......................................... 110
Raitano, Florine P........................................... 118
Rembert, Mark................................................ 126
Vilsack, Hon. Tom............................................ 149
Document(s) Submitted for the Record:
Hon. Pat Roberts:
Kansas Farm Bureau, prepared statement....................... 158
Hon. John Boozman:
Various organizations representing the forestry and forest
products community, prepared statement..................... 159
Lugar, Hon. Richard G.:
Title IV--Enery From Rural America, Sec.4001. Definitions.... 165
Question and Answer:
Stabenow, Hon. Debbie:
Written questions to Hon. Tom Vilsack........................ 180
Written questions to Mathias J. McCauley..................... 182
Written questions to Florine P. Raitano...................... 182
Written questions to Mark Rembert............................ 182
Written questions to Charles Fluharty........................ 182
Written questions to Lee Edwards............................. 182
Written questions to Steve Flick............................. 183
Written questions to Bennie Hutchins......................... 183
Roberts, Hon. Pat:
Written questions to Hon. Tom Vilsack........................ 184
Bennet, Hon. Michael:
Written questions to Florine P. Raitano...................... 187
Boozman, Hon. John:
Written questions to Hon. Tom Vilsack........................ 188
Chambliss, Hon. Saxby:
Written questions to Hon. Tom Vilsack........................ 189
Gillibrand, Hon. Kirsten:
Written questions to Hon. Tom Vilsack........................ 190
Thune, Hon. John:
Written questions to Hon. Tom Vilsack........................ 192
Written questions to Mathias J. McCauley..................... 194
Written questions to Florine P. Raitano...................... 194
Written questions to Mark Rembert............................ 194
Written questions to Charles Fluharty........................ 194
Written questions to Lee Edwards............................. 194
Written questions to Steve Flick............................. 194
Written questions to Bennie Hutchins......................... 194
Written questions to William Greving......................... 195
Edwards, Lee:
Written response to questions from Hon. Debbie Stabenow...... 196
Written response to questions from Hon. John Thune........... 198
Flick, Steve:
Written response to questions from Hon. Debbie Stabenow...... 199
Written response to questions from Hon. John Thune........... 199
Fluharty, Charles:
Written response to questions from Hon. Debbie Stabenow...... 203
Written response to questions from Hon. John Thune........... 203
Greving, William:
Written response to questions from Hon. John Thune........... 207
Hutchins, Bennie:
Written response to questions from Hon. Debbie Stabenow...... 208
Written response to questions from Hon. John Thune........... 208
McCauley, Mathias J.:
Written response to questions from Hon. Debbie Stabenow...... 211
Written response to questions from Hon. John Thune........... 212
Raitano, Florine P.:
Written response to questions from Hon. Debbie Stabenow...... 214
Written response to questions from Hon. Michael Bennet....... 215
Written response to questions from Hon. John Thune........... 219
Rembert, Mark:
Written response to questions from Hon. Debbie Stabenow...... 222
Written response to questions from Hon. John Thune........... 223
Vilsack, Hon. Tom:
Written response to questions from Hon. Debbie Stabenow...... 226
Written response to questions from Hon. Pat Roberts.......... 234
Written response to questions from Hon. Kirsten Gillibrand... 244
Written response to questions from Hon. Saxby Chambliss...... 246
Written response to questions from Hon. John Thune........... 248
Written response to questions from Hon. John Boozman......... 251
ENERGY AND ECONOMIC GROWTH
FOR RURAL AMERICA
----------
Wednesday, February 15, 2012
United States Senate,
Committee on Agriculture, Nutrition and Forestry,
Washington, DC
The Committee met, pursuant to notice, at 9:36 a.m., in
room SD-G50, Dirksen Senate Office Building, Hon. Debbie
Stabenow, Chairwoman of the Committee, presiding.
Present: Senators Stabenow, Harkin, Baucus, Nelson,
Klobuchar, Bennet, Roberts, Cochran, Johanns, Boozman,
Grassley, Thune, and Hoeven.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION
AND FORESTRY
Chairwoman Stabenow. Good morning. The Senate
Committee on Agriculture, Nutrition and Forestry will come
to order. We appreciate all of your attendance this morning. We
certainly appreciate having Secretary Vilsack with us today.
Today's hearing focuses on our efforts around rural
development, bio manufacturing, and energy--all of which
involve policies that help businesses create jobs in rural
America and new markets for our farmers. As I have said many
times before, the farm bill is a jobs bill; 16 million people
in this country are employed related to agriculture, and we are
very proud of that. It is very critical that we pass a farm
bill this spring--a sentiment we heard this week from more than
80 farm groups, and I could not agree more.
I count myself lucky to have grown up in the small town of
Clare, Michigan, in northern Lower Peninsula, and preserving
our rural way of life is something that is very near and dear
to me personally and to my family. This can mean helping small
towns build a safe drinking water system or affordable
broadband Internet access, or it can be in the form of
streamlined programs that are more accessible for the people
who use them. Cutting red tape and making programs work more
efficiently will be a priority as we look at the titles of the
farm bill, particularly so in rural development.
Especially with our current budget pressures, we need to
think strategically about the best way to achieve long-term
economic growth in rural America. One of the most effective
things we can do is to encourage leaders to work together on
regional economic strategies--and we will hear about that
today--allowing them to create job opportunities that are more
likely to stay in their own home town and in their region.
Bio-based manufacturing is a great example of new
opportunities in rural America through innovative businesses
that create good jobs. The economic benefit is twofold: new
markets for our farmers and new jobs and opportunities in town.
According to a recent Department of Agriculture study, the bio-
based plastic and chemical products industry could create over
100,000 American jobs--and many of those in rural America.
Biomass is another critical component of the bio-economy. These
companies develop new uses for wood fiber and other forest
products and clean, American-grown energy.
Farm bill energy programs promote innovation by
entrepreneurs and businesses small and large. Secretary Vilsack
and I had a chance to see this firsthand last August at the
Pure Michigan 400 NASCAR race, where all of the cars are
powered using E15, American-made biofuel. But the energy title
is not just about next generation of biofuels. The most popular
program is the Rural Energy for America Program, which helps
producers reduce their energy costs through renewable or
efficiency measures. We know this has created or saved 14,000
rural jobs to date.
This weekend, we remembered the birthday of President
Abraham Lincoln, who, 150 years ago this year, created the
Department of Agriculture. He called it the ``People's
Department.'' It is only fitting that today's hearing focuses
on the millions of people whose livelihoods depend on the
health of rural economies all across the country and all
Americans who depend on what is done for a healthy and secure
food supply in America.
I want to thank all of our panelists for being here, and I
would now like to turn to my friend and Ranking Member of the
Committee, Senator Roberts, for his opening statement.
STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
KANSAS
Senator Roberts. Well, thank you. It is always helpful when
you turn the microphone on.
Thank you, Madam Chairwoman, and thank you to our witnesses
for joining us today. I look forward to hearing from each of
you as we talk about the next farm bill, how we should shape
policy, specifically in the areas of rural development and
energy.
Unfortunately, our current budget situation leaves us with
very little room for error, so when making policy decisions on
what is best for rural Americans, we will rely heavily on our
witnesses to tell us what programs are working, what programs
are not working, and how we can make smarter decisions here in
Washington that will provide our producers around the country
with the tools they need to growth our rural economies in a
smart, viable, and lasting way.
I would just like to highlight for a moment, Madam
Chairman, some achievements in my home State of Kansas. We have
a solid group of leaders who are spending a lot of time,
resources, and talent on solutions for growing our rural
economies. I commend those leaders, like the Kansas Farm
Bureau, the W.K. Kellogg Foundation, Kansas State's Advanced
Manufacturing Institute, as well as the Rural Policy Research
Institute, for the innovative thinking and commitments to this
effort.
I am glad we have Mr. Fluharty here from the Rural Policy
Research Institute to tell us about these projects, how they
are improving the lives and the economies of rural Kansans.
With that in mind, Madam Chairwoman, I ask unanimous
consent for the written testimony submitted by the Kansas Farm
Bureau to be included in the official record at this point.
Chairwoman Stabenow. Without objection.
[The prepared statement of the Kansas Farm Bureau can be
found on page 158 in the appendix.]
Senator Roberts. I thank you.
I am also pleased to welcome Mr. Bill Greving and his wife,
Diana, from Prairie View, Kansas. Bill is a sorghum and wheat
farmer and will share his experiences working with local
ethanol facilities both on supplying sorghum and utilization of
the distillers drain for his cattle.
I look forward to hearing from our witnesses today about
the results from these investments and what each of you sees as
the future in renewable energy. I am concerned that after 4
years some of these programs were just implemented within the
last year. We need to make sure we are taking into
consideration the complexity of these energy programs--and it
is not just energy; we are discussing this issue in multiple
titles--the complexity of programs and the ability of the
Department to deliver the programs effectively and for
producers to understand their options.
We also have a responsibility to craft the right type of
programs to facilitate new markets without adversely affecting
the existing markets or duplicating actions of other Government
agencies. Hopefully we can use all of this good insight from
our panel of witnesses today as we move forward with farm bill
discussions.
I do appreciate very much our Secretary, Secretary Vilsack,
for taking his valuable time to testify this morning. I know he
has a plane to catch, and I appreciate him being here.
While we are here to discuss other matters, I would be
remiss if I did not comment about the President's budget
announcement this week. I was very disappointed to see--yet
again, I might add--a proposal that cuts nearly $8 billion out
of the Crop Insurance Program. Madam Chairman, this is the
number one issue that we have heard about in every hearing we
have had in regards to what farmers need and what they rely on.
This is on top of the $6 billion cut from the previous SRA.
What baffles me is that instead of looking for new and
innovative ways to protect producers as well as taxpayers, the
President's budget simply dusted off old policy proposals that
Congress simply has rejected.
Furthermore, with roughly 80 percent of agriculture's
budget tied to nutrition programs, his proposal cannot find $1
of savings from increased efficiencies. Thankfully, this
Committee is about to start a process where we will make the
necessary policy decisions for the future as opposed to simply
looking at numbers and dollars and cuts that have been there in
the past.
Madam Chairwoman, I appreciate the extra time for me to
make this point. I look forward to today's hearing, and I thank
you for your leadership.
Chairwoman Stabenow. Well, thank you very much, and we will
proceed with our first witness.
First let me say we have excellent panelists today, and we
appreciate everyone who has come to be with us. We will ask
members of the Committee to please submit their opening
statements for the record.
Also, when we have a quorum of 11 members, we will be
proceeding very briefly with reporting nominees from the
Committee that we have held nomination hearings on, and so I
would ask members to please remain until we can have 11 members
to be able to do that.
Let me also say we will be extending our time this morning
to 7-minute rounds for Secretary Vilsack, and we very much
appreciate, Mr. Secretary, your being here today.
As everyone knows, Secretary Tom Vilsack is the current
Secretary of Agriculture, and prior to his appointment,
Secretary Vilsack served two terms as the Governor of Iowa. In
that role and as a State Senator and the mayor of Mount
Pleasant, Iowa, Secretary Vilsack has a remarkable record of
making positive change in the lives of those he has served. We
appreciate your bringing your talents to this job and welcome.
STATEMENT OF THE HON. TOM VILSACK, SECRETARY, U.S. DEPARTMENT
OF AGRICULTURE
Secretary Vilsack. Madam Chair, thank you very much to you
and to Senator Roberts and members of the Committee. Thank you
for this opportunity.
You have a copy of a written statement, which we would ask
just simply be made part of the record, and if I might just
spend a minute or two talking from the heart about the issues
that you confront.
I will never forget when I was campaigning for Governor
going to a small town in southwest Iowa and sitting down in a
coffee shop and having a conversation with a couple of
community leaders. They talked about the importance of their
school, of their hospital, of law enforcement, and then they
stopped the conversation and just indicated to me that the
concern that they had about their community was that there was
a great dependence on Government-supported institutions for
jobs, and that what they really wanted to do was to figure out
ways in which the private sector could be more excited about
their small community and small communities across the State.
I think this Committee has an extraordinary opportunity,
notwithstanding the difficult fiscal circumstances we find
ourselves in, to make a very bold statement about the
importance of rural America and small towns and to create a new
opportunity. I think we started that conversation with biofuels
and renewable energy. I think there is an extraordinary
potential for a bio-based economy.
We have put the pieces in place to do research, to provide
assistance for small business development, to provide resources
for manufacturing, to provide opportunities for producers to
produce non-food feedstocks for this bio-based economy. I think
as we craft the farm bill, working with the Senate and House
Agriculture Committees, we are very interested in providing the
technical assistance that you all need to be able to focus on
this great opportunity. Not only is it an opportunity to
increase farm income, and not only is it an opportunity for
smaller producers to have additional markets which are local
and regional in nature, but it is a job creator.
You mentioned 100,000 jobs. Well, the reality is that as we
move towards the 36 billion gallons of renewable fuel under the
Renewable Fuel Standard, and as we fully integrate and
coordinate our efforts in the bio-based economy, we are talking
about millions of jobs.
The very nature of biomass, the bulk of biomass, suggests
that we will not have one large refinery servicing multiple
States. We will have these refineries dotting the landscape
across America in every part of America. This is not just a
Midwestern idea. This is not just a Southeast idea. This is a
national opportunity.
So I am excited about the opportunity to visit with you
today because I think for the first time in a long time, we
have a vision of a rural America where moms and dads and
granddads and grandmoms can be able to sit down and talk to
their children and their grandchildren and explain to them that
they have an extraordinary opportunity to create an economy in
rural America that makes us less dependent on foreign oil, that
makes us less dependent on moving to cities and suburbs to find
real opportunity, that provides us a chance to fundamentally
change the character of the economy of this country and get us
back in the business of making, creating, and innovating. We do
that better than anyone else in the world, and folks in rural
communities have been waiting for this moment.
As you consider the farm bill, I hope that you will
recognize the importance of streamlining the number of programs
we have, providing us the flexibility to be able to use these
programs creatively and adjust them to regional differences,
and to understand the significance and importance of regional
economic development.
These communities by themselves may have a difficult time
finding the human capital or the financial resources, but as
part of an economic unit, an economic region, they can join
forces, they can leverage their resources both human and
financial, and with the help and assistance of USDA, can build
the platform and the foundation for an extraordinary economy.
So I look forward to responding to questions today and to
our team working with the Senate and House Agriculture
Committees to take full advantage of this opportunity. And,
again, I thank you for the chance to be here today.
[The prepared statement of Secretary Vilsack can be found
on page 149 in the appendix.]
Chairwoman Stabenow. Well, thank you very much, Mr.
Secretary, and I share your view about the opportunities in the
new biofuel, bio-manufacturing, and bio-economy and what the
opportunities are for rural America and for the country as a
whole.
Before we get into specifics, though, I do want to spend a
moment on the budget because it is very, very important as we
go into this farm bill discussion. As you know, when the
leadership of the House and Senate Agriculture Committees were
asked to make recommendations last year on deficit reduction,
we chose to do something a little different than ended up
happening anywhere else, which was to sit down and develop
something in a bipartisan, bicameral way. We are very proud
that we were able to do that even though the full process did
not come to a conclusion. We did recommend $23 billion in cuts.
I would say that agriculture is about a little less than 2
percent of Federal outlays, and the $23 billion was a little
less than the amount in total that needed to be cut. We felt we
recommended our fair share.
But in all of that, we placed as a cornerstone crop
insurance, and as Senator Roberts had mentioned, we have heard
across the country from our field hearing in Michigan to Kansas
to people coming in and speaking with us here how critical crop
insurance is.
So we need you to speak to the President's proposals on
cuts in farm programs, and I am particularly concerned about
crop insurance.
Secretary Vilsack. Madam Chair, thank you for that
question. You all have two great opportunities to impact the
rural economy: the farm bill and the budget. We certainly
respect the responsibilities of the House and the Senate with
reference to both.
Let me first of all say that I have publicly said this and
will continue to say that you in your position as Chair of this
Committee and Representative Lucas in his position as Chair of
the House Committee did what most Americans want us to do,
which is to work together to figure out compromise, to figure
out middle ground, to give and take and get things done. I am
deeply disappointed that your work was not fully accepted
ultimately by the Committee of 12 and replicated by that
committee so that we would be in a position to deal with
deficit reductions.
Having said that, we are now back to square one. We
understand and appreciate the $23 billion proposal. We also
understand that Representative Ryan's budget, which passed the
House last year, called for $48 billion of reductions. We are
not certain what will take place this year, but Representative
Ryan's statements have indicated that the budget will look
similar to what has been proposed in the past. So one has to
assume that that number may be higher than the $23 billion that
you all talked about.
Budgets are difficult processes, and they involved, as you
well know, choices and priorities. The President, when he
looked at the agricultural budget, basically had to decide
whether or not to focus on a balanced approach and an approach
that basically took resources from farm programs, conservation
programs, and nutrition assistance programs. He opted not to
take money from nutrition assistance programs. With due respect
to Senator Roberts, it is not about efficiencies. That
efficiency issue is one that we are dealing with in our
operating budget, which has been reduced and which we are
currently working on.
The crop insurance proposal basically focuses on four
elements:
First of all, a recrafting of the catastrophic coverage, a
recalibration of the way in which those premiums are set. It
will not impact or affect farmers in any way, but it will
provide us some savings.
Secondly, a look at the administrative and operating
expense that is provided for the implementation and
administration of the Crop Insurance Program and essentially
placing a cap on the A&O, which would save several billion
dollars over 10 years. That involves, obviously, agents, not
necessarily farmers and ranchers and producers.
A substantial piece of the President's proposal also takes
a look at the return on investment that insurance companies
generate from the sale of crop insurance. Historically, we
believe, based on studies, that roughly a 12-percent return is
sufficient to adequately support this industry. Today we are
significantly above that 12-percent return on investment, and
the President feels that 12 percent is an appropriate place to
be. I suspect that a lot of Americans would love to have a 12-
percent return on their investments. That is several billion
dollars.
Then there is a premium adjustment for those farmers who
are currently purchasing policies where the subsidy to them is
more than 50 percent of the premium. This is obviously a
partnership between the insurance industry, Government, and the
farmers, and the President felt that something closer to a 50/
50 partnership was fair.
That is essentially the proposal, and that allowed us not
to take resources away from nutrition assistance programs, and
that is basically a choice. So the question is: Who is in the
best position to bear the difficult cuts and reductions that
must be forthcoming? It is obviously an issue that we will talk
about and debate, and everyone's position should be respected
for their views. But in the President's view, these insurance
companies are perhaps in a better position to withstand these
difficult times than the folks who are currently struggling
with tight budgets and cannot afford to put enough food on the
table for their families.
Chairwoman Stabenow. Well, thank you. I want to ask
specifically about our topic today. I do want to also
underscore, though, that I am equally concerned, actually more
concerned about what the House budget showed last year and what
we anticipate, if we are going to try to write a farm bill. So
I want to underscore that as well and am very concerned about
that.
But let us talk also about particularly around energy.
There are two kinds of things happening for us in Michigan.
There was a groundbreaking in Fremont, Michigan, the
international home of Gerber Baby Food, last year, the first
commercial-scale digester project in the United States. It
would take over 100,000 tons of agricultural waste and turn it
into energy, and this was something supported by USDA. So we
have those kinds of projects.
Then we also have bio-based manufacturing where, in fact,
we are using agricultural products to replace, as you know,
petroleum in products, and we have our Big Three auto makers
right now using, for instance, soy-based foam in the seats of
their automobiles. So if you are buying an F-150 truck or a new
Chevy Volt--I could go on advertising, but I will not--in fact,
you are sitting on soybeans. So if you get hungry, you know you
have got something you can munch on.
But talk a bit about how we continue to expand on the
opportunities there.
Secretary Vilsack. Madam Chair, I think there are two
significant proposals that you all ought to consider. The
reality is that the energy programs in the 2008 farm bill were
not funded through the length of the farm bill and, therefore,
are not in the baseline that you all have to deal with. That
creates the challenge of whether or not those programs are
continued.
In the event you make the decision that you cannot provide
the resources in those programs, then what you need to consider
is providing flexibility in the existing programs that will
remain. The Business and Industry Loan Program is one that is
very tightly structured to only provide resources for
``commercially viable products.'' That limits the capacity to
use that program that has billions of dollars of opportunity in
it over the course of a farm bill life to be able to utilize
for these bio-based manufacturing facilities, because some of
this may not be ``commercially viable.'' So one thing you ought
to look at is providing enough flexibility in the B&I Program
to give us the capacity to further provide resources for these
entities.
The second program is the REAP program. You know, we are
excited about the over 22,000 projects that were funded through
REAP. Many of them included anaerobic digesters and other
mechanisms on a much smaller scale on a farm-by-farm, small
community scale. We think that this is a program that requires
and needs attention from the Congress and provide us the
resources because it can make a significant difference; 22,500
projects have been funded through this program already, and
there is enormous potential for it.
Chairwoman Stabenow. Thank you very much. I am over my
time. I will turn to Senator Roberts.
Senator Roberts. Thank you, Madam Chairwoman.
Let me just say something that I think we are going to
agree to disagree on crop insurance, but I look forward to
working with you. I think we have made some real progress on
crop insurance. During our very unique deliberations, it was a
situation that I do not think we have ever had to face before
as a Committee. Four principals--the two Rankings, the two
Chairpersons--trying to come up with something in regards to
deficit reduction. We were the only Committee that submitted
$23 billion to the process. The process broke down.
This time around, we have scheduled four hearings--this is
the first--and we have agreed to start over. We have agreed to
build on the progress that we think we have made on
conservation, on crop insurance, and on other titles. We still
have some work to do without question.
The point I would make is that all 21 members will be part
of this. It will be an open process. I have visited with all of
my side, on the Republican side, and I know the Chairwoman is
doing the same thing on her side as well. It is our hope that
we can get a bill out as soon as possible after the hearings,
and we have to move in a very expeditious fashion. It is our
hope that we can get unity on this Committee during that open
process where everybody feels that they have an opportunity to
participate. That is not in my prepared remarks, but I thought
it would be very helpful.
I am going to ask a parochial question, but it does have
national security implications. Several years ago, Kansas was
selected through a competitive process run by the Department of
Homeland Security to be the site of the new National Bio and
Agro-Defense Facility. The acronym for that is NBAF. The
purpose was to replace the aging Plum Island facility, which,
by the way, ranked sixth out of six finalists under
consideration for the final site selection.
To date, the Federal Government has spent over $100 million
in design and preparations to build this facility. The State of
Kansas is also designated a cost share as part of the proposal,
is well over $206 million. In fact, the land where this
facility is to be built at Kansas State University has already
been cleared of all the buildings and structures.
I know you support the construction of this new facility. I
thank you so much for your time when we talked about this and
the dangers to our country and our Nation's food supply and
what that threat really poses. As a former member and Chairman
of the Intelligence Committee, I can assure you that threat
still exists. I know you understand the important need it would
fill in our agriculture and food security.
The Secretary of Health and Human Services, Kathleen
Sebelius, our former Governor--she was Governor when this all
went through--is supportive, and DHS Secretary Napolitano has
previously toured the site and expressed her support for the
project. So I and most Kansans were surprised--and I think all
of agriculture was surprised, stunned actually--when the
President's budget came out on Monday and proposed no
construction funds in 2013, and it also proposed a task force
to determine if a new facility is actually needed.
Mr. Secretary, do you believe construction of this facility
is vital to our Nation's food and agriculture security?
Secretary Vilsack. Yes.
[Laughter.]
Senator Roberts. Thank you, Mr. Secretary.
Mr. Secretary, since we both agree it is vital and the Plum
Island facility is in a sense starting to fall apart, were you
surprised at all to see the budget eliminate the construction
funding and instead pump more money into research? I want to
emphasize that research that the State of Kansas has already
agreed to support is part of our share of that Kansas' cost
share proposal.
Secretary Vilsack. Senator, we are looking at
opportunities, as you and I have discussed, to see if there are
ways in which some of the activities or some of the work that
is being done in Plum Island, that some of that work may
transition, if you will, to the Kansas location, which I am
committed to trying to make happen this year. So, obviously, we
are going to continue to work with you and work with the
Committee and work with the Congress to make sure that folks
understand the significance of this facility, to make sure that
they understand the concerns that we have with the Plum Island
facility, and some of the needed repairs that would be required
and the cost of those repairs over a period of 10, 15, 20
years, and whether or not we would be better off as a country
having a modern facility.
This is critical for us. It is critical for us in terms of
being able to identify problems and being able to accurately
analyze the extent of the problem. As we become more engaged in
global trade, and as agriculture becomes a great story for
American exports, we obviously want to be able to maintain our
good reputation around the world.
So this facility is important. We will continue to work
with Homeland Security, as we have, and we will continue to
work with your office, as we have, to make sure that at some
point in time this becomes a reality.
There is still a lot of work that has to be done in terms
of the design. We have to make sure that it is adequate to
contain some very dangerous materials that they will have to
deal with, but my hope is that we can find a way to get this
thing built at some point.
Senator Roberts. I certainly appreciate your answer.
Let me change subjects with the minute I have left. Last
summer, the President announced the creation of the White House
Rural Council. It is chaired by you, sir, and it focuses on
actions to better coordinate and streamline Federal program
efforts in rural America. I was pleased to see such an effort
to take down the stovepipes of bureaucracy on behalf of farm
country. Oftentimes, actions taken by agencies other than the
Department have a tremendous impact on the development of rural
America.
What role are our agriculture industries--farmers,
ranchers, small businesses, State and local officials, and
other rural stakeholders--what role are they playing to achieve
the goals of the White House Rural Council?
Secretary Vilsack. Senator, the first thing we are
attempting to do with this Council, which is, as you have
noted, the first time in the history of our country that such a
committee has been put together by an Executive order, is to
figure out ways in which initially the Federal Government can
work more closely with each other. Let me give you a couple of
examples of things we have already done that are in the
pipeline.
We recognized the need for more venture capital and more
capital to be placed and invested in rural America. As a result
of the Rural Council's work, the Small Business Administration
has committed to doubling the amount of that type of credit
going into rural communities over the next 5 years. It is
roughly $3.5 billion of additional credit that is going to be
made available.
As a result of that coordination, USDA and SBA are now
holding a series of venture capital conferences across the
country where we are bringing people in from regional areas,
bankers, agribusiness, institutional investors--and encouraging
them to look at opportunities in rural communities. Again, this
bio-based economy is one of those opportunities. We want to
acquaint them with those opportunities as well as the
infrastructure opportunities. We think that there are a number
of pension plans and other entities that are looking for stable
investments, and public infrastructure investments is a way of
providing that stability and that appropriate return. Madam
Chair referred to wastewater treatment facilities. That is an
example.
We are working with Health and Human Services to better
coordinate rural health technology. We announced an opportunity
for USDA and HHS to work together to create the workforce that
will allow us to do electronic medical records more effectively
in these small rural hospitals. So we are working with the
medical community in terms of that proposal.
The Department of Navy and the Department of Energy and
USDA are working together in a first-time-ever proposal to help
the commercial aviation industry create a drop-in aviation fuel
which would be used by our Navy. That is obviously of great
interest to agribusiness and to farmers and producers. It is
also of interest to Boeing and United and Honeywell and other
entities that are trying to build a commercial aviation
industry in the United States that is prepared for the 21st
century.
So there is a whole series of proposals that are taking
place. We meet monthly. I chair the meetings. I physically go
to the meetings. We are demanding results from these agencies,
and we are getting them. I think you will see over the next
month or so a series of announcements coming out that will
impress upon you that we are working in a collaborative
fashion.
Senator Roberts. Well, thank you for such a fine statement
and for your leadership.
My time has expired, Madam Chairwoman. I would like to
submit several other questions for the record.
Chairwoman Stabenow. Absolutely.
[The questions of Hon. Pat Roberts can be found on page 184
in the appendix.]
Chairwoman Stabenow. Senator Harkin.
Senator Harkin. Thank you very much, Madam Chair.
Mr. Secretary, thank you very much for a very eloquent
opening statement, and thank you for the great work that you
are doing at the Department of Agriculture. Two things.
First, thanks for what you said about the nutrition
programs. I had my weekly breakfast this morning with Iowans. I
had a big group there from the Diocese of Davenport, a Catholic
diocese, and that is what they wanted to talk about, not
backing off of our support for low-income people who are facing
tough times now, with high rates of unemployment, that need the
Supplemental Nutrition Assistance Program, or, as it is called,
``food stamps.'' I thought one of the statements made there was
kind of profound. They said, you know, ``If someone is accusing
this President of being a food stamp President,'' one of them
said, ``well, he ought to wear that as a badge of honor, that
in this country because people face tough times or they are
disabled or are unemployed for periods of time, that we do not
force them out on the street to beg for food, that we keep
their kids well fed and healthy in our country.''
To me that is a source of pride for the United States of
America, not something to be embarrassed by. So I congratulate
you for your strong support of the nutrition assistance program
and the President for his budget that also keeps that important
safety net there.
Secondly, on the biofuels, again, I hope that the President
will get behind those of us here on both sides of the aisle who
have been pushing for market access. I do not think it comes
down to whether or not we need much financial support. The
enzymes have been developed. We have a new plant being built in
Nebraska now by Novozymes, producing the enzymes for the
breakdown of certain cellulosic materials--wheat straw, corn
stover, things like that, bagasse from sugar. What we need is
market access, and that is three elements: we need more flex-
fuel cars, which Detroit must build; we need blender pumps at
our gasoline stations so that at least half, 50 percent of our
gasoline stations should have a blender pump by 2020; and we
need a dedicated pipeline to take the biofuels from sources in
the Midwest to the East.
We have right-of-way. We got the Tax Code fixed for that.
But there is a loan guarantee that should be granted by the
Government to get that pipeline built. If you do those things,
we do not have any worries. We have got the enzymes now. As you
pointed out, these biofuel plants are going to be built all
over. They will provide a lot of local jobs. But we need market
access, and that is what the oil companies are clamping down
on.
I would just say this: I hope that you will take that back
to the President and tell him to get behind what some of us are
trying to do here in the Congress to open up those markets in
those three areas.
Lastly, I have to make a comment about NBAF, as it is
called. We have looked at this for years. The National Research
Council found serious problems in the Department of Homeland
Security's risk analysis. Those issues have not yet been
resolved. It is my judgment that NBAR, a billion dollars, with
all of the problems it has got and with all the needs that we
have in our country now--and I know, okay, we have put some
money into it. I heard the same arguments bout the Clinch River
breeder reactor when we had a Congressman--when I was in the
House, we had a Congressman from Tennessee and later a Senator
by the name of Al Gore, a big pusher of that. But, you know, we
finally realized that even though we had put money into it, we
should not chase bad money with good.
Then later on there was something called the
Superconducting Super Collider. Do we remember that? I remember
a lot of people supporting that here. We had put money into it.
We had already dug some tunnels in Texas. We killed that, too,
because we decided that we were not going to chase bad money
with good.
I think this whole NBAF thing needs a whole fresh look from
the beginning as to whether or not it is better economically
and also for our national security to upgrade the Plum Island
facilities, which are off the coast of America. There is no
country that I know of that has a facility like this that is
out in a farmland area, plus the fact that we have a neighbor
to the north, Canada, that has one of these facilities that we
can use at any time. We have very good relationships with
Canada, by the way.
So I think this whole--and I understand--I could be wrong,
but I understand that the Governor of Kansas recently told the
legislature that the State could not afford or would be putting
that on hold because they were not going to be funding it. I
will have to get the exact words of what Governor Brownback
said, but that was sort of the intent of it.
Lastly, the huge issue--the huge issue--of the possible
escape of foot-and-mouth disease into cattle in cattle country,
I came across one report--again, I do not know if it is true or
not--that said that if this got out, they could not--if foot-
and-mouth disease got out of that facility--and there is a high
probability it could from this risk analysis--that, in fact,
they could not kill the cattle fast enough to stop the spread.
They could not kill the cattle fast enough to stop the spread.
I can understand my friend from Kansas. People want things
built in their States and stuff. We all fight for our own
States and things like that. I understand that. I have no
problem with that whatsoever. But I do believe that on the
basis of national security, the safety of our population, the
safety of our livestock herds, and the probability that it
would be cheaper and better to do this off the coast of America
someplace--and a redesigned and rebuilt Plum Island might be
better for our country, but these are things that we are going
to have to discuss and debate.
Mr. Secretary, thank you very much for being here.
Senator Roberts. Madam Chairman, could I just say a few
remarks?
Chairwoman Stabenow. Yes, Senator Roberts. I do not want to
debate this this morning, but I do understand it is important
to you, so I will yield for a moment.
Senator Roberts. Well, I have been in contact with the
Governor of Kansas virtually every day on this project, and the
Governor, quite the opposite, did not say that they were not
committing funds. As a matter of fact, in talking with DHS, he
is trying to work out a solution that, due to the budget
restrictions, is there any way Kansas can step up? How can
Kansas step up? It is because we have quite a bit of money
dedicated to this project in addition to the commitment by the
Federal Government, which now has not been forthcoming to the
extent that we have. He is sending his top person to meet with
Dr. Tara O'Toole as of tomorrow in regards to further
negotiation on this. It is quite the opposite in regards to
saying that we do not have the money. There were flaws in the
National Academy of Science report. They did not take into
account all the mitigation efforts that we have already put in
place dating back even 10, 5, 3 years ago.
So we do have strong statements on behalf of this facility
from the Department of Homeland Security, from the USDA, and
from the administration, and more especially from the
intelligence community in regard to the secret cities of
Russia, one of which I visited and have tremendous bio-weaponry
capability that would endanger our food supply. Those secret
cities are now closed because we have Mr. Putin in charge as
opposed to Dick Lugar and myself running around Russia trying
to achieve some degree of cooperation from the folks there,
from the scientists in these secret cities. The threat is real.
We have complete support, three Democrat Governors, one
Republican Governor, the entire Kansas delegation, the entire
Kansas State Legislature.
I understand the gentleman's concern. I will be more than
happy to talk with him individually. We have always gotten
along. I think we can get along on this.
Secretary Vilsack. Madam Chair, can I just make a comment
about blender pumps?
Chairwoman Stabenow. Yes, Mr. Secretary. Absolutely, you
may do that, and then we will turn to Senator Cochran, who is
next up.
Secretary Vilsack. I just think it is important to
emphasize the fact that, with some flexibility within the REAP
program, we are in the process of trying to assist in the
location and development of blender pump distribution. I think
Senator Harkin's comment about market access is a good one, and
we are trying to use the REAP program in a creative way to
address that, at least in a small way.
Chairwoman Stabenow. Thank you very much.
Senator Cochran.
Senator Cochran. Madam Chairman, thank you very much for
convening this hearing, and I want to join with other members
of the Committee in welcoming the Secretary of Agriculture to
lead off a discussion of what our hopes are and what the
realities are for assisting production agriculture and the
programs that are administered by the Department of
Agriculture.
We come upon this period of time from occasionally where we
review our farm bill to try to make sure that it is up to date,
and that is one of the key reasons for the Department of
Agriculture and this Committee to exist, in my opinion. It is a
big challenge. We have a lot of people who depend upon programs
administered by the Department for conservation practices which
would be way too expensive for individual landowners to try to
handle by themselves without the benefit of farm bill programs
and other support they get from our Federal Government.
So thank you for being here, and let me just ask you
whether or not you see in the future of this farm bill that we
will be writing and extending programs and reauthorizing
programs whether programs like the Delta Regional Authority,
the Delta Health Alliance, Rural Water Associations, will
continue to be able to look to Washington for support and
guidance as we try to provide health care, housing, and basic
infrastructure needs in rural America.
Secretary Vilsack. Senator, I think it is important for
rural America to have programs that have enough flexibility to
be able to address the multiple needs. We are, particularly in
areas that are poverty stricken, working in a program called
Strike Force where we are attempting to go deeper into these
communities and to create a bond with USDA that had not existed
so that they are comfortable in applying for programs and
comfortable in knowing what the rules of the game are.
So it is important for us to continue to figure out ways in
which we can work with community-building organizations to make
people in these small communities comfortable with the
competitive processes that we have to make sure that we
leverage our resources as effectively as possible.
The most important thing we can do now, I think, is what
this Committee is doing: try to get a farm bill as quickly as
possible so that we have some degree of certainty. Recognizing
the fiscal challenges that you all face, there may not be the
capacity to specifically designate money for a particular
organization or entity, but there is a process by which you can
created a competitive circumstance in which the best programs
will be funded and supported as they should be and giving us
the flexibility to work carefully and closely with regions,
economic regions, to make sure that their needs are well
thought out.
So a long way of answering your question. I think we are
probably not going to see specific designations, but we are
probably going to see more competitive opportunities and
working with communities to make sure that they can be
competitive. I think that is a key. So more flexibility,
streamline the process, and recognizing the importance of these
programs.
Senator Cochran. Some of the Department offices in our
State are given the responsibility of helping administer
assistance programs not only for agricultural producers but
rural communities, small towns, where the opportunities for
education, health care, understanding how to comply with
Federal programs that provide cost sharing for programs that
you just mentioned are very important to be continued and
reauthorized in the farm bill that we will be writing.
As Secretary, you will be looked to for a lot of assistance
in identifying our priorities. Is this administration going to
support the reauthorization of agriculture production in rural
community assistance programs so that we can continue to see
quality-of-life issues addressed with the Federal Government's
assistance?
Secretary Vilsack. Senator, let me see if I can respond to
that question. First of all, to the extent your question asks
whether or not this administration will be supportive of an
adequate safety net to ensure that producers stay in business,
the answer to that is an unequivocal yes. We do recognize that
part of that safety net is some process by which difficult
times--revenues can be protected during difficult times, and we
know the fiscal constraints that we are working under will
require us to recraft and modify existing programs to provide
that safety net.
I would also say that part of the safety net in rural
America is a good job. Many farm families are relying on off-
farm income as well as farm income to be able to meet the needs
of their families. So I see the rural development component of
our responsibility as part of that safety net.
We need to make sure that we use every dollar as
effectively as we can. I can talk to you about the 6,200
community facilities that we have helped build in the last 3
years, a record number of Business & Industry loans that we
have made, worked with small entrepreneurial activities through
a variety of smaller programs. At the end of the day, we have
got 40 programs in rural development. Candidly, we do not need
40 programs. We need fewer programs. But within those existing
programs, you need to give us the flexibility to be able to
craft them and use them creatively.
Again, I think the potential here is unlimited in every
part of the country for a bio-based economy--fuel, energy,
chemicals, et cetera--and the job creation opportunities are
enormous. But right now the stovepipe nature of what we have
makes it difficult for us to be able to really spur that
opportunity and that vision on.
The last thing I would say on conservation, that is also an
extraordinarily important component of economic activity. It is
not just simply the economic and environmental benefits that
come directly to the producer from our conservation programs,
but it is also the outdoor recreation opportunities that are
expanded and created when we have habitat for wildlife. More
hunting and fishing opportunities are extremely important and
an underutilized opportunity for us, I think, in terms of
turning the rural economy around. So it is a broad approach.
Senator Cochran. Thank you very much.
Thank you, Madam Chairman.
Chairwoman Stabenow. Thank you very much.
We are very close to a quorum as well to be able to report
out our nominees, so I would ask patience of the members. We
hope to have a quorum in just a moment.
Senator Nelson.
Senator Nelson. Thank you, Madam Chair. Thank you, Mr.
Secretary, for being here.
I must say that I was relieved that my good friend from
Iowa had more positive things to say about Nebraska's Novozymes
than he had positive things to say about Kansas. So I am much
more relieved, Senator. Thank you.
[Laughter.]
Senator Roberts. Much more promising in the future.
Senator Nelson. I see.
Secretary Vilsack, I know from all of your comments and
everything that you have been doing on biofuels that you share
the view that the future of our transportation needs and the
fuel to run the engine of our economy will depend a great deal,
to a great extent on biofuels. I think, you know, all of us
have this commitment to producing 36 billion gallons of
renewable fuel by 2022. We know that in order to do that, we
are going to have to have a greater diversification of
feedstocks.
So my first question would be: Is the Department in support
of adding a number of feedstocks to the RFS2, including some
annual grains like sorghum?
Secretary Vilsack. Senator, there is no question that we
have to focus on non-food feedstocks. That is one of the
reasons why with the BCAP program we have encouraged the
development of camelina and miscanthus, hybrid poplars, and
switchgrass as potential opportunities. So we are obviously
looking for ways in which we can expand the feedstocks. We are
doing research on trying to figure out how to more effectively
and efficiently use those feedstocks. We are also providing
assistance to bio-refineries in all parts of the country that
use different feedstocks so we can determine what is
commercially feasible. We are focusing on making sure that we
play to the strengths of each region of the country.
So all of that is important, and we will continue to work
with industry. We met with the sorghum producers not long ago
about this issue. We will continue to work with our friends at
EPA to provide them the information, the technical information
they need to make the determinations as to what should be or
should not be included in the RFS2. But I will tell you we are
very much for a broad-based approach.
Senator Nelson. I think if we are able to achieve that
goal, you will see more existing ethanol plants in the Great
Plains retrofitted to take into account and be able to process
feedstocks to move away from some of the other foodstocks that
are currently being used. I think it would be in all of our
interests to see this move as quickly as we possibly can, so if
there is something we can do to be helpful as well as part of
the budget, clearly we ought to be committed to do that.
Secretary Vilsack. Well, let me make one comment on that.
One of the things that we have determined is that the credit
needs of these facilities are complicated, and they are
complicated because Government is normally there at the
beginning of an operation to provide credit. The private sector
is there at the end after you have established commercial
viability. But what we see is there is no one in the middle.
Now, we have used the Biomass Research and Development
Initiative as a way of trying to deal with this Valley of Death
issue, but it is real, and it is significant, and part of what
Congress can do is to look at ways in which that initiative or
other initiatives can help us do a better job of bridging that
credit gap that exists. I think if we get there, I think you
are going to see a substantial increase in the amount of
advanced biofuels that are being produced in this country. I
know there has been frustration with the pace, but I think we
are reaching a tipping point, and you are going to see much
more of it come online here soon.
Senator Nelson. Well, if we do not broaden the base for
feedstocks, it is going to be nearly impossible to reach the 36
billion gallons requirement by 2022. Is that fair to say?
Secretary Vilsack. It is because we are pretty much almost
at the corn-based ethanol cap of 15 billion, so it is
absolutely essential for us to move beyond the overreliance on
corn-based ethanol. I think we are seeing that. We are seeing
algae plants. We are seeing agricultural waste being used in
Florida. We are seeing switchgrass and woody biomass being used
in other parts of the country. And, you know, there is a great
deal of interest here. We just want to make sure we continue
the commitment, that we hold firm on the RFS2 and keep that as
part of our direction.
Senator Nelson. Thank you.
Switching a little bit now to micro entrepreneur
assistance, I have been a supporter of the rural program,
getting it in the last farm bill, and I really think that
programs like RMAP are critical to rural America, small
businesses that make up 90 percent of all rural businesses.
More than 1 million rural businesses have 20 or fewer
employees. So small businesses in the rural areas need capital
to finance those start-up costs as well as for expansion, and
the continued success of these entrepreneurs is essential to
ensuring that rural communities survive.
As you were talking, many of these jobs could be or are
off-farm jobs, will help support agriculture. I recognize the
problems that Congress created for the Department by not
continuing funding for the program in fiscal year 2012. But I
have heard concerns from constituents who have utilized the
program that the Department has suspended activities on all
RMAP loans and grants even though there is still some funding
remaining from past fiscal years.
What is the Department doing here? The reports that we are
getting, are they accurate?
Secretary Vilsack. Senator, to date, $51 million has been
dedicated to 236 loans helping nearly 1,000 businesses. The
problem comes from the language that was included in the
appropriations bill and some concern that we have about
precisely what the direction is from Congress, whether it is
basically suggesting that no further resources are going to be
available or whether it is suggesting that we ought not to
administer the program at all. So we are working with our
General Counsel's office to try to figure out precisely what
that language will allow us to do.
My personal preference would be that we make good on the
commitments that we have made in the past. A lot of folks
worked really hard to get to that point and I think are
frustrated that they cannot get the resources that will allow
them to create the business. We want to be able to do that. I
hope we get there. I just want to make sure that when we do it,
we do not disregard the intent and direction of Congress.
Senator Nelson. Thank you, Mr. Secretary.
Thank you, Madam Chair.
Chairwoman Stabenow. Thank you very much.
Before proceeding with Senator Johanns, we do have a
quorum.
[Whereupon, at 10:32 a.m., the Committee proceeded to other
business and reconvened at 10:34 a.m.]
Secretary Vilsack. Madam Chair.
Chairwoman Stabenow. Mr. Secretary.
Secretary Vilsack. First of all, thank you for getting Mr.
Scuse through the Committee. But, Senator Nelson, in the time
that you had this business hearing, I have learned that we have
actually been given authority to proceed in funding the 2010
and 2011 RMAP loans, so those are going to go through the
process.
Senator Nelson. Thank you.
Chairwoman Stabenow. Senator Nelson, you are pretty
powerful there.
[Laughter.]
Chairwoman Stabenow. Can we give you a couple other
minutes? Maybe you can come up with some other--no.
Senator Johanns.
Senator Johanns. I have to say that was very impressive,
Ben. That is remarkable. Well, let me offer a few thoughts, if
I could.
First of all, it is good to see you again. It is good to
have you at the hearing. As you know, we are kicking off a farm
bill process, although we have had some hearings already, and a
fair amount of work has been done on the farm bill. I have been
saying for a long time, thinking about this farm bill, that the
unwritten story--now it is the written story--is that it is
going to be all about budget. It is tough to get a multiyear
program in place. You know, we are working on the
transportation plan now. In a perfect world, that would be a 5-
year plan. We are working on a 2-year plan. That just seems to
be, unfortunately, the way of the world these days. Like I
said, in a perfect world we would have longer plans, but the
world is less than perfect.
So in thinking about the farm bill process, it has occurred
to me that I think the more streamlined, the more efficient,
the targeted we can make our various programs, the better
chance we have of moving it through the Senate process and
through the House process. So I am going to throw out a couple
of things that I would like your reaction to.
Let me just say, Mr. Secretary, I appreciate the challenge
of being the Secretary. You know, you have got a boss, and that
is a pretty powerful boss, to say the least-- the President of
the United States. I do not expect you, nobody expects you to
come in here and talk down a budget proposal that is made by
the President of the United States. I get it. I understand it.
Yet I also understand that there are probably some things that
you look at and say, ``Boy, I am going to try to work through
this and try to get some flexibility with OMB and the folks at
the White House.'' So let me run these ideas by you and see
what you think.
I look at the risk management aspect, which essentially is
crop insurance, and overwhelmingly producers are telling me--
not only from Nebraska but when I visit with producers around
the country--that they think risk management is really the key
issue of the next farm bill, and they, by and large, like crop
insurance. They might argue about this feature or that feature,
but, by and large, they have felt this to be a very useful tool
in their risk management process.
If anything, I would like to do some things to try to
improve it, maybe fix some things. You know, a multiyear has--
or disasters are difficult and that sort of thing. But without
going into the detail, I see our Crop Insurance Program. Then I
see another program, SURE, and I have yet to have a producer
come to me and say, ``Boy, I love that SURE program, Mike. Go
up to Washington and make sure you fight to keep every dime and
dollar of it.'' Quite the opposite. It just has not worked very
well. People wait a long time to get anything out of it. I do
not think it has done the job, just to be very honest about it.
I am not a fan of it.
We cut crop insurance $8 billion. Maybe you can make a
strong case that, ``By golly, Mike, that is the right thing to
do,'' while funding SURE for $8 billion. I think that is the
number that keeps SURE going for another 5 years. I understand
the politics of that but, quite honestly, it does not make any
sense to me whatsoever.
The second thing I wanted to mention--and then I had better
quit talking or you will not have time to respond--is it does
occur to me that direct payments, although they made a lot of
sense maybe at one point--you know, when I became Secretary, I
think corn was $1.95 or $1.96 a bushel, and I could go on and
on through the commodities. It does not seem to make any sense
anymore.
I have said openly that direct payments need to disappear
if we are going to make--if we are going to do something with
those funds, let us focus on risk management. I can mention
some other things, but like I said, we only have a couple
minutes left here, and I would like your reaction to some of
what I have said.
Secretary Vilsack. Well, Senator, you, probably more than
just about anybody else in Washington, have an appreciation for
the position that I am in since you held it, with great
distinction, for a number of years. Let me start where you
ended with direct payments.
When I first came into this job, I remember going to speak
to the cotton producers and suggesting--this was very early in
the administration--that there were going to have to be changes
in the direct payment program, that it was not going to last. I
did not get back to the office before I got calls from not only
the cotton producers but also my staff going, ``You cannot say
that.''
Well, here we are today. You and I, I think, would agree
that the direct payment system as it exists today is probably
not going to survive these conversations, and probably with
good reason. It is hard to justify to the 98 percent of America
why farmers are receiving payments even in good years. So I
think there is a consensus that that has to change.
Now, the question is: How do you change it and what
replaces it? Obviously, crop insurance is critical and
important. We have expanded the number of crop insurance
policies in this administration and will continue to look for
ways to make the program better. You have mentioned a couple of
issues which I think we do need to work on.
The issue of SURE, I would agree with you, the concept is a
good concept because crop insurance does not necessarily get
you totally out of the woods if you are hit hard with disaster.
We also have to understand that we have seen a significant
increase in the input costs in putting a crop in the ground,
and it used to be you had enough diversity in your operation
that if you had a bad year in one crop, you could pretty much
survive.
With as little diversity as we have in terms of crop
production on some of these farms and as high cost as it is to
put a crop in the ground, one bad year may be enough to put a
pretty good operator under.
So I think in addition to crop insurance, you need some
kind of mechanism to provide assistance and help when that
producer really needs it. The problem with SURE is it is a
dollar short and a day late. So whether you continue that
program, clearly you are going to have to change the program so
it is more relevant than it is today.
Now, what does that look like? We will be happy to work
with you on revenue protection processes and concepts on some
kind of streamlined disaster program, whatever it might be. We
see our role as working with you. You have identified issues
and problems, and we ought to be about solutions.
Senator Johanns. I appreciate your openness, and I am a
little bit over, but I just wanted to make two last quick
comments.
I would love the opportunity to sit down with whatever of
your staff would be appropriate to talk about this issue,
because I think there is an opportunity to do something within
the Crop Insurance Program that gets to what many members on
both sides of the aisle were trying to get to with SURE. I
would like their best thoughts on what might be the appropriate
vehicle.
Then the final thing, Madam Chair, that I just have to put
in the record here, my good colleagues Senators Hoeven and
Thune point out that corn prices are a lot higher now than when
I was Secretary, so Secretary Vilsack must be a far improved
Secretary than I was, so congratulations.
[Laughter.]
Secretary Vilsack. You could also make the point that what
you and Secretary Schafer did set up the table for better
prices.
Senator Johanns. Thank you very much.
Chairwoman Stabenow. Thank you very much.
Senator Klobuchar.
Senator Klobuchar. Thank you very much, Madam Chairman.
Thank you, Mr. Secretary. Thank you for visiting my State many
times, given how close it is to your home State--it is not that
far--and also for the great work that you have done. I just
wanted to echo some of the comments from my colleagues about
the concerns on crop insurance and also just to emphasize,
which I think you know better than any member of the
administration, what a huge success we have had in the rural
areas and how important this has been to our recovery. I see it
in our State. We have 5.7-percent unemployment, and a lot of it
has to do with that stability that we have seen in our food
production, that interrelationship with energy and the
interrelationships with our food manufacturers as well. So I
want to thank you for being such a steady hand and also voice
my concerns. I thought we were working on a good idea here with
the $23 billion in cuts, and I hope we can get closer in that
neighborhood as opposed to some of the other proposals that we
have seen.
I was talking to Representative Peterson last night whom
you know well, and he was saying the same thing, that this has
been one of the positive apples of the eye of the country that
we have been able to keep strong rural, and we want to keep
that going with our economy.
I thought of asking you about blender pumps and the blend
wall, and then you announcing, like you did with Senator Nelson
5 minutes later, that it was done. But I think you know how
important those issues are. I thought I would ask first a
question in another area. We are a big forest State, and what
role do you think the USDA can play in encouraging other
departments to make similar improvements that we have seen for
the use of wood in the procurement of construction materials
for green building designs, something USDA has been working on?
What role do you think you can play in encouraging other
departments to make those kinds of improvements? How can we
improve the BioPreferred Markets Program to encourage the use
of traditional bio-based forest products while encouraging the
development of new bio-based products that replace oil-based
products?
Secretary Vilsack. Senator, thank you for that question. We
have made a recent commitment to do a better job of restoring
our forests and putting together a forest planning rule and a
restoration concept that we think will lead to more
opportunities for the timber industry in particular. We have
made a commitment to get to 3 billion board feet within the
next couple years, and we are well on our way to doing that.
I wish you could have asked me that question about the
BioPreferred Program in a week or so because I might be able to
do for you what I did for Senator Nelson.
Senator Klobuchar. This is sounding like a really good
hearing. Thank you.
Secretary Vilsack. We are very focused on our role at USDA
in terms of increasing the number of products that qualify in
that program. We are going to make a concerted effort to
encourage Federal agencies and their procurement to be more
supportive of that BioPreferred effort.
Senator Klobuchar. Very good.
Secretary Vilsack. We are going to do a better job and a
faster job of labeling items so not only Federal agencies but
also, more importantly, American consumers will have the
opportunity to support bio-based products. There are literally
thousands of products on the market today that could qualify
for that labeling, and we need to work through the process and
streamline the process.
So I think you are going to continue--you are going to see
some activity and action in this area in the very near future.
Senator Klobuchar. Thank you.
Secretary Vilsack. The last thing I would say on the green
building is that the Forest Service has made a commitment to
all of its new construction to be green and to use wood
products more, which obviously makes sense for the Forest
Service, and we would like to see other agencies do as well.
Senator Klobuchar. Thank you.
In your testimony you mentioned the Rural Energy for
America Program, or the REAP program. That is the flagship
program for renewable energy at USDA. The program has been a
success with over 700 projects in my State alone, helping to
support on-farm wind and solar and energy efficiency projects.
Given this success, the growing demand for the program, can
you talk about how this program leverages private investments
and provides a long-term value for rural America?
Secretary Vilsack. Well, in the last couple of years, we
have invested roughly $300 million, $350 million, to finance
several thousand loans which have helped almost 7,500
businesses creating jobs, and these are opportunities to create
greater energy efficiency and more focus on renewable energy. I
have been to facilities where folks are taking methane
producing enough electricity to power their own farm operation
and put electricity on the grid. All of those types of
opportunities are being helped by REAP.
This is a really good program. You all structured it and
created it with enough flexibility that it can deal with a
number of different opportunities, and we are trying to utilize
that flexibility. It obviously received significantly less
support financially in the last budget, but we are going to do
our very level best to leverage those resources most
effectively.
The key here is leverage, and if I might add, we are
looking for partners. We are looking for partners not just in
the private sector but also the nonprofit sector. We think that
there are opportunities to work with foundations who are making
investment decisions to generate income so that they can grant
money. We want them to make those investment decisions, a
portion of them, in rural communities. We want to acquaint them
with rural projects. We need to do a better job of educating
them about what is actually going on in rural America, and,
frankly, you know, this hearing is a good opportunity to
educate the public about what is happening in rural America.
There is something significant. Record income levels and
the unemployment rate, at least according to the last report I
saw from the Bureau of labor Statistics, dropping more quickly
in rural America than any other place in America. We obviously
want to continue that.
Senator Klobuchar. Very good. Then I think I will do my
last question in writing. I have to go to a bulletproof vest
hearing, and you do not need one here.
Secretary Vilsack. There is nanotechnology using wood
products that we are researching for that very issue.
Senator Klobuchar. Okay, wow.
Secretary Vilsack. You might want to look into that.
Senator Klobuchar. Okay. Very good. But my last question,
which I will do in writing, is just about kind of what you
touched on at the end, these long-term projects and trying to
get that financing for water, for infrastructure, electricity,
all those things in rural areas that we have just heard a lot
about because we have not had the kind of funding that we have
had in the past in looking for creative solutions on how to
deal with those rural development projects.
Senator Klobuchar. Thank you very much.
Chairwoman Stabenow. Thank you very much.
We were kind of pondering over here a bulletproof vest
hearing. Good luck with that.
Senator Grassley is next. I believe he has left. Senator
Hoeven.
Senator Hoeven. Thank you, Madam Chairman.
Secretary, good to see you. Thanks for being here today. I
just want to start off with a couple comments regarding the
President's budget relative to the farm bill.
First I want to echo my concern, and you have heard it from
the others here today, and that is crop insurance. Everybody,
you know, throughout our State, all the producers are telling
us that crop insurance is absolutely the number one priority.
Number one. So I think the $8 billion reduction there does not
work. I think that we are going to have to address that as we
work on a farm bill, and I think really that goes to what we
are trying to accomplish, which is the strongest possible
safety net for our producers on a cost-effective basis. That is
what we are shooting for with crop insurance. So, again, that
is an absolute priority. Whether it is the commodity groups,
whether it is producers throughout my State or throughout the
country, that is what I am hearing; that is what all of us are
hearing. So, again, I really want to emphasize that point, and
so we have work to do there, and we look forward to doing it in
this Committee.
The other thing I want to mention right at the outset is
university-based ag research. At North Dakota State University,
we have just built, largely with State money, an ag research
greenhouse, state of the art, incredible. NDSU and our other
universities are doing amazing research in agriculture, which
is bringing enormous productivity, not only dramatically
increasing productivity on the farm and the ranch, creating
jobs, creating exports of favorable balance of trade in
agricultural forests. So incredible opportunity there. That is
a real priority and a tremendous leveraging of the Federal
investment through what the States provide on that university-
based research as well as the private dollars that are raised
and go into university-based ag research. So I really want to
emphasize that to you as well.
Then picking up on something that Senator Johanns said and
it is true, Senator Thune and I did tease him about corn prices
being higher under your watch than his or Secretary Schafer's,
but all three of you have done a fine job, and we appreciate
the work you do. But we are working myself, Senator Thune,
Senator Baucus, certainly Senator Conrad, and others--on the
whole ACRE SURE program and how do we develop a commodity title
package overall that works well, again, with crop insurance
being the centerpiece.
With that, I am going to switch to biofuels--unless you
have some advice for us as we tackle this farm bill--and we
really want to lead that effort here in the Senate--I believe
we have a very strong Committee on a bipartisan basis with a
lot of background in agriculture and really need to lead
writing that farm bill. Any advice or input you have relative
to any of those comments?
Secretary Vilsack. Senator, just one comment. I think you
have heard me talk about crop insurance and our view. We
obviously recognize the importance of it and the significance
of it. I think the question is, you know, how much of a profit
margin do you need in order for it to be sustainable. That is
obviously something we can talk about.
But let me focus a comment that you made that is extremely
important, in my view, and that is, the issue of ag research.
Agricultural research has not received the attention that it
deserves by the country. We have seen significant increases in
a lot of other research areas within the Federal Government and
in other areas, but ag research has been flat-lined for an
extended period of time.
The President's budget does propose an increase, a
significant increase, in the competitive grant process of our
ag research, our external opportunities, the opportunities that
you alluded to working with universities and the private
sector. I would strongly encourage this Committee to take a
look at the historical data that suggests that productivity in
agriculture is directly related to the investment in research
and that we need to really do a good job of supporting that
research opportunity.
There are countless reasons why it is important, but I
appreciate your bringing this up because it is something that
is often not talked about enough, in my view.
Senator Hoeven. I am glad you brought up that point on the
competitive grant piece, and we will absolutely look at that.
That may fit with exactly what I am talking about, so we will
take a look at that, and I thank you for that.
I do want to go back to--again, when we are talking ag
research, it is about food, fuel, and fiber. I see this as an
opportunity, I see this as a real job creator opportunity, just
like you started your remarks with that comment, you know,
about creating jobs in rural America. No question about it.
Back to what do we do now with biofuels, I really feel
like--in our State we started a program that we provided some
assistance to get blender pumps out there, and it has really
worked. We have, I think, more blender pumps than any State in
the Nation now. We have got to somehow get blender pumps so
that--we have got something like 10 million flex-fuel vehicles
on the road. That is growing. That is a simple thing to make
these vehicles flex-fuel. We have got to get EPA to simplify
the rules and get the higher blend allowances. We have got to
do more with blender pumps. We have got to do more with the
liability laws. We have got to do more with the equipment, I
think.
How can you help us with legislation or other ideas to
advance this thing? We are kind of stuck here. This is going to
be important to get more ethanol in the fuel supply and
particularly as we get into the cellulosic second-generation
stuff. So what help can you give us in either moving some
legislation or getting some things going here?
Secretary Vilsack. Senator, I think the key here is for you
to--given the fiscal constraints that we are operating under,
whatever programs you decide to fund, making sure that they
have enough flexibility for us to be able to use it creatively
for the infrastructure that is necessary to get the fuel to the
market more conveniently in all parts of the country, we are
currently using the REAP program for blender pumps, but there
has been some resistance to that in Congress, and we would
encourage and work with you to sort of break down that
resistance so that that flexibility in that program can be
created and it can be adequately funded to reach our goal. We
wanted to put 10,000 blender pumps out into the marketplace in
a relatively short period of time. That is hard to do if there
are restrictions on what we can do with the REAP dollars.
Secondly, again, the flagship project or program in our
rural development job creation toolkit is the B&I program, and
to the extent that we can create flexibilities in that program,
because that is the one that is going to be supported and
funded probably more extensively than some of the other
programs--more flexibility there would be helpful as well.
Senator Hoeven. I could work with your staff to get some of
that language that we should maybe look at?
Secretary Vilsack. Yes, sir.
Senator Hoeven. All right. Thank you very much.
Chairwoman Stabenow. Thank you.
Senator Bennet.
Senator Bennet. Thank you, Madam Chair. Senator Hoeven's
comments on crop insurance, I think we all share his view
there, and I want to thank you for the work that you have
done--when the Super Committee was supposed to be doing its
work, and not doing its work terribly well--and the Ranking
Member for your leadership, and my hope is that this Committee
is going to be able to come together on this farm bill in a way
that not only is good for agriculture and the country but sets
an example for the Senate and for the House in these difficult
fiscal times. So thank you for everything you have done.
Mr. Secretary, thank you very much for your leadership.
Sitting behind you is one of the smartest people in the State
of Colorado, Flo Raitano, who is a constituent of mine, and it
is not because she is there--but I am delighted that she is
there--that I am going to ask you a question about the bark
beetle. We, as you know, have had a terrible epidemic in our
State. It has killed 3.3 million acres since we first saw the
beetles in 1996. The Forest Service has a critical role to play
in helping address the issue. You have worked hard on this, and
I appreciate it, and Senator Udall appreciates it as well. But
I am wondering if you could talk a little bit about the Forest
Service's evolving approach to managing this epidemic in
Colorado and throughout the Rocky Mountain West.
Secretary Vilsack. Senator, let me----
Senator Bennet. She was the mayor of Dillon, Colorado, I
should tell you--twice. She lives in the middle of it.
Secretary Vilsack. Specifically, the budget this year will
allocate somewhere in the neighborhood of $100 million for the
States that have been impacted and affected by the bark beetle
epidemic. So we are targeting specific resources, and we are
doing this in a priority way. First and foremost, it is about
life and property protection. Where do we think the falling
tree challenge is the greatest in terms of threats to people
and property? Then, secondly, how do we mitigate the impact on
fire hazard? So that is primarily the focus of where that $100
million will be invested in terms of managing this issue.
Secondly, on a larger scale, we think that there really
does need to be a forest planning rule that really gives our
foresters the capacity on a local level to do a better job of
the multi-uses of forests and do a better job of restoring
those forests and making them more resilient to pests and
disease. So in the short term, we are addressing critical areas
with $100 million. In the long term, the forest planning rule
and a restoration focus we think over the long haul will
mitigate future situations like the one we are dealing with in
your State.
The targeted resources are also part of a collaborative
landscape approach. We are not just simply focusing on
individual forested areas. We are looking at proper maintenance
of those forests in relationship to the landscape and also
better coordinating with private landowners. So it is a
collaborative process. It is looking at whole-scale landscapes,
it is focused on resilience, it is focused on water
preservation and specific dollars targeted to trying to protect
as best we can people and property.
Senator Bennet. We have, as you know, an enormous sense of
urgency about it because there are the safety issues that you
mentioned; also, to the extent that there is any commercial
value to this timber at all, that obviously over time is going
to diminish, which means that we have got to get after this.
Secretary Vilsack. Two things. One, our commitment to get
to 3 billion board feet I think is an indication of our
understanding of the need for this for us to get a more robust
commitment to timber.
Secondly, we have 57 biomass research projects and programs
underway within the Forest Service property to take a look at
ways in which we can use this as an energy and fuel source. We
think there are, again, tremendous opportunities here with
woody biomass to be able to provide electricity and power and
heat as well as turning them into the fuel and the chemicals we
have talked about throughout this morning. So we are very
committed to this, and the Forest Service is very committed to
it.
Senator Bennet. Moving away into the Rural Council that you
lead, Senator Roberts asked a great question of the panel about
6 months ago or maybe it was even a year ago. he said, ``What
keeps you up at night?'' There were several producers from
around the country, and we went down the row, and the person in
the middle said, ``What keeps me up at night is immigration.''
Everybody nodded their heads.
I wondered whether that topic has been something that is
being addressed in your Rural Council or someplace, what you
are hearing from producers around the country. I am hearing
from producers in our State that this broken immigration system
is jeopardizing, seriously jeopardizing their farms and ranches
and our businesses.
Secretary Vilsack. Senator, this is one of the more
frustrating issues that we deal with on a regular basis at
USDA. There is no question that a substantial percentage of
food that is picked and processed in this country is done so by
immigrant hands. It is also true that there are certain parts
of the country today where things are not being picked and
packaged simply because there are not sufficient hands.
It is frustrating for us to step back and understand that
everyone--everyone--believes the system is broken. There is no
disagreement about that. And, frankly, there is very little
disagreement about the basic elements of what needs to be done.
Clearly, border security needs to be front and center, and it
has been in this administration and will continue to be. But
there has to be a system and a process by which we solve this
problem. But I think there are some who want to use it to
separate this country and divide this country. What really
needs to happen is that there needs to be the political courage
to stand up and say we are not going to have this issue divide
this Nation. We are going to do what this Nation needs done,
which is we are going to solve this problem because we are
Nation of immigrants. Our story has been written in large part
because of the enormous diversity and power of immigration and
welcoming people. We need a process by which we make sure that
the workforce is adequate to do the jobs that need to be done
to provide the extraordinary advantage we have in America.
People take this for granted, and they should not. We are
food secure in this country.
Now, you travel all over the world, you are going to go to
countries big and small. I am going to be spending time tonight
in my home State with Chinese leaders. They need our soybeans
to be able to feed their people. We do not really need
anybody's food to feed our people.
We also walk out of a grocery store with far more in our
pockets as a percentage of our paycheck than virtually anybody
on the face of this Earth. There are reasons for that, and one
reason is that we are extraordinarily productive and our
farmers do an extraordinary job and an underappreciated job;
and, secondly, we have got a processing process and facilities
that allow us to produce these things and put them in our
grocery stores for pennies on the dollar. I mean, 10 percent of
our paycheck goes to food, a maximum on average. In most other
countries it is 15, 20 percent.
So, you know, I am encouraging this Congress to basically
say we have had enough of this divisive discussion; let us
solve this problem. The country needs it, and certainly
agriculture needs it.
Senator Bennet. Well, I appreciate your leadership very
much and agree completely with what you have just said, and I
think if we do not solve this problem, what we are going to see
is these farms moving south of the border to where the labor
is, and that is not a good outcome for rural America.
Thank you, Madam Chair.
Chairwoman Stabenow. Thank you very much.
Senator Thune.
Senator Thune. Thank you, Madam Chair, and, Mr. Secretary,
thank you for being with us today.
I would echo what has been said by most of my colleagues
with regard to that the number one priority of South Dakotans
in the farm bill is a strong Crop Insurance Program. Hands
down, it is what people want to see maintained. It is the thing
that they are most concerned with and, that is, that we have a
good risk management tool available to them. That is not the
only priority we have in the next farm bill, but that is
certainly, I think, the most important one in terms of the
people that I represent.
Let me ask you, though, about the energy and rural
development title of the next farm bill because that is
critical in terms of the future of rural America as well. We
have got forecasts of $4 gasoline now, perhaps by Memorial Day,
and the full potential yet to be seen for rural America to
contribute to our Nation's energy independence is going to be
really important in terms of drafting the next farm bill energy
title. We all know it creates jobs. It has been a tremendous
economic boom for rural America, but it is really important
that we get past corn-based ethanol and move on to next-
generation biofuels and get to cellulosic ethanol.
I know that we have got a fiscal crisis here in Washington,
D.C., that is going to impact the next farm bill. There is no
spending baseline for rural energy programs in the next farm
bill. We know we are going to have to do more with less. But I
am interested, I guess, in knowing with regard to the energy
title in the last farm bill, the Biomass Crop Assistance
Program, which Senator Nelson and I included in that last farm
bill, has two components for collection, harvest, storage, and
transportation. I am interested in knowing kind of what your
thoughts are with regard to that, whether that is an important
part of the BCAP program.
I met yesterday with the CEO of a major enzymes research
and development company who told me that BCAP and that
particular component of it--the collection, harvest, storage,
and transportation component--is extremely important to the
future of the biomass harvest and delivery to energy-producing
facilities.
So what are your thoughts on that? Do you believe that that
particular component is important to furthering the development
of cellulosic ethanol?
Secretary Vilsack. Senator, first of all, American
consumers, because we have a robust biofuel industry, are
probably paying, it is estimated, somewhere 90 cents and $1.30
less for their gas than they would otherwise be paying but for
that industry, so we need to understand the importance that the
industry does and provides in terms of consumer choice. And,
obviously, the more that we do, the better those prices will
be.
As it relates to BCAP, as you well know, that program
received a 96-percent reduction in funding last year, so we
have $17 million to deal with a several hundred million dollar
need.
Two aspects of BCAP. You have mentioned one, the
collection, storage, transport, and harvesting. Clearly
important in order to be able to encourage producers to do what
they have to do to accumulate the biomass necessary to fund
these new ways of producing fuel. At the same time, we do have
to diversify away from corn-based ethanol, so we have also
focused on the second part of BCAP, which is the project area
portion. With $17 million, there is not a whole lot you can do
relative to the collection, storage, and harvesting. You really
need more resource to be able to provide that assistance.
Several hundred million dollars has been used in the past for
that part of the program. We will continue to fund those
contracts, but in terms of expansion of the number of
contracts, it is going to be impossible with $17 million.
So the question is: How do you use that limited resource
for the biggest bang for the buck? I think you will probably
see a majority of that being used in project areas. So I would
encourage, if the Congress decides that BCAP is worth keeping--
and I think you ought to very seriously think about this. If
you are going to have it, it needs to be adequately resourced.
We need to basically decide whether or not it is pilot project
areas or whether it is collection, storage, and harvest.
Playing two masters makes it difficult, especially if resource
are tight.
Senator Thune. Let me go back to the issue that was raised
by my colleague from Colorado, and that is the pine beetle
issue. I guess what I would say, I think we have a request
probably in to you right now to reprogram some funds to the
Black Hills National Forest. We have an epidemic problem with
the pine beetle in the Black Hills, and it is home to Mount
Rushmore, a huge economic impact on the State of South Dakota
every year with visitors who come to visit. And, you know, it
is tragic to see what has happened. We have 350,000 to 400,000
acres that are now impacted by the pine beetle, which had we
been better on the front end of this, I think we could have
really done a much better job of preventing this from
spreading. There is a certain amount of this that you are going
to be dealing with all the time, but it has really gotten out
of control.
So I would hope that to the degree that you can help with
the Black Hills issue that you will do that. I just wanted to
reiterate that for the record here today. It is something that
we have a written request in on in terms of reprogramming some
12 funds to the Black Hills. It is a very isolated area. It is
one of our national treasures, and it has just been
tremendously adversely impacted by the pine beetle.
Let me ask just one other question in the time I have left.
I am curious to know your thoughts on this and whether or not
you have had any consultation with the Labor Secretary on this.
But as you perhaps know, there are some new regulations that
have been proposed by the Department of Labor that apply to
young people working on farms and agricultural operations which
would be very restrictive in terms of what young people can do,
limiting them to working at levels--anything over 6 feet would
be prohibited, which would eliminate a lot of farm activity;
working with farm animals that are older than 6 months old; you
know, working around grain elevators, stockyards, those sorts
of things, certain types of equipment. They have said that they
are going to modify this. We do not think they have modified it
enough. They are going to modify, evidently, the definition of
``farm,'' but there are still a lot of areas that would impact
profoundly the way that farm operations function, particularly
with regard to how young people contribute to the success of
those operations.
I am curious if you have conveyed concerns on the part of
the agriculture community and the Department to the Department
of Labor about these proposed regulations. It is insane to
people in farm country.
Secretary Vilsack. Senator, I think one of the reasons why
a portion is going to be reprogrammed and the rest of the rules
being looked at is because we worked well with the Department
of Labor. I actually personally talked to Secretary Solis about
this issue, so rest assured that we have been engaged in it,
will continue to be engaged in it.
You know, I think all of us care about child safety, as we
should, and all of us recognize that there are certain
circumstances and situations in a sophisticated farming
operation, as sophisticated as agriculture is generally, that
pose unusual risks. So we obviously want to deal with those.
At the same time, what I explained to Secretary Solis and
others in the Labor Department was that this is not just about
safety. It is also about a values system that in many farm
families the value of hard work, the importance of hard work,
and the responsibility associated with pulling your weight and
doing your share of the chores, that these lessons are taught
in the very chores that they were discussing in this rule, and
that they needed to be sensitive to the fact that this values
system could be threatened by too restrictive a set of
categories. I think to their credit they listened, and they now
recognize that they have got a lot of work to do on this
particular proposal, and we will continue to work with them.
Senator Thune. I hope you will stay engaged. We really need
a voice of reason, so thank you.
Secretary Vilsack. Thank you.
Senator Thune. Thank you, Madam Chair.
Chairwoman Stabenow. Thank you very much.
Senator Baucus.
Senator Baucus. Thank you, Madam Chairman.
Mr. Secretary, thanks so much for taking the time to come
visit with us. I would like to talk to you a little bit about
infrastructure needs. Montana is an agricultural State where 50
percent of our economy is based in agriculture. We are spread
out. There are six people per square mile, and we are very
proud of the agricultural contribution we make to the country
and to the world.
We are also a diversified State. There is manufacturing,
mining, coal, oil and gas, and so forth. As you well know, in
the eastern part of Montana, there is a big boom in oil. It is
called the Bakken formation. It is in eastern Montana as well
as western North Dakota. The estimates are that the Bakken is
one of the largest plays in U.S. history, estimated about 4
billion barrels of oil with the new fracking technology that
has developed not just in the Bakken formation, as I said, in
eastern Montana and western North Dakota, but also the shale
development in other parts of the country. But I am talking
about Montana right now.
The Bakken is a great blessing. Unemployment in eastern
Montana is at rock bottom, as you might guess, and it is a
great opportunity for businesses and all the ancillary
companies that build up around the oil production.
The trouble is it is coming too fast. There are just too
many people coming too soon, putting incredible pressure on the
communities there. Roads just cannot take the beating from all
the trucks. Sewage cannot handle all these new people. There
are man camps there, a lot of them developed, just these guys
living in basically trailers, and people living in heated
garages. There is a shortage of school teachers. There are all
the pressures you might expect with a great influx of people in
a very short period of time.
So I am wondering if you could help us out a little bit.
For example, the USDA has jurisdiction over lots of different
agencies that have a lot of relevance here, including the Rural
Development Office. I might say the nearest USDA Rural
Development Office is 5 hours away from the main focus of all
the pressures here. But what efforts can you take to address
this situation?
Last month, I sent a letter to the President asking him to
coordinate his efforts to address the need here and develop
some kind of a temporary multi-agency office in the area, if we
could set an office up in the area physically in eastern
Montana that people could go to and help coordinate Federal and
State efforts. It would make a huge difference. Right now we
are just--not to mix metaphors, we are at sea, just struggling,
just doing our doggonedest to try to meet all these pressures.
I met with the mayor, I met with the county commissioners, and
law enforcement. It is a huge issue now. I talked to a sheriff
nearby, not just in Richland County where Sidney, Montana, is
located, but a sheriff from a nearby county and all the law
enforcement problems they are facing, too. There was a recent
murder in the area. They finally found this lady's body after
it was gone for almost a month.
So if you could tell us a little bit about what you might
be able to do and what efforts you could pledge to undertake to
help us and work together to solve this, it would make a big
difference to us.
Secretary Vilsack. Senator, I am not specifically familiar
with whether or not that area of Montana has a Regional
Planning Commission. Do you know if it does?
Senator Baucus. I do not know.
Secretary Vilsack. Well, I guess my first suggestion would
be to consider, if they do not have a Regional Planning
Commission, to work with the local officials that you have
mentioned to form one because a Regional Planning Commission
can essentially do much of what you are asking us to do, which
is to coordinate efforts to ensure that you have a
prioritization of assets and resources directed at trying to
solve the problems that you have identified.
The second thing I would suggest is that the folks in
eastern Montana consider, if they are not already part of this,
applying to USDA for what we refer to as a ``Great Regions
Initiative.'' We are trying to encourage folks to think
regionally, and obviously those folks in eastern Montana have
an economic engine that impacts and affects the communities
surrounding that engine, and we will be willing to work with
them in creating sort of a strategic plan in how to address the
needs that they have and where the resources can come from to
address those needs. That regional process will basically bring
in a lot of the Federal agencies that need to be brought in to
consider how would you fund a highway or how would you fund a
wastewater treatment facility or what grant is available from
HUD or from Commerce or from EPA or from us. That is the
process and vehicle through which I would suggest and encourage
that it be done, and I would be happy to work with your office
to facilitate the application process.
Senator Baucus. I appreciate that very much, Mr. Secretary.
North Dakota is in a little bit better situation because a
little bit more of the production is in North Dakota as opposed
to Montana. North Dakota was quite farsighted, actually, in
putting together a fund, a trust fund, where a certain
percentage of the revenue, royalties, are dedicated to the
trust fund. The fund is then used to address needs such as
this. That is something that maybe the State of Montana has to
do as well.
Secretary Vilsack. Senator, that is essentially what we
attempted to do with the regional approach that we suggested
for USDA. We have 40 different programs that are stovepiped. It
makes it hard to coordinate multiple applications to meet
multiple needs. So we suggested Congress giving us the capacity
and the authority to essentially take 5 percent of those
programs and put it into a pot and basically use that pot to
help regions who are confronting the kinds of situations that
you are talking about so that we would not have to worry about
the stovepipes. We would be able to coordinate grants and
applications and so forth within USDA.
Now, what Congress has done is it has basically said you
can do this, but--as we interpreted the language, you can do
it, but you cannot do it until we authorize it. Well, you sort
of authorized it but you did not. So we are a little bit
confused about what our authorities are here.
I would strongly encourage you, as you look at this farm
bill, as you look at putting together programs in the future,
that you give us the capacity to do this. If you are going to
have 40 different programs, give us the capacity to put
together a pot of money from all 40 that will encourage
regional economic development, because at the end of the day
you are going to be far better off and leverage those dollars
more effectively if you do it that way.
Senator Baucus. I totally agree, but I hear you saying you
do not think you have sufficient authority today.
Secretary Vilsack. We are confused. That is probably not
the first time you have heard that from a Secretary, but we are
a little uncertain as to precisely what the language was in the
appropriations bill.
Senator Baucus. Well, let us see if we can make you less
confused in the right way.
Secretary Vilsack. Thank you.
Senator Baucus. Thank you very much. Thanks for your
attention to this. It makes a big difference to a lot of us.
Thank you.
Chairwoman Stabenow. Thank you.
Senator Boozman.
Senator Boozman. Thank you, Madam Chairman.
It is good to have you with us, Mr. Secretary, and I
enjoyed getting to visit with you the other day at the prayer
breakfast. That was a great event.
A lot is being talked about about the safety nets, and that
is so important for a variety of different reasons. I think our
banks, you know, with the regulation that they are under now
and just the situation with the economy, if our producers do
not have a strong safety net, I think there is a real question
as to whether or not they will actually get a loan to put the
crops in.
The other thing is the recognition that there really are
real differences--and you know this better than anybody. I know
I am preaching to the choir. But there are real differences in
production and input costs, and it is difficult to come up
with, you know, something, kind of a one-size-fits-all. Then we
have the worries of making it WTO compliant. It is going to
take the wisdom of Solomon to figure it out. There is real
concern by producers that, you know, one safety net is going to
go down and then reinforce another safety net, which we do not
want. Then the other problem is that if this is not done right,
you are going to incentivize certain crops too much, and then
we will have this imbalance.
As you said earlier--and the statistics that you gave are
great, and we just need to hammer on that, you know, our
producers are doing a tremendous job with low prices and
things, and we are feeding the world. But if it is not done
right, then food costs will rise, and our single moms or people
on fixed incomes, those kind of folks really will suffer the
most.
So, again, I know it is a big job, and we are looking
forward to working with you to try and figure that out.
Secretary Vilsack. Senator, you obviously come from a State
that represents that diversity. A lot of different crops are
grown in the State of Arkansas, and the input costs for some
are more and significant, the land needs are more and
significant, and the risk is greater. It will be difficult but
not impossible, and I think eventually working together we can
create a safety net that utilizes crop insurance appropriately,
that has some kind of revenue protection mechanism that will
provide assistance and help to folks when they need it the
most, and that we will begin to understand that part of the
safety net is rural development, economic opportunity, and jobs
for off-farm income, which for many producers and many families
is very important.
You know, I think there is enormous opportunity here. I
really appreciate the Chair's willingness to take this on and
get it through the process quickly because this uncertainty--
you know, we have got a good thing going here. We obviously
want to continue the momentum, and the sooner we get certainty
as to what the rules are going to be, the better it is going to
be for the market, the better for producers, and better for us
to plan for rural economic opportunity.
So I certainly agree with you, and we look forward to
working with you on trying to figure out precisely what that
right balance is.
Senator Boozman. Well, thank you. We appreciate that. I
think the certainty, you know, as you brought up, really is a
key to the whole thing.
The other thing, I would like to echo the Senator from
Minnesota about the BioPreferred Markets Program. As you know,
our forest industry is really struggling right now. In fact, I
would like, with your permission, Madam Chair, to put a
statement in the record from a number of landowners and forest
industry organizations that are expressing their concern with
the program.
Chairwoman Stabenow. Without objection, we will put that in
the record.
Senator Boozman. Thank you.
[The information can be found on page 159 in the appendix.]
Senator Boozman. It is difficult, you know, if you have a
product, bamboo or something like that coming in from someplace
else and then the mature markets, one is USDA certified in a
sense or it appears that way, and the other is not, there is
real concern that that will create a problem with consumers.
Secretary Vilsack. Senator, what we are attempting to do,
first of all, is to do a better job of restoring forests, which
will create, in our view, more opportunity for the timber
industry that we recognize has been dealing with some tough
times. We think getting to 3 billion board feet is a good step
in the right direction, number one.
Number two, as far as the BioPreferred Program is
concerned, we are looking for ways in which we can streamline
our processes within USDA to identify more products that
basically qualify, and I think you will see a significant
increase both on the Federal procurement side and on the
private sector labeling opportunities for consumers. We are
going to focus on that this year. We think this is a way of
underscoring the enormous potential that rural America has to
produce virtually everything we need in an economy from what we
grow in a renewable way. By doing that you create jobs and
create new income opportunities for producers.
Frankly, we are looking for creative opportunities here,
and if I might say, one of the concerns that we have which we
have not talked about today is whether or not we are going to
have the next generation of producers to do all of this. We are
very concerned about beginning farmers, as I know you are, and
I would strongly urge this Committee to think creatively not
just within the bounds of the farm bill, where you have fiscal
constraints--I probably should have said this when Senator
Baucus was here, but there are Finance Committee opportunities
as well.
As you well know, the way this works today, I own a farm.
That farm has appreciated in value. I could not afford to sell
it today to a young farmer. I would have to wait and my kids
would have to wait for me to die, and hopefully the estate tax
is where it needs to be so that I do not have too--you know, so
they can sell it with a stepped-up basis and they do not incur
tax.
We ought to really be thinking about our tax structure and
ways in which we can encourage more incentives for folks to
sell to beginning farmers and socially disadvantaged folks.
That may not cost a lot of money, but it may be an
extraordinarily helpful thing as we look at the aging nature of
our farm population and the fact that we have got to have young
farmers.
Senator Boozman. Right. Well, thank you. Another area--I
mean, I understand as well as anybody and am very supportive of
us reining in spending. We have a situation with the USDA
office closures, and I guess the only thing I would say in that
regard is that you would really look at those. You have a
number of meetings, you know, with local input, and those were
very well attended in Arkansas. I think the comments were very
constructive, you know, in trying to give good guidance. So I
would hope that you all will actually look at those, the
results of those meetings, the comments. I know that you will.
Then also really look at the 20-mile limit. I think that the
intent was that that was actually 20 miles versus the crow
flies. You know, again look at that, but I would say, just, you
know, depending on the comments, use some common sense in
regard to that. Certainly 20 miles in Kansas is different than
20 miles in very rural Arkansas where it is really hilly, you
know, where it might take 45 minutes to an hour to get
someplace, with, as you mentioned earlier, a pretty elderly
farm population now that we are facing as the ages go up.
We had a great meeting--I want to compliment your staff. We
had a great meeting with them. They were very--you know, they
listened to us and made some good suggestions.
Secretary Vilsack. Senator, these are tough decisions, and,
candidly, if you were designing this system today, you probably
would design it a little differently than it is. Despite the
numbers of closings we have announced, we are still going to
have several thousands offices open. Here is the problem: When
your operating budget is reduced, as it was--and I am not
complaining about this. I am just stating the fact that it was
reduced. When you have an aging workforce, which we have at
USDA, and we are seeing retirements accelerate, and in order to
manage this, we encouraged some early separations so that it
would be easier for us to do this without furloughs or layoffs.
Basically we saw 7,100 folks retire in the last 15 months from
USDA. So you have less money, and you have got fewer workers.
But at the same time, we have actually more work. Commercial
bank are not doing as much on the farm side, so that created a
lot of concern in terms of loans, Rural Development doing
record numbers of grants and loans, and I think with good
results.
So we had to do something, and the choice was either what
we did or a furlough or a layoff, which basically would impact
thousands of offices and farmers across the country, or taking
money away from the investments that we are making in new
technology. We have such an antiquated technology system
servicing our farmers today, we really want to get to a point
where maybe that visit to the office is infrequent because they
can do stuff at home.
So these are hard questions, tough choices, and tough
calls, but that is basically what happens when budgets get
reduced. And, you know, we tried to do it in a thoughtful way.
We tried to do it as consistent with the direction of Congress.
You know, how many offices are the right number? You all said
those offices that have one employee or two employees. We found
in this process that there were 35 offices that had no
employees.
So, you know, it is an ongoing process, and I want to
assure you--and I know my time is up, but I want to assure you
that we are also looking internally in terms of how we do
business with ourselves, and we have 379 recommendations for
better, more efficient operations within USDA, how we do
property management, procurement, security, human resources,
budget, and finance, et cetera. So we are really tasking our
people with trying to figure out how to do better work, more
work, with fewer dollars and fewer people.
Chairwoman Stabenow. Thank you very much.
I would ask unanimous consent that Senator Lugar be able to
submit a written statement for the record. So ordered without
objection.
[The prepared statement of Senator Lugar can be found on
page 63 in the appendix.]
Chairwoman Stabenow. Secretary Vilsack, we very much
appreciate your time this morning. We know that it is an
extraordinarily busy week, and I would like to just underscore
your desire to work with us to consolidate, reduce paperwork,
create more flexibility. We are in a time where that is
absolutely necessary, and it is a time that-- we should always
be focused on that, but certainly we have great opportunities
in rural development and in the areas of energy, both of which
are absolutely critical to be able to develop ways that we can
provide the opportunities to create jobs and opportunities for
quality of life in rural America and do it in a way that is
more flexible and more effective. That is really our goal as we
write this farm bill.
So we thank you very much for coming this morning, and at
this point we will ask our second panel to come forward. Thank
you.
Secretary Vilsack. Madam Chair, thank you very much.
Chairwoman Stabenow. Thank you.
[Recess.]
Chairwoman Stabenow. Well, good morning. We are so pleased
to have all of you with us to continue a very important
discussion this morning. We will ask each of you to limit your
remarks to 5 minutes, but we certainly welcome any additional
written testimony that you have this morning. We will be having
5-minute rounds on questions as well.
Let me first introduce each of our panelists and welcome
you, and then we will ask each of you to make an opening
statement and then go to questions.
I am very pleased to introduce our first panelists, Mr.
Matt McCauley. Mr. McCauley is director of regional planning
and community development with Northwest Michigan Council of
Governments in Traverse City. He assists communities with
coordinating planning efforts through education, training,
technical support, issue analysis, and guidance. This work
supports the quality of life in northwest lower Michigan, which
is one of the most beautiful places in the country. We welcome
you to come and have the opportunity to visit one of the
beautiful places in Michigan. Mr. McCauley holds a bachelor's
degree in business administration and a master's degree in
public administration, both from Grand Valley University. I am
so pleased to have you with us today.
I will now turn to Senator Bennet who I believe would like
to make the introduce of our next panelist.
Senator Bennet. Thank you, Madam Chair. We are fortunate
indeed to have Dr. Florine P. Raitano here today. She is
currently a member of the Board of Directors of the Rural
Community Assistance Corporation. She is a third-generation
Coloradan, the former mayor of Dillon, Colorado, having been
elected I think twice and having served on more boards and
commissions than anybody could ever imagine. She received her
bachelor's degree from the University of Colorado, Boulder; her
doctorate of veterinary medicine degree from Colorado State
University in Fort Collins, Colorado. There could be no finer
representative from the State of Colorado than Flo, so thank
you very much for being here today.
Thank you, Madam Chair.
Chairwoman Stabenow. Thank you very much.
Next we have Mr. Mark Rembert. We are very pleased to have
you here as the co-founder and co-director of Energize Clinton
County. He co-founded the organization in November 2008 in
response to the announced loss of nearly 9,000 jobs in his home
town. The organization works to develop community-based
initiatives that engage citizens in the process of economic
development. He is also the director of the Wilmington-Clinton
County Chamber of Commerce, and we welcome you as well. We are
very, very pleased that you are here.
I believe Senator Roberts would like to introduce the final
witness on this panel.
Senator Roberts. It is my privilege to introduce Mr.
Charles Fluharty, who is president and CEO of the Rural Policy
Research Institute. He is a research professor from the Truman
School of Public Affairs--we have to be bipartisan here--at the
University of Missouri--and that is really being bipartisan--in
Columbia. It shows that we are able to work together, but his
efforts are regional, and he has really been a leader for so
many years in regards to rural development. He brings the
experience necessary, hands-on experience, and I have several
questions for him which I think will be good questions, and he
will provide even better answers.
I appreciate it. Thank you.
Chairwoman Stabenow. Thank you very much.
Mr. McCauley, welcome. Please proceed.
STATEMENT OF MATHIAS J. MCCAULEY, DIRECTOR OF REGIONAL PLANNING
& COMMUNITY DEVELOPMENT, NORTHWEST MICHIGAN COUNCIL OF
GOVERNMENTS, TRAVERSE CITY, MICHIGAN
Mr. McCauley. Thank you, Chairman Stabenow, Ranking Member
Roberts, and members of the committee, for the opportunity to
testify today on the 2012 farm bill's rural development title
and the important role it plays in helping regional and local
organizations provide financial and technical assistance to
rural communities, entrepreneurs, and businesses.
My name is Mathias McCauley. I serve as the director of
Regional Planning and Community Development for the Northwest
Michigan Council of Governments, a multidisciplinary regional
planning and workforce development organization serving the
ten-county region of northwest lower Michigan. I am pleased to
also be representing the National Association of Counties and
the National Association of Development Organizations with my
testimony this morning.
Madam Chairman and members of the Committee, I will focus
my remarks today on three key areas related to USDA rural
development and the future of our rural communities.
First, the mission area of USDA rural development is a
critical piece to the overall competitiveness of rural regions
as we work to foster job growth, regional innovation, and
economic prosperity. This includes basic yet essential
investments for infrastructure and utilities, housing and
community facilities, and access to capital and entrepreneurial
development. In today's era of intense budget pressures and
growing local needs, we should be focusing on making more
strategic investments, especially investments that strengthen
regional and local competitive advantages and coordinate our
public sector resources.
Second, with rural regions facing increasingly global
competition but also opportunities, we need to ensure USDA
Rural Development has the tools, resources, and flexibility to
assist rural communities and regions with cutting-edge, asset-
based regional innovation strategies and investments. To be
successful in the modern economy, rural entrepreneurs and
communities must be connected to global and domestic markets.
This includes virtually, digitally, institutionally, and
physically networked approaches. This will take a new level of
sophistication and capacity within our rural regions and at
USDA Rural Development. It will also mean improving Federal
interagency collaboration, fostering stronger public-private-
nonprofit partnerships, and leveraging existing strategy
processes, such as the U.S. Economic Development
Administration's Comprehensive Economic Development Strategy,
or CEDS, framework.
My third and final point is that USDA Rural Development
applications, policies, and reporting requirements should be
streamlined and broadened to reflect the scale of rural
investments, emerging needs and opportunities of rural regions,
and capacity of local organizations. While retaining the
necessary financial and performance accountability standards,
Congress should ensure USDA Rural Development has a modern set
of policies, programs, and incentives to help all rural
communities pursue community and economic development growth.
This should entail assisting rural communities with the
fundamental building blocks of quality communities in addition
to more advanced regional innovation and globally competitive
development strategies.
Let me use our region of northwest lower Michigan as an
example of this vision. USDA has been a highly valuable partner
for us and an essential source of capital as we embark on these
strategies. In the last two fiscal years, the USDA Business &
Industry Program guaranteed in excess of $27 million of loans
within our region, helping create 165 jobs and retaining
another 441. These include ``head-of-household'' type jobs at
manufacturing facilities, lumber mills, food processors, and
the like.
We have also used the Rural Business Enterprise Grants,
RBAG, and the Rural Energy Assistance Program, REAP, funding to
assist with leveraging our agricultural, energy, and natural
resource assets. These individual projects are important
because they often flow from our region's EDA Comprehensive
Economic Development Strategy, or CEDS, as well as our broader
regional collaboration known as the ``Grand Vision,'' which
includes the Grand Traverse County area.
In recent years, our region has spent considerable time and
resources engaging the public with more than 12,000 people--
that may not seem like a lot to many in this room, but that
represents about 8.5 percent of our total population--being
involved throughout a six-county area and about 98 units of
Government. Governmental bodies are collaborating, business
leaders are endorsing a focused vision for the future,
community members are engaged, and projects are being
conceptualized and implemented.
The Grand Vision is succeeding by demonstrating the
importance of regions working with existing assets as a means
to focus efforts towards programs and projects that create
conditions for job growth and ensure a high quality of life for
all.
In closing, I urge your continued support of rural
development programs and funding in the 2012 farm bill,
especially those built around regional, asset-based development
strategies that create conditions for quality job growth. USDA
Rural Development is an essential partner and funding source
for rural people and places. That is why NADO and NACo are
joined by a broad base of 30 other national organizations in
advocating for USDA Rural Development through the Campaign for
a Renewed Rural Development. The campaign's joint principles
mirror much of this testimony and demonstrate the wide support
for USDA Rural Development and consensus on the critical policy
changes needed in the upcoming reauthorization of the farm
bill.
Thank you again, Madam Chairman, Ranking Member Roberts,
and members of the committee, for the opportunity to testify
today. I welcome any questions.
[The prepared statement of Mr. McCauley can be found on
page 110 in the appendix.]
Chairwoman Stabenow. Thank you very much.
Dr. Raitano, welcome.
STATEMENT OF FLORINE P. RAITANO, IMMEDIATE PAST PRESIDENT,
RURAL COMMUNITY ASSISTANCE CORPORATION, DILLON, COLORADO
Ms. Raitano. Thank you, Chairman Stabenow, Ranking Member
Roberts, members of this Committee, and my esteemed Senator
from Colorado, for this opportunity to discuss the USDA RD
programs and their importance to rural America.
My name is Flo Raitano, and I served two terms as the mayor
of Dillon. Dillon has a population of 904 individuals. We
worked with USDA back in the days when it was known as Farmers
Home Administration. We were able to secure a 515 multi-family
loan to build some much-needed affordable housing in the
community of Dillon. We could not have done it if we did not
have an experienced development partner. There was no way that
I as a 32-year-old mayor, absolutely brand-spanking-new to the
job, would have been able to figure out the rules and
regulations. I would have taken one look at the letter of
conditions from USDA and run screaming from the room. So, you
know, that is one thing that RCAC does, and I am on the Board
of Directors of the Rural Community Assistance Corporation. We
are the western RCAP, the Rural Community Assistance
Partnership, and we serve the States of Colorado, Arizona,
Alaska, California, Hawaii, Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, Wyoming, and the Pacific Territories,
including the Mariana Islands. It is really important to
understand the role of technical assistance providers as an
asset and a way to extend the reach and the impact of the USDA
rural development programs.
Just down the road from my community of Dillon is Silver
Plume. Silver Plume is a little community of 203 people, and
that is if you count the dogs, the drop-ins, and the ground
squirrels. A couple years ago, Silver Plume had a major rock
slide in a relatively geologically unstable location, and it
completely obliterated their water delivery system. I mean, it
was squished flat. RCAC was able to step in within a week and
to marshal the resources of the Colorado Department of Public
Health and Environment, the Department of Local Affairs, and
USDA Rural Development to put together a package to replace the
water system for this community of 203 people. They had a part-
time town clerk. You can imagine what that town council must
have been going through. So, again, it was the ability of an
RCAP provider, Rural Community Assistance Corporation, to step
into the breach and provide that bridge.
Across the United States, Rural Development has over 18,000
active loans through the water and environmental programs at
the Rural Utilities Service. They serve more than 19 million
rural residents with those programs, and with the help of
technical assistance providers they have a delinquency rate,
Madam Chairman, of less than 0.18 percent. Maybe you should put
us in charge of Fannie and Freddie.
[Laughter.]
Ms. Raitano. It is really about the efficiency, and the
work that we do to make sure that after the ribbon cutting and
after the grand opening of the plants and the facilities that
we stick around and do the heavy lifting and the harder work of
building the human capacity and doing the board training and
working with the water boards to really be able to manage and
operate and sustain what we have just handed them. So we do a
lot of the front-end loading for the analysis for rural
development. So, again, it is a great partnership that we have.
One of the emphases is on regionalization. I live in
Colorado. That is one of the big-box States out West, and we
have counties in Colorado that are bigger than some of the
Eastern seaboard States. When we talk about regionalization,
you have got to remember there is a lot of dirt between light
bulbs in our communities, and it is not always feasible to
build pipes to serve multiple communities off a single system.
But we have had some success doing that. In New Mexico, we had
the Lower Rio Grande Mutual Domestic Water Company, which is
now serving five very small, very poor colonias near the Mexico
border. Two of those communities, one of which was Desert
Sands, had a high arsenic level and was actually issued an out-
of-compliance notice by EPA in 2008 because of arsenic. The
community put together a compliance plan, but the annual cost
of that plan was over $120,000 for 580 households.
So as you can imagine, there are a lot of challenges out in
rural America, and we appreciate the fact that Rural
Development has programs in place to address those. Our role is
to extend their efficacy.
Thank you, Madam Chairman and Ranking Member Roberts.
[The prepared statement of Ms. Raitano can be found on page
118 in the appendix.]
Chairwoman Stabenow. Well, thank you very much.
Mr. Rembert, welcome.
STATEMENT OF MARK REMBERT, CO-DIRECTOR, ENERGIZE CLINTON
COUNTY, WILMINGTON, OHIO
Mr. Rembert. Chairwoman Stabenow, Ranking Member Roberts,
Ohio Senator Brown, and members of the Committee, thank you for
the opportunity to share the story of Energize Clinton County
and our experiences rebuilding our community following the loss
of our largest employer.
I grew up in Wilmington, Ohio, a rural community of 12,000
in the southwest part of the State. Like most young people who
grow up in small towns, I left after graduating from high
school and attended college in Philadelphia, where I studied
economics. Like most of my generation, I had no plans to return
home. The world changed for me--as it did for so many--in 2008.
I had decided to put my training in economic development to
work and join the Peace Corps. I was preparing for my departure
when news from home reached me in Philadelphia. DHL, the
region's largest single source of employment, was ending its
operations at the Wilmington Air Park. Realizing that the
community where I grew up would be changed forever by this
crisis, I decided to return home for the final months before my
departure to reconnect with the community.
Not long after my arrival, I was joined by Taylor
Stuckert--another Wilmington native--who had been prematurely
evacuated from his Peace Corps service in Bolivia. As we
witnessed the economic equivalent of a hurricane hitting our
home town, we talked to people throughout the community and
quickly recognized a new energy brewing. There was a desire to
push for increased involvement and ownership in the
redevelopment of our devastated local economy. By re-engaging
with our home town, we realized that we could best serve our
country by working in our own community rather than working
overseas. We decided to stay home and contribute to the
redevelopment of our region.
As Taylor and I set out on our economic development
project, our perspective was heavily influenced by the Peace
Corps model, which approaches development at the community
level and emphasizes the importance of grassroots analysis and
action. We believed that the Peace Corps approach in our
community could generate solutions that were more immediate,
actionable, and sustainable than traditional solutions and
would complement ongoing efforts by community leaders to
acquire the DHL-owned airpark and leverage it as an asset to
attract new employers.
In late 2008, Taylor and I founded Energize Clinton County,
a nonprofit community economic development organization. We
quickly built a strong partnership with Chris Schock and the
Clinton County Regional Planning Commission and began
developing programs that invested in our local assets and
transformed citizens into agents of economic change.
While our work has primarily focused on Clinton County, we
have recently begun working regionally with the six other rural
counties impacted by the departure of DHL. With the assistance
from Ohio USDA State Director Tony Logan, ECC received a
$48,000 USDA Rural Business Opportunity Grant to transfer
strategies and techniques developed by ECC to engage the
community in supporting local businesses. This grant has given
us the ability and the opportunity to build new regional
partnerships, to coordinate strategies that strengthen local
assets, and invest in our shared future.
For many rural communities in our region, it can be
challenging to understand how we fit into a globalized world.
If our communities are to survive, it is critical that we
establish a vision for rural places that inspires a new sense
of ownership and investment in our future. Without a long-term
vision and strategy, communities are at high risk of continued
decline. When communities lack a clear plan and a clear sense
of direction, citizens are less likely to invest in necessary
changes that have large up-front costs, public officials are
more likely to make reactionary rather than strategic
decisions, and there are fewer mechanisms for a community to
hold itself accountable.
Given the economic challenges our communities face and our
declining local resources, planning and long-term visioning are
absolutely critical to the development of our communities.
Unfortunately, many of us lack the resources or the capacity
needed to do the planning required to move beyond a purely
reactive economic development approach.
Given the critical needs present in our communities, we
encourage rural development to explore new ways to assist
communities in rural regions and economic development planning
and visioning.
My thanks to you, Chairwoman Stabenow, Ranking Member
Roberts, Senator Brown, and the Committee, for considering my
testimony and for your focus on meeting the needs of America's
rural communities and citizens.
[The prepared statement of Mr. Rembert can be found on page
126 in the appendix.]
Chairwoman Stabenow. Thank you very much.
Mr. Fluharty, welcome.
STATEMENT OF CHARLES W. FLUHARTY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, RURAL POLICY RESEARCH INSTITUTE, AND RESEARCH
PROFESSOR, TRUMAN SCHOOL OF PUBLIC AFFAIRS, COLUMBIA, MISSOURI
Mr. Fluharty. Madam Chair, Ranking Member Roberts, it is a
privilege to be with the Committee again. We live in a very
egocentric domestic policy framework, and I would like to
applaud you and the members of this Committee for your
continued tenacity to assure that rural considerations make a
difference in this town.
I am also pleased to be joined by three practitioners who
are making huge differences in the lives of rural people.
I am also extremely pleased by the consensus today that
appears to be evidence that, with less money, we have to first
ask: Should the Federal Government do it? Second, should USDA
do it? And, third, how should USDA do it leveraging resources?
I commend you to stay on that track. I think it is very much
the right one. I think your Committee's approach to ag policy
in this farm bill gives us an apt analogy for what I would
argue must occur in rural development.
We are in a new commodity world, and risk management and a
safety net for our ag producers is absolutely essential. This
is exactly what is needed for our rural communities, our
regions, and our counties. It is very important also that this
Committee have both those obligations at this point in our
history.
Yesterday, ERS released their 2010 Farm Household Income
Report which showed $49,500 of the $54,000 in median U.S. farm
household income was generated off the farm. Most farm
households earn the majority of their income from off-farm
employment. For those with up to a quarter of a million dollars
in farm sales, it is 75 percent of that family's income. For
our very largest commercial farms, it is 20 percent.
So vital rural economies are key not only for all rural
Americans, but for agriculture. In the future, energy will be
rural development. Bio futures in entrepreneurship for
agriculture will be rural development. In the future, as
everyone has said, this will align.
So the very same risk management tools that you are
approaching ag policy with--innovation, flexibility,
streamlining, and leverageable safety net mechanisms--they are
exactly the same ones we need for economic development and
entrepreneurs as we are seeking for our ag producers. This is
what this Committee is being asked to do: create risk
management tools for public entrepreneurs, like the three at
this table today.
I would just urge three principles be thought about. You
have to streamline, make more flexible, and leverage your
existing programs, I would argue in a regional context wherever
possible. You are going to need to think about asset-based
innovation and entrepreneurship in everything from value chains
to how the Federal, State, and local public sector responds,
and we are going to have to figure out ways to give Secretary
Vilsack what he asked for, which is indeed the ability to work
across other Federal programs.
Finally, and most importantly, and a thing that I think
perhaps was not focused upon enough in the earlier hearings, we
are going to have to expand, align, and leverage very, very
scarce rural resources. We are going to have to assure debt
equity and venture capital is still there. And, lastly, I would
like this Committee to do all in its power to take a look at
the rural giving by America's foundations. In this regard, as I
close, I would like to suggest two numbers be seared in your
mind, Madam Chairman: $28 billion and 1 percent.
The $28 billion are additional rural community and economic
development resources that would have been available in 2010 in
rural counties if they received the same per capita funding as
urban counties. Twenty-eight billion dollars.
Secondly, with rural development budget authority
continuing to reduce, the real question this Nation has is:
Where does rural America go? Perhaps to America's foundations.
Here in 2010, the same year, $46 billion was contributed by our
Nation's foundations, and less than 1 percent went to rural
programming. Less than 1 percent.
The geographic inequity here is growing worse as rural
capacity is threatened and as the safety net grows worse. For
years our Nation's foundations have decried perceived redlining
on the part of Government, and yet this de facto rural
redlining by foundations is longstanding. The funding has never
been more critical, and I urge this Committee to assess whether
this ridiculously low rural payout may, in fact, call into
question the very solemn public trust that our American
foundations have in exchange for the loss of tax revenues that
are received because of that public good.
Thank you, Madam Chairman, and I look forward to questions.
[The prepared statement of Mr. Fluharty can be found on
page 86 in the appendix.]
Chairwoman Stabenow. Well, thank you very much, and you
certainly raise some very important questions with some
startling statistics, so I appreciate that very much.
I would like to ask each of you, because you are all
talking about efforts to collaborate on economic development
strategies and projects: From your perspective, as you look at
current rural development programs, are there programs right
now or are there barriers right now to doing what you believe
you need to do? How do we have better regional collaboration?
Are there specific things that we need to focus on that you run
up against as barriers?
Mr. McCauley.
Mr. McCauley. I think a couple barriers come to mind. One,
the very intensive nature of Federal programming can often be
an impediment for local communities to apply for the resources
that they dearly need. We have wonderful and very smart
individuals in our region, but as Dr. Raitano said earlier,
once they get that packet from USDA--or any other Federal
agency, for that matter--that talks about the terms and
conditions, they often run out of the room as well. So I would
mention that, one.
I would say that, two--and Secretary Vilsack mentioned this
earlier--sometimes the inflexible nature of specific Federal
programs. I believe he mentioned that there are 40 different
USDA programs, and a stovepipe approach to rural development is
not one that benefits rural America, that we need the
flexibility to meet our needs, to meet our regional economic
development strategies in such a way where they benefit our
regions and the country as a whole.
Chairwoman Stabenow. Thank you. Since the beginning of our
process on the farm bill, I have suggested we focus on
principles instead of programs, and the idea being let us look
at the functions of what needs to be done. I really have a
question about whether or not we need 40 different programs.
Why can't we bring those together in a more flexible way?
Dr. Raitano, could you speak to the question of barriers?
Ms. Raitano. Thank you, Madam Chairman. I have to agree
with my colleague Mr. McCauley that one of the challenges we
have is the stovepiping of this. But as my colleague and mentor
to my left, Dr. Fluharty, has pointed out many times, once you
have seen one rural community, you have seen one rural
community. So the flexibility and the adaptability of those
Federal programs are absolutely key to being valuable and
staying fresh and applicable to rural communities.
One of the challenges we have is that there is not a
comprehensive approach to technical assistance, and so one
program facilitates technical assistance, another program has
no provision at all for facilitating technical assistance.
There is not a single silver bullet for solving the needs of
rural communities. It is going to require the whole arsenal.
So we really need to make sure that we have an integrated,
holistic approach across all of the programs in RD.
Chairwoman Stabenow. Thank you very much.
I believe we are just discussing the fact that there is a
vote that has been called. We are going to attempt to do this
in a way where I can step away and vote, and then Senator
Roberts can do that. We will take turns and keep going, but we
apologize in advance if we are stepping away.
Mr. Rembert, would you speak to the question of any
barriers?
Mr. Rembert. I think when it comes to especially leveraging
regional collaboration to engage with USDA programs, one of the
challenges that we continually face is that we do not have in
our region a cross-county set of goals or strategies or vision
for how multiple counties work together.
Just to give you a sense, when DHL departed the Wilmington
airpark, we realized that it was the largest employer for seven
rural counties in southern Ohio. Those seven counties had never
had a shared vision about how they interlock together as a
region. So it has only been in the last 3 years that we have
even realized what our region was.
So until we have that established plan as a region to
understand what we are trying to achieve and where our common
goals lie, it is going to be difficult for us, I think, to
really engage with USDA in a streamlined fashion and leverage
our regional resources to take advantage of partnerships with
USDA.
Chairwoman Stabenow. Mr. Fluharty, I am going to ask you to
speak while I ask you to excuse me, and I will be back in just
a moment.
Mr. Fluharty. Sure. Two or three quick points.
First of all, RUPRI has been honored for now heading into
our third decade to work with a number of different
administrations and a number of different committees, and we
have tried to take our nonpartisan external mandate and humble
honor in a very, very serious way. So we have been able to look
at a lot of programs over the last three decades. We have also
worked extensively in most States in the United States and,
frankly, all over the world.
The first thing I would say is in Europe they automatically
commit 3 percent right up front when they give a grant to
technical assistance because they recognize capacity does not
exist. We are not going to be in a world where we can do that
any longer. But we have Federal programs that are doing it
already in our sister agencies. And I would simply say that a
comprehensive economic development strategy currently in EDA in
Commerce, it is not something you do any longer to get a grant.
It actually is turning into the vehicle that my colleague here
mentioned. We need to figure out a way to align where this
Committee takes very scarce resources with other functions in
the Federal Government that will enable us to do risk
management. And by ``risk management,'' I mean rigorously
assessing: Is this the right thing for us to do? Most small
county commissions have no research staff. Secondly, where can
I go to get help? Thirdly, are there Federal, State, local,
private, or philanthropic resources that might align?
We need to think about a suite of services that can do
this, frankly, in USDA. This is my fifth farm bill, and,
Senator, you and I go way, way back to the other chamber. We
have asked for five farm bills to actually move from silos to a
vision. And I think the vision is private sector based,
innovations in value chains and governance, entrepreneurship,
and asset-based development, developed by local regions
rigorously assessing their own future. That is what we lack
right now.
I think USDA is reaching out to try to do that. I know it
is hard because there are programs that are essential that will
not fit in this compendium, and they need to survive as well.
But I hope you can move toward an integrated framework that
finally says let us use all the resources of the Federal
Government the way, frankly, cities do because they have CDBG
and they have foundations with millions of dollars supporting
program integration. And here is a 20-year-old county
commissioner saying, ``What do I do?''
I think it is time for this Committee to simply say, ``The
people are way ahead of our policy development process. Let us
catch up and let us work with this administration to do what
these three fine practitioners are asking.'' I really believe
that is the key, Senator.
Senator Roberts. Mr. Fluharty, as usual, you are an
effective voice, very articulate voice on behalf of rural
development, and mixed in a big batch of common sense. Seven
farm bills for me.
Mr. Fluharty. Exactly, Senator.
Senator Roberts. I hope I can get to eight this spring.
Mr. Fluharty. I do indeed hope that.
Senator Roberts. Can you talk just a little bit about
Project 17, the economic development initiative which I think
speaks to this?
Mr. Fluharty. Absolutely, Senator. I would love to very
quickly because I know the hearing has been long.
I was honored a year and a half ago to go into Garden City
and Dodge City to look at a regional development framework for
southwest Kansas, and it got a lot of interest in southeast
Kansas. So in the last year, with Governor Brownback's support
and the commitment of four State Senators, we initiated a 17-
county project to build a 1-year dialogue which says, ``What
are the major institutions that could change this region? How
will we align our resources? How will we move forward in a
public-private-philanthropic partnership to change southeast
Kansas?''
Now, that is very much an unnatural adult act in southeast
Kansas. I recognize that, as do all of the other institutions,
and the journey is just beginning. But all of the major players
in Kansas have come to this agenda: Kansas Farm Bureau, Network
Kansas, the Department of Commerce, the State legislature, the
Governor, the philanthropic communities, the Advanced
Manufacturing Institute at Kansas State that I think is one of
the cutting-edge engineering schools for innovation value
chains in rural America, and on and on and on. They are
beginning a cadenced, deliberate set of regional dialogues to
figure out a way to build a business plan that has a logical
value statement within it, and, Senator, we are going to be
honored to work with them.
I will simply say this is going on at this level more and
more in more and more areas, and if we could help it rather
than have them do it in spite of the fact that it is kind of
hard in USDA to get it going, it would truly matter, I think,
for the businesses in this region. It is a wonderfully exciting
Kansas venture. It is really exciting.
Senator Roberts. Well, thank you for describing that. Count
me in. Anybody that could get Liberal, Kansas, Garden City,
Kansas, and Dodge City, Kansas, with the rivals that we have
out there, to finally decide on one regional airport, you must
be a miracle worker.
I want to go to Mr. McCauley and your plea, is there some
way that we can streamline the application process and
reporting requirements. Basically are you saying when you get
that packet of information on the criteria, all the
regulations, I would think it would be so overwhelming that you
would wonder whether you want to even apply or not? The good
mayor sitting next to you said exactly the same thing. What on
Earth do you do if you are 32 years old and a mayor and all of
a sudden you are presented with all this information? Who do
you go to? How do you wade through all of that?
Mr. McCauley. Well, Senator, you are exactly right, and in
the case of our region, and I am sure in the case of many other
regions across the country, a lot of the people that are vested
with the trust to handle this have day jobs. They are the
hardware store owners, they are the farmers and so on and so
forth.
Senator Roberts. Exactly.
Mr. McCauley. Again, these are smart, capable people, but
this may be a volunteer opportunity for them, and simply put,
as the rules and regulations and terms and conditions are put
forth right now through many of these programs, they cannot
handle it because there is just simply not enough time in the
day.
So how they handle it is oftentimes through organizations
like ours, through regional planning commissions across the
country. Also counties help the communities that are located
within their boundaries. We can provide that technical
assistance to communities, to individuals, and to businesses
who are having a tough time with this. But similar to them,
there is only so much staff that we can commit to this and so
many hours in the day as well. For our case, it is ten
counties----
Senator Roberts. Well, let me interrupt.
Mr. McCauley. Yes.
Senator Roberts. There is only so much time in a vote, and
I understand there is 1 minute left. It is going to be sort of
a super-human effort for me to get over there. The Chairwoman
will be right back, and the Committee will stand in a short
recess, and I shall return as well. Thank you so much. Just
stay put, enjoy yourself, talk to each other.
[Recess.]
Chairwoman Stabenow. Well, good afternoon. We very much
appreciate all of you on our panel testifying. Senator Roberts
has gone to vote. He indicated he will be submitting additional
questions to you in writing, as will I. We care very much and
very much appreciate your perspectives. I know you understand,
but we are juggling votes on the floor and so on. So we will
dismiss our panel, and thank you very much for your efforts on
rural development. We look forward to working with you and take
very seriously your recommendations regarding flexibility and
how we might consolidate and streamline what we are doing so
that the part-time mayor can have the opportunity to be able to
weave through all the rules and be able to get things done,
which is what we are all about.
So thank you very much. We will ask our second panel to
come forward. Thank you.
[Pause.]
Chairwoman Stabenow. Well, good afternoon. We very much
appreciate your patience. We know you have traveled long
distances to be able to be with us, and your experience and
this panel particularly on energy is very, very important to
us, very important to me personally. We have a number of
challenges that relate to the budget, as you know, and how we
are going to proceed to be as aggressive and supportive as we
can be for energy. But this is, I think, a very important part
of developing economic opportunities in rural America and for
all of America, and we very much appreciate the work that you
are doing and the fact that all of you are with us.
I am going to proceed and introduce each of you. We will
proceed with your testimony. Senator Roberts will be returning
as soon as he votes, and, again, we appreciate your patience
today.
Our first witness--we do not quite have this in order, but
I am going to proceed here--is Mr. Steve Flick, who is the
current chairman of the board of Show Me Energy--I like that
name--Show Me Energy Cooperative in Centerview, Missouri. Show
Me Energy Cooperative is a cellulosic biomass facility owned by
612 farmers. It was the first project supported by the Biomass
Crop Assistance Program in 2011. Mr. Flick is participating
with the Meridian Institute Council for Sustainable Biomass
Production, Farm Bureau, and is a plenary speaker for bioenergy
conferences throughout the United States, and we welcome you.
Our next witness is Mr. Lee Edwards. Mr. Edwards is the
president and CEO of Virent, Incorporated, a company in
Madison, Wisconsin, and Virent creates chemicals and fuels from
a wide range of naturally occurring renewable resources that
can be used in products traditionally created with petroleum
and chemicals. The company has received numerous honors,
including the World Economic Forum Technology Pioneer Award and
the EPA's Presidential Chemistry Award. Mr. Edwards is a
graduate of the Wharton School at the University of
Pennsylvania and holds a B.S. in chemical exchange from
Bucknell University, and so we welcome you also.
Our third panelist is Mr. Bennie Hutchins. Mr. Hutchins is
the energy program coordinator at Ag Energy Resources, a
consulting group in Brookhaven, Mississippi. In that capacity
he assists agricultural producers and small businesses
nationwide in applying for USDA programs such as Rural Energy
for America, the REAP program. Prior to his work, Mr. Hutchins
worked for 35-1/2 years for USDA's Natural Resources
Conservation Service, and we welcome you as well.
Our final witness is Mr. Bill Greving. Mr. Greving and his
family have owned and operated their family farm for the past
121 years--you look very good for 121 years.
[Laughter.]
Chairwoman Stabenow. --in Prairie View, Kansas, and I know
that Senator Roberts will be back to welcome you as well. The
Greving Farm produces sorghum and other crops and beef cattle.
Bill and his wife, Diana, are shareholders in the nearby
Prairie Horizon's ethanol plant. They sell sorghum to the plant
for its use and purchase wet distillers grains to feed their
livestock, and Mr. Greving is active in his community, his
church, his school board, and retirement center board as well.
We welcome all of you today and appreciate the work that
you are doing. At this point we will go back to where I just
ended with Mr. Greving, and we will ask you to proceed first
this morning--or ``this afternoon,'' I guess we should say now.
We need you just to push--there is a button there that will
activate the microphone. Thank you.
STATEMENT OF WILLIAM GREVING, SORGHUM FARMER, GREVING FARMS,
INC., PRAIRIE VIEW, KANSAS
Mr. Greving. Madam Chairwoman, Ranking Member Roberts, and
members of the Committee, I would like to thank you on behalf
of Kansas grain sorghum farmers for the opportunity to share my
insights into sorghum, ethanol, and energy.
Greving Farms is a diversified family farm located in north
central Kansas. We produce grain and wheat on our dryland acres
as well as corn and alfalfa on our limited irrigated acres. Our
livestock operation consists of 500 mother cows as well as a
thousand head feedlot where we finish our cattle for slaughter.
Since inception of the ethanol plant in Phillipsburg, we
have realized approximately a 30-cent-per-bushel increase in
price for the sorghum delivered to the plant. In addition, we
bring wet distillers grain back from the plant for use in our
feedlot rations.
Now for some facts about Kansas sorghum and its usage in
Kansas ethanol plants. Last year, 51 percent of U.S. production
in the sorghum crop was produced in Kansas. Of that, 40 percent
was turned into ethanol in our Kansas plants.
Grain sorghum is a unique crop in that it is drought and
heat tolerant. It lends itself well to our western Kansas semi-
arid climate, and we believe in the future it will have more
importance as the declining water table in the Ogallala aquifer
occurs.
My wife and I invested in the ethanol plant in Phillipsburg
approximately 8 years ago. We had three reasons for doing so:
one, we knew it would benefit our farming operation
economically; the second reason as a retirement investment; and
the third reason, we wanted to help promote the economic
activity in our local area.
Prairie Horizon Agri-Energy has accomplished that. It
provides 33 good-paying jobs in the area, not to mention the
jobs that are generated by the local trucking industries and
other businesses that are associated with it.
The jobs, the economic activity created, and the tax
revenue generated by the plant have a large economic impact on
Phillipsburg and the surrounding area. In addition, our plant
is an active member of the community and sponsors many
activities in our area.
I have always felt that taking a raw product such as grain
sorghum and corn and turning it into a high-value energy
product which reduces our dependence on foreign oil is a win-
win situation. It also provides jobs and economic activity, as
I have stated.
I would like to touch on the 9005 portion of the farm bill
energy title which provides payments to energy producers to
support their expansion of advanced biofuels.
Grain sorghum is an eligible feedstock for the production
of advanced biofuels. Eight ethanol plants in Kansas benefitted
last year from the payments under this program, which provided
incentives to ethanol plants to use grain sorghum, thereby
leading to more acres of a drought-and heat-tolerant crop being
produced.
I would also like to mention the potential for sweet
sorghum and biomass forage sorghum to be used in ethanol
production. Both crops qualify as feedstocks for advanced
biofuel production. Much research and work has been done on
these crops, and this year, the first commercial-scale sweet
sorghum-to-ethanol plant is expected to break ground in
Florida. Sweet sorghum is the next logical step for ethanol
production in the United States, and the continuation of the
9005 program is essential in supporting the development of
commercial production of sweet sorghum ethanol. We believe that
sweet sorghum can be successfully grown in Kansas, and we think
it has a lot of potential if the juice from the sweet sorghum
plant can be incorporated into the feedstock stream of our
Kansas ethanol plants. This past year, in Arizona, a company
demonstrated that this process is feasible.
In conclusion, I would thank Chairwoman Stabenow and
Ranking Member Roberts for inviting a farmer to appear before
you today to talk about agriculture and energy. While those who
have spoken before me are focused on policy, I am focused on
the production of food, fuel, and feed in a synergistic system
which I believe will make our operation and operations like
ours profitable into the future.
Again, thank you, and I would entertain any questions.
[The prepared statement of Mr. Greving can be found on page
96 in the appendix.]
Chairwoman Stabenow. Thank you very much.
Mr. Flick, I understand there was a typo in your
introduction. You are active with the Farmers Union, and I want
to make sure that is clear. So thank you very much, Mr. Flick.
STATEMENT OF STEVE FLICK, CHAIRMAN OF THE BOARD, SHOW ME ENERGY
COOPERATIVE, CENTERVIEW, MISSOURI, ON BEHALF OF NATIONAL
FARMERS UNION
Mr. Flick. Chairwoman Stabenow, Ranking Member Roberts and
members of the Committee, thank you for inviting me to testify
today on the energy title of the 2012 farm bill and how we can
continue to provide energy and economic growth in rural
America. My name is Steve Flick, and I am a Missouri Farmers
Union member and the board chairman of Show Me Energy
Cooperative, a next-generation biorefinery owned by 612 farmers
in western Missouri. Today I am testifying on behalf of NFU's
approximately 200,000 members in support of a strong,
bipartisan energy title in the 2012 farm bill.
For years, renewable energy of all sorts has served as a
significant boom for rural America. It provides well-paying
jobs and helps support our local economies. The energy title is
especially important in reaching the goal of energy
independence and promoting rural economic development.
Specifically, we support an energy title that includes robust
funding for REAP, BCAP, and the Biorefinery Assistance Program,
and other renewable energy programs.
Show Me Energy Cooperative is a perfect example of how the
farm bill renewable energy programs are successfully working to
spur real economic development, create jobs, and reduce oil
dependence. Show Me is in the business of growing, processing,
and refining dedicated energy crops into fuels to provide
energy security for the U.S. The cooperative provides numerous
good-paying jobs for families in the region.
In 1983, I purchased my own farm by saving money from
hauling small square bales during and before college. Since
then my operation has continued to expand and diversify. In
2008, Show Me built its first biorefinery, creating 21 direct
jobs and 516 indirect jobs. Our entire board consists of
volunteer farmers and producers. From day one, farmer
innovation was the mind-set, and this country was built on that
mind-set. Our members were committed to accomplishing the same
in building the first U.S. biorefinery owned by farmers.
Show Me farmers succeeded. We built the plant which
currently produces a biomass pellet that is used to heat homes,
livestock barns, and produces power. In 2009, Show Me partnered
with our local electric utility to test burn around 29,000 tons
of biomass pellets with coal. From this experiment, we learned
that biomass and coal can successfully be combined in old
boilers and power plants. We are currently negotiating a PPA
with that local utility to generate base-load power from our
facility.
BCAP is the program that led to the next phase of our
cooperative's development. In May 2011, Show Me submitted to
BCAP an ``energy hub'' area under the FSA guidelines to cover
32 counties in western Missouri and 7 counties in eastern
Kansas. The proposal was to grow native grasses on marginal
land under a program called ``Plant, Baby, Plant.'' These
native grass poly-cultures will harvest the power of the sun,
developing through the typical growing seasons and will be
harvested for their cellulose content by the farmers after a
killing freeze, by either round or square bailing. Farmers in
the project area seized on the opportunity and signed up their
acres. On May 5, 2011, Secretary of Agriculture Tom Vilsack
announced the approval of the first BCAP project area. By
September, 26,000 acres were enrolled. Farmers will begin the
process of planting these energy crops on these acres this
year.
Show Me Energy's BCAP project will be deployed over 39
counties. In the process, it will lead to the creation of
hundreds of direct jobs and thousands of indirect jobs. By
planting these acres yielding an average of 5 tons per acre, we
will produce 130,000 tons of material per year.
Show Me's plant in Centerview currently pelletizes the
crops into biomass fuel for heat and electric power.
Eventually, our technology will provide liquid fuels that will
replace petroleum based jet fuel. Thousands of farmers in the
Midwest will be growing energy crops.
We plan for our BCAP area to provide the necessary
feedstock for our biorefinery's next phase, manufacturing jet
fuel from butanol. Our goal is to produce 3 million gallons of
high-quality fuel for the Department of Defense from dedicated
energy crops produced in this decentralized feedstock area.
BCAP helped our cooperative tremendously, and I am
confident that with the continued implementation we will lead
the proliferation of advanced biorefineries with American
farmers, providing power, heat, and liquid fuels in commercial
quantities. Yet even after a successful project, the
President's budget zeroes out funding for BCAP.
As it relates to Show Me Energy Cooperative, I believe that
Congress needs to adequately fund BCAP and the rest of the
energy title. These programs should not be seen as a handout
but, rather, a handup that will change the way we live in rural
America. It will change the way we produce energy, and it will
change us as a country for the better.
The United States is a country with unlimited potential to
do great things. I believe that American farmers, ranchers, and
rural residents have a bright future ahead of them with the
right incentives. Renewable energy is the future of rural
America. As such, I urge your Committee to pass a farm bill
this year with a robust energy title to continue essential
progress on these vital renewable energy programs while
providing energy security for the U.S..
On behalf of the members of the National Farmers Union and
Show Me Energy Cooperative, thank you for the opportunity to
outline our priorities. My written testimony goes into more
details on these programs, and I would be happy to answer any
questions you have.
[The prepared statement of Mr. Flick can be found on page
73 in the appendix.]
Chairwoman Stabenow. Thank you very much.
Mr. Edwards, welcome.
STATEMENT OF LEE EDWARDS, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, VIRENT, INC., MADISON, WISCONSIN
Mr. Edwards. Thank you very much, Chairwoman Stabenow,
Ranking Member Roberts, and distinguished members of the
Committee. It is an honor and a privilege to be here today to
speak to you about energy and economic growth for rural
America.
My name is Lee Edwards, and I am the CEO of Virent, now in
my fourth year in this position. Prior to Virent, I was an
energy executive at BP for 25 years.
Virent is in the business of replacing crude oil. The
company was founded in 2002, spun out from research at the
University of Wisconsin. We have 117 proud employees, growing
at about 20 percent per year.
Virent has been able to attract global leaders like, Shell,
and Honda as investors and partners. In December, we also
announced a new strategic partnership with The Coca-Cola
Company to develop and commercialize renewable, recyclable
beverage packaging.
Virent is commercializing technology that transforms
renewable biomass into gasoline, diesel, jet fuel, and
chemicals that are the same as those currently refined from
crude oil.
Because these products are chemically identical to those
made from petroleum, they are ``drop-in,'' and by that I mean
they can be seamlessly integrated into existing infrastructure
and work in all engines that are used today.
Virent has proven our scalability with a demonstration
facility producing 10,000 gallons a year of renewable gasoline
and chemicals. We also have 20 pilot-scale plants that convert
a wide range of biomass into drop-in products.
To date, Virent has attracted $75 million in private sector
investment, and I have to say this would not be possible
without R&D grants from the Federal Government, including the
USDA Biomass Research and Development Initiative.
Government grants facilitated early discoveries at the
company and spurred investment from the private sector. In
fact, for every dollar received from Government grants, we have
matched that with more than $4 from the private sector.
The deployment of first-generation biofuels has already
created significant opportunities in rural communities.
Deployment of the next generation of biorefineries has the
potential to increase markets for cellulosic materials from
every region of the country--from corn stover in Michigan,
Iowa, and Kansas, to switchgrass in Georgia, to woody biomass
in places as diverse as Arkansas and Vermont.
Currently, Virent is working on our first commercial-scale
plant to produce gasoline and chemicals from renewable biomass
to open in 2015. This facility will create over 200 temporary
construction jobs and 50 permanent jobs.
However, like any innovative company, Virent faces
obstacles. The capital required to build a biorefinery today is
daunting, well beyond the investment limits of venture capital.
Private lenders are unlikely to loan funds at reasonable cost
to pioneer plants using new technologies. Equity investors
raise concerns around the long-term stability of policy and tax
initiatives.
Compounding these issues are significant commodity price
risks, volatile pricing and uncertainty in feedstock supply, as
well as fluctuating prices for crude oil and petroleum
products. Fortunately, several of the programs within the
energy title have been well positioned to address these
challenges.
To start, the Biorefinery Assistance Program has been
successful in bringing private lenders to the table. However,
the program currently requires that biorefineries manufacture
at least 51 percent fuels. Given private sector interest in
renewable chemicals, USDA should allow the production of any
mix of fuels and other products that the market demands.
Further, the definition of ``advanced biofuel'' does not
include the full array of technologies, feedstocks, and
products that companies are seeking to develop today. On the
feedstock side, the Biomass Crop Assistance Program has the
potential to serve as an important tool for helping farmers and
other feedstock developers produce and deliver cellulosic
materials. And, finally, the Biomass Research and Development
Initiative remains critical in seeding innovation and
leveraging private dollars into these new technologies.
In conclusion, it is possible to replace imported crude
oil. Virent is using cost-competitive, domestic, renewable
resources to create direct replacement drop-in products,
providing our Nation with the opportunity to build energy
security, long-lasting jobs, and a healthier world. American
farmers and foresters will be essential in realizing this
potential, and the farm bill has a significant role to play in
this effort.
I appreciate the opportunity to testify today and look
forward to working with the Committee on these issues.
[The prepared statement of Mr. Edwards can be found on page
67 in the appendix.]
Chairwoman Stabenow. Thank you very much.
Mr. Hutchins, welcome.
STATEMENT OF BENNIE HUTCHINS, ENERGY PROGRAM COORDINATOR, AG
ENERGY RESOURCES, LLC, BROOKHAVEN, MISSISSIPPI
Mr. Hutchins. Thank you, Chairwoman Stabenow and Senator
Roberts and members of the Committee. I do appreciate this
opportunity to come before you today to give you my views about
the Rural Energy for America Program, or REAP, that we have
heard talked about and the critical role that REAP is playing
across our country in helping our rural small businesses and ag
producers implement energy efficiency and renewable energy
projects.
Three points I hope you take from my comments today: First,
REAP has application in every State across this country;
second, REAP has application in every agricultural sector and
small business basically that you can imagine; and then, third,
the REAP participants through this program are reducing their
energy consumption, of course, or bringing in other additional
income from renewable energy sources. Doing so, though, saves
jobs and increases their financial stability, of course,
creates jobs. But in my work as the energy program coordinator
with Ag Energy Resources out of Brookhaven, Mississippi, I have
worked with several hundred applicants, REAP applicants,
participants from across the country, 12 or 15 different
States. Most of these are agricultural producers. I am here
today to put a face to those producers and those small
businesses.
A lot of them have been poultry producers, like Tara Adams,
a single-mom poultry producer in Haleyville, Alabama; or David
Craig, a poultry producer in Blackville, South Carolina; Billy
Whiteley, a Native American poultry producer in Berryville,
Arkansas; or Pakou Her and Kao Xiong, poultry producers in
Ottawa County, Oklahoma. I wish I had time, but you can look at
my written report to see all the data, the statistics as to how
these people have benefitted.
But just real quickly, we took a recent survey of 40
participants, poultry producers from Mississippi that had
participated in REAP, and we found that after the
implementation of the REAP project, they are saving each year 6
percent on their electricity consumption and 41 percent on
their propane consumption in their poultry houses.
Now, to put that in perspective, that is a $12,000 value,
and that is in an agricultural enterprise with a net bottom
line on their Schedule F in a typical year of $20,000 to
$30,000. So a $12,000 increase in their net bottom line is a
huge impact. So better financial stability and jobs saved, of
course.
I have worked with other agricultural sectors out there:
the pork producers, Spring Hill Pork Farm in Virginia; and Gulf
American Shrimp in Port St. Joe, Florida; and White Rock Fish
Farm in North Carolina; and quite a few aquaculture catfish
producers across the Mississippi Delta. These farms are all
small family-owned farmers, two to three people employed, up to
dozens, some of them, on the larger farms.
But I am here to tell you today that REAP is much more than
just a Midwest grain dryer program. It reaches every State and
ag sector across the country.
Then there are the renewable energy projects that we have
heard talked about, the methane digesters and the solar PV
systems like for pecan orchard drip irrigation system, or for
broiler farms in Mississippi. Then there are biomass energy
potentials with sawmills and dry kiln operations and so forth,
like Beasley Forest Products in Georgia, Browder Veneer Mill in
Alabama, that I have worked with. Then biomass heating systems
in poultry houses across the country.
So what is the future potential for REAP? Of course, ag
producers primarily have been participating, but the rural
small businesses can participate, too. So the story is still
yet untold out there. There are thousands of rural small
businesses in areas less than 50,000 population that could
qualify to benefit from this program. Small businesses like a
laundromat in Mississippi or South Alabama Grocers in Ozark,
Alabama, or Mike's Supermarket in Rio Hondo, Texas--all of
these employ up to two to three dozen people, and REAP is
helping reduce their operating costs, increase sales, and save
jobs.
As far as the current trend of participation in REAP, last
year, Rural Development received 3 times more requests than
they had money for.
Another point about REAP, REAP stimulates private
investment. This is one Federal program that for every $1 in
Federal funds, it mandates that $3 in private funds be
invested. Usually it is the other way around. But this 25-
percent incentive is just enough to get people to install
cutting-edge new technology in real-world situations so that
others hopefully will follow suit. REAP creates jobs, REAP
saves jobs. Think of just the confined-animal operations across
the country, the pork, the poultry, the dairy, the aquaculture
type operations. They are huge energy users, and just the
confined-animal operations across this country, that
agricultural sector, contribute over 1.8 million jobs across
the Nation, and this is up more than 100,000 jobs from 10 years
ago.
So my testimony here today is just to encourage you to
consider strong funding for REAP and for the other core energy
title programs in the next farm bill.
I thank you again for the opportunity to come before this
Committee, and I welcome any questions.
[The prepared statement of Mr. Hutchins can be found on
page 100 in the appendix.]
Chairwoman Stabenow. Well, I thank each of you very much,
and I very much appreciate all the work that you are doing.
First, I would have a question for each of you. Given the
challenges that we have in the energy title with there not
being baseline going forward and not having funding after
September 30th of this year, which is a great concern to me,
because what you are talking about are real opportunities,
current investments we have made, opportunities to expand, it
seems to me there are very important opportunities that we
should not walk away from.
But knowing the obstacles and with each of your areas of
experience, what would you prioritize if you were in our shoes
at this point, and why?
Yes, Mr. Greving.
Mr. Greving. Well, I think it was talked about earlier
today. In production agriculture, a safety net is vitally
important. Crop insurance is just vitally important to us. And,
of course, we would also like to see the continuation in some
form of the 9005 program that will help us to develop new
sources of ethanol from forage sorghum and sweet sorghum.
Chairwoman Stabenow. Mr. Flick.
Mr. Flick. We believe at Show Me Energy that the BCAP
program is the baseline for any type of project going forward.
If we do not have the feedstocks, no matter what technology one
has, those feedstocks themselves are the drivers of those
technologies, and those producers that grow that feedstock are
a key one. Because of that growing, there is actually no
Federal crop insurance for them, either. They are taking that
risk on themselves. So we believe that the idea of utilizing
the Biomass Crop Assistance Program is first and foremost in
order to develop the new technologies for advanced cellulosic
refineries in the future.
Chairwoman Stabenow. Thank you.
Mr. Edwards.
Mr. Edwards. Thank you for the question. From my
perspective, to get through the Valley of Death that was
referenced regarding new technologies, I spend a lot of my day
trying to attract capital for the first plant. So when I look
at the opportunity, we need to be able to compete against
industries that have been in place for decades, and to do so we
need affordable financing. So within the energy title of the
farm bill, the Biorefinery Assistance Program has provided an
instrumental tool to help leverage private sector funds with
low-cost financing.
I also think in the feedstock area a lot of investors get
concerned around the overall commodity price volatility between
agricultural-based feedstocks and crude oil-based feedstocks.
So to the extent possible, I think BCAP provides a good tool to
help mitigate some of those feedstock risks that are keeping
large company capital on the sidelines waiting for some greater
certainty between does the technology work, have you reduced
and mitigated some of the commodity price uncertainty, and do
we have policy certainty that we can invest hundreds of
millions of dollars on and expect to get a return from.
Chairwoman Stabenow. If I might just do a follow-up on
that, you are suggesting that right now if we focused on BCAP
in terms of commercialization, which I absolutely understand
what you are saying in terms of where we lose these important
projects, so rather than something new, you are saying focusing
in this area would address it from your perspective?
Mr. Edwards. Would help a great deal.
Chairwoman Stabenow. Okay. Thank you.
Mr. Hutchins.
Mr. Hutchins. Yes, thank you. Of course, I am more familiar
with the REAP program, having worked with it, but still, for
the reasons I stated earlier, I would prefer obviously more
funding for REAP because it makes a bigger bang for the Federal
taxpayer dollar since it does require $3 for every $1 on
Federal grant funds invested. Again, that 25-percent incentive
is just enough to get those small farmers, small businesses to
install this cutting-edge technology without a lot of R&D
budgets and things like that. They are basically ready, see
they have the need to save energy, but just need that little
incentive, that 25 percent. So it is a great program from that
respect.
Chairwoman Stabenow. Well, I might just say on REAP that
there has been some really excellent work done in Michigan, in
my home State. I understand what you are saying, and I think it
is impressive as you talk about the jobs that have been saved
or created. I wonder if you might speak just a little bit more
about the jobs, the impact really beyond the farm, and how REAP
is having a broader impact in terms of saving or creating jobs.
Mr. Hutchins. Right. Well, one study--and it is referenced
in my written statements--indicates that there are 18 jobs
created for every $1 million of REAP funds invested. Then, of
course, if you quadruple that because of the private funds
invested, the numbers come up to about $14,000 per job created.
This is not only just saving the jobs on the farm, making them
more financially viable, but for the industries, the
contractors that are manufacturing the equipment, the
technology to be installed on these farms, and installing them
and that sort of thing, so it goes on up the line.
Chairwoman Stabenow. Thank you very much.
Senator Roberts.
Senator Roberts. Bill, if I may call you that, I could not
help but notice that in 1969 you graduated from Fort Hays State
University.
Mr. Greving. That is correct.
Senator Roberts. About that time, I was climbing into a car
with Kate Sebelius coming from Frank Carlson's office, Senator
Frank Carlson, and we left north and headed for Colby on his
big first listening tour, and 52 counties--and now, as you
know, it is 69 or 72, or whatever it is. But it is certainly a
big area. We ran into a blizzard. We were counting telephone
poles to try to stay out of the ditch. Had we headed east, it
would not have been so bad. We could have come to P'burg and
gone to that cafe? sitting on the corner and just had a cup of
coffee with you and Huck Boyd and solved the world's problems.
But at any rate, I feel a certain identity with you in
regards to how you started off. You have obviously found the
right balance between crop production, ethanol, and distillers
grain, and your livestock operation. How did you find the
balance? How did you do that? Is it just by experience and
trying it out? I mean, you know, how did you come to that? What
can you share from your experience as a crop farmer and a
livestock operator and an investor?
Mr. Greving. I think it probably started 20-some years ago.
We have a nutritionist that develops our rations, feed rations
for our livestock. I think this was back in 1989, and he told
us about dried distillers grain. At that time there were very
few ethanol plants--there were none in Kansas, or maybe one. We
hauled dried distillers grain 100 miles out of the Hasting
ethanol plant. It did not take us long to find that this dried
distillers product was a real benefit in our feeding rations.
At this time we were not finishing our cattle. This was
prior to my son graduating from Fort Hays and coming back to
the farm in 1993. When he came back, we were looking for ways
to expand our farming operation without taking on a lot of
debt. We felt that finishing our cattle to slaughter weight was
one way we could generate extra income.
About the time we did this, U.S. Premium Beef program came
along. We were an initial investor in U.S. premium beef. This
has been a hugely successful program for our operation. So when
you combine that with the fact that when the ethanol plant came
in, we could see we could hold wet distillers grain, which is
much improved over dried distillers grain in a feedlot ration.
We could haul it out of our plant 15 miles away, and as I said
in my testimony, we could gain 30 cents in the price of our
grain.
All of these things just kind of fit together, and we have
been doing this now for the last 7, 8 years, and it has been
very good for our operation.
Senator Roberts. How can you share that experience with
others? Or are others just sort of taking note of what you have
done? I think that is a splendid story of being an
entrepreneur, if I can apply that word to a farmer stockman.
But at any rate, your experience, I think, you know, gives us
hope in regards to--well, basically to make sure your son
continues to have a successful farming operation. I thank you
so much for coming.
Let me ask Mr. Edwards: Virent, how many Federal Government
departments or agencies did actually provide assistance? You
mentioned a bunch.
Mr. Edwards. Three, primarily. USDA, Department of Energy,
and Department of Commerce have been the three primary funders.
Senator Roberts. Now, were the processes different
depending on which Department? Did you stay on the same trail,
or did one of those departments sort of force you off your
basic course? Or were they coordinated?
Mr. Edwards. Different timelines, and, you know, I should
also say we also received a grant from the Department of
Defense through the Navy.
As the technology emerged, we kind of discovered new
opportunities and new uses for what the core catalytic
conversion technology could provide. So starting out looking at
hydrogen for fuel cells, the company then merged into liquid
fuels and now into biochemicals as kind of our key success
factors. So what we found important was that the nature of
these grants gave us funding to help leverage our private
sector dollars for research we wanted to do anyway, and it
allowed us to do it faster with more focus to help broaden the
feedstocks that are potentially available for us to convert and
also broaden the products that we were making for customers.
Senator Roberts. Mr. Hutchins, my first question is: How is
your son doing in his baseball? Is he a pitcher or second base
or what?
Mr. Hutchins. Basically shortstop or wherever I decide he
needs to play.
[Laughter.]
Senator Roberts. All right.
Mr. Hutchins. Thank you.
Senator Roberts. I have looked at the map, and the
participation in regards to REAP is concentrated in the
Midwest. But your testimony said that you have hippety-hopped
all around the country sort of like a circle around where there
is the most participation. Are people familiar with REAP, or is
that part of your work basically simply presenting the
information? Is it word of mouth or, you know, how do we get
this word out?
Mr. Hutchins. I think the first few years it was a lot of
word of mouth, but primarily the way we promoted it was working
with ag commodity groups, whether it be poultry associations,
catfish growers, Farm Bureau, groups like that to get the
information out, and their producer-grower meetings, and also
working directly with the companies, the integrator companies,
as far as the poultry producers.
Senator Roberts. Well, I thank you all for your testimony.
I see I am over time by a minute, and we have stretched on and
on. Thank you for your patience. Thank you for contributing.
Madam Chairman, I have no more questions.
Chairwoman Stabenow. Thank you very much. This is a very,
very interesting panel, and we look forward to working with you
on the issues that you have raised.
We would indicate for all of the members that additional
questions for the record should be submitted to the Committee
clerk 5 business days from today. That is 5 o'clock on
Wednesday, February 22nd. We look forward to working with you.
Thank you again, and the meeting is adjourned.
[Whereupon, at 1:08 p.m., the Committee was adjourned.]
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A P P E N D I X
FEBRUARY 15, 2012
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=======================================================================
DOCUMENTS SUBMITTED FOR THE RECORD
FEBRUARY 15, 2012
=======================================================================
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=======================================================================
QUESTIONS AND ANSWERS
FEBRUARY 15, 2012
=======================================================================
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