[Senate Hearing 112-695]
[From the U.S. Government Publishing Office]
S. Hrg. 112-695
S. 3239--EGG PRODUCTS INSPECTION ACT
AMENDMENTS OF 2012: IMPACT ON EGG PRODUCERS
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HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
JULY 26, 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):
S. 3239--Egg Products Inspection Act Amendments of 2012: Impact
on Egg Producers............................................... 1
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Thursday, July 26, 2012
STATEMENTS PRESENTED BY SENATORS
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan,
Chairwoman, Committee on Agriculture, Nutrition and Forestry... 1
Roberts, Hon. Pat, U.S. Senator from the State of Kansas......... 2
Witnesses
Feinstein, Hon. Dianne, U.S. Senator From The State of California 4
Lathem, David, Chairman, United Egg Producers, Lathem Farms,
Pendergrass, Georgia........................................... 7
Benson, Eric, President, J.S. West & Companies, Modesto,
California..................................................... 9
Herbruck, Greg, Executive Vice President, Herbruck's Poultry
Ranch, Saranac, Michigan....................................... 11
Baer, Amon, Owner, Mendelson Egg Company, Lake Park, Minnesota... 13
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APPENDIX
Prepared Statements:
Grassley, Hon. Charles....................................... 24
Thune, Hon. John............................................. 25
Feinstein, Hon. Dianne....................................... 26
Baer, Amon................................................... 29
Benson, Eric................................................. 35
Herbruck, Greg............................................... 38
Lathem, David................................................ 40
Document(s) Submitted for the Record:
Roberts, Hon. Pat:
American Farm Bureau Federation, prepared statement.......... 44
National Veterinary Organizations, Joint Letter Requesting
Non-support for S. 3239.................................... 45
Various Organizations, Joint Letter Requesting Non-support
for S. 3239................................................ 46
Feinstein, Hon. Dianne:
Egg Bill Master Endorsement list, the Egg Products Inspection
Act Amendments of 2012..................................... 48
Grassley, Hon. Charles:
Southwest Iowa Egg Cooperative, prepared statement........... 61
Humane Society of the United States, prepared statement.......... 63
United Egg Producers, prepared statement and attachments......... 68
Question and Answer:
Stabenow, Hon. Debbie:
Written questions to David Lathem............................ 95
Written questions to Greg Herbruck........................... 93
Written questions to Eric Benson............................. 90
Written questions to Amon Baer............................... 88
Roberts, Hon. Pat:
Written questions to David Lathem............................ 96
Thune, Hon. John:
Written questions to Hon. Dianne Feinstein................... 86
Written questions to David Lathem............................ 98
Written questions to Eric Benson............................. 91
Written questions to Greg Herbruck........................... 93
Written questions to Amon Baer............................... 88
Feinstein, Hon. Dianne:
Written response to questions from Hon. John Thune........... 86
Baer, Amon:
Written response to questions from Hon. Debbie Stabenow...... 88
Written response to questions from Hon. John Thune........... 88
Benson, Eric:
Written response to questions from Hon. Debbie Stabenow...... 90
Written response to questions from Hon. John Thune........... 91
Herbruck, Greg:
Written response to questions from Hon. Debbie Stabenow...... 93
Written response to questions from Hon. John Thune........... 93
Lathem, David:
Written response to questions from Hon. Debbie Stabenow...... 95
Written response to questions from Hon. Pat Roberts.......... 96
Written response to questions from Hon. John Thune........... 98
S. 3239--EGG PRODUCTS INSPECTION ACT
AMENDMENTS OF 2012: IMPACT ON EGG PRODUCERS
Thursday, July 26, 2012
United States Senate,
Committee on Agriculture, Nutrition and Forestry,
Washington, DC
The Committee met, pursuant to notice, at 9:35 a.m., in
room 328A, Russell Senate Office Building, Hon. Debbie
Stabenow, Chairwoman of the Committee, presiding.
Present: Senators Stabenow, Klobuchar, Roberts, Boozman,
Grassley, and Thune.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION
AND FORESTRY
Chairwoman Stabenow. Good morning. We will call the
Committee to order, Conservation, Nutrition and Forestry--
excuse me--Agriculture, Nutrition and Forestry Committee, and I
know we do have other members that are planning to join us,
but, Senator Feinstein, in the interest of time, and I know you
have many commitments as well, we want to move ahead this
morning.
This is a very important hearing. We appreciate your being
here. We appreciate everyone being here today. There is
tremendous amount of interest, as we can see from an overflow
crowd today. We are here to consider S.3239, Egg Products
Inspection Act Amendments of 2012, which is a bipartisan bill
that is led by Senator Dianne Feinstein.
We all know that breakfast is the most important meal of
the day, whether you are running a farm, taking your produce to
market, leading a Committee hearing, eggs are as much a part of
our mornings as juice or coffee or the bacon on our plates, or
the milk or grains in our cereal. So when we talk about this
important nutritious product, it is very much a part of America
and our nutrition and food system.
Eggs are an important staple of the American diet. The
average person consumes 250 eggs per year. I think I am
probably above that actually. They are also an important part
of the agricultural economy. Every year, eggs generate nearly
$15 billion for our economy. So it is incredibly important that
our producers have certainty as they produce the eggs that we
need for so many of our food products.
This bill we have before us is driven by a coalition of
industry producers who have come together to request these
changes, and it is designed to give producers certainty from
regulations. Senator Feinstein, the bill's author, is here to
testify today, as I indicated, as well as egg producers from
across the country.
This bill represents a compromise for egg production
standards. It was proposed by the industry and has the support
of the Humane Society of the United States. We will hear today
from those who are in favor of the bill and the agreement, and
we will hear from those who have concerns. I look forward to
the testimony from Senator Feinstein and from the producers who
have taken the time. Thank you to each of you for taking the
time to join us, to be able to be here for this very important
discussion on a very important issue.
I will now turn to my friend and Ranking Member, Senator
Pat Roberts, for his opening remarks.
STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
KANSAS
Senator Roberts. Madam Chairwoman, thank you for calling
this hearing this morning, giving us an opportunity to hear
directly from egg producers regarding a bill that would, for
the first time ever, put the Federal Government in charge of
the standards under which eggs are produced in this country.
And I truly appreciate the chance to hear from my friend
and colleague, Senator Feinstein. Senator Feinstein and I have
put a lot of years in on the Intelligence Committee and I thank
her for standing up in behalf of our country, our national
security, and the long years of effort that you have put on the
Intelligence Committee. We have no greater obligation than the
national security of our country and I thank you for your
service.
Senator Feinstein. Thank you, sir.
Senator Roberts. First let me say that I firmly believe
that farmers and ranchers are good stewards of the animals
under their care. One of the fundamental principles of the
animal husbandry profession is that your animals get fed,
watered, and taken care of the night before you actually head
for the house.
There is absolutely no excuse for animal cruelty, in
particular, given the multitude of training programs and
educational efforts about animal care and handling for those
who work with and around animals. Producers understand that the
better they take care of their animals, the more productive
those animals will be.
Second, let me say that Senator Feinstein and the egg
producers of California have a real challenge. There is no
doubt that California's Proposition 2 has created some
uncertainty in the industry. That comes with leadership.
I am not sure this agreement between the United Egg
Producers marketing cooperative and the Humane Society of the
United States, HSUS--I guess everything has to be an acronym, I
apologize for that--is a solution that addresses the unintended
consequences we as policy makers need to consider.
When this Committee considers any change in policy that
will impact animal agriculture, there are a wide range of
factors that should be taken into account. Considerations like
food safety, animal health and welfare, the economics of food
production, environmental issues, our international trade
obligations, and most importantly, science. What is the best
possible science available to govern the manner in which our
food supply is produced in this country? Is this legislation
based on that kind of science?
Put simply, when we deviate from science-based decisions,
we end up making the very problems we are trying to resolve
worse. If the science eventually says that a smaller cage is
better, will this alliance of producers and HSUS be back before
this Committee in a year or two petitioning for a change in the
law when the science changes?
I also hope to learn why egg producers were solidly against
any agreement with HSUS before they were for it. What changed
in the issue to bring about such a reversal in their position?
I understand there are also class action suits involving
antitrust issues that are at the forefront of many challenges
that egg producers are dealing with right now. Is this
agreement somehow viewed as an escape hatch from those
discussions?
I wish, Madam Chairwoman, that we had the Department of
Agriculture with us here this morning to explain how they would
actually enforce this agreement were it ever to become law. In
addition to questions regarding the implications of this
agreement on interstate commerce and our international trade
obligations, I am also concerned about how this agreement will
affect the price that consumers will pay for eggs.
European consumers are dealing with these challenges right
now. European consumers saw their supply of eggs drop 10 to 15
percent soon after the government implemented its version of
this law, a decrease which led to a 55 percent increase in the
price of eggs.
At the Federal level, this Committee must examine what
effects a dramatic price increase like this would cause to our
programs like the WIC program and SNAP or food stamps. A 55
percent increase in egg prices would significantly reduce the
purchasing power of the recipient of these programs. I do not
think we want that.
Madam Chairwoman, I have letters in opposition to this
legislation from the American Farm Bureau Federation, a group
of four national veterinary organizations, and a letter signed
by 94 state and national organizations representing egg, milk,
sheep, wool, turkey, pork, and beef producers that I would like
to enter for the record.
Madam Chairman, thank you and I look forward to this
morning's discussion.
Chairwoman Stabenow. Thank you very much. We will enter
those documents into the record without objection.
[The information from Hon. Pat Roberts can be found on
pages 44, 45 and 46 in the appendix.]
Chairwoman Stabenow. Again, welcome to our very
distinguished colleague, as Senator Roberts mentioned, the
Chair of the Intelligence Committee. We owe you all a debt of
gratitude for the hours that you spend, literally, every day in
efforts to protect our country and all of us as Americans. So
thank you for that. We also thank you for being here as the
lead author of S.3239, the Egg Products Inspection Act, and we
would welcome your comments in relationship to the bill.
STATEMENT OF HON. DIANNE FEINSTEIN, U.S. SENATOR FROM THE STATE
OF CALIFORNIA
Senator Feinstein. Well, thank you very much, Madam
Chairman and Ranking Member Roberts, and I want to thank you
really for the time to discuss this amendment which would be to
the Egg Products Inspection Act.
I want to just begin by pointing out that this is a
bipartisan bill. It is co-sponsored by yourself, Senators
Leahy, Blumenthal, Scott Brown, Cantwell, Collins, Kerry,
Lautenberg, Lieberman, Menendez, Merkley, Murray, Saunders,
Schumer, Vitter, and Wyden. Unfortunately, Senator Leahy could
not be here this morning. He has a mark-up, as does Senator
Klobuchar and myself at ten o'clock. I am also delighted to see
the Ranking Member of the Judiciary Committee, Senator
Grassley, here this morning as well.
The United Egg Producers represent approximately 90 percent
of the eggs sold in the United States, and the Humane Society
of the United States is the largest animal welfare organization
in the country, I believe with 11 million members. These two
groups came together to forge a compromise agreement that can
ensure the future of the egg industry and result in a better
product.
You are right, Senator Roberts. In 2008, California passed
Proposition 2, which among other things created a requirement
that hens be able to stretch their wings and turn around. This
initiative passed with an overwhelming majority. Similar
measures were also put in place in Michigan, Arizona,
Washington, Ohio, and Oregon. The result of these individual
state-level initiatives is now a patchwork of standards that
make it hard for egg producers to know the rules of the road
and to conduct interstate commerce.
Egg farmers nationwide are stymied as they attempt to
upgrade their infrastructure and develop new enterprises. Why
grow when the rules of the road might change and invalidate
your investments? Why develop a new market if that market might
not be open to you in a few short years? This legislation
addresses these problems. The agreement establishes a single
national standard for the treatment of egg-laying hens and the
labeling of eggs.
Now, you are going to hear a lot in detail about it from
the next panel, but let me just quickly, briefly explain what
the bill does. The size of hen cages is increased over the next
18 years and enrichments like perches and nests are added so
that chickens can engage in natural behaviors. The practice of
depriving hens of food and water to increase egg production is
outlawed.
Minimum air quality standards are put in place for henhouse
protecting workers and birds. And clear requirements for egg
labeling are created so consumers know whether the eggs they
buy come from hens that are caged, cage-free, free range, or
housed in enriched cages.
Now, there are some who have concerns about the bill, and I
just want to be clear on a few points. This legislation only
applies to egg producers and is the result of careful
negotiation between animal welfare groups and the only industry
that is affected. No other is affected.
Secondly, I have heard concerns that the bill would hurt
small producers. That is simply incorrect. Farmers with 3,000
birds or fewer are specifically exempted from the provisions of
this legislation.
Organic, cage-free, and free range egg producers will also
be unaffected by the housing provisions, except that they may
see increased sales as consumers are able to more clearly tell
what is available on store shelves as a result of the labeling
provisions. And for those who are affected by our bill, there
is a long phase-in period, up to 18 years. In this period of
time, most producers, I am told, will replace their cages in
any event.
Next, the science behind the legislation. This legislation
is endorsed by the leading scientists in the egg industry, the
American Veterinary Medical Association, and the two leading
avian veterinary groups. Studies show that these new cages can
result in lower mortality and higher productivity for hens,
making them more efficient for egg producers.
Finally, I want to set the record straight with regard to
the cost of the bill. The CBO scores the legislation as having
no cost, and a study by Agrilytica, a consulting firm, found
that this legislation would not have a substantial price effect
on consumers. It is also important to note that this bill
reflects what is already happening because of consumer demand.
McDonald's, Burger King, Costo, Safeway, and other companies
are already phasing in new humane handling requirements for the
production of the food they sell.
Further, a study by an independent research company, the
Bantam Group, indicates broad support from consumers.
Specifically, they found consumers support the industry
transitioning to larger cages with enrichments like perches, by
a ratio of 12 to 1, and I would like to submit for the record
13 pages of endorsements from organizations in virtually most
major states in the country, if I can.
Chairwoman Stabenow. Without objection.
Senator Feinstein. Thank you.
[The information from Hon. Dianne Feinstein can be found on
page 48 in the appendix.]
Senator Feinstein. You can tell how important this bill is
to the egg industry because farmers have come from all across
the United States to attend this hearing and show their
support. You will meet several on the next panel, including
Eric Benson from my State of California whom I would like to
welcome. Other farmers are here as well in the audience. Let me
just mention a few.
Jim Dean from Iowa. Since 30 percent of the eggs in
California grocery stores come from Iowa, farmers in Iowa have
a strong interest in seeing this bill pass so that rules of the
road are clear and they can be productive and grow and access
this huge consumer market.
Dolph Baker from Mississippi. He is CEO of Cal-Maine Foods
which operates egg farms in multiple states. Cal-Maine will
find it more and more difficult to comply with conflicting
state standards unless we can pass this bill.
Arnie Riebli, also from California. Peter, David, and Gary
Forsman from Minnesota. They are here representing smaller
scale operations. Marcus Rust, Bob Krouse, Ron Truex, and Roger
Seger from Indiana. They have enacted state level production
standards. They are having to make decisions about what
infrastructure to invest in and wondering if they are going to
be locked out of their neighboring markets.
Molly Weaver from Ohio. She is trying to cope with new
regulations imposed by her home state and figure out how she
will compete with eggs produced more cheaply by her neighbors
just across state lines. Now, there are many producers who
could not even get into the room today and they are sitting in
overflow rooms around the corner, but they have all come to
Washington to be heard.
I would also like to add that the most recent list of
supporters--well, I said that--is 13 pages long. It includes 14
agriculture and egg-producing groups, the four major veterinary
groups who look at eggs and egg-laying hens, five consumer
groups, and many more.
Now, this compromise represents something very unique in
animal agriculture. This is an animal welfare group and a major
industry working together to forge an agreement that is
practical and contains reasonable time frames for producers to
implement new cage sizes, 18 years; new protections for the
animals and workers; and clearer labeling.
This is a practical, fair-minded resolution that I think
solves a real problem for the egg industry. I encourage the
Committee to support this bill. I thank you very much for this
opportunity.
[The prepared statement of Hon. Dianne Feinstein can be
found on page 26 in the appendix.]
Chairwoman Stabenow. Thank you very much for your
comprehensive testimony. We look forward to working with you,
and as we move forward in discussing this issue, I believe at
this point we will, unless someone has a question for Senator
Feinstein, that we will move forward to our other panel. But,
Senator Grassley, you look like you might have a question.
Senator Grassley. I wonder, because we have all got to go
to Judiciary, I would like to put a statement in the record,
some questions to submit, and I would also like to submit a
letter in opposition from the Southwest Iowa Egg Cooperative on
the legislation.
Chairwoman Stabenow. Without objection.
[The information from Hon. Charles Grassley can be found on
page 61 in the appendix.]
Chairwoman Stabenow. Thank you again. We look forward to
working with you----
Senator Feinstein. Appreciate it.
Chairwoman Stabenow. --and appreciate your comprehensive
remarks.
Senator Feinstein. Thank you.
Chairwoman Stabenow. We will ask our second panel to come
forward at this point.
Well, good morning. We appreciate so much all of you taking
the time to join us today. Let me introduce each of our
witnesses and then we will ask each of you for five minutes of
verbal testimony. We certainly welcome any other written
testimony you would like to leave with the Committee as well.
And then we will do a round of questions.
First let me introduce our first panelist. David Lathem is
the Chairman of United Egg Producers and is an egg farmer from
Pendergrass, Georgia. We are very pleased to have you with us
today.
Our second panelist is Eric Benson from Modesto,
California. Mr. Benson is President of J.W. West, a diversified
agricultural company started by his family in 1909. So that is
terrific. Welcome.
I am particularly pleased to have the next witness from
Michigan, Greg Herbruck, who manages Herbruck Poultry Ranch
along with his son and two brothers. They are the third and
fourth generation involved in this family farm, very well-
respected leaders in agriculture in Michigan, and it is great
to have you here.
And then finally I am going to turn to Senator Roberts to
welcome our final witness.
Senator Roberts. Thank you, Madam Chair. I would like to
introduce Amon Baer, second generation ag farmer from Lake
Park, Minnesota. In this Committee, the term family farmer is
volleyed back and forth with some poetic license, but when you
look at the number of Baer family members that are actually in
the business of farming, you quickly appreciate that Amon may
have farmed out of necessity so that he had enough food for his
family and all the mouths congregating around the dinner table.
Amon Baer and his wife of 38 years, Camille, are owners and
family farm operators. They have nine children, all of whom are
involved in the farming operation. Together with two of their
five sons, they own 300,000 laying hens and they grade, carton,
and market 6 million dozen eggs per year. And believe it or
not, Madam Chairman, this is not a big operation.
Additionally, the Baers raise hogs and grow corn, soybeans,
and wheat in Minnesota as well as Laramore and Dakota, North
Dakota. To the south, Amon and one of his sons are partners in
a farm near New Effington and Rosholt, South Dakota. And not to
be outdone, one of his 14 siblings, three of Amon's brothers,
Amos, Joel, and Jonah, are also farming in the Red River Valley
region.
You cannot get any more farm family than Amon. Mr. Baer, if
there was any more family in your farming operations, we may
have trouble fitting them all into this room. Welcome. We
appreciate your coming here today to share your thoughts on
this legislation.
Chairwoman Stabenow. Thank you. And welcome to each of you.
We will start with Mr. Lathem. Good morning.
STATEMENT OF DAVID LATHEM, CHAIRMAN, UNITED EGG PRODUCERS,
LATHEM FARMS, PENDERGRASS, GEORGIA
Mr. Lathem. Good morning. My name is David Lathem. I am an
egg farmer from Pendergrass, Georgia, and I am Chairman of the
United Egg Producers. UEP represents farmers who market
approximately 90 percent----
Chairwoman Stabenow. Excuse me, Mr. Lathem. We are going to
ask you just to move. Either the mic is not on or just move it
a little bit more towards your mouth. We want to make sure that
everybody has a chance to hear you.
Mr. Lathem. Is that better?
Chairwoman Stabenow. That is better. Thank you.
Mr. Lathem. Okay. UEP represents farmers who market
approximately 90 percent of all eggs sold in the United States.
I am pleased that in the hearing room and overflow room, we
have egg producers who have come to Washington for this hearing
and manage almost half of the nation's laying hens. UEP
strongly supports S.3239 and we appreciate the Committee having
this hearing.
Speaking personally, I believe that long-term viability of
my family farm is in jeopardy without S.3239. Our farm is not
among the very largest. We cannot set up different production
systems to meet conflicting and inconsistent standards of every
state. We need a production standard that is for everyone and
is fair for everyone.
S.3239 allows us to plan for our future. It lets us, as
producers, take charge of our own destiny. This bill has the
overwhelming support of our industry. Not unanimous, because
nothing important is ever unanimous, but overwhelming.
We as producers realize that we are living in the 21st
century when the American public is interested as never before
in where its food comes from and how it is produced. We should
see this as an opportunity rather than a threat. UEP believes
that S.3239 represents the sustainable future for all of us,
but we are not the only ones.
This bill has scientific support from the American
Veterinary Medical Association and other professional
societies. It has the support of Consumer Federation of America
and the National Consumer's League. Egg producer groups at the
state level have come out in support from the Rocky Mountain
Farmer's Union to United Farm Workers. This bill has wide
support.
However, some do oppose it. I would like to engage in
argument seriously and explain why we disagree. Some simply
attack the Humane Society of the United States. They say, You
cannot trust HSUS. It is no secret that our organization and
HSUS have been adversaries. We have disagreed and fought on
animal welfare use for years.
But once we started to explore whether there might be
common ground, they realized that we did care about the welfare
of our hens and we realized that they did care about the
survival of our farms. And so we began to do work, what
everyone says you should do, look for common ground, seek
compromise, try to find solutions.
So the main complaints some people have against us in the
egg industry, look for common ground, we plead guilty to that
charge. Opponents of S.3239 also assert that this bill
represents a slippery slope, a precedent that will inevitably
force other animal industries into similar settlements. This is
not true. There are two basic reasons why.
First, we are all here because we as producers want this
agreement. With all due respect to HSUS, if they were for the
agreement and we were against it, I do not think we would be
having this hearing today. If other livestock sectors did not
want a legislative settlement with HSUS, it is not going to
happen.
The slippery slope argument says that if you approve this
bill for eggs, you will inevitably follow up with similar laws
for pork or beef. This assumes you as legislators are incapable
of making distinctions between commodities. The problem with
this argument is that it is completely at odds with what
Congress has actually done over the years.
You have, in fact, always looked at each commodity
separately. You do not, for example, legislate the same program
for cotton as you do for peanuts. Dairy is an animal product
that has price supports, but you have never seriously
considered price supports for beef, pork, or eggs. Eggs have
always been regulated differently from other animal products.
The Food and Drug Administration has on-farm safety
authority for our farms, but not for beef, pork, or turkey
operations. USDA has civil penalty authority for eggs, but not
for other livestock species. By contrast, USDA Packers and
Stockyards Act applies to beef, pork, and broilers, but not to
eggs.
The slippery slope argument ignores this clear history and
replaces it with hypothetical fears. The reality is that
Congress and Federal agencies have always made distinctions
among commodities. I hopefully you will forcefully reject this
argument.
Madam Chairwoman, I genuinely believe that the survival of
my farm and other farms are hanging in the balance. We need
Senate Bill 3239 in order to provide a fair operating
environment for all American farms. I strongly urge this
Committee to advance the legislation and I thank you for
letting me speak today.
[The prepared statement of Mr. Lathem can be found on page
40 in the appendix.]
Chairwoman Stabenow. Thank you very much. Mr. Benson,
welcome.
STATEMENT OF ERIC BENSON, PRESIDENT, J.S. WEST & COMPANIES,
MODESTO, CALIFORNIA
Mr. Benson. Good morning and thank you for having us here,
Senator Stabenow, and other Senators. We appreciate your
attending.
I am here today representing J.S. West here in Modesto,
California. Our business was founded in 1909. We are family
owned and operated, third and fourth generations of the West
and Benson families now providing management for the company.
We believe in providing the highest quality products to our
customer and contributing to the communities in which we live
and operate, for example, by offering high quality and
retirement benefits to all 300 of our employees.
You have heard about the problems in the egg industry, the
growing patchwork of inconsistent animal welfare statutes that
began with Prop. 2 in California. Our family was deeply engaged
in the debate on this. I have always believed that the
marketplace should make most economic decisions through
consumer demand and preferences. That is balanced by a belief
in the political process to help set standards that our society
believes in.
The dilemma we face today is that today's consumers will
vote with their hearts and buy food with their pocketbooks. We
as a society need to decide how we are to treat our food before
it is food. I think Government's role is to set a standard. We
are willing and able to produce competitively under most all
conditions as long as the playing field is fair and the rules
are clear.
I am here to tell you the best solution to our industry's
problems in this area is S.3239, the bill that our Senator,
Dianne Feinstein, has sponsored along with 15 of her
colleagues. We are very proud of the leadership our Senator has
shown in standing tall as a champion for our industry and for
improved animal welfare as well. The two are not incompatible.
I would like to spend my brief time talking a bit about the
system which would become a national standard if the bill
passes. Under S.3239, producers would make a multi-year
transition to enriched colony systems. At J.S. West, we have
installed two production houses with this system and have taken
a flock through the complete laying cycle with two more flocks
currently in production.
So if you want to know what the egg industry will look like
if S.3239 passes, you can watch our web cam at jswest.com. It
lets anybody with access to the Internet look at our hens live
and in real time. The enriched colony system is not an
experiment. These enclosures are the standard for caged egg
production in the European Union.
However, not many of these systems are in place in the
United States yet, so you might be interested in some of our
results. First, what exactly is it? It is larger than the
conventional enclosure. In our case, each colony contains about
60 hens, measures 5 feet by 12 feet. Each colony is furnished
with a nest box, perches, scratch areas.
Hens can express more of their natural behaviors and, of
course, there is substantially more space per animal than in
conventional enclosures, and you can see an example of these
hens enjoying themselves with their perches and everything else
right over here with our photograph that was taken out of our
hens in the new system.
Our results in this system have been very encouraging. Hen
mortality is lower, meaning that the small portion of hens that
die during the production cycle is lower than other systems.
Our egg production is somewhat better than in conventional
systems. Hen feed consumption is a little bit greater, but we
think that is because of the higher activity levels and the use
of feed in the scratch areas. And the birds definitely use the
enrichments.
S.3239 wisely provides for a multi-year phase-in of
enriched systems. There are undoubtedly incremental capital
costs associated with moving to the new system. However, that
being said, manufacturers have told us that more than 80
percent of new equipment today is capable of conversion to
these enriched colony systems.
That means that S.3239 will not necessarily require most
producers to make capital investments they were not already
planning to make, albeit somewhat at a higher level than
before. When you consider the cost of any investment, you
always consider what the returns will be and what the
alternatives are.
If you really believe that you can maintain current
conventional cage systems forever, there is a cost to enriched
cages. In California, we are pretty sure that is not the case.
If we cannot gain a consensus in favor of this enriched colony
system at densities that society agrees is acceptable, the
future will lie with those egg producers with the highest
density of hens per square foot and the cheapest possible
approach to food safety in a state where no rules exist and
little concern is given to society's standards on hen welfare.
I am not here to criticize any particular production system
or density level, but I am convinced that this colony system
and the standards that support it are the best compromise for
the future of our industry. This system has higher production
efficiency and better animal welfare than cage-free, free
range, or conventional systems, and reflects the best welfare
standard for egg production moving forward.
I salute HSUS for their willingness to be open on
compromise in this issue in supporting this legislation. The
Humane Society of the United States, as Senator Roberts so
succinctly put, without using the acronyms, they recognize that
you can improve animal welfare within the context of an
economically sustainable cage production system if it is
designed right.
What does make sense is a national production standard that
is fair to everybody, that treats everybody the same, and that
reflects our country's ideas of fairness and humanity. That is
what is required here and that is what S.3239 provides, and we
strongly urge you to support it. Thank you very much, Senator.
[The prepared statement of Mr. Benson can be found on page
35 in the appendix.]
Chairwoman Stabenow. Thank you very much. Mr. Herbruck,
welcome. It is good to see you.
STATEMENT OF GREG HERBRUCK, EXECUTIVE VICE PRESIDENT,
HERBRUCK'S POULTRY RANCH, SARANAC, MICHIGAN
Mr. Herbruck. Good morning and thank you for the chance to
testify today. My name is Greg Herbruck and my brothers and I
own and manage our egg farm in Michigan. Four generations of
our family have been in the egg business and we struggle with
the same challenges as other egg farmers and livestock
producers.
For example, more than half the cost of producing eggs is
feed. In the current drought, we have seen costs go through the
roof. As projected yields have fallen over much of the nation,
grain prices have soared, and the vast majority of our feed
cost is the corn and soybean meal. And yet, in some ways, the
situation I will describe to you today is even more serious for
us than the drought.
Over the years, we have always tried to meet the needs of
our customers. For example, we have been part of the growing
organic egg industry and we partner with 28 other farms, many
of them very small scale, to supply a wide range of eggs
through different production systems.
We also produce conventional eggs where the hens are kept
in cages. There were good reasons our industry moved to this
production system many decades ago: Animal health, protection
from predators, and economic efficiencies. But we have to
acknowledge that in the last few years, keeping hens in cages
has become extremely controversial.
As producers, we believed we had science on our side,
having implemented the welfare recommendations of an
independent scientific advisory committee. However, we have
learned that consumers and voters do not make the decisions
based simply on science.
Most are several generations removed from the farm, and
whether you call it values or emotion, the way they form their
views of animal welfare issues is not the same as ours. They
are our customers and in any business, if you do not listen to
your customers, you are headed for trouble.
Egg farmers got a dramatic wake-up call when California
voters passed Proposition 2 by a two to one margin in 2008.
This ballot initiative made the conventional cage system
illegal. Under the threat of similar ballot measures, other
states moved to establish their own standards for egg
production. Madam Chairwoman, you are aware that our State of
Michigan was one of those.
In just a few years, egg farms in Michigan will be required
to provide more than twice as much space for each bird as the
current industry standard. The future of our industry on the
current path is a patchwork of state animal welfare laws that
are inconsistent, contradictory, and ultimately unworkable.
In many, if not most, cases, these laws will not just
affect the producers in a particular state. They are written to
apply to all eggs sold in the state, no matter where they are
produced. This means that a farmer in Iowa will have to comply
with California state standards because some 30 percent of the
eggs sold in California currently come from Iowa.
This helps you understand why we have a problem. Eggs move
across state lines every day. This is how our business works.
Virtually all states are either in surplus, meaning we produce
more eggs than the population consumes, like Michigan, or in
deficit, meaning that most farms are incapable of producing
what the state consumes, like New York or South Dakota.
Our farms cannot maintain a separate henhouse standard for
every state where we want to sell eggs. And yet, that is pretty
much where we are headed where the current patchwork of laws
keeps expanding. Even already passed laws. Michigan's standard
is different from Ohio's, which is different from Washington's,
which is different from Oregon's, which is different from
California's. It actually gets worse.
We sell to major food service and grocery customers who
have outlets in these states. It would be an impossible task to
keep track of which eggs were produced in which states, to meet
all the different standards of every state where they have a
store or a restaurant. You can see we are on a road to chaos.
I also urge you to examine the House version of the Farm
Bill. There is an amendment which encourages the exact opposite
approach to a national standard. If Herbruck's has to produce
to a specific food safety and welfare standard and neighboring
states do not, this will constitute an economic death sentence
for our farm.
The situation is the same for producers in California,
Oregon, Washington, Ohio, and Arizona, and other states with
similar standards. Unfortunately, the private sector alone
cannot solve this problem. No matter what we do as producers
voluntarily, we cannot avoid the threat of future ballot
initiatives, and 24 states have them.
So we are at the mercy of the next activist group that
wants to mandate cage-free production in our state. We are
convinced the only solution to this problem is a national
production standard, as contained in Senator Feinstein's bill,
S.3239. This bill is the best solution for hen welfare, food
safety, and consumer choice.
It is essential to the Michigan egg industry that this
legislation be passed as quickly as possible so we can stay in
business. We strongly urge this Committee to support S.3239.
Thank you.
[The prepared statement of Mr. Herbruck can be found on
page 38 in the appendix.]
Chairwoman Stabenow. Thank you very much. Mr. Baer, thank
you, welcome.
STATEMENT OF AMON BAER, OWNER, MENDELSON EGG COMPANY, LAKE
PARK, MINNESOTA
Mr. Baer. Thank you very much, Madam Chairwoman, Senator
Roberts, thank you for the kind introduction, and other
distinguished Senators of the Committee. Thank you for the
opportunity for me to be able to testify today on behalf of Egg
Farmers of America, to our opposition to S.3239.
Egg Farmers of America is an association of over a dozen
small and medium-sized egg family farming operations, including
cage-free operators located throughout the Midwest. Senator
Roberts did a very nice job of introducing me, so I will not
re-introduce myself. Thank you.
We have five primary reasons we are opposed to this bill.
The bill will essentially kill the small family egg farmer. The
bill will result in a dramatic increase in cost to consumers.
The bill is not necessary. You would be establishing a
precedent that could virtually affect all of the livestock
industries. And S.3239 is not justified by science.
Killing the small family egg farm. Egg production is a
cyclical, high volume, very low margin business. This bill, if
passed, would benefit the 180 or so mega-sized operations to
the detriment of the 1,800 other family farms. The experience
of my nephew is an example of why this is the case. He has just
installed new housing for 200,000 layers, investing almost $2.5
million.
That equipment system has a useful life of over 30 years.
If S.3239 becomes law, he will be required to tear all of that
equipment out and essentially start over just as he is getting
his first set of equipment paid for. His replacement cost then
to maintain his current production standards would be almost $5
million. In my 40 years in the egg business, I can tell you
there is no way that young man will be able to raise that kind
of money in 18 years.
Cost to the industry. In 1999, the European Union issued a
similar directive requiring conversion to enriched housing over
a period of 12 years. As anticipated, many producers waited
until January and simply closed their operations due to the
higher operating costs and capital investment required.
European consumers have seen supplies cut by 20 percent and
prices soar up to 55 percent higher. We can expect similar
results in this country. UEP's own economic analysis indicates
that by 2029, 65 percent of the production will still be in
conventional cages at 67 inches.
This law is unnecessary. Today, any egg producer who
currently wants to produce eggs in enriched colony housing has
the freedom and ability to do so. They do not need a Federal
law to require them to produce eggs at that level. The Federal
law is needed to push the small farmer out of business so there
is less production.
It sets a bad precedent. As a lifelong UEP member and UEP
Board member, I am very sympathetic to the unfortunate
situation faced by the egg farmers in California. Eric Benson
mentioned that a lot of money was spent. My family sent
thousands of dollars to help California try and defeat
Proposition 2. But the problems of one state, even a handful of
states, does not justify a Federal mandate in all 50 states.
I agree with the California Congressman who recently said
during the House Ag. Committee consideration of the Farm Bill,
quote, We have a terrible situation created by the voters of
California with the egg situation. Now that I am a retiring
member, I can say that I do not always agree with what the
voters do, and they in California made an awful mistake with
regard to the poultry and egg situation. I certainly agree with
that Congressman.
After the 1999 EU directive, as many as 27 separate food
safety studies were performed in Europe and the United States.
None of the science conclusively points to improved food safety
as a result of enriched housing. Additionally, the U.S.
Department of Agriculture stated last July, Hens can experience
stress in all housing types and no single housing system gets
high score on all welfare parameters.
On January 26th of this year, the American Veterinary
Medical Association noted in a statement that, quote, Each of
the additional features in an enriched colony has the potential
to malfunction, causing injury, harboring disease vectors or
parasites, or provoking aggression.
Before concluding my remarks, I would like to state for the
record that I personally, as well as others who oppose this
legislation, have received threats in an attempt to force our
support rather than oppose this legislation. We are evaluating
those threats with lawyers and law enforcement officials. I
wanted this record to reflect our concern so that its absence
is not used against us in later legal proceedings. Thank you,
Madam Chairwoman, for the time.
[The prepared statement of Mr. Baer can be found on page 29
in the appendix.]
Chairwoman Stabenow. Thank you very much. We will move to
questions at this point. Mr. Herbruck, could you respond a
little bit more to the challenge of patchwork of different
state regulations? I know certainly in Michigan the state
legislature, as you mentioned, passed a law that takes effect,
I believe, like 2020. What Mr. Baer is talking about, a
voluntary effort, why can we not just do this voluntarily as
opposed to what is happening and how it affects the management
decisions for you as an egg producer looking at the patchwork
of different regulations across the country?
Mr. Herbruck. Well, as I mentioned, we sell eggs in roughly
30 other states, and with this continued expanding of
individual state standards, we could have to have a chicken
house for every state. And it is just impossible to manage that
type of operation, as well as the logistics of moving eggs
through a system, of what it takes to keep track of Ohio eggs
versus West Virginia eggs versus Michigan eggs.
And that is our concern, is that we will be having to do
the logistics of that. Then our customer. If it is a
centralized warehouse, they have got to say, Well, this egg has
to go to Ohio or West Virginia or Michigan, and that is a real
concern of where that patchwork is leading.
Chairwoman Stabenow. Thank you very much. And I also want
to thank you because you have been really at the forefront of
proactively reacting to consumer interest, and so we appreciate
that.
Mr. Lathem, could you talk about the issue around prices
for eggs that has been raised in terms of what this does to
food prices and so on? If S.3239 becomes law, what will the
consumer level impact on egg prices be and are there provisions
in the bill that would ensure that egg prices do not
dramatically increase as a result of what is proposed in these
changes?
Mr. Lathem. Well, of course, egg prices always fluctuate.
You know, the last two years, eggs have been as cheap as 75
cents a dozen. The market today, they are probably $1.60. We
are affected a lot by the cost of our ingredients, and as we
all know, corn and soy have gone very high, so we have always
had a lot of prices.
But we did have a study from Agrilytica Consulting and the
work they did shows that over the 18-year phase-in time period,
there is only about one-and-a-half cents per dozen, 1 percent
extra cost from implementing this program. Even when we get
through that phase-in period, we are looking at approximately 9
cents per dozen when everybody is in enriched cages. And we
think that is a very reasonable number. It is less than a 5
percent increase from where we are today and we think that is
very reasonable.
Chairwoman Stabenow. And could you speak at all to the
price increases in the European Union and what they have
experienced?
Mr. Lathem. Yes, definitely. You know, we have done a lot
of work on this legislation, and one of the things that we
wanted to do is ensure that we did not have what happened in
Europe. So we have a phased-in tiered approach where there are
dates that we will raise the square inches per chicken, and
unlike Europe, which did not do that. Europe had one final date
that you had to go from existing housing to new enriched
housing. So our legislation is much, much better, well thought
out and well planned so that we will not have price spikes.
Chairwoman Stabenow. Thank you. And Mr. Benson, in talking
about the price differences from the standpoint of a producer,
when you look at things like a depreciation schedule and so on
for the traditional hen cages, what provisions are included in
the bill to make the transition compatible with what you would
do in the normal course of business as you make decisions?
Mr. Benson. We currently have a couple of houses on our
ranch. I think my cousin put them in 1992 or 1993, and the
equipment in those houses is in desperate need of replace right
now. We do not know what we can put in there. That is obviously
part of the uncertainty issue. But if you take a look at that,
it is about 20 years.
The legs to the bottom of the cages are starting to rot
away, the roll-outs where the eggs rolls out from underneath
the hens is getting more wavy than it should, the belt feeder
that goes down is going up and down and it is a much higher
level of checks. It is time for us to replace the equipment in
our Hilmar houses 3 and 4.
So from that experience--and that was good quality
equipment that we purchased--other people may have different
experiences, I do not know, but from our experience, we have
got to do this in 20 years. The equipment is just not as
efficient. Today's equipment is a lot better, it is designed
stronger, the Dutchman equipment we put in is designed to last
a long time, but once again, beyond 20 years, I just--I do not
think it is practical. We need to do it anyway.
As far as depreciation schedules, you know, a lot of people
say, Well, what does it cost? I have to say ongoing operating
costs are very similar to what we are going to have today.
People costs, a little different. The biggest difference is
possibly a little bit higher feed costs. The biggest thing is
the capital. At some point, you are going to have to get that
money, but it is not--the rest of it is really no different.
Chairwoman Stabenow. Thank you very much. Senator Roberts?
Senator Roberts. Limited time. Amon, as a UEP Board member,
did anybody from UEP give you any notice or contact you to tell
you that UEP was negotiating this agreement?
Mr. Baer. As a Board member, I was notified, but the UEP
membership as a whole was not notified about the negotiation of
this. I have a brother who has been a UEP member for 20 years
and he knew nothing about it.
Senator Roberts. After the deal was reached, were you ever
formally polled to see if you supported the agreement?
Mr. Baer. I am sorry. Somebody coughed behind me.
Senator Roberts. That is allowed.
Mr. Baer. But I am getting old. My hearing is not good
anymore.
Senator Roberts. Well, that is allowed, too. After the deal
was reached, were you ever formally polled to see if you
supported the agreement?
Mr. Baer. No. The UEP membership as a whole was never asked
to vote on this.
Senator Roberts. All right.
Mr. Baer. The only votes taken were Board members.
Senator Roberts. If the Federal Government mandates the new
standards described in this legislation, what will happen to
your business? I think you pretty well answered that with your
nephew who has expended 2 million bucks to basically modernize
his operation, and you are indicating it could cost him $5
million. The folks to your left will say--your right, my left--
will say, but they have got 18 years to do it. Any comments?
Mr. Baer. Yes. I guess I would just like to say that my son
is also looking at taking over my operation. I would like to
sell it to him. My nephew, because he put equipment in two
years, can produce eggs at 67 square inches up until 2029. My
son, if he takes over my operation and puts new equipment in
now, he will have to produce eggs at 78 square inches, at 90
square inches, at 101 square inches, 113 square inches, and 124
square inches in three-year increments.
And because he is starting two years later, he will be
locked into a more inefficient egg production system that costs
more per dozen than his cousin, and he will be competing with
his cousin at a two or three or four cent a dozen disadvantage
for that entire period.
My son will not be able to take over my operation and
produce eggs for 18 years at that big a production cost
deficiency. He is going to be competing with his cousin and the
70 percent of the other producers who are able to produce them
at 67.
Senator Roberts. You not only are into egg production, you
have got a very diversified farming operation. Do you have
concerns that a regulation like this will just lead to even
more consolidation in what is already a very consolidated
industry?
Mr. Baer. Absolutely. My son is a prime example. He will
simply not be able to borrow the money to put these new cages
in if he has to be at a competitive disadvantage to 70 percent
of the industry.
Senator Roberts. Actually that was another question that I
had. How have others responded to your opposition? Are you
getting along with those folks on your right?
Mr. Baer. I have a great deal of respect for all of my
fellow producers. This one issue we disagree on entirely. I
agree with all the points they made. I just do not think this
is the proper solution.
Senator Roberts. All right. You raised hogs. You mentioned
in your testimony you are worried about the precedent that this
legislation will set. Would you talk a little bit about your
concerns?
Mr. Baer. Yes. Proposition 2 did not only cover laying
hens. It also covered hog gestation stalls, and that same issue
is being played out in the hog industry right now. If Congress
steps in and starts the process of regulating on-farm
production practices, I do not think that HSUS or the animal
rights groups or anybody else that is advocating for that will
stop. They will continue to try and advocate and have the
Federal Government set standards for all livestock.
Senator Roberts. Mr. Lathem, UEP controls 90 percent of egg
marketing. Is that about right?
Mr. Lathem. Yes, yes, sir. That is correct.
Senator Roberts. UEP also has the UEP certified program
that sets welfare standards.
Mr. Lathem. Correct.
Senator Roberts. If you control 90 percent of the market
and you have a welfare standard that should be available,
knowledge to all consumers, why do you need the Federal
Government to set a new standard?
Mr. Lathem. Well, what I think we found out in the egg
industry is that truly the public is interested in our industry
like never before. We do have an excellent program. It is size,
space. It has been very well accepted.
But what we have seen now is that people, our consumers, we
see that through ballot initiatives, through our customers
developing their own plans. We see that people want to be
involved in how their food is produced. And what we need is a
consistent, level playing field, everybody on the same program.
We do not feel like it is right for some producers to stay in
business while some others go out because they live in the
wrong state or because the luck of the draw.
We feel like that eggs should be produced humanely and
consumers are going to have a right to say in that. And the
main thing is, is something that we all can live with, and I
think that is very, very important.
Senator Roberts. If this bill were enacted into law and
cage size is increased, what is the benefit to human, to human
health from a food safety standpoint?
Mr. Lathem. Excuse me. Would you repeat that question?
Senator Roberts. If this bill is enacted into law and cage
size is increased, what is the benefit to human health from a
food safety standpoint?
Mr. Lathem. Well, I think we produce very safe eggs today,
the safest they have ever been, and I do not see that changing.
I think we have safe eggs today. We will continue to have safe
eggs.
Senator Roberts. The hen housing requirement in the
proposed rule calls for 116 square inches. Why are we
considering a law that calls for 144 square inches for white
eggs or, for that matter, 130 or 150? Who decided on this
number? How do you know this is exactly the right number of
square inches?
Mr. Lathem. Well, we actually are not doing--it is actually
124 inches, is the number. I think the other number that you
quoted was for brown hens. For white hens, it is. That was a
negotiated number, but there is a lot of science behind that.
You know, this is not a new system for Europe. They have been
working on this system for years, and we have relied on them
and their number is 116. So we negotiated 124, which is very,
very close to the 116 number that there is a lot of science
that supports.
Senator Roberts. You commissioned a report that says the
investment cost for enriched cages was 24 bucks per hen for new
construction, $20 per hen for renovation, plus another dollar
per hen for perches and scratch pads. So that would equal
roughly $8 billion to convert U.S. egg-laying houses over to
the enriched system.
Is this argument in favor of the bill, that no one will
notice such a dramatic cost increase if they are spread out
over several years, or what? That is 8 billion bucks. That is a
lot of money.
Mr. Lathem. Well, I think, number one, $8 billion is a
little on the high side. I do not come up with that figure and
I build hen houses----
Senator Roberts. What do you think, six or seven?
Mr. Lathem. I think it could be as high as 6 billion.
Senator Roberts. Six billion.
Mr. Lathem. But I also think it is very important that you
realize that over the next 15 to 18 years, we are probably
going to spend 3 billion anyway. So the incremental cost, I
would say, would be closer to the 3 billion number. And when
you spread that over the number of eggs, it comes up to one-
and-a-half cents per dozen over the transition period and
approximately nine cents when we totally complete the
transition. Nine cents is about 5 percent of the cost of a
dozen eggs.
So we think it is very reasonable when, at the end of the
day, all farmers are here to please the public and produce what
they want. We do have to listen to the public and we hear what
they want.
Mr. Benson. I can say, Senator Roberts, that our experience
is around those numbers. $20.50 is the bid that I got to
replace the equipment in our houses three and four, and 24 is
about right to build from scratch the kind of scale we are
talking about. But we do not plan to spend it all right away.
Senator Roberts. Mr. Benson, you got that right. You
indicated that egg production costs are pretty stable and that
as a consequence you could probably figure out what would
happen in 18 years. Are you aware of the drought that is going
on here nationwide, Midwest, North Dakota down to Texas, second
year for Kansas? We have pretty well burned up, and cattle and
poultry are affected dramatically.
I would expect that those consumer implications, while not
immediate, that over the next year could be considerable. Note
I should could be. We do not have all of the USDA figures. The
Chairwoman and I are very concerned about that. Have you
figured that? You do not know what is going to happen in
regards to your cost of production. Of course, that is an
impossible thing to determine.
Mr. Benson. Well, I mean, I think the cost of feed is the
one of our biggest costs, and yeah, that is a real uncertain
portion of what is going to happen going forward, but we live
in a very competitive marketplace, and I know that the 5
percent that we are talking about or that we have talked about
in the Agrilytica study, over an 18-year period is a fairly low
number compared to the amount of money that--or the amount of
prices of eggs that have gone up and down over the last couple
of weeks.
These short-term fluctuations are one thing, but I also
know something about the long-term trend. The long-term trend
has been towards better technology, better production
efficiency, and more room for the hens. It is how long the
equipment lasts, 18 to 20 years, like I said. We are pretty
aware of some of the longer term trends. And quite frankly, if
there is money in this business, people will expand production.
Senator Roberts. Madam Chairwoman, I think they have
already talked about the situation in the EU. When Europe
implemented this and that, it was a 13-year phase-in, egg
supplies. Apparently they waited until the last and then tried
to implement it. Typical situation in the business community
with a regulation, but that egg supplies plummeted 20 percent,
egg prices soared 55 percent. I certainly hope that does not
happen in the United States.
Chairwoman Stabenow. Thank you very much. Before concluding
the hearing, I would like to ask each of you, from your
perspective, what the biggest challenges are for egg producers
in the United States and what you see as the future of the
industry over the next 20 years. Mr. Baer, would you want to
talk about what you think the biggest challenges are from your
perspective?
Mr. Baer. Certainly the short-term challenges will be the
feed costs, as Senator Roberts explained. The feed costs this
year, who knows where they are going to end up at, and it is 65
to 70 percent of our total costs of production.
On a long-term basis, there is going to continue to be
consolidation. This type of a bill would accelerate that. It is
just much easier for the big operators, the multi-million bird
operations, to convert small percentages of their farms over.
That works to the detriment of individual family farms like
my nephew and my son who, when they make the conversion,
basically because they have got one barn, they have to do 100
percent of the conversion right now. And that is why it does
not work for the small family farmer, and other concerns long-
term, certainly as the activism from animal rights advocates
and all the issues that surround that. Thank you.
Chairwoman Stabenow. Mr. Herbruck.
Mr. Herbruck. Good morning again. The corn prices and the
grain prices are significant, but that is going to be impacted
whether we have a conventional or an enriched cage. We will be
dealing with that. Really the biggest concern is the
uncertainty. I have a family. We are all family members and we
hope to have a business we can share with our children and
grandchildren for the future.
Right now we have an uncertainty. As I mentioned, in
Michigan, we are in a tough spot. If we do not do something to
change the path, we could be significantly competitively
unprofitable because if our peers in the neighboring states do
not have to do things and we do have to follow a new standard
that doubles our capacity, our customers love us, but they will
move on. For a few pennies, they will move on.
And so, the uncertainty. That is why we need this as a
certainty so we can all make plans for our futures.
Chairwoman Stabenow. Thank you. Mr. Benson.
Mr. Benson. I am afraid Mr. Herbruck has taken my major
point and it is that uncertainty, especially in California. It
is not just the various rules we have for various states. It is
also the way that they are going to be interpreted, and the
uncertainty that we have in whether or not what we are planning
on doing complies with ill-written initiatives from various
states.
If the rules are not clear, much less whether or not there
is a level playing field, but if the rules are not clear, we do
not know what to do going forward and that puts our family in a
difficult bind.
Chairwoman Stabenow. Thank you. Mr. Lathem.
Mr. Lathem. I would say that they stole my point, too, but
I really look at it a little different. I think it is really--
that is why we are all here. That is why almost 50 percent of
the U.S. production is represented here today. We are unified.
We do need to know that we have a future. We need a level
playing ground.
The number one thing that scares me is, what kind of house
do I build? Will my customers change their mind? Will I not be
able to ship eggs? Will somebody from Iowa ship eggs to Georgia
because they cannot go to California? We, as farmers and
producers, our job is to look after consumers, to do a good
job, to produce abundant, cheap, quality, high quality food
that is safe, and that is what we want to do.
But we deserve and want a level playing ground and that is
why we are here today. Thank you.
Chairwoman Stabenow. Thank you very much. And thank you to
each of you. This is a very challenging issue because of what
the states are doing, and I certainly know from Michigan's
standpoint, Mr. Herbruck, what you are talking about in terms
of our Michigan producers and the patchwork effort that is
going on across the country right now.
So we thank you very much for being here. Mr. Lathem, you
talked about coming together, of differing views, folks that
normally would not be on the same side coming together and
finding common ground. We are used to doing that in this
Committee. We sit around this table and do that. That is how we
got a bipartisan Farm Bill and we are proud of that and how we
were able to pass it in the Senate.
So I am hopeful that we will be able to come together and
find common ground on this very important issue for the egg
producers across the country.
Mr. Lathem. It is important and we do appreciate the
opportunity.
Chairwoman Stabenow. Thank you very much. The hearing is
adjourned.
[Whereupon, at 10:41 a.m., the hearing was adjourned.]
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A P P E N D I X
July 26, 2012
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DOCUMENTS SUBMITTED FOR THE RECORD
July 26, 2012
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QUESTIONS AND ANSWERS
July 26, 2012
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