[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
            HEARING TO REVIEW THE STATE OF THE RURAL ECONOMY

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 5, 2013

                               __________

                            Serial No. 113-1


          Printed for the use of the Committee on Agriculture
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                        COMMITTEE ON AGRICULTURE

                   FRANK D. LUCAS, Oklahoma, Chairman

BOB GOODLATTE, Virginia,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
STEVE KING, Iowa                     MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas              DAVID SCOTT, Georgia
MIKE ROGERS, Alabama                 JIM COSTA, California
K. MICHAEL CONAWAY, Texas            TIMOTHY J. WALZ, Minnesota
GLENN THOMPSON, Pennsylvania         KURT SCHRADER, Oregon
BOB GIBBS, Ohio                      MARCIA L. FUDGE, Ohio
AUSTIN SCOTT, Georgia                JAMES P. McGOVERN, Massachusetts
SCOTT R. TIPTON, Colorado            SUZAN K. DelBENE, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas  GLORIA NEGRETE McLEOD, California
MARTHA ROBY, Alabama                 FILEMON VELA, Texas
SCOTT DesJARLAIS, Tennessee          MICHELLE LUJAN GRISHAM, New Mexico
CHRISTOPHER P. GIBSON, New York      ANN M. KUSTER, New Hampshire
VICKY HARTZLER, Missouri             RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            PETE P. GALLEGO, Texas
KRISTI L. NOEM, South Dakota         WILLIAM L. ENYART, Illinois
DAN BENISHEK, Michigan               JUAN VARGAS, California
JEFF DENHAM, California              CHERI BUSTOS, Illinois
STEPHEN LEE FINCHER, Tennessee       SEAN PATRICK MALONEY, New York
DOUG LaMALFA, California             JOE COURTNEY, Connecticut
RICHARD HUDSON, North Carolina       JOHN GARAMENDI, California
RODNEY DAVIS, Illinois
CHRIS COLLINS, New York
TED S. YOHO, Florida

                                 ______

                      Nicole Scott, Staff Director

                     Kevin J. Kramp, Chief Counsel

                 Tamara Hinton, Communications Director

                Robert L. Larew, Minority Staff Director

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................     1
    Prepared statement...........................................     3
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     4
    Prepared statement...........................................     5

                                Witness

Vilsack, Hon. Thomas ``Tom'' J., Secretary, U.S. Department of 
  Agriculture, Washington, D.C...................................     6
    Prepared statement...........................................     8
    Supplementary information....................................    67
    Submitted questions..........................................    68


            HEARING TO REVIEW THE STATE OF THE RURAL ECONOMY

                              ----------                              


                         TUESDAY, MARCH 5, 2013

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:05 a.m., in Room 
1300 of the Longworth House Office Building, Hon. Frank D. 
Lucas [Chairman of the Committee] presiding.
    Members present: Representatives Lucas, Goodlatte, King, 
Neugebauer, Rogers, Conaway, Thompson, Gibbs, Austin Scott of 
Georgia, Tipton, Crawford, Roby, Gibson, Hartzler, Ribble, 
Noem, Benishek, Denham, Fincher, LaMalfa, Hudson, Davis, 
Collins, Yoho, Peterson, McIntyre, David Scott of Georgia, 
Costa, Walz, Schrader, Fudge, McGovern, DelBene, Negrete 
McLeod, Vela, Lujan Grisham, Kuster, Nolan, Gallego, Enyart, 
Vargas, Bustos, Maloney, Courtney, and Garamendi.
    Staff present: Bart Fischer, John Goldberg, Josh Mathis, 
Lauren Sturgeon, Matt Schertz, Nicole Scott, Pelham Straughn, 
Pete Thomson, Stacey Glasscock, Tamara Hinton, Anne Simmons, C. 
Clark Ogilvie, Lisa Shelton, Liz Friedlander, Mary Knigge, John 
Konya, Merrick Munday, and Caleb Crosswhite.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    The Chairman. This hearing of the Committee on Agriculture 
to review the state of the rural economy will come to order.
    Thank you, Mr. Secretary, for appearing before us today. I 
am pleased that the President asked you to continue in your 
role as Secretary. While we may not always agree on every 
topic, you have never been disagreeable, and you are a good 
friend to American agriculture. I appreciate your hard work to 
quickly implement the extension of the 2008 Farm Bill and 
announce the signup for farm programs, which gave producers 
some certainty during a time when uncertainty, or when 
certainty, I should say, is sorely lacking. All of us can agree 
that an extension was not our preference but I want to 
personally thank you for announcing the signup so quickly.
    This country continues to face a fiscal crisis that if not 
addressed will not only harm the agricultural sector in rural 
America but the country as a whole. The agricultural sector 
wants to be a part of the solution to our nation's debt crisis. 
We must find commonsense solutions without trying to scare the 
American people with worst-case scenarios. I have confidence in 
you, Mr. Secretary, to manage sequestration without a mass 
disruption to the rural economy.
    The Committee believes the best way to achieve deficit 
reduction is in the context of reauthorizing the farm bill with 
sustainable and fiscally responsible reforms. This Committee 
and this Congress must pass a comprehensive 5 year farm bill 
this year. The reforms in the House bill are too great, the 
savings to the taxpayers are too important and the benefits to 
our farmers and ranchers are too critical to not complete the 
process this year.
    Few in the agricultural sector will deny that the 
agricultural economy has done well overall in the last few 
years, but that well-being has not been distributed evenly 
throughout the entire sector, and if history is any guide, we 
know how fleeting the good times are. For example, livestock 
producers have suffered through multiple years of drought and 
are operating with no safety net in place. Our livestock 
disaster programs no longer function because the 2008 Farm Bill 
only provided 4 years of funding for these important programs. 
Additionally, record-high prices for some crops have hurt the 
livestock industry tremendously. Now, I am not here to place 
blame, but we have to acknowledge that fact. Crop producers in 
my part of the country and elsewhere are dealing with a third 
straight year or drought, and also rice, peanut, sugar, dairy 
and cotton producers have not enjoyed the consistent record-
high prices that our friends in the Midwest have.
    We must be careful when we paint a rosy picture with a 
broad brush. While income is up, so is the cost of doing 
business. Inputs continue to rise as do rental rates. So the 
fact is, farming and ranching have been and will continue to be 
a tremendously risky business.
    As we all know, agriculture is highly cyclical, and the 
agricultural community must be prepared for bad yields, bad 
prices and much lower net farm income in the future. We must be 
very careful in ensuring that we replace direct payments with a 
policy that works for all commodities in all regions of the 
country. We must acknowledge that crop insurance is the 
backbone of the safety net. But we also recognize its 
limitations in protecting against multi-year price declines. 
The Committee firmly believes in providing a true safety net 
rather than providing payments regardless of market conditions.
    Mr. Secretary, I was interested in your comments earlier 
this year about the agricultural community's loss of influence. 
The truth is, the United States is less rural, the Congress 
reflects that reality, and we must adapt. Making the case for 
production agriculture in rural America is the challenge before 
us, and we face an uncertain future if the agricultural 
community is divided. Commodity groups must not tear each other 
down with the ultimate goal of seeing who gets the biggest 
slice of the pie. Conservation groups and so-called sustainable 
groups must realize that for farmers to implement additional 
conservation practices, they must have the resources to do so. 
Quite simply, the agricultural community must accept that no 
bill is perfect but that should not serve as a discouragement. 
Instead, we must have a rural coalition pushing together to get 
a bill passed and signed into law.
    Mr. Secretary, without hesitation, I know you are a great 
friend of agriculture and rural America but I am disappointed 
to see the Administration's comments on meat inspection. You 
have stated that the sequester provisions of the Budget Control 
Act will cause you to furlough Food Safety Inspection Service 
inspectors. The Members of this Committee have heard from 
constituents that these statements about the interruption of 
production have affected prices, caused concern among the 
financial markets and alarmed buyers and sellers in retail and 
food service community. I anticipate that my colleagues will 
have questions for you regarding your statements and the 
evolution of Administration policy in this critical area. 
Further, I was disappointed to see the Administration favored 
the Reid-Stabenow proposal to replace the sequester. 
Fortunately, the Senate failed to pass that proposal, which 
unfairly targeted agriculture: a proposed 50 percent cut in a 
single title of the farm bill that accounts for six percent of 
overall agricultural spending and less than one percent of 
overall spending. It was not balanced and not acceptable. I 
believe the best way to achieve deficit reduction as related to 
agriculture is in the context of reauthorizing the farm bill 
with sustainable and fiscally responsible reforms such as those 
the Committee passed last year.
    Mr. Secretary, again, thank you for being with us today. I 
look forward to your testimony.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma

    Thank you, Mr. Secretary, for appearing before the Committee today.
    I am pleased the President asked you to continue in your role as 
Secretary. While we may not always agree on every topic, you have never 
been disagreeable and you are a good friend to American agriculture. I 
appreciate your hard work to quickly implement the extension of the 
2008 Farm Bill and announce the sign-up for farm programs, which gave 
producers some certainty during a time when certainty is sorely 
lacking. All of us can agree that an extension was not our preference, 
but I want to personally thank you for announcing the signup so 
quickly.
    This country continues to face a fiscal crisis that, if not 
addressed, will not only harm the agricultural sector and rural 
America, but the country as a whole. The agriculture sector wants to be 
part of the solution to our nation's debt crisis. We must find common-
sense solutions without trying to scare the American people with worst-
case scenarios. I have confidence in you, Mr. Secretary, to manage 
sequestration without a mass disruption to the rural economy.
    The Committee believes the best way to achieve deficit reduction is 
in the context of reauthorizing the farm bill with sustainable and 
fiscally responsible reforms. This Committee and this Congress must 
pass a comprehensive, 5 year farm bill this year. The reforms in the 
House bill are too great, the savings to the taxpayer are too 
important, and the benefits to our farmers and ranchers are too 
critical to not complete the process this year.
    Few in the agriculture sector will deny that the agriculture 
economy has done well overall in the last few years. But that well-
being has not been distributed evenly across the entire sector, and if 
history is any guide, we know how fleeting the good times are.
    For example, livestock producers have suffered through multiple 
years of drought and are operating with no safety net in place. 
Livestock disaster programs no longer function because the 2008 Farm 
Bill only provided 4 years of funding for these important programs. 
Additionally, record high prices for some crops have hurt the livestock 
industry tremendously. I am not here to place blame but we have to 
acknowledge that fact.
    Crop producers in my part of the country and elsewhere are dealing 
with a third straight year of drought. Also, rice, peanut, sugar, dairy 
and cotton producers have not enjoyed consistent, record high prices 
that our friends in the Midwest have, so we must be careful to paint a 
rosy picture with a broad brush. While income is up, so is the cost of 
doing business. Inputs continue to rise, as do rental rates. The fact 
is--farming and ranching have been and will continue to be a 
tremendously risky business.
    As we all know, agriculture is highly cyclical and the agriculture 
community must be prepared for bad yields, bad prices, and much lower 
net farm income in the future. We must be very careful in ensuring that 
we replace direct payments with policy that works for all commodities 
in all regions of the country. We must acknowledge that crop insurance 
is the backbone of the safety net, but we must also recognize its 
limitations in protecting against multi-year price declines. The 
Committee firmly believes in providing a true safety net, rather than 
providing payments regardless of market conditions.
    Mr. Secretary, I was interested in your comments earlier this year 
about the agriculture community's loss of influence. The truth is the 
United States is less rural. The Congress reflects that reality and we 
must adapt.
    Making the case for production agriculture and rural America is the 
challenge before us. And, we face an uncertain future if the 
agriculture community is divided.
    Commodity groups must not tear each other down with the ultimate 
goal of seeing who gets the biggest piece of the pie. Conservation 
groups and so called sustainable groups must realize that for farmers 
to implement additional conservation practices, they must have the 
resources to do so. Quite simply, the agriculture community must accept 
that no bill is perfect, but that should not serve as discouragement. 
Instead, we must have a rural coalition pushing forward to get a bill 
passed and signed into law.
    Mr. Secretary, without hesitation, I know you are a great friend of 
agriculture and rural America, but I am disappointed to see the 
Administration's comments on meat inspection. You have stated that the 
sequester provisions in the Budget Control Act will cause you to 
furlough Food Safety Inspection Service inspectors. Members of this 
Committee have heard from constituents that these statements about the 
interruption of production have affected prices, caused concern among 
financial markets, and alarmed buyers and sellers in the retail and 
food service community. I anticipate that my colleagues will have 
questions for you regarding your statements and the evolution of 
Administration policy in this critical area.
    Further, it was disappointing to see the Administration favored the 
Reid-Stabenow proposal to replace the sequester. Fortunately, the 
Senate failed to pass that proposal, which unfairly targeted 
agriculture. It proposed a 50 percent cut to a single title in the farm 
bill that accounts for six percent of overall agriculture spending and 
less than one percent of overall Federal spending. It was not balanced 
and not acceptable. I believe the best way to achieve deficit 
reduction, as it relates to agriculture, is in the context of 
reauthorizing the farm bill with sustainable and fiscally responsible 
reforms such as those the Committee passed last year.
    Mr. Secretary, again thank you for being with us today. I look 
forward to your testimony.

    The Chairman. I now turn to the Ranking Member for any 
opening statement he might have.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE 
                   IN CONGRESS FROM MINNESOTA

    Mr. Peterson. Thank you, Mr. Chairman, for holding today's 
hearing on the state of the rural economy, and welcome back, 
Mr. Secretary, and I echo Mr. Lucas's comments that we are glad 
that you are on board for another 4 years, I hope, and we think 
you have been doing a good job.
    With the exception of those affected by the continuing 
drought, the rural economy by and large is doing well. And as 
long as Congress doesn't screw things up, I am hopeful that the 
rural economy will continue to do well for the foreseeable 
future. And while last year--primarily it was the Republican 
leadership that kept us from getting a farm bill to the Floor--
the fact that we had a strong ag economy didn't help our case. 
Farmers and ranchers weren't pressuring Congress to act because 
for the most part, they have been doing pretty well. So now we 
are operating under a 1 year extension of the 2008 bill, and 
the unfortunate part of the extension is that it does not 
address the need for real reforms to the dairy and cotton 
programs. There is no funding for disaster assistance, and 
funding for many of the renewable energy, conservation and 
rural development programs are reduced or eliminated 
altogether.
    I still think I have a question about how we are going to 
move forward. I agree with the Chairman that we need to get 
this bill done this year, but we need to have some kind of an 
assurance before we move ahead, number one. Number two, we have 
to have some resolution on what it is we are trying to achieve 
here, what is the number that we are going to be expected to 
reduce our outlays and hopefully before we get started on 
writing the bill, we are going to have some answers in that 
regard. I have spoken to the Speaker a number of times. In one 
of those, I said, ``What really would help us if you and Harry 
Reid could come up with a number, what it is that is agreed to 
on what it is you want us to reduce the bill.'' Second, what 
would really help us if you could come up with a number between 
the two of them on what they want to do with SNAP, and if we 
could get a number, I think it would be relatively easy to get 
things done.
    So hopefully this will all come together. We will get 
through this budget morass here for the next couple months and 
have a fairly good idea of how we are going to move ahead when 
we get ready to do it. The sequester is a challenge, and 
neither Republicans nor Democrats have put forward a plan to 
replace it that has a chance of getting done, so it is what it 
is, and there are a lot of questions about what it means. We 
haven't gotten all the answers yet. Maybe we will get some of 
those today, and I hope that is the case.
    Before I finish, Mr. Secretary, I know you have taken some 
heat from your recent comments about agriculture and rural 
America, but I see where you are coming from. You know, we have 
had a long history of bipartisan success but I think to some 
extent because we have been successful, that is now causing us 
problems because we haven't had the pulling together that we 
needed to have on some of these issues in rural America. I 
don't know exactly what we do about it but it seems like good 
times always kind of get us into this situation. So we can't 
afford to be complacent. There are other programs that are very 
important to rural America, as you pointed out, that don't 
always get as much attention, and we have to come up with a 
balanced approach that takes care of everybody in rural 
America, not just farmers, if we are going to be able to be 
successful in putting together a bill that is going to stand 
the test of time.
    So again, thank you for being with us, Mr. Secretary. Thank 
you, Mr. Chairman, for holding this hearing and I look forward 
to the testimony and questions.
    [The prepared statement of Mr. Peterson follows:]

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota

    Thank you, Chairman Lucas, for holding today's hearing on the state 
of the rural economy and welcome back, Secretary Vilsack, to the 
Committee.
    With the exception of those affected by continuing drought, the 
rural economy, by and large, is doing well. As long as Congress doesn't 
screw things up, I am hopeful the rural economy will continue to do 
well for the foreseeable future.
    While it was the Republican Leadership that did not bring the farm 
bill to the floor last Congress, the strong ag economy didn't help our 
case. Farmers and ranchers weren't pressuring Congress to act because, 
for the most part, they've been doing pretty well. So now, we're 
operating under a 1 year extension of the 2008 Farm Bill. The 
unfortunate part of an extension is that it does not address the need 
for real reforms to the dairy and cotton programs. There is no funding 
for disaster assistance and funding for many renewable energy, 
conservation and rural development programs was reduced or eliminated 
altogether.
    I still don't think it's worth the Committee's time and effort to 
mark-up a farm bill this year if we don't have an assurance that the 
bill will be brought to the floor. As it was last year, the budget 
situation is going to be a huge challenge, which is part of the reason 
I pushed so hard to pass a bill last Congress. CBO just put out a new 
score for the Committee's farm bill; and instead of saving $35.1 
billion over 10 years, they now say the bill will save $26.6 billion 
over 10 years. So, we may need to reassess our objectives before moving 
forward. Despite all this, I'm optimistic that we'll be able to find a 
way to get this done.
    The biggest challenge, at the moment, is the sequester. Since 
neither Republicans nor Democrats have put forward a balanced plan to 
replace it, the sequester is in effect. There are still a lot of 
questions about what this means for agriculture; I hope today will 
yield some clear answers.
    Before I finish, Mr. Secretary, you've taken a lot of heat for some 
of your recent comments about agriculture and rural America but, I see 
where you're coming from.
    Given our bipartisan history and past success, I fear that some in 
agriculture take it for granted that farm policy will always be taken 
care of--that Congress will pass a new farm bill every 5 years or 
approve disaster aid in a timely manner. We've seen that this is no 
longer the case. There is now a significant segment of lawmakers that 
never met a government program they didn't want to cut or eliminate; 
the farm bill is no exception.
    Rural America is relevant but we need get past this complacent 
mindset, look to the real issues and speak with a unified voice calling 
for action. If we can't do that, I'm not sure what the ultimate fate of 
farm policy will be in this Congress.
    So, again, I thank the Chairman for this hearing and look forward 
to the Secretary's testimony.

    The Chairman. And I thank the Ranking Member for his 
comments.
    The chair would request that other Members submit their 
opening statements for the record so the witness may begin his 
testimony and to ensure that there is ample time for questions.
    With that, I would like to welcome our only witness today 
to the table, the Hon. Tom Vilsack, Secretary, U.S. Department 
of Agriculture, Washington, D.C. Secretary Vilsack, please 
begin when you are ready.

 STATEMENT OF HON. THOMAS ``TOM'' J. VILSACK, SECRETARY, U.S. 
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

    Secretary Vilsack. Mr. Chairman, thank you very much, and 
to the Ranking Member, thank you for the opportunity to be here 
today. Let me begin by suggesting that I have submitted a 
formal statement for the record. What I would like to do is 
just simply summarize that in the interest of time.
    And let me start where every hearing in agriculture should 
begin by acknowledging an obvious fact, which is that America 
has the greatest farmers and ranchers in the world. No better 
evidence of that than what happened last year with the drought 
that was the worst drought we have seen since the 1930s, albeit 
crop production was remarkably high, given the circumstances, 
and it is a testimony to the greatness of our producers.
    As a result of that, and as a result of record exports, 
record enrollment in conservation programs, record expansion of 
local and regional food systems and expanded opportunity in the 
biobased economy, farmers generally enjoyed record farm income, 
but as the Chairman indicated and as the Ranking Member 
indicated, this was not necessarily shared by all in 
agriculture. There were regional differences and obviously 
differences between producers.
    Notwithstanding that, I am bullish about this year. Forty-
five percent of America is still impacted and affected by 
drought but that is the first time that that number has been 
below 50 percent for the last 30+ weeks. We are projecting, 
with any kind of decent weather, record crop production, which 
should help moderate crop prices which in turn should allow 
dairy and livestock producers to return to profitability 
sometime this year, which is obviously an extraordinarily 
important thing.
    There is, as the Chairman indicated, a degree of 
uncertainty. The sequester has caused uncertainty, and the 
impact of sequester will be felt in terms of reduced farm 
credit, reduced conservation efforts, reduced food inspection 
and reduced exports. In addition, we have uncertainty as a 
result of the lack of a passage of a 5 year farm program, and 
now we find perhaps that work will be even more difficult as 
the Congressional Budget Office has realigned some of the 
savings from previously discussed programs, but I would agree 
with the Chairman that the most significant thing that could be 
done this year would be for us to get a 5 year farm program 
through the process. That will provide the certainty for 
producers and rural America and will reaffirm the importance of 
rural America to the rest of the country.
    But that uncertainty is complicated further by what can 
happen from other countries. We are obviously dealing with 
trade barriers as we speak. Despite the fact that we are 
anticipating a record export year, we are constantly battling 
unscientific trade barriers, most recently Russia's decision 
with reference to ractopamine.
    I know that there will be questions about the sequester but 
I thought I should share with the Committee that we have been 
taking deficit reduction and budgets very seriously at USDA. 
Over the last 2 years, we have identified and implemented 
programs that have resulted in savings in excess of $700 
million. We have reduced our workforce by eight percent. We 
have closed offices and labs. We have consolidated rented 
space. We focused on IT savings. We created a strategic 
sourcing effort for purchases of supplies, and we have 
significantly reduced travel, conferences, and supply 
expenditures. We are proud of this effort. It will continue 
because we recognize the important role of creating greater 
efficiencies in government. But I tell this to the Committee 
just simply to make sure that you all understand that we do 
take this very seriously and we have taken steps proactively to 
try to reduce our budget. As a result of the sequester, we are 
now faced with an operating budget that is less than it was in 
Fiscal Year 2009, and we have had pretty much a flatline budget 
the last 3 years. So we understand and appreciate the 
importance of being fiscally responsible and we have shown good 
faith in that effort. We will continue that. But the sequester 
has implications and impacts, some of which cannot be avoided, 
and I would be happy to discuss those impacts with the 
Committee today if that is of importance and significance to 
the Committee.
    Mr. Chairman, let me just finish by saying that despite the 
challenges, despite the difficulties, despite what Mother 
Nature throws, we still do indeed have the greatest farmers and 
ranchers in the country, and the result is that we can be 
confident that regardless of the challenge, rural America is up 
to it and we will continue to provide the food supply for this 
country, making us a food-secure nation. We will continue to 
promote conservation and water preservation and conservation. 
We will continue to provide an ever-increasing amount of the 
fuel and energy this country needs to grow. We will continue to 
create job opportunities not just in rural America but across 
the country as one out of every 12 jobs is impacted and 
affected in this country by agriculture, and our families will 
continue to disproportionately provide military service to this 
country as they have throughout history.
    I am proud to be here today as Secretary of Agriculture, 
and while I appreciate the fact that you all think I can be 
here for 4 years, I serve at the pleasure of the President. I 
could be gone tomorrow. We will see how this hearing goes.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Vilsack follows:]

 Prepared Statement of Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S. 
              Department Of Agriculture, Washington, D.C.

    Mr. Chairman and Members of the Committee, I am pleased to have 
this opportunity to discuss the state of the rural economy. I believe 
that the state of the agricultural economy is strong--and that the 
strength of American agriculture is driving further economic 
opportunity across rural America. Today, I would like to discuss why I 
make this statement, and highlight the significant opportunities that 
exist to continue to grow and strengthen the rest of our rural economy, 
which plays such a vital role in our nation's overall economic health.
    The U.S. Department of Agriculture (USDA) under President Obama's 
leadership has taken significant steps to strengthen production 
agriculture by: providing a strong safety net and expanding markets for 
U.S. exports; enhancing America's conservation efforts alongside 
farmers and ranchers; investing in the biobased energy and product 
manufacturing of the future; and strengthening new local and regional 
marketing opportunities for producers. These efforts have already had a 
significant impact in rural America, where the seasonally adjusted 
unemployment rate fell to 7.7 percent for the third quarter of Fiscal 
Year (FY) 2012--down from a peak of 9.5 percent in late 2009. Going 
forward, we must step up our efforts to invest in these four areas to 
ensure rural America remains strong and viable long into the future. 
Additionally, it is my hope that Congress will support these efforts 
and provide more certainty for American agriculture by stopping the 
across-the-board spending cuts that went into effect on March 1, and 
through passage of a comprehensive, multi-year Food, Farm and Jobs 
Bill.

Supporting Production Agriculture
    America's rural economy is tied closely to the success of our 
farmers and ranchers. The Administration recognizes the critical role 
American agriculture plays in strengthening our economy, given that one 
in twelve U.S. jobs is supported by our agriculture sector, and we have 
prioritized the delivery of a strong safety net. Thanks to their 
willingness to innovate, use of technological advances, and smart 
business decisions, producers have kept U.S. agriculture strong in the 
face of a record drought and other disasters over the course of the 
past year. After adjusting for inflation, net farm income is projected 
to be the highest in 4 decades, and aggregate farm equity is at an all 
time high. I'm proud of USDA's record under President Obama to provide 
a strong safety net for producers while expanding markets for U.S. 
products.
    USDA staff has successfully implemented a number of new and 
complicated programs to ensure the effectiveness of the farm safety 
net. In 2009 and 2010 the Department expedited implementation of the 
2008 Farm Bill disaster programs, which provided more than 400,000 
payments to producers totaling $4 billion. USDA has made record farm 
loans--more than 134,000 loans totaling $18.6 billion in credit. And we 
strengthened the Federal Crop Insurance Program, achieving $4 billion 
in savings while ensuring that many producers had an avenue for 
assistance in times of disaster.
    During the historic drought last summer, the Administration took 
every possible step to strengthen the safety net. For example, USDA 
shortened the time taken to provide Secretarial Disaster Designations, 
achieving a 40 percent reduction in processing time and quicker 
assistance for farmers and ranchers. USDA worked with crop insurance 
companies to provide flexibility to farmers within the Federal Crop 
Insurance Program, freeing up about $20 million for producers. USDA 
opened millions of Conservation Reserve Program acres for emergency 
haying and grazing--making an estimated $200 million in additional 
forage available for producers while still meeting our conservation 
goals. We further expanded credit, effectively lowering the Farm 
Service Agency (FSA) Emergency Loan interest rate and working with the 
Small Business Administration to extend nearly $7 million in SBA 
emergency credit for rural small businesses. USDA also purchased over 
$170 million of pork, lamb, chicken, and catfish to help relieve 
pressure on American livestock producers and bring the nation's meat 
supply in line with demand.
    While I am proud of these efforts, it is clear that more must be 
done to provide a complete safety net that comes with the certainty of 
a multi-year Food, Farm, and Jobs Bill. For example, many in the dairy 
and livestock industries remain severely impacted by rising input and 
feed costs and tight margins as a result of the drought and other 
disasters. Our current farm safety net is centered on crop insurance, 
which is critically important for many farmers but does not provide 
certainty for dairy and livestock producers, or growers of many 
specialty crops. Additionally, without a comprehensive, multi-year farm 
bill that provides long-term certainty for producers, it is difficult 
to ensure that a strong and viable safety net of programs is 
consistently offered by USDA.
    In addition to our efforts to provide a strong safety net, USDA 
will work in the coming years to support production agriculture by 
expanding new markets around the world, building on three new trade 
agreements signed by President Obama with Korea, Colombia, and Panama. 
Agricultural exports have increased 43.6% from 2009 through 2012, from 
$101.2 billion to a record $145.4 billion. This progress means that 
agriculture is making a strong contribution to achieve President 
Obama's goal under the National Export Initiative of doubling exports 
by the end of 2014. Over the course of 2013, I am hopeful that the 
United States can achieve additional trade with the European Union and 
with a number of Asian nations through progress on a Trans-Pacific 
Partnership.
    USDA will also continue to support production agriculture by 
investing in strong agricultural research, particularly as we 
investigate new measures to adapt agriculture to extreme weather 
events. Since 2009, USDA has thoughtfully restructured its science 
agencies to ensure the most effective and efficient use of its 
resources, while leveraging the strengths of our partners across the 
scientific community to achieve even more results. For example, the 
National Institute of Food and Agriculture (NIFA) was created to 
advance knowledge by supporting research, education and extension 
programs in the Land-Grant Universities and other partner 
organizations. In 2012, we celebrated 150 years of partnership with the 
Land-Grant Universities, which have educated more than 20 million 
students and opened the doors of education far and wide. Studies have 
shown that every dollar invested in agricultural research returns 
roughly $20 in economic benefits to the nation.

Unlimited Opportunity for the Rural Economy
    As I mentioned, the rural economy is stronger today--led by the 
continued strength of the agricultural economy and record efforts by 
President Obama to invest in the prosperity of rural communities. For 
example, since 2009 USDA has provided nearly 15,000 loans and grants to 
help more than 60,000 rural businesses grow and support more than 
320,000 jobs; helped more than 620,000 rural families to achieve the 
dream of homeownership; and invested in nearly 8,000 projects to help 
rural towns and communities provide vital community facilities.
    At the same time, the Administration recognizes the long-standing 
challenges that the decline in rural population, as well as continuing 
rural poverty, pose to our nation's well-being. In addition to our 
continuing support for production agriculture that stands at the heart 
of the rural economy, USDA is focused on helping to achieve new markets 
and new partnerships for local and regional agricultural markets; 
conservation, natural resources and outdoor recreation; and further 
development of an advanced biobased economy--all of which will 
complement the strength of production agriculture to create new 
opportunity in rural America.
    USDA is focusing on providing new local and regional marketing 
opportunities for farmers and ranchers. Our efforts to promote local 
and regional marketing opportunities have increased the number of 
farmers' markets to more than 7,800 nationwide, a 67 percent increase 
over 2008. We also have taken steps to increase the number of regional 
food hubs to more than 200 in operation nationwide today. We will also 
continue looking for new steps to aid smaller farmers and farm 
businesses, an effort that will complement investments in local and 
regional marketing opportunities. In January, USDA finalized a new 
Microloan Program within FSA's Direct Operating Loan program. The 
program will provide loans up to $35,000 to help launch startup farm 
businesses, provide needed resources, and increase equity so farmers 
can graduate to commercial credit and expand their operations. Access 
to credit is especially important for young farmers who are faced with 
high start-up costs and record land prices.
    USDA will help spur job creation through conservation and 
management of America's natural resources. Visitors to National Forests 
have helped support more than 200,000 jobs annually in rural 
communities. By protecting and strengthening these National Forest 
System lands and resources, we can provide even greater opportunities 
for outdoor recreation in the national forests. In the coming years 
USDA will take new steps to support conservation efforts while 
providing new opportunity for farmers to generate income. For example, 
USDA set a new goal last year to target 1 million acres for wildlife 
habitat to further support hunting, fishing and conservation efforts 
through the Conservation Reserve Program (CRP). USDA has supported 
states and other partners in their efforts to establish ecosystem 
trading markets, an effort that will continue in 2013. USDA also is 
further investigating the potential use of multi-cropping by farmers to 
further expand the availability of cost effective biofuel feedstocks 
while reaping significant economic and natural resource benefits.
    USDA will continue to make investments needed to grow opportunity 
in the biobased economy. USDA has helped create markets for advanced 
biofuels from non-food, non-feed sources--from the farm field to the 
end user--and we are taking the necessary steps to create more jobs 
through rural manufacturing. Since 2009 USDA has helped jumpstart 
efforts to provide a reliable supply of advanced plant materials for 
biofuels. USDA has provided incentives to produce advanced feed stocks 
for biofuels; invested in efforts to build advanced new biorefineries; 
invested in six regional research systems across America to develop 
advanced biobased energy technology appropriate to every region; and 
worked with agencies across the government--including the U.S. Navy--to 
strengthen markets for the use of advanced biofuels. Meanwhile, 
biobased manufacturing is stronger, with 3,000 companies producing more 
than 25,000 plant-based products today. The Administration has 
supported this growing industry, prioritizing more than 9,000 
``biobased'' products for Federal procurement. In the coming year, USDA 
has set a goal to assist 50 additional U.S. companies producing 
homegrown biobased products.
    The Administration believes that in the wealthiest nation on Earth, 
no American who works hard at a full-time job should live in poverty. 
Even as we create more jobs in rural America, the Administration 
recognizes that there are areas of persistent poverty across rural 
areas. In 2013 USDA will continue to expand a pilot program--the Strike 
Force for Rural Growth and Opportunity--to identify persistent poverty 
communities in pilot states and carry out targeted efforts to increase 
program awareness and opportunity in these areas. USDA piloted the 
Strike Force Initiative in 2010 in the States of Arkansas, Georgia and 
Mississippi. In 2011, the Strike Force expanded to the Southwest adding 
Colorado, New Mexico and Nevada. The efforts to target resources to 
areas in the pilot have already been successful. For example, FSA loans 
in Strike Force areas were up almost ten percent in 2012 over the 
previous year--even when the nation as a whole saw farm lending drop 
ten percent. USDA intends to further expand the Strike Force initiative 
to additional states in the coming months.

Conclusion
    Finally today, I want to reiterate the critical nature of providing 
certainty through a balanced and sensible plan to stop the sequester 
that took effect on March 1, as well as a through passage of a 
comprehensive Food, Farm and Jobs Bill.
    Like all American families, it's important that USDA and other 
Federal agencies get our job done within a sensible budget. USDA's 
efforts have helped to deeply reduce USDA's operating expenses over the 
past 2 years. Through the Blueprint for Stronger Service we have 
achieved more than $100 million in cost avoidances already, with 
efforts underway to achieve $250 million in such savings over the 
course of this year. However, the across-the-board spending cuts known 
as sequestration are now severely limiting our ability to deliver 
critical programs for the American people, and I share the President's 
hope that Congress will stop these harmful cuts.
    Through passage of a comprehensive, multi-year Food, Farm and Jobs 
Bill, Congress would provide much-needed certainty to millions of 
Americans impacted by this legislation and USDA programs. The farm bill 
provides for a great number of critical programs delivered by USDA, 
including programs for farm commodity and price support, conservation, 
research, nutrition, food safety, and agricultural trade. Over the 
course of 2013, I look forward to working with Members of this 
Committee, and with Congressional leaders, to achieve passage of a 
comprehensive, multi-year Food, Farm and Jobs Bill that will allow USDA 
to continue to provide a strong safety net, combat rural poverty and 
create even more good jobs in rural America.
    Mr. Chairman and Members of the Committee, thank you for this 
opportunity to speak briefly about the current state of the rural 
economy in the United States. Rural Americans have shown over the past 
year their resolve and their willingness to embrace innovation--and I 
believe that the same tools that kept the rural economy resilient over 
the course of an uncertain year will help rural America continue to 
drive the economy forward.

    The Chairman. Thank you, Mr. Secretary, and I would note 
for the record that the Secretary of Agriculture's position has 
always been one of the most challenging in any Presidential 
Cabinet, and those who serve for a full term or potentially two 
terms are to be greatly respected and admired.
    That said, let us talk for a moment about the February 27 
memo, but first I should note, the chair would like to remind 
Members that they will be recognized for questioning in the 
order of seniority for Members who were here at the start of 
the hearing, and after that, Members will be recognized in 
order of arrival. I appreciate the Member's understanding, and 
I recognize myself for 5 minutes for questions.
    Let us talk about that February 27 memo, Mr. Secretary, 
from OMB regarding agency responsibilities in the event of 
sequestration. It states that agencies must be guided by the 
principles of protecting the agency's core mission to serve the 
public to the greatest extent practical. Wouldn't you agree 
that providing the essential inspection services that protect 
public health and provide wholesome and affordable food is 
consistent with that directive?
    Secretary Vilsack. It is, Mr. Chairman, so long as there is 
adequate appropriations to provide that assistance, and that is 
the problem. The sequester, the way it is structured, requires 
every account to be reduced by the same percentage amount, and 
in the food safety area, there are very few accounts. Eighty-
seven percent of the budget is frontline inspectors and the 
support system for those frontline inspectors. We have a 
limited period of time in which to implement the sequester, 6, 
7 months. The impact of it is basically 10 to 12 percent of our 
remaining budget, and no matter how you slice it, no matter how 
you dice it, there is nothing you can do without impacting the 
frontline inspectors. You don't have the luxury as you do in 
normal circumstances of transferring money because there is no 
money to transfer based on the way the sequester is structured.
    So I agree with you, the inspections are very, very 
important, and we will do everything we can to minimize the 
disruption, but I have to be truthful with this Committee that 
based on the way the sequester is structured, it will impact 
food inspection.
    The Chairman. But you will, Mr. Secretary, utilize the 
maximum flexibility you have? I mean, you have substantial 
inspectors and plants all over the country, plants that work on 
different hour schedules. The odds that we would furlough every 
inspector on the same day are rather minuscule, correct?
    Secretary Vilsack. Well, the problem, Mr. Chairman, is that 
it is not just a circumstance of flexibility in terms of the 
facilities. There are 6,263 facilities, and the reality is that 
you have to be careful about how you structure this because 
some facilities are actually dependent upon the work of other 
facilities, and we are now seeing some of these facilities 
actually reducing their hours because of the overall economy, 
so it is a complicated process that we have to go through to 
determine how and under what circumstances, plus this is not 
just something I can determine by myself. There are 
requirements to bargain with the union that represents the 
inspectors in terms of the sequencing and the structure of the 
sequester and how it is implemented. So it is extraordinarily 
complicated.
    The Chairman. So if the sequester trumps the food safety 
Acts, which is basically what you are saying, do your union 
labor agreements trump the sequester act?
    Secretary Vilsack. No, Mr. Chairman. The way I see this is, 
the Food Safety Inspection Act requires companies that want to 
sell meat, process pork whatever, to have those items inspected 
before they can sell them to customers. The law also requires 
that the companies cannot privatize, if you will, that 
inspection service. It has to be done by USDA officials, USDA 
employees. That is subject obviously to having the resources 
and the appropriations to be able to pay for those inspections 
because you have anti-deficiency issues. So it is not a matter 
of trumping, it is just a matter of the sequencing of this is 
such that if you don't have the money to pay for people, you 
can't have people on the line, and that is, candidly, where we 
are.
    The Chairman. So in the circumstance you have described, it 
would sound like there are things that obligate you not to 
begin immediate furloughs. How far down the road is it before 
those issues will be sorted out?
    Secretary Vilsack. That is a fair question. This week we 
will send out notices to the union representatives that a 
furlough is possible, and one of the challenges is that not 
every one of our workers in this particular area has e-mail, so 
we actually have to hand-deliver a letter or written 
notification to those employees. That has to be followed up 
under the agreement with oral conferences that have to take 
place for any employee who requests an oral conference. That 
will be done at the local level by local or regional 
supervisors. So we are looking at a several-month period, if 
you will, before a furlough could be implemented, assuming that 
we can negotiate with the unions a process, and I obviously 
don't know when those negotiations will take place, but I am 
assuming that we will be able to get to a resolution of how and 
under what circumstances. So the industry will have some notice 
of what will actually happen, which we hope we will be able to 
some extent, a minimal extent avoid the disruption that is 
going to occur.
    The Chairman. Mr. Secretary, could your lawyers down at the 
Department--we are going to get questions as Members and as a 
Committee as a whole about how all this works. Could your 
lawyers provide us with the legal background on how they make 
their decisions on what takes priority over what so that we can 
understand what is going on?
    Secretary Vilsack. Sure. I think Senator Grassley requested 
an evaluation, which we are furnishing today or tomorrow, and 
we would be more than happy to furnish that to the Committee.
    The Chairman. Thank you, Mr. Secretary. My time has 
expired. I now recognize the Ranking Member for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    So I am trying to understand this. So 87 percent of the 
money goes to inspectors, and you just said it is going to take 
some matter of months before you get through this process, so I 
don't know what that is, maybe 3, 4 months.
    Secretary Vilsack. Well, it is going to take several months 
because----
    Mr. Peterson. So my question is this. You have to cut five 
percent, and you now have by September 30, right?
    Secretary Vilsack. I am sorry. What?
    Mr. Peterson. By September 30, you have to cut five 
percent?
    Secretary Vilsack. That is correct.
    Mr. Peterson. So if it is going to take some number of 
months, you could get down to a situation where you have only 
have 3 months left in the year by the time you get this ready 
to go?
    Secretary Vilsack. That is correct.
    Mr. Peterson. Does that mean that you are going to have to 
make bigger reductions in order to meet the five percent? Is 
that the reality of what the situation is?
    Secretary Vilsack. If you have 6 months left to implement 
this, you have, in essence, a ten percent reduction of your 
remaining resources. If there are 3 months, you have a 15 
percent reduction of your remaining resources.
    Mr. Peterson. So that is how it is going to work?
    Secretary Vilsack. Well, we may have a bit more than 3 
months but it won't be a lot more than 3 months, and that is 
one of the problems.
    Mr. Peterson. Now, last year, a year ago, FSIS issued a 
proposed rule on modernization of poultry inspection, and 
according to your data, establishments operating under this 
HACCP-based inspection model project called HIMP, a pilot 
project, that performs as well or better than traditionally 
inspected plants, and furthermore, the rule created additional 
poultry plant jobs and will have budgetary savings for FSIS. 
Can you give us an update on when USDA plans to issue a final 
rule on this?
    Secretary Vilsack. Well, we are hopeful of getting this 
through the process this year, Congressman. This is an 
important opportunity for us to improve the safety of food 
inspection in poultry plants. It really hasn't changed for 
probably 60 years. It is an opportunity for us to really focus 
on where we think the risk of pathogens is greatest. It does 
require a shifting of responsibility with companies assuming 
more responsibility for examining defects of poultry that are 
not necessarily tied to food safety, and that would free up our 
inspectors to actually do a better job of inspecting the entire 
plant. We do believe it will save money and we believe, based 
on the experience, that it will reduce illnesses and the risk 
of death.
    Mr. Peterson. But it won't happen before September 30th?
    Secretary Vilsack. No, no.
    Mr. Peterson. A few weeks ago, Deputy Secretary of Defense 
Ashton Carter testified regarding the sequester that if they 
had additional flexibility, well, I guess he testified that at 
this late date would do little to offset the effects of 
sequestration, even if they had flexibility. Is the Department 
seeking any legislation to give it flexibility? I know we have 
had discussions that if you had some flexibility, you might be 
able to avoid some of the problems with the meat inspectors, 
for example. Are you able to pursue anything, or where are you 
all with all of that?
    Secretary Vilsack. Well, respecting the process here, 
knowing that you all are going to be faced with a circumstance 
in a couple of weeks of having to decide what to do with the 
continuing resolution and discussions that will take place in 
terms of the farm bill. Our focus has been on basically 
implementing the sequester, focusing on what we would do in the 
event the continuing resolution is not continued and trying to 
do the best we can to deal with the extension of the farm bill 
and to work with this Committee and the Senate Committee to try 
to get a farm bill through. That is where our focus has been.
    You know, we will work with whatever Congress provides us 
but you have to give us the tools, and the reality is that 
there are micro problems and macro problems with the sequester. 
You know, $85 billion taken out of the economy in addition to 
the payroll tax increase that took place at the 1st of the year 
is a pretty significant hit to the economy. It is going to 
probably impact growth. We are trying to avoid that the best we 
can.
    Mr. Peterson. But bottom line, if you had some flexibility, 
you might be able to soften some of the problem with the meat 
inspection situation?
    Secretary Vilsack. Well, the reality of a sequester is that 
it doesn't allow you any ability to prioritize.
    Mr. Peterson. Right. So if you had flexibility to move 
things around, it might not be as big of an issue with the meat 
inspectors?
    Secretary Vilsack. We would obviously recognize the 
important role of mission first and we would do everything we 
could to make sure that the most important missions were 
completed and done. We don't have that capacity today. That is 
why this is recognized by all as bad policy.
    Mr. Peterson. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Iowa, Mr. King, for 5 
minutes.
    Mr. King. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary for your testimony and your service as our Secretary.
    I am following up on the gentleman from Minnesota's 
questions. The viewpoint I would have would be that if you had 
more--what I am hearing is, if you had more flexibility, you 
could diminish the effect of the potential furlough of our meat 
inspectors, and I don't hear you say yes to the question, have 
you submitted a plan or proposal as to where you might take 
that money if you had full flexibility within the Department. 
Can you tell us here today where you would take that money from 
if you had full flexibility?
    Secretary Vilsack. Congressman, I am a little reluctant to 
do that because I would like to obviously have the opportunity 
to understand precisely what flexibility I have, what 
directions Congress is providing to me and what our staff has 
to say. These are difficult choices that we make. Do we take it 
from the Foreign Agricultural Service and reduce exports? That 
is not a particular----
    Mr. King. But I am really interested in what you might do, 
and rather than what would be a bad thing to do, and as I watch 
the Pentagon, they seem to be able to propose that they can 
furlough civilian employees with a significant amount of 
flexibility. I am going to expect that they went to OMB for 
analysis of the sequestration language. Have you had any 
directives from OMB that would illuminate this thing in such a 
way that you have less flexibility than the Pentagon, perhaps?
    Secretary Vilsack. Well, no. The Pentagon--the difference, 
Congressman, is depending upon how many accounts you have in a 
particular area. So, for example, NRCS in my world has far more 
accounts than the food safety account and so you do have some 
degree within the NRCS world of being able to prioritize 
because you have different accounts. But with food safety, you 
only have a couple of accounts and they are all basically 
people, and most of them are people on the front lines.
    Mr. King. I do understand that, and that has been part of 
your public statement over the last few days. I would ask you 
if you would be willing to, and just ask you to submit to this 
Committee your recommendations on what you would like to see 
written into the CR to give you the flexibility necessary so 
that the meat industry no longer has to be concerned about the 
backup that could be caused by furloughs of meat inspectors?
    Secretary Vilsack. Well, the answer to that question is 
relatively easy, Congressman. Just give us the resources.
    Mr. King. That is not an option, Mr. Secretary, as you well 
know.
    Secretary Vilsack. Well, see, now, that is a choice you all 
are making.
    Mr. King. That is a choice that was actually recommended by 
the President and it is the current law. I am suggesting this: 
staying within sequestration caps, which you have said that you 
intend to do and follow the law. Do you have a recommendation 
you would be willing to offer this Committee that could go into 
the CR that would alleviate the meat inspection problem that 
you say is impending?
    Secretary Vilsack. Well, again, if I was going to make a 
recommendation, it would be to adequately fund that line item 
of the budget.
    Mr. King. We have reached an impasse on that, Mr. 
Secretary. So let me pose a couple of other things. Can you 
cite any evidence that the School Lunch Program is contributing 
to the obesity of our children?
    Secretary Vilsack. Well, there is an Institute of Medicine 
study that was done prior to the Healthy, Hunger-Free Kids Act 
passage in 2010 that suggested that our School Lunch Programs 
were providing our youngsters with too much sodium, too much 
sugar and too much fat content, all of which do in fact 
contribute to obesity.
    Mr. King. Out there across the people that are providing 
the food to these kids, I can't find anybody in the industry, 
in the cafeterias that would concur that the food they are 
getting now is contributing to obesity.
    Secretary Vilsack. Well, there is a difference, 
Congressman. You asked if there was evidence----
    Mr. King. You cited the study, and I recognize that.
    Secretary Vilsack. So if you are asking the question today, 
obviously we are taking steps to improve our meals and 
providing more fruits and vegetables, less sodium, less sugar, 
less fat, more whole grains and low-fat dairy. So we believe 
that it is making a difference, and the fact that we have seen 
obesity levels in major cities basically plateau is a good 
indicator of perhaps----
    Mr. King. I read the First Lady's op-ed on that. I didn't 
see a lot of evidence in it, but I saw her op-ed. But can you 
cite a statutory directive to cap calories or meat in the 
School Lunch Program, or isn't that an option that you have 
taken when you wrote the rules?
    Secretary Vilsack. Well, one of the concerns obviously is 
calories in and calories out, and what we have done in light of 
the concerns that have been expressed by school officials is to 
provide some degree of flexibility on this. I think there is 
greater appreciation and greater acceptance of this because of 
the flexibility we provided. So there has been flexibility but 
we haven't necessarily sacrificed the principles that the 
Healthy, Hunger-Free Kids Act directed us to do.
    Mr. King. What is the rationale for rationing meat?
    Secretary Vilsack. Well, it is not rationing meat. It is 
balancing the meal, Congressman. It is making sure that there 
is a balance between fruits, vegetables, grains and protein.
    Mr. King. You have a cap written into it, meat that can be 
supplemented by other forms of protein, so I would define that 
as rationing meat. What would the rationale be?
    Secretary Vilsack. Well, it is giving school districts 
choices in terms of their protein choices and making sure that 
they understand the importance of a balanced plate and a 
balanced meal.
    Mr. King. Thank you, Mr. Secretary. I yield back.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Georgia, Mr. Scott, for 5 
minutes.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    Mr. Secretary, given that in respect to the furloughs of 
the food safety inspectors under sequestration, and the fact 
that these food inspectors do not just stop at the plant but 
they deal with the ranchers, the farmers and ultimately the 
consumers under sequestration, so it would be very interesting 
to get your take: will sequestration give the American people 
cause for alarm about the safety of the food they will eat?
    Secretary Vilsack. Congressman, I don't think it is so much 
the safety of the food in my world, in USDA. Now, if I were the 
FDA Commissioner, I might answer that question a little bit 
differently. But we know that when inspectors leave the plant, 
the plant shuts down. I think it is more about the supply and 
production of food and whether we are faced with higher prices 
or lower prices as a result of disruptions in supply and the 
impact that it has on producers. I mean, the reality is, if you 
feed a chicken one more day than you should, then basically it 
creates potential issues with that chicken going down the line 
and the equipment and the machinery that is used to process. So 
there are ramifications to this. I think it is less about the 
safety and more about production, but on the FDA side, it is 
more about safety.
    Mr. David Scott of Georgia. And you say that given the fact 
that we have had a number of foodborne illnesses, Salmonella 
outbreaks, given the current status of food inspectors. And now 
we are going to have this furloughing system, and you can give 
the American people assurances that the food safety will not be 
jeopardized through this sequestration and loss of the number 
and the availability of man-hours for food safety inspectors?
    Secretary Vilsack. Our number one goal, Congressman, is to 
make sure that product that leaves those plants is safe, and we 
have taken steps in the last couple of years to reduce the risk 
of Salmonella and we are going to continue to work hard to make 
sure that food is safe. I don't want to--this is not about 
creating great concern among consumers. This is about being 
very truthful about the consequences of sequester, which is 
that it is going to disrupt production in these facilities.
    Mr. David Scott of Georgia. So it will disrupt production 
but will not jeopardize food safety?
    Secretary Vilsack. Just simply because it is a situation 
where the production of food is stopped and it creates a clog 
in the system or it creates shortages, which has an impact on 
consumers and on grocery stores and things of that nature.
    Mr. David Scott of Georgia. Well, tell us how these 
furloughs will work. That will be helpful. Will they be 
staggered or will all 15 furlough days have to be taken 
continuously?
    Secretary Vilsack. I don't think that you are going to see 
a continuous furlough because that would basically shut the 
pipeline down completely. What we are going to try to do is to 
maintain some degree of movement through the pipeline to avoid 
a more significant disruption.
    Mr. David Scott of Georgia. Well, does an individual 
plant's production cycle have any bearing on when the 
inspectors assigned to that plant will suffer their furlough 
days?
    Secretary Vilsack. If I understand your question, it is not 
so much the cycle that the plant is on, it is more how we can 
coordinate the furloughs to make the most sense and to avoid 
the least amount of disruption and to treat all plants 
equitably.
    Here is the issue. You know, just a hypothetical. Let us 
assume for the sake of discussion we wanted to create a 
regional impact and we would start in the Southeast initially 
and we would furlough people in the Southeast and then let us 
assume that Congress decided through a CR or the farm bill or 
some other mechanism to provide resources to end the sequester 
or to change the sequester or to create greater flexibility. If 
you don't treat everybody the same, you have a situation where 
some plants will be inequitably treated, and we think it is 
important as a principle of this to try to be as equitable as 
we can in this process.
    Mr. David Scott of Georgia. And your process of dealing 
with the furloughing of these food inspectors that you have 
outlined so far is basically categorized by the $85 billion 
sequester that will go through September 30th. Let us suppose 
that continues. Has any thought been given to what the impact 
will be if we go beyond, if we are not able to come up with a 
substitute to the sequester in this short period of time? What 
will happen if it goes on 2 years, 3 years?
    Secretary Vilsack. That gets back to the Ranking Member's 
point about the poultry slaughter inspection process. At least 
as it relates to poultry, there are potential savings that 
could be realized with this new system if it is instituted and 
implemented. That is one thing. And obviously in a budget 
situation without the limitations of a sequester, you obviously 
have a much greater capacity to prioritize. That is one of the 
reasons why even though our budget is below Fiscal Year 2009 
total, our operating budget, in the food safety area, it is 
pretty much flatline because there has been a recognition by 
Congress that that is an area that should not be reduced, but 
the Farm Service accounts, the Rural Development accounts, some 
of the other areas of our budget have been significantly 
reduced.
    The Chairman. The gentleman's time has expired.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman.
    The Chairman. The chair now recognizes the gentleman from 
Texas, Mr. Neugebauer, for 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here. I don't want to 
spend a whole lot of time on the food inspection but I want to 
go to a follow-up. I am a little concerned about the fact that 
you are going to wait 3 months before you begin to implement 
the sequester and so banking basically then on having to do a 
larger amount of cut in the last 3 months. I think the question 
is, why wouldn't you begin that process almost immediately and 
sit down with the stakeholders and say, ``Where in your plants 
could we inspect 4 days rather than 5 days?'' Because in some 
areas, as you mentioned, some of the production, the capacity 
is down in the beef industry, for example. Why wouldn't you 
start that now? I am not very concerned about the negotiations 
with the labor unions. What I am concerned about is farmers and 
ranchers all across America that are growing livestock or 
poultry and their ability to take that to markets and for the 
people of this country to be able to have safe food. So I am a 
little confused why you would start this labor union process 
now and possibly make this process more harmful than it needs 
to be.
    Secretary Vilsack. Well, Congressman, first of all, we are 
contractually required to start the process and we are 
contractually required to give at least 30 days' notice. 
Unfortunately, not all of our frontline inspectors have e-mail 
so those people have to be hand-delivered.
    Mr. Neugebauer. I heard that.
    Secretary Vilsack. Okay.
    Mr. Neugebauer. So here is the question. You have known 
this is coming. This is your Administration's plan. Why did we 
wait until March 1st to begin this process? Why didn't we begin 
that process sooner?
    Secretary Vilsack. We couldn't begin until the President 
signed the order, Congressman. That was what actually triggered 
the Act and gave us the authority to then begin the process. If 
I can just say one thing in response to your question to 
clarify this, it really doesn't make any difference in terms of 
the number of furlough days whether we do it in 3 months or 6 
months. The number of furlough days is a finite amount of days 
based on the amount of savings that we have to accomplish. What 
it does provide is notice to the industry and producers a long 
enough period of time. To the extent they can prepare or 
adjust, they have a little bit more time to do that. And we are 
expecting that the furlough days might be in the neighborhood 
of 11 to 12 days at this point.
    Mr. Neugebauer. I want to move on. As you alluded to in 
your testimony, recently the CBO updated their scores for the 
House and Senate farm bills from last year that were passed out 
of committees but did not become law. In their analysis, both 
the House and Senate bills for nutrition funding, CBO stated 
that CBO now estimates that spending on nutrition programs 
under Title IV of the legislation would be $4 billion more in 
the next 10 years than it was estimated in 2012, primarily 
because of a change in our estimate of a provision regarding 
utility allowance, LIHEAP, I guess it is referring to, in the 
Supplemental Nutrition Assistance Program. CBO has obtained new 
information on states' practices and the USDA's interpretation 
of the current law with respect to how households qualify for 
utility allowances, and accordingly, CBO now believes that the 
states would have more flexibility under proposal than was 
assumed from the previous estimates. This is a quote from the 
CBO report. ``Thus, now CBO expects that these provisions will 
bring little or no reduction to the cost of nutrition 
programs.'' I think that is very troubling because that was 
probably one of the most bipartisan aspects of the farm bill 
both in the House and the Senate, but what is troubling is, 
basically they went back and reevaluated how you are 
interpreting that provision, and it is how you are interpreting 
that provision that is causing them to say that this program is 
going to cost more money. How would you respond to that?
    Secretary Vilsack. Well, I would say this, Congressman. 
With due respect to the CBO, I think that this issue is far 
from settled, and the reason I say that is, that it is not a 
situation where CBO, as I understand it, went out to all 50 
states to find out precisely how they were administering this 
utility allowance. They only contacted two states. I think that 
we may have a small sampling here, and our view is that perhaps 
a larger sampling might result in a different conclusion.
    Mr. Neugebauer. What are you going to do proactively to--
this is a major setback for the farm bill, and it is a major 
setback for the American people--if in fact it is becoming too 
easy for states to utilize this loophole, if you would call it 
that. This is a program that, as you know, when you look at the 
graph, is increasing at an alarming rate. Some people say one 
in seven Americans are now on food stamps, but at a time when 
were trying to cut back, making it easier for states to somehow 
game the food stamp program is a little disheartening.
    Secretary Vilsack. Well, we are certainly not interested in 
having folks game the system. I would point out that there are 
many reasons for the increased number. Part of it is an economy 
that for many has not been what it needs to be. Part of is an 
aging population. Seniors now comprise an ever-increasing 
amount of food stamp recipients. In fact, 80 percent of those 
who receive SNAP benefits are either senior citizens, people 
with disabilities, children or those who are actually in the 
workforce but simply are working at jobs that aren't paying 
enough.
    I think the goal here, Congressman, and we would be happy 
to work with you on this, is ways in which we can figure out 
those people who are working at jobs, if we could get them to a 
better job with a little more training and a little more 
education, maybe we could get them out of the program which is 
to me the best way to do this is to get folks so they don't 
need the program, and we are happy to work with you on that.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from California, Mr. Costa, 5 
minutes.
    Mr. Costa. Thank you very much, Mr. Chairman. A lot of 
questions, a little time. Thank you, Mr. Secretary, for your 
willingness to continue to serve as our Secretary of the United 
States Department of Agriculture, an important job.
    Just an observation. I mean, we are still spinning who is 
responsible for the sequestration. Let us all remember that we 
all agreed to this a couple years ago, and while we may not 
like various aspects, we did so under the feeling that it would 
not be implemented. Well, it is here and now the fact is, we 
are all responsible, period, and the American public gets it.
    On the issue of--and I am not going to beat this horse to 
death, but on the issue of our USDA inspectors, the carring out 
of their services, the Office of Management and Budget in the 
past has determined this to be an essential service. Now, how 
we handle this and the conversation that we just had is based 
on what happens. I am clear about that. But you deem that these 
services are not essential, and I am trying to understand, Mr. 
Secretary, why we would not deem these services as being 
essential.
    Secretary Vilsack. Well, Congressman, that option is not 
available in a sequester circumstances. Here is the difference. 
When we are dealing with----
    Mr. Costa. I think they are essential.
    Secretary Vilsack. Well, I do too, but that is not the 
issue. The issue is, you are asking in a continuing resolution 
where we are looking at a shutdown or lapse in budget, there is 
an expectation and anticipation that there are going to be a 
budget and there are going to be resources to essentially 
reimburse the food safety folks because you are going to have a 
budget and you will be able to reimburse, you will have the 
flexibility to do this. In this situation, we are not talking 
about a lapsed budget; we are talking about a cut in the 
budget. And so you have not provided sufficient resources to 
pay for the inspectors. It is not about their classification as 
essential or non-essential, it is that there simply is not 
enough money to pay them for the service that they have to 
provide.
    Mr. Costa. All right. I want to move on. You talked in your 
opening comments about the impacts of the drought throughout 
the country, and regionally they have been very difficult, 
devastating in some communities. We are finding a situation 
back in California where the last 2 months, January and 
February, have been the driest 2 consecutive months since 1925. 
I am wondering under your definition of drought whether or not 
because nine percent of California is irrigated, whether or not 
we qualify under the definition of drought, because I can tell 
you, we just last week received a 25 percent allocation for 
water under the projects, 40 percent right now at the state. 
That may be cut back. And we are facing a very difficult 
situation, a possible repeat of 2009 and 2010 where we had over 
40 percent unemployment levels in some communities.
    Secretary Vilsack. Our definition of drought is based on 
the Drought Monitor and it is based on factors that are taken 
into consideration, and that Monitor is adjusted every week, 
which is why I was in a position to say to the Chairman that 
for over 30 consecutive weeks we had over 50 percent of America 
on that Drought Monitor. Now we are at 45 percent. It may very 
well include significant sections of California to make up that 
45 percent.
    Mr. Costa. Okay. I want to follow up with you on that. The 
definition on rural has been a problem for many of us in this 
Committee, and we lamented in previous hearings where members 
of the USDA have testified why we didn't get a more timely 
response on the definition of what is rural. We finally got it 
last month, and I am not so sure that I am pleased. Maybe I 
will ask you to go back to the drawing board. But the fact is, 
we have oversubscribed accounts. What is the proposed rule on 
rural definition? What is your intent in terms of 
implementation?
    Secretary Vilsack. Well, the proposed rule basically sets a 
sort of single definition as opposed to the 11 or 12 different 
definitions that we have in law at 50,000 people or less, and 
it is a reflection of what is happening to the demographics in 
the United States as the rural population now represents 16 
percent of America's population and that is the lowest 
percentage in the history of the country. I think in order for 
us to make sure that we continue to be viable in terms of 
resource allocation, we have to make sure that we have 
sufficient resources coming into those rural areas. A 
definition will help in that respect.
    Having said that, I recognize that we are going to have to 
ensure that very, very small communities are able to get their 
fair share of the resources we have, and what we have been 
attempting to do, Congressman, is encouraging small communities 
to work regionally because we are pretty convinced that you get 
more leverage and better bang for your buck and you extend the 
human and financial capital if folks think of themselves as 
part of an economic region as opposed to individual 
communities. We think we could have more success in developing 
economic opportunity that way.
    Mr. Costa. All right. My time has expired, but if there is 
a second round, I would like to talk to you a little bit about 
trade and dairy.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Texas, Mr. Conaway, for 5 
minutes.
    Mr. Conaway. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. Thank you for your response to my 
letter. As irritating as it is to have to answer letters to 
Members of Congress, I appreciate you sending your letter March 
1st.
    In that letter, you said the Department as a whole has 
planned extensively on how to address sequestration. It has 
taken all the actions feasible to mitigate its impacts. The 
second paragraph says also in anticipation of sequestration, 
FSIS Administrator directed the initial Fiscal Year 2013 budget 
allocations to be reduced across program areas. So thank you 
for those proactive kind of comments. It does kind of run 
counter to some of the answers earlier when you said you really 
couldn't do anything until March 1st. You couldn't put out 
notices, you couldn't let folks know that this was in fact 
coming as part of your fiduciary responsibility as the leader 
of that organization. You have $1.9 billion that you have to 
trim in planned spending. Can you tell us this morning where 
you stand against that $1.9 billion based on all the good 
things that you did from October 1st through the end of 
February in terms of lessening the impact of the last 7 months 
of the year with things that you did the first 7 months?
    Secretary Vilsack. Congressman, if I understand your 
question, we were taking proactive steps to control our budget, 
not necessarily because of sequester but because of the fact 
that----
    Mr. Conaway. Thank you, sir. I have limited time.
    Secretary Vilsack.--we have flatline budgets. I want to 
make sure that we are talking about----
    Mr. Conaway. From October 1st forward, there was a petition 
for sequestration and there wasn't really a lot of movement 
away from it, and dollars saved between October 1st and 
February 18th count against that $1.9 billion, so can you tell 
us this morning, and maybe you don't know.
    Secretary Vilsack. I don't think they count against the 
$1.9 billion, Congressman, and the reason they don't is because 
we were dealing with the consequences of Congress reducing 
budgets from the previous year and the year before that.
    Mr. Conaway. You had a budget to start the year, right?
    Secretary Vilsack. Yes, sir.
    Mr. Conaway. Okay.
    Secretary Vilsack. Well, we had a continuing resolution.
    Mr. Conaway. Yes. You had funding authorized and 
appropriated to start the year.
    Secretary Vilsack. For a section of the year, portion of 
the year.
    Mr. Conaway. Right, through the 27th, so it is your 
testimony this morning that to the extent that you spent less 
than that in the first 5 months, that that does not count 
against the sequestration cut in spending? I don't want to use 
the word savings because that is an inappropriate term. Those 
funds don't count against the $1.9 billion that you are going 
to have to not spend this year?
    Secretary Vilsack. The resources that we were able to save 
in travel and supplies and things of that nature allowed us to 
fit within the budget that you all gave us.
    Mr. Conaway. All right. So your testimony is, in spite of 
the letter, that you have mitigated the impact of 
sequestration, your testimony orally this morning is in fact 
you have not----
    Secretary Vilsack. No, I don't agree with that, 
Congressman. I think what we are trying to say is that the 
steps that we have taken, a lot of people say well, surely, 
there is a lot of fat and a lot of--what we were trying to 
suggest to you is that we have already taken those steps 
because of the----
    Mr. Conaway. The letter says as well that those steps have 
resulted in savings that allow you to cut the number of days 
potentially for furlough by \1/2\.
    Secretary Vilsack. Well, furlough----
    Mr. Conaway. So you can't tell me two things at the same 
time, Mr. Secretary.
    Secretary Vilsack. Furloughs obviously would have been 
higher----
    Mr. Conaway. Right. So how much----
    Secretary Vilsack. I think it is $30 million, Congressman.
    Mr. Conaway. Thirty million dollars out of the $1.9 billion 
that you have to come up with?
    Secretary Vilsack. Right.
    Mr. Conaway. Now, back on the union issue, can the unions 
drag their heels and force sequestration to occur in the last 
15 days of September?
    Secretary Vilsack. No. There is a----
    Mr. Conaway. Why can't they?
    Secretary Vilsack. There is an impasse process. If after a 
week or so of negotiations and discussions----
    Mr. Conaway. Okay. And that week starts March 1st?
    Secretary Vilsack. No, sir. You have to get a 30 day 
notice.
    Mr. Conaway. Okay. And that notice has gone out?
    Secretary Vilsack. I believe it goes out today or tomorrow.
    Mr. Conaway. Why wouldn't it have gone out on the 1st?
    Secretary Vilsack. It is going to go out today or tomorrow, 
and unfortunately, we can't necessarily get everyone an e-mail, 
which would have been the most efficient way to----
    Mr. Conaway. They all get paid, Mr. Secretary. That 
argument that the union negotiators don't have e-mail, really?
    Secretary Vilsack. It is not negotiators, sir. It is every 
worker.
    Mr. Conaway. Well, I understand, but you aren't negotiating 
furloughs with each and every worker, do you?
    Secretary Vilsack. Well, actually, the G7s have to receive 
notice, and not all G7s have e-mail. So you have to actually 
hand-deliver or mail them a notice. Thirty days after they have 
all been notified, the clock starts on 30 days, and then during 
that 30 day period we can start the process of negotiation, and 
it is not about stopping the furloughs, it is how you are going 
to implement the furloughs. After that, there are oral 
conferences that are required under the contract, so if an 
employee says I want an oral conference, you have to do that, 
and that will be done at the local level. So, we are going to 
try to do this as quickly as we can but it isn't going to 
impact the number of days.
    Mr. Conaway. You said that earlier, but 12 days spread over 
6 months is less of an impact than 12 days taken all in 
September.
    Secretary Vilsack. We are not going to have them all in 
September.
    Mr. Conaway. But you said that early on in February. You 
said the implication was you were going to shut the entire 
process down for 15 days.
    Secretary Vilsack. No, sir, that is basically how you 
interpreted it. That is not what I said, with due respect. What 
I said was, there was going to be----
    Mr. Conaway. You did not mention the word furlough until 
late February.
    Secretary Vilsack. Well, the furlough----
    Mr. Conaway. The staggered furlough until late February.
    Secretary Vilsack. Well, no. What I said was, there were 
going to be so many days of furloughs. I never said they were 
going to be continuous. You interpreted that, and I am sorry 
that you did that because----
    Mr. Conaway. Well, I am not the only one.
    Secretary Vilsack. Well, I am sorry that anybody did it 
because I was making a truthful statement. There were going to 
be furlough days, to give everyone notice of the fact that what 
was going to happen with the sequester, and it is not something 
we want to do, sir. It is something we have to do.
    Mr. Conaway. I understand. It is the law. Thank you, Mr. 
Chairman.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Minnesota for 5 minutes.
    Mr. Walz. Thank you, Mr. Chairman, and Mr. Secretary, thank 
you for being here, and thank you not just for being a friend 
of agriculture but being a friend of rural America. And I go 
back to--it is interesting, this hearing is titled Review of 
the State of the Rural Economy and yet as the American people 
see, we are in the minuti# of idiocy on policy instead of 
allowing us to have a vision that grows the country, grows 
rural America, lets us create the jobs that allow families to 
live where they want to, and I am thankful that you continue to 
stay focused on that.
    I have two questions that I think would go a little broader 
than what the title of the dang hearing was about. A diverse 
rural economy is the strongest hedge we have against economic 
downturn and natural disaster. When we put all of our eggs in 
one basket, it becomes a problem. You are doing things through 
USDA that I believe is broadening that economic diversity. Two 
programs or two things I would like to just mention and get 
your feeling on as to the future of these beyond sequestration 
when we get back to actually wanting to govern and get beyond 
crisis mode. What is the future of the RUS program in creating 
energy efficiency, job creation, stability and that, and then 
how do you see, Mr. Secretary, the energy title portion of the 
farm bill and the ability to create jobs and make sure we are 
energy independent in rural America through those programs?
    Secretary Vilsack. There are four cornerstones to 
revitalizing and renewing the rural economy. One of those is 
production agriculture and exports, local and regional food 
systems, conservation and outdoor recreation, and the biobased 
economy. Within the biobased economy, there are tremendous 
opportunities for taking our plant material, livestock waste, 
grasses and converting them into energy and converting them 
into fuel and converting them into chemicals, plastics, 
polymers, fabrics, fibers, a whole wide variety of 
manufacturing opportunities. So it is important to have an 
energy title that is a bit extended to include biobased 
products. We have 3,100 companies located throughout the 
country that are in this biobased space and that number is 
growing. We as the Federal Government are trying to purchase 
biobased products in a BioPreferred Program that we are 
running. We have doubled the number of products that we can 
purchase, and we also have a bio-labeling program, which is 
basically giving people, consumers the awareness that when you 
are buying something, you are helping an American farmer, 
producer out.
    As far as RUS is concerned, that combined with the REAP 
program, I can tell you in the last 4 years, we have done 6,600 
energy efficiency and renewable energy projects that are 
individualized to farms and businesses. They have saved or 
generated over 7 billion kilowatt-hours of electricity, which 
obviously is important to the RECs that are out there providing 
good utility service. We have improved 91,000 miles of electric 
transmission lines and we are creating a development through 
our rural development housing effort and RUS to sort of 
reenergize and create more efficient homes. Our housing stock 
in rural America, there are a lot of energy efficiency 
opportunities there and there are training and job 
opportunities that are connected to retrofitting homes with 
energy efficiency. So there is a lot of activity in this space 
but a 5 year program would provide the certainty, especially if 
there is an energy title that is adequately funded and we have 
an expanded opportunity to move into the biobased area.
    Mr. Walz. Well, I appreciate that vision, and just for the 
record, I want to make it clear, this Committee did pass a farm 
bill and at any given time it could have been brought to the 
Floor for an up-or-down vote. It did not happen. Our commitment 
to making that happen is certainly strong. Thank you, Mr. 
Secretary.
    The Chairman. And I thank the gentleman from Minnesota for 
his vote for that farm bill.
    The chair now recognizes the gentleman from Ohio, Mr. 
Gibbs, for 5 minutes.
    Mr. Gibbs. Thank you, Mr. Chairman.
    Mr. Secretary, I know this is a little bit out of your area 
but I want to see how you weigh in on it. Earlier the EPA 
released raw data to certain groups dealing with livestock 
operations, businesses and personal information, it was the raw 
data, and I know that the associations out there are really 
concerned about that and potential for harassment, 
intimidation, whatever. Did you in your capacity weigh in on 
that to the EPA expressing your thoughts or make sure it 
doesn't happen, or where do you stand on that?
    Secretary Vilsack. We know that EPA has taken this issue 
very seriously, as they should, and we have indicated to them a 
concern that you have expressed and that has been expressed to 
them by various groups, and I think that they realize that this 
is something that probably shouldn't have been done.
    Mr. Gibbs. So you expressed your strong opposition to that 
type of thing?
    Secretary Vilsack. Well, we expressed a concern as we 
always do. We have a relationship with the EPA. When we see 
something that they are considering or doing that we think may 
have an impact on rural America, it is our job, and we have a 
good line of communication. They just recently hired someone 
from USDA to be their ag liaison, Sarah Bittleman, who worked 
in my office, so we will continue to have a close relationship 
with them in terms of being able to communicate concerns or 
advice.
    Mr. Gibbs. All right. I am going to move on. Of course, I 
am a strong believer that we need to have a safety net program, 
and crop insurance is a good vehicle. I was wondering--some of 
the opponents of crop insurance said the claims might reach $40 
billion in 2012. Do you know what the claims were?
    Secretary Vilsack. Well, at this point, Congressman, they 
are a little over $15 billion.
    Mr. Gibbs. Okay.
    Secretary Vilsack. I don't know that the books have been 
closed on this but it is probably a pretty close estimate.
    Mr. Gibbs. On average over the last 10 years, how much 
premium was paid compared to the indemnities that were paid 
out? Do you know what the ratio is?
    Secretary Vilsack. Well, the ratio is probably 2 to 1. For 
every dollar that was paid in premiums, there is probably $2 in 
indemnity payments out, somewhere between $250 billion and $500 
billion.
    Mr. Gibbs. I just want to talk a little bit about farm 
credit. We have seen 2011 record net farm income in 2012 even 
with the drought, estimated to be the second highest ever. What 
kind of default rates does the Farm Service Agency seeing?
    Secretary Vilsack. In past years, the default rates were 
down a little bit in the direct programs. The previous year, 
they were 6.5 percent default. This year, 2012, they were 6.3 
percent. On the guaranteed program, the default rates in 2011 
were 1.3 percent, and in 2012, they were 1.14 percent.
    Mr. Gibbs. It has been in the press a concern that maybe 
farm income, we were in a bubble. Do you see the potential for 
a farmland bubble?
    Secretary Vilsack. Well, I am with the Chairman on this. 
You always have to be cautious about this, but this is 
different than the 1980s when the debt-to-asset ratio was 
significantly higher than it is today. There is quite a bit of 
equity that is built up, and we are not quite in the same 
circumstance we were in the 1980s. Obviously, the land price 
issue is one that concerns me for this reason. It is more 
difficult for beginning farmers to basically get into the 
business or stay in the business, and that is an issue because 
of the aging nature of farmers generally.
    Mr. Gibbs. And high capital costs to get into, right?
    Secretary Vilsack. Correct.
    Mr. Gibbs. What is the status of the MAP and programs in 
the FMD program?
    Secretary Vilsack. Well, both the Market Access Program and 
the FMD program will receive reductions as a result of the 
sequester, I would estimate somewhere in the neighborhood of 
$12 to $15 million in those programs. Every dollar that we use 
to promote trade generates about $35 in trade activity. So if 
we reduce those resources, obviously that is going to have an 
impact on trade, but we are still looking at a record year for 
exports.
    Mr. Gibbs. For this year, the direct payments and ACRE 
programs, what is the status or what percent cut would you be 
looking at, do you think, in the sequester?
    Secretary Vilsack. Well, I am not clear about that, and the 
reason I am not is because we are still in the process of 
trying to figure out precisely how this all works with the CCC 
and whether or not there is any degree of flexibility. Part of 
the challenge that we have with sequester is that some accounts 
we have already paid money out, and the question is, do you 
have to ask people to return the money that you paid to them or 
is there a way in which you can avoid that disruption, and we 
are still in the process of trying to figure out precisely what 
we can do. But I would anticipate and expect that there will be 
a slight reduction but we are still on track. The signup is 
taking place for both of those programs.
    Mr. Gibbs. Thank you, Mr. Chairman.
    Mr. King [presiding.] The gentleman yields back. The chair 
recognizes the gentleman from Oregon, Mr. Schrader.
    Mr. Schrader. Thank you, Mr. Chairman. I appreciate it. 
Thank you, Mr. Secretary, for being here. I really enjoy your 
leadership at the Department of Agriculture in some pretty 
tough times.
    I was generally pleased with the President's State of the 
Union speech, particularly the bipartisan balanced approach to 
deficit reduction, but was a little concerned that he didn't 
really talk much about the rural economy, so I appreciate you 
being here to clarify where the Administration is. And as you 
know, unemployment has been pretty high in rural America, 
actually for a long time. I would argue they have been in a 
depression, not just a great recession here recently.
    In a lot of states out West and some back East, Federal 
forestland plays a key role in potential economic growth in a 
lot of these communities. We tried a variety of approaches to 
forest policy not really working very well, and you wrote a 
letter to Senator Mikulski, just recently, talking about the 
effect sequestration would have in further reducing in my state 
the 90 percent reduction that has occurred in timber production 
and an increase in diseased, dead, dying forests in much of 
America--Colorado, New Mexico, Oregon, northern California.
    Could you comment briefly on the letter to the Senator and 
the effects that not pursuing a thoughtful forest policy or 
being able to get at it and increasing timber production and 
cleaning up our forests so that we have a balanced approach? 
And maybe in this budget-limited environment, using some of the 
timber harvest receipts to actually help pay to hire folks to 
supplement our Federal tax dollars and get the job done for 
rural America.
    Secretary Vilsack. Congressman, we have actually increased 
the amount of treated wood in this Administration. In our new 
forest planning rule, we understand the multiple uses to which 
our forests have to be put, and we have indeed increased the 
amount of board feet that we are treating, and we have also 
increased the wood-to-energy opportunities that are created. We 
have also----
    Mr. Schrader. But in your letter--I don't mean to 
interrupt--you talked about expected 2.8 billion board feet 
going down to 2.4, which is a 15 percent reduction between 2010 
and 2012.
    Secretary Vilsack. I am sorry. I didn't know you were 
asking about sequester. I thought you were talking about the 
general policy. The sequester will obviously have an impact on 
our forests in the following respects. Number one, it does 
indeed reduce our capacity to treat board feet because we 
actually have to pay people to do that. Even though they get 
the benefit of the lumber, still, because of the economy, we 
have to pay people to do that. Second, we will probably not be 
able to work with communities in the interface between the 
forests and urban areas to reduce the fire risk, about 200,000 
acres. That too will obviously impact.
    Mr. Schrader. So if were able to actually have a forest 
policy modification that allowed for the harvest to actually 
pay for some of the management that you talk about, that would 
increase our opportunity?
    Secretary Vilsack. Well, what we need is Congress to extend 
the stewarding contract capacity, which expires this September. 
That is important that it be extended and also that it would 
allow us to go for longer contract opportunities. If we could 
go from 10 years to 20 year contracts, we think we could 
provide greater stability. Our goal is to treat more wood, it 
is to create more opportunities, to use research to develop new 
products, and our forest planning rule is the right policy. We 
just need the resources to be able to----
    Mr. Schrader. And you have shown that because of your 
support of your green energy building policy, which I really 
appreciate the Administration and you in particular taking on 
the Department of Agriculture over the last couple years. My 
good friend, G.T. Thompson, and I are introducing a Forest 
Products Fairness Act that hopefully would start treating wood 
as one of our biobased products as opposed to having been 
discriminated against based on old 1970s work, and I am sure my 
colleague will comment on that.
    Last quickie question is, I don't know if you are aware but 
the DEA has decided that mobile veterinary clinics--I was a 
veterinarian for 35 years before coming to this job--can no 
longer carry controlled substances, even though there is often 
a locked ambulatory box in the back of their rig. That poses 
huge problems for us to be able to treat the livestock, give 
the animals on those farms the veterinary care they need in a 
safe and efficient, humane manner. I hope you take some time 
and look at that bizarre bureaucratic piece of red tape. I 
understand the goal behind keeping our narcotics locked up, but 
I think there is a bit of practicality that has to ensue or we 
can't keep the food safety chain alive and well in our country. 
So I just bring that to your attention. If you had a comment, I 
would appreciate it. If not, please get back to me.
    Secretary Vilsack. Well, Congressman, we appreciate your 
bringing this issue up and we will certainly reach out to our 
colleagues at DEA to make sure that we understand the policy 
and to see if there is any degree of flexibility in the 
crafting of that policy.
    Mr. Schrader. Thank you very much, and I yield back.
    Mr. King. The gentleman from Oregon yields back, and the 
chair would now recognize the gentleman from Colorado, Mr. 
Tipton.
    Mr. Tipton. Thank you, Mr. Chairman.
    Mr. Secretary thank you for being here for the state of our 
rural economy, particularly out in the West, be it agriculture 
or some of the recreational ends. Water is obviously key. We 
have a deep concern in the State of Colorado from a directive 
that was coming out of the Forest Service that was going to 
require as a condition use of permit for our ski areas to be 
able to sign over water rights that they had paid for, they had 
developed and were on their balance sheet to the Federal 
Government. This obviously is contrary to Colorado water law, 
private property rights. It is going to inhibit their ability 
with signing over those water rights to be able to leverage 
their resources, to be able to keep people employed. The 
directive that came out of your agency was struck down in court 
because it did not comply with the Administrative Procedures 
Act, but yet again, we see the Federal Government and your 
agency going back after Colorado water, western water in terms 
of conditional use of permits. Mark Amity's district out of 
Nevada had a rancher on BLM lands that was required to sign 
over their water rights.
    So given the subversive nature that this has to state law 
in Colorado and what this directive will really represent, the 
potential negative impacts to our local communities, I guess I 
would like to have a little better understanding of why your 
agency feels that this is an appropriate use of agency 
resources.
    Secretary Vilsack. Well, Congressman, as you were asking 
that question, I was thinking about my son, who is a lawyer in 
Colorado, telling me, the advice he gave me, is never get into 
water law issues, it is complicated. I think the Forest Service 
learned a lesson in terms of approaching this issue. We 
obviously did not provide enough notice and enough 
clarification and understanding. That is why we have gone back 
and----
    Mr. Tipton. But you are still going to pursue Federal 
preemption of Colorado water rights?
    Secretary Vilsack. Well, we are in the process of reviewing 
precisely what we were thinking about and seeing whether or not 
we could respond in some way, shape or form to the concerns 
that have been expressed. I will tell you that the focus here 
is making sure that we use our forests, our U.S. forestlands, 
in the most appropriate way to conserve and preserve water. One 
of our driving principles of forest management is water 
management because we recognize how precious the water is, and 
I think that the impetus for this was really starting with that 
concern but recognizing that we need to balance that with the 
interests of those who need the water for economic purposes, 
the ski industry specifically.
    Mr. Tipton. Has there ever been any violation, any sale of 
water other than for those purposes?
    Secretary Vilsack. I can't tell you that, Congressman. I 
don't know.
    Mr. Tipton. I actually know the answer to that question. It 
is no.
    Secretary Vilsack. Okay.
    Mr. Tipton. So I guess the question actually, Mr. 
Secretary, is, why is the Federal Government continuing to 
pursue a water grab in western states when we already have 
water law, which works?
    Secretary Vilsack. Well, it may very well----
    Mr. Tipton. It is private property right in our state.
    Secretary Vilsack. It may very well be that that policy is 
going to be different than what we initially proposed because 
we learned from that lesson of not providing adequate notice 
and an opportunity to be heard. So their folks are looking at 
this now and trying to rethink this. I think the goal for us is 
making sure that as we use our forest areas, we use them in the 
best possible way to preserve and conserve water resources.
    Mr. Tipton. And I hope there will be heavy consideration 
again for the state water rights, state law and private 
property rights. It should not be preempted by the Federal 
Government.
    One other area I would like to be able to move on, and I 
applaud some of the efforts to be able to grow some of our 
exports, and you noted that with the President's sequestration 
that we may well see some impacts actually to our ability to be 
able to export. San Luis Valley, we have a lot of potatoes that 
we would like to be able to export down into Mexico. Can you 
give us an update on where that is at? It seems like in dealing 
with the Mexican Government that we are having a real inability 
to be able to export our potatoes and they are trying to use 
some issues to be able to inhibit that.
    Secretary Vilsack. Well, this is a good example of those 
circumstances where barriers are created that have no 
justification in science and we think are contrary to 
agreements, and we have been working with the Mexican 
Government to create a process by which our potato access to 
their markets would be expanded significantly.
    We had an agreement with Minister Mayorga, who was of the 
previous government, to potentially open up that market. We are 
going through a process with the Mexican Government to sort of 
refine that agreement and the technical aspects of it, and the 
hope is that with the new Administration that we would be able 
to carry that agreement forward and ultimately see access. We 
have had some success in reopening the beef market in Mexico, 
and that gives us some degree of optimism that this is an 
opportunity for us to also reopen that potato market. It is 
very, very limited and we don't think it is justified.
    Mr. Tipton. My time has expired. Thank you, sir.
    Mr. King. The gentleman's time has expired and now the 
chair would recognize the gentlelady from Ohio, Ms. Fudge.
    Ms. Fudge. Thank you so much, Mr. Chairman, and thank you 
for being here, Mr. Secretary.
    Mr. Secretary, we all know that building a diverse 
workforce is an extremely effective tool in addressing 
discrimination. Many of the civil rights complaints in the 
past, particularly those in Pigford, might have been mitigated 
had USDA had a more diverse workforce that was better able to 
interact with minority farmers. So to that end, what has USDA 
done to ensure a more diverse workforce? And I am particularly 
interested in hearing about how many African Americans serve in 
leadership roles within the Department, and before you respond, 
I just want to remind you that I asked this same question 
almost 2 years ago and have yet to get a response, sir.
    Secretary Vilsack. Well, let me see if I can respond to 
your question here, and I apologize for not responding before 
that. That is something that shouldn't have happened. We have 
engaged in a process which we refer to as cultural 
transformation at USDA, and every month I get a report on the 
diversity of our workforce. I can tell you that we have seen 
significant increases in the hiring of African Americans, 
Hispanics, Asian Americans, Native Americans, people with 
disabilities, and veterans, and that is the focus of this 
report. We are casting a wider net to try to find good, 
qualified folks, and the result of that is that our numbers are 
increasing. Within the SES ranks, 17 percent of our SESs, our 
Senior Executive Service folks, are African American, which is 
seven percent higher than the civilian workforce.
    Ms. Fudge. Let me just ask you this, and I could be wrong 
so you could please correct me. But it is my understanding that 
there are 12 positions that are Senate-confirmed positions 
within USDA, and one is an African American.
    Secretary Vilsack. I don't think that is--well, that may be 
correct now because one of the positions that was Senate 
confirmed is no longer Senate confirmed. But we have an African 
American who is in charge of our entire operations, Dr. Parham, 
Greg Parham. We have an African American who is obviously in 
charge of the civil rights area. We have an African American 
who is the administrator of our largest part of our budget.
    Ms. Fudge. Well, if we know that, why is it so difficult 
for me to get a report?
    Secretary Vilsack. Well----
    Ms. Fudge. Which I even asked you about as recently as a 
couple of months ago, a chart.
    Secretary Vilsack. Well, I mean, I can give you the 
cultural transformation report if that would be of assistance 
and help to you.
    Ms. Fudge. Whatever answers my question is what I would 
like to have, sir.
    [The information referred to is located on p. 67.]
    Secretary Vilsack. Well, the other thing----
    Ms. Fudge. I am going to go to my next question.
    Secretary Vilsack. May I just add one other thing, which I 
think is important?
    Ms. Fudge. As long as you do it quickly.
    Secretary Vilsack. I understand. We have also added 
minority representation on our county committee process, which 
should address the issue that your question started with, which 
is the----
    Ms. Fudge. Whatever information you can give me would be 
helpful, sir.
    Let me also ask, has there been any plan to in a very 
targeted fashion address rural hunger in this country? We know 
that, certainly I am not from a rural community, I am from an 
urban community, but I do understand hunger, and I know that 
the rate of rural hunger has been increasing. Is there some way 
you are going to target rural communities as it relates to the 
hunger issues that exist today?
    Secretary Vilsack. I would say quickly two answers to that 
question. One, our Strike Force Initiative, which is now in 
Mississippi, Arkansas, Georgia, Nevada, Colorado, South Dakota, 
North Dakota, Virginia and North Carolina and New Mexico. This 
is an effort to really focus on the persistently poor areas of 
those states and part of that involves expanding opportunities 
in all of our programs. In New Mexico, we saw a rather 
significant expansion to our summer feeding program as a result 
of Strike Force.
    The second thing is our Healthy Financing Initiative, which 
is designed to address the issue of food deserts in both urban 
and rural areas, and while we don't have resources appropriated 
by Congress, we are using our existing programs to try to 
advance the cause of solving the food desert issues in those 
rural areas.
    Ms. Fudge. Thank you. And my last question for you is, how 
is the sequester going to affect TEFAP?
    Secretary Vilsack. We will see a slight reduction in the 
amount of resource available for TEFAP, which obviously will 
mean that we won't be able to--that the food banks and so forth 
won't be able to have as much in the form of commodities. We 
anticipate roughly 700 million pounds of food being provided. 
It would be a little bit more were it not for sequestration.
    Ms. Fudge. Thank you very much. I yield back, Mr. Chairman.
    The Chairman. The gentlelady yields back. The chair now 
recognizes the gentleman from Arkansas, Mr. Crawford, for 5 
minutes.
    Mr. Crawford. Thank you, Mr. Chairman.
    Mr. Secretary, I know that the issue of CAFOs was raised 
earlier. One of my colleagues had discussed it with you 
briefly. I just want to ask some questions regarding that.
    During the EPA's rulemaking process, can you tell me if 
USDA raised to OMB and EPA the same biosecurity food supply and 
producer safety concerns that were raised by the Department of 
Homeland Security?
    Secretary Vilsack. Our focus in conversations with the EPA 
about that rule was to try to, consistent with their need to 
protect the environment, minimize the disruption in livestock 
operations.
    Mr. Crawford. Were those concerns conveyed in writing?
    Secretary Vilsack. I am not sure about that. I know what we 
had was, we have a liaison who comes over to the USDA two or 
three times a week to discuss issues, and I am sure there were 
verbal conversations. I am not sure if there was a written 
message but I know that there was clearly verbal conversations 
about this because I was engaged in them as well. In addition, 
the EPA Administrator and myself met with livestock groups on a 
regular basis and had the opportunity to converse about a 
variety of issues.
    Mr. Crawford. Okay. If you have those in writing, I would 
appreciate it if you could supply those to the Committee. Was 
USDA aware that EPA was engaged in this effort after the 
withdrawal of the rule to collect detailed information from 
livestock and poultry operations across the country or that 
they intended to create this comprehensive national and 
searchable database for the public to use?
    [The information referred to is located on p. 67.]
    Secretary Vilsack. Well, I can't speak for the entire 
94,000 people that work for USDA. I think we were generally 
aware of this. Obviously we are not aware of the fact that this 
could be released as it was.
    Mr. Crawford. I guess now the most important thing now that 
this information is out, what will you do as Secretary of 
Agriculture to protect producers and their operations from the 
possible misuse of this information?
    Secretary Vilsack. Well, I am open to suggestions about 
this, Congressman. Other than basically suggesting that it was 
an unfortunate circumstance. I am not quite sure what we could 
do but I am open to suggestions. If you have some suggestions, 
I would be more than----
    Mr. Crawford. Okay. I would love to talk with you about 
that. In the interest of time, I have one more question for you 
on that particular issue. Can you tell us what steps you can 
take immediately to ensure that the EPA makes no further 
releases of that type of data in the future?
    Secretary Vilsack. Well, expressing to them the concern 
that they heard from a variety of different sources is probably 
what we can do and what we have done.
    Mr. Crawford. I want to switch gears just a little bit and 
talk about catfish, a food safety issue that has gotten a lot 
of negative attention recently. I was hoping you can kind of 
help me clear the air in preparation for the next farm bill 
markup, but I am kind of running out of time. I want to make 
this clear here. The 2008 Farm Bill included a provision 
putting catfish inspection authority under the umbrella of 
FSIS, aligning catfish food safety standards with the rest of 
animal agriculture. This program has been repeatedly 
mischaracterized as duplicative and trade distorting. As you 
know, catfish inspection authority is simply being transferred 
from FDA to USDA and is in fact not duplicative. I wanted to 
question you on how often foreign countries have retaliated 
against American goods as a result of USDA's meat inspection 
requirements. I don't know if we have time for you to answer 
that, but I would like to say that USDA's time on implementing 
this program never seems to run out. It has been 5 years now 
almost since the 2008 Farm Bill was signed into law, so it is 
about time for the Department to get to move on this thing, and 
if you want to comment on what you know about foreign countries 
having retaliated against the United States in the context of 
what I just said, I would like to hear your comments.
    Secretary Vilsack. Well, I am not sure this is going to be 
responsive to your question but it is an attempt. You know, we 
are confronted with barriers almost every week and every month 
by countries. I mean, APHIS last year knocked down 175 barriers 
alone just in their department. So there is constant pull and 
push in trade issues and constant barriers being constructed. 
Right now, we are dealing with Russia and China and 
ractopamine, an issue that has no scientific basis, where the 
international community has spoken through Codex Alimentarius 
Commission, and we still have these barriers being constructed. 
So that is happening all the time, and I would agree with you, 
Congressman, that it is time for us to take action on catfish 
and I would anticipate that that will happen this year.
    Mr. Crawford. Thank you. I yield back.
    Mr. Goodlatte [presiding.] I thank the gentleman. The chair 
now recognizes the gentlewoman from California, Mrs. Negrete 
McLeod. Oh, she is not here? The Congresswoman from Washington, 
Ms. DelBene, is recognized for 5 minutes.
    Ms. DelBene. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary, for being here and for all of your work in support 
of agriculture.
    You highlighted the importance of investing in strong 
agricultural research in your submitted testimony. However, in 
the 1 year extension of the farm bill, critical research 
programs have been left without any funding at all including 
the Specialty Crop Research Initiative, which is very, very 
vital to many of the fruit and vegetable growers that farm in 
my district and throughout our country. Can you describe the 
impacts on the economy for the lack of investment that we have 
in agricultural research and the long-term impact that might 
have?
    Secretary Vilsack. Every dollar that we invest in 
agricultural research generates $20 of economic activity so 
whenever we don't adequately fund research, it has an impact on 
the economy. But more importantly, it makes it more difficult 
for us to deal with the production challenges and the 
protection challenges that crops face every single day. That is 
why it is important and relevant that we have not only a 5 year 
bill but in that bill there is a strong research title and that 
you all give us the tools that other areas of government in the 
health area in particular have to leverage and to attract 
additional private sector investment. Ag research has been 
flatlined for far too long and we will pay a penalty for that 
over the long haul in terms of reduced productivity if we don't 
begin to ratchet that up a little bit.
    Ms. DelBene. Thank you. And speaking of specialty crops, my 
district is the largest producer of red raspberries, and 
specialty crops are incredibly important in our region but they 
are also about \1/3\ to \1/2\ of the total value of U.S. crop 
production and they don't get the same share of attention in 
our farm bill programs. Now with sequestration likely to reduce 
the overall amount of funding for agricultural programs, can 
you address this issue and what we can do or any 
recommendations you have to make sure we support our specialty 
crop industries?
    Secretary Vilsack. Well, the best advice I could give, 
Congresswoman, is to get a 5 year bill through and in that bill 
to do what at least the Senate Agriculture Committee bill and 
the Senate bill did last year, which is to make an increased 
investment in specialty crops, and the reason for this is 
twofold. One, we are obviously a country that is interested in 
producing and consuming more fruits and vegetables but, two, 
this is one of the fastest-growing areas of agriculture, and it 
helps to support local and regional food systems, which is also 
a fast-growing aspect of agriculture. The ability to expand 
farmers' markets, the ability to have farm-to-school programs, 
all of that is somewhat dependent on our ability to produce and 
to protect those specialty crops. I think there is a growing 
awareness in the agricultural community of the significance of 
specialty crops, and would hope that we would speak with a 
single voice about all crops and not just specific commodity 
crops in the farm bill.
    Ms. DelBene. Thank you for that. When the continuing 
resolution runs out at the end of the month, four communities 
in my district will become ineligible for rural housing loans 
because the USDA will revert to a definition that uses a 
population requirement that is pretty outdated. Changing that 
threshold shouldn't impact the budget but it would maintain 
current eligibility. Do you have an issue with changing that 
definition, especially when we are talking about a general 
definition of rural being 50,000? That is not currently what is 
used in this.
    Secretary Vilsack. We have made a concerted effort to try 
to make sure that we didn't disenfranchise folks from the 
housing programs based on a definition until Congress has had a 
chance to speak in the farm bill. I appreciate you raising the 
issue of the sequester. It is going to have an impact on 
housing programs generally. We anticipate that over 10,000 
folks will probably lose their rental assistance as a result 
and there will probably be obviously fewer homes financed as 
well, which at a time when we want the housing market to 
continue to rebound, it is an unfortunate consequence of 
sequester.
    Ms. DelBene. So would you be open to Congressional action 
that would increase the population threshold potentially?
    Secretary Vilsack. Well, I will tell you, what I am 
interested in is simplicity. I just want--it would be helpful 
if we did not have 12 different definitions because it makes it 
really hard to explain to people why they qualify for one 
program and don't qualify for some other program. What we are 
looking at is, is consistency and simplicity, trying to 
streamline the process, and we are anxious to provide as much 
help and assistance in rural areas as we possibly can. So if 
there is a way the definition could be cleaned up or clarified 
or to provide greater consistency and simplicity, I am for it.
    Ms. DelBene. Thank you. Thank you, Mr. Chairman.
    Mr. Goodlatte. I thank the gentlewoman, and the chair 
recognizes himself for questions.
    Mr. Secretary, welcome. I want to start with an issue that 
I am not sure Members have asked you about but I am willing to 
bet that most Members of this Committee have seen the clips of 
the mandated sensitivity training that has been taking place at 
the Department. Could you please explain to the Committee the 
necessity of these trainings where workers are required to 
recite such things as, ``The Pilgrims were illegal aliens.'' 
Are these trainings mandatory for employees?
    Secretary Vilsack. Congressman, they are not mandatory. 
They are not--that process is not in play today. The effort was 
part of a larger loss prevention effort to try to reduce the 
number of program complaints and EEO complaints that we had in 
the Department when I came in as Secretary. We are now at 
record lows in both the program----
    Mr. Goodlatte. The objective was good but the messenger was 
not too desirable, in my opinion. Can you tell us how much 
money the USDA spent on the training, particularly the ones 
hosted by Samuel Betances? I have heard as much as $400,000 was 
paid to him.
    Secretary Vilsack. I can't tell you the specific amount. I 
would be happy to provide that to you, Congressman. I would 
only point out, obviously they were provocative statements 
designed to get people to think in the context of how it feels 
in a diverse circumstance. This is a company that has been used 
by Fortune 500 companies and other agencies of the Federal 
Government. So it is not as if we plucked them out of someplace 
where they hadn't been involved before.
    [The information referred to is located on p. 68.]
    Mr. Goodlatte. Were you as shocked as many of us were to 
see some of the statements that he made in those sessions on 
video?
    Secretary Vilsack. Well, I understand that they are 
provocative and I am sure hindsight is always 20/20, but the 
point of this should not be lost, and that is, we were faced 
with multiple billions of dollars of claims and multiple----
    Mr. Goodlatte. But then you get a whole new round of claims 
based upon the types of statements and actions that he took in 
those sensitivity training programs.
    Secretary Vilsack. I am not sure about that, Congressman.
    Mr. Goodlatte. Subjecting people to that kind of nonsense.
    Secretary Vilsack. You know, it wasn't mandated but it is 
important for us to reduce the number of these complaints and 
the number of these lawsuits, and we have done that, and that 
saves taxpayer money.
    Mr. Goodlatte. Well, I would hope, given the sequester, 
when the USDA is considering furloughs of meat inspectors, that 
the impact on public health of doing something like that 
compared to these trainings, that the trainings would get a 
healthy cut in this process, especially if you say that you are 
not experiencing the difficulties that you were before.
    Secretary Vilsack. Mr. Chairman, we are reducing 
conferences, as I said earlier.
    Mr. Goodlatte. Let me ask you about farmers who have 
recently gotten surveys asking about injuries of youth on their 
farms. Given the DOL rule last year, this has raised concerns 
among producers about why this information is being collected, 
and could you provide us with background on why producers 
receive these surveys, many of which have complained bitterly 
about the intrusiveness of the questions, the length of the 
survey and want to know whether or not they are voluntary.
    Secretary Vilsack. Is this part of the Ag Census, sir?
    Mr. Goodlatte. Yes.
    Secretary Vilsack. Okay. Well, the Ag Census obviously is 
something that is a significant effort on the part of USDA to 
assemble an amount of data that will allow us to develop better 
policy. One point six seven million farmers have already 
responded to the Census, so that represents a significant 
reaction to the Census and a positive aspect of it. The Census, 
in terms of the Department of Labor issue, what we are doing 
now is we are developing with the universities a curriculum for 
farm safety because we believe that education is better than 
what was being proposed by the Department of Labor.
    Mr. Goodlatte. So you are saying the surveys are not 
voluntary then if they are part of the Census. Is that correct?
    Secretary Vilsack. Well, people have the ability to return 
it if they want or not return it if they don't want it.
    Mr. Goodlatte. But they may face consequences if they don't 
return it?
    Secretary Vilsack. No. I mean, the consequence is that we 
don't get the rich database that we need to be able to make 
policy decisions that are----
    Mr. Goodlatte. So you are saying if a farmer doesn't like 
the questions and doesn't want to return it, they don't have 
to? You have enough data from the ones who complied?
    Secretary Vilsack. What I am saying is that they have the 
option, Congressman, Mr. Chairman, and they can exercise that 
option. We would hope that they would provide responses, 
because the more farmers who respond, the better the 
information we have, the better the policies hopefully can be 
developed because we have good data.
    Mr. Goodlatte. And to the point about the youth injuries, 
is the USDA working with DOL to change those requirements on 
the issue of youth participation in agriculture?
    Secretary Vilsack. As I said, we are working together to 
put together, along with the Farm Bureau and the National 
Farmers Union and universities and land-grant universities, a 
curriculum similar to what a college would have where there 
would be basic safety courses that could be available, and we 
are going to then try to work with the insurance industry to 
see if they might be able to provide incentives for folks, 
operations that would exercise----
    Mr. Goodlatte. If you have a small farm and your neighbor's 
child is working on your farm, are you going to have to have 
them or you participate in a safety program?
    Secretary Vilsack. No, no. It is just we are trying to 
provide education about farm safety because we know that farm 
families are concerned about that. We are trying to provide 
information and then what we hope to have is more sophisticated 
and more detailed safety courses on more complex machinery. The 
whole goal here is to provide education to folks, not to 
provide mandates.
    Mr. Goodlatte. Thank you very much, Mr. Secretary. And now 
it is appropriate to recognize the gentlelady from New 
Hampshire, Ms. Kuster, for 5 minutes.
    Ms. Kuster. Thank you, Mr. Chairman, and thank you, 
Secretary Vilsack. As I mentioned on the way in, I am very 
excited to be representing the New Hampshire perspective on 
this Committee for the first time in 70 years, and I look 
forward to working with my colleagues on both sides of the 
aisle to advance commonsense solutions and to cut wasteful 
spending, as you have talked about. I am very focused on 
creating economic opportunity in our rural areas. I represent 
the 2nd District in New Hampshire, which is rural with 
agriculture and biomass and bioenergy projects, and my question 
relates to a project in our district in the City of Berlin, New 
Hampshire, up near the Canada border. A former paper mill is 
being repurposed into a 75 megawatt biomass power plant to 
provide renewable energy and new jobs, both at the plant and 
businesses, and I was particularly excited to visit recently to 
see the number of jobs. There were over 400 construction jobs 
while the project is in construction, and they expect hundreds 
of jobs continuing. Can you talk to us today about the impact 
of the funding and the sequester issues on development of 
energy in our rural areas, and in particular bioenergy 
development? Are we losing ground by not moving forward with 
the farm bill?
    Secretary Vilsack. Well, when the farm bill was extended, 
it didn't include a reauthorization or additional resources in 
the energy title. So to that extent, we are sort of in a 
holding pattern as it relates to bioenergy. We still are 
funding nine biorefineries that are using non-food feedstocks. 
We still have a regional research effort underway. We still are 
helping advance biofuel producers with resources but we are 
pretty much limited in what we are currently doing. We can't 
really extend it until we get direction from Congress and 
resources.
    In terms of the sequester, the one vehicle that could be 
used by a company potentially to embrace biomass energy 
production would be the Business and Industry Loan Program or 
some of our RUS programs, Rural Utilities Service programs. All 
of those are subject obviously to the sequester, so to the 
extent that we have to reduce those accounts by five or six 
percent, whatever it is, that obviously limits the amount of 
projects that we can fund. Just in the last 4 years, we have 
had 15,000 grants and loans in that B&I program helping over 
60,000 businesses and helping to stimulate and support 300,000 
jobs. So every time you have fewer resources, you obviously 
will have fewer projects, which means fewer jobs.
    Ms. Kuster. Thank you. And then the other question relates 
to conservation, which is a hallmark in our New Hampshire 
history and an important part of managing our forests and 
farmlands. We talked about the importance of USDA's 
conservation programs to farmers and particularly young farmers 
who are just beginning their operations. I have been involved 
in some conservation efforts to protect small farms so that we 
don't lose them in New Hampshire. Will there be impacts on 
individual farm bill conservation programs under the 
sequestration, and is there enough funding to pay out our 
existing obligations under the contracts that are in force 
right now?
    Secretary Vilsack. There will be sufficient resources to 
pay out on existing contracts. The problem is, we won't be able 
to go quite a bit further. We estimate 2,600 farmers will not--
and that is across the country--will not be able to get the 
help they need to even put a plan together because simply, we 
won't be filling vacant jobs, about 400 jobs.
    Then second, there is somewhere in the neighborhood of 
11,000, 12,000 producers that will probably not get the 
financial support they would have otherwise gotten but for 
sequester so they won't be able to proceed with their 
conservation program with the cost-share that they were 
counting on, so that probably will reduce the number of 
projects that move forward. And the problem with all that is, 
it also has a ramification not just on the environment but also 
on our ability to produce outdoor recreational opportunities to 
the extent that we use conservation to increase habitat or 
increase and improve water quality and fishing. That could 
potentially reduce over time the outdoor recreational 
opportunities as well.
    Ms. Kuster. And I am pleased to say that the outdoor 
recreational opportunities on the farms that we preserved have 
been terrific in terms of building community and creating a 
total mixed use. They have been very, very well received. So 
thank you very much, and I yield back.
    Mr. Goodlatte. I thank the gentlewoman, and the gentlelady 
from Alabama, Mrs. Roby, is recognized for 5 minutes.
    Mrs. Roby. Thank you, Mr. Chairman. Thank you for being 
here today, Mr. Secretary. I want to continue along the lines 
of conservation but specifically the Conservation Reserve 
Program, which we all refer to as CRP. I want to explain a 
little bit about what is happening specifically in Alabama's 
2nd District because the majority of the acreage is 
designated--the acres designated in Alabama do reside--are part 
of the 15 counties that I represent. It is heavily weighted in 
southeast Alabama, and what is happening is, CRP, as you know, 
was originally there to help preserve marginal to highly 
erodible pieces of property. What is happening now is, we have 
kind of turned it on its head and we are putting highly 
productive farmland into CRP program. So for the farmers in 
Alabama that lease their property, they are now in competition. 
So the families that own the property are seeing that they can 
put in a 40 year crop of a long-leaf pine, take that highly 
productive farmland out of production and it is decreasing the 
number of acres that our farmers actually have to farm.
    With that being said, in the last farm bill, we offered up 
that we should reduce over the next 5 years the number of 
acres, and then I even took it a step further and said not only 
should we reduce the number of acres, we should put in some 
measure to say that marginal to highly productive--we left 
marginal in, but anything better than marginal property to 
highly productive would not qualify for CRP, thus protecting 
highly productive farmland for our farmers to farm. So I just 
want to ask, what do you see as the future role of CRP and what 
changes would you like to see in light of the facts that I have 
given you?
    Secretary Vilsack. Well, it is a balance Congresswoman, and 
actually your question caught me a bit by surprise because we 
actually have increased the indexing score that we use to 
determine whether or not a contract is going to be awarded 
based on this issue of focusing on more marginal lands and 
highly erodible lands, so it is obviously something we need to 
look at in relationship to your statement. But, the overall 
policy is consistent with where you want it to be, which is 
focusing on these marginal lands, these highly erodible lands. 
And we fully expect that the number of acres that are enrolled 
in that program are likely to go down. As you look for savings, 
that is one place where you are likely to go.
    In the meantime, though, we are going to--obviously we 
still have the program and we still have the directive from 
Congress. We are going to follow that. And to a certain extent, 
it helps protect that shrinking baseline within the farm bill, 
which I think is important to everybody on this Committee.
    Mrs. Roby. Well, in your position as Secretary, are you 
recommending a cap on the acres that are allowed under the CRP?
    Secretary Vilsack. I am a big fan of CRP because I see the 
opportunities for these marginal lands to create more outdoor 
recreational opportunities. You know, it is not so much a 
recommendation of a cap, it is just a recognition that there is 
a lot of competition now. In other parts of the country, we are 
seeing CRP land being taken out that probably should be in the 
program because people can get $7 a bushel for corn or $15 a 
bushel for soybeans. So we have sort of the reverse situation 
in other parts of the country. So our goal here is to try to 
find the right balance----
    Mrs. Roby. I would really like you to take a hard look at 
how this is affecting, particularly in the southeastern portion 
of the United States where you don't have these large expanse 
farms, you have farms that are divided up and not so much 
acreage in one area, and you hit the nail on the head when it 
comes to competition because our farmers that do lease property 
are not competing with CRP in order to be able to do what they 
want to do, and that is farm, because the landowner sees an 
opportunity for this 40 year crop in long-leaf pine. So if you 
would, please roll down on this because as you said, you are a 
big fan of CRP. We understand the conservation aspects but we 
also have to feed America and the world, and the more land that 
is taken out, highly productive land that is taken out, the 
harder it becomes for us to do that.
    Secretary Vilsack. Well, it is a fair point, but I would 
point out that we actually have fewer acres in the program than 
we have had for quite some time because of the competition in 
other parts of the country, so it is a balance that we have 
to----
    Mrs. Roby. Well, let us look at the balance, because if we 
reduce over 5 years the number of acres, which we are not even 
using the full amount that is available now, and if we reduce 
it over 5 years, it equates to savings in the billions of 
dollars, and in this current financial scene that we are in 
that that is really worth taking a look at.
    With that, I yield back. Thank you.
    The Chairman [presiding.] The gentlelady's time has 
expired. The chair now recognizes the gentleman from 
Massachusetts, Mr. McGovern, for 5 minutes.
    Mr. McGovern. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary, for being here.
    Mr. Secretary, as you know, there are over 50 million of 
our fellow citizens who are either hungry or food-insecure, and 
one of the reasons why we don't have starvation in this country 
is because we have kind of an anti-hunger safety net including 
SNAP, which provides people of modest benefit to be able to put 
food on the table. SNAP is the most effective and most 
efficient anti-hunger program that we have, and as far as I 
know, it is one of the most efficient programs in the Federal 
Government. It has the lowest error rate in the history of the 
program, and a large part of the errors are actually 
underpayments. And you never know when you listen to some of 
the rhetoric on this Committee. This program has been demonized 
and diminished in a way that I think is totally unjustified, 
and since this is a hearing about rural economy, I just want to 
focus there a minute.
    According to USDA statistics, rural areas are poorer than 
urban areas, and according to the latest USDA data, households 
in rural areas are more likely to be food-insecure. While 14.9 
percent of all households were food-insecure in 2011, 15.4 
percent of those households in rural areas were food-insecure. 
Ten percent of the rural population relied on SNAP compared to 
seven percent of the urban population. Children under 18 made 
up 25 percent of the rural population but made up 40 percent of 
the rural population participating in SNAP.
    Mr. Secretary, can you tell me if the impact of SNAP is 
more or less likely to reduce poverty?
    Secretary Vilsack. Congressman, there is a study that I 
think was issued last year that indicated that the SNAP program 
was helpful in reducing poverty. I am sorry I don't have the 
precise percentage but to my memory, it has reduced it by seven 
to nine percent as a result of the SNAP program.
    Mr. McGovern. And second, in the last Congress, this 
Committee made a concerted effort to dramatically cut SNAP. Can 
you talk about how the cuts to SNAP that would range from $16 
billion to $33 billion or more would impact rural America? How 
would these cuts impact the ability of low-income rural 
families to purchase food? What would these cuts do to local 
economies? How would SNAP cuts impact the school breakfast or 
lunch programs?
    Secretary Vilsack. Well, the SNAP program is part of the 
safety net, and it provides resources to families to be able to 
shop. Ninety-five percent of the SNAP program benefits are 
spent within the first 30 days of receipt, so they get into the 
economy very quickly and they circulate around in the economy. 
I think part of the focus, Congressman, if I might say, 
obviously people are concerned about the overall costs of the 
program, and I think there is an interesting debate that takes 
place about that but we are missing the point, and the point to 
me is that if you want to reduce SNAP, the one way to do it 
that is the most beneficial is to focus on the individuals who 
are very close to no longer needing SNAP and figuring out a way 
in which we could assist them with a better-paying job or more 
training that would allow them to access a better-paying job so 
they no longer would need the program.
    Mr. McGovern. I absolutely agree with you. I mean, that is 
one of the reasons why I have been urging the White House to do 
a conference on food and nutrition so that we can connect all 
the dots to not only make sure that people get what they need 
in the short term but that there is a clear path to be able to 
get off of public assistance, to be independent.
    Finally, I just want to say that I think we need the 
Administration to stand up and fight for this program because I 
worry as we talk about balancing budgets that SNAP has become 
kind of the convenient ATM machine. I hear it in this 
Committee, I hear it in the Budget Committee that if we want to 
balance the budget, we have to dramatically reduce SNAP, which 
means that millions of families who currently receive a benefit 
will no longer receive a benefit, and the Administration did, 
to its credit, help us in the stimulus bill with an uptick in 
SNAP but we then paid for the FMAP bill and for the child 
nutrition bill with those SNAP dollars, and if we do nothing 
right now, the benefit will actually decrease by the end of the 
year.
    I think we need the Administration to draw a line in the 
sand that enough is enough. We can't afford a $16.5 billion cut 
in SNAP without adversely impacting a lot of poor people, and I 
would hope that the Administration would draw that line in the 
sand and make it clear to this Committee or any other committee 
that is talking about those kind of dramatic cuts that there is 
a point where you go so far that we are not going to sign that 
kind of bill because it would adversely impact millions of poor 
people in this country.
    Secretary Vilsack. I just want to reiterate, if folks--the 
thing about SNAP is that we know where people are. We know who 
these people are and we know what their circumstances are 
because we have to have that information to be able to know 
whether they are qualified for the program. Since you know 
where they are and you know those who are working, and there is 
a substantial percentage of people receiving SNAP that are 
actually working, if we could get them to a better-paying job 
opportunity, they would no longer qualify for SNAP and you 
would get a cut in the program but you would get it in a way 
that wouldn't necessarily----
    Mr. McGovern. Look, I absolutely agree with you. I mean, 
the thing is that the way you reduce SNAP is put people back to 
work. I mean, when the economy is bad, the amount we spend goes 
up. When it gets better, it goes down. But in the short term, 
it is important that the Administration make it clear that a 
cut of $16.5 billion is unacceptable.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentlelady from South Dakota, Mrs. Noem, for 
5 minutes.
    Mrs. Noem. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here today. I have an e-
mail that is dated yesterday from someone in the USDA Animal 
and Plant Health Inspection Service from Raleigh, North 
Carolina, regional office. It appears to be an e-mail to his 
regional team, and I wanted to read you a part of that e-mail 
that concerns me. It says, ``During the management team 
conference call this morning, I asked if there was any latitude 
in how sequestration cuts related to aquaculture could be 
managed spread across the region. The question was elevated to 
APHIS BPAS. The response back was, we have gone on record with 
a notification to Congress and whoever else that APHIS would 
eliminate assistance to producers in 24 states in managing 
wildlife damage to the aquaculture industry unless they provide 
funding to cover the costs. So it is our opinion that however 
you manage the reduction, you need to make sure that you are 
not contradicting what we said the impact would be.''
    Mr. Secretary, I am very concerned about that last line. I 
will read it to you one more time: ``however you manage the 
reduction, you need to make sure that you are not contradicting 
what we said the impact would be.'' Mr. Secretary, is it the 
policy of your Department and within USDA to not use any 
flexibility that you may have in managing the sequester?
    Secretary Vilsack. No, Congresswoman, and I am not sure 
whether that decision is a result of prioritizing and actually 
using flexibility. If we have flexibility, we are going to try 
to use it to make sure that we do sequester in the most 
equitable and least disruptive way. There are some 
circumstances, and we have talked a lot about the meat 
inspection, where we do not have that flexibility because there 
are so few accounts, but in other areas, you may have multiple 
accounts and you may have flexibility, in which case you have 
to prioritize what is the most important thing to adequately 
fund. I am not familiar with that e-mail, obviously, nor am I--
--
    Mrs. Noem. Would you agree that reducing the impact to 
producers should be a priority?
    Secretary Vilsack. Yes, but if you have limited resources, 
and given the diversity of agriculture, you may have to choose 
how much of an impact you have on any one particular group of 
producers to be able to maximize the protection of a larger 
group or a group that has broader reach. I just don't know 
about that particular issue. I wouldn't say that we have said 
no to flexibility but there are certain circumstances where we 
don't have flexibility.
    Mrs. Noem. My concern from the e-mail is that it intends, I 
believe, and the way that it is worded is that it prioritizes 
staying consistent with the Administration of what they 
previously said and what they may decide to do to protect 
producers. I am hopeful that that isn't an agenda that has been 
put forward that really will look at the reductions that we 
have to deal with and do them in the best manner possible to 
make sure that we protect the industry and as many producers as 
we can.
    Secretary Vilsack. I don't disagree with that.
    Mrs. Noem. Thank you. I just wanted to follow up quickly. 
You know that in South Dakota, we have a big problem with the 
mountain pine beetle, and the Mountain Pine Beetle Response 
Project has been wonderful for us to get that opportunity in 
the Black Hills to help manage that infestation, so I want to 
thank you for your help with that and getting that off the 
ground. My concern is that with sequestration coming, I 
recognize that there is going to be a decrease in logged areas 
and contracts within the Hills and throughout the nation 
because of those reductions in spending, but it appears to me 
when I look at the numbers that we are going to reduce actual 
board feet harvested to a greater extent than what the 
sequestration cuts would reflect, and I am wondering if you 
could comment on that.
    Secretary Vilsack. Well, it may very well be a result of 
making a determination of what is the most significant thing we 
can do. Do we have to have adequate resources in our fire 
suppression budget? Is it more important to protect the safety 
of homes and people by treating more acres in that interface 
between the wildlands and the urban interface? There are a 
series of decisions within the Forest Service because we have a 
lot of different accounts that we can make, and I think that 
that is an estimate in terms of what will likely happen with 
reference to board feet. It costs us money when we have lumber 
treated, and I think there is a determination that that is a 
consequence of sequester. Now, whether it is disproportionate 
or not, I don't know, but if it is disproportionate, it may be 
because there is a higher priority related to safety in terms 
of the Forest Service, and we have, obviously as you well know, 
faced a horrendous set of fires in the last couple of years and 
the expectation is with drought and the pine bark beetle, that 
that is not going to go away for a while.
    Mrs. Noem. Yes, we absolutely have an emergency situation 
in the Black Hills, so communities that live amongst these dead 
and dying trees are a lightning strike away from wiping out an 
entire town or population. And so we are very concerned with 
that, and that is why when we look at the situation, we like to 
see those numbers increased. We would like to see full funding 
come into the programs that as they are allocated and hopefully 
that they will be prioritized within the Forest Service.
    Secretary Vilsack. Well, we want to see more board feet. 
That is the goal. We are trying to get to 3 billion and beyond. 
We recognize the importance of that.
    Mrs. Noem. Thank you. I appreciate it.
    With that, Mr. Chairman, I yield back.
    The Chairman. The gentlelady's time has expired. The chair 
now recognizes the gentleman from Texas, Mr. Gallego, for 5 
minutes.
    Mr. Gallego. Thank you, Mr. Chairman, and thank you for 
being here, Mr. Secretary. You have a great command of all of 
the issues.
    As a new Member, I am finding it interesting, Congress uses 
power of the purse to cut your budget but doesn't seem to like 
the idea that that means a reduction in services, and so I 
appreciate the spot that you are in in that sense.
    I want to join in the conversation about the definition of 
rural. I heard you say, or perhaps I misunderstood you, that 
part of the philosophy going forward is to talk about it in 
terms of regions, and one of the challenges in the rural part 
of Texas that I represent as an example is Ozona, Texas, has 
about 3,000 people in it, but you have to drive a little over 
100 miles to get to Fort Stockton, Texas, which has about 
10,000 people in it. And so when you are talking about doing it 
regionally, the distances make it a little more difficult than 
perhaps in some of the other regions. Is that something that 
you all will take into consideration or is that----
    Secretary Vilsack. The answer is yes, Congressman. I 
apologize for giving you a misunderstanding of this. When I 
talked about regions, I am suggesting that we are working with 
self-described--or it is not that we impose a regional 
definition. We essentially say to communities that can function 
as a region, you are going to get a bigger bang for your buck 
if you work together as opposed to individual communities doing 
things in isolation. If you could coordinate what you are 
doing, it may very well actually result in greater economic 
activity. If you have a situation where there are substantial 
distances between communities, obviously that won't work 
particularly well, so that is why we have a couple things. That 
is why we will focus on individual community grants and loans. 
That is why we have our Strike Force Initiative in some states 
that can really sort of go to those areas of persistent 
poverty.
    Mr. Gallego. And even if you use the MSAs, there is a huge 
difference, for example, between the rural areas of El Paso 
County and the City of El Paso itself and some of the farming 
communities. And so even though they may be in the same region, 
the truth is that their interests are totally diverse, and many 
times they are not exactly aligned as well. I would hope that 
you would take that into consideration.
    Let me ask you, with respect to--there has been some recent 
actions at the FCC to overhaul what is called the Universal 
Service Fund, and as a result of that, there are a number of 
providers in rural Texas that are facing substantial cuts to 
the USF, and as a result, there is a possibility or a danger 
that they might default on some of their USDA loans. I am 
wondering what steps the USDA has taken to prevent those kinds 
of defaults or potential bankruptcies and what you are doing 
proactively to help those companies that are going to be 
impacted by those Universal Service Fund decisions at the FCC.
    Secretary Vilsack. Well, I sat down with the Chair of the 
FCC several weeks ago to discuss this issue, and there is a 
process within the FCC rules, a waiver process that can provide 
some degree of flexibility for the folks that are essentially 
on the bubble, that might find it difficult to comply with the 
new FCC structure and still be able to make their payments. 
Right now, it is a relatively small number and so we have been 
working through those individual issues one by one, but we have 
acquainted the FCC with the concern.
    The second thing that we have decided is that there needs 
to be a coordinated effort between Rural Utilities Service at 
the USDA and the FCC because we speak to a different universe 
here. The FCC is really focused on areas that can be protected 
and provided through the regional Bell Systems, the larger 
companies. We in turn are dealing with those small 
telecommunications companies. I think you are going to see 
better coordination between the two efforts, and we have 
suggested a couple of things that could be done to tweak the 
FCC approach that might make it a little bit easier and more 
likely that broadband and Internet activities are expanded in 
some of those remote locations.
    Mr. Gallego. I look forward to working with you and your 
office on those issues. They are kind of core to the part of 
Texas that I represent, and offline at some point I would also 
like to have a conversation about some litigation with some 
Latino farmers in Texas and New Mexico that has been ongoing 
for a period of time. And so at some point if you could send 
your staff over to tell me what is going on, that would be 
wonderful.
    Secretary Vilsack. Actually, I can send the same guy to 
talk about both issues.
    Mr. Gallego. That would be great.
    Secretary Vilsack. John Paladino is basically in charge of 
our RUS but he has also been involved in the Hispanic claims 
process, so we will arrange for him to come see you.
    Mr. Gallego. Thank you so much.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from northern California for 5 
minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary, for appearing before us here today. Also, thank you 
for a recent trip you made to northern California to Trinity 
County to view some of the very difficult issues we have in 
forestry, and forestry practices or lack of forest management 
we have there. Two thousand and eight was one of the most 
devastating years for fire in California. The air was brown and 
actually extremely unsafe levels for that county for months up 
there, so I appreciate your viewing that and seeing what is 
going on with drug labs and the marijuana growers that are 
probably a thousandfold more harmful than any agricultural 
activity that may go on.
    California's issues are many and very diverse and unique 
with our regional, our cost of doing business, foreign and 
domestic markets as well as the specialty crops we have, olives 
and olive oil. We have a lot of different things going on. I 
want to drill down on a couple specifics that I hear a lot 
about in my district with dairies and with rice. The issue on 
rice, there are a couple things going on here with Japan and in 
the Trans-Pacific Partnership, Japan wanting to come in on 
that. It is very important that we support that as well as that 
rice be included in any of the negotiations going on with fair 
and free trade through the USTR. So we want to be sure that 
that is included and encourage as much as possible Japan and 
California rice in that. And second, with California's rice 
situation, we have--again, it is a unique crop compared to the 
southern portion of the country. Long grain is grown in the 
South but it is short and medium grain in the West, and so 
there is a different cost structure and price structure for 
medium and short grain that we would like to see addressed as 
an industry differently in that because, again, California's 
cost, price, et cetera for that. So I would ask for you on both 
those issues with Japan and the Trans-Pacific Partnership and 
fair trade that is coming up as well as with continued support 
through the Risk Management Agency a workable solution for 
California's uniqueness in rice, so I would ask if you could 
comment or if you could come in on those two issues, please?
    Secretary Vilsack. As it relates to TPP and the Japanese 
involvement as was stated last week, we obviously will continue 
to work with the Japanese to see whether or not they can in 
fact be included in the TPP discussions. One of the hallmarks 
of inclusion in TPP is the willingness to actually reduce a lot 
of the barriers that exist in your country, and the Japanese 
obviously have to work through that process to determine if 
that is what they want to do, but that is sort of the cost of 
admission into the conversation is reducing trade barriers and 
things that are artificial barriers to products.
    As it relates to rice, our RMA folks are constantly looking 
for ways in which we can do a better job of distinguishing 
between products and making sure that the crop insurance 
program is as diverse as the diversity of agriculture. Today we 
have 132 products that are covered, 281 million acres and so 
this is a constant effort on our part, and I think that they 
have been working on downed rice specifically to try to expand 
coverage, so this is something we can take back to them.
    Mr. LaMalfa. Thank you. With regards to our dairies, they 
are really struggling too, and in California too, and 
California is the leading dairy-producing state. You know, it 
is the cost of feed, purchasing feed and extraordinary prices 
these days as well as the cost structure, especially in 
California, of milk prices, and it is very important we have 
that regional production there as opposed to having to bring it 
in from a long distance--including the jobs in the economy for 
our own state. So any continued effort to find relief for dairy 
producers in California to policy for feed prices as well as 
what we can do with price structure that would help them out, 
because it is extremely key for our local economy as well as 
the needs of our consumers of the state. So any comment there, 
sir?
    Secretary Vilsack. Well, first of all, I certainly 
recognize the challenges that dairy has just as a general 
proposition. The volatility of the market makes it really hard 
for dairy producers to have the stability that other 
commodities have. We expect and anticipate good production this 
year, and if that occurs, the expectation is that crop prices 
will come down, commodity prices will come down, which would 
translate into more profitability for dairy producers. In the 
meantime, we will administer the program that we have to 
provide help and assistance.
    The MILC program, it may be adjusted a little bit because 
of sequester, and it is one of those issues that we have to 
figure out folks who have already received their MILC payments 
whether or not there is any kind of reimbursement that has to 
take place, it is one of those complexities of sequester but we 
will continue to administer that program in the hope that when 
the 5 year farm bill is done that you put in place a different 
program that will work more effectively to provide assistance 
and protection when feed costs are high or prices are low or a 
combination of both.
    Mr. LaMalfa. Thank you. A quick note on that sensitivity 
training too. I received a lot of calls about that, and----
    Secretary Vilsack. I am sorry. On what?
    Mr. LaMalfa. On the sensitivity training. We received a lot 
of calls about that, and being provocative, depending on what 
racial group is being provoked, it could cut across all those 
lines, so I would say that you need to be a lot more careful 
about that because it could be hurtful or offensive to anybody, 
no matter who is on the receiving end. So thank you for looking 
into that.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from New York, Mr. Maloney, for 5 
minutes.
    Mr. Maloney. Thank you, Mr. Chairman, and I look forward to 
serving with you on the Committee.
    Mr. Secretary, thank you for your testimony today and for 
your extraordinary service to your own citizens in your home 
state but also to all of us in your current position. It is 
much appreciated.
    I represent the Hudson Valley just above New York City, and 
we have a lot of specialty crop farmers in the Hudson Valley, 
in Orange County but also on the east side of the river. There 
is a real feeling in my part of the world, as important as the 
Secretary is to feeding New York City and to the economy of the 
local region, that the laws and the Department are oriented in 
such a way towards the large agribusinesses in other parts of 
the country that they often leave our folks behind. In 
particular, I have one of my constituents here today, Chris 
Pavelsky, who runs a fourth-generation, I believe, onion farmer 
from central Orange County. There is another couple he 
introduced me to, Jeff and Adena Bialis, who grow 250 crop 
varieties on 12 acres of land and sometimes they will change 
the crops during the season. They have real problems with the 
crop insurance programs, so I was hoping you might say a word 
about the attention of the Department to specialty crop farmers 
and to the way the crop insurance program works or in many 
cases does not work for those types of farmers.
    Secretary Vilsack. Well, first of all, I am familiar with 
the Hudson Valley. I went to school in upstate New York, both 
college and law school, so----
    Mr. Maloney. Well, that explains your outstanding service 
to the country. It is all becoming clear to me now.
    Secretary Vilsack. Right. Well, first of all, we continue 
to expand access to crop insurance. Basically 85 percent of 
commodity producers are covered by crop insurance, and that 
percentage is less for specialty crop producers. It is about 70 
percent. Far more fruit producers are covered then vegetable 
producers but that is increasing. We are constantly looking at 
data and accumulating information that allows us to actuarially 
develop products and expand those products. We are also 
significantly expanding one area of the specialty crop world, 
which has not received a lot of attention until recently, which 
is the organic producer. Only about 20 percent of organic 
production is covered by crop insurance. So it is unique 
because of the value-added proposition, so it is about really 
accumulating the data and the information.
    Mr. Maloney. If I could just interrupt briefly, would you 
support efforts to sort of minimize the--I understand part of 
the problem is getting good actuarial data to provide that type 
of insurance. There are some ideas out there to make this more 
cost-effective for folks in terms of the match and how it is 
done. Would you support those efforts?
    Secretary Vilsack. Well, obviously we are always looking at 
whether or not the rates that are currently being charged for 
products are appropriate. We have actually had some adjustments 
in products recently as a result of a rate analysis. So that is 
part of our job.
    The other thing is, we have really made a concerted effort 
to expand market opportunities as well. It is not just 
providing the risk management, it is also creating market 
opportunities, and that is one of the reasons why the local and 
regional food system effort, Know Your Farmer, is important 
because it creates new market opportunities. It is why the Farm 
to School Program is important. It creates new market 
opportunities. It is why we have knocked down trade barriers to 
some of our fruits and vegetables because that is market 
opportunity, and it is why we are looking for equivalency 
agreements on organics with the EU and Canada, for example, 
because it creates market opportunities. So it is a combination 
of both things.
    Mr. Maloney. If I can ask you as well in the minute and a 
half I have remaining, there is a real concern among my folks 
that they were not helped adequately after Hurricane Irene. You 
know, with all the attention on Superstorm Sandy, there was a 
hurricane a year before and it had a devastating impact in 
Orange County, New York, and so the rubber really met the road 
on a lot of these crop insurance programs, and there is a 
concern that loan rates have been adjusted for folks in light 
of the drought but not for smaller farmers as a result of 
Irene. Can you comment on that, sir?
    Secretary Vilsack. The disaster loan rates are across the 
board. It isn't necessarily drought related. What we did do is, 
we streamlined the disaster declaration process, and anybody 
who is in a disaster area gets the benefit of that lower 
interest rate on disaster loans, number one. Number two, I 
actually traveled to upstate New York with Hurricane Irene, and 
there was an issue and continues to be an issue with our NAP 
product, and we are trying to make adjustments to make it a 
little bit more available or making a little bit more sense for 
specialty crop producers. I think it is an evolution, and I 
think there is a sensitivity in the Department to the need for 
us to continue to find ways to help these producers out because 
they are an important part of agriculture.
    Mr. Maloney. Well, thanks, and I would love to get you back 
in the Hudson Valley.
    I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back. The gentleman's 
time has expired. The chair now recognizes the gentleman from 
North Carolina, Mr. Hudson, for 5 minutes.
    Mr. Hudson. Thank you, Mr. Chairman, and thank you, Mr. 
Secretary, for being here today. I really appreciate your time. 
I would like to direct this back to the question raised by the 
Ranking Member about the poultry inspection rule. You know, it 
seems as though the rule has been properly vetted and gotten 
widespread support. What is sort of holding us back from 
getting going? We have an opportunity for better food safety, 
for better production but also some cost savings there, and it 
seems to me we would want to get that online as quick as we can 
to start taking advantage of those benefits.
    Secretary Vilsack. I don't disagree, but any time you are 
proposing something that hasn't been changed fundamentally for 
60 years, it is an education process, making sure that people 
understand that it isn't revolutionizing or changing the 
process significantly but it is really providing inspectors to 
do a better job and freeing up folks. The cost savings are 
going to be some adjustments in terms of the overall inspection 
workforce. We are probably over a period of time going to have 
slots that will no longer be necessary but we will deal with 
that through attrition. Some of the inspectors will actually 
get better-paying jobs because there will be more 
responsibility. So it is a matter of educating people. It is 
complex, it is complicated, and it is a matter of educating, 
and hopefully we are in a better spot, people have a better 
sensitivity and understanding of what we are actually doing and 
hopefully you will see that rule forthcoming very soon.
    Mr. Hudson. I appreciate that, and that is certainly an 
area where we can all agree. It is very important in my part of 
North Carolina.
    I wonder, though, as we are looking at sequestration and 
the issues you are having to deal with with inspectors, if we 
could start putting this process in place, would that enable 
you to--if you are going to need to trim back to do that quick 
enough?
    Secretary Vilsack. We wouldn't be able to do it in time to 
make a difference in terms of this year because once we issue 
the rule, then there is a notice and comment period that we 
have to go through that administrative process. We would 
anticipate and expect a lot of people weighing in on this. 
There may have to be some adjustments. It will take time. So I 
don't think that this is the vehicle for creating a better 
circumstance than what we have in food inspection, 
unfortunately.
    Mr. Hudson. I understand. Well, just ballpark, are we 
talking about next year, implementation, or----
    Secretary Vilsack. That is the hope, but to make sure you 
understand, it is likely that this will be staggered and it is 
likely that not every production facility will use this new 
system because it does depend on the way in which your plant is 
set up and the space of your plant, and it may not work for 
some plants but we think it will work for enough plants that we 
can save resources and certainly increase food safety.
    Mr. Hudson. Thank you, sir. I yield back my time, Mr. 
Chairman.
    The Chairman. The gentleman very efficiently yields back 
his time. The chair now recognizes our friend from Illinois for 
5 minutes.
    Mr. Enyart. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. I am very impressed with your breadth of knowledge. 
You certainly have a firm grasp of the issues.
    Mr. Secretary, the Navy, the U.S. Department of Agriculture 
and the Department of Energy have a Memorandum of Understanding 
in place promoting biofuels. Would you be supportive of 
expanding these efforts to include the United States Air Force 
as well as the Navy?
    Secretary Vilsack. Well, yes, the Air Force is involved in 
other aspects of this initiative, but this specific initiative 
between the Navy, the Energy Department and us is really 
designed to create the infrastructure that will allow us to 
produce a drop-in aviation and marine fuel, which obviously 
could be used by the Air Force and the Army and the Coast 
Guard.
    Mr. Enyart. So then your understanding would be that once 
the infrastructure is in place, that it would be expanded to 
the other military services as well as the Navy?
    Secretary Vilsack. Well, it would create product that would 
be available, and frankly, would also be available to 
commercial air. We have a Farm to Fly Initiative, which is 
involving the commercial aviation industry, and they are very 
interested in this because in order to comply with 
international greenhouse gas reduction emissions, they are 
going to have to need this new fuel, so it is a very important 
thing for commercial aviation as well.
    Mr. Enyart. Mr. Secretary, of particular concern in my 
district in southern Illinois--I like to say that I have the 
western coast of Illinois along the Mississippi River--is 
moving agricultural products to market via the Mississippi. 
Now, particularly in light of the low water levels that we have 
experienced recently due to the drought that you have spoken 
of, would you encourage USDA support in encouraging the Corps 
of Engineers to address the need for infrastructure 
improvements on the river?
    Secretary Vilsack. Yes.
    Mr. Enyart. I love those kinds of answers, as does the 
Chairman.
    Could you tell me, Mr. Secretary, what is the impact of not 
having--this goes back to the energy question, the biofuel 
question. What is the impact of not having any funding for most 
of the energy title program for Fiscal Year 2013?
    Secretary Vilsack. Well, it limits our ability to continue 
to expand beyond corn-based ethanol to non-food feedstocks, 
which carry economic opportunity in all regions of the country. 
We think there is an opportunity to use woody biomass, plant 
material, livestock waste, crop residue and municipal waste to 
produce new energy sources. To that extent, we would be limited 
in terms of our current investments if we don't get additional 
resources or additional authority.
    Second, as I said earlier, it is important to extend that 
beyond just the energy. I think there is a biobased opportunity 
here. I have been to facilities that are taking corncobs and 
producing plastic bottles for Coca-Cola. I think there is just 
literally unlimited opportunities here for a new manufacturing 
revolution in rural areas, and these biorefineries because of 
the nature of the biomass that is necessary will have to dot 
the landscape of rural America to create new job opportunities 
and maybe allow us to stem the population declines that we have 
seen in many small communities. I think there is tremendous 
opportunity here but we have to have the resources and we have 
to keep encouraging expansion of these new products.
    Mr. Enyart. So what you are talking about then is taking 
what is essentially waste products now, turning them into 
valuable economic opportunities and increasing good job 
opportunities in rural America?
    Secretary Vilsack. That is correct.
    Mr. Enyart. One other question relating to the biofuels and 
the military. Can you tell me why is helping the Navy and the 
other branches of the military increase their use of renewable 
energy such an important goal for your Administration?
    Secretary Vilsack. Well, there are a couple reasons. One, 
it is a national security imperative. If you talk to Secretary 
Mabus of the Navy, he will tell you that he is deeply concerned 
about the ability to adequately fuel the ships and planes 
necessary to defend our country if you have to be reliant on 
imported sources of that energy. Second, since most of--since a 
high percentage of the military, a higher percentage than the 
population would suggest, comes from these rural areas, a lot 
of these folks who are serving in the military go back into the 
rural areas that they came from and they want to have economic 
opportunity when they retire or leave the service. We are going 
to have a lot of young people leaving the service as a result 
of these wars being ended and we are going to create new 
opportunities, and I think there is a concern on the part of 
the Navy that those who have served their country admirably 
have economic opportunity back home, that they aren't 
necessarily compelled to go someplace else if they want to go 
back home. You know, it creates a new industry and there are 
obviously jobs connected with that new industry, and it creates 
an opportunity for our commercial aviation system to be more 
competitive internationally. So there are a lot of positives to 
this.
    Mr. Enyart. Thank you, Mr. Secretary.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes another gentleman from Illinois, Mr. Davis, for 
5 minutes.
    Mr. Davis. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for your time today. It was great 
to meet you before the hearing. I appreciate you taking the 
opportunity today to educate us on a few different issues too.
    First off, I want to tell you, the number one issue on the 
minds of the farmers in central and southwestern Illinois is 
crop insurance. As a matter of fact, the President of the 
Illinois Farm Bureau, Phil Nelson, who has a mighty fine taste 
in ties, I must say, is here in the audience today to reiterate 
that point. Last fall, some opponents of crop insurance, they 
predicted that crop insurance indemnities would be about $40 
billion. What is your latest estimate for the total indemnities 
paid for the 2012 crop year?
    Secretary Vilsack. In terms of what has actually been paid 
out, it is roughly $15\1/2\ billion. You know, I don't know 
that all the claims have been satisfied but it is certainly 
substantially less than the number that you just quoted.
    Mr. Davis. So we can easily say about \1/2\ the estimated 
cost originally?
    Secretary Vilsack. I think that would be safe.
    Mr. Davis. Okay. Do you agree crop insurance is working?
    Secretary Vilsack. Absolutely.
    Mr. Davis. I am a father of three kids, one is high school, 
two in junior high, and I want to hopefully work with you on an 
issue that a lot of folks are talking to me about back home, 
and that is school nutrition. Our kids are not getting enough 
to eat at school. As a matter of fact, I understand the goal of 
the recent new changes to reduce the calories that the kids are 
eating, they make them make better choices, but it is having 
the opposite effect. I also coach Little League and football, 
and I know some of these kids are just not getting enough to 
eat at school. As a matter of fact, it is backfiring because 
they go out to the convenience store that is right across the 
street and they eat worse as soon as they leave. So I would ask 
that you give the schools the flexibility they need to make 
sure that they are able to feed the kids, and one size does not 
fit all with our children and the energy they need. Can you 
please comment on what USDA is actually doing to allow more 
flexibility?
    Secretary Vilsack. Well, there are 32 million children that 
are involved in this program and so you aren't going to have 32 
million different menus. You are not going to be able to 
individualize it to that point. It is somewhat surprising that 
people are concerned about this because the calorie count is 
not significantly less than what it was the year before this 
went into effect but it does change the makeup of the meal and 
the makeup of the calories to provide a nutritionally balanced 
meal. That doesn't prohibit additional a la carte opportunities 
nor does it prohibit additional snacks nor does it prohibit 
youngsters using vending machines that are in school with 
healthy snacks. So we recognize the need for flexibility and so 
we indicated to school districts that they could adjust within 
the week portion sizes so long as they kept within the basic 
framework.
    I mean, we do have a serious issue with obesity. A third of 
our children are overweight or obese. That is going to have 
consequences in the classroom. It is going to have consequences 
in health care. It is going to have consequences in 
opportunities. It is a national security issue. We have had 
retired generals and admirals come in this very building and 
testify on behalf of these nutrition standards because they are 
concerned about the shrinking number of young people available 
to serve in the military. So it is an issue, and we have 
provided flexibility, and I think that there is at least 
perhaps not in your area but at least in many parts of the 
country a greater acceptance and understanding of what we are 
doing, and we have seen particularly among the elementary 
school kids that they are really excited about this.
    Mr. Davis. Well, I am not getting that excitement out of 
the folks that are in my district, but I would be happy to work 
with you and let you know some of the individual circumstances 
that some of our schools are facing.
    I have one last question in the balance of my time. You 
know, Mr. Secretary, it was reported in today's Washington 
Times that the Federal Government has actually posted 400 new 
jobs yesterday including three insect production workers to 
help grow bollworms in Phoenix. At a time when this 
Administration is claiming the sequestration is going to cause 
flight delays, meat shortages, are you going to still fill 
those three positions in Phoenix?
    Secretary Vilsack. Well, I am not familiar with those three 
positions, Congressman, and I will be happy to check on that, 
but I do want to say a couple things in response to your 
question.
    First of all, we have eight percent fewer workers than we 
had when I took over. We have a budget that is less than it was 
in Fiscal Year 2009. We have made a lot of changes and a lot of 
things that have created a great deal of difficulty in terms of 
getting our job done but we are getting it done. We are going 
to continue to be mindful of the importance of working with 
taxpayer dollars, and I am pretty proud of the effort at USDA 
to save and reduce spending by $700 million.
    With due respect, you can pick out one or two items but on 
balance, you will get a workforce that is very committed----
    Mr. Davis. Mr. Secretary----
    Secretary Vilsack.--to the people of rural America.
    Mr. Davis. I appreciate what you have done at USDA and I am 
glad you guys have cut, but with sequestration and what we are 
seeing in the news media today, the fact that we have three 
positions that are in the USDA--granted, there are many others 
that I think should be pulled down before we start furloughing 
some of the workers that are on your payroll now. I just want 
to make sure, I want to know, can you please look into the fact 
that we have three brand-new positions to actually grow 
bollworms in Phoenix. If we could please look at----
    Secretary Vilsack. Well, I will look into that but if you 
will understand that even if those positions are not filled, it 
doesn't have any impact on meat inspection. That is the thing 
that seems to be missing here is a recognition of what you all 
have done. With the sequestration the way it is structured, 
every account item has to be cut by a certain percentage and so 
in the food safety area, there are only a couple of accounts 
and they are almost all labor. So even if you eliminate those 
jobs, it isn't necessarily going to resolve the issue that we 
are all concerned about.
    The Chairman. Would the gentleman from Illinois yield to 
the Chairman for a moment?
    Mr. Davis. Yes, sir.
    The Chairman. The Secretary is exactly right. One of the 
challenges we face here is trying to come up with ways to 
mitigate the effects of sequestration. That was my earlier line 
of questioning about whether the Department had worked with OMB 
or the appropriators to try to come up with language. We as a 
Committee have been trying to work with the appropriators when 
there is an opportunity in this CR or legislatively to give you 
the flexibility. They say they have heard nothing from the 
Department or OMB or the Administration. That is our concern.
    Thank you, Mr. Secretary. The gentleman's time has expired. 
The chair now recognizes the gentlelady from New Mexico for 5 
minutes.
    Ms. Lujan Grisham. Mr. Chairman, thank you very much, and 
Mr. Secretary, it is a pleasure. I am delighted to get to meet 
you today and to have you before this Committee. I also 
appreciate that several questions today and much of your 
testimony has been focused on food security issues and hunger 
and that New Mexico is included in your recent efforts, Strike 
Force, is the language that you used, to address this problem. 
As you are already well aware, New Mexico has one of the 
highest hunger or food insecurity rates in the country, and you 
identified that in food security are a couple of those 
programs, both SNAP and the Commodity Supplemental Food 
Program, that we have a growing number of disabled adults and 
seniors on those programs, and in fact, in New Mexico, what you 
have is another dynamic. Not only do we have some of the 
highest poverty rates among those populations and diversity 
rates among those retirees, but in addition, we have the 
fastest or one of the fastest growing seniors raising or 
grandparents raising grandchildren populations. So you have a 
double exposure, if you will, to a lack of resources, a lack of 
support and a growing problem with hunger. You also mentioned 
the First Lady's Let's Move Initiative and how that could 
provide some positive impacts in rural efforts to address those 
populations. Can you talk to me about how much has been 
appropriated or funded for that program, the efficacy of that, 
and can you give me some of those outcomes that are working for 
us in rural America?
    Secretary Vilsack. Well, the First Lady's Let's Move 
Initiative is really a function of her outreach to the private 
sector and it is predominantly being funded by private 
foundations and private enterprise, private companies. But it 
has had a profound impact in one particular area. We have a 
thing called the U.S. Healthier Schools Challenge where we 
encourage schools to embrace better nutrition as well as 
physical education and more exercise, more physical movement. 
We have seen a dramatic increase in the number of those schools 
basically reaching the various levels that we have. We have a 
bronze, silver and gold level and a platinum level. We have 
seen thousands of schools participate in that program, and we 
think over time that is going to make a difference, maybe a 
small reason why in some of the major cities we are beginning 
to see the obesity levels abate a bit.
    Ms. Lujan Grisham. Mr. Secretary, I appreciate that. I am 
going to take this to maybe a more complex area to address in 
that regard. We also have in New Mexico some of the highest 
type 2 diabetes rates, among adolescent, some of the highest 
obesity rates. Our health disparity issues are problematic, and 
when I was the Secretary of Health, I worked diligently to 
actually ban junk food out of the schools and recognized that 
all of the research indicates that if you want to see better 
outcomes in education, you can tie that directly to a healthier 
school environment, which goes right to nutrition and then 
saves us billions of dollars in health care costs for both 
those issues.
    But I am really concerned in addition to that effort, and I 
do see great promise at focusing on healthy school initiatives, 
which include both better nutrition and exercise, but outside 
the school and in rural areas, what are we doing about those 
families in the summer and what innovations can we take from 
some of the healthy school initiatives and apply to making sure 
that those kids and families get the nutrition that they need 
in the off-school months?
    Secretary Vilsack. Well, we have seen a significant 
increase in summer feeding spots and locations. We have 38,000 
locations that we are involved in supporting. They serve about 
143 million meals a year during the summer months. We are 
continuing to reach out to faith-based organizations and the 
private sector to help fund mobile units that can go to where 
the kids are as opposed to the kids coming to a central 
location. In a rural area, that is particularly important to 
have a mobile area where you have healthy snacks or healthy 
meals that can wheel around to the Little League diamond or the 
swimming pool or locations where we know kids are congregating 
and provide them access to decent food. So that is one thing 
that we are encouraging, greater expansion of the summer 
feeding program.
    Ms. Lujan Grisham. And Mr. Secretary, on that point, I 
appreciate that, and one of your nonprofit partners in New 
Mexico, Appleseed, is doing a fantastic job, but I do worry 
that sometimes the lack of flexibility has stunted some of that 
innovation and their ability and other nonprofit partners to 
really do their job. I would love for the Department to 
entertain that flexibility, and given that I have very little 
time left, I would also want you to talk about with the 
sequestration and notwithstanding sequester that is my sense 
that we don't have enough people on the ground in USDA to 
partner productively in those programs or to get any grants and 
loans out either for rural economic development.
    Secretary Vilsack. Well, with due respect on that rural 
development, we are still going to have people on the ground 
and still people doing business. We just not going to be able 
to do as much business because we don't have the resources. We 
will see a reduction in wastewater and business and industry 
loan programs and utility programs but we are still going to do 
our job, and we are going to continue to focus on getting the 
job done in rural areas. It is one of the reasons why we have 
focused on process improvement. We, for example, reduced the 
loan application for smaller loans in rural development so we 
don't have to spend as much time so we can do more of those 
smaller loans. We have created new opportunities in the FSA 
area with microloans to help small farming operations. So there 
is a lot of work being done but we are not going to be able to 
do as much of it, just simply because we don't have the 
financial resources that we would have had but for sequester.
    The Chairman. The gentlelady's time has expired. I would 
note to my colleagues, we have five more Members in the queue. 
Secretary, your patience has been very much appreciated, and 
with that, I recognize the gentleman from New York, Mr. 
Collins, for 5 minutes.
    Mr. Collins. Mr. Secretary, we have covered a lot of 
territory today, and I am a little surprised. I represent the 
27th District of New York, the eight counties on the western 
part of the state, and we have one of the largest dairy-
producing counties in the entire country. We need jobs. We need 
to grow the economy. We need legal workers. And as the 
Secretary in the Administration, I hope somewhat rhetorically, 
we are counting on you to be a voice for the dairy producers so 
we can get the legal workers we need 24/7, 365 as this 
immigration debate moves forward, and I am just curious if you 
have some comments, certainly recognizing that that is the 
issue with the dairy farmers--legal workers.
    Secretary Vilsack. Well, Representative, I talk a lot about 
this issue and the need for comprehensive immigration reform 
that would include and respond to the unique nature of 
agricultural workers. It is something that I have talked to 
groups about. It is something I have talked within the 
Administration about, so we are clearly focused on this, and we 
understand the unique nature of farm work, and our hope and our 
prayer is that we finally get this broken system fixed and get 
it fixed once and for all, that we provide better border 
security, that we provide a pathway to legitimacy and 
citizenship for those who are here that we want to stay here, 
that we make sure that people are held accountable by paying 
fines and paying taxes and learning the language but that we 
get this process fixed and that we get it fixed in a way that 
doesn't make it cumbersome and difficult for producers to 
comply with the law. One of the concerns we had about e-verify 
that was discussed in past Congresses is that it may apply very 
well for a large industry but it doesn't apply particularly 
well for a small dairy operation, so we are very, very 
sensitive to this issue.
    Mr. Collins. Well, we will be counting on your voice as 
this moves forward. I do think that bipartisan support is there 
to get it done this year, and I hope that is not just optimism.
    Secretary Vilsack. We are counting on your vote, 
Congressman.
    Mr. Collins. Moving forward, we covered a lot of things and 
there were a few questions that I may ask you to go back over, 
but do you consider yourself the CEO of the Department of 
Agriculture, I am assuming?
    Secretary Vilsack. Actually, to a certain extent I have to 
be careful about how I answer that question because the 
President is my boss and the people of this country are my 
boss, so I am middle-level management in that scenario.
    Mr. Collins. Well, I would think and hope you would 
consider yourself more of that, because it goes back to in my 
world, a CEO should be proactive--I think you would agree with 
that--anticipatory, do contingency planning, and I guess my 
question is, do you do those things?
    Secretary Vilsack. We have done them, Congressman. That is 
why we have been able to deal with a budget that is less than 
it was in 2009 and still provide service.
    Mr. Collins. So if you are proactive, anticipatory, you do 
contingency planning and you are the CEO of the Department of 
Agriculture, how is it that for 18 months you have done no 
planning related to the sequester and in fact today you can't 
even contact all your employees. We are 4 days post sequester 
and you don't even know how to get a hold of your employees.
    Secretary Vilsack. Well, that is not a fair statement, 
Congressman. First of all, we have done planning. We have been 
doing planning all along, so we have a good understanding of 
some of the challenges. We know, for example, that we are going 
to have 1,500 fewer farm loans as a result of sequester. We 
know that we are going to be able to do a lot less 
conservation. We know that we are going to be able to do a lot 
less rural development. We know the implications of this. What 
I said in terms of contacting folks is that folks don't have e-
mail and so there is a process by which we have to follow for 
folks who don't have e-mail to be able to notify them legally 
pursuant to contracts and pursuant to the law. So we know where 
the folks are. It is just a matter of using different 
techniques to communicate with them.
    Mr. Collins. Well, I would suggest had you done some 
advance planning, they could have already been contacted.
    Secretary Vilsack. You can't contact them until the 
sequester is triggered, Congressman. That is the legality of 
what we are faced with. As soon as the President signed the 
order, we began the process of notifying people.
    Mr. Collins. You know, with 1 minute left, have you heard 
of Lean Six Sigma?
    Secretary Vilsack. Yes, sir. We are using it in process 
improvement at USDA. We have a number of Lean Six Sigma 
trainings. We have a number of black belts in that process.
    Mr. Collins. And are you trying to utilize that as a way to 
minimize the sequester impacts on, for instance, your meat 
inspectors and a way to improve processes? Because Lean Six 
Sigma will reduce the need for employees, which could reduce 
the need for furloughs.
    Secretary Vilsack. I don't think it would work in this 
particular area but we have used it in other areas. We have 
used it specifically in our biotech regulatory area is one 
place where we have used it. As I say, we have a number of 
black belts throughout the entire USDA process. I am very keen 
on this.
    The problem with food inspectors is the amount of time and 
the amount of the cut and the fact that the budget is 
predominantly inspectors, and there is just not much 
flexibility. It is not like a regular budget. It is not like 
you can prioritize. That is the problem that people just can't 
get their arms around but that is the reality we have to face.
    Mr. Collins. Well, respectfully, I do believe Lean Six 
Sigma would help you with meat inspectors, and I request that 
you take a look at it. It will pretty much work everywhere.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Florida, Mr. Yoho, for 5 
minutes.
    Mr. Yoho. How are you doing today?
    Secretary Vilsack. All right. How are you?
    Mr. Yoho. I admire you for sitting through this. I learned 
a long time ago that the mind can only absorb what the rear end 
can endure, and you are doing a great job.
    I have been proud to be associated with agriculture pretty 
much all my life. You know, since I was 16, I have worked 
around agriculture. I have been a large-animal veterinarian for 
the last 29 years, and I have worked with the USDA and I am 
proud of that organization, and you have a tough job and you 
have been at the helm for 3 years. My question kind of goes 
along with Mr. Collins's here too. Knowing that sequestration 
was a possibility 2 years ago, the planning stage, you have to 
work out your budget, knowing this was coming, I have heard you 
had the response that you did and the steps that you took, and 
I realize that you did do like a lot of the farmers in our area 
and I did certainly in practice, do more with less, and I 
commend you for that. But again, with your mission statement as 
you stated is to make sure our food supply is safe in this 
country and it is important when we address the topic for 
today's discussion to review the state of the rural economy, we 
want to make that strong. The small businesses are the backbone 
of this country, and of course, the farmers are the breadbasket 
of this country and a large portion of the world. And so with 
the statements that come out of the Administration or through 
the USDA when you say the money is not there, we are going to 
have to lay off the meat inspectors, I find that somewhat 
disheartening to come out of an agricultural community because 
by sending that message out, you are stating to the rest of the 
world, not just the country, not just the region that our food 
could possibly not be safe, and that is a bad message to send 
out, and I would caution in the future to use different 
messaging techniques because we are trying to expand 
agriculture. I am proud to be from Florida, which is such a 
strong ag area, that we want to make sure that we continue our 
trade with other countries and I would just like to hear your 
comments on that.
    Secretary Vilsack. Congressman, we are expecting a record 
year of exports in beef, poultry and pork. We have seen 4 of 
the best export years in the history of this country in the 
last 4 years. This is the reality of the circumstance to give 
everyone adequate notice to be able to begin the process of 
adjusting to the reality that we are going to have to not lay 
people off but furlough people, and by furloughing people, 
because of the nature of the inspection process in this country 
in which companies are required to have food inspected and are 
required to have USDA inspectors as opposed to their own 
privately funded inspectors, it is going to cause a reduction 
in production for a period of time, and that is the unfortunate 
circumstance. We did take steps to try to minimize that, but at 
the end of the day when 87 percent of your budget is that line 
item, there is just not much you can do.
    Mr. Yoho. I realize that, I worked in a slaughterhouse, I 
have worked with the inspector and I have seen that process and 
I know the importance. My concern is the messaging going out to 
people when we are trying to expand exports, and you have done 
a great job, and I commend the government for expanding that, 
but when we send a message out like that, it is kind of like 
BSE. When they hear one cow has BSE, the markets close down, 
and if the foreign countries hear that we are not inspecting 
our meat, it sends a signal and that is what concerns me, and 
if we are to keep the rural agricultural economy growing----
    Secretary Vilsack. It is not that we are--and I don't think 
anybody ever said we are not inspecting the meat. We are 
furloughing people and as a result those production facilities 
are going to shut down for a period of time. It is not that 
food isn't going to be inspected.
    Mr. Yoho. It is one of those things. I know what we say but 
we don't know what people hear, and when you hear in the news 
that meat inspectors are going to be laid off not inspecting 
the meat, it sends a signal and that concerns me.
    Secretary Vilsack. Well, we will communicate to our 
cooperators in foreign countries precisely what this is all 
about, and we actually began that process. We have--another 
part of sequester which we haven't discussed today is the 
impact on the Brazilian cotton situation which is a very 
serious issue that has to get resolved. We are going to have 
to--sequester applies to that account as well, and so we are in 
the process of reaching out to our foreign friends and explain 
to them precisely what this is, and I don't anticipate that we 
are going to continue to have a strong, robust commitment to 
exports now. It will be impacted by the fact that not only are 
we dealing with this issue of meat inspection but we are also 
dealing with less money in promotion, which is unfortunate.
    Mr. Yoho. Well, and the other thing is, we need to work 
together for the betterment of not just ag but of the country, 
and that is a bipartisan commitment, and I look forward to 
doing that. I have several other questions but I am going to 
run out of time, but I would like to talk to maybe somebody 
from your Department on immigration, on the Food Stamp Program, 
as a possibility of cutting back on our expenses since that 
eats up about 80 percent of the farm bill, and I look forward 
to talking to you at a later date. Thank you for your time.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Pennsylvania, Mr. Thompson, 
for 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Mr. Secretary, good to see you again.
    Secretary Vilsack. Nice to see you.
    Mr. Thompson. We bumped into each other in an airport not 
too long ago.
    Secretary Vilsack. In the great State of Iowa.
    Mr. Thompson. In the great State of Iowa, absolutely.
    Secretary Vilsack. Where your grandchildren are.
    Mr. Thompson. My grandson, one of many in the future, I 
hope, but he is the only one there.
    I was actually going to go down the road with Mr. Schrader. 
We work very closely together, but he had already kind of 
talked about the biopreferred bill, the Forest Products 
Fairness Act. We are going to be reintroducing that. I mean, it 
amazes me that we discriminate against U.S. forest products and 
yet that program, which is a Federal program, promotes foreign 
products. So we are hoping to fix that, and we have some 
support to do that and we will go down that road.
    I wanted to stay with forestry in terms of just some 
questions for you. You know, we are beginning to address the 
budget issues that confront us, and I want to move beyond 
sequestration because obviously we have a responsibility to 
operate in a fiscally responsible manner, and we all know that. 
You all have demonstrated a commitment to that with what you 
have been doing since you became Secretary, but one of the 
areas and the opportunities I just don't see us taking full 
advantage is is the revenue from our timber production. I am 
not talking about stewardship cuts because those do create 
local jobs and you can keep some of that money, quite frankly, 
in the forests for other projects but I am talking about the 
green timber sales. Those are the ones that when U.S. national 
forests were created, it was local folks, my predecessors 100 
years ago all sat at the table and said, ``Well, how can we 
make sure we have robust rural economies and how we manage our 
national forests in a way that they produce timber?'' You know, 
we talk a lot in the literature about the Forest Service about 
multiple use. I happen to believe that it is all secondary to 
producing resources. That is what those national forests were 
all about. And we just have never come close and we have been 
on a decline in terms of timber production that promotes 
healthy forests. That is how we prevent, as you know, invasive 
species. We prevent wildfires. We promote healthy forests by 
timbering, and we promote robust rural economies.
    And so are there any thoughts, or what are your thoughts--
and we are going to have a Subcommittee hearing next week so I 
will really go into depth with Chief Tidwell. Great guy. I 
enjoy working with him. And so we are really going to pursue 
this. But can you update the Committee on what the Forest 
Service is doing to increase timber sales on Federal forests so 
that we as U.S. taxpayers quite frankly can start to capitalize 
on our investments, because it is not just about healthy 
forests and healthy rural economies, but that is revenue that 
can come into the Treasury.
    Secretary Vilsack. Well, as I sit here I am thinking of 
three things that we have done. One is, we have increased 
commitment to treat more board feet to get up to 3 billion 
board feet over the course of the next couple of years, and 
part of that does require a process that we have to go through 
in terms of projects in NEPA. What we have done with NEPA is, 
we try to figure out a way in which we could streamline that 
process so we don't spend quite as much time, and that 
obviously reduces the amount of work we can do, and we have 
been pretty successful.
    Mr. Thompson. I appreciate your steps in that direction, 
that landscape approach.
    Secretary Vilsack. Second, or third, so it is one, 
increasing sales, two, reducing the administrative burdens 
associated with those sales, and then three is actually 
continuing to research a new product development. You know, I 
was at the Forest Product Lab recently and saw the development 
of new tornado shelters, and most tornado shelters are made 
from metal but they are now experimenting with wood shelters 
that can withstand something going into it at 150 miles an 
hour. I actually saw a 2 x 4, they shot it into this facility 
and it didn't penetrate the facility. So creating new products 
for wood. We have also seen nanotechnology potentially creating 
armor opportunities and a variety of things that could be used 
in cell phones, the film for cell phones. I mean, it is 
unlimited here.
    So the key here is continuing to increase the sales, 
understanding that it is consistent with proper forest 
management, reducing the administrative burdens that can slow 
this process down, and making sure that we are constantly on 
the edge of researching new products.
    Mr. Thompson. And new products are important, innovation is 
incredibly important but I would argue that what has been 
excluded because it has been considered mature is really, it 
was shortsighted when it was put in place. We have lost 300,000 
jobs in the forest products industry, and so we also have to 
maintain--we have a commitment to maintain as well as 
developing emerging markets.
    Secretary Vilsack. Well, and obviously we need help from 
you on that to better clarify the definitions so that there is 
greater flexibility in what we can do there, but we are looking 
at new and emerging market opportunities and if you all change 
the direction and focus on this, we will obviously respond to 
it.
    Mr. Thompson. I appreciate that. And another comment but 
just real briefly. You know, I do have concerns, and I am out 
of time, so I don't want to set this up and not give you a 
response time, but we can talk later on it. You know, your 
response to the Senator talked about the impact of 
sequestration. You only projected a $4 million cut in land 
acquisition, which quite frankly takes lands off the tax rolls 
and this makes it very challenging for rural communities when 
they have lands that go into the National Forests and off the 
tax rolls, especially if we are not doing our job with 
harvesting timber. At the same time, your letter outlined a 
projected 15 percent reduction in timber harvesting, and I just 
have real concerns about that, but that is something I look 
forward to talking to you in the future on.
    The Chairman. The gentleman's time has expired. The chair 
now recognizes the gentleman from Georgia, Mr. Scott, for 5 
minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and 
Secretary Vilsack, I was happy to hear you talk about research 
and the importance of research. I think it has been an 
extremely valuable part of agriculture that actually helps us 
increase our yields per acre and allows us to increase export 
opportunities. So thanks for mentioning that. As you know, that 
falls into kind of that other category of the ag bill, if you 
will, on the spending.
    My question deals with the 2014 budget request that you 
would have submitted to the President. Can you tell us what 
your top-line number is?
    Secretary Vilsack. Congressman, that process has not been 
completed, and it would be premature for me to respond to that 
question. We would be more than happy to explain to you the 
intricacies of our budget after it is published. But let me 
just simply say this. You know, we are continuing to be 
challenged to do the job you all want us to do when we are 
dealing right now with a budget that is less than what it was 
in Fiscal Year 2009 for operating.
    Mr. Austin Scott of Georgia. Let us talk about that for a 
second then because we hear that from pretty much every 
Administration official, but the President's budget was due 
February 4th. I didn't ask you for a detailed explanation. I 
just asked you if you would give us the top-line number, and 
you are telling us that you have not turned in your budget to 
the President yet. Is that correct?
    Secretary Vilsack. No, what I am telling you is that the 
process has not been completed in terms of our discussions.
    Mr. Austin Scott of Georgia. Let me ask it this way. Have 
you turned in your budget to the President?
    Secretary Vilsack. Well, the answer to that is yes and no. 
We have turned in information to the White House and to the OMB 
but that process has not been totally locked down yet.
    Mr. Austin Scott of Georgia. Okay. So you will have to 
forgive me, Mr. Chairman. It is kind of baffling that you stood 
there or sat there and said what you all have done when the 
President was supposed to deliver a budget to us February 4th 
and you can't even tell us or won't, I should say, you won't, 
because you are making a choice to tell us yes and no instead 
of just saying yes or no. But the fact of the matter is this. 
In 2013, according to your website, your total outlays were 
$155 billion; 2012, $151; 2011, $139; 2010, $129; 2009, $95.
    Secretary Vilsack. That doesn't tell the full story, 
Congressman, because those are----
    Mr. Austin Scott of Georgia. Sir----
    Secretary Vilsack.--eliminated programs, and I am talking 
about operating here. In order to do the programs, we have to 
do have----
    Mr. Austin Scott of Georgia. Sir, I will ask you the 
question. Do those numbers from your website accurately reflect 
the total spending of the USDA?
    Secretary Vilsack. If they are on the website, I am sure 
they are accurate, Congressman.
    Mr. Austin Scott of Georgia. You said that there was a $700 
million cut. If you take $129 from $155, that is a $26 billion 
increase in spending over the last 4 years. Where is the $700 
million cut?
    Secretary Vilsack. Congressman, what I said was, our 
operating budget, which is the discretionary part of our 
budget. Now, we have no control over the mandated expenses. 
They are what they are. If SNAP is X, it is X. If other 
mandated programs are what they are, they are.
    Mr. Austin Scott of Georgia. What percentage of the farm 
bill do you think should actually go to support production 
agriculture, farm and commodity programs? What percentage of 
what we call the farm bill do you as the Secretary of 
Agriculture believe should go to support those programs?
    Secretary Vilsack. You know, it is an interesting question 
because what you want me to say is a large number.
    Mr. Austin Scott of Georgia. No, sir, I just want an honest 
answer.
    Secretary Vilsack. Well, it is not an honest question, 
Congressman.
    Mr. Austin Scott of Georgia. Sure it is.
    Secretary Vilsack. No, it is not. It really isn't.
    Mr. Austin Scott of Georgia. It is an honest question.
    Secretary Vilsack. The reason it is not is because you want 
to pit parts of our budget against each other, and that is not 
right.
    Mr. Austin Scott of Georgia. Sir, what is not right is the 
fact that you won't give a straight answer. Have you given your 
budget----
    The Chairman. The gentleman----
    Mr. Austin Scott of Georgia.--to the President or not?
    The Chairman. The gentlemen will allow each other to 
answer.
    Secretary Vilsack. The process is that we submit 
information and OMB responds back. So there is a give and take, 
and that give and take has not yet been completed, so I can't 
tell you what the number is because it hasn't been finalized. 
It could be this number or they could come back tomorrow and 
say, ``You know what, we need to give the Defense Department X 
number of dollars and so we are taking this from you.'' You 
know, it is a process.
    Mr. Austin Scott of Georgia. I don't expect this President 
to give any more money to the Defense Department. I am on Armed 
Services as well. The fact of the matter is this: Spending has 
increased dramatically under your agency, and the other fact is 
that in 2013, the total percentage of funds that went to farm 
and commodity programs is 16 percent. Sixteen percent is what 
actually went to production agriculture.
    Secretary Vilsack. That is--I could quibble with that 
number and here is why----
    Mr. Austin Scott of Georgia. This is part of your website.
    Secretary Vilsack. Here is why I can quibble with that----
    Mr. Austin Scott of Georgia. If the information is not 
accurate, it is because you are putting out false information 
on your website.
    Secretary Vilsack. No, no, no. It is because I need to 
explain it to you, Congressman. The SNAP program is part of 
that, right? And you are going to suggest that that is not part 
of the farm programs. It is not technically but----
    Mr. Austin Scott of Georgia. It is not part of commodity 
and production agriculture.
    Secretary Vilsack. Well, but it helps commodity and 
production agriculture because 16 of every food dollar that is 
spent in this country ends up in a farmer's pocket. So you have 
to look at the totality of the programs in terms of how we 
support agriculture in this country, and the research budget, a 
part of that is used for production agriculture. So I don't 
think it is fair to suggest that title I or the crop insurance 
title is the only thing that goes to production agriculture. 
That is what I am saying.
    The Chairman. Would the gentleman from Georgia yield?
    Mr. Austin Scott of Georgia. Yes, sir, Mr. Chairman, I will 
yield, but that is a long, long stretch of a rubber band right 
there.
    The Chairman. I would just note to my good friend from 
Georgia that he cuts to the core issue of what this farm bill 
debate will be about this summer and into the fall and the 
conference committee process: how do we allocate our resources? 
Is the 80/20 spilt that we are operating under right now 
between programs that help consume food versus in the general 
sense the programs that help raise the food, is that the right 
balance. There are a good many folks on this Committee, and I 
suspect on the Floor of the United States House, who will say 
that that ratio is out of balance, and we will address those 
issues. The folks in the Senate may have a different 
perspective. But you and I are going to have a lot of fun with 
this topic, sir.
    Mr. Austin Scott of Georgia. Well, Mr. Chairman, I 
appreciate that, and what I tell you is my farmers have told me 
that we no longer want to be held hostage.
    The Chairman. I understand that.
    Mr. Austin Scott of Georgia. Thank you, and I yield my 
time.
    The Chairman. The gentleman yields back. I recognize the 
gentleman from New York for our concluding 5 minutes.
    Mr. Gibson. Well, thanks, Mr. Chairman, and I appreciate 
the opportunity to be part of this hearing, the state of the 
rural economy, so vitally important to upstate New York. I want 
to thank the Secretary. Good to see him again. I appreciate the 
work that he has done for my area, and certainly he has been 
well received as he has traveled in upstate New York.
    We have talked about a number of issues that are important 
to my farmers and to the ag economy. I just want to list some 
of these in terms of my support with this upcoming farm bill. 
Number one, crop insurance for fruit and vegetable growers, 
this is critically important to them, particularly given the 
needs of the Northeast, and I think the Secretary agrees on 
that. I just want to echo the comments, and actually associate 
myself with my neighbor in the Hudson Valley, Mr. Maloney. 
Research for fruits and vegetables is vitally important. I am 
proud of my alma mater. I am an alumni of Cornell and I am 
proud of the work that they do with the cooperative extension. 
I want to see us continue to support that in the farm bill. 
Dairy security, margin, margin insurance, critically important 
to my dairy farmers. Number four, ag labor. We won't see that 
in the farm bill but I concur, this is something that I hear 
every time when I meet with my farmers has to be addressed, so 
I appreciate your support for that. Number five is, I want to 
actually support what the report that your agency or 
Administration came up with with regard to definition of rural. 
You know, I have Kingston in upstate New York and that mayor 
there, Mayor Gallo, is working hard to revitalize parts of his 
downtown, and among the parts of his vision is supporting the 
agricultural economy by bringing the farmers' market and so 
having access--it is 23,000 in Kingston, so having access to 
that program is going to be helpful. So I am going to be 
supportive of that, and I was in the process here during the 
farm bill.
    I do want to mention three other priorities that are 
important for upstate New York to pose you on these. Number one 
is broadband. I know it was brought up at least tangentially 
earlier in the hearing but the FCC has found that the Low 
Interest Loan Program is something we have a need for yet, of 
course, the demand for it seems to be declining. I have my own 
views on it. I will be interested to hear yours in a second. 
Beginning Farmer Program, critically important. I am so proud 
of our farmers in upstate New York, but we recognize that the 
average age is 57, so this is a national security issue too. We 
need to inspire a whole new generation to come to the farm, and 
our office is going to be involved in the farm bill continuing 
to strengthen that program, going forward. And then Lyme, which 
is a public health scourge certainly in the Northeast in my 
district but I would argue around the country, and we are 
working with your folks in terms of ag research service to try 
to make a difference on that.
    So I appreciate the opportunity to express the priorities 
for upstate New York, Mr. Secretary, and I would be interested 
in your viewpoint on the Low Interest Loan Program for 
broadband and perhaps at this time other follow-up.
    Secretary Vilsack. Well, in terms of USDA's capacity to 
provide assistance, we are going to focus our attention on the 
area that is not being served as well by the FCC efforts, and 
as I indicated, the FCC is pretty much focused on the regional 
Bells and where their capacity is to expand broadband. There 
are many areas of the country that are served by small 
telephone companies that don't necessarily fall into that 
world, and that is the world that we want to try to help and 
provide assistance to, and we do it in providing loans but we 
also do it in providing distance learning and telemedicine 
opportunities. We have had a number of projects, over 1,400 
projects that we funded over the last couple of years in that 
area. That is going to continue.
    I do think there are things that the FCC could potentially 
do to make it a little bit easier for those regional folks to--
the rate of return for carriers to participate in their program 
and we have had conversations with them about that and we will 
continue to try to have a coordinated effort.
    I appreciate you mentioning the Beginning Farmer Program. I 
would tell you that as we went about closing labs, ARS labs, we 
noticed that there was a great deal of real estate associated 
with those labs, and the process that we have to follow is that 
we have to provide opportunities for land-grant universities 
that are located in and around the lab first dibs, if you will, 
on the land but we made it as a condition of most of the 
transfers that they establish or beef up their Beginning Farmer 
and development programs. It is a way in which we can use a bad 
situation and a tough financial situation to find opportunity. 
So those land-grant universities are going to do an even more 
extended job on the Beginning Farmer. I would encourage you 
with the mayor to take a look at the Know Your Farmer compass 
on our USDA website. That provides a lot of information about 
the programs that that mayor could potentially use to build a 
farmers' market economy in his downtown area, and I would agree 
with you on ag research. The challenge will be limited 
resources and a lot of pests and a lot of diseases and a lot of 
issues, trying to prioritize them as best we can, but this area 
is one area that has been ignored in terms of conversation and 
discussion, which may be in the long term one of the most 
important areas.
    Mr. Gibson. I greatly appreciate those remarks. I look 
forward to working with you, your team, and of course this 
Committee as we move forward with this process in the coming 
weeks and months.
    Mr. Chairman, thank you, and I yield back.
    The Chairman. The gentleman yields back. I recognize 
myself.
    Mr. Secretary, I would note that I will send down to you 
some questions about the Small Watershed Dam Program, one of 
our very successful things that your Department has been a part 
of since the 1940s and look forward to your responses. Other 
than that, thank you for your time today and your insights and 
your interactions with Members of the Committee. This is always 
a good use of our time, and I believe it is a good use of your 
time too.
    With that, under the rules of the Committee, the record for 
today's hearing will remain open for 10 calendar days to 
receive additional material and supplemental written responses 
from the witness to any question posed by a Member.
    This hearing of the Committee on Agriculture is adjourned.
    [Whereupon, at 1:12 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]

Supplementary Information Submitted by Hon. Thomas ``Tom'' J. Vilsack, 
               Secretary, U.S. Department Of Agriculture
Insert 1
          Ms. Fudge. Thank you so much, Mr. Chairman, and thank you for 
        being here, Mr. Secretary.
          Mr. Secretary, we all know that building a diverse workforce 
        is an extremely effective tool in addressing discrimination. 
        Many of the civil rights complaints in the past, particularly 
        those in Pigford, might have been mitigated had USDA had a more 
        diverse workforce that was better able to interact with 
        minority farmers. So to that end, what has USDA done to ensure 
        a more diverse workforce? And I am particularly interested in 
        hearing about how many African Americans serve in leadership 
        roles within the Department, and before you respond, I just 
        want to remind you that I asked this same question almost 2 
        years ago and have yet to get a response, sir.
          Secretary Vilsack. Well, let me see if I can respond to your 
        question here, and I apologize for not responding before that. 
        That is something that shouldn't have happened. We have engaged 
        in a process which we refer to as cultural transformation at 
        USDA, and every month I get a report on the diversity of our 
        workforce. I can tell you that we have seen significant 
        increases in the hiring of African Americans, Hispanics, Asian 
        Americans, Native Americans, people with disabilities, and 
        veterans, and that is the focus of this report. We are casting 
        a wider net to try to find good, qualified folks, and the 
        result of that is that our numbers are increasing. Within the 
        SES ranks, 17 percent of our SESs, our Senior Executive Service 
        folks, are African American, which is seven percent higher than 
        the civilian workforce.
          Ms. Fudge. Let me just ask you this, and I could be wrong so 
        you could please correct me. But it is my understanding that 
        there are 12 positions that are Senate-confirmed positions 
        within USDA, and one is an African American.
          Secretary Vilsack. I don't think that is--well, that may be 
        correct now because one of the positions that was Senate 
        confirmed is no longer Senate confirmed. But we have an African 
        American who is in charge of our entire operations, Dr. Parham, 
        Greg Parham. We have an African American who is obviously in 
        charge of the civil rights area. We have an African American 
        who is the administrator of our largest part of our budget.
          Ms. Fudge. Well, if we know that, why is it so difficult for 
        me to get a report?
          Secretary Vilsack. Well----
          Ms. Fudge. Which I even asked you about as recently as a 
        couple of months ago, a chart.
          Secretary Vilsack. Well, I mean, I can give you the cultural 
        transformation report if that would be of assistance and help 
        to you.
          Ms. Fudge. Whatever answers my question is what I would like 
        to have, sir.

    USDA staff met with Rep. Fudge's staff to provide additional 
information on April 18, 2013 and will continue to work with her office 
to provide updates on hiring within the Department.

Insert 2
          Mr. Crawford. Thank you, Mr. Chairman.
          Mr. Secretary, I know that the issue of CAFOs was raised 
        earlier. One of my colleagues had discussed it with you 
        briefly. I just want to ask some questions regarding that.
          During the EPA's rulemaking process, can you tell me if USDA 
        raised to OMB and EPA the same biosecurity food supply and 
        producer safety concerns that were raised by the Department of 
        Homeland Security?
          Secretary Vilsack. Our focus in conversations with the EPA 
        about that rule was to try to, consistent with their need to 
        protect the environment, minimize the disruption in livestock 
        operations.
          Mr. Crawford. Were those concerns conveyed in writing?
          Secretary Vilsack. I am not sure about that. I know what we 
        had was, we have a liaison who comes over to the USDA two or 
        three times a week to discuss issues, and I am sure there were 
        verbal conversations. I am not sure if there was a written 
        message but I know that there was clearly verbal conversations 
        about this because I was engaged in them as well. In addition, 
        the EPA Administrator and myself met with livestock groups on a 
        regular basis and had the opportunity to converse about a 
        variety of issues.
          Mr. Crawford. Okay. If you have those in writing, I would 
        appreciate it if you could supply those to the Committee. . . .

    USDA staff discussed a number of issues with the EPA concerning the 
draft section 308 rule governing CAFOs, including biosecurity, 
producers' concerns about publicly available addresses, and others. 
Because this was a deliberative, interagency rule-making process, we 
cannot share specific written materials that we provided EPA. If Rep. 
Crawford would like, USDA staff is happy to set up a meeting or phone 
call to discuss the conversations between USDA and EPA in more detail. 
Please contact the USDA Office of Congressional Relations if this is of 
interest.

Insert 3
          Mr. Goodlatte. The objective was good but the messenger was 
        not too desirable, in my opinion. Can you tell us how much 
        money the USDA spent on the training, particularly the ones 
        hosted by Samuel Betances? I have heard as much as $400,000 was 
        paid to him.
          Secretary Vilsack. I can't tell you the specific amount. I 
        would be happy to provide that to you, Congressman. . . .

    APHIS had two separate contracts in 2010 and 2011 with Dr. Betances 
to provide training to employees. Together these contracts amounted to 
approximately $175,000 paid by APHIS to Dr. Betances.
                                 ______
                                 
                          Submitted Questions

Response from Hon. Thomas ``Tom'' J. Vilsack, Secretary, U.S. 
        Department Of Agriculture

Questions Submitted By Hon. Frank D. Lucas, a Representative in 
        Congress from Oklahoma
    Question 1. The current Continuing Resolution expires on March 
27th. In a letter to the Senate Committee on Appropriations dated 
February 5, 2013, you outlined the impact of $53 million in 
sequestration cuts, detailing the economic effects of a 15 day period 
of furloughs. Please provide a copy of all communications with the 
House Committee on Appropriations offering the Administration's 
proposed alternative to inspector furloughs.
    Answer. On February 5, 2013 USDA responded to a request from 
Senator Mikulski, Chair of the Senate Appropriations Committee, asking 
for additional information on impact of the potential sequester. This 
letter lists the FSIS furloughs as one impact. Subsequently, on 
February 15, 2013, USDA responded to a request from Representatives Sam 
Farr and Rosa DeLauro, both senior members of the House Agriculture 
Appropriations Subcommittee, asking for clarity on the impact that 
sequestration may have on USDA's ability to deliver its services. This 
response is similar to the response to Senator Mikulski, and also lists 
the FSIS furloughs as one impact. Both letters are enclosed with this 
response. (See Attachments 1 and 2)

    Question 2. According to the economic analysis USDA has conducted 
regarding the proposed Poultry Inspection Rule, what percentage of 
savings with respect to online inspection costs can be achieved while 
maintaining or exceeding the current level of food safety? What would 
be the percentage savings if a similar rule were implemented for other 
amenable species? What is the current status of the Poultry Inspection 
Rule and when do you anticipate it will be finalized?
    Answer. FSIS calculates that the savings attributable to the 
proposed Poultry Slaughter Modernization Rule, once it is fully 
implemented, will be approximately 23% annually ($31 M). This type of 
savings will not be achievable with other amenable species. The agency 
is in the process of preparing a final rule on poultry slaughter after 
considering the comments received. It is not possible to provide a 
specific timeline.

    Question 3. In the current year, Congress and the President 
provided the Department $14 million of funds for the Watershed 
Rehabilitation Program that would be used to protect lives and 
property, while also creating jobs and repairing the nation's 
infrastructure. We understand that OMB has blocked the distribution of 
the funding to NRCS.
    What actions are you taking to have OMB release these funds?
    Answer. Under the terms and conditions of the Continuing 
Appropriations Resolution, 2013 (P.L. 112-175), which provided funding 
through March 27, 2013, $14.2 million would have been available for the 
Watershed Rehabilitation Program (after the reduction imposed by the 
sequester). However, under the terms and conditions of the automatic 
apportionment provided by OMB, these funds were not automatically 
apportioned since the Senate Appropriations Committee had reported a 
bill that would have zeroed out the funding for this program, thus 
preserving the prerogative of Congress to determine the funding levels 
for programs.
    The Consolidated and Further Continuing Appropriations Act, 2013 
(P.L. 113-6) subsequently provided $13.5 million for this program 
(after reductions and rescissions). These funds have since been 
apportioned.

    Question 3a. Additionally, would you provide the Committee with a 
state-by-state break-down of the Watershed Rehabilitation projects that 
you intend to fund once the Department receives the funds?
    Answer. It is too early in the project selection process to provide 
a state-by-state break-down of selected projects. We are evaluating 
funding requests from the NRCS State offices. Project selection will be 
based on such factors as the project's risk index and project phase or 
readiness (i.e., planning, design or construction). We will provide the 
information requested after the funding is received by the agency.

Questions Submitted By Hon. K. Michael Conaway, a Representative in 
        Congress from Texas
    Question 1. The Committee has seen your response to Senator 
Grassley's letter, signed by seven additional Senators, asking for 
``any written legal opinions you have been provided by USDA attorneys, 
the White House, or the Office of Management and Budget, indicating you 
have the ability to disregard the requirements under FMIA and PPIAS and 
furlough inspectors.'' Many observers agree with Senator Grassley's 
public statement that your response was unsatisfactory. Please provide 
these documents for the Committee Record.
    Answer. I consulted with the Office of the General Counsel (OGC) 
regarding the argument that the Federal Meat Inspection Action (FMIA) 
and Poultry Product Inspections Act (PPIA) require inspection 
regardless of appropriations available for that purpose. OGC informally 
advised that both Acts were subject to an authorization of 
appropriations (see, e.g., 21 U.S.C.  469 and 680); and therefore the 
so-called mandate for inspection exists only to the extent 
appropriations are provided by Congress. Accordingly, to avoid an 
Antideficiency Act violation, if Congress had not provided additional 
appropriations for inspectors, USDA would have been required to 
furlough inspectors in order to live within the limits of its 
appropriations provided to carry out the FMIA and PPIA, as reduced by 
the Budget Control Act sequester. No formal legal opinions were 
prepared. Fortunately, Congress recognized the limit of the mandate and 
provided additional appropriations so that furloughs of inspectors will 
not occur.

    Question 2. Please provide a legal analysis explaining the apparent 
contradiction between the Administration's decision to disregard its 
statutory obligations to conduct inspections under the FMIA and PPIA as 
a result of the Budget Control Act and the decision to delay the onset 
of furloughs in order to comply with a lengthy union consultation 
process.
    Answer. There was no relationship between the Department's decision 
to abide by the limits of its appropriations provided by Congress for 
carrying out the FMIA and PPIA, and to carry out the union consultation 
process required by FSIS collective bargaining agreements (CBAs), and 
hence there is no contradiction. Fortunately, the Department had 
sufficient remaining time left in the fiscal year that it could have 
complied both with the legal requirements of its CBAs and the 
Antideficiency Act and implemented furloughs to avoid a deficiency in 
the appropriation at the close of the fiscal year; however, as a result 
of additional funding provided in the Consolidated and Further 
Continuing Appropriations Act, 2013, Public Law 113-6, that became 
unnecessary.

Question Submitted Hon. Bob Gibbs, a Representative in Congress from 
        Ohio
    Question. Mr. Vilsack, you stated in your testimony that you, as 
head of the USDA, officially told the EPA that you did not think that 
they should be releasing private information on farmers who own CAFOs. 
Could you please provide us with the conversations you had with EPA 
regarding this matter?
    Answer. USDA staff discussed a number of issues with the EPA 
concerning the draft section 308 rule governing CAFOs. Because this was 
a deliberative, interagency rule-making process, we cannot share 
specific details of these discussions.

Questions Submitted Hon. Eric A. ``Rick'' Crawford, a Representative in 
        Congress from Arkansas
    Question 1. I understand that on February 8th you met with FCC 
Chairman Genachowski to discuss the USF Transformation Order. I was 
pleased the Department supports fully obligating two rounds of Connect 
America Funds in 2013--that will do a great deal to immediately deploy 
broadband in unserved rural areas. But it appears the Department may 
have some concerns about the impact of the Transformation Order on 
broadband investment by RUS borrowers. Can you explain the Department's 
perspective? What impact have the FCC's USF reforms had on the RUS 
telecom loan portfolio and why? Is rural broadband buildout endangered? 
What must be done in order to promote a sustainable broadband future in 
rural America?
    Answer. The economic stability of rural America depends on the 
availability of a resilient and robust broadband infrastructure capable 
of delivering advanced services to consumers and businesses in rural 
high cost areas. Rural-based industries that produce food, energy, 
technology, manufactured goods and other services consumed across the 
country rely on broadband, often provided by Rural Utilities Service 
(RUS) borrowers, to remain globally competitive.
    As the Federal Government's longest serving infrastructure lender 
in rural America, the USDA has an institutional interest the USF/ICC 
reform order and its potential impact on the ability of existing 
borrowers to complete their broadband investments across rural un-
served areas. While the order and its effects are still being examined, 
there is little doubt that it will have a profound effect on future 
lending for rural telecommunications.
    We remain committed to working with the Federal Communications 
Commission (FCC) to ensure that that the promise of Section 254 of the 
Telecommunications Act of 1996 be fully realized. Sufficient, 
predictable, and specific USF and Inter-Carrier Compensation (ICC) 
mechanisms can drive investment, improve the quality of life, create 
jobs, and increase economic opportunities in Rural America.
    According to the FCC's Eighth Broadband Progress Report, nearly \1/
4\ of the rural population lacks access to high speed broadband. Yet, 
demand for RUS loan funds dropped to roughly 37% of the total amount of 
loan funds appropriated by Congress in FY 2012. Current and prospective 
RUS borrowers have communicated their hesitation to increase their 
outstanding debt and move forward with planned construction due to the 
recently implemented reductions in USF support and ICC payments.
    Major portions of FCC's Universal Service Fund (USF) Reform Order 
took effect last July. To date, no RUS borrowers have defaulted on 
their loans specifically due to this action. Rural service providers, 
state public utility commissions and others are challenging the FCC's 
Order in the 10th Circuit Court of Appeals and many have contacted RUS 
to seek restructuring authority of their pending loans to accommodate 
for the shortfall in USF revenues going forward. To date, the FCC 
waiver process has yielded one partial waiver to Allband Communications 
in Michigan and one full waiver with conditions to Accipiter 
Communications. RUS staff actively engaged with FCC staff in support of 
waiver relief sought by both. As of February, 13 petitions seeking 
relief from the FCC's USF/ICC rules are pending before the FCC, 9 of 
which are from RUS borrowers. Each assert that default and possible 
bankruptcy will occur if waiver relief is not granted.
    This February, Secretary Vilsack met with the FCC Chairman to share 
his concerns and hopes for a path forward that ensures a successful 
outcome for existing borrowers and Recovery act awardees. The Secretary 
outlined his concerns in an ex parte filing that highlighted 4 key 
points needed to restore certainty and predictability for rural 
broadband investment to continue.
    USDA urged the FCC to enhance as quickly as possible the level of 
broadband investment in rural communities served by mid-sized price-
capped carriers, and redeploy the unused incremental CAF Phase 1 funds 
and combine it with $300 million in a second round of CAF Phase 1 for 
2013. This effort would accelerate USF resources to rural price-capped 
carriers seeking to meet customer demand in their rural service areas.
    USDA also urged the FCC to correct the structure and data integrity 
concerns of the Quantile Regression Analysis (QRA) benchmarks that caps 
USF support and apply those caps incrementally. Such fixes are 
necessary to ensure greater transparency, accuracy and predictability 
in the underlying cost model. Many RUS borrowers affected by the 
regression-based caps have suggested that the underlying data do not 
properly quantify costs. While the regression analysis may be helpful 
in focusing attention on certain categories of spending, in its current 
state, it should not be used as the sole determinate of costs. These 
points have been reiterated by RUS borrowers to the White House, 
Congress and the FCC since the Order was adopted in November 2011.
    While the USF reforms continue to unfold, RUS is open for business. 
We want to press forward and continue the momentum of the Recovery Act. 
As a lender we are compelled to make conservative assumptions about all 
carrier revenue streams until the USF ecosystem becomes more certain.
    We continue to focus our attention on addressing the challenges, 
namely cost, density, distance and economic hardship--in delivering 
affordable, high capacity bandwidth to the most rural and remote 
portions of our nation. Our ongoing commitment to expand broadband 
connectivity, capacity and to extend service to the millions of rural 
communities still lacking affordable access remains our primary 
objective.
    RUS will continue to meet the high level of demand for affordable 
broadband access among rural and remote communities seeking to expand 
into new markets and create jobs that in-source the talent and creative 
spirit that has characterized rural America for over a century.

    Question 2. In your testimony, you outlined the importance of 
agriculture research, and explained USDA's commitment to further 
research investment. As you know, Arkansas is one of the top ten states 
in agriculture productivity. However, in recent years the ARS presence 
has been out of proportion relative to the size and the complexity of 
the issues affecting Arkansas producers. For instance, the Booneville 
small farms research center has been on the chopping block and deemed a 
lower priority, even though not long ago USDA proposed a large funding 
increase for biofuel research. Additionally, the former Delta Obesity 
Nutrition Research Unit was eliminated entirely. Can you please explain 
to the Committee how USDA goes about prioritizing ARS research funding, 
and explain why the Arkansas ARS centers have been dismantled at a more 
rapid rate than other states? Given the uniqueness of Arkansas and its 
important role in the agriculture sector, especially with respect to 
rice, poultry, and aquaculture, I have a hard time understanding why 
we've seen such a large-scale withdrawal of support in proportion to 
other states.
    Answer. In FY 2011, USDA sustained a reduction of $5.2 million in 
research support in Arkansas due to the loss of earmark funds and 
rescissions. The loss to the Dale Bumpers Small Farms Research Center 
in Booneville, AR was substantial, totaling $3.1 million. With the loss 
of resources, Booneville is no longer financially viable and therefore 
the location is proposed for closure in the FY 2014 budget.
    USDA continues to have a strong research presence in Arkansas with 
programs carried out in the areas of poultry, rice, aquaculture, and 
nutrition. The FY 2014 budget proposes $16.9 million for these research 
programs in Arkansas. In 2012, ARS closed the Rice Research Unit in 
Beaumont, TX and transferred the resources to the Dale Bumpers National 
Rice Research Center in Stuttgart, AR. Accordingly, USDA's research 
presence in Arkansas is currently greater than it was in FY 2011.

    Question 3. I read recently that your Interagency Trade Enforcement 
Center is beginning the process of estimating all of the foreign 
subsidies and tariffs other countries like Brazil, China, and India use 
to give them an unfair advantage and may well violate their trade 
commitments under the WTO. I think this is an extremely important 
exercise. I know that there are a couple of academic studies out there 
on this as well. For example, according to a Texas Tech study, Brazil 
actually has a minimum support price for cotton of 75 a pound. Yet, 
Brazil was able to win a WTO case against the United States which has 
an equivalent marketing loan rate of 52 a pound: 13 lower than 
Brazil's! Brazil's case was essentially that the U.S. loan rate was 
suppressing the world market and harming farmers in Brazil even though 
U.S. production has been in decline while Brazilian production has 
skyrocketed. We are now hearing a lot about some of Brazil's other 
subsidy programs, including the ``PEP program''. Mr. Secretary, when do 
you expect this process of cataloguing foreign subsidies and tariffs to 
be completed and do you anticipate the Administration will be 
aggressive in filing WTO claims where they find violations?
    Answer. USDA is also concerned that our trading partners are 
increasingly using domestic subsidy programs, potentially in violation 
of their WTO commitments. Our attaches overseas publish public reports 
that include foreign country usage of domestic report programs. For 
example, Foreign Agricultural Service (FAS)/Brasilia issued a report 
entitled Cotton and Products, dated March 28, 2013. This report, 
available on the FAS website, is one of many with detailed information 
on Brazil's use of numerous support programs such as the Premium for 
Product Outflow (PEP) program.
    USDA works very closely with the United States Trade Representative 
(USTR) on potential trade violations affecting U.S. agriculture to 
ensure that our trading partners adhere to the WTO and other trade 
agreements. We seek to address issues through negotiation when possible 
and litigation where appropriate.
    President Obama established a new trade enforcement unit--the 
Interagency Trade Enforcement Center (ITEC)--specifically to enhance 
the administration's capabilities to prioritize and aggressively 
challenge unfair trade practices around the world. USDA supports this 
effort and has provided detailees, though sequestration budget cuts 
could pose a challenge to continuing that support.

Question Submitted Hon. Reid J. Ribble, a Representative in Congress 
        from Wisconsin
    Question. Secretary Vilsack, the forest products industry is a 
significant economic engine in Wisconsin, employing over 80,000 people 
in the state. Because of this, I continue to be concerned that USDA's 
Biobased Markets Program does not allow most forest products to be 
treated as ``biobased'' in the program, leaving forest products out of 
an important market opportunity. Why does USDA arbitrarily restrict the 
use of the biobased label for forest products, which are in fact made 
from biobased materials?
    Answer. Section 9002 of the Farm Security and Rural Investment Act 
of 2002 (FSRIA) originally authorized the BioPreferred program. The 
Food, Conservation, and Energy Act of 2008 reauthorized and 
strengthened the program. The USDA regulation outlining the procurement 
preference program was developed based on the conference report 
accompanying FSRIA, which states that the intent of section 9002 ``is 
to stimulate the production of new biobased products and to energize 
emerging markets for those products.'' For this reason, USDA's 
regulation, ``Guidelines for Designating Biobased Products for Federal 
Procurement,'' currently excludes mature market products from the 
program. It is generally understood that the forest products industry 
is mature. However, we recognize the need for as much flexibility as 
possible to develop new markets. As such, USDA proposed amendments to 
the BioPreferred Guidelines in May 2012 that would eliminate the mature 
market exclusion and focus the program on creating ``new and emerging 
markets for biobased materials.'' The proposed rule seeks to provide 
additional flexibility in considering forestry products for inclusion 
in the BioPreferred program and continues to be consistent with the 
guidance provided in the FSRIA's conference report.
    USDA notes that many mature market products already use other well-
established and well known labels such as the ``cotton'' logo and the 
Forest Stewardship Council certification. Additionally, there are 45 
forestry products currently in the BioPreferred catalog, which contains 
products in the Federal Procurement Preference Program and the 
Voluntary Labeling Program. Of these, 21 products participate in the 
Federal procurement preference program, 16 have received USDA 
certification under the voluntary labeling program, and eight are both 
Federally preferred and label certified.

Questions Submitted Hon. Jeff Denham, a Representative in Congress from 
        California
    Question 1. USDA's own farm income reports say agriculture is doing 
pretty well unless you are a livestock producer purchasing your feed. 
Dairy producers in California are under tremendous financial pressure 
because of extraordinary feed prices and milk prices that are 
inadequate to cover milk production costs. What are USDA's specific 
plans to provide financial assistance and much needed relief to dairy 
producers in California, the nation's leading dairy state?
    Answer. The Farm Service Agency's primary support to dairy 
producers is the Milk Income Loss Contract (MILC) program, which 
provides financial protection in times of low milk prices and/or high 
feed costs. MILC was extended by the American Taxpayer Relief Act of 
2012 through September 30, 2013. MILC payments to California have 
totaled $85 million in FY 2009, $19 million in FY 2010, and $36 million 
in FY 2012, and we anticipate payments for production that occurs each 
month of calendar 2013 through August. Because of sequestration, MILC 
payments for October 2012 and January and February 2013 production were 
awaiting approval of interchange authority; payments resumed May 8, 
2013. Direct and guaranteed loans are also available to qualifying 
producers.
    Additionally, USDA has been providing technical assistance to 
California dairy industry stakeholders, as requested, regarding their 
interest in establishing a Federal Milk Marketing Order.

    Question 2. Mr. Secretary, if I am correct the U.S./EU Free Trade 
Agreement will be the largest U.S. Free Trade Agreement. However, as I 
understand it, the U.S. Government negotiators recognize that the 
European Commission is not very transparent with reference to subsidies 
for fruit, tree nuts, and vegetables, whereas the U.S. is extremely 
transparent with its fruit and vegetable support programs. Will 
complete disclosure be required before serious negotiations with the 
European Commission proceeds?
    Answer. Before beginning negotiations with the EU, the 
Administration first must complete its consultations with Congress and 
the public to ensure the concerns of all stakeholders, including as 
those expressed in your question are addressed, as we develop our 
objectives and strategy for the negotiations.

    Question 3. The EPA, USDA, and State Department recently announced 
a joint decision that they would discontinue the nomination of critical 
uses of methyl bromide under the Montreal Protocol for dried fruits and 
nuts. Since 2005 the Administration has routinely approved these 
critical uses based on a lack of suitable alternatives.
    Allegedly this decision was made because EPA determined that the 
industry was able to use the alternative Sulfuryl Fluoride (SF). At the 
same time, EPA currently has a proposed rule out to discontinue or 
cancel the food tolerances of SF on all food uses.
    This puts California's premier dried fruit and nuts industry at 
jeopardy of having no fumigant for use if the proposed rule is adopted. 
This would no doubt be devastating and economically ruin these world-
class industries.
    First, did USDA concur in the EPA decision to discontinue Critical 
Use Exemptions for dried fruits and nuts, and what are your plans for 
this important sector if EPA follows through and cancels SF for dried 
fruits and nuts?
    Answer. The USDA Agricultural Research Service has been conducting 
research on improving the efficacy of sulfuryl fluoride for dried 
fruits and nuts. Testing on a commercial scale using reduced rates of 
sulfuryl fluoride is planned. Since EPA is still evaluating public 
comments, no decisions on tolerances have been made. USDA and EPA 
recognize the importance of sulfuryl fluoride for dried fruit and nuts 
as well as other commodities. USDA had apprised EPA on its most recent 
research before the final regulatory decision. USDA is developing 
alternative approaches including Integrated Pest Management methods to 
limit insect infestation.

    Question 4. Mr. Secretary, I remain concerned about USDA's 
continued allowance of misleading labels on meat and poultry products. 
As you know, some processors are continuing to engage in the misleading 
labeling practice of falsely claiming that poultry deliberately 
injected with saltwater or seaweed solutions is ``100% All Natural.''
    In July 2011, USDA finally proposed a rule that would address part 
of this problem by requiring more prominent disclosure on the label of 
these added saltwater solutions. I understand that over 30,000 
consumers filed comments supporting the USDA proposal. Comments 
supporting the proposal came from the American Heart Association, the 
National Kidney Foundation, Consumers Union, the California Department 
of Food and Agriculture, and the California Agricultural Commissioners 
and Sealers Association, among others. I strongly support the proposal 
as well and urge you to finalize the rule without further delay.
    Furthermore, I am still waiting for USDA to address the false and 
misleading ``Natural'' claims on these so-called ``enhanced'' products. 
USDA published an Advanced Notice of Proposed Rulemaking over 3 years 
ago. Since then, I am unaware of any further action by USDA. When will 
USDA finally complete action on these long-overdue rules?
    Answer. Thank you for your comments supporting the FSIS proposed 
rule on the ``Common or Usual Name for Raw Meat and Poultry Products 
Containing Added Solutions.'' FSIS is in the process of developing a 
final rule.
    On September 11, 2009, FSIS issued an Advance Notice of Proposed 
Rulemaking (ANPR) to assist the agency in defining the conditions under 
which it will permit the voluntary claim ``natural'' to be used in the 
labeling of meat and poultry products. The purpose of the ANPR was to 
solicit more focused comments on a number of specific issues. FSIS 
completed its review of the more than 7,500 comments received. The 
comments demonstrate that stakeholders continue to have divergent views 
about how the word ``natural,'' as applied to meat and poultry 
products, should be defined. While FSIS considers how to proceed on 
this contentious issue, companies may continue to submit labels 
containing ``natural'' claims for consideration, and each label will be 
judged on a case-by-case basis.

    Question 5. Secretary Vilsack, in your recent statements about 
poultry inspectors being furloughed, you indicated that these employees 
require a certain timetable for pre-notification of a possible 
furlough. This pre-notification period ranges from 30 days to a much 
longer time. Please share your thoughts with the Committee on how you 
foresee this pre-notification working.
    Answer. Before sequestration took effect, the agency engaged in the 
pre-notification process with employees and the Union. FSIS 
subsequently engaged the Union in Pre-Decisional Involvement. Upon 
finalization of the sequester, the plan called for FSIS to negotiate 
with the Union. Assuming the Union wished to negotiate, management 
would enter into negotiations with the Union prior to the 
implementation of the anticipated furloughs. Fortunately, Congress 
provided enough funding in the FY 2013 CR to prevent the need for 
furloughs of FSIS inspection personnel. Thus, FSIS withdrew its request 
to negotiate with the Union.

    Question 6. Currently, domestic olive producers are experiencing 
the significant negative impact of market share declines and economic 
losses that are a direct result of highly subsidized, low priced 
imports of canned ripe olives from the European Union and Morocco. What 
additional actions can be taken to create a fair playing field for the 
U.S. table olive industry?
    Answer. There is currently a marketing order for U.S. olives, in 
effect since 1965, which seeks to assist the olive industry in 
overcoming some of their marketing challenges. This order (1) 
authorizes minimum grade and size requirements for olives produced in 
California, which are also applied to imported olives and (2) 
authorizes production and marketing research and development projects, 
including paid advertising.
    On March 20, 2013, the Obama Administration notified the U.S. 
Congress of its intent to enter into negotiations on a comprehensive 
trade and investment agreement with the European Union. The 
Administration will hold regular and rigorous consultations with 
Congress and stakeholders in developing our objectives and strategy for 
the negotiations. The Administration values this opportunity to take on 
board the concerns of all our stakeholders, such as those expressed in 
this question.
    Section 8e of the Agricultural Marketing Agreement Act of 1937 
provides that when certain domestically produced commodities are 
regulated by a Federal marketing order, imports of the commodity must 
meet the same or comparable grade, size, quality and maturity 
requirements. Currently, the list of imported commodities subject to 
Section 8e of the Act includes canned ripe olives.

    Question 7. Mr. Secretary, as you know, California agriculture 
needs a legal work force to harvest our crops. What is your Department 
doing to see that immigration reform for agriculture is going to be 
accomplished?
    Answer. Immigration reform is particularly important to rural 
communities and to a competitive, productive U.S. agricultural sector. 
I have been and will continue to be committed to ensuring that USDA is 
available to provide whatever technical assistance we can as Congress 
takes up immigration reform. In my view, immigration reform is relevant 
and important to rural areas of our nation for three key reasons: 
First, immigration reform will ensure a safe and fair system for farm 
workers. By demanding responsibility from workers and businesses alike, 
we can protect those farm workers who play by the rules--and we can 
reverse the troubling fact that too many workers live in the shadows 
today. Second, immigration reform will help strengthen farm businesses. 
Many U.S. producers face challenges today, not just in the constant 
struggle to find labor but from trade competitors around the world. We 
need to fix that by ensuring our producers can hire a full contingent 
of workers--and today's complex and inadequate system too often 
prevents them from doing so. Third, immigration reform will strengthen 
our communities. A reform of today's broken system will help rural 
America expand new markets in conservation, agriculture, natural 
resources and the biobased economy.

Questions Submitted Hon. Collin C. Peterson, a Representative in 
        Congress from Minnesota
    Question 1. What impact will sequestration have on the import and 
export of meat and poultry products? Will sequestration impact the 
ability of the Animal and Plant Health Inspection Service or the 
Agricultural Marketing Service (AMS) to carry-out their duties related 
to imports and exports?
    Answer:
    APHIS Response: As part of the National Export Initiative, USDA has 
made it a priority to expand market access and opportunities for 
businesses overseas. Despite the cuts contained in the Fiscal Year 2013 
budget, USDA's Animal and Health Plant Inspection Service (APHIS) 
continues to make its export-assistance services a priority, and the 
funding decrease will have no impact on these essential services. The 
majority of these activities--such as inspection and certification 
services--will be unaffected by the decreases in the 2013 budget 
because they are funded through user fees. For services funded with 
appropriated dollars--such as the development of international 
standards and protocols to assist with imports and exports--APHIS has 
taken steps to minimize the impact of the reduced budget on these 
priority programs. These steps include the implementation of a hiring 
freeze and cost-cutting measures such as the elimination of unessential 
travel. The Agency is actively monitoring its budget and adjusting 
these program priorities to ensure that these critical import and 
export functions are maintained.
    AMS Response: Sequestration will not impact AMS' ability to carry 
out its Export Verification Programs as they are funded by voluntary 
user fees which were minimally impacted by sequester.

    Question 2. How will sequestration affect payments made to 
producers under the Milk Income Loss Contract (MILC) program?
    Answer. Sequestration reduced MILC payments by $14.79 million. In a 
letter on March 19, 2013, Secretary Vilsack proposed to use interchange 
authority under 7 U.S.C. 2257 to transfer funds from direct payments to 
several other programs including MILC to address the reduction from 
sequestration. Approval of interchange authority by Congress will 
allow, MILC recipients to receive payments as normal. Without 
interchange authority, USDA would reexamine how the sequestration 
reduction is applied; MILC recipients would receive smaller payments 
and producers who received payments in FY13 may be required to return a 
portion of these payments to meet sequestration funding shortfalls.

    Question 3. When will the MILC payments for October 2012 be issued? 
Will they be issued for the full amount, or reduced due to the 
sequester?
    Answer. Dairy producers received MILC payments of $0.02368 for 
October 2012; $0.11800 for January 2013; and $0.52224 for February 2013 
in May, once the use of interchange authority was approved.

    Question 4. How will sequestration affect the activities at AMS and 
the National Agricultural Statistics Service (NASS), including 
activities related to the issuance of reports? Which, if any, reports 
by NASS will be suspended because of sequestration? If any reports are 
being suspended, how did the agency determine which reports to suspend?
    Answer:
    AMS Response: The sequestration reduced AMS' Marketing Services 
appropriation by $4.1 million which was applied to each program, 
project, and activity as required. AMS will likely suspend the issuance 
of three Cotton and Tobacco market news reports. The Federal-State 
Marketing Improvement matching grants funding were reduced by $60 
thousand. Section 32 activities were reduced by $40.4 million for 
program purchases and administration. The available funding for the 
Specialty Crop Block Grant program was reduced to $52 million from $55 
million.
    NASS Response: USDA's National Agricultural Statistics Service 
suspended a number of statistical surveys and reports for the remainder 
of the fiscal year due to reduced funding caused by sequestration. 
Before deciding upon the program suspensions, NASS reviewed its survey 
programs against mission and user based criteria as well as the amount 
of time remaining in the fiscal year to conduct the surveys with the 
goal of finding available cost savings and maintaining the strongest 
data in service to agriculture. The decision to suspend these reports 
was not made lightly, but it was nevertheless necessary, given the 
funding situation, NASS's top priority was to maintain the Principal 
Economic Indicator Reports.
    NASS reduced reporting frequency when possible, and considered the 
costs of data collection for each report. The Milk Production Report 
will be produced, but in a streamlined version that eliminates farmer 
surveys.

   NASS suspended the following Agricultural Estimate reports:

    b All Catfish and Trout Reports including Catfish Feed Deliveries 
            and Catfish Processing;

    b July Cattle Report (This is a principal economic indicator 
            report, but NASS determined that its January Cattle Report 
            will be sufficient for this fiscal year);

    b Potato Stocks Reports;

    b All Non-Citrus Fruit, Nut, and Vegetable Forecasts and Estimates;

    b June Rice Stocks Reports;

    b All Hops and Hops Stocks Estimates;

    b Mink Report; Nursery Report;

    b June on- and off-farms stocks for Austrian Winter Peas, 
            Chickpeas, Dry Peas and Lentils; and,

    b July acreage forecasts for Austrian Winter Peas, Dry Edible Peas 
            and Lentils.

   Milk Production reports:

    b streamlined version of the monthly Milk Production Report will be 
            published through the end of the fiscal year. This report 
            will contain monthly milk production estimates, but will 
            not contain estimates for number of milk cows and the 
            output rate per cow, which requires costly survey data 
            collection. The Milk Production Report typically involves a 
            quarterly survey and modeling in the interim months. NASS 
            will forgo the survey and instead model for the rest of the 
            fiscal year to produce the streamlined report.

    b The annual Milk Production, Disposition, and Income report will 
            not be produced this year.

   NASS scaled back the following Agricultural Estimates 
        Reports in FY 2013:

    b Monthly Crop Production: The following items will not be included 
            in this year's reports:

      May 10 Report:

        (1) Revision of 2012 almond production

        (2) Indicated 2013 production of almonds

      June 12 Report: Hops area strung for harvest by variety

      July 11 Report:

        (1) Planted and harvested area for dry edible peas, Austrian 
            winter peas, and lentils

        (2) Indicated production of apricots, almonds

      August 12 Report:

        (1) Indicated area harvested, yield and production as of August 
            1 for hops

        (2) Indicated production of commercial apples, peaches, pears, 
            and grapes

   NASS Suspended the following Census of Agriculture Projects:

    b NASS is conducting the 2012 Census of Agriculture on Puerto Rico, 
            but due to the reduced budget coverage for the other 
            Outlying Areas is suspended. The outlying areas consist of:

       Guam,

       the U.S. Virgin Islands,

       Samoa, and

       U.S. Northern Mariana Islands.

    b Two Census of Agriculture special products are suspended:

       ZIP Code Tabulations

       County Profiles

    Question 5. The Office of Management and Budget's (OMB) 
sequestration report says that the Commodity Credit Corporation Fund 
will be cut by $329 million. Can you give us a breakdown of that figure 
and the programs it represents?
    Answer. Please refer to below table.

            Table 1: CCC Outlays Subject to Sequestration ($)
------------------------------------------------------------------------
                                        Sequesterable     Sequestration
    Program, Project or Activity           Amount            Amount
------------------------------------------------------------------------
                      CCC Outlays                                  5.10%
------------------------------------------------------------------------
Total CCC                                6,460,280,000       329,474,280
Marketing Assistance Loans                 261,996,000        13,361,796
2013-crop Direct Payments                4,950,904,000       252,496,104
2013-crop Loan Deficiency Payments           1,453,000            74,103
FY 2013 MILC (H.R. 8)                      290,000,000        14,790,000
2013 Non-Insured Assistance Program        165,000,000         8,415,000
Upland Cotton Econ Adj Assistance           49,318,000         2,515,218
Storage and Handling                           213,000            10,863
Administrative Expenses (Food for            9,559,000           487,509
 Peace Title II)
Brazilian Cotton Program                   147,300,000         7,512,300
Emerging Market Program                     10,000,000           510,000
Foreign Market Development                  34,500,000         1,759,500
 Cooperator Program
Quality Samples Program                      2,500,000           127,500
Technical Assistance for Specialty           9,000,000           459,000
 Crops
Market Access Program                      200,000,000        10,200,000
Bio-Fuel Program                           171,000,000         8,721,000
Food for Progress Purchase/                157,537,000         8,034,387
 Transportation
------------------------------------------------------------------------


    Question 6. Will sequestration impact fee-based programs like the 
dairy graders? If so, will fee-based programs--fees mind you, that 
cover a significant portion of the cost--be subjected to sequestration 
cuts in the same manner that non-fee based programs are impacted? If 
so, what will USDA do to mitigate the short and long term impacts to 
our export markets?
    Answer. AMS grading and verification activities are fully financed 
by user fees. Sequestration mandates a reduction of AMS grading 
programs' administrative expenditures. However, AMS does not expect 
sequestration to significantly impact the delivery of fee-funded 
services.

    Question 7. There have been reports that dairy and livestock 
futures trading on futures exchanges could be shut down because of 
their dependence on USDA grading and inspection as part of the physical 
delivery and cash settlement mechanisms of those futures products. What 
can you tell us about this? Has your Department been in touch with 
anyone at the Commodity Futures Trading Commission or with any futures 
exchange about the impact sequestration cuts to USDA services will have 
on futures trading?
    Answer. The passage and signing of H.R. 933 (``Consolidated and 
Further Continuing Appropriations Act, 2013'') assures funding of 
grading and inspection services for FY 2013. Prior to passage of H.R. 
933, USDA had numerous discussions with the CME futures exchange 
regarding how sequestration actions may affect physical delivery and 
cash settlement mechanisms of futures products.

    Question 8. Will there be impacts on individual farm bill 
conservation program participants under sequestration? Is there enough 
funding to pay out existing obligations under contracts in force?
    Answer. The Agency estimates that the funding reduction imposed by 
the sequester will reduce the Agency's ability to enter into new 
conservation contracts across all programs with approximately 11,000 
participants (assuming 2.5 participants per contract), covering 
approximately 3.2 million acres. These are contracts the Agency would 
have been able to enter into but will have to forego because of the 
reduction in funding.
    For most farm bill programs the Agency will have sufficient 
resources to cover the commitments made to our conservation partners in 
prior years. We are only able to do so, however, by reducing the new 
commitments the Agency makes in the current year. However, for the 
Conservation Security Program, which does not have the authority for 
new enrollments, the Agency does not have the same flexibility. As a 
result, the Agency is currently exploring the options available to 
provide additional resources for this program, including a possible 
reprogramming from another mandatory program. Without additional 
resources, the Agency would be forced to reduce the payments on all 
existing contracts, which would require requesting the return of funds 
from participants who have already received full payment.

    Question 9. How is the Department managing and prioritizing Farm 
Service Agency loan funds given the funding levels in the Continuing 
Resolution? Is demand from FSA direct and guaranteed borrowers running 
ahead or behind previous years? Are FSA loans subject to a sequester 
order?
    Answer. For those programs which have a significant backlog of 
approved, unfunded applications, funding provided for Farm Service 
Agency (FSA) farm loans by the Consolidated and Further Continuing 
Appropriations Act, 2013 will be distributed by date order of 
application, subject to the funding reserves for socially disadvantaged 
and beginning farmers as prescribed by statute. For programs without 
application backlogs, funds will be allocated to states according to 
formula, again subject to the statutory reserves for targeted groups.
    Demand for direct loan funding is running slightly ahead while 
demand for guaranteed loan funds is consistent with a year ago at this 
time.
    The budget authority which supports farm loan programs is subject 
to sequestration, and the additional 2.5% rescission mandated in P.L. 
113-6.

    Question 10. New enrollments in the Conservation Security Program 
(CSP) have been shut down for Fiscal Year 2013. Can you explain to us 
why you aren't able to do any new sign-ups?
    Answer. Under the terms and conditions of the Continuing 
Appropriations Resolution, 2013 (P.L. 112-175), there would have been 
sufficient funding to provide payments on contracts entered into in 
previous years, and to provide the required oversight to ensure that 
all such payments were properly made, prior to the reductions imposed 
by the sequester. However, the funding restraint enacted in Section 
726(1) of the Consolidated and Further Continuing Appropriations Act, 
2012 (P.L. 112-55) was carried forward under the continuing resolution, 
and constrained USDA's ability to enroll new acreage in the program.
    The full-year appropriation passed in March will allow the Natural 
Resources Conservation Service (NRCS) to proceed with a 2013 CSP 
enrollment period. Based on the latest projections, the agency 
estimates an enrollment of 11.3 to 11.8 million new acres this fiscal 
year.

    Question 11. In discussions with OMB regarding the Administration's 
list of anomalies that were submitted to the Appropriations Committees 
to be considered for inclusion in the continuing resolution, did the 
Department and OMB consider requesting an adjustment for CSP?
    Answer. Under the terms and conditions of the Continuing 
Appropriations Resolution, 2013 (P.L. 112-175), there would have been 
sufficient funding to provide payments on contracts entered into in 
previous years, and to provide the required oversight to ensure that 
all such payments were properly made, prior to the reductions imposed 
by the sequester. However, the funding restraint enacted in Section 
726(1) of the Consolidated and Further Continuing Appropriations Act, 
2012 (P.L. 112-55) was carried forward under the continuing resolution, 
and constrained USDA's ability to enroll new acreage in the program. In 
order to preserve Congress' prerogative to determine the funding level 
for the program, USDA decided to operate the program within the funding 
level provided under the CR until passage of the full-year 
appropriation determined the final funding level.
    The Consolidated and Further Continuing Appropriations Act, 2013 
(P.L. 113-6) did not include the funding constraint enacted in Section 
726(1), and USDA will be able to enroll new acreage in FY 2013. NRCS 
requested an apportionment for these funds.

    Question 12. Please provide an analysis for the record of the 
economic benefit to industry and consumers as a result of the poultry 
slaughter modernization rule.
    Answer. FSIS estimates that participating establishments will see 
lower production costs resulting in a shared benefit to consumers and 
industry of about $250 million annually. For further information, 
please refer to the full discussion of benefits in the proposed Poultry 
Slaughter Modernization Rule at http://1.usa.gov/10WZP7w.*
---------------------------------------------------------------------------
    * Editor's note: The hyperlink to the official referenced document 
in PDF format, Modernization of Poultry Slaughter Inspection, Proposed 
Rule, Federal Register, Vol. 77, No. 18, Friday, January 27, 2012, Part 
II is: http://www.gpo.gov/fdsys/pkg/FR-2012-01-27/pdf/2012-1516.pdf.

    Question 13. In developing the proposed rule for poultry slaughter 
modernization and in moving towards a final rule, what steps have been 
taken to analyze worker safety issues in both HACCP-based Inspection 
Models Project (HIMP) plants and non-HIMP plants?
    Answer. As a public health agency our core mission is to protect 
the food supply. This is the driving force behind our proposal to 
modernize poultry inspection. USDA has been inspecting poultry in 
largely the same way since the 1950s. The science to detect pathogens 
has advanced considerably since then. Now, we are leveraging that 
science to better protect public health by proposing the Poultry 
Slaughter Modernization Rule. We believe that we have an obligation to 
do our best to ensure food safety. We have demonstrated that this new, 
modernized system could help us reduce pathogens--potentially 
preventing 5,000 foodborne illnesses annually.
    In order to ensure worker safety, we are working with our Federal 
partners that have oversight responsibility and regulatory authority 
over this area. The following are examples of how we have partnered 
with other Federal agencies:

   USDA has asked the National Institute for Occupational 
        Safety and Health (NIOSH) to study the effects of line speeds 
        on plant workers.

   USDA has been coordinating with Occupational Safety and 
        Health Administration (OSHA) to explore how we can assist that 
        agency within our legal authority, including training FSIS 
        inspectors to report plant worker safety concerns to OSHA.

   USDA also encourages industry to collaborate with OSHA and 
        NIOSH.

    Question 14. What are the potential public health advantages 
associated with the poultry slaughter modernization rule?
    Answer. As we outlined in the proposed rule, FSIS would focus its 
inspection personnel on critical food safety tasks, such as pathogen 
testing and verifying HACCP and sanitation standard operating 
procedures, and the quality assurance tasks would be turned over to the 
company. FSIS would continue to inspect every carcass, as required by 
law, but our inspection personnel would focus on the conditions that 
present public health concerns and not on quality defects. We estimate 
that the new poultry inspection system would avert about 5,000 
illnesses from Salmonella and Campylobacter each year.

    Question 15. Knowing that USDA faces sequestration and tight 
budgets, how does the poultry slaughter modernization rule help you 
operate in a fiscally constrained environment? Are there increased 
costs with implementation and/or cost savings?
    Answer. FSIS estimates that modernization of poultry slaughter 
inspection, if fully implemented as proposed, would save taxpayers 
approximately $90 million over a 3 year period after implementation 
begins.

    Question 16. An impressive aspect of the USDA Food for Progress 
program is that it has market-driven approaches to strengthen food 
systems and incomes. Could you provide examples of how this program has 
contributed to economic development and a favorable environment for 
private sector investment?
    Answer. In FY 2012, USDA completed a 4 year, $5.7 million Food for 
Progress investment in micro lending capital and small business loans 
in Tanzania. Small holder producers and small businesses used loans to 
expand food processing operations, buy new equipment, buy supplies in 
bulk, improve transportation to markets, and install greenhouses and 
irrigation infrastructure. As loans were repaid on a seasonal basis, 
these funds were re-cycled an average of three times. The growth in the 
USDA loan capital allowed the number of loan recipients to grow from 
15,000 initial borrowers to more than 46,000 borrowers at the end of 
the project. The success of the program encouraged other lenders, such 
as the World Bank and Credit Suisse Bank, to invest an additional $18.8 
million in the project. The investment from other lenders supported an 
additional 382,000 loans valued at more than $206 million. Most 
important, the loan fund has turned into a sustainable operation that 
will continue to provide credit to producers and businesses even though 
USDA support has ended.
    In FY 2012, implementation of a Food for Progress program in Kenya 
was completed. The $8 million grant boosted Kenya's dairy value chain 
through improvements in production and marketing. USDA worked with Land 
O' Lakes in improving agricultural productivity by providing training 
to small farmers in improved livestock practices and water conservation 
schemes. The project also improved small farmers' access to financial 
services. On the marketing side, the Food for Progress program 
supported the construction and refurbishment of cold chain storage 
facilities, training in efficient and safe methods for handling bulk 
milk, and improvements in the technical capacity and infrastructure of 
dairy cooperatives. The project's activities reached approximately 
78,000 farmer beneficiaries. Milk production per cow rose from 6.9 
liters to 9.6 liters (a 12.7 percent increase). Net farmer income rose 
by 745 percent over the life of the project, and 86,200 jobs were 
created or sustained.
    Looking ahead, USDA plans to support a $22.2 million Food for 
Progress grant to increase productivity, trade, and value of cashew 
production by small holder farmers in Mozambique. Key features of the 
project include developing in-country cashew roasting and processing 
capacity, as well as linking producers directly to international 
retailers. The project will train producers to improve cashew yields 
and quality, establish seed nurseries, improve business process 
management, and provide loans for needed capital inputs. On the sales 
end, the Food for Progress program will help processors to achieve food 
safety standards and certifications and establish purchasing contracts 
with international retailer private labels (e.g., Whole Foods, Costco). 
Purchasing contracts emphasize the use of innovative ``shared value'' 
models where profits are partially diverted back into community 
investments for farmers. The project is expected to boost the incomes 
of 340,000 beneficiaries by about 74 percent.

    Question 17. If the Food for Peace program is changed to an 
international procurement program, what would be the potential impact 
on U.S. agricultural, transportation and other jobs and on U.S. 
economic activity?
    Answer. The Administration's FY 2014 Budget proposal would transfer 
$1.47 in P.L. 480 Title II funds to the U.S. Agency for International 
Development. Commercial business generated by the Food for Peace 
program in the United States is relatively small, and we would not 
expect substantial economic impacts in the agricultural and 
transportation sectors. Of the $1.4 billion in Title II funding, only 
about 40 percent is spent on commodities, which is less than one 
percent of recent U.S. agricultural exports. The potential impact is 
further mitigated by due to the FY 2014 Budget proposal to use at least 
55 percent of the funding for the USAID food program to purchase U.S. 
products.
    Other parts of the FY14 budget proposal would help to further 
mitigate any economic impact in the United States. First, the 
Administration proposes to provide $330 million through the Community 
Development and Resilience Fund, which would help to continue the 
development programs of nongovernment organizations. Second, the budget 
proposal would provide $25 million in additional subsidy through the 
Maritime Security Program. This increase would increase the per-vessel 
subsidy by about 25 percent on average and could prevent a loss of up 
to 425 jobs over time. Third, up to $10 million will be available for 
worker adjustment training for affected workers.

    Question 18. In Africa, wheat has been an important commodity for 
food aid programs since it is not produced in appreciable amounts. 
Since it cannot be locally procured, where would it be bought if not 
provided from the United States? Which other countries would be 
suppliers?
    Answer. Following the implementation of the Administration's FY 
2014 Budget proposal, the Administration would review market situations 
and food assistance needs in recipient countries to determine the best 
type of response and source of commodity. The budget proposal envisions 
that U.S. wheat and other products would continue to be used in food 
assistance programs. If local and regional sources of wheat are not 
sufficient to meet the needs, then U.S. wheat would likely be used.

    Question 19. Just a few years ago, 70% of the corn crop in Kenya 
was declared contaminated by aflatoxin. Reports by the Partnership for 
Aflatoxin Control in Africa show that high levels of aflatoxin are 
common in Africa, found in many basic foods, like corn, sorghum, 
cassava and peanuts, which undermines local purchase programs. More 
worrisome is that contamination controls and enforcement are lacking, 
so unsafe products regularly seep into the food supply. While the USDA 
Local and Regional Procurement Pilot Study report indicates that small 
amounts can be bought locally, it does not address the large 
procurements that are more typical for food aid. How would that be 
achieved ``locally'' and with assured quality and safety?
    Answer. Organizations and donor agencies employ a number of best 
practices to ensure the quality and safety of the commodities, 
including extensive testing requirements for all commodities. Recent 
experiences by USDA and USAID demonstrate that testing is successful in 
assuring quality and safety. In USDA's Local and Regional Procurement 
Pilot Study, USDA required that all commodities procured be tested for 
aflatoxin. USDA found that most countries had testing facilities with 
the ability to conduct this type of testing. Under the Emergency Food 
Security Program (EFSP), USAID requires that all cereals and cereal 
product commodities be tested for aflatoxin and have moisture content 
certified. The maximum acceptable total aflatoxin level is 20 parts per 
billion, which is the U.S. Food and Drug Administration action level 
for aflatoxin in human foods. USAID requires that all organizations are 
required to contract established inspection services prior to shipment 
and distribution and retain a copy of each certificate for their 
records.
    While procurements under the USDA Local and Regional Food Aid 
Procurement Pilot Project involved smaller tonnages due to the 
available funding under the project, other programs and organizations 
have been successfully procuring large quantities of commodities in 
developing country markets across the globe. For example, in 2012, the 
United Nations World Food Programme (WFP) procured 1,806,899 metric 
tons (MT) of food aid commodities from Low Income Countries or Middle 
Income Countries. Of this amount, WFP procured 706,249 MT in Africa. 
The WFP and other organizations have found testing to be successful in 
assuring quality and safety.

Questions Submitted Hon. Mike McIntyre, a Representative in Congress 
        from North Carolina
    Question 1. Mr. Secretary, thank you for the work you have done to 
focus on the economy of rural America. One major issue facing my 
district and most of rural America is the lack of adequate 
infrastructure that is necessary for our rural communities to compete 
in the global economy. For instance the backlog of pending applications 
for USDA Rural Development's water/waste water projects is $3.2 
billion. I have worked to include mandatory funding for this backlog in 
the farm bill. How will your Department work to address this issue?
    Answer. Thank you for your support of our Water and Waste Disposal 
(WWD) Loan and Grant Programs. Since 2009 USDA, Rural Development, 
Rural Utilities Service has invested $8 billion in new and improved 
infrastructure that will benefit 4.5 million households and businesses 
and 12.4 million rural residents.
    USDA will use any additional funds received to address the backlog 
of requests for funding. Rural Development will also continue to 
encourage its State Offices to partner with other state and Federal 
funding sources to address pending funding requests.

    Question 2. Now that the $85 billion in sequester cuts have taken 
effect, how will USDA's Rural Development programs be impacted, and how 
will you minimize the impact of the sequester on rural communities?
    Answer. Because of the sequester and the additional rescission in 
the final FY13 appropriations measure, Rural Development staffing and 
programs will experience a third year of significant reductions. The 
two most significant budget lines for Rural Development to be affected 
are its Salaries and Expense account and the Rental Assistance account. 
For Salaries and expenses, after already reducing the workforce by 18 
percent over the last 18 months (or over 1,000 people), RD is looking 
for ways to manage the approximately 7.8% reduction in S and E by 
minimizing the impact on its workforce. We are doing so by cutting all 
other expenses and considering how to utilize our interchange authority 
to shift resources into Salaries and Expenses. Further, USDA recognizes 
how important the rental assistance program is to our multifamily 
housing partners and tenants, and we are committed to providing as much 
assistance to borrowers as possible. We are working to ensure our 
multifamily housing properties continue to be financially healthy as 
possible and are able to provide affordable housing to rural residents. 
We will work with our borrowers to explore every available step to 
mitigate the effects of these cuts, including working with borrowers to 
alleviate as much as possible the negative consequences of the loss of 
rental assistance from project income.

    Question 3. Rural development stakeholders in my district are 
concerned that many rural communities in NC lack the infrastructure 
needed to grow or even sustain businesses and industries in their 
communities. As a result, they are losing population as many younger 
folks leave to find jobs, and this in turn further slows economic 
growth. This is true for the family farm as well--up-and-coming 
generations are moving away and farms that have traditionally been 
family-owned are being sold to corporations or developers. What are 
USDA's plans to continue to help rural committees secure jobs and 
promote economic development moving forward?
    Answer. As you know, USDA Rural Development is the leading Federal 
agency for rural America. RD supports rural communities and enhances 
the quality of life for rural residents by improving economic 
opportunities and community infrastructure. Rural Development has loan, 
grant, and technical assistance programs that help create sustainable 
jobs and lay a strong foundation for rural America to participate fully 
in the global economy. Our programs support a wide variety of 
infrastructure projects that include, but are not limited to, improving 
and expanding the rural electrical grid; providing clean drinking water 
to rural communities; providing access to and improving Internet 
service to rural families and to businesses; and constructing, 
converting, enlarging, repairing, and modernizing access streets and 
roads, parking areas, utilities, and pollution control and abatement 
facilities.
    To help rural communities move forward, Rural Development will 
continue our successful outreach to our stakeholders through our 47 
state offices through both our business programs and our cooperative 
programs. For example, RD has an extensive storehouse of educational 
material that covers all aspects of the cooperative business model and 
is used by RD employees, cooperative developers, government officials, 
academics and the general public to better understand and use 
cooperatives as an economic development tool in rural areas. 
Additionally, RD staff has expertise in conducting research, providing 
technical assistance, and developing educational and outreach 
activities that support cooperative approaches for family farms to 
increase income and maintain viability.
    In addition, Rural Development is:

   Embarking on several new Capital Markets initiatives 
        associated with Rural Business--Cooperative Service programs 
        for improving rural access to capital at both the regulatory 
        and policy levels. For example, RD is also looking for 
        opportunities to improve the rate at which funds in revolving 
        loan funds established under the Intermediary Relending Program 
        can be re-loaned. To increase the utilization of these funds, 
        RD is engaging its intermediaries to understand the 
        difficulties in lending the money and to encourage them to be 
        more active. Our State Offices are holding lender/re-lender 
        forums during the first half of FY 2013 to engage intermediary 
        lenders and encourage them to be more active and to lend their 
        balances, and to identify ways to improve the program. In 
        addition, the National Office is emphasizing with the State 
        Offices the potential for transferring balances from non-
        performing intermediaries to performing intermediaries. Just 
        recently, this effort with our intermediaries has paid off with 
        $750,000 in loans being made to four recipients in Montana.

   Continuing to prioritize assistance to beginning and 
        socially disadvantaged producers and small and medium-sized 
        farms structured as family farms within the Value-Added 
        Producer Grant program. This prioritization addresses some of 
        the out-migration issues in rural communities by providing the 
        resources necessary to develop profitable and sustainable 
        agricultural businesses and expand employment opportunities.

    Rural Development Section 502 housing programs have a significant 
impact on the quality of life in rural America. These programs are 
among the largest provided by USDA and are estimated to have created 
more than 250,000 jobs in rural communities in FY 2012--and more than 1 
million jobs in the last four years. A strong housing sector is 
critical to health of the rural economy, and the USDA Rural Housing 
Service (RHS) is committed to promoting a vibrant rural housing market. 
Combining very manageable fees with an appealing no-down payment 
mortgage structure, the program has enabled hundreds of thousands of 
eligible low and moderate-income borrowers to become successful 
homeowners.
    Additionally, through our Water and Waste Disposal Loan and Grant 
Programs, we ensure that rural communities have the critical 
infrastructure they need to support the needs of rural residents and 
provide opportunities for business development. We will continue to 
fund as many of these critical projects as possible and to partner with 
other funding programs to do so. These investments will provide 
immediate and long term job opportunities in rural America.

    Question 4. Livestock and meatpacking are both major industries in 
my district. The livestock products in my district have a market value 
greater than $2 billion annually, and the largest meat processing 
facility in the world is located in Bladen County. The people who work 
and depend on these industries are middle class Americans with 
families, who have mortgages and bills to pay every month. I am 
concerned by the impact that sequestration will have on FSIS frontline 
inspectors. You previously indicated that inspectors might be 
furloughed up to 15 days because of sequestration. When these 
inspectors are furloughed, the meat processing facilities cannot run, 
and the employees and farmers do not get paid.
    Absent any changes to the statute that triggered sequestration, 
what, if any, administrative tools are available to mitigate the impact 
of sequestration on the furloughing of FSIS inspectors and the impact 
to the meat processing industry? Could inspectors be furloughed on a 
staggered schedule, such that processing activities are perhaps slowed, 
but not completely disrupted? If not, could inspectors be furloughed 
for half days, spaced over several months, to prevent complete 
disruptions?

    Question 4a. What is the practical timeline for when all of this 
will take place? It is important that companies and growers have time 
to plan and prepare for this.

    Question 4b. How can Congress and the affected industries assist 
you in fixing this problem?
    Answer 4-4b. Fortunately, Congress provided enough funding in the 
FY 2013 CR to prevent the need for furloughs of FSIS inspection 
personnel. Thus, industry operations will not be disrupted.

    Question 5. Can you relay any suggestions you have for livestock 
producers who may be dealing with more livestock than they have barn 
space now that the sequester has gone into effect and meat inspectors 
are set to be furloughed? This is a question I've been getting from 
producers in NC, who operate under very tight schedules on how they 
move their livestock. Typically they have a date scheduled with the 
packer to receive their hogs. Then they spend about 2 days cleaning, 
sanitizing and drying barns before the next group of livestock move in. 
I'm concerned that if a furlough situation continues for 2 or 3 days 
that there will be no place to put these livestock, and this could pose 
a huge biosecurity and welfare risk for livestock producers.
    Answer. Fortunately, Congress provided enough funding in the FY 
2013 CR to prevent the need for furloughs of FSIS inspection personnel. 
Thus, industry operations will not be disrupted.

    Question 6. Many rural development stakeholders in my district have 
expressed concern that a large number of key personnel in state Rural 
Development offices will soon be retiring. How will you address the 
issue of replacing the critical staff (such as engineers) in these 
offices as they retire?
    Answer. Thank you for your question. The reduced staff has strained 
our ability to protect the RD portfolio and deliver RD programs. We are 
making the best use of the resources we have and within the current 
budget constraints. We are addressing the reductions in staffing in 
four ways. First, we are working with our state offices and conducting 
training for staff that have, or will be, reassigned from other program 
areas to work on water and waste loans and grants. Second, we are 
helping to facilitate, where possible, the sharing of resources across 
state offices. For example, our South Carolina Rural Development Office 
is receiving assistance from one of the three engineers on our North 
Carolina staff. We are also exploring longer-term solutions that will 
allow for regional staffing approaches to address staffing shortages 
where they exist for engineers in particular. Finally, we are also 
evaluating requests for backfilling of key positions within current 
budget constraints.

    Question 7. Back in 2010, you were kind enough to join me in my 
Congressional district to announce almost $20 million in USDA Federal 
funds for Lumbee River Electric Membership Corporation (LREMC) for 
rural broadband services. The announcement brought broadband to 27,000 
people in my district, 1,600 businesses and 100 community institutions, 
and it created or saved 51 jobs. Going forward, what is the potential 
for USDA investments in broadband given our national budget situation?
    Answer. USDA will continue to support the Administration's goals 
for broadband deployment in rural communities. This mission is 
critically important to the future of rural America. The 2014 Budget 
provides $8.3 million in budget authority to support $63 million in 
broadband loans, $10 million for Broadband grants, $25 million for 
grants under the Distance Learning and Telemedicine Program and $690 
million in program level funding for telecommunications infrastructure. 
For FY 2013, RUS has available more than $700 million in program level 
funding for broadband infrastructure for rural residents, businesses 
and community institutions. RUS is diligently monitoring the progress 
of funded projects and ensuring that funds are used appropriately, 
while managing a $4.6 billion loan portfolio. Access to broadband is 
essential for the economic development and quality of life in rural 
communities and is recognized by the Secretary as a key initiative. We 
are working in several areas to encourage public/private partnerships 
to leverage Federal resources with state and local governments, 
industry, other Federal agencies and key rural constituencies to 
maximize the impact of public and private funding for broadband 
services.

    Question 8. In his ``Outlook for Agriculture in 2013'' address, 
USDA Chief Economist Joe Glauber discussed an expected drop in 
commodity prices. How will this impact the livestock industry going 
forward, and will it spur more planting in non-grain crops like tobacco 
cotton and peanuts?
    Answer. On March 28, 2013, USDA released its Prospective Plantings 
report. The report indicates that producers intend to plant 97.3 
million acres of corn in 2013, which, if realized, will be the highest 
planted acreage since 1936. Soybean planted area is estimated at 77.1 
million acres, down slightly from last year but the fourth highest on 
record, if realized. All wheat planted acres are estimated at 56.4 
million acres, up 1 percent from 2012. All cotton planted area for 2013 
is expected to total 9.82 million acres, down 18 percent from last 
year. All tobacco area for harvest in 2013 is estimated at 349,630 
acres, up 4 percent from 2012. Flue-cured tobacco is estimated at 
218,000 acres, up 6 percent from 2012.
    The outlook for 2013 calls for a rebound in crop yields resulting 
in record production levels for corn and soybeans, and by autumn 2013, 
lower prices for most grains and oilseeds. Lower crop prices should 
lead to lower feed costs and improved profitability for the livestock, 
dairy and poultry sectors.

    Question 9. In rural communities, there are many challenges to 
capital access. Does the lack of capital call for a continued 
commitment in rural development programs that offer capital to rural 
business owners?
    Answer. RD agrees that rural business owners continue to face many 
challenges in accessing capital and that this situation calls for a 
continued commitment in our rural development programs that offer 
capital assistance to rural business owners. The need for access to 
capital, especially for small and mid-sized businesses, is one of the 
key findings made by the National Governors Association in their 
January 2013 report, ``Making'' Our Future--What States are Doing to 
Encourage Growth in Manufacturing through Innovation, Entrepreneurship, 
and Investment. This report discusses, in part, gaps in access to 
capital for innovation, commercialization, and business expansion. The 
need to continue funding rural development programs is further 
illustrated by the fact that many of our programs frequently have more 
demand for financial assistance than we can meet.

    Question 10. What is your team doing to resolve China and Russia's 
decisions to enforce zero-tolerance standards for trace amounts of 
ractopamine, which has effectively banned U.S. beef, pork and turkey 
imports in those countries?
    Answer. USDA repeatedly expresses our stalwart disagreement with 
the Russian Government on its actions related to ractopamine, through 
official meetings in Washington and Moscow and official correspondence. 
USDA and USTR will continue to press Russia to adopt the international 
standards for ractopamine minimum residue levels in beef and pork.
    USDA is coordinating with U.S. industry on a strategy for supplying 
ractopamine-free beef, pork and turkey meat shipments to Russia. While 
China is not demanding ractopamine-free certification from USDA and 
exports of ractopamine-free pork continues to flow, China has demanded 
that all U.S. pork shipments departing the United States on or after 
March 1, 2013 be tested prior to importation to demonstrate that they 
do not contain ractopamine. We continue to consult with U.S. industry 
associations and USTR on the best way to address these demands.

    Question 11. Your efforts as chair of the White House rural council 
have made improving the rural economy a priority. I appreciate your 
efforts to better coordinate Federal agencies efforts in rural America. 
What plans do you have for the White House rural council moving forward 
and how will you ensure rural stakeholders are able to provide input?
    Answer. The White House Rural Council (WHRC) was established to 
better coordinate Federal programs and maximize the impact of Federal 
investment to promote economic prosperity and improve the quality of 
life in rural communities. The WHRC will work with stakeholders to 
identify challenges and develop solutions to improve opportunities and 
the quality of life in rural areas. In 2013 efforts will continue to be 
focused on following four areas:

   Improving the flow of capital to rural areas, job creation, 
        and workforce development;

   Increasing telecommunications, renewable energy and new 
        markets opportunities in rural communities;

   Expanding access to quality health care, education, and 
        housing, and particularly in persistent poverty counties and 
        tribal areas; and

   Developing outdoor recreational opportunities that 
        contribute to economic growth.

    Question 12. Nearly a year ago, FSIS issued its proposed rule on 
Modernization of Poultry Inspection. According to USDA's data, 
establishments operating under the HIMP pilot program perform as well 
as, or better than, traditionally inspected plants. Furthermore, the 
rule will create additional poultry plant jobs, and will have 
substantial budgetary savings for FSIS. Can you give us an update on 
when USDA plans to issue the final rule?
    Answer. The agency is in the process of preparing a final rule on 
poultry slaughter after considering the comments received. It is not 
possible to provide a specific timeline, although I have said publicly 
that we hope to get the final rule out by September 2013.

    Question 13. I'm also concerned about how certain green building 
standards, especially the U.S. Green Building Council's LEED system, 
affects our rural economies. As you're aware, the LEED system 
discourages the use of forest products--which is not good for states 
like North Carolina--where the forest products industry is the 4th 
largest industry and employs over 60,000 people, many of whom are in 
rural communities. Recently, I learned that despite this, USDA 
continues to use the LEED system for its buildings--including a recent 
building on the Mars Hill ranger station in my home state. Why is USDA 
using a green building system that discourages the use of forest 
products--are you concerned with the impact this could have on rural 
economies? What is USDA doing to help correct this problem as the 
Department responsible for supporting rural economies and American 
agriculture and forestry?
    Answer. Thank you for your question regarding building construction 
certification standards and the use of wood products in the new 
Appalachian Ranger District office located in Mars Hill, North 
Carolina. Forest Service policy was changed in May 2011 to also allow 
for Green Globes certification, while LEED certification is still an 
option and has been in effect for several years. Even though Agency 
policy permits 3rd party certification of either standard, we currently 
recommend that all new construction projects be reviewed for Green 
Globes certification. The policy change in 2011 also encourages 
projects to be designed and constructed with domestically harvested 
wood products, ideally locally sourced and from National Forest System 
lands, wherever practicable and to the maximum extent feasible. The 
Southern Region is following this direction and is currently on track 
to complete the agency's first Green Globes certified project, a 
renovation of, and addition to, the Enoree Ranger District Office, 
located in Whitmire, SC.
    The change in policy did not occur before the design of the new 
office in Mars Hill was completed in 2007. Construction began in 2011 
once funding was received for the project and was completed in 2012. 
Although, the building contractor was not required by the design to use 
certified wood to construct the building; a substantial amount of 
locally purchased wood was used in the construction, including framing, 
trim, roof decking, windows, and cabinetry. The majority of the 
building materials, in all of our construction projects, is wood and 
wood products.

Questions Submitted Hon. Kurt Schrader, a Representative in Congress 
        from Oregon
    Question 1. My colleague, Mr. Glenn Thompson and I have 
reintroduced the Forest Products Fairness Act (H.R. 979), a bill to fix 
the discrepancies against most forest products in the USDA biobased 
markets program. I continue to believe this program was developed to 
encourage the use of all biobased products and should promote all 
agriculture and forest products. With that in mind, can you respond to 
the following questions:
    How USDA is currently managing the Biobased Markets Program with no 
mandatory funds provided in the recent farm bill extension? What 
elements are you implementing and what are on hold?
    Answer. USDA is implementing the Biobased Markets Program using 
employee staff resources in the absence of funding for technical 
support. To the extent feasible, we are continuing to develop 
regulations to designate additional categories of biobased products for 
preferred Federal procurement. This effort involves regulation writing 
for products for which biobased content testing has already occurred. 
No new testing is possible without funding. USDA is also conducting 
training and outreach activities locally in Washington, D.C. or by 
telephone. USDA suspended the labeling program on January 31, 2013 due 
to lack of funding for our third party independent certification 
organization.

    Question 1a. Can you explain what is meant by ``mature'' and how 
you account for the continuous improvement and change in the production 
and manufacturing of forest products?
    Answer. USDA's Guidelines for Designating Biobased Products for 
Federal Procurement indicate in 7 CFR 3201.5(c)(2) that ``USDA 
additionally will not designate items for preferred procurement that 
are determined to have mature markets. USDA will determine mature 
market status by whether the item had significant national market 
penetration in 1972.'' USDA has adopted this same definition for the 
voluntary labeling program. The Department evaluates label applications 
for forest products with the assistance of the Forest Service Forest 
Products Laboratory in the determination of the mature market 
exclusion.

    Question 1b. You also have a rule-making underway to consider 
changing ``mature'' to ``new and emerging markets.'' I remain concerned 
that this proposed change does not address my belief that this USDA 
program should promote all products that support strong rural 
economies, jobs, and America's forest and agriculture land owners 
regardless of how new or old the products are. Can you provide an 
update on the Department's plans for finalizing this rule?
    Answer. USDA is evaluating comments received on the proposed rule 
to amend the Program Guidelines and drafting a final rule; however this 
effort is hampered by the lack of technical support as described above. 
Nevertheless, once this effort is completed the draft final rule will 
undergo internal USDA review and a 90 day review by the Office of 
Management and Budget prior to its promulgation.

    Question 2. In 2011, the USDA changed its green building policy to 
call for use of all credible green building rating systems, not just 
LEED, and you announced plans to prefer wood products in USDA 
buildings. Can you provide an update on what the Department has done to 
implement this? How many buildings have been built with wood, and how 
many have used rating systems other than LEED--which discourages wood 
use? What additional research and demonstration is being done to have 
wood products more widely used by other Federal agencies and the 
building community?
    Answer. Since May 2011, the Forest Service policy is that all new 
building construction projects for regional offices supervisor's 
offices, district offices, visitor centers, and research offices or 
laboratories where the building is 10,000 gross square feet or greater 
in size, must be registered and certified using either the U.S. Green 
Building Council's Leadership in Energy and Environmental Design (LEED) 
rating system (minimum Silver certification), Green Globes (minimum Two 
Green Globes certification) or other third-party certification system. 
All other buildings, whether new or major renovations, must be designed 
to incorporate sustainable principles into the systems and components 
appropriate to the building type and project scope. This requirement 
applies to buildings on an individual basis, and the most recently 
issued version of the third-party certification system must be used. We 
encourage construction projects to be designed and constructed with 
domestically harvested wood products ideally locally sourced and from 
National Forest System lands, whenever practicable and feasible. We 
currently are recommending that all new construction projects be 
considered for Green Globes certification.
    The following facilities were designed prior to May 2011 and 
constructed since May 2011. The majority of building materials used in 
these facilities is wood and wood products:

   Angeles National Forest Supervisor Office, Arcadia, CA

   Camino Real Ranger Station, Carson National Forest, Penasco, 
        NM

   Corvallis Forest Science Laboratory and Siuslaw National 
        Forest HQ Office, Corvallis, OR

   Arcata Lab, CA

   Juneau Lab, AK

   Wood Products Insect Laboratory, Starkville, MS

   White Mt. Forest Supervisor's Office, NH

   Francis Marion Ranger District Office, Huger, SC

   Deschutes Forest Supervisor's Office, OR

   Appalachian Ranger District Office, NC

   Walker Ranger District Office, MN

    These are larger facilities; however there have also been some 
small buildings constructed that also contain a majority use wood and 
wood products. The majority of the building materials, in all of our 
construction projects, are wood and wood products. We estimate that 
wood makes up approximately two thirds of all building materials used 
for new facilities and large scale renovation projects.
    In December 2011, the Forest Service Forest Products Laboratory 
published ``Science Supporting the Economic and Environmental Benefits 
of Using Wood and Wood Products in Green Building Construction''. This 
report summarizes the scientific findings that support the 
environmental and economic benefits of using wood and wood products in 
green building construction. It addresses a general lack of recognition 
that wood is a renewable resource, helps mitigate climate change, 
promotes healthy forests and is a green construction material. The 
report also:

   Provides solutions to advance wood as a green building 
        material, including:

     Scientific advancement in the area of life cycle 
            analysis

     Development of new technologies for improved and 
            extended wood use

   Outlines benefits in helping achieve USDA objectives, 
        including:

     Creating domestic jobs

     Bolstering the competitive position and long-term 
            economic stability of the wood industry

     Reducing U.S. dependence on foreign oil

   Offers recommendations on how to accomplish:

     Research and development--life cycle analysis

     Technology transfer--carbon and green building 
            benefits of typical wood structures
Questions Submitted Hon. Joe Courtney, a Representative in Congress 
        from Connecticut
    Question 1. The USDA's ``Report on the Definition of Rural'' 
explains that your agency is ready to use the 2010 Census figures for 
Rural Development programs. Under this path the ``rural in character'' 
exceptions that were made under the last farm bill will expire on March 
28th. Hundreds of RD mission areas that have unique characteristics 
warranting this exemption would become ineligible overnight. It is my 
understanding from the Committee on Appropriations that the ``rural in 
character'' grandfathering will be continued under a new CR without any 
changes to the current legislative language. Do you intend to continue 
the status quo of grandfather in target areas that utilize older Census 
data to determine ``rural in character'' eligibility or would new CR 
language need to be tailored to ensure the status quo?
    Answer. The Consolidated and Further Continuing Appropriations Act 
of 2013 (CR) signed into law on March 26, 2013 extends the eligibility 
of communities for housing programs administered by the Rural Housing 
Service (Single Family and Multi Family Housing Programs) on September 
30, 2012 to September 30, 2013 (Title VII, Section 731). All other 
Rural Development programs will use the 2010 Census data to determine 
eligibility for rural areas beginning on March 27, 2013.

    Question 2. It is my understanding that USDA has proposed a new 
formula for the allocation of full-time equivalent (FTE) slots in local 
RD offices. The formula announced would use new factors to determine 
what staffing an office might have. The three main determinants of FTE 
slots would be geographical size of the state, the amount of rural 
population in the state, and the amount of rural poverty in the state. 
I also understand that there would be more weight put towards rural 
population and rural poverty than geography. While I recognize the 
difficult fiscal position USDA currently finds itself and understand 
the need your agency has to allocate RD resources to those areas that 
need it most, I am concerned that this formula targets specific 
geographic areas at the expense of others. Will there be consideration 
given in this new formula for factors such as the number of jobs 
created, the amount of productivity in the state, or the amount of 
contract servicing needed in the state? Also, does your agency intend 
to utilize a similar formula beyond the RD office, perhaps to NRCS or 
FSA?
    Answer. Thank you for your question. RD has undergone an 
examination of how to allocate its FTE's in times of diminishing 
resources and has arrived at a working model that is much more 
transparent then the allocations in the past. While the three main 
variables are rural population, poverty, and service area, RD is also 
looking at how to incorporate the size of the state's portfolio and 
workload. This is a work in progress and we look forward to working 
with Congress on how to best use our human resources.
                              attachment 1
February 5, 2013

  Hon. Barbara Mikulski,
  Chairwoman,
  Senate Committee on Appropriations,
  Washington, D.C.

    Dear Madam Chair:

    Thank you for your letter of January 18, 2013, requesting 
additional information on the impact of potential across-the-board 
spending cuts on the Department of Agriculture's (USDA) operations. 
Like you, I am very concerned about the impact of the March 1 sequester 
on the American economy, specifically in the areas of food, 
agriculture, natural resources, rural development, nutrition, and 
related issues.
    Since Fiscal Year (FY) 2010, USDA's operating budget has been 
reduced by about $3 billion, or 12 percent. As part of our Blueprint 
for Stronger Service, USDA has saved taxpayers millions in travel and 
printing costs and is consolidating more than 700 different cell phone 
contracts into about 10. We are also pursuing other cost reduction 
efforts in several areas such as sourcing uniforms from the AbilityOne 
Strategic Alliance, standardizing bulk mail and processes, and 
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving 
significant savings by closing more than 250 domestic and foreign 
offices while ensuring that the vital services they provide are not 
cut.
    If Congress does not act before March 1, it is estimated that the 
across-the-board spending cuts would indiscriminately reduce funding 
for USDA programs further by almost $2 billion in FY 2013. About \2/3\ 
of these cuts would come from programs funded by discretionary 
appropriations under the Committee's jurisdiction. While the Department 
is still developing plans on how to operate under a sequester, agencies 
have already taken actions--in addition to those mentioned above--to 
prepare for additional funding reductions through prudent practices 
such as hiring freezes and limiting operating costs. Should a 
sequestration occur, we would likely need to implement furloughs 
impacting about \1/3\ of our workforce, as well as other actions. These 
furloughs and other actions would severely disrupt our ability to 
provide the broad range of public services we administer. Examples of 
these programmatic impacts include:

   A reduction of 600,000 low-income women and children who 
        could receive nutrition assistance and associated nutrition 
        education and breastfeeding support through the Special 
        Supplemental Nutrition Program for Women, Infants, and Children 
        (WIC). WIC has been shown to provide important improvements in 
        nutrition of women and children, lower health care costs, and 
        improved cognitive development of children.

   A nationwide shutdown of meat and poultry plants during a 
        furlough of inspection personnel. The furlough could result in 
        as much as 15 days of lost production, costing roughly over $10 
        billion in production losses, and industry workers would 
        experience over $400 million in lost wages. Consumers would 
        experience limited meat and poultry supplies, and potentially 
        higher prices, and food safety could be compromised.

   Elimination of rental assistance for more than 10,000 very 
        low income rural residents, generally elderly, disabled, and 
        single female heads of households. With an average monthly 
        income of approximately $803, these Americans are the least 
        able to absorb rent increases and would face very limited 
        options for alternate housing if landlords increase rents to 
        cover the loss of the rental assistance payments.

   A curtailing of conservation technical and financial 
        assistance to approximately 11,000 producers and landowners, 
        thereby limiting benefits to water quality and quantity, soil 
        erosion, and wildlife habitat that benefit the public.

   Increased risk to communities from wildfires with as many as 
        200,000 fewer acres treated for hazardous fuels.

   A loss of over $60 million resulting in more than 100 fewer 
        grants awarded for agricultural research conducted by both 
        university scientists and private partners, disrupting critical 
        progress being made in many topical areas such as water, 
        nutrient management, bioenergy production, animal and plant 
        disease, and childhood obesity.

   A reduction in assistance to states for pest and disease 
        prevention, surveillance, and response, potentially leading to 
        more extensive outbreaks and economic losses to farmers and 
        ranchers.

   Furloughs and other reductions in a number of USDA agencies 
        that would limit the ability to provide program oversight, 
        leading to potentially higher levels of erroneous payments and/
        or fraud. Even small increases in improper payments have large 
        public costs given the magnitude of programs involved.

    Additional information on impacts covering selected accounts is 
enclosed.
    In addition to impact to programs under the Committee's 
jurisdiction, \1/3\ of USDA's sequestered funds would come from 
mandatory programs, including those authorized through the farm bill. 
While plans are still being developed on how the sequester would be 
implemented for these programs, reductions have the potential to impair 
important elements of support for agriculture and the environment, 
including disaster assistance, conservation, and export enhancement 
programs.
    I deeply hope that Congressional leaders will reach an agreement to 
achieve deficit reduction while averting an across-the-board cut. I 
look forward to working with Congress to preserve the many priorities 
of rural America while making sensible program reforms and reductions 
that will lead to deficit reduction.
    Again, thank you for writing.
            Sincerely,
            
            
Hon. Thomas J. Vilsack,
Secretary.
Additional Sequestration Information
    Bureau: Food and Nutrition Service
    Program: Special Supplemental Nutrition Program for Women, Infants, 
and Children (WIC)
    Sequestration Amount: $333 million
    Impact:

        Grants to States

   WIC is a federally funded program. If funding is inadequate 
        to maintain the current caseload--as it would be under 
        sequestration--State WIC programs would have to reduce 
        participation and establish waiting lists using the priority 
        system provided in regulation.

   A full year continuing resolution, coupled with 
        sequestration, will result in a budget authority of about $6.3 
        billion. Using all available resources, including carryover and 
        all contingency funds, will allow the program to support about 
        8.6 million participants--a reduction of approximately 300,000 
        participants on an annual basis from last year or about 600,000 
        participants if the reductions are compressed in the last two 
        quarters of the fiscal year.

   Even before sequestration occurs, states may begin to 
        implement cost-cutting strategies sometime in February. These 
        strategies could range from reducing clinic hours, closing 
        clinics, to establishing waiting lists as a last resort.

   When funds are not sufficient to support caseload, WIC 
        agencies implement a priority waiting list of individuals. The 
        first to lose benefits would be non-breastfeeding postpartum 
        women and individuals certified solely due to homelessness or 
        migrancy. African-American women have the lowest breastfeeding 
        rates so they are more likely to represent a significant 
        proportion of these women.

   Nutrition Services and Administration funding provided to 
        states would be reduced by about $75-$100 million from the 
        Fiscal Year (FY) 2012 level, which could result in up to 1,600 
        state and local jobs lost.

    Bureau: Food Safety and Inspection Service (FSIS)
    Program: Salaries and Expenses
    Sequestration Amount: $51 million
    Impact: Sequestration would result in an across-the-board furlough 
of as much as 15 days for all FSIS employees, including inspectors. 
Since Federal law mandates inspection of meat, poultry, and egg 
products, production will shut down for that time period, impacting 
approximately 6,290 establishments nationwide. Due to lost production 
volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3 
billion pounds of poultry and over 200 million pounds of egg products, 
the industry would experience a production loss of over $10 billion. 
Consumers would experience a shortage of meat, poultry, and egg 
products available for public consumption, and the shortage may result 
in price increases for these products. Restaurants, grocers, local 
merchants, and others who rely on FSIS-inspected products would suffer 
multiplier effects from the shortfall in production. The impact could 
force smaller businesses and merchants out of business. Industry 
workers would also be furloughed, resulting in over $400 million in 
lost wages. The livestock industry would also incur additional costs 
for disruption of the pipeline from farms to production establishments 
as farmers and livestock producers would have to feed and store animals 
longer than anticipated.
    FSIS would also eliminate export inspections, resulting in losses 
for U.S. producers and causing additional storage costs and or loss of 
product. Export inspections could adversely affect other nations since 
the volume of products would decline. Furthermore, public food safety 
could be compromised by the illegal selling and distribution of 
uninspected meat, poultry, and egg products. Because FSIS is also 
responsible for verifying the safety of imported products, cutting 
import inspections would result in a reduction of 154 to 178 million 
pounds of imported meat, poultry, and egg products entering the 
country, in addition to the lost production capacity within the United 
States. Cutting import inspections might be construed as an 
international trade issue. Moreover, there is limited storage space 
along the border so that unless foreign countries stopped shipments, 
chill/frozen storage capacity and refrigerated truck/train/ship 
capacity would be compromised.

    Bureau: Rural Development, Rural Housing Service
    Program: Rental Assistance
    Sequestration Amount: $46 million
    Impact: The Rental Assistance Program provides assistance to 
eligible low-income tenants in USDA-financed multi-family housing so 
that Americans pay no more than 30 percent of their incomes for rent. 
Approximately 286,000 tenants receive the benefit of rental assistance 
in almost all of the apartment complexes financed by Rural Development. 
The sequestration would cause more than 10,000 current recipients to 
lose rental assistance. The average monthly income of families and 
individuals receiving rental assistance (generally female-headed 
households, elderly, and the disabled) is approximately $803. These 
Americans are the least able to absorb any increase in the rent due to 
the loss of rental assistance. Loss of this rent supplement may cause 
property owners to increase rents, making the units unaffordable to the 
very low income residents who have few options for decent, affordable 
housing.
    With the loss of rental assistance, or higher vacancies resulting 
from very low-income Americans being unable to afford higher rents, 
many properties will be unable to pay all of their operating costs. 
Owners may be unable to maintain the property and allow it to fall into 
disrepair, or the properties may become delinquent in their loan 
payments. Potentially, 411 projects may become delinquent by October 
2013. Ongoing delinquencies will lead to defaults and foreclosure and 
may result in long-term loss of affordable housing in rural communities 
in future years.
    The loss of rental assistance supporting new construction of Farm 
Labor housing would result in the loss of affordable housing for 
approximately 28 farm workers and their families; the loss of rental 
assistance supporting construction of multi-family assisted housing 
would result in the loss of affordable housing opportunities for 17 low 
or very low income families.

    Bureau: Natural Resources Conservation Service (NRCS)
    Program: Conservation Operations and Farm Security and Rural 
Investment Programs
    Sequestration Amount: $222 million
    Impact: NRCS will implement a hiring freeze and reduce travel and 
other costs. This will impact NRCS' ability to ensure timely, complete 
conservation planning activities and delivery of financial assistance, 
which would affect program accomplishments and service to farmers and 
ranchers nationwide. This would result in longer timeframes to address 
these challenges continuing to put at risk the business operations of 
the agency. In addition, NRCS would implement significant cuts in 
agreements and contracts with non-Federal entities by over $20 million 
in technical assistance and about $109 million in financial assistance. 
These reductions will have a deleterious impact on the ability to 
provide technical and financial assistance services to conservation 
customers, resulting in reduced conservations opportunities and reduced 
natural resource benefits with short and long effects on the nation's 
private lands.
    Overall, these cuts will undercut the ability to support priorities 
including landscape-scale conservation, water quality improvements, 
wildlife habitat protection, open space protection, as well as natural 
infrastructure restoration, carbon sequestration, weather prediction 
capacity, plant material development and other programs and services 
that support extreme weather and climate change adaptation and 
mitigation.

    Bureau: Farm Service Agency (FSA)
    Program: Farm Loan and Salaries and Expenses
    Sequestration Amount: $80 million
    Impact: Sequestration would require reductions of $80 million in 
FSA salaries and expenses and Farm Credit programs. The following 
highlights address some of the impacts of these reductions.

    FSA Program Management

    The sequestration would reduce the spending authority for FSA 
salaries and administrative expenses by about $75 million. In order to 
accomplish this reduction, FSA will implement a number of actions 
including hiring freezes, reducing contract operations for both 
Information Technology (IT) and non-IT operations, eliminating states 
flown in the National Aerial Imagery Program, and furloughing employees 
up to 5 days. FSA employees are responsible for managing a wide range 
of programs including farm loans, conservation and disaster activities 
with budgets totaling over $11 billion annually. Reduced ability to 
effectively manage these major nationwide programs will limit the 
ability to provide timely support to producers during the ongoing 
extreme, widespread drought and will erode the capability to provide 
oversight to limit erroneous payments.

    Farm Loan Programs

    FSA provides direct loans to family farmers and ranchers who cannot 
obtain commercial credit from a bank or other lender. The program is an 
important source of credit for beginning farmers, who tend to have 
limited resources and as a result, are less likely to meet commercial 
credit standards. Extreme drought conditions prevailing in significant 
areas of the nation that have weakened the financial condition of 
agricultural producers significantly increase the importance of these 
loan programs. Operating loans are used to purchase items such as 
livestock, feed, farm equipment, fuel, farm chemicals, insurance, minor 
improvements or repairs to buildings, refinance farm-related debt 
excluding real estate and other operating costs, including family 
living expenses. Sequestration would reduce the budget authority for 
Farm Credit Programs by approximately $5.4 million ($35.6 million in 
program level), meaning that 890 fewer direct farm operating loans and 
661 other farm loans could be made. The sequestration of farm loan 
funding could result in a loss of over 1,650 private sector jobs (plus 
the hundreds of farmers that would be forced out of farming and into 
the off-farm job market), reduce the GDP by more than $259 million, and 
could reduce household income by $44 million.

    Bureau: Forest Service
    Program: Wildland Fire Management
    Sequestration Amount: $134 million
    Impact: This level of reduced funds would result in an appropriated 
funding level that is $42 million below the calculated 10 year average 
of fire suppression costs for FY 2013. In addition, a reduction of 
Preparedness funds typically increases suppression costs since the 
initial attack success will be reduced. Additionally, 2012 fire 
transfer funds are subject to sequestration, which results in needing 
to recover $20 million of funds repaid. The agency would complete as 
many as 200,000 fewer acres of hazardous fuel treatments, resulting in 
an increased risk to communities from wildfires.
    Certain decisions may result in increased costs in the end. For 
example, the agency could reduce up-front costs by reducing use of 
Exclusive Use aviation contracts, 115 engines, and 10 hotshot crews. 
However, this could result in larger fires, which will result in higher 
expenditures.

    Bureau: Forest Service
    Program: National Forest System (NFS)
    Sequestration Amount: $78 million
    Impact: The agency's essential services to the public will be 
reduced for a variety of high demand activities (recreation, forest and 
watershed restoration, grazing, mining and oil/gas operations) as a 
result of reduced operations at campgrounds, visitor information 
centers, and offices. This would largely occur during the peak use 
seasons in spring and summer. Thousands of private sector jobs in rural 
communities across the nation would be lost due to a reduction of 
recreation opportunities, and minerals and oil and gas operations, 
which are completed through contracts, grants, and agreements.
    The agency would close up to 670 public developed recreation sites 
out of 19,000 sites, such as campgrounds, picnic areas, and trailheads. 
Closing this many recreation sites would reduce an estimated 1.6 
million recreation visits across the country, thereby harming the 
economies of remote rural communities that depend on recreationists' 
economic activity, and eliminating convenient vacation opportunities 
for rural residents.
    Increased risks to health and safety for visitors to the 193 
million acres of public lands would occur as a result of reductions of 
35 sworn law enforcement officers, leaving 707 total officers to 
control drug trafficking organizations, prevent crime, and protect and 
serve the public. The reduction in sworn officers would result in an 
increase of illegal activities on National Forest System lands, like 
arson during fire season, timber theft, and other natural resource 
crimes.
    Forest and watershed restoration work would be curtailed. Timber 
volume sold would be reduced to 2,379 million board feet from 2,800 
million board feet proposed for FY 2013. The agency would restore 390 
fewer stream miles, 2,700 fewer acres of lake habitat and improve 
260,000 fewer acres of wildlife habitat.

    Bureau: National Agricultural Statistics Service (NASS)
    Program: Census of Agriculture and Agricultural Estimates
    Sequestration Amount: $8 million
    Impact: NASS is responsible for the collection and analysis of a 
broad range of agricultural statistics and completion of the Census of 
Agriculture. These statistics provide information critical to 
decisionmaking by a wide population of stakeholders and ultimately 
benefit all consumers by enhancing orderly and unbiased market 
conditions for agricultural products. Sequestration would stop FY 2013 
scheduled activities for the Census, causing data processing to be 
placed on hold and potentially not recoverable. Data will become 
incomplete and will not be statistically sound for publication. Not 
having the 2012 Census will negatively affect decisions made by 
farmers, businesses, and governments and ultimately will bring 
volatility to food markets and impact prices consumers pay. Data 
collected by the Census includes the number of farms, value of land, 
market value of agricultural production, and inventory of livestock and 
poultry.
    NASS' annual agricultural estimates reports are critically 
important to assess the current supply and demand in agricultural 
commodities. These unbiased, timely reports are extremely valuable to 
producers, agribusinesses, farm organizations, commodity groups, 
economists, public officials, and others who use the data for 
decisionmaking. The statistics disseminated by NASS support fairness in 
markets ensuring buyers and sellers have access to the same objective 
official statistics at the same pre-announced time. This prevents 
markets from being influenced by ``inside'' information, which might 
unfairly affect market prices for the gain of an individual market 
participant. The efficiency of commodity markets is enhanced by the 
free flow of information, which minimizes price fluctuations for U.S. 
producers. Statistical measures help the competitiveness of our 
nation's agricultural industry and have become increasingly important 
as producers rely more on world markets for their sales. There is no 
other source for the statistical surveys, estimates, and reports NASS 
produces.
                              attachment 2
February 15, 2013

  Hon. Rosa L. DeLauro,
  U.S. House of Representatives
  Washington, D.C.

    Dear Congresswoman DeLauro:

    Thank you for your letter of February 6, 2013, cosigned by 
Congressman Sam Farr, requesting additional information on the impact 
of potential across-the-board spending cuts on the Department of 
Agriculture's (USDA) operations. Like you, I am very concerned about 
the impact of the March 1 sequester on the American economy, 
specifically in the areas of food, agriculture, natural resources, 
rural development, nutrition, and related issues.
    Since Fiscal Year (FY) 2010, USDA's operating budget has been 
reduced by about $3 billion, or 12 percent. As part of our Blueprint 
for Stronger Service, USDA has saved taxpayers millions in travel and 
printing costs and is consolidating more than 700 different cell phone 
contracts into about 10. We are also pursuing other cost reduction 
efforts in several areas such as sourcing uniforms from the AbilityOne 
Strategic Alliance, standardizing bulk mail and processes, and 
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving 
significant savings by closing more than 250 domestic and foreign 
offices while ensuring that the vital services they provide are not 
cut.
    If Congress does not act before March 1, it is estimated that the 
across-the-board spending cuts would indiscriminately reduce funding 
for USDA programs further by almost $2 billion in FY 2013. About \2/3\ 
of these cuts would come from programs funded by discretionary 
appropriations under the Committee's jurisdiction. While the Department 
is still developing plans on how to operate under a sequester, agencies 
have already taken actions--in addition to those mentioned above--to 
prepare for additional funding reductions through prudent practices 
such as hiring freezes and limiting operating costs. Should a 
sequestration occur, we would likely need to implement furloughs 
impacting about \1/3\ of our workforce, as well as other actions. These 
furloughs and other actions would severely disrupt our ability to 
provide the broad range of public services we administer. Examples of 
these programmatic impacts include:

   A reduction of 600,000 low-income women and children who 
        could receive nutrition assistance and associated nutrition 
        education and breastfeeding support through the Special 
        Supplemental Nutrition Program for Women, Infants, and Children 
        (WIC). WIC has been shown to provide important improvements in 
        nutrition of women and children, lower health care costs, and 
        improved cognitive development of children.

   A nationwide shutdown of meat and poultry plants during a 
        furlough of inspection personnel. The furlough could result in 
        as much as 15 days of lost production, costing roughly over $10 
        billion in production losses, and industry workers would 
        experience over $400 million in lost wages. Consumers would 
        experience limited meat and poultry supplies, and potentially 
        higher prices, and food safety could be compromised.

   Elimination of rental assistance for more than 10,000 very 
        low income rural residents, generally elderly, disabled, and 
        single female heads of households. With an average monthly 
        income of approximately $803, these Americans are the least 
        able to absorb rent increases and would face very limited 
        options for alternate housing if landlords increase rents to 
        cover the loss of the rental assistance payments.

   A curtailing of conservation technical and financial 
        assistance to approximately 11,000 producers and landowners, 
        thereby limiting benefits to water quality and quantity, soil 
        erosion, and wildlife habitat that benefit the public.

   Increased risk to communities from wildfires with as many as 
        200,000 fewer acres treated for hazardous fuels.

   A loss of over $60 million resulting in more than 100 fewer 
        grants awarded for agricultural research conducted by both 
        university scientists and private partners, disrupting critical 
        progress being made in many topical areas such as water, 
        nutrient management, bioenergy production, animal and plant 
        disease, and childhood obesity.

   A reduction in assistance to states for pest and disease 
        prevention, surveillance, and response, potentially leading to 
        more extensive outbreaks and economic losses to farmers and 
        ranchers.

   Furloughs and other reductions in a number of USDA agencies 
        that would limit the ability to provide program oversight, 
        leading to potentially higher levels of erroneous payments and/
        or fraud. Even small increases in improper payments have large 
        public costs given the magnitude of programs involved.

    Additional information on impacts covering selected accounts is 
enclosed.
    In addition to impact to programs under the Committee's 
jurisdiction, \1/3\ of USDA's sequestered funds would come from 
mandatory programs, including those authorized through the farm bill. 
While plans are still being developed on how the sequester would be 
implemented for these programs, reductions have the potential to impair 
important elements of support for agriculture and the environment, 
including disaster assistance, conservation, and export enhancement 
programs.
    I deeply hope that Congressional leaders will reach an agreement to 
achieve deficit reduction while averting an across-the-board cut. I 
look forward to working with Congress to preserve the many priorities 
of rural America while making sensible program reforms and reductions 
that will lead to deficit reduction.
    Again, thank you for writing. A similar letter is being sent to 
Congressman Farr.
            Sincerely,
            
            
Hon. Thomas J. Vilsack,
Secretary.
                               attachment
February 15, 2013

  Hon. Sam Farr,
  U.S. House of Representatives
  Washington, D.C.

    Dear Congressman Farr:

    Thank you for your letter of February 6, 2013, cosigned by 
Congresswoman Rosa L. DeLauro, requesting additional information on the 
impact of potential across-the-board spending cuts on the Department of 
Agriculture's (USDA) operations. Like you, I am very concerned about 
the impact of the March 1 sequester on the American economy, 
specifically in the areas of food, agriculture, natural resources, 
rural development, nutrition, and related issues.
    Since Fiscal Year (FY) 2010, USDA's operating budget has been 
reduced by about $3 billion, or 12 percent. As part of our Blueprint 
for Stronger Service, USDA has saved taxpayers millions in travel and 
printing costs and is consolidating more than 700 different cell phone 
contracts into about 10. We are also pursuing other cost reduction 
efforts in several areas such as sourcing uniforms from the AbilityOne 
Strategic Alliance, standardizing bulk mail and processes, and 
implementing a ``Shared First'' acquisition policy to consolidate IT-
related acquisitions. What's more, the Department is achieving 
significant savings by closing more than 250 domestic and foreign 
offices while ensuring that the vital services they provide are not 
cut.
    If Congress does not act before March 1, it is estimated that the 
across-the-board spending cuts would indiscriminately reduce funding 
for USDA programs further by almost $2 billion in FY 2013. About \2/3\ 
of these cuts would come from programs funded by discretionary 
appropriations under the Committee's jurisdiction. While the Department 
is still developing plans on how to operate under a sequester, agencies 
have already taken actions--in addition to those mentioned above--to 
prepare for additional funding reductions through prudent practices 
such as hiring freezes and limiting operating costs. Should a 
sequestration occur, we would likely need to implement furloughs 
impacting about \1/3\ of our workforce, as well as other actions. These 
furloughs and other actions would severely disrupt our ability to 
provide the broad range of public services we administer. Examples of 
these programmatic impacts include:

   A reduction of 600,000 low-income women and children who 
        could receive nutrition assistance and associated nutrition 
        education and breastfeeding support through the Special 
        Supplemental Nutrition Program for Women, Infants, and Children 
        (WIC). WIC has been shown to provide important improvements in 
        nutrition of women and children, lower health care costs, and 
        improved cognitive development of children.

   A nationwide shutdown of meat and poultry plants during a 
        furlough of inspection personnel. The furlough could result in 
        as much as 15 days of lost production, costing roughly over $10 
        billion in production losses, and industry workers would 
        experience over $400 million in lost wages. Consumers would 
        experience limited meat and poultry supplies, and potentially 
        higher prices, and food safety could be compromised.

   Elimination of rental assistance for more than 10,000 very 
        low income rural residents, generally elderly, disabled, and 
        single female heads of households. With an average monthly 
        income of approximately $803, these Americans are the least 
        able to absorb rent increases and would face very limited 
        options for alternate housing if landlords increase rents to 
        cover the loss of the rental assistance payments.

   A curtailing of conservation technical and financial 
        assistance to approximately 11,000 producers and landowners, 
        thereby limiting benefits to water quality and quantity, soil 
        erosion, and wildlife habitat that benefit the public.

   Increased risk to communities from wildfires with as many as 
        200,000 fewer acres treated for hazardous fuels.

   A loss of over $60 million resulting in more than 100 fewer 
        grants awarded for agricultural research conducted by both 
        university scientists and private partners, disrupting critical 
        progress being made in many topical areas such as water, 
        nutrient management, bioenergy production, animal and plant 
        disease, and childhood obesity.

   A reduction in assistance to states for pest and disease 
        prevention, surveillance, and response, potentially leading to 
        more extensive outbreaks and economic losses to farmers and 
        ranchers.

   Furloughs and other reductions in a number of USDA agencies 
        that would limit the ability to provide program oversight, 
        leading to potentially higher levels of erroneous payments and/
        or fraud. Even small increases in improper payments have large 
        public costs given the magnitude of programs involved.

    Additional information on impacts covering selected accounts is 
enclosed.
    In addition to impact to programs under the Committee's 
jurisdiction, \1/3\ of USDA's sequestered funds would come from 
mandatory programs, including those authorized through the farm bill. 
While plans are still being developed on how the sequester would be 
implemented for these programs, reductions have the potential to impair 
important elements of support for agriculture and the environment, 
including disaster assistance, conservation, and export enhancement 
programs.
    I deeply hope that Congressional leaders will reach an agreement to 
achieve deficit reduction while averting an across-the-board cut. I 
look forward to working with Congress to preserve the many priorities 
of rural America while making sensible program reforms and reductions 
that will lead to deficit reduction.
    Again, thank you for writing. A similar letter is being sent to 
Congresswoman DeLauro.
            Sincerely,
            
            
Hon. Thomas J. Vilsack,
Secretary.
Additional Sequestration Information
    Bureau: Food and Nutrition Service
    Program: Special Supplemental Nutrition Program for Women, Infants, 
and Children (WIC)
    Sequestration Amount: $333 million
    Impact:

    Grants to States

   WIC is a federally funded program. If funding is inadequate 
        to maintain the current caseload--as it would be under 
        sequestration--State WIC programs would have to reduce 
        participation and establish waiting lists using the priority 
        system provided in regulation.

   A full year continuing resolution, coupled with 
        sequestration, will result in a budget authority of about $6.3 
        billion. Using all available resources, including carryover and 
        all contingency funds, will allow the program to support about 
        8.6 million participants--a reduction of approximately 300,000 
        participants on an annual basis from last year or about 600,000 
        participants if the reductions are compressed in the last two 
        quarters of the fiscal year.

   Even before sequestration occurs, states may begin to 
        implement cost-cutting strategies sometime in February. These 
        strategies could range from reducing clinic hours, closing 
        clinics, to establishing waiting lists as a last resort.

   When funds are not sufficient to support caseload, WIC 
        agencies implement a priority waiting list of individuals. The 
        first to lose benefits would be non-breastfeeding postpartum 
        women and individuals certified solely due to homelessness or 
        migrancy. African-American women have the lowest breastfeeding 
        rates so they are more likely to represent a significant 
        proportion of these women.

   Nutrition Services and Administration funding provided to 
        states would be reduced by about $75-$100 million from the 
        Fiscal Year (FY) 2012 level, which could result in up to 1,600 
        state and local jobs lost.

    Bureau: Food Safety and Inspection Service (FSIS)
    Program: Salaries and Expenses
    Sequestration Amount: $51 million
    Impact: Sequestration would result in an across-the-board furlough 
of as much as 15 days for all FSIS employees, including inspectors. 
Since Federal law mandates inspection of meat, poultry, and egg 
products, production will shut down for that time period, impacting 
approximately 6,290 establishments nationwide. Due to lost production 
volume of more than 2 billion pounds of meat, an additional 2.8 to 3.3 
billion pounds of poultry and over 200 million pounds of egg products, 
the industry would experience a production loss of over $10 billion. 
Consumers would experience a shortage of meat, poultry, and egg 
products available for public consumption, and the shortage may result 
in price increases for these products. Restaurants, grocers, local 
merchants, and others who rely on FSIS-inspected products would suffer 
multiplier effects from the shortfall in production. The impact could 
force smaller businesses and merchants out of business. Industry 
workers would also be furloughed, resulting in over $400 million in 
lost wages. The livestock industry would also incur additional costs 
for disruption of the pipeline from farms to production establishments 
as farmers and livestock producers would have to feed and store animals 
longer than anticipated.
    FSIS would also eliminate export inspections, resulting in losses 
for U.S. producers and causing additional storage costs and or loss of 
product. Export inspections could adversely affect other nations since 
the volume of products would decline. Furthermore, public food safety 
could be compromised by the illegal selling and distribution of 
uninspected meat, poultry, and egg products. Because FSIS is also 
responsible for verifying the safety of imported products, cutting 
import inspections would result in a reduction of 154 to 178 million 
pounds of imported meat, poultry, and egg products entering the 
country, in addition to the lost production capacity within the United 
States. Cutting import inspections might be construed as an 
international trade issue. Moreover, there is limited storage space 
along the border so that unless foreign countries stopped shipments, 
chill/frozen storage capacity and refrigerated truck/train/ship 
capacity would be compromised.

    Bureau: Rural Development, Rural Housing Service
    Program: Rental Assistance
    Sequestration Amount: $46 million
    Impact: The Rental Assistance Program provides assistance to 
eligible low-income tenants in USDA-financed multi-family housing so 
that Americans pay no more than 30 percent of their incomes for rent. 
Approximately 286,000 tenants receive the benefit of rental assistance 
in almost all of the apartment complexes financed by Rural Development. 
The sequestration would cause more than 10,000 current recipients to 
lose rental assistance. The average monthly income of families and 
individuals receiving rental assistance (generally female-headed 
households, elderly, and the disabled) is approximately $803. These 
Americans are the least able to absorb any increase in the rent due to 
the loss of rental assistance. Loss of this rent supplement may cause 
property owners to increase rents, making the units unaffordable to the 
very low income residents who have few options for decent, affordable 
housing.
    With the loss of rental assistance, or higher vacancies resulting 
from very low-income Americans being unable to afford higher rents, 
many properties will be unable to pay all of their operating costs. 
Owners may be unable to maintain the property and allow it to fall into 
disrepair, or the properties may become delinquent in their loan 
payments. Potentially, 411 projects may become delinquent by October 
2013. Ongoing delinquencies will lead to defaults and foreclosure and 
may result in long-term loss of affordable housing in rural communities 
in future years.
    The loss of rental assistance supporting new construction of Farm 
Labor housing would result in the loss of affordable housing for 
approximately 28 farm workers and their families; the loss of rental 
assistance supporting construction of multi-family assisted housing 
would result in the loss of affordable housing opportunities for 17 low 
or very low income families.

    Bureau: Natural Resources Conservation Service (NRCS)
    Program: Conservation Operations and Farm Security and Rural 
Investment Programs
    Sequestration Amount: $222 million
    Impact: NRCS will implement a hiring freeze and reduce travel and 
other costs. This will impact NRCS' ability to ensure timely, complete 
conservation planning activities and delivery of financial assistance, 
which would affect program accomplishments and service to farmers and 
ranchers nationwide. This would result in longer timeframes to address 
these challenges continuing to put at risk the business operations of 
the agency. In addition, NRCS would implement significant cuts in 
agreements and contracts with non-Federal entities by over $20 million 
in technical assistance and about $109 million in financial assistance. 
These reductions will have a deleterious impact on the ability to 
provide technical and financial assistance services to conservation 
customers, resulting in reduced conservations opportunities and reduced 
natural resource benefits with short and long effects on the nation's 
private lands.
    Overall, these cuts will undercut the ability to support priorities 
including landscape-scale conservation, water quality improvements, 
wildlife habitat protection, open space protection, as well as natural 
infrastructure restoration, carbon sequestration, weather prediction 
capacity, plant material development and other programs and services 
that support extreme weather and climate change adaptation and 
mitigation.

    Bureau: Farm Service Agency (FSA)
    Program: Farm Loan and Salaries and Expenses
    Sequestration Amount: $80 million
    Impact: Sequestration would require reductions of $80 million in 
FSA salaries and expenses and Farm Credit programs. The following 
highlights address some of the impacts of these reductions.

    FSA Program Management

    The sequestration would reduce the spending authority for FSA 
salaries and administrative expenses by about $75 million. In order to 
accomplish this reduction, FSA will implement a number of actions 
including hiring freezes, reducing contract operations for both 
Information Technology (IT) and non-IT operations, eliminating states 
flown in the National Aerial Imagery Program, and furloughing employees 
up to 5 days. FSA employees are responsible for managing a wide range 
of programs including farm loans, conservation and disaster activities 
with budgets totaling over $11 billion annually. Reduced ability to 
effectively manage these major nationwide programs will limit the 
ability to provide timely support to producers during the ongoing 
extreme, widespread drought and will erode the capability to provide 
oversight to limit erroneous payments.

    Farm Loan Programs

    FSA provides direct loans to family farmers and ranchers who cannot 
obtain commercial credit from a bank or other lender. The program is an 
important source of credit for beginning farmers, who tend to have 
limited resources and as a result, are less likely to meet commercial 
credit standards. Extreme drought conditions prevailing in significant 
areas of the nation that have weakened the financial condition of 
agricultural producers significantly increase the importance of these 
loan programs. Operating loans are used to purchase items such as 
livestock, feed, farm equipment, fuel, farm chemicals, insurance, minor 
improvements or repairs to buildings, refinance farm-related debt 
excluding real estate and other operating costs, including family 
living expenses. Sequestration would reduce the budget authority for 
Farm Credit Programs by approximately $5.4 million ($35.6 million in 
program level), meaning that 890 fewer direct farm operating loans and 
661 other farm loans could be made. The sequestration of farm loan 
funding could result in a loss of over 1,650 private sector jobs (plus 
the hundreds of farmers that would be forced out of farming and into 
the off-farm job market), reduce the GDP by more than $259 million, and 
could reduce household income by $44 million.

    Bureau: Forest Service
    Program: Wildland Fire Management
    Sequestration Amount: $134 million
    Impact: This level of reduced funds would result in an appropriated 
funding level that is $42 million below the calculated 10 year average 
of fire suppression costs for FY 2013. In addition, a reduction of 
Preparedness funds typically increases suppression costs since the 
initial attack success will be reduced. Additionally, 2012 fire 
transfer funds are subject to sequestration, which results in needing 
to recover $20 million of funds repaid. The agency would complete as 
many as 200,000 fewer acres of hazardous fuel treatments, resulting in 
an increased risk to communities from wildfires.
    Certain decisions may result in increased costs in the end. For 
example, the agency could reduce up-front costs by reducing use of 
Exclusive Use aviation contracts, 115 engines, and 10 hotshot crews. 
However, this could result in larger fires, which will result in higher 
expenditures.

    Bureau: Forest Service
    Program: National Forest System (NFS)
    Sequestration Amount: $78 million
    Impact: The agency's essential services to the public will be 
reduced for a variety of high demand activities (recreation, forest and 
watershed restoration, grazing, mining and oil/gas operations) as a 
result of reduced operations at campgrounds, visitor information 
centers, and offices. This would largely occur during the peak use 
seasons in spring and summer. Thousands of private sector jobs in rural 
communities across the nation would be lost due to a reduction of 
recreation opportunities, and minerals and oil and gas operations, 
which are completed through contracts, grants, and agreements.
    The agency would close up to 670 public developed recreation sites 
out of 19,000 sites, such as campgrounds, picnic areas, and trailheads. 
Closing this many recreation sites would reduce an estimated 1.6 
million recreation visits across the country, thereby harming the 
economies of remote rural communities that depend on recreationists' 
economic activity, and eliminating convenient vacation opportunities 
for rural residents.
    Increased risks to health and safety for visitors to the 193 
million acres of public lands would occur as a result of reductions of 
35 sworn law enforcement officers, leaving 707 total officers to 
control drug trafficking organizations, prevent crime, and protect and 
serve the public. The reduction in sworn officers would result in an 
increase of illegal activities on National Forest System lands, like 
arson during fire season, timber theft, and other natural resource 
crimes.
    Forest and watershed restoration work would be curtailed. Timber 
volume sold would be reduced to 2,379 million board feet from 2,800 
million board feet proposed for FY 2013. The agency would restore 390 
fewer stream miles, 2,700 fewer acres of lake habitat and improve 
260,000 fewer acres of wildlife habitat.

    Bureau: National Agricultural Statistics Service (NASS)
    Program: Census of Agriculture and Agricultural Estimates
    Sequestration Amount: $8 million
    Impact: NASS is responsible for the collection and analysis of a 
broad range of agricultural statistics and completion of the Census of 
Agriculture. These statistics provide information critical to 
decisionmaking by a wide population of stakeholders and ultimately 
benefit all consumers by enhancing orderly and unbiased market 
conditions for agricultural products. Sequestration would stop FY 2013 
scheduled activities for the Census, causing data processing to be 
placed on hold and potentially not recoverable. Data will become 
incomplete and will not be statistically sound for publication. Not 
having the 2012 Census will negatively affect decisions made by 
farmers, businesses, and governments and ultimately will bring 
volatility to food markets and impact prices consumers pay. Data 
collected by the Census includes the number of farms, value of land, 
market value of agricultural production, and inventory of livestock and 
poultry.
    NASS' annual agricultural estimates reports are critically 
important to assess the current supply and demand in agricultural 
commodities. These unbiased, timely reports are extremely valuable to 
producers, agribusinesses, farm organizations, commodity groups, 
economists, public officials, and others who use the data for 
decisionmaking. The statistics disseminated by NASS support fairness in 
markets ensuring buyers and sellers have access to the same objective 
official statistics at the same pre-announced time. This prevents 
markets from being influenced by ``inside'' information, which might 
unfairly affect market prices for the gain of an individual market 
participant. The efficiency of commodity markets is enhanced by the 
free flow of information, which minimizes price fluctuations for U.S. 
producers. Statistical measures help the competitiveness of our 
nation's agricultural industry and have become increasingly important 
as producers rely more on world markets for their sales. There is no 
other source for the statistical surveys, estimates, and reports NASS 
produces.

                                  
