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






 FIELD HEARING IN NEW YORK: ROOM TO GROW: THE BENEFITS OF PARTNERSHIPS 
               IN SMALL AGRICULTURE BUSINESS DEVELOPMENT

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON HEALTH AND TECHNOLOGY

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                              MAY 13, 2014

                               __________


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


            Small Business Committee Document Number 113-068
              Available via the GPO Website: www.fdsys.gov

                               __________

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                      BLAINE LUETKEMEYER, Missouri
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                   JAIME HERRERA BEUTLER, Washington
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                       DAVID SCHWEIKERT, Arizona
                       KERRY BENTIVOLIO, Michigan
                        CHRIS COLLINS, New York
                        TOM RICE, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                        BRAD SCHNEIDER, Illinois
                          RON BARBER, Arizona
                    ANN McLANE KUSTER, New Hampshire
                        PATRICK MURPHY, Florida

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


















                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Chris Collins...............................................     1

                               WITNESSES

Ms. Linda Hamilton, Triple H Farms, Leicester, NY, testifying on 
  behalf of the New York Farm Bureau.............................     2
Mr. Steven Van Voorhis, President, New York Corn Growers 
  Association, Henrietta, NY.....................................     5
Mr. Joe Weber, Vice President, Mike Weber Greenhouses, Inc., West 
  Seneca, NY.....................................................     8
Mr. Ray Schueth, Director of Agriculture, Eastern Operations, 
  Seneca Foods, Corporation, Janesville, WI......................     9

                                APPENDIX

Prepared Statements:
    Ms. Linda Hamilton, Triple H Farms, Leicester, NY, testifying 
      on behalf of the New York Farm Bureau......................    20
    Mr. Steven Van Voorhis, President, New York Corn Growers 
      Association, Henrietta, NY.................................    24
    Mr. Joe Weber, Vice President, Mike Weber Greenhouses, Inc., 
      West Seneca, NY............................................    27
    Mr. Ray Schueth, Director of Agriculture, Eastern Operations, 
      Seneca Foods, Corporation, Janesville, WI..................    29
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
    ROOM TO GROW: THE BENEFITS OF PARTNERSHIPS IN SMALL AGRICULTURE 
                          BUSINESS DEVELOPMENT

                              ----------                              


                         TUESDAY, MAY 13, 2014

                  House of Representatives,
               Committee on Small Business,
             Subcommittee on Health and Technology,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
the Board of Supervisors Committee Room, Livingston County 
Government Center, 6 Court Street, Third Floor, Geneseo, New 
York, Hon. Chris Collins [chairman of the Subcommittee] 
presiding.
    Present: Representative Collins.
    Chairman Collins. The hearing is called to order.
    I would like to thank the witnesses and the public for 
attending today's hearing to examine how developing changes in 
the marketplace are influencing relationships between small and 
large businesses in agriculture.
    New York is home to some of the most productive and 
valuable agricultural lands in the Nation. The fruits, 
vegetables, dairy, and other products produced here can be 
found on store shelves, in kitchen cabinets, and in restaurants 
across the country and overseas.
    The contributions of the industry to jobs and the economy 
are significant. According to the New York State Department of 
Agriculture, our farms, ranches, and dairies produced more than 
$4.7 billion worth of commodities in 2010. In addition, New 
York ranks behind only California in the number of food-
processing and manufacturing plants in the Nation. And small 
businesses account for a significant share of these economic 
contributions. According to research by Cornell University, 
approximately 91 percent of all farms in New York are small-
business farms.
    However, the importance of agriculture can be measured in 
more than just the direct contribution to the economy. 
Improvements in agriculture's productivity and efficiency have 
greatly reduced the cost of food for consumers. This frees up 
income, labor, and capital for investments that contribute to 
job growth and development in other sectors of the economy.
    And as in other sectors of the economy, small businesses in 
agriculture are often the leading innovators in their 
industries. For example, 10 years ago Greek Yogurt that we know 
today was not nearly the phenomena that it is now. An immigrant 
entrepreneur with a dream, and the drive to realize it, started 
his own small business right here in New York. This 
entrepreneur manufactured an innovative product and created the 
company we know as Chobani, which today has over 1,200 
employees.
    While not every small innovative business will achieve that 
scale of success, their success does point to positive changes 
occurring in the marketplace for agricultural products. In 
recent years, a growing number of consumers have demonstrated a 
willingness to pay a premium for agricultural products that 
have been locally grown, produced according to organic 
standards, or high-value artisan products. And now these 
marketplace changes are creating a number of opportunities for 
small, medium, and large businesses across agricultural 
industry supply chains.
    Serving these emerging markets will require investing in 
new production technologies and processes. Accessing the 
capital necessary to undertake these efforts will be among 
small businesses' biggest challenge. Likewise, even businesses 
serving niche markets will need to achieve sufficient scale in 
order to make their investments worthwhile. Utilizing existing 
relationships that small producers and processors have with 
their larger peers may be one way to address the challenges 
that small businesses have in making new ventures work.
    I look forward to hearing everyone's testimony today and in 
learning your views on this important topic.
    If Committee members have an opening statement prepared, I 
ask they be submitted for the record.
    We are not going to use timing lights today. We do that in 
Washington to try to keep it down, but we are going to give you 
all the time you need to bring your testimony forward, and then 
I am sure we will have some questions after you are done.
    So our first witness is Mrs. Linda Hamilton. She is a part 
owner of Triple H Farms, located in the town of Leicester. 
Triple H Farms is a family owned, diversified crop operation 
growing corn and soybeans, as well as vegetables under contract 
for Seneca Foods. Mrs. Hamilton's husband and her brother-in-
law are in charge of the farm on a day-to-day basis, but this 
arrangement may soon include Mrs. Hamilton's daughter, who is 
interested in adding livestock to the farm. She is testifying 
today on behalf of the New York Farm Bureau.
    Mrs. Hamilton, thank you for appearing today, and we would 
love to hear your testimony.

 STATEMENTS OF MS. LINDA HAMILTON, TRIPLE H FARMS, LEICESTER, 
NEW YORK, TESTIFYING ON BEHALF OF THE NEW YORK FARM BUREAU; MR. 
     STEVEN VAN VOORHIS, PRESIDENT, NEW YORK CORN GROWERS 
     ASSOCIATION, HENRIETTA, NEW YORK; MR. JOE WEBER, VICE 
PRESIDENT, MIKE WEBER GREENHOUSES, INC., WEST SENECA, NEW YORK; 
     AND MR. RAY SCHUETH, DIRECTOR OF AGRICULTURE, EASTERN 
  OPERATIONS, SENECA FOODS CORPORATION, JANESVILLE, WISCONSIN

                  STATEMENT OF LINDA HAMILTON

    Ms. Hamilton. Thank you to the Committee on Small Business 
and to the Subcommittee Chairman, Chris Collins, for inviting 
me to testify before you today on how our family farm benefits 
from larger processing businesses. My name you have already 
said--you took part of my little spiel here to start off with--
my name is Linda Hamilton, and my husband Roger and my brother-
in-law Randy own Triple H Farms. We do vegetables and crop 
farming, half of it in the town of Leicester and half of it in 
the town of Geneseo.
    If you look out this window, straight out the hallway, when 
you are done with this hearing today, you will see some of our 
land right below us. And it is really kind of moving to stand 
here and speak for my farm and be able to look out at some of 
our land.
    We are third-generation farmers. While I have worked off 
the farm as a registered nurse, I was raised by parents who ran 
a full-time farm very much together. I am also speaking on 
behalf of New York State Farm Bureau, the largest general farm 
organization in the State. We have 25,000 members.
    My family works 1,100 acres of farmland in the Genesee 
River Valley. We grow some field corn and soybeans, but we are 
really proud of our fresh vegetables. We process approximately 
200 acres of those, some years more. This year we are planting 
peas, beets, green snap beans, and possibly yellow wax beans. 
Depends if some other farm person's land has extreme amounts of 
water or is so dry that they have had no water and at last 
minute scrambling we have an opening and we have been willing 
probably for over 10 years to say, all right, then we will not 
put in corn and we will put in some wax beans for you. We try 
to be very versatile and agreeable if at all possible.
    These vegetables will eventually be canned or frozen at one 
of the local processing plants. We are very fortunate to have 
four plants nearby. They are owned by two different companies. 
This year, half of our product will go to Seneca Foods. The 
processing plants for Seneca Foods are in Leicester and Geneva. 
And half will go to Farm Fresh First-Bonduelle. Those two 
processing plants are in Oakfield and Bergen.
    May I remind you, New York does have a very limited growing 
season. Getting started is half the trick usually, especially 
after a winter like this. This is why preserving the vegetables 
that we grow so people can eat them year-round is still 
important. It is the only way for everyone to get to eat local 
green beans in the month of February.
    We work closely with the processing companies to decide 
what we will plant, how much, and then they present a contract 
to us. Over the years, this can change significantly as 
consumer demand shifts for certain vegetables or the company 
may change the type of vegetables that it can process at a 
specific plant. It used to be we could take four or five 
different types of vegetables to one plant. Now we are seeing 
more of one or two vegetables at a certain plant. So the plan 
between our farm and the processors needs to be very 
coordinated. We know them on a first-name basis.
    The huge investment in processing equipment and marketing 
costs alone are not something a farm of our size could 
profitably take on. Thus we are integrally dependent on the 
processing companies as much as they are dependent on what we 
hope to be a quality product that is delivered right to their 
door.
    My husband's family has been selling vegetables to the 
various processing plants for yearly 60 years. It is key for 
our business to have a variety of plants nearby that can accept 
a diversity of farm fresh vegetables. In farming, it is very 
risky to just grow one thing, especially nowadays, and it is 
also very expensive to transport vegetables while keeping them 
fresh over long distances. In our early married years, I can 
remember being called to bring in bags of ice that they would 
spread across the top of the trucks that had fresh peas so that 
they could not have sun bothering them until we got them to the 
processing plant. Thus we need a healthy local processing 
sector to continue doing what we do best.
    Not only is my farm family very experienced and skilled in 
growing vegetables, but our actual farmland is uniquely suited 
to grow the crops. Our farmland sits in the Genesee Valley and 
is bordered by the Genesee River. This valley, where you are 
all sitting this very minute, contains much of the top 
vegetable and crop farming soil in New York State. For 
thousands of years the river would flood this area over and 
over again, depositing a deep layer of topsoil that is nutrient 
rich and free of stones. Being free of stones is a big deal in 
agriculture. That is what makes this land so great to grow 
vegetables. I wanted to quote from my husband and his brother. 
They said quite a few different things and came up with finally 
with a grin on their faces: This land, their land is a gift 
from nature.
    Here in New York, we have access to markets that other 
farmers would just envy. Our farm is located between the cities 
of Buffalo and Rochester, but--and this is a very important 
point--we are also located within 500 miles of one-third of the 
United States' population, with New York City, Boston, 
Philadelphia, Washington, D.C., Pittsburgh, and Cleveland, all 
areas that are hungry for the things we produce. Without 
vegetable processing plants, we would be forced to grow more 
row crops like field corn and soybeans. This area is a 
wonderful vegetable-growing region, and if we were not able to 
do that here anymore you would notice the price of vegetables 
going up in stores on the east coast.
    As I mentioned, we are third-generation farmers, but we are 
very excited to have the fourth generation, our daughter Leslie 
Hamilton, join Triple H Farms. She graduated 2 years ago from 
Cornell University and chose to come back to our family farm. 
Leslie has been on a tractor the past 3 weeks with a 25-foot 
vertical tiller preparing land, ahead of the fertilizer, to 
plant field corn.
    Young farmers are so discouraged by the challenges and 
stress that they face in committing to a career in agriculture, 
we just are not seeing people going into it like we have in the 
past. It used to be the farmer's sons and often the farmer's 
daughters would go into it. We don't see it anymore. Now it is 
a rarity.
    Concerns that the young farmers have--and I talked to quite 
a few of them in the Farm Bureau--they wanted to voice that the 
expense of land, finding land because God isn't making land 
anymore, labor, fuel, energy, machinery, repairs, taxes, rules, 
licenses, insurances, and the list goes on. It is no secret 
that New York is a high-cost State with a difficult regulatory 
environment. This affects family businesses and farms. Despite 
all of this, we are very proud that she has decided to carry on 
our farming tradition.
    Just this morning, I already had a person speak to me about 
it, that he had met her and that he thought it was great that 
she was enthusiastic and not frightened and right there doing 
whatever needs to be done. However, Leslie also understands 
that diversification is important in today's farming 
environment. She has a plan with one of her cousins, a male 
cousin, and is in the beginning stages of developing a grass-
fed beef business. They plan on starting out small and will 
grow slowly. They plan to cater to high-end niche markets, and 
that is a great value-added business venture.
    A little additional thing is they have been working on 
fences for probably the past month while they are trying to get 
old pastures, people that used to have cows in a certain area, 
people that have passed on and the kids have the land and they 
really didn't want to sell it for houses. And so one of the 
spots they have been working is 19 acres, they have put in 
every spare minute, usually in the rain, repairing the fences 
so that they can get some beef cattle in there soon.
    Without the certainty of our processing vegetables and 
other crops, it would be hard to take this kind of risk. Our 
daughter's entrepreneurial spirit has the potential for a 
decent payout. In the meantime, the longstanding relationships 
we have developed with our processing companies and where we 
sell our grain means we can still have income to support the 
main farm operation.
    We Hamiltons truly hope that vegetables will always be 
grown on our land. Just as we have diversified the crops that 
we have grown, it is wonderful to see our next generation 
diversifying even further. This kind of diversification helps 
minimize the risks, the top two being fluctuating market 
prices, and the second one, in bright bold letters, weather, 
both of which farmers have no control over year in and year 
out.
    Thank you again for the opportunity to share a little about 
my family's farm. I would being willing to take any questions 
you may have.
    Chairman Collins. Thank you, Mrs. Hamilton.
    Our next witness is Mr. Steve Van Voorhis. Steve manages a 
corn and soybean operation in Henrietta. In addition to his 
family operation, Steve serves as president of the New York 
Corn and Soybean Growers Association. In his 7 years as 
president, he has seen firsthand the changes taking place in 
agricultural product markets and how these are affecting small 
business corn and soybean producers.
    Mr. Van Voorhis, thank you for appearing here today. You 
could now deliver your testimony.

                STATEMENT OF STEVEN VAN VOORHIS

    Mr. Van Voorhis. Okay. Thank you for this opportunity to 
testify today about the value-added nature of corn and soybeans 
for our family farms and to New York's economy.
    Traditionally, New York's agriculture has been known for 
dairy, apples, and wine. But for the last decade, New York crop 
growers and dairy farmers have been adding hundreds of 
thousands of acres of corn and soybeans to their farms' 
portfolios. In the last 5 years, with the growing international 
export market and a good price per bushel, New York farmers 
have continued to add soybean acreage to their operations. In 
2007, New York growers planted just over 205,000 acres of 
soybeans and harvested 7.9 million bushels. In 2012, soybean 
acres numbered over 315,000 and the harvest pulled in almost 15 
million bushels, an addition of over 7 million bushels in the 
New York grain market in just the last 5 years.
    While soybeans are a relatively newer crop to New York, 
farmers in New York have been growing corn for decades. 
However, thanks to two ethanol plants in New York State, one in 
central New York and one here in western New York, growers have 
continued to add acres of corn to their farms as well. Since 
2007, farmers have planted 200,000 more acres of corn, 
resulting in 25 million more bushels on the market. The total 
corn acreage in 2012 was 1.2 million with over 90 million 
bushels harvested.
    So why the added acreage in corn and soybeans in New York? 
You will remember that when I gave you the soybean statistics I 
mentioned a growing international market. The number one market 
for New York soy is Southeast Asia. With a rapidly growing 
middle class, Southeast Asia is buying U.S. soy for animal 
feed, mostly for aquaculture operations, fish farming. New York 
farmers sell their beans to grain dealers who then load them 
onto the rail cars and then they arrive to eastern seaboard 
ports.
    From there they are loaded into containers, which 
originally arrived in New York full of consumer goods such as 
TVs, and shipped back across to Southeast Asia. Approximately 
80 percent of New York's soybean crop is being exported in this 
manner.
    Such a strong market overseas has created high demand for 
soy, resulting in a good price paid to growers for their crops. 
In the last quarter, soybeans were going for $12 to $14 per 
bushel. Because of such a good price, many dairy farmers in the 
State are utilizing extra land by growing soybeans as a 
straight cash crop.
    Another big customer for New York soy are our dairy cattle. 
Soybeans are made up of 80 percent high protein meal and 20 
percent oil. Soybeans are crushed and the oil is extracted. The 
meal is then mixed into the feed for animals such as dairy cows 
and the remaining oil is used for vegetable oil, consumer 
products such as lotions, lip gloss, candles, or biodiesel.
    Speaking of biodiesel, the New York Corn and Soybean 
Growers Association is excited about the increasing potential 
for the use of biodiesel in New York State both in heating oil 
and on-road diesel. Currently, New York City requires a 2 
percent blend of biodiesel into all heating oil sold in the 
city, and many municipal city fleets are using biodiesel blends 
of up to 20 percent in their trucks and vehicles.
    The continued growth of the biodiesel market in New York is 
a great opportunity for growers to add value to their soybean 
crop. Increased production and use of biodiesel will also 
create demand for the crop, providing another market for New 
York soy. Finally, the higher demand for soy oil, the cheaper 
soy meal, will mean dairy farmers will save money because of 
that additional material being made available to them.
    Now, back to corn. As I said, while farmers added soybean 
acreage to their operations, they also added corn acreage. A 
decade ago as the potential for the construction of an ethanol 
plant was being tossed around, many naysayers said New York 
would never support an ethanol plant with New York corn, let 
alone two ethanol plants. Today, we have two successful ethanol 
refineries that produce over 160 million gallons of ethanol 
from 60 million bushels of New York corn. And in fact all the 
ethanol for NASCAR comes right out of the Sunoco's Fulton, New 
York, ethanol facility.
    Many of you have heard about the food-versus-fuel debate 
when it comes to ethanol. But this renewable fuel's production 
is providing additional value to New York dairy farmers as 
well. The byproduct of ethanol production from corn is dried 
distiller's grain or DDGs. Since New York began producing 
ethanol, dairy farmers have come to rely on these DDGs as a 
source of high protein feed for their cows, resulting in higher 
milk production. The grain corn that is not used for ethanol in 
New York State is processed as meal for dairy, poultry, and 
hogs, as well as exported out of State or internationally.
    Corn silage is also an important value-added crop to many 
dairy farmers and growers across New York State. Nearly half of 
New York's corn acreage is harvested as corn silage, a vitamin-
rich feed for cows. In 2012, of the 1.2 million acres of corn 
planted in New York, 475,000 acres were harvested as silage. 
Instead of investing in their own planting and harvesting 
equipment, some smaller dairy farms will contract with larger 
crop operations to produce their silage, which is a win-win for 
both farms. The dairy gets the feed they need for their cows 
without the expensive upfront investment of planters and 
combines, and the crop businesses get additional use out of 
their expensive equipment, resulting in it paying for itself 
more quickly.
    Finally, both corn and soybeans are useful replacements for 
petroleum-based ingredients in everyday products. Soy is 
already being used in plastics, foam, lawn and field turf, 
rubber, and as carpet backing. Research is also being done by 
the U.S. Department of Energy on converting corn biomass into 
useful high-value chemicals and materials.
    So what does the corn and soybean industries mean for New 
York's economy? In 2012, the direct value of corn was over $600 
million and the direct value of the New York soybean crop was 
$195 million, putting corn as the second most valuable 
commodity--second only to dairy--in New York State, and 
soybeans coming in at number six. Add the indirect value of 
equipment purchases, fertilizer, seed and labor and more, and 
the value of these grains multiplies exponentially.
    Given the fact that farmers are planting more and more corn 
and soybeans in addition to the value of the crops in dollars, 
one can see how large and important the grain and soybean 
industry in the State has become.
    Chairman Collins. Thank you.
    I would now like to introduce Mr. Joe Weber. He is vice 
president of Mike Weber Greenhouses, located in West Seneca, 
New York. Mike Weber Greenhouses was started by Joe's father 
and has been a family-owned operation for more than 35 years. 
For the past 20 years, Wegmans supermarkets has been one of 
their primary customers. This relationship has helped Joe 
expand his business and to comply with growing regulatory 
requirements on food products.
    Mr. Weber, thank you for appearing here today. We look 
forward to your testimony.

                     STATEMENT OF JOE WEBER

    Mr. Weber. My name is Joe Weber. I am the vice president of 
Mike Weber Greenhouses, Incorporated, a greenhouse company 
located in West Seneca, New York, growing and selling quality 
plants for the past 35-plus years. We currently have seven 
full-time employees and nine part-time employees and $1.3 
million in annual sales.
    My parents, Michael and Susan Weber, started this business 
as a traditional greenhouse company selling retail year round. 
My father, and then myself, have found that it was easier for 
us to grow the wholesale side of the business and have evolved 
into niche markets, including growing potted herbs which we 
sell under our Gardener's Own brand. We are the only ones that 
grow this brand. If you have seen it out in the store, it came 
from our family farm. Wegmans is the primary purchaser of 
these. It is our supermarket and we sell to independent garden 
centers as well.
    Our relationship with Wegmans had been a positive example 
of how small businesses can work with larger businesses to 
improve efficiencies, profitability, and a unique offering to 
customers. The example I will highlight that relates to the 
work of the Subcommittee is in the area of food safety.
    Wegmans has a strong brand, an excellent reputation, and a 
tremendous commitment to food safety and their customers. Our 
herbs enter through their produce department where they require 
all of their produce suppliers, even the smallest, to be 
certified by the U.S. Department of Agriculture's Good 
Agricultural Practice standards. We are good at growing plants 
and not nearly as experienced with government red tape. This 
certification would be very difficult to accomplish without 
Wegmans' help. They put on a GAP training workshop and provided 
materials to train growers in the importance of GAPs in 
reducing microbial and bacterial risks during the production 
and distribution of fresh fruits and vegetables. The emphasis 
here is on ``fresh,'' since there is no processing for fresh 
herbs or melons. This is where their emphasis is on food 
safety.
    The workshop covers areas like water quality, manure and 
composting, assessing food safety risks, and developing a 
crisis management plan. After growers have completed their own 
GAP program and have implemented it, we are required to undergo 
an annual GAP audit, but much of the cost of this audit is 
reimbursed by Wegmans--but only if we pass.
    There is still a large cost in writing and implementing a 
GAP program. Each individual GAP grower has to tailor their GAP 
programs for their own facility. They can't be told how to 
write it. They can just be told what the guidelines are and how 
we have to develop it ourselves with value added by the 
Department of Agriculture.
    The end result is that we have a high quality product that 
consumers really want and can trust in its safety and value in 
the market. Mike Weber Greenhouses, Incorporated, has a market 
and distribution in Wegmans that far exceeds anything we could 
duplicate with our retail or even wholesale sales.
    As far as I am concerned, that is the value in partnership 
between small and larger businesses. Consumers get a unique, 
quality product that a small, local business can offer, and the 
large business can help distribute the product to customers 
over a geographic area and volume that we could never 
duplicate.
    I brought two particular examples of some of our herbs for 
you to see. They both happen to be sweet basil; different 
sizes. They add up to 7 percent of the herbs that we do sell.
    I appreciate the opportunity to be here with you, and I 
would be pleased to answer any questions that you may have.
    Chairman Collins. Thank you very much.
    Our final witness is Ray Schueth. He is director of 
agriculture, Eastern Operations, for Seneca Foods. As many of 
those attending today's hearing know, Seneca Foods is one of 
the largest agricultural-producing companies in the United 
States. Ray is here today to discuss how Seneca contracts with 
local agricultural producers and other small businesses as part 
of their firm's operations.
    Mr. Schueth, thank you for appearing today. We look forward 
to your testimony.

                    STATEMENT OF RAY SCHUETH

    Mr. Schueth. Thank you to the subcommittee for the 
opportunity to speak to you today as a representative of Seneca 
Foods Corporation and discuss the benefits of the partnerships 
in small Ag businesses and their development.
    My name is Ray Schueth. I am the director of Ag for Seneca 
Foods Corporation. Seneca Foods, as you had mentioned, is the 
largest fruit and vegetable processor in America with 22 
processing facilities located in Pennsylvania, New York, 
Wisconsin, Illinois, Minnesota, Idaho, Washington, and 
California.
    We are also vertically integrated with our seed production 
capabilities in the Northwest. We have a 12,000-acre company 
farm operation in Wisconsin and we have three state-of-the-art 
can manufacturing facilities, one in Idaho, Wisconsin, and one 
at Marian, New York. Basically, we produce all of our own cans 
needed for production of all the fruits and vegetables that we 
produce.
    We employ about 3,300 full-time employees in all of these 
plants. In addition to that, we use about 9,000 seasonal in our 
plants during our processing times and we have an annual 
revenue of approximately $1.3 billion.
    In my role, I am responsible for 11 of these processing 
plants, in Wisconsin, Illinois and then the two here in New 
York that were mentioned. Leicester right down the road and 
Geneva, New York, are our two facilities here in the state.
    In addition, basically we contract with over 2,000 growers 
and we contract approximately about 230,000 acres to produce 
primarily 11 vegetables and four fruits, throughout the United 
States. Some of these producers may only grow a few acres. Two 
where we have growers that produce over a thousand acres each 
for us throughout all of the different growing areas as far as 
it goes. While some producers specialize in vegetables and only 
in vegetables, with producing various crops, we have other 
growers that it is just a small part of their overall 
operation. They use it for rotational purposes, they use it for 
management time, and they also utilize reduced capital 
expenditures by us being involved in part of their operation.
    Each year, as Mrs. Hamilton mentioned, we have field reps 
that go out to each of these farmers and sit down with them, 
take a look at their operation, the land available. Naturally 
the pricing, whether our pricing is favorable or unfavorable 
compared to other commodities, and sign basically yearly 
contracts to produce these vegetables for us.
    And in some cases, some of these crops that we are 
contracting, we may provide the seed, the chemicals, actually 
do some of the planting and the harvesting, which reduces the 
overall capital expenditures for some of these growers, or 
working capital outlay on a yearly basis, which is all 
advantageous in those respects, on that.
    So we work through that with all of these growers, 
scheduling is very critical, so we sit down with farmers and 
put together a plan, because we need to have crops come in 
daily to the plants, so that we can utilize full production at 
our plants throughout the season. Most of the crops run from a 
30-day harvest time period to as long as 90 days depending on 
the crop. Basically, here in New York, beans for example, we 
can grow them and run the plant about 70 days, by utilizing 
early varieties and full season varieties and planting as early 
to as late as we can. So we can take numerous growers and 
spread the season out.
    Our products reach about every retailer and food service 
operator in the United States and we also export to 80 
countries around the world. We offer various styles of 
commodity and numerous different package and configurations to 
satisfy the needs of the market.
    Increasing awareness of the consumers work, where their 
food comes from and how it is produced is one thing that we are 
seeing more and more of and it continues to lead to changes in 
our operations. Example of this as far as consumer perception 
is BPA, which is basically a lining utilized in the cans. 
Science and the FDA continues to support the usage of this and 
find no flaws on it, but consumer protection basically and with 
the news media, phones, instantaneous information and that, the 
perception has really become negative. So, Seneca Foods was one 
of the first major canned vegetables that we are switching the 
majority of our cans to non-BPA lining. More expensive, but 
again we need to meet the consumers' wants and needs in that 
respect.
    Another important shift in our business has been a move 
towards organic products. A little of that has been mentioned 
already today. But, we have been producing peas, beans and corn 
organically for the last number of years. But in the last 3 
years now we have actually quadrupled our acreage of organic 
ground. We have added edamames and we've added pumpkin to the 
portfolio and we are seeing more and more demand coming from 
the consumers for these type of products.
    These crops are grown almost exclusively with smaller 
growers, in some cases growers that are actually just getting 
into the farming business, and so these people and these 
growers are the ones that need--are small businesses and we 
also see with the organic growers that we need to work with 
them more in a long-term relation. So they are critical to our 
business. If the consumers' demand, although small, continues 
to grow in that field and we wish to be partaking in that and 
be able to deliver organic products, we need long-term working 
relationships with this base.
    Because even more than conventional produced crops, it is 
just as important that we continue to try to develop those 
relationships. While the cost of this is higher in a 
competitive or alternatives for organic vegetables, such as 
field corn and soybeans are also growing, the consumer seems to 
be willing to pay the higher cost needed to sustain the shift 
in this here dimension.
    Even our farming operation that I mentioned earlier in 
Wisconsin, we work very closely, we have long-term 
relationships with potato growers. We have small and large 
potato growers that exclusively want to put their time and 
energy growing potatoes so in their nonrotational years when 
they are not growing potatoes on the ground, are the years that 
we actually farm the ground.
    So, we have different ground every year through these 
growers when they are not growing potatoes on them, that we 
actually work with that. We only grow vegetables, which works 
ideally with potato growers as far as the rotational crops and 
it is just another way of interacting with growers, whether 
they are large or small, and forming a long-term business 
relationship with them.
    In conclusion, while fruit and vegetable production is not 
available for all producers due to the location of our 
processing facilities, and some crops can only be grown in 
certain areas, the demand associated with growing these crops 
may not also be of interest to every producer. It should be 
recognized that these producers and their relationships are 
developed with the processors that they supply. It plays an 
essential role in not only in the success of the processing 
industry and our mission to provide nutritional and affordable 
food to the consumers, but also the diversity and 
sustainability of the producers themselves. The development of 
farm policies must continue to be sensitive to the needs of 
these special crop producers as well as the processing 
partners.
    Thank you for your consideration; I will be happy to answer 
any questions that you may have.
    Chairman Collins. Thank you, Mr. Schueth.
    I think all of us find the testimony that you have given 
interesting and when we think about our role in the Small 
Business Committee, it is really to point out in this case to 
America the cooperation between small and large businesses and 
that is what we are seeing today and I will have a few 
questions, maybe to expand on that important role that Seneca 
Foods or Wegmans would provide to the producers relative to 
access to capital and planning and the like.
    I think America takes our food for granted because we just 
get in the car and drive X number of miles down the street or 
just a few blocks and walk into a well-stocked supermarket and 
have all of this variety to pick from and I think most 
Americans are not necessarily aware of what is going on in the 
agricultural community and, in this case, the cooperation 
between the many of the large food processors and then the 
growers.
    So I guess you know, where I would like to maybe start a 
little bit is, we hear about, and I think Ms. Hamilton you 
mentioned the access to capital. The young farmers are not 
entering the business today. The regulatory hurdles, limited 
land. You know, and we are trying to do some things, I serve on 
the Agriculture Committee, to have some incentives to get some 
younger folks in.
    But when you look at access to capital and growth in your 
farm, I have got to assume it helps you to go to a bank and say 
I have a contract with Seneca Foods. Or, Joe, to go to a bank 
and stay I have a contract with Wegmans, both of whom are known 
to pay their bills. Is that part of----
    Ms. Hamilton. I would say that is helpful. Our daughter and 
her cousin are going through--looking to see if they can go 
through getting a loan, that is their major part. But they are 
using a resource that my husband hadn't used in the past 
because they are interested in having some younger farmers, and 
the name escapes me of where they are going, but it was 
encouraged through the Cornell Cooperative Extension and it was 
encouraged through one of the Federal agencies, crop agencies: 
Go look into this, you should have a good chance of being able 
to get something without a tremendously high percentage rate.
    Chairman Collins. Yeah, so Joe, with yours I am assuming 
your bank is very happy to know that you are doing business 
with someone like the Wegmans.
    Mr. Weber. They are happy to hear that, but we are very 
seasonal. Right now we are extremely busy. I managed to get 
away today, but we have 6 weeks to make our year right now. The 
rest of the year we are breaking even just about. And banks 
don't like to see that. Always that you walking in and you see 
what is going on. We have a relationship there with Wegmans and 
it helps, but we have gone other place, other avenues for 
revenue.
    Chairman Collins. So when it comes to pricing, I mean, I am 
just curious on this, because Mother Nature plays such a 
critical role, droughts in California, droughts in the Midwest. 
Great weather here, but in many cases crops can move not only 
all across the country but across the world.
    You know so, Mr. Scheuth, how do you set a contract price 
or is it based on every day when the commodities show up, 
whatever the spot price is in the commodity market? How do you 
go to Mrs. Hamilton before we really know what Mother Nature is 
going to do through the year to determine the pricing on the 
contract?
    Mr. Schueth. Basically, we set our contracts out here and 
in the Midwest, as far as the vegetables, they are set in 
January. Okay? And we really base it off of the December 
futures of the new crop year coming and actually, we set a base 
price and it has to be competitive with field corn and 
soybeans, because that is a big option that most growers have. 
If they don't grow our crop, then they would go to corn or 
soybeans as far as all of our main crops.
    We have got a scenario in there that, that contract can 
actually go up in the month of February if the commodity prices 
move up. It won't go down but it can move up. But basically the 
growers they lock in a price on our contract then in February. 
And a good way to look at it, a lot of our growers look at it 
if they grow 5 percent of their acres, 3 percent of their 
acres, or 30 percent of their acres, it is the same as locking 
down 30 percent of their acreage against a field corn or 
soybean price at that point in time.
    Which is, in today's marketing world it is critical that 
they do protect themselves to some degree. Our contracts have 
minimum guarantees. We have some contracts that actually are 
covered under Federal crop insurance. So growers are protected 
in about the same way as if they were growing field corn or 
soybeans.
    Chairman Collins. That is an interesting piece that I guess 
many of us didn't know. I am just curious to hear your 
comments.
    Ms. Hamilton. I have to play a little bit devil's advocate 
here for my darling husband, brother-in-law, and daughter. And 
that is that, one thing about these contracts is they really 
are what we would consider for lack of a better word 
``extremely flexible,'' and not always in a positive way. If we 
have a year when we have had a lot of bird damage such as birds 
pecking the top of the ears of corn, the factory is not happy.
    And if we had a year that we have had so much rain that we 
have mushy vegetables, the factory is not happy. If we have a 
year where it is so dry and the beets are too, almost if there 
is such a thing, too hard, too small, not exactly what they are 
looking for, that is not good. The tenderness factor is rated. 
How tender are our peas? That is a big deal. And those 
variables impact the bottom line of what type of income we will 
get because factories have to take out for that.
    So that is always a very nerve wracking time when we are 
loading our fresh vegetables and we already can almost tell or 
predict what type of grades of beets, 1s, 2s, 3s and 4s, and 
the factory wants 1s and 2s. They don't want the 3s and 4s and 
so, and so am I being truthful about that, sir?
    Mr. Schueth. No, no, no, no. No question about it, you 
know, because we pay, most of our contracts are--naturally, 
they all have deductions for various reasons, depending on what 
we can take out, what we can sell the finished product for. So 
there are variabilities there. So, the grower carries part of 
that risk along with us. There is no question about it, you 
know.
    And that is why I think as I made in my comments, not all 
producers work into our portfolio, so to speak, type situation. 
Most of our growers that have grown for us for a long time 
understand and know how to measure that, and so they have 
already got that built into what they assume will be their 
final pricing to speak of; and some years they are ahead of it 
and some years they are probably not to that point.
    And then it depends what crops you grow. Beets is a good 
example. There is basically to the growers really not a 
guarantee to speak of as far as that crop, so their protection 
is a lot less maybe in that commodity than some others.
    Ms. Hamilton. Farmers have to be hopeful. If you are ill, 
you are hopeful that you can get better. As a farmer you are 
hopeful that the crop will be decent because of weather, 
because you have the right herbicides, and because you had a 
decent seed. And an old farmer that I grew up with, my dad, 
said: Hope, I am stuck like a dope on a thing called hope and I 
can't get it out of my mind. Meaning that farmers just will not 
give up. They keep at it. It is a rare guy that really gives 
up. But they are always hoping that it is going to be their 
product, that produce will be above average for the consumer 
and then for them to not have things deducted from their final 
payment.
    Chairman Collins. So Mr. Van Voorhis. GMOs. You were 
talking about the exporting of corn, that is in soybeans and 
you know, there is quite the debate in Congress and across the 
country on genetically modified organisms, GMOs. The seed that 
in many cases have allowed us to increase crop production, 
especially in corn. Tremendous increases taking into account, 
you know, pests and weather conditions and soil and the 
whatever.
    But we have seen, and I know we have got the trade 
negotiations going on now, some countries trying to prevent 
U.S. produced crops from entering their markets and they are 
using the GMO issue as something to block. We are also seeing 
in some cities and other places the demand or requirement that 
companies label their products. So Seneca Foods or others would 
have to label the product whether there is genetically modified 
organisms as part of it with the I should say unfair assumption 
in some cases that GMO is bad. Well, I mean, that is just not 
the case from the science standpoint and you know, one reason 
we have the productions we have and are feeding much of the 
world is because we have had biotech type of innovations that 
have allowed us to produce better foods, you know, in different 
temperatures.
    I am just curious Mr. Van Voorhis, on GMOs and you in 
particular and corn and so forth if you would like to make some 
comments on that.
    Mr. Van Voorhis. Yes, I would agree that the GMO issue is 
out there and very much alive and I am glad that you mentioned 
sound science, because I think speaking on behalf of 
agriculture, I think we have to rely on sound science. But 
there are countries out there that and perhaps, you know, maybe 
they have used the GMO issue because maybe they purchased too 
much of one particular product like the soy is, you know, 
Chinese or whatever, maybe the price for when they brought the 
soybeans has gone down. So sometimes they use that sort of an 
excuse or whatever, that you know, that we can't take GMOs or 
we are not going to do this or that to move away from a 
contract, a signed contract. You know I think that is a 
separate issue. But that gets blamed as a GMO issue as well.
    Chairman Collins. I know on the Agriculture Committee we 
are trying to push the sound science piece at every level. The 
good news is that people love organic. They are more aware of 
their foods. I think in Buffalo now we have a Whole Foods going 
in. They have determined that Whole Foods can open a successful 
operation in the Buffalo market. But there are misconceptions 
and what the word is, is your perception is your reality, and 
if your perception is that for some reason GMOs are bad then 
you are going to be looking for that, much like country of 
origin labeling.
    You know, the cattle was born in the United States, fed in 
the United States, perhaps sent to Canada for something, 
brought back in the United States, slaughtered in the United 
States. I mean this idea of tracing where that cattle was all 
the way through. That is another thing that we are seeing 
coming down the pike. And in some cases trade barriers, I mean, 
trade wars can be established over things like country of 
origin, labeling and GMO labeling and it is part of the world 
economy we are in, and it is certainly not always good.
    Ms. Hamilton. Advertising can be so frustrating sometimes. 
I can tell after many years of being married to my farm guy, 
that when his face goes red like this something is not good. We 
were in a large grocery store over the winter and he picked up 
and he said look at this, and he picked up a quart of ice cream 
and it said ``No GMO.'' GMO pertains to grains. And it was just 
very, very, they were really pushing the edge.
    Chairman Collins. I know they are.
    Ms. Hamilton. It is so frustrating.
    Chairman Collins. Because again, sound science, one reason 
we have the production we have today is because of biotech 
advances that are extraordinarily positive with the perception 
of those driving it to try to presume it is bad.
    So on the regulatory side, Mr. Weber, you were mentioning 
how a partnership with a larger organization, certainly Wegmans 
which is known for their produce and their plants and they 
certainly stress local, you know, associations. Maybe you 
could, you know, talk a little bit more about the role they 
play in assisting you with their resources, which they are a 
very large organization versus--I would think that the value, 
the value-added they are bringing you is quite substantial by 
that association.
    Mr. Weber. Yes, to be associated with them is a big bonus 
in our own retail store. People go out in a local area and see 
our product has a label showing where it was grown and trace it 
back to us.
    They help us tremendously in the whole food safety and GAP 
scenario since they demand it from everybody. They put on a 
training session every year, usually in January, this year it 
was moved to March. So they invite some of--every one of their 
vendors to come and they will bring Bob Divine, a gentleman 
from Cornell that helps with the program. He comes in and goes 
down what is new in the program. Changes that are being made. A 
refresher course on it. And you first audit.
    Susceptibility to surprise audits, they can walk in--USDA 
can whenever they want to--and inspect us. So it is really was 
not a big change because we were doing things the right way, 
but we had to make sure that we did record everything. But they 
have been a big help in implementing it and encouraging it. 
When we first initially started the program, I inquired about a 
lot of the labeling requirements. We added personnel and the 
time involved. We said what about putting a label on there that 
says we are doing this. And they said they don't believe it 
needs a label because the customers expect clean produce.
    Chairman Collins. So one other topic that we all hear about 
is labor, immigration, and we are not really talking about 
dairy here today. I mean, dairy, that is huge. Cows have to be 
milked twice a day and in many cases the dairy farmers are 
milking three times a day and having legal labor certainly on 
dairy, where the guest worker program is just not designed for 
it.
    I am just curious, the guest worker program in the crop 
field, is that something you take advantage of, Mrs. Hamilton, 
and does it work for you as it is currently designed?
    Ms. Hamilton. Actually, we have--my husband, his brother, a 
full-time hired man, our daughter, and over the years we would 
have several part-timers, usually older guys who just love to 
come back and do it. The thing we have all commented on that we 
are seeing in this past and I will say at 15-plus years is that 
we can't get the young kids to come and help. It was a routine 
thing that neighborhood kids or town kids would come and pull 
weeds by hand walking through our vegetable rows. I think they 
did that for 15 years, kids did it. The last 15, we can't get 
anybody to do it. They are like I am not going to do that all 
day in the hot sun and only get a minimum wage and we are nice 
to them.
    Another example would be when you see the huge round bales 
of hay and straw out in the fields now. It was always the small 
bale, that was decades. Many people have gone to the big ones 
because they can quickly pick them up with a piece of 
machinery. But, smaller farmers will tell you they can't get 
anybody who will help load and unload those wagons and put 
their bales on the elevators and be up in the barn stacking 
them, it is hot and dusty. They are coughing, they are sweaty. 
It is too hot, the bales are too heavy, I don't want to do 
this. We can't get people to do it. We don't have to deal with 
straw and hay, but we know it firsthand of many, many friends 
and neighbors.
    So it is a sad commentary. I am not seeing a whole lot of 
interest in our younger population even for a part-time job. 
Very interesting.
    Chairman Collins. Mr. Van Voorhis, how is the immigration 
labor issue in the corn and soybean growing?
    Mr. Van Voorhis. It has a big impact on the dairy as 
obviously as you mentioned. Roughly half of our corn acres in 
New York are silage. We have a number of dairy farmers that 
belong to our board and the labor issue for them is tremendous.
    A lot of them are trying to use technology, robotics and 
some other things. But at the end of the day there is still 
manual labor that needs to be done and it is extremely hard to 
get local people to do it, in comparison to the quality and the 
dependability of those offshore people to do the work.
    Chairman Collins. Well, in some cases this is the big 
elephant in the room that Congress needs to deal with, is 
legalizing the workforce. We have the Greek yogurt plant right 
here, right next door in Batavia. Two Greek yogurt plants. 
There is not enough milk produced in our region to serve us, so 
on the supply-demand side some of the older plants are having 
to go into the Midwest or other places for supplies paying as 
much as $1 or even more per hundred weight just on 
transportation costs. And so you would think we would have more 
cows needing more feed, that is growth for everyone. Growth on 
the machinery side. But you need to legalize workers.
    And until we in Congress can deal with the legalized 
immigration issue, you can't blame a dairy farmer who says how 
can I go to bed on Thursday and wonder if I will have a 
workforce on Friday morning, because every cow still needs to 
be milked at least twice on Friday.
    So I mean, I think many of us are frustrated by the lack of 
movement of the politics that have entered the picture on the 
legalized immigration front, especially as it enters the debate 
on dairy. But then you know, we sit here today and think 
through the impact of dairy on the corn growers and you can see 
the common thread.
    I am interested really, it was just today that I am hearing 
now the price of corn, soybeans and how that could have 
vegetable growers switching their crops as Mr. Scheuth 
indicated. I don't think too many of us make that connection. 
But I gather it is a very real connection. That if the demand 
in price for corn went high, you are going to have to pay more 
for vegetables or you are not going to have any vegetables.
    Mr. Schueth. That is exactly right. I mean, a few years ago 
when corn went to $6, $7 a bushel, yes, we had to move our feed 
corn and beans, our pricing had to take a substantial gain 
upward also to be competitive. So, if we are not, we sign--the 
great thing, all of our, basically for our vegetables all of 
our contracts are yearly contracts. So we start off January 1st 
with not an acre under contract. So if we are not competitive 
we do not get those acres. If we do not get those acres we have 
major issues.
    And yet that has worked very, very well for processing 
companies for mega years. We don't see a change in that. We 
have a lot of growers that are second, we even have third 
generation growers that are growing for us and I have been in 
the business 42 years and I know some of those, and 
fortunately, they are younger growers, younger farmers now who 
have taken over different operations, which is fantastic, 
because they understand what it takes to produce a vegetable 
crop. As far as the immigration thing, it needs to be resolved. 
It just needs----
    Chairman Collins. There is universal agreement it needs to 
be resolved and nobody is doing it.
    Mr. Schueth. You have all of this luggage that we keep 
postponing and have to deal with it and set it up for the 
future generations.
    Chairman Collins. I am curious, you know, I am not going to 
try to get off topic, but take beets. You want 1s and 2s. It is 
almost impossible to guarantee it. You don't know what Mother 
Nature is going to hand you. So why do you grow beets? Because 
you could grow other things on that land; right?
    Ms. Hamilton. Because the processing plants near us, the 
beets plant in Leicester----
    Chairman Collins. Oh it is huge.
    Ms. Hamilton. It is, correct me where I am on this, as my 
husband's direct quote, it is one of the largest if not the 
largest beet plant east of the Mississippi River.
    Chairman Collins. It is; right? And I have been there 
tasting their beets, and I didn't know there were so many 
different kinds of beets.
    Mr. Schueth. It is the largest beet producing plant in the 
United States. It is not the largest in our system this year as 
you are well aware, but it can produce more cases of beets than 
any other plant we have. But honestly we have three beet 
plants, two in the Midwest and one here.
    Ms. Hamilton. Well, the question you just alluded to, that 
is a good one. There are days my husband and his brother will 
say: Why the ``blank'' are we putting ourselves through all of 
this stuff? And then they will say because there is this little 
part of them. It is the frustration factor that alternates with 
hope. But there is this little part of them that comes up 
within them to a bigger part: We are helping to feed the United 
States. And when they see a 5-acre plot that was turned down 
due to too much water damage, we are all just sick about it and 
we are like there are people starving. There are people who 
don't have enough to eat in the U.S. and this has to sit here 
like this. We tell everybody we know come and get some, but it 
is not reaching the really, the neediest people.
    But I do want to say something about Seneca that I was very 
impressed by. Another story from my husband and brother-in-law 
is how he thought they worked hand in hand with them a few 
years ago. I can't tell you the year, but you probably know it 
off the top of your head, Mr. Schueth. That beets were trying 
to be grown in a three county area that were coming to Seneca 
and I think it was Genesee, Wyoming and Livingston County, and 
there was either a problem with I think it was a fungus, a mold 
or a something, and they needed a special herbicide and/or 
pesticide that they knew they had to use in the spring or it 
was going to be close to an extremely poor crop, and they had 
to get a waiver through Albany to get that and--is this 
familiar to you? And they went----
    Mr. Schueth. We used the I-4. What we refer to as the I-4 
to get the special label.
    Ms. Hamilton. So your company and the producers, our local 
farmers, all had to be in on this together and all willing to 
sign for it to get it. A special waiver from Albany to use what 
you need to use to grow your beets in your own state in an 
extremely fertile valley. This is why the guys get frustrated. 
But they were grateful they were able to work hand in hand to 
do it.
    Mr. Schueth. Cornell University was very helpful on that 
also.
    Chairman Collins. We were also able in the farm bill which 
was a big deal, the 5-year farm bill that we finally did get 
signed--the prior Congress had kicked the can for a year--but 
we actually increased the amount of money available to Cornell 
and some of the other land-grant universities on the research 
side. Because the small farmer can't afford that research.
    So you need to look to the university setting some place. 
We are very fortunate to have Cornell in our backyard to 
assist, whether it is the fruits--and I know McDonald's is 
using more and more apples. They are very picky about what that 
apple looks like and how it is presented. And peaches, 
likewise. We had the peach festival up in Lewiston. But they 
are very, very picky about how the way those peaches are 
presented. It is not as easy as pull it off the tree and there 
you go.
    So, Cornell I know has been a Godsend to all of our 
vegetable growers, our food suppliers and others who have 
needed in this day and age the demand for quality presentation, 
visual appeal, is very much different today than it was even 10 
years ago.
    Ms. Hamilton. They are advocates that we are grateful to 
have.
    Chairman Collins. So we did the right thing in the farm 
bill. We got some crop insurance available to some of the 
vegetables that in the past were not eligible for crop 
insurance. We need to remind America that the farmers, while it 
is subsidized insurance much like flood insurance, and that is 
the role of the government, the farmers are picking and 
choosing the amount of coverage and they are paying a large 
piece of that. So it is not a handout as some would suggest.
    Mr. Schueth. And that is something to keep in mind. We are 
talking about small businesses, young farmers, start-ups and 
things like that. A lot of these that are in the specialty 
crops, the small crops, in a lot of cases they can't get crop 
insurance on some of these specialty crops.
    Chairman Collins. We have improved it in this farm bill but 
it is certainly not perfect.
    Mr. Schueth. Beets cannot be covered under Federal crop 
insurance, yet at this time, neither can carrots. So those are 
two crops that become a higher risk to the grower to even grow. 
Because if they get flooded out they can't turn that 5 acres in 
that they lose. So, you know, a side note but something that 
needs to be continued to be looked at.
    Chairman Collins. Well, we covered a lot of territory 
today. I think the main purpose we have achieved, which is on 
the small business side showing the relationship between some 
larger companies, the Wegmans, the Seneca Foods and others, and 
the production of crops, and you know we tried to touch on the 
issues that we need to continue to work on, whether it is GMOs 
or immigration reform or crop insurance.
    And so the purpose of these hearings is to come locally and 
get local input. We are very fortunate to be able to do that 
here in such an agricultural district, and I am sitting here 
looking out at your land right now.
    Ms. Hamilton. There you go, you are.
    Chairman Collins. I can tell you that California would die 
for the weather that we are having here. They are going through 
droughts. We had a little touch of it last year but nothing, 
nothing like they have seen out there in California.
    So this has been I think a very worthwhile hearing and I 
want to thank all four of you for participating.
    And Mr. Weber, taking you away from your very short season. 
I appreciate your time here today and I think this has been 
very worthwhile. I know it has been on my part. Serving on both 
the Agriculture Committee and Small Business, you know the two 
do come together.
    So with that, we will call this hearing to a close. And 
thank you again for all of your participation.
    [Whereupon, at 11:15 a.m., the subcommittee was adjourned.]




                            A P P E N D I X



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Thank you to the Committee on Small Business and to 
Subcommittee Chairman Chris Collins for inviting me to testify 
before you today on how our family farm benefits from larger 
processing businesses. My name is Linda Hamilton and my 
husband, Roger, and his brother, Randy, own Triple H Farms, a 
vegetable and crop farm based half in Leicester and half in 
Geneseo, approximately four miles apart. We are third 
generation farmers. While I also have worked off the farm as a 
registered nurse, my own parents were involved in full-time 
farming and I myself am the third generation in agriculture. I 
am also speaking on behalf of New York Farm Bureau, the largest 
general farm organization in the state with 25,000 members 
representing all commodities, all production methods and living 
in all corners of the state.

    We have 1,100 acres of farmland in the Genesee River Valley 
and grow some field corn and soybeans, but we are really proud 
of the vegetables we grow for processing on 200 of those acres. 
This year we are planting peas, beets, green snap beans and 
possibly yellow wax beans. These vegetables will eventually be 
canned or frozen at one of the local processing plants. We are 
lucky to have four nearby plants owned by two different 
companies. This year half of our product will go to Seneca 
Foods, which is represented here today, and half to Farm Fresh 
First-Bonduelle.

    As much as consumer awareness of fresh local vegetables, 
and farmers markets have grown in recent years, New York does 
have a limited growing season. This is why preserving the 
vegetables we grow, so people can eat them year-rou8nd is still 
important--and it's the only way you're going to eat local 
green beans in February!

    We work very closely with the processing companies each 
year to decide what we will plant and how much and then we 
negotiate a contract early in the year. These decisions are 
based on consumer demand, what the plants can handle, and even 
which vegetables we are best at growing on our farmland. Over 
the course of many years, this can change significantly as 
consumer demand shifts or the company may change the types of 
vegetables it can process at a specific plant. So the 
relationship between our farm and the processing company must 
be closely coordinated.

    Processing vegetables for the consumer market is not 
something that our small business could do on our own. The huge 
investment in processing equipment and marketing costs alone 
are not something a farm of our size could profitably take on. 
So we are integrally dependent on the processing companies, as 
much as they are dependent on the quality product that we 
deliver to their doors.

    My husband's family has been selling vegetables to the 
nearby processing plants for nearly 60 years and it is key for 
our business to have a variety of these plants nearby that can 
accept a diversity of fresh vegetable crops. In farming, it's 
very risky to grow just one thing, and it is very expensive to 
transport vegetables and keep them fresh over long distances. 
Thus we need a healthy local processing sector to continue 
doing what we do best.

    Not only is my family very experienced and skilled in 
growing vegetables, but our farm is uniquely suited to grow 
these crops. Our farmland sits in the Genesee Valley and is 
bordered by the Genesee River. This valley, where you are right 
now, contains about 7% of the top vegetable and crop farming 
soil in the United States. For thousands of years the river 
flooded this area over and over again, depositing a deep layer 
of topsoil that is nutrient rich and free of stones. That's 
what makes this land so great for growing vegetables. My 
husband and his brother call it ``a gift from nature.''

    Here in New York, we have access to markets that other 
farmers would envy. Our farm is located between the cities of 
Buffalo and Rochester, but we are also located within 500 miles 
of one-third of the U.S. population with New York City, Boston, 
Philadelphia, Washington, D.C., Pittsburg, and Cleveland all 
areas hungry for what we grow.

    Without access to processing plants for our vegetables, we 
would be forced to grow more row crops like corn and soybeans 
and we wouldn't be taking advantage of our expertise, our 
wonderful soil resources, or the consumers that are so close. 
This area is a huge vegetable growing region and if we weren't 
able to do that here anymore, the price of vegetables would go 
up on the East Coast!

    As I mentioned before, we are third-generation farm, but we 
are very excited to have the fourth generation, our daughter, 
Leslie Hamilton, on Triple H Farms. She graduated two years ago 
from Cornell University and chose to come back to our family 
farm. Leslie is on a tractor as we speak with 25-foot vertical 
tiller preparing land to plant field corn.

    Young farmers are so discouraged by challenges they will 
have to face by making a career in agriculture--the expense of 
land, labor, fuel, energy, machinery, taxes, rules and 
regulations, the list goes on and on. It is no secret that New 
York is a high-cost state with a difficult regulatory 
environment for family businesses and farms. And despite all 
this, we are so proud she has decided to carry on our farming 
tradition.

    However, Leslie also understands that diversification is 
important in today's farming environment. She has a plan with a 
cousin and is in the beginning stages of developing a grass-fed 
beef business. They are starting out small and will grow 
slowly, but they plan to cater to a high-end niche market and 
this is a great value-added business venture.

    This is a new way for our farm to continue to grow and 
bring in the next generation, but without the certainty of our 
processing vegetables and other crops, it would be hard to take 
this kind of risk on the farm. Our daughter's entrepreneurial 
spirit has the potential for a big payoff at the end of the 
road, but in the meantime, the longstanding relationships we 
have developed with our processing companies and where we swell 
our grain means we will still have income to support the farm 
operation while this new venture is in is formative years.

    We Hamiltons hope that vegetables will always be grown on 
our land, but just as we have diversified the crops we have 
grown, it is wonderful to see the next generation diversifying 
even further into a new value-added market. This helps minimize 
the risks of fluctuating market prices and weather that farmers 
have to deal with year in and year out.

    Thank you again for the opportunity to share a little about 
my family's farm and how our small business benefits from 
larger processing businesses here in Western New York. I would 
be glad to take any questions you may have.

    ###
    Steve Van Voorhis, Voorhis Farm, Henrietta, NY

    My name is Steve Van Voorhis. I am a fourth generation 
farmer, growing five hundred and fifty acres of corn, soybeans, 
and wheat in Henrietta, NY. I also serve as the President of 
the New York Corn & Soybean Growers Association, a membership 
and soybean checkoff organization that focuses on promotion, 
education and production research in the corn and soybean 
industries of New York.

    Thank you for this opportunity to testify today about the 
added value of corn and soybeans for our family farms and to 
New York's economy.

    Traditionally, New York agriculture has been known for 
dairy, apples, and wine. But for the last decade, New York crop 
growers and dairy farmers have been adding hundreds of 
thousands of acres of corn and soybeans to their farms' 
portfolios.

    In the last five years, with a growing international export 
market and a good price per bushel, New York farmers have 
continued to add soybean acreage to their operations. In 2007, 
New York growers planted just 205,000 acres of soybeans and 
harvested 7.9 million bushels. In 2012, soybean acres numbered 
over 315,000 in New York and the harvest pulled in almost $15 
million bushels, an addition of over 7 million bushels to the 
New York grain market in just 5 years.

    While soybeans are a relatively newer crop to New York, 
farmers in New York have been growing corn for decades. 
However, thanks to two ethanol plants in New York state, one in 
Central New York and one here in Western New York, growers have 
continued to add acreage of corn to their farms as well. Since 
2007, farmers have planted 200,000 more acres of corn resulting 
in 25 million more bushels on the market. The total corn 
acreage in 2012 was 1.2 million with over 90 million bushels 
harvested.

    So, why the added acreage in corn and soybeans in New York?

    You'll remember that when I gave you the soybean 
statistics, I mentioned a growing international market. The 
number one market for New York soy is Southeast Asia. With a 
rapidly growing middle-class, Southeast Asia is buying US soy 
for animal feed, mostly for aquaculture operations (fish 
farming). New York farmers sell their beans to grain dealers, 
who then load the crop onto rail cars, which then head to 
eastern seaboard ports. From there they are loaded onto 
containers (which originally arrived in the US full of consumer 
goods such as TVs), and shipped back across the world to 
Southeast Asia. Approximately 80% of New York's soybean crop is 
being exported in this manner. Such a strong market overseas 
has created high demand for soy, resulting in a good price paid 
to growers for their crop. In the last quarter, soybeans were 
going for $12 to $14 per bushel. Because of such a good price, 
many dairy farmers in the state are utilizing extra land by 
growing soybeans as a straight cash crop.

    Another big customer for New York soy are our dairy cattle. 
Soybeans are made up of 80% high protein meal, and 20% oil. 
Soybeans are crushed, and the oil is extracted. The meal is 
then mixed into feed for animals--such as dairy cows--and the 
remaining oil is used for vegetable oil, consumer products such 
as lotions, lip glosses, candles, etc., or biodiesel.

    Speaking of biodiesel, the New York Corn & Soybean Growers 
Association is excited about the increasing potential for the 
use of biodiesel in New York state both in heating oil and on-
road diesel. Currently, New York City requires a 2% blend of 
biodiesel into all heating oil sold in the City, and many 
municipal city fleets are using biodiesel blends of up to 20% 
in their trucks and vehicles. The continued growth of the 
biodiesel market in New York state is a great opportunity for 
growers to add value to their soybean crops. Increased 
production and use of biodiesel will create additional demand 
for the crop, providing another market for New York soy. 
Finally, the higher the demand for soy oil--the cheaper the soy 
meal, which means dairy farmers will save money.

    Now, back to corn. As I said, while farmers add soybean 
acreage to their operations, they are also adding corn acreage. 
A decade ago, as the potential for the construction of an 
ethanol plant was being tossed around, many nay-sayers said 
that New York could never support an ethanol plant with New 
York corn, let alone two ethanol plants. Today, we have two 
successful ethanol refineries that produce over 160 million 
gallons of ethanol from 60 million bushels of New York corn. In 
fact, all the ethanol for NASCAR comes right out of Sunoco's 
Fulton, New York ethanol facility.

    Many of you have heard about the food vs. fuel debate when 
it comes to ethanol. But this renewable fuel's production is 
providing additional value to New York's dairy farmers as well. 
The byproduct of ethanol production from corn is dried 
distiller's gain or DDGs. Since New York began producing 
ethanol, dairy farmers have come ton rely on DDGs as a source 
of high-protein feed for their cows, resulting in higher milk 
production.

    The grain corn that is not used for ethanol in New York 
state is processed as meal for dairy, poultry and hogs as well 
as exported out of state or internationally.

    Corn silage is also an important value-added crop to many 
dairy farmers and growers across New York state. Nearly half of 
New York's corn acreage is harvested as corn silage, a vitamin-
rich feed for cows. In 2012, of the 1.2 million acres of corn 
planted in New York, 475,000 acres were harvested as silage. 
Instead of investing in their own planting and harvesting 
equipment, some smaller dairy farms will contract with larger 
crop operations to produce their silage, which is a win-win for 
both farms. The dairy gets the feed they need for their cows 
without the expensive upfront investment of planters and 
combines, and the crop businesses get additional use out of 
that their expensive equipment, resulting in it paying for 
itself more quickly.

    Finally, both corn and soybeans are useful as replacements 
for petroleum-based ingredients in everyday products. Soy is 
already being used in plastics, foam, lawn and field turf, 
rubber and as carpet backing. Research is also being done by 
the US Department of Energy on converting corn biomass into 
useful high value chemicals and materials.

    So what does the corn and soybean industries mean for New 
York's economy? In 2012, the direct value of corn was over $600 
million, and the direct value of New York's soybean crop was 
$195 million, putting corn as the second most valuable 
commodity--second only to dairy--in New York state, and 
soybeans coming in at number 6. Add in the indirect value of 
equipment purchases, fertilizer, seed, labor and more, and the 
value of these grains multiplies exponentially.

    Given the fact that farmers are planting more and more corn 
and soybeans in addition to the value of the crops in dollars, 
one can see just how large--and important--the grain and 
soybean industry in the state has become.
                       Testimony of Joseph Weber


              Vice President, Mike Weber Greenhouses, Inc.


                            West Seneca, NY


               http://www.webergreenhouses.com/links.php3


                Before the U.S. House of Representatives


                      Committee on Small Business


                 Subcommittee on Health and Technology


                              May 13, 2014


                              Geneseo, NY

    Mr. Chairman and Members of the Committee:

    My name is Joseph Weber. I am the Vice President of Mike 
Weber Greenhouses Inc., a greenhouse company located in West 
Seneca, NY growing and selling quality plants for the past 35 
plus years. We currently have 7 full time employees and 9 part 
time employees and $1.3 million in annual sales.

    My parents, Michael and Susan Weber, started this business 
as a traditional greenhouse company selling retail year round. 
We have found that it was easier for us to grow the wholesale 
side of the business and have evolved into niche markets 
including growing potted herbs we sell under our Gardner's Own 
brand, primarily at Wegmans supermarkets and independent garden 
centers. Our relationship with Wegmans has been a very positive 
example of how small businesses can work with larger businesses 
to improve efficiencies, profitability and a unique offering to 
customers. The example I will highlight that relates to the 
work of this Subcommittee is in the area of food safety.

    Wegmans has a strong brand, an excellent reputation and a 
tremendous commitment to food safety and their customers. Our 
herbs enter through their produce department where they require 
all of their produce suppliers--even the smallest--to be 
certified to the U.S. Department of Agriculture's Good 
Agricultural Practice (GAP) standards. We are good at growing 
plants and not nearly as experienced with government red tape. 
This certification would be very difficult for us to accomplish 
without Wegman's help. They put on a GAP training workshop and 
provide materials to train growers in the importance of GAPs in 
reducing microbial and bacterial risks during the production 
and distribution of FRESH fruits and vegetables. The workshop 
covers areas like water quality, manure and composting, 
assessing food safety risks and developing a crisis management 
plan. After growers have completed their own GAP program and 
have implemented it, we are required to undergo an annual GAP 
audit, but much of the cost of this audit is reimbursed by 
Wegmans. There is still a large cost in writing and 
implementing a GAP program. The end result is that we have a 
high quality product that consumers really want and can trust 
in its safety and value in the market. Mike Weber Greenhouses, 
Inc. has a market and distribution in Wegmans that far exceeds 
anything we could duplicate with our retail or even wholesale 
sales.

    As far as I am concerned, that is the value of a 
partnership between small and larger businesses--consumers get 
a unique, quality product that a small, local business can 
offer; and the large business can help distribute the product 
to customers over a geographic area and volume that we could 
never duplicate. I brought a sample of some of our herbs for 
you to see.

    I appreciate the opportunity to be here with you and would 
be pleased to answer any questions you may have.
                               Testimony


                      Committee on Small Business


                 Subcommittee on Health and Technology


                         Tuesday, May 13, 2014


              10:00 am Livingston County Government Center


                    6 Court Street Geneseo, New York


    Honorable members of the Subcommittee, thank you for the 
opportunity to be here today as a representative of Seneca 
Foods Corporation to discuss ``The Benefits of Partnerships in 
Small Agriculture Business Development''.

    My name is Ray Schueth; I am Director of Agriculture for 
Seneca Foods Corporation. Seneca Foods is the largest fruit and 
vegetable processor in America with 22 processing facilities 
located in New York, Pennsylvania, Wisconsin, Illinois, 
Minnesota, Idaho, Washington and California. We are vertically 
integrated with vegetable seed production capability in 
Washington, a 12,000 acre farm in Wisconsin and three state of 
the art can manufacturing operations in Wisconsin, Idaho and 
New York. We employ approximately 3,300 full time and as many 
as 9,000 seasonal employees and generate annual revenue of 
approximately $1.3 billion. In my role I am responsible for all 
agriculture activities for 11 of our facilities in Wisconsin, 
Illinois and New York, located in Geneva and Leicester.

    In addition, we contract with approximately 2000 producers 
located near our processing locations for more than 230,000 
acres of fruit and vegetable crops. These producer 
relationships are absolutely essential to our ability to secure 
the needed produce for canning and freezing. The number of 
acres contracted with each producer may be as small as a few 
acres of peaches or pears under multiple year contracts in 
Washington and California to in excess of 1000 acres of peas, 
sweet corn, green beans or any of the other fruit and vegetable 
crops that we process in the Midwest and New York.

    While some producers specialize in vegetable production and 
producing the various crops that we need is their primary 
focus, for others it may be just a small part of their 
operation providing diversity for rotational purposes as well 
as management and working capital requirements.

    Each year representatives of the Agricultural Departments 
at each of our plants work with their local producers to 
determine number of acres and varieties of crops that will be 
grown for that year. In some cases we might provide the full 
range of inputs from seed to planting and harvesting while in 
other cases our larger producers have their own capabilities in 
some areas. In all cases we are closely coordinating with our 
local producers to assure that crops are managed and ultimately 
harvested and delivered to our facilities on schedules that 
vary by commodity over a 30 to 90 days harvest season.

    Our products reach just about every retailer and 
foodservice operation in the United States and we export to 
more than 80 countries. We offer various styles of each 
commodity in numerous different packaging configurations to 
satisfy the needs of the market. Increasing awareness by 
consumers of where their food comes from as well as how it is 
produced has led to changes to our offerings. An example might 
be the consumer perception of bisphenol A (BPA). While sound 
science as well as FDA continue to support that these products 
used in the linings of many food cans for food safety reasons 
are safe, consumer perception based negative information but 
small but vocal activist groups has made BPA an issue. In 
response, Seneca Foods was the first major canned vegetable 
producer to switch the majority of our products to more 
expensive materials that do not utilize BPA in their 
manufacture.

    Another important shift in our business has been the move 
towards organic products. While we have offered organically 
produced canned peas, sweet corn and green beans for a number 
of years we have seen significant increased demand for these 
and other products over the past couple of years. In response 
we have quadrupled our organic acreage over just the past three 
years and have added pumpkin, edam me as well as frozen peas 
and sweet corn to our line up. These crops are grown almost 
exclusively with smaller producers, many of whom are new into 
farming and have made the decision to focus on organic. Even 
more than with conventionally produced crops the importance of 
developing longer term relationships is paramount in order to 
achieve needed stability to allow proper rotation and markets 
for these crops. We see this shift as just beginning and are 
actively developing new organic sourcing in order to supply 
market needs in to the future. While the cost to produce these 
crops is higher and competitive alternatives for organic 
vegetable production such as field corn and soybeans are also 
growing, the consumer seems to be willing to pay the higher 
costs needed to sustain the shift.

    Even in our own farming operations the need for 
collaboration and working hand in hand with local producers is 
paramount. We have developed a successful model where we have 
long term leases with varying sized potato producers for most 
of the land that we directly farm. These are producers who wish 
to focus exclusively on potato production and rely on us to 
farm the land when not being used for potatoes. We only grow 
vegetables that we need at our facilities vs other commercial 
crops that may not be the best rotation for potatoes and we in 
turn have reliable, high quality land under longer term 
arrangements in order to produce our crops.

    In conclusion, while fruit and vegetable production is not 
available for all producers due to the location of processing 
facilities and crops that can be grown in certain areas and the 
challenges and demands associated with growing these crops may 
not be for every producer even in the areas that they can be 
grown. It should be recognized that these producers and the 
relationships that are developed with the processors that they 
supply, plays and essential role in not only the success of the 
processing industry and our mission to provide nutritious and 
affordable food to consumers, but also the diversity and 
sustainability of the producers themselves. The development of 
Farm Policy must continue to be sensitive to the needs of the 
specialty crop producer as well as their processor partners.

    Thank you for your consideration and I would be happy to 
answer any questions that you might have.

                                 
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