[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.