[Senate Hearing 113-245]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-245
 
                       DROUGHT, FIRE, AND FREEZE:

                     THE ECONOMICS OF DISASTERS FOR

                    AMERICA'S AGRICULTURAL PRODUCERS
=======================================================================



                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,

                         NUTRITION AND FORESTRY

                          UNITED STATES SENATE


                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION


                               __________

                           FEBRUARY 14, 2013

                               __________

                       Printed for the use of the
            Committee on Agriculture, Nutrition and Forestry


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            COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY



                 DEBBIE STABENOW, Michigan, Chairwoman

PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
MAX BAUCUS, Montana                  PAT ROBERTS, Kansas
SHERROD BROWN, Ohio                  SAXBY CHAMBLISS, Georgia
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
MICHAEL BENNET, Colorado             JOHN HOEVEN, North Dakota
KIRSTEN GILLIBRAND, New York         MIKE JOHANNS, Nebraska
JOE DONNELLY, Indiana                CHARLES E. GRASSLEY, Iowa
HEITKAMP, HEIDI, North Dakota        JOHN THUNE, South Dakota
COWAN, WILLIAM ``MO'', 
Massachusetts

             Christopher J. Adamo, Majority Staff Director

              Jonathan W. Coppess, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

              Thomas Allen Hawks, Minority Staff Director

                Anne C. Hazlett, Minority Chief Counsel

                                  (ii)


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

Drought, Fire, and Freeze: The Economics of Disasters for 
  America's Agricultural Producers...............................     1

                              ----------                              

                      Thursday, February 14, 2013
                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, 
  Chairwoman, Committee on Agriculture, Nutrition and Forestry...     1
Cochran, Hon. Thad, U.S. Senator from the State of Mississippi...     3

                               Witnesses

Pulwarty, Roger, Director, National Integrated Drought 
  Information System, National Oceanic and Atmospheric 
  Administration, Boulder, Colorado..............................     5
Glauber, Joe, Chief Economist, U.S. Department of Agriculture, 
  Washington, DC.................................................     7
LaSalle, Leon, Rancher, Havre, Montana...........................    27
Steinbarger, Anngie, Farmer, Edinburgh, Indiana..................    29
Send, Jeff, Cherry Farmer, Leelanau, Michigan....................    30
Steffen, Ben E., Farmer, Steffen Ag, Inc., Humboldt, Nebraska....    32
                              ----------                              

                                APPENDIX

Prepared Statements:
    Boozman, Hon. John...........................................    42
    Brown, Hon. Sherrod..........................................    44
    Cochran, Hon. Thad...........................................    45
    Thune, Hon. John.............................................    46
    Glauber, Joe.................................................    47
    LaSalle, Leon................................................    74
    Pulwarty, Roger..............................................    78
    Send, Jeff...................................................    98
    Steffen, Ben E...............................................   112
    Steinbarger, Anngie..........................................   117
Documents Submitted for the Record:
Stabenow, Hon. Debbie:
Various organizations representing U.S. farmers and ranchers, 
  prepared statement.............................................   124
National Association of Concervation Districts, prepared 
  statement......................................................   125
Question and Answer:
Stabenow, Hon. Debbie:
    Written questions to Joe Glauber.............................   128
    Written questions to Roger Pulwarty..........................   128
Roberts, Hon. Pat:
    Written questions to Joe Glauber.............................   140
Bennet, Hon. Michael:
    Written questions to Jeff Send...............................   130
    Written questions to Anngie Steinbarger......................   129
Brown, Hon. Sherrod:
    Written questions to Joe Glauber.............................   131
    Written questions to Roger Pulwarty..........................   131
Cochran, Hon. Thad:
    Written questions to Joe Glauber.............................   133
    Written questions to Roger Pulwarty..........................   134
    Written questions to Ben E. Steffen..........................   134
Gillibrand, Hon. Kirsten:
    Written questions to Joe Glauber.............................   135
    Written questions to Ben E. Steffen..........................   137
Heitkamp, Hon. Heidi:
    Written questions to Joe Glauber.............................   139
Thune, Hon. John:
    Written questions to Joe Glauber.............................   141
    Written questions to Leon LaSalle............................   142
    Written questions to Roger Pulwarty..........................   141
    Written questions to Jeff Send...............................   142
    Written questions to Anngie Steinbarger......................   142
Glauber, Joe:
    Written response to questions from Hon. Debbie Stabenow......   143
    Written response to questions from Hon. Thad Cochran.........   146
    Written response to questions from Hon. Sherrod Brown........   153
    Written response to questions from Hon. Kirsten Gillibrand...   156
    Written response to questions from Hon. Heidi Heitkamp.......   162
    Written response to questions from Hon. Pat Roberts..........   164
    Written response to questions from Hon. John Thune...........   166
LaSalle, Leon:
    Written response to questions from Hon. John Thune...........   169
Pulwarty, Roger:
    Written response to questions from Hon. Debbie Stabenow......   170
    Written response to questions from Hon. Thad Cochran.........   174
    Written response to questions from Hon. Sherrod Brown........   175
    Written response to questions from Hon. John Thune...........   178
Send, Jeff:
    Written response to questions from Hon. Michael Bennet.......   187
    Written response to questions from Hon. John Thune...........   187
Steffen, Ben E.:
    Written response to questions from Hon. Thad Cochran.........   188
    Written response to questions from Hon. Kirsten Gillibrand...   188
Steinbarger, Anngie:
    Written response to questions from Hon. Michael Bennet.......   199
    Written response to questions from Hon. John Thune...........   199



                       DROUGHT, FIRE, AND FREEZE:



                     THE ECONOMICS OF DISASTERS FOR



                    AMERICA'S AGRICULTURAL PRODUCERS

                              ----------                              


                      Thursday, February 14, 2013

                              United States Senate,
          Committee on Agriculture, Nutrition and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 9:39 a.m., in 
room 328A, Russell Senate Office Building, Hon. Debbie 
Stabenow, Chairwoman of the committee, presiding.
    Present or submitting a statement: Senators Stabenow, 
Baucus, Brown, Klobuchar, Bennet, Donnelly, Heitkamp, Cowan, 
Cochran, Roberts, Chambliss, Boozman, Johanns, Grassley, and 
Thune.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
 OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION 
                          AND FORESTRY

    Chairwoman Stabenow. So, good morning again, and it is, in 
fact, my pleasure to call to order this first meeting of the 
committee.
    First of all, we do not see Senator Roberts here, but as 
Senator Roberts becomes Ranking Member of the Rules Committee 
and we wish him best in this new assignment, I am very pleased 
to welcome our new Ranking Member, Senator Cochran, who, 
frankly, is no stranger to this committee, who has sat in this 
chair, whose painting is on the wall. We appreciate that it 
must be an interesting feeling, to be as we have for a number 
of our members, Senator Chambliss, as well, to have served in a 
number of capacities. We are very pleased to have the expertise 
of Senator Cochran joining me as a partner in leading the 
committee. We appreciate your years of service and your 
insight.
    We also are welcoming three new members to the committee, 
Senator Donnelly, Senator Heitkamp, Senator Cowan. We welcome 
all of you, and are looking forward to your hard work on the 
committee. We know you all are very interested and committed to 
agriculture. So it is great to have you with us.
    Moving to the hearing topic, nobody feels the effect of 
weather disasters more than our nation's farmers and ranchers, 
as we all know, whose livelihoods depend on getting the right 
amount of rain, the right amount of sunshine, getting it all 
together the right way at the right time. All too frequently, 
an entire season's crop can be lost, as we know. Or an entire 
herd must be sent to slaughter due to the lack of feed.
    The year 2012 was a year of unprecedented destruction, from 
drought, freezes, wildfires, hurricanes, and tornadoes, 
including the tornadoes that hit Mississippi and other parts of 
the South last weekend, and my heart goes out to all the 
survivors of those devastating storms. Our country experienced 
two of the most destructive hurricanes on record last year, 
Isaac and Sandy.
    We experienced the warmest year on record ever in the 
contiguous United States, which, coupled with the historic 
drought, produced conditions that rivaled the Dust Bowl. 
Wildfires raged in the West. In the Upper Midwest and 
Northeast, warm weather in February and March caused trees to 
bloom early, resulting in total fruit destruction when 
temperatures dropped down to the 20s again in April, and we 
certainly were hit hard with that in Michigan. California and 
Arizona experienced a freeze just last month, threatening 
citrus, strawberries, lettuce, and avocados. We learned last 
week that our cattle herd inventories are the lowest in over 
six decades, which has had broad-ranging impacts, including job 
losses in rural communities as processing facilities and 
feedlots idle.
    The drought has left many of our waterways with dangerously 
low water levels. Lake Michigan, Lake Huron have hit their all-
time lowest water levels. Barge traffic on the Mississippi, our 
most vital waterway has nearly ground to a halt. We have seen 
major disruptions and increased transportation costs for 
commodities and fertilizers.
    Today, we will hear from officials at the National Oceanic 
and Atmospheric Administration, NOAA, and the Department of 
Agriculture about the disasters we faced last year. We also 
will hear directly from those affected by these disasters.
    Thanks to our successful Crop Insurance Program, many 
farmers will be able to recover their losses. For those farmers 
who did not have access to crop insurance or the other risk 
management tools we worked so hard to include in our Senate-
passed farm bill, the future is less certain. Unfortunately, 
instead of a farm bill that gave those farmers certainty, we 
ended up with a partial extension that creates the haves and 
haven'ts. Low crop producers that participate in crop insurance 
not only get assistance from crop insurance, which is 
essential, but some will continue to receive direct payments, 
as well, regardless if they have a loss. Meanwhile, many 
livestock producers and specialty crop growers who suffered 
substantial losses will not receive any assistance.
    We all know that farming is the riskiest business in the 
world and altogether employs 16 million Americans. This is 
important. Mother Nature certainly made sure that we did not 
forget the fact that it is the riskiest business last year.
    We need--and we know because we are committed on this 
committee--we need to give producers the tools to manage the 
risks from those weather events and other risks. We need to 
give them certainty so they can make plans for their 
businesses. That is why we are committed to work together again 
to lead the way in passing a five-year farm bill.
    This committee did not shrink from its responsibility last 
year nor will we this year. We did our work. We came together 
in a bipartisan way to pass a farm bill that gives certainty to 
rural America while reducing our deficit. We passed a bill that 
gave farmers the risk management tools they need to protect 
against disasters, as well.
    So I want to thank my colleagues on the committee for the 
work that we did last year. Working together, I am very 
confident that we will again come forward with a farm bill that 
provides certainty to rural America that is desperately needed.
    I would now like to turn to my good friend and Ranking 
Member, Senator Cochran, for his opening remarks.

STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM THE STATE OF 
                          MISSISSIPPI

    Senator Cochran. Madam Chair, thank you very much. I again 
am pleased to join you in welcoming the members of our 
committee to our initial hearing and meeting today.
    We are here to learn more about how we can respond to the 
drought and other disaster events of recent years. We would 
like to express appreciation to all the members of the 
committee and especially to the members of our staffs who are 
working to help prepare for hearings such as this and our 
meetings so that we can respond to the interests of American 
agriculture in an efficient, thoughtful, understanding and 
helpful way.
    It is an honor to serve as the Ranking Member of this 
committee. It has a great tradition of service in its 
membership, from leaders of the Senate that go back all of my 
lifetime. The room is, of course, decorated with a lot of 
portraits around here. I did not know--I am glad that you do 
not have to be dead to get your picture on the wall. That is a 
nice touch.
    [Laughter.]
    Senator Cochran. But we are here to learn from our 
witnesses, and so I am going to ask that my full statement be 
printed in the record and express the hope, again, that our 
good work can result in a strong and robust safety net being 
created for our farmers. That is important to the United States 
economy. to our producers, and our exporters. We can gain from 
today's witnesses' ideas and suggestions about how we can 
improve our response to these needs, and I appreciate all of 
them being here to work with us in this regard.
    Again, Madam Chair, I am looking forward to working with 
you and all the members of the committee as we move forward in 
the 113th Congress.
    [The prepared statement of Senator Cochran can be found on 
page 45 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    We have a group of excellent panelists today, and I am 
going to ask that members' opening statements be submitted for 
the record. For our new members, we recognize Senators based on 
order of appearance at the committee, alternating sides.
    But before I introduce the first panel, I would like to ask 
unanimous consent to enter two items into the record, first, 
testimony from the National Association of Conservation 
Districts, into the official record, and second, a letter from 
the U.S. Cattlemen's Association. If there is no objection, we 
would enter that into the record.
    [The following information can be found on page 124-125 in 
the appendix.]
    Chairwoman Stabenow. Thank you.
    Welcome again. We ask that you keep, as you know, our two 
witnesses know, keep your comments to five minutes, but we 
welcome your extensive written testimony to be shared with us, 
as well, and we are very pleased to have two very important 
experts with us.
    Our first panelist, Dr. Joe Glauber, is certainly no 
stranger to this committee. Dr. Glauber is the Chief Economist 
at the United States Department of Agriculture. Dr. Glauber 
served as Deputy Chief Economist at USDA from 1992 to 2007. In 
2007, he was named the special Doha Agricultural Envoy and 
continues to serve as Chief Agricultural Negotiator in the Doha 
talks.
    Our next witness is Dr. Roger Pulwarty. I will now turn to 
Senator Bennet to introduce him, as well.
    Senator Bennet. Thank you, Madam Chair, and I want to just 
thank you on behalf of the people of Colorado for holding this 
incredibly important hearing. We have been afflicted by both 
drought and fire, so thank you for doing it.
    I am very pleased to introduce Dr. Roger Pulwarty to the 
committee this morning. Dr. Pulwarty comes to us by way of 
Boulder, Colorado, where he works at the National Oceanic and 
Atmospheric Administration. There, he heads NOAA's National 
Integrated Drought Information System. He also serves as the 
Chief of the Climate and Societal Interactions Division of 
NOAA's Climate Division.
    His past research and publications have focused on extreme 
weather events and disaster risk reduction in the Western 
United States, Latin America, and the Caribbean. Dr. Pulwarty 
has testified before Congress before. His past appearances have 
focused on climate change, water resources, and climate 
adaptation issues.
    He received his Bachelor's degree from York University in 
Toronto and he received his Ph.D. in climatology from the 
University of Colorado at Boulder.
    Madam Chair, thank you very much for allowing Dr. Pulwarty 
to testify today.
    Chairwoman Stabenow. Thank you very much.
    Before hearing from our two witnesses, I am going to turn 
to Senator Johanns, who I know is doing double duty on a couple 
of meetings and wants to recognize someone who is on our second 
panel. Senator Johanns.
    Senator Johanns. Thank you, Madam Chair, for this courtesy. 
It means a lot to me, because I have a good friend and a great 
Nebraskan here and I think I am going to be gone during the 
second panel.
    But I did want to recognize Ben Steffen, and Ben, if you 
could just stand so everybody can identify who you are. Thank 
you, Ben.
    Ben is a successful farmer from Humboldt, Nebraska. He has 
a diversified operation. It includes dairy cattle, corn, 
soybeans, wheat, and hay. Ben and his wife, Paula Sue, and 
their family have been recognized for their good work by the 
Nebraska Farm Bureau and the Nebraska State Fair as Ag Family 
of the Day. They were one of five families chosen because of 
their contributions not only to agriculture, but to the 
community and to our great State.
    Ben is a perfect example of someone who demonstrates the 
values of rural America. He is actively engaged in his 
community. In addition to the farming operation, Ben is 
involved with University of Nebraska's President's Advisory 
Board Committee and the State's County Extension Boards.
    Given all of his experience, I think he is going to add 
valuable testimony, and I will just wrap up today and thank you 
and the Ranking Member for holding this very important hearing. 
Thank you.
    Chairwoman Stabenow. Thank you very much.
    We are actually going to start with Dr. Pulwarty today and 
ask you to share your perspective, and then we will turn to Dr. 
Glauber. Welcome.

  STATEMENT OF ROGER PULWARTY, DIRECTOR, NATIONAL INTEGRATED 
 DROUGHT INFORMATION SYSTEM, NATIONAL OCEANIC AND ATMOSPHERIC 
               ADMINISTRATION, BOULDER, COLORADO

    Mr. Pulwarty. Good morning. Thank you very much for 
allowing me to be here. Good morning, Chairwoman Stabenow and 
members of the committee. My name is Roger Pulwarty and I am 
Program Director of the National Integrated Drought Information 
System of NOAA. It is my honor to be here today. Thank you for 
inviting me to speak about the present drought and how we can 
improve information for anticipating and managing drought 
impacts.
    Drought is a pallet of the American experience, from the 
Southwest in the 13th century to the events of the 1930s and 
the 1950s to the present. From 2000 to 2010, the annual average 
land area affected by drought in the United States was 25 
percent. Prior to the 2000s, this number stood at 15 percent. 
2012 ended as one of the driest years on record, having had 
five months in which over 60 percent of the country was in 
moderate to extreme drought. It was also the warmest year on 
record. Only 1934 had more months with over 60 percent of the 
U.S. in moderate to severe drought. 1934 was also a warm year.
    Drought conditions continue across much of the nation. 
According to one estimate, the cost of the 2012 drought is in 
excess of $35 billion, based on agriculture alone. However, it 
is important to note the drought-related impacts cross a broad 
spectrum, from energy, tourism, and recreation in the State of 
Colorado where I live, to wildfire impacts. According to the 
National Interagency Fire Center in Boise, over nine million 
acres were burned last year, which had only happened twice 
before in the record, 2006 and 2007, since 1960. Low river 
levels also threaten commerce on the vital Mississippi shipping 
lanes, affecting transportation of agricultural products. As 
many of you know, half of the transport on the Mississippi is 
agriculturally based.
    An important feature of conditions in 2012 was the 
persistence of the area of dryness and warm temperatures, the 
magnitude of the extremes, and the large area they encompassed. 
Figure 1, which you have in front of you, shows the progression 
of drought conditions since 2010 to the present. Twenty-twelve 
began with about 32 percent of the U.S. in moderate to 
exceptional drought. The drought reintensified in May, and you 
can see a jump in the figure there. And by the end of August, 
the drought had expanded to cover 60 percent of the country, 
from the Central Rockies to the Ohio Valley and the Mexican to 
the Canadian borders. Several States had record dry seasons, 
including Arkansas, Kansas, Nebraska and South Dakota.
    The drought years of 1955 and 1956 have the closest 
geographical pattern to what we have seen to date, and the year 
1998, now the second-warmest year on record, and 2006, the 
third-warmest year on record, have the closest temperature 
pattern to what we see.
    So as of this morning, we have released the U.S. Drought 
Monitor that gives you present conditions, which people have in 
front of them. And what we are pointing out in this case is the 
drought continues across many parts of the Midwest and the 
West. The physical drivers of drought are linked to sea surface 
temperatures in the Tropical Pacific and Atlantic Oceans.
    As you can see from the last figure on the U.S. Drought 
Monitor, a dry pattern is expected over the upcoming three 
months across the South and the Midwest. Prospects are limited 
for improvement in drought conditions in California, Nevada, 
and Western Arizona. Drought development and persistence is 
forecasted for Texas by the end of April. The drought and warm 
temperatures in the Midwest are firmly entrenched into 
February, placing a greater need for above-normal spring rains 
if the region is to recover. This area is now becoming the 
epicenter of the 2013 drought. Despite some relief, much of the 
Appalachicola-Chattahoochee-Flint River Basin remain under 
extreme drought conditions, including low ground water levels, 
and Georgia is now in its driest two-year period on record.
    The number of watershed and State drought plans that use 
information from the National Integrated Drought Information 
System at the local levels has increased significantly, and the 
effectiveness of this effort through 2012 is the result of 
strong multi-State and multi-agency partnerships.
    In December 2012, we drew on these partnerships and 
convened a National Drought Forum in D.C. The goals of the 
forum were to understand the extent of the 2012 drought impacts 
and response and help provide new information on coordination 
for improving the nation's drought readiness for 2013 and into 
the future. This forum was cosponsored by the National, 
Midwestern, Southern, and Western Governors Association, 
Federal agencies, and regional and local partners. It 
highlighted the need to increase public awareness of this 
year's drought and potential future impacts, to increase the 
technical assistance for using drought-related information in 
those local rural impacted communities, and ensure sustained 
support for monitoring and other data critical for responding 
to drought, such as SNOTEL sites and the water census led by 
the USGS.
    Through the Economic Development Administration and NIDIS, 
we are working with USDA on its National Disaster Recovery 
Framework for drought, and these efforts will be bought around 
a recently signed MOU between Commerce and USDA to improve 
cross-agency collaboration.
    Over the coming year, we will focus on increasing public 
awareness of available information and transfer successful 
approaches in early warning to areas not having those systems 
as yet to improve the understand and predictability of multi-
year droughts and to work with the private sector and others on 
guidance and standards for developing value-added products.
    All of the information in this testimony is drawn from 
NIDIS and its many supporting Federal, State, Tribal, and 
private partners, including NOAA's Climate Prediction Center, 
the National Drought Mitigation Center, the University of 
Lincoln, Nebraska, the Corps of Engineers, the Department of 
Interior, USDA, and others.
    Thank you for the opportunity to be here today.
    [The prepared statement of Mr. Pulwarty can be found on 
page 78 in the appendix.]
    Chairwoman Stabenow. Thank you very much for that sobering 
information.
    Dr. Glauber.

 STATEMENT OF JOE GLAUBER, CHIEF ECONOMIST, U.S. DEPARTMENT OF 
                  AGRICULTURE, WASHINGTON, DC

    Mr. Glauber. Well, thanks very much. Chairwoman Stabenow, 
Ranking Member Cochran, and other members of the committee, 
thank you for the opportunity to be at today's hearing.
    Despite a historic drought affecting much of U.S. 
agriculture, the U.S. agricultural economy is strong, and in 
aggregate, farm income measures are at or near record highs. 
However, aggregate measures belie large differences between 
sectors. Row crop producers have generally fared well, despite 
the adverse weather, in large part due to higher prices and 
protection from the Federal Crop Insurance Program, which has 
helped offset many of the yield losses. For uninsured 
producers, or producers of crops for which insurance is 
unavailable, however, crop losses have had a more adverse 
effect. Livestock producers experienced high feed costs and 
poor pasture conditions this year with limited programs to fall 
back on, particularly since key livestock disaster programs 
authorized under the 2008 farm bill are currently unfunded.
    What had started out as a promising year for U.S. crop 
production, with favorable planting conditions supporting high 
planted acreage and expectations of record or near-record 
production turned into one of the most unfavorable growing 
seasons in decades. Crop production estimates for several major 
crops declined throughout the summer. By January 2013, final 
production estimates for corn were down almost 28 percent from 
our May projections. Sorghum was down 26 percent, while 
soybeans fell about six percent over the same period.
    As a result, prices for grains and oil seeds soared to 
record highs in the summer. Higher prices and crop insurance 
indemnity payments helped offset crop losses for many rural 
crop producers. Roughly 85 percent of corn, wheat, and soybean 
area, almost 80 percent of rice area, and over 90 percent of 
cotton area is typically enrolled in the Crop Insurance 
Program, and for those of you who were around back in 1988, 
this contrasts sharply with what the experience was in 1988 
when we had this massive drought in the Midwest. At that time, 
only about 25 percent of the area, insurable area, was enrolled 
in the program. So, again, very, very strong participation has 
helped offset those losses.
    As of February 11, just this Monday, about $14.2 billion in 
indemnity payments have been made to producers of 2012 crops 
suffering crop or revenue losses. We think that these indemnity 
payments will likely go higher. They could be as high as 16 or 
17 billion dollars before we are done.
    On the other hand, looking at the livestock, dairy, and 
poultry producers, they are facing very high feed costs for 
most--they faced very high feed costs for most of 2012, and the 
high prices are likely to persist through much of 2013 until 
new crops become available in the fall. And in addition to 
these high feed costs, cattle producers have been particularly 
hard hit by poor pasture conditions and a poor hay crop. Almost 
two-thirds of the nation's pasture and hay crops were in 
drought conditions, with almost 60 percent of pasture 
conditions rated poor or very poor for most of July, August, 
and September 2012. December 1 stocks for hay were at their 
lowest level since 1957.
    The U.S. cattle and calf herd, as was mentioned in your 
statement, is at its lowest level since 1952. Dryness in the 
Southern Plains has persisted for over two years and resulted 
in large liquidation in cattle numbers. The January 1 NASS 
Cattle Report indicated that total cattle and calf numbers in 
Kansas, Oklahoma, and Texas alone declined by 3.4 million head 
between 2011 and 2013. The reduction is a 13.6 percent decline 
and almost equals the net decline in the U.S. herd over the 
same period. Likewise, dairy producers have faced high feed 
costs and poor pasture conditions, and higher temperatures 
during the summer also adversely affected milk production.
    Net cash income is forecast lower in 2013 for all 
livestock, dairy, and poultry sector. Feed costs make up 51 
percent of expenses for dairy, about 20 percent for beef 
cattle, 42 percent for hogs, and 35 percent for poultry farm 
businesses.
    Major concerns related to persistent drought conditions 
remain. Fifty-nine percent of wheat area, the winter wheat 
area, 69 percent of cattle production, and 59 percent of hay 
acreage remains under drought conditions. Forty-three percent 
of the winter wheat production is located in areas under 
extreme or exceptional drought conditions, down only slightly 
from the 51 percent in August. While that also implies that 
spring plantings may be affected by drought conditions, there 
have been some improvements in the Eastern Corn Belt, where 
many areas are no longer experiencing drought. Assuming 
adequate precipitation, it is likely that the major spring 
planted row crops will see a return to trend yields. If so, a 
rebuilding of stocks and lower commodity prices would be 
expected in the fall, that is, the fall of 2013. This should 
help relieve feed prices.
    That concludes my testimony. I would be happy to answer any 
questions.
    [The prepared statement of Mr. Glauber can be found on page 
47 in the appendix.]
    Chairwoman Stabenow. Thank you very much to both of our 
witnesses.
    Dr. Glauber, let me start with you. If you could talk a 
little bit more about the financial impacts of the drought 
between sectors, the average livestock producer, a row crop 
farmer, a specialty crop grower. Paint a little bit more of a 
picture on this.
    Mr. Glauber. Well, again, it is--as you mentioned, there 
were a number of calamities that hit producers. If I can start 
with the drought, because that certainly has had most of the 
attention. There, you really have just seen, because of the 
extensiveness of the drought and the severity of the drought, 
larger yield loss in most areas, and we haven't seen anything 
like this in the Corn Belt since 1988. I mean, certainly, the 
floods in 1993 were bad, but insofar as drought is concerned, 
this drought is the worst since 1988.
    With that, we saw record prices. Now, record prices help 
row crop producers, because if you have a crop, you are going 
to be getting paid high prices and several areas of the country 
did do pretty well. Southeast, for example, which was in 
drought conditions for most of the year, including the summer, 
they did have timely rains and they were able to get a crop in, 
in many cases, record yields in some areas. They were able to 
take advantage of higher prices. Higher prices help offset some 
of those losses, but when you move to areas--and in addition, 
again, as I mentioned in my testimony, just very high 
participation rates with many of the corn and soybean producers 
insuring at 70 percent or higher and many of them insuring with 
revenue products that indemnify at harvest prices.
    Chairwoman Stabenow. So if you have crop insurance, it made 
a significant difference.
    Mr. Glauber. It made a very big difference.
    Now, let us go to the flip side. If you were under-insured, 
if you were not insured, then you were looking at yield losses, 
and particularly for some specialty crop producers, where the 
participation rates tend to be lower, or there may not be 
anything other than non-insured acreage disaster programs, 
their losses could be larger. We know, for example, in your 
area, Pennsylvania, New York, because, as you mentioned, the 
warm early spring, a lot of the tree crops flowered and then 
were hit with a devastating freeze. And, again, if you are 
insured, you will get some compensation there, but if not--you 
were facing some serious losses.
    Chairwoman Stabenow. Well, how long before we are going to 
have crop insurance available for specialty crop growers?
    Mr. Glauber. Well, I think we have made some improvements 
there. As you know, I sit on the Federal Crop Insurance Board. 
We have seen several products, new products that have come in 
that have extended crop insurance to some specialty crops. We 
have made some changes, for example, in the cherry policy with 
a revenue product. I think the overall liability for specialty 
crops right now is around 10 to 13 billion dollars. Certainly, 
we would like to see that improved.
    The difficulty is that with a lot of these crops, they are 
very small with not a lot of producers, and sometimes some of 
the producers are not interested in crop insurance. Now, what 
we have seen over the last five years, ten years, which is very 
different than, I would say, 15 years ago, is the fact that a 
lot of producers now are interested in developing these 
products.
    I think there is some potential there, particularly for 
these rainfall products and some of these index products, more 
generic insurance products that could affect some of these 
producers that are particularly vulnerable to specific risks, 
like freeze or other sorts of weather damages.
    Chairwoman Stabenow. Well, as you know, I care very deeply 
about making sure we provide the same kind of crop insurance 
to--we have an awful lot of producers that want that, and I 
appreciate you working with us on cherries. But we have got to 
make sure all of our producers that want and need crop 
insurance have access to it.
    But I want to turn to Dr. Pulwarty before my time is up and 
ask, was the weather experience last year normal, and if not, 
do you expect the same type of severe weather that we saw in 
2012 to be a persistent problem in coming years? What about 
this year? What about the future, when we look at the 
volatility in the weather patterns?
    Mr. Pulwarty. Thank you for the question. The event that we 
saw in 2012 began to a large extent at the end of 2012. The 
extent to which we saw the drought conditions was not 
completely outside the realm of natural variability, even 
though the drought itself was exacerbated by the fact that we 
had very high temperatures. That combination of natural 
variability and the background temperatures did have a 
significant impact on stressing our reservoir systems and our 
crops.
    From the standpoint of looking at temperature relationships 
and the future, in the 1950s and the 1930s and other periods in 
which we had high temperatures, we saw that it did impact, 
affect, the size, magnitude, and the extent of the drought 
system. Twenty-twelve was very unusual, but we are not finding 
a strong link from sea surface temperatures or other driving 
factors. But, instead, the major jump from May into summer, 
when we jumped from about 30 percent to 60 percent, was caused 
by a high ridge just sitting over the United States leading to 
much drier conditions.
    Chairwoman Stabenow. And you expect that--did I hear you 
earlier say that you expect that this year, as well?
    Mr. Pulwarty. And the continuing conditions really look 
like we are setting up for a very similar level of drought in 
the Midwest and the West. However, since none of this is 
absolutely predictable 100 percent, we are hoping for some 
alleviation in the late spring.
    Our major issue, as you know, in the Midwest and the 
Southwest, in particular, the Colorado Basin, is that we are 
having back-to-back dry years, and a third year of that puts 
our systems completely under stress. The forecast for this 
season is that, in fact, we are projecting drier conditions.
    Chairwoman Stabenow. Thank you very much.
    Senator Cochran.
    Senator Cochran. Madam Chair, thank you very much.
    We are all trying to figure out exactly what the practical 
consequences are going to be for sequestration and targeting of 
certain programs for cuts. These cuts will be visited on 
recipients of government program dollars, and these recipients 
had been planning the use of these dollars for some time. And I 
specifically wanted to ask you about the Agricultural Disaster 
Relief Fund. It is included in a list of accounts targeted for 
sequestration. Can you tell us a little bit more about when, 
specifically, the dates for this sequestration can be expected 
to be released or imposed on those who benefit from these 
programs, and exactly what the impact will be on producers who 
have signed contracts relying upon the fact that the 
Agricultural Disaster Relief Fund would provide specific 
amounts, given the sign-ups and other compliance requirements.
    Mr. Glauber. Thanks, Senator, and I am almost hesitant to 
talk about appropriations with someone like yourself who knows 
these books far better than I do.
    As you know, we have the mandatory accounts and we have the 
discretionary accounts. My understanding is we have been 
working with OMB on determinations of what under the mandatory 
accounts would be shielded and what would be affected by the 
sequester. Hopefully, there will be some release on that 
information soon.
    Insofar as the discretionary accounts, there what you find 
is that for a lot of the--as you are well aware, on the 
discretionary side in terms of the agency budgets, a lot of 
those are salary-based. There is some discretion, but with the 
costs of salaries and expenses, there is not a lot you can do 
to sort of avoid, if you are talking about a five, six percent 
cut, in terms of how you manage that.
    Insofar as these specific disaster provisions that you 
mentioned, I am going to have to get back with you on that and 
would be happy to do so. We will follow up on that. But in 
terms of the specific things like livestock disaster 
provisions, those have been unfunded out of the 2008 farm bill, 
of course, and so they would need additional funding for those. 
But I can get back with you on the other accounts.
    Senator Cochran. It would be interesting to know what the 
administration's plans are so producers can plan and not be 
surprised totally at the last minute. So that would be very 
helpful, if you can supply us with some information.
    Sequestration is a word we are all still trying to figure 
out how you define and what the practical consequences of it 
are. I think it shifts more responsibility to the 
administration than they are accustomed to having. Usually, 
Congress specifies a level of appropriations for government 
program funding and that is carried out. I remember, I think it 
was maybe during the Nixon administration where they came in 
and impounded funds and everybody in Congress threw up their 
hands and held their heart, oh, my gosh. We directed that this 
be spent. This is mandatory spending. So we contrived these 
things that tell the administration in no uncertain terms, this 
is money that is to be spent. It is appropriated. It is 
mandated. Spend it.
    What is your reaction to that in this environment? Have 
things changed? Are we going back to government impoundment? 
And when do we know about it? How are you going about 
identifying those programs that are going to have the funds 
impounded, or sequestered, the new word?
    Mr. Glauber. Well, thanks. I remember not so fondly the 
days of Gramm-Rudman and the cuts that went in place back in 
the 1980s. Again, as I mentioned, my understanding, at least, 
the Secretary has been working with OMB on what qualifies, at 
least under the mandatory spending, what would be subject to 
sequestration. Obviously, there are some accounts that will not 
be affected because of contractual relations, other things, and 
then others that at least the lawyers feel that they do have 
authority to sequester. I can get back with you on that.
    I agree with you in your point that the sooner the better 
this is made known. People have to make planning decisions, 
understand.
    Senator Cochran. Thank you.
    Chairwoman Stabenow. Thank you very much.
    Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Madam Chair. Thank 
you for heading up this hearing, calling this hearing.
    I think, first of all, it just calls to mind how important 
it is to get this farm bill passed when you think of the 
provisions that would help with the disasters that you 
mentioned, from the Livestock Disaster Program to the 
conservation tools that are contained in our new farm bill, 
obviously, the crop insurance and then the grazing, expanded 
grazing opportunities that we included for livestock producers 
as well as the agriculture research on drought-resistant seed. 
So, again, that was my basic reaction when I listened to both 
of you, so thank you for that.
    I wanted to ask specifically about, first of all, how this 
could affect exports. I see this is one of our main ways to get 
out of somewhat of the trench we are in with the economy right 
now, and that is increasing exports. Minnesota exported $6.8 
billion worth of agricultural goods just last year, and how 
does the increase in extreme weather impact our ability to 
capture growing export markets.
    Dr. Glauber.
    Mr. Glauber. Thank you, Senator. There is a certain 
counterintuitive result about exports, much like farm income. 
We will put out new farm export numbers just next week. But our 
November estimates show a record export level this year. Now, 
that is largely because of higher prices. If you look at, say, 
corn, we just revised our estimates downward for corn exports 
over the 2013-2014 year to 900 million bushels. That is the 
lowest level since 1971.
    Senator Klobuchar. So what you are saying is the price has 
caused the export numbers to go up?
    Mr. Glauber. Export value, that is right. The volumes are 
down, not for all commodities, but for corn.
    Senator Klobuchar. Okay. Very good. But we would like the 
volumes to go up, I think, too.
    Mr. Glauber. Yes.
    Senator Klobuchar. Mississippi River transportation is my 
next question. In 2012, as you know, the barge traffic on the 
Mississippi was greatly impacted by the drought. It was more 
difficult to transport grain abroad and more farm inputs up-
river to our farmers in Minnesota. We were very scared at the 
end of the year they were actually going to have to stop barge 
traffic. Could you talk about that a little and how this could 
impact our ability to stay competitive, as so many agriculture 
products go down the Mississippi?
    Mr. Glauber. Yes. We, too, were very concerned with it 
because it looked like, particularly late December, early 
January, that there would be a halt in traffic. Now, 
understand, the upper part of the Mississippi, as you well 
know, you stop shipping because of the winter weather. But I 
think there were a couple of good things. One, the best thing, 
is that we got rain. The Corps was able to go in and clear out 
some of the disruptions in the river and then we got adequate 
rain and barge traffic is moving very well.
    I will say this. Because of the lower corn harvest and 
lower soybean harvest and the fact that so much more grain is 
going to China, it was probably less stress than it might have 
been under, say, 15 years ago. But, still, the best news is 
that we have adequate water.
    Senator Klobuchar. Right. It is good, but it was a close 
call and I think it is something that we have to prepare better 
for next time and have a plan in place.
    Drought-resistant seeds--what efforts is the USDA taking to 
speed the adoption of such drought-hardy varieties developed 
using biotech or conventional breeding?
    Mr. Glauber. Well, as you know, most of the breeding for 
seed breeding is in private hands these days. They do it 
better. There are a lot of profits to be made in that industry 
and they are working very hard. My understanding is, is that we 
should be seeing some disaster-resistant, purely disaster-
resistant strains come on the market just in the next few 
years. So that is an encouraging sign. I think the R&D that has 
been going into seed research continues to be very, very 
strong, largely in private hands. We do some public research 
there, but most of it is coming from the private sector.
    Senator Klobuchar. All right. During last year's disaster, 
I supported emergency efforts to help with haying and grazing, 
as you know, and one of the concerns I have heard is that 
emergency haying and grazing is often only allowed in counties 
already impacted by drought, in other words, counties where the 
land is already dry. I see you nodding your head, Dr. Pulwarty. 
What steps could the USDA take to expand the areas allowed for 
emergency haying and grazing?
    Mr. Glauber. Well, you are absolutely right. It does not 
help you much if you allow haying and grazing when there is no 
pasture to speak of. I think we allowed about 2.8 million acres 
to be hayed and grazed. There are restrictions on that during 
nesting periods. Right now, we do it with disaster designated 
counties. I might add, with things like pasture, obviously, it 
does not help much to have pasture 1,000 miles away that is in 
good shape. But with hay and things like that, you can move 
that around some. So, certainly, we would be happy to work with 
you in trying to improve that flexibility. But it is just to 
say, remember, this year, it was such an extensive area where 
you are really talking 60, 65 percent of pasture in drought 
conditions.
    Senator Klobuchar. Thank you.
    Dr. Pulwarty, did you want a quick follow-up?
    Mr. Pulwarty. Just a very brief follow-up to the issue of 
the Mississippi and barging. We know upstream, as well, about 
20 percent of what comes into the basin is coal and 20 percent 
is about fertilizers, as well. And from the standpoint of how 
we look at monitoring, while there is the strong effort on 
improving certainly our drought-resistant crops and the 
conservation programs, the idea of monitoring around the world, 
places like China and so son, becomes very important from the 
standpoint of how we understand where drought is happening.
    Senator Klobuchar. Okay.
    Mr. Pulwarty. We have been receiving calls from around the 
world saying, well, what is happening this year, and where----
    Senator Klobuchar. Because they know it is going to impact 
them.
    Mr. Pulwarty. --they can step into some of the markets. So 
from that standpoint, I would really like to add to the issue 
of given the importance of transportation, that in the context 
of other areas that are not only vulnerable, but they are 
looking at their own productivity, like Brazil, India, and 
elsewhere, that strengthening our understanding of global 
monitoring is critical.
    Senator Klobuchar. Thank you.
    Dr. Glauber, please pass on to Secretary Vilsack that I am 
very much looking forward to him coming to our Pheasants 
Forever Convention in Minnesota this weekend. We are going to 
be together. Thank you.
    Chairwoman Stabenow. You got that plus in there. Okay.
    [Laughter.]
    Chairwoman Stabenow. All right. Senator Roberts, before you 
arrived, I said, thank you for your service and wish you well 
in your new Ranking Membership on the Rules Committee. And so, 
welcome.
    Senator Roberts. Would you like me to respond?
    Chairwoman Stabenow. Yes, please. Well, you are actually up 
next for questions, as well, so----
    Senator Roberts. Well, I thank you. I want to say that I am 
looking forward very much to working with our new leadership 
team. No Chair of this committee, at least to my memory, and I 
have been around for quite a while, has worked any harder, with 
more perseverance, with more enthusiasm for agriculture than 
our current Chairperson. So, Madam Chairperson, I want to thank 
you personally for all of your past courtesies, your staff 
working with my staff during very difficult times, the 
committee hearings that we have enjoyed, and especially your 
perseverance over the last session.
    I look forward to working with you and my colleague and my 
friend for over 20 years. I just told him that my closing line 
with regard to Senator Cochran--Thad and I have been friends 
for a long time--is that the Marines always depend on the Navy 
if we are going to get anything done.
    [Laughter.]
    Chairwoman Stabenow. Well, thank you very much.
    Senator Roberts. Well, they just bring us to the battle, 
and then we have to do the fighting, but then that is beside 
the point.
    [Laughter.]
    Senator Roberts. He asked a very critical question. Joe, I 
really hope that you and the Secretary can work together and 
the rest of your staff to determine what--we might have a 
different idea of what is mandatory and what is discretionary. 
And I would point out that through the leadership of the 
Chairperson and everybody on this committee, we were the only 
committee that stepped up in the last session and offered up 
$24 billion of savings. That was wrapped up in the five-year 
farm bill that we passed here with 73 votes. And so I am very 
proud of the fact that agriculture did its duty in regards to 
deficit reduction, but what is considered mandatory and 
discretionary is going to be exceedingly important to our 
farmers out there, and you know which programs we are talking 
about. So I think Senator Cochran really hit the nail on the 
head, and if we can get that information to all of us, that 
would be helpful.
    Well, we have got two years of sustained drought and 
another one coming, according to our renowned forecaster here. 
But Kansas producers, once again, put seeds in the ground. Many 
will once again fire up their tractor and their planter in 
another six weeks. This is not due to some day late or dollar 
short ad hoc disaster program. It is because they manage their 
risk and protect their operations from Mother Nature's 
destruction through the purchase of crop insurance.
    Unfortunately, livestock producers do not have a similar 
safety net. However, with the support of Secretary Vilsack last 
year, the Department authorized the emergency haying and 
grazing of Conservation Reserve Program acres in all Kansas 
counties, including the emergency grazing on CP-25 for the 
first time. You do not do that unless you have a very, very 
serious problem. This was a lifesaver for ranchers struggling 
to find or pay for feed, and I want to thank all the parties 
involved for allowing it to happen.
    Now, according to USDA reports last year, over 9,000 
emergency haying and grazing contracts allowed haying and 
grazing on over 470,000 acres in Kansas, that's a lot of acres. 
As we continue to experience drought, and Dr. Pulwarty, if you 
could get El Nino to step up to La Nina, it would be very, very 
helpful. Bring a little moisture in from the Gulf. But as we 
continue to experience what we have experienced in the 1950s 
and back in the 1930s, what considerations has the Department 
given to allowing emergency haying and grazing of CRP acres for 
2013??
    Mr. Glauber. Senator, we will certainly be looking at this. 
We have already made some disaster declarations for counties in 
2013. As we move forward and we get into those situations--I 
would agree with you. I think, particularly for cattle 
producers, the next four or five months are extremely critical, 
one, to be looking at, hopefully, some better pasture 
conditions, and then in the fall, better crop prices so that we 
get lower feed costs. But a lot of these producers have been 
hanging on with very, very tight or negative margins. And 
again, I cited these numbers. Over three million, three-and-a-
half million head down from just two years ago in your region 
of the country. And so it is very critical. I think any help 
that we can get to the producers to help them make it through 
to better prices, we will be working with your office on that.
    Senator Roberts. I know you will cooperate with us. You 
have in the past, and I thank you for your assistance. As you 
know, many ranchers simply culled their herds and lost their 
genetics and many are out of business.
    Mr. Glauber. Yes.
    Senator Roberts. And we look for the same problems, 
unfortunately, today.
    Northwest Kansas producers irrigating from the Ogallala 
Aquifer, they must work to conserve their water, but current 
RMA practices do not have a middle ground between fully 
irrigated and dry land practices and we need a mechanism to 
allow limited irrigation to be fairly rated. I know you know 
that. And as the Chairwoman has pointed out, time and time 
again, the more producers that are under the crop insurance 
tent and using risk management tools, why, the better off we 
are going to be. So I am interested in hearing your thoughts on 
how to improve an enormously successful program. You do not 
have to answer that right now. My time has expired, and I will 
submit that question for the record. I thank you for your 
service.
    Thank you, Madam Chairperson.
    Chairwoman Stabenow. Thank you.
    Senator Bennet.
    Senator Bennet. Thank you, Madam Chair, and again, thanks 
for holding the hearing.
    I actually just want to pick up where Senator Roberts left 
off and say thank you for the emergency grazing. We have a 
rancher named Al Heaton who runs most of his cattle in 
Colorado's Dolores County, which is near the Utah border, and 
he was the first person, Madam Chair, to say to me that if he 
knew in advance that he could have an extended period of time 
on CRP land, that it would allow him to manage his summer 
grazing differently than he was and stress that less. We were 
able to take his voice to Washington and the Secretary 
responded to that, and it sounds like we are going to have 
another year where we are going to need more of that.
    I wonder, Dr. Glauber, if you would like to talk briefly 
about the value of the USDA Conservation Programs for keeping 
our soils healthy and occasionally giving producers this type 
of relief.
    Mr. Glauber. No, there is no question. I think, 
particularly in--well, in a lot of areas, obviously----
    Senator Bennet. I am all that is left, so you can talk 
about how important it is to Colorado.
    [Laughter.]
    Mr. Glauber. But, particularly in those areas where we are 
seeing very dry conditions right now. Things like the Emergency 
Watershed Protection Program, which I think is very, very 
important. If you look at the wildfires that affected Colorado, 
there, as you know, we are limited in funding. We hope that we 
can work and get funding restored to some of these programs. 
But I think, there, again, very important to mitigate and to 
help communities respond to these disasters.
    Senator Bennet. Actually, you raise--I am going to come to 
Dr. Pulwarty next, but you raise an important point. We had the 
EWP funds in the Sandy bill that was passed by the Senate, 
appropriately so, I think, because we are still trying to deal 
with the effects of these disasters in our State, these 
wildfires that you talk about brought on by drought and other 
circumstance. You know, as the former Ranking Member was saying 
earlier, this is the only committee that actually did 
bipartisan deficit reduction in the last Congress. It had the 
sense, however, to think about things like fire mitigation as 
something that would save us money going forward rather than 
making these cuts in the name of deficit reduction, knowing 
that we are going to have to deal with these disasters on the 
back end and the effect on our watershed on the back end. I 
wonder if you have thoughts about that. You are an economist--
--
    Mr. Glauber. Well, no, this has been a very successful 
program when the funding is there to help communities and to 
organize on this and to do the sort of mitigation efforts and 
rehabilitation efforts that are necessary. It has been very 
important and, hopefully, we will find a funding source for 
these.
    Senator Bennet. This is another case, I think, where the 
Congress's inability to act in real time is absolutely penny 
wise and pound foolish. I mean, when the spring snow melts 
start in Colorado, which they inevitably will, even though we 
do not have the snow pack that we wish that we had, you know, 
watch these hillsides wash into our streams. The effect on our 
water systems, the effect on our producers could be very 
significant. It is, I think, another case where people are 
playing games here instead of focusing on what is going on at 
home.
    Dr. Pulwarty, I have never said this to a witness in any 
hearing that I have ever attended in Congress, but I hope you 
are wrong, because----
    Mr. Pulwarty. I do, too, sir.
    Senator Bennet. --we have now had two years in a row, and 
it sounds like we are going to have a third year of drought in 
our region. And I wonder if you could talk about the specific 
challenges that NOAA projects for producers in the water-scarce 
Western region of our country.
    Mr. Pulwarty. Thank you very much, Senator. I hope I am 
wrong, as well. The State of Colorado, as you know, in the 
Front Range, where I live and others do, we get 40 percent of 
our water, 30 to 40 percent, from the Colorado Basin itself. 
The Colorado Basin came in at 44 percent in the previous water 
year. So far, the fall snow pack has not been as significant as 
we would like it. In some places, it is 40, some places 60 
percent, and we hope that picks up in March and April.
    However, right now, based on what is happening in the 
Pacific Ocean and the Atlantic Oceans, we are not projecting an 
improved set of conditions in those basins, the Upper Basin, 
including the San Juan and places like that. I actually know 
the Dolores Valley pretty well. I know where Mr. Heaton is.
    The area in terms of the basin is experiencing some lower 
precipitation and snow pack, and it is also experiencing a 
combination of high temperatures, however driven. Something 
else that is happening in that basin has to do with some of our 
rural communities, where there is rain-fed agriculture. So the 
combination of temperature and drought is actually creating the 
die-off of key vegetation that holds our soils together. And 
the result, then, is dust storms, dust on snow, which lets the 
runoff and melt occur even earlier than we are accustomed to 
managing it.
    From that standpoint, and looking into the future, while we 
are seeing some improvement in the lower Colorado Basin--
Arizona, Southern California, Nevada--we are expecting that to 
be short-lived into April. From the standpoint of the Upper 
Basin, and again, I hope I am, in fact, wrong, we are not 
projecting significant new inputs of snow unless we get heavy 
rainfall events later in the spring.
    One of the reasons why that is the case is when it has been 
dry for a year before, even when you get significant snow pack, 
a lot of that disappears because the soil just picks it up. In 
2005, we had 100 percent of snow pack, but the runoff was 70 
percent of what we expected because the springtime had been 
warm.
    The Colorado is now in its second longest ten-year period 
of low flows on record. If we average over the last ten years, 
the flow has been at average or less, and this is in an already 
over-allocated system, as you know better than I do. I have 
only lived in Colorado for 26 years, so I am a newbie.
    The issue concerning the basin, where 30 million people 
live and where we have seven States reliant on the water, is 
very much at the edge. The demand exceeded supply about ten 
years ago, so it does not take a major drought to put us into 
areas of contention.
    What has been excellent, however, has been that our 
partners, the Bureau of Reclamation and others, have stepped 
back and said, let us work with the States on how to 
effectively manage this situation. What new information can we 
provide?
    So NOAA is working with the River Forecast Center in Salt 
Lake City, is working with Reclamation and others, to make 
certain that we are clearer on what that inflow might look 
like. And to be perfectly honest, given the uncertainty, 
certainly, there are issues in introducing drought-resistant 
crops. There are issues in introducing risk pooling and 
insurance. But where the Conservation Reserve Programs come in 
is the admission that we are uncertain about the future, that 
it leaves us the flexibility to manage for the pieces that we 
are uncertain about. And I think that is the richest 
contribution from the standpoint of an understand what the 
weather incline is doing, naturally or otherwise, and then what 
the buffers in our system supply.
    Senator Bennet. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    Senator Cowan, welcome.
    Senator Cowan. Thank you, Madam Chair, and I am pleased to 
join this honorable committee today. I have a question, but I 
would preface it by saying the last time a Massachusetts 
Senator sat on this committee was in 1879----
    [Laughter.]
    Senator Cowan. --and I am only the third Senator from 
Massachusetts to serve on this committee. So if you are 
wondering why I am here, I want to tell you.
    We in Massachusetts are not unfamiliar with agricultural 
issues and the importance of agriculture to this nation and 
certainly the Commonwealth. Personally, I spent much of my 
childhood in North Carolina on my great-grandparents' working 
farm, where almost everything we ate was either grown or born 
on that farm.
    Though Massachusetts is not a Corn or Wheat Belt State, it 
is an important food producer for the nation. In the Northeast, 
specialty crops and dairy are our largest agricultural sectors, 
and we are the nation's leaders in sales of locally-grown 
products, with a growing and dynamic population of organic and 
new and first-time farmers. We are also the second-largest 
producer of cranberries. Not only do we have roughly 8,000 
farms, we also have over 80,000 fishermen, farmers of the sea. 
These farmers and fishermen have a combined production of $7.2 
billion in annual sales.
    I recognize that some aspect of our fisheries are not in 
the jurisdiction of this committee, but fishermen from the 
Northeast who risk their lives to put food on our tables must 
be treated with the same respect as farmers across the nation. 
Our fishermen are struggling, too, and are currently facing 
drastic stock reductions. Many fishermen, through no fault of 
their own, are in dire straits, and I will continue to push for 
provisions in the farm bill that my predecessor, Secretary John 
Kerry, advanced to ensure that fishermen are eligible for 
disaster assistance programs, just like the other important 
farmers in this nation.
    As we look to reauthorize the farm bill in this Congress, 
we must make sure farmers and fishermen have the tools they 
need to manage risk, that we protect our natural environment 
for future generations, and that we preserve Federal nutrition 
and other programs that ensure that no child is forced to go to 
bed hungry.
    We also need to be thinking about new threats that our 
farmers and fishermen are facing. The climate change and more 
frequent and intense extreme weather events threaten our 
agricultural economy, and I am pleased that the committee is 
discussing this important issue today. According to the Climate 
Vulnerability Initiative, the U.S. is among the top ten 
countries that will be most adversely affected by 
desertification and sea level risk, and this does not bode well 
for either our farmers or fishermen.
    Again, I am honored to join this committee and I look 
forward to representing the interests of Massachusetts 
citizens, farmers, and fishermen and working with all to solve 
our challenges.
    Now, I would like to ask a question of Dr. Glauber, if I 
may. As an economist, and as we have heard more and more about 
the increased frequency and intensity of weather patterns and 
the changing climate over the next 50 years, I am wondering if 
you might be able to tell us a little more about your 
expectations of what that is going to mean in terms of our 
agricultural economy, both in the U.S. and globally, if we do 
not do something to curb some of the greenhouse gas issues we 
are facing.
    Mr. Glauber. Well, thanks very much, Senator. Just last 
week, in fact, the USDA put out two major reports on climate 
change, looking at what the impacts of climate change would be 
on agriculture, and among a number of findings, one that does 
stand out is sort of the variability in weather and the 
potential there, the impact on agriculture from the sort of 
extremes that one might see because of increases in 
temperatures due to climate change.
    One thing we are working on at USDA, and this goes across 
both in terms of the forests and in terms of agriculture, is 
looking at adaptation strategies. I think these are going to be 
very, very important. Clearly, the Forest Service has a good 
history there of putting in additional resources to look at 
that, but as we face these sorts of pressures, agriculture is 
going to have to be able to have adoptive strategies where they 
can help mitigate the impacts of variances in weather.
    The other thing, obviously, is things that can be done to 
actually reduce carbon emissions, and there, forests in 
particular, we are looking at things like carbon sinks. There 
has been a lot of work done there, and there continues to be a 
lot of work done there, and on conservation practices, which 
help reduce greenhouse gas emissions.
    Senator Cowan. Thank you, Doctor. Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much, Senator. I 
appreciate your advocacy for fisheries. You do follow in the 
distinguished steps of former Senator Kerry and we look forward 
to working with you on those issues, as well.
    Just one final question for Dr. Pulwarty. From your 
perspective, are the long-term temperature changes from climate 
change affecting the length or the severity of droughts like 
the one that we just saw last year?
    Mr. Pulwarty. Thank you for the question, Senator. When we 
have seen high temperatures before, they have certainly helped 
to exacerbate drought conditions. From the standpoint of what 
the modeling studies are showing, into the middle of this 
century, it is about when we would really begin to see the 
stronger influence of temperature on the severity of drought.
    From the standpoint of what has recently happened, there is 
a lot to be learned from it, about the relationship between 
temperature and the extent of drought, but it is as yet too 
early to say that we can definitely describe a piece of this to 
anthropogenic climate change, how much that would be.
    Is the background changing? Is climate changing? It is. 
Will temperature affect the magnitude and strength of droughts 
into the long term? We are anticipating by the middle of the 
century, we would, in fact, see that signal. Was that the case 
in 2012? We can't conclusively say so. However, what we can say 
into the future is that the link between temperature and dry 
conditions--in the case of 2012, the drought was actually 
caused really much more by a lack of precipitation--temperature 
itself does not create a drought, it can help exacerbate a 
drought--from that standpoint, it becomes even more important 
to develop the monitoring and early warning systems that are 
needed, simply because when we add drought and a background 
trend together, what we produce is a surprise in the system, 
such as 2012 or 2002. It is not simply the addition of a 
drought event on a linear trend. When those two are added 
together, in many cases, sometimes what is produced is larger 
than we anticipate. Thank you.
    Chairwoman Stabenow. Thank you very much.
    We have been joined by Senator Grassley. Welcome. We are 
pleased to see you this morning and we will turn things over to 
you for questions.
    Senator Grassley. Am I the only one who has not yet asked a 
question?
    Chairwoman Stabenow. You are the only one, and if you would 
like, we could keep----
    Senator Grassley. Can you please give me five minutes?
    Chairwoman Stabenow. I can give you--what I will do is 
ask--we can continue to ask questions of our panelists.
    I will ask Dr. Glauber, could you speak a little bit more--
and we will give Senator Grassley a moment--from a livestock 
perspective as to what has happened in terms of the severity of 
the drought. Livestock producers have no access to crop 
insurance. From a financial standpoint, they are left there 
trying to deal with everything that has been happening, as well 
as rural communities and what is happening. We are seeing 
facilities shutting down and so on. The ripple effect of this 
is very serious. I wonder if you might speak a little bit more 
about that.
    Mr. Glauber. No, absolutely, and I think--I keep pointing 
out to people, when we talk about record farm income, it makes 
it sound like everything is going great. I think if you look at 
the livestock sector, and really over the last five years, you 
think of the price spikes that we have seen--we saw one, of 
course, in 2007-2008, another price spike in 2010-2011, and now 
this one caused by the drought--these clearly, when you talk 
about higher grain prices, higher soybean prices, this as a big 
impact on producers. We all remember the struggles that the 
dairy industry went through in 2009. You look at the hog 
sector, look at the poultry sector, similar things happened in 
2008. We are really back in those sort of margin levels right 
now.
    Now, the good news is, the hog sector has shown great 
productivity. Dairy, looking at milk production per cow, that 
has gone up some. So these margins have declined, but that has 
been offset a little bit by increased productivity. But there 
is no question right now, it does not matter which species you 
are looking at, they have been under very tight margins, and 
particularly for those who depend on pasture. I think that is 
the double-whammy, if you will, because not only are you facing 
high feed costs, you are looking at very limited pasture 
opportunities.
    So to the degree that those things have impacted beef and 
hogs, and as we mentioned earlier in answer to, I think, 
Senator Roberts, these have been very, very tough times, and 
hopefully, with this year, if we can get a return to more 
normal yields on the feed grain side, soybean side, we should 
see some softening in those feed prices towards the end of the 
year and then, hopefully, some spring rains to get pasture 
conditions back up.
    Chairwoman Stabenow. Thank you very much, and I will now 
turn to Senator Grassley.
    Senator Grassley. I am sorry I missed your testimony, but I 
had two other committee meetings this morning and I am glad to 
get here, because this is such an important issue, 
particularly, it looks like the maps I see of my State and 
maybe even further West than my State, things are bad, but 
particularly in the Western part of my State.
    So something Senator Klobuchar started on, I want to follow 
up on. Some of this improvement, where we did not have quite 
the reduction in production as we thought we would have. It, of 
course, is due to better practices and modern technology. A lot 
of it is the improvement of seed technology. Dr. Glauber, how 
important have biotechnology-derived seeds been to farmers in 
producing crops in these drought conditions? And I am asking 
this question, I think, even before a couple years--it is a 
couple of years before we have what you call drought-resistant 
corn seed available.
    Mr. Glauber. No, that is right, but you are absolutely 
right. What has been developed of the crop developments that we 
have seen have really been very instrumental in sort of 
preventing a much more catastrophic impact on crop yields this 
year, at least in 2012.
    If you look at the weather, and Dr. Pulwarty went through 
this pretty well, very similar to 1988 in terms of the 
intensity of the drought. But remember, in 1988, you had fields 
that came out with no corn, and all things considered, we took 
four billion bushels off our corn crop estimate by the end, but 
that was about the size of the 1988 crop. Because of the no-
till practices, and a lot of that has been helped by biotech 
varieties, and because of the developments in seed varieties, I 
think we were able to get a much better crop than we would have 
had otherwise.
    Senator Grassley. Yes. For Senator Stabenow, you just 
answered her question about livestock problems. I would like to 
continue on, if you could discuss the problems that will have 
for the renewable fuel industry faced by the lessened 
production, the higher prices, et cetera, the challenges you 
see ahead for that.
    Mr. Glauber. Well, two things on the renewable fuels. I 
think that, clearly, this past year, because of the high corn 
prices, we saw a reduction in margins for ethanol producers and 
we saw a cutback in production. If you look at the weekly 
levels of ethanol production, they took a big dip about mid-
July when corn prices came up. They have been remaining below, 
well below, the caps under the Renewable Fuel Standard for 
conventional fuels. We have revised our estimates downward for 
corn use for ethanol, down to 4.5 billion bushels. We 
anticipate that they will remain low over the course of the 
next year.
    The other major thing going on with the Renewable Fuel 
Standard, of course, is also the so-called blend wall, and 
there, that refers to how much ethanol can be put into the 
gasoline supply. There, because of declining fuel consumption, 
because of improved fuel efficiency, because of other factors, 
that has put a ceiling on how much ethanol can be blended. But 
the hope, or at least, I think, the main thing driving it for 
the time--for at least over the last year or so--has been 
higher corn prices. I think, looking forward, it is going to be 
this blend wall which will be the real challenge to the 
industry.
    Senator Grassley. Okay, and my last question, if I could, 
Madam Chairman, is, you know, with just one or two percent of 
the people producing most of the food in this country, there is 
not as much understanding of agriculture, and you always read 
about food prices going up. Speak to me, as best you can, what 
direct correlation there is between consumer prices and the 
problems of drought and which causes the price of agricultural 
products to go up.
    Mr. Glauber. Well, that is a great question, and I get this 
all the time because people often talk about commodity prices 
as food prices. And, of course, for something like corn, you 
are a very long way from a plate of food that you might 
purchase. For some products, obviously, the difference between 
a farm-level price and the retail price is closer. For things 
like corn, of course, you are talking about what goes into an 
animal that then gets processed and then ends up being sold as 
meat to consumers.
    If you look at the total value of farm products in the 
retail food dollar that we spend, that is about 14 cents. So 
even large increases in commodity prices have fairly small 
impacts on consumer prices. That is not to say that they are 
not significant. If you look over 2007-2008, you look at this 
most recent period, 2011-2012, and I have--I think in my 
testimony there is a chart on this--it shows the monthly 
inflation rates looking at the year before, so the change, say, 
from December 2012 vis-a-vis 2011. And you can see that we have 
now come down to a very low level of inflation. I think the 
most recent levels that BLS reported for food at home was about 
1.3 percent, and that is well below the two to three percent 
that we saw a lot over the last 20 years.
    However, back in 2007-2008, floor inflation rose about 
seven percent. It has come down. We will see some increase, I 
think, due to the current food prices. The Economic Research 
Service is forecasting food inflation of around three to four 
percent. But, again, a far cry from the 26, 30, 40 percent 
increases in commodity prices that we saw in the summer.
    Senator Grassley. In closing, let me give you an admonition 
from your position of respect as an economist, and particularly 
in the Department of Agriculture. Do not let people get away 
with saying that 40 percent of our corn crop goes for ethanol 
when considering one-third of the bushel of corn is still 
available for animal feed, which then would bring that down to 
20 to 25 percent of the corn crop that is used for ethanol.
    Mr. Glauber. Well, you are absolutely right. The distiller 
dry grains, the other byproducts from ethanol production, have 
become a very central portion of the overall feed diets of a 
number of these livestock groups. Thanks.
    Senator Grassley. Thank you, Madam Chairman.
    Chairwoman Stabenow. You are welcome. Thank you.
    Senator Donnelly.
    Senator Donnelly. Thank you, Madam Chair. I just have a 
couple of questions.
    To Mr. Glauber, and I apologize if these have been asked. I 
was at an Armed Services Committee hearing that I had to go to. 
You had mentioned about the debt-to-asset ratio for those with 
crop insurance. Do you have any idea right now what the debt-
to-asset ratio is for those producers of crops for which 
insurance is not available?
    Mr. Glauber. No, thanks; actually, the debt-to-asset ratio 
that I mentioned was for the aggregate, for the entire U.S. 
farm sector. And as I said earlier in my remarks, you have to 
be very, very careful of the aggregate.
    Let me see if we can coax that out of the numbers, and I 
can go back and look to see if we can get a breakout for those 
numbers and get back to you. I mean, obviously, this year, 
there is no question that if you were a field crop producer and 
you had high coverage levels, if you have a revenue product, 
the crop insurance was a big boost and helped you maintain--
offset those losses.
    Senator Donnelly. Thank you, Doctor.
    Dr. Pulwarty, you mentioned the collaboration between NOAA 
and USDA to try to be able to better handle drought and drought 
situations. Are there any other tools that you can think of 
that would help us in minimizing the impact of these droughts?
    Mr. Pulwarty. Thank you for the question. There are several 
practices that are there, that people in USDA and elsewhere, 
and our farmers, have been doing for a long time. In fact, that 
is why we are still there.
    From the standpoint of an understanding of the impacts of 
drought, there is a lot that can be learned from this present 
event that we are going through that can help us stave off 
longer-term risks. I think Mr. Bennet and others mentioned 
knowing the fact that some things that we put into place up 
front. For a long time, we have learned, if you put in a dollar 
up front, you can save three to four dollars in drought 
mitigation practice in the long term.
    Looking more effectively at our observations, our 
satellite-based observations of where there might be risks to 
crops, what lands might be fallowed so that the price of the 
water can be used by the farmer for other purposes, is an 
avenue that we should probably pursue, simply because if we are 
not--if we can get the prices for the crops, that is fine. If 
we can get a higher price for the water, then the farmer should 
keep the right to the water but also be able to sell it when he 
or she can.
    From that standpoint, we have projects with USDA and others 
in the State of California on what areas might be likely to be 
fallowed during a drought such that, up front, one can see 
there is an amount of water that can be saved that can be sold 
somewhere else.
    There is quite a bit of early warning information that 
leads to making those types of decisions, and if I can be clear 
about it, the idea of having better improved monitoring for 
soil moisture is really the missing piece, coordinated across 
all of our agencies. We have good pieces of soil moisture data, 
but effectively coordinating the soil moisture, what we know 
about it across NOAA, USDA, and others, I think is extremely 
critical.
    From that standpoint, we can also point to the ideas that 
you have heard today of looking at where we have programs like 
EQIP, WHIP, and the Conservation Program as to how to 
effectively design those programs for extended drought. We are 
really good at the onset of drought. We have the markets that 
can take care of it. We have the storage that can take care of 
it.
    But as was mentioned earlier, when you get to places like 
Texas, when we get into a deep drought and the price of 
purchasing feed and so on goes up, all of a sudden, we are 
rapidly selling off. And so we have worked very closely with 
the State and others on what is the likelihood of meeting those 
thresholds. So, from our standpoint, finding out where the 
thresholds for making those decisions are and how best we can 
provide information from an economic standpoint to secure the 
investments.
    As a last statement, that is actually the basis of an MOU 
that NOAA signed with the Western Governors Association and we 
can look to sort of learning from how we think about where to 
place our investments over the long term.
    Senator Donnelly. Thank you very much, Doctor.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much to both of you for 
a very important discussion about the challenges facing our 
ranchers and farmers going forward. We appreciate and we look 
forward to working with you.
    This would conclude our first panel. We would ask our 
second panel to come forward. Thank you.
    [Pause.]
    Chairwoman Stabenow. Well, good morning again, and we are 
so pleased to have this panel with us. I know, as others have 
been here in the past understand, we have multiple commitments 
that members are trying to be able to meet this morning. 
Cloning might be good for the committee structure here. I know 
we are working on that in agriculture. But Senator Cochran had 
to step out to an Appropriations meeting, but certainly it does 
not reflect his interest, and others will be coming and going, 
as well, this morning.
    We so appreciate all of you being here. We will introduce 
all of our witnesses and then ask you each to speak for five 
minutes, and we welcome any other written testimony that you 
have.
    I am first going to turn and ask Senator Baucus to 
introduce the distinguished first panelist, Leon LaSalle. 
Senator Baucus.
    Senator Baucus. Thank you, Madam Chairwoman.
    It is a real honor for me to introduce Leon LaSalle. Leon 
is a Native American rancher. The real deal, several 
generations. His grandfather, Frank Billy, is one of the first 
to found the ranch on the Chippewa Cree Reservation of Montana. 
It actually is part of the Rocky Boys Reservation. We have got 
seven reservations in Montana. Leon and his family are real 
stalwarts, and one of the reservations is Rocky Boys and the 
Chippewa Cree are the Tribal members in that reservation. They 
raise Black Angus around the Bears Paw Mountains between Rocky 
Boys, up around Havre, Montana. It is sort of a real standout, 
that is, as a landmark in our State. We are very proud of it.
    Leon was featured in a book. The book was called Big Sky 
Boots. It is the working seasons of a Montana cowboy. He has a 
great quote in that book. He said he thinks there is a growing 
disconnect between the general public and agriculture 
producers. Well, Leon, I have got to tell you, the same thing 
is true in Washington, D.C. There is a disconnect between the 
people here and the people who represent the rest of the 
country, and maybe you can kind of help connect those dots a 
little bit here when it comes time for you to testify.
    We are really very honored to have you here because you are 
a great credit to the Tribe and to the State of Montana and 
your industry. I might say, Leon is also on the Board of 
Directors of the Montana Stockgrowers and one of the guiding 
lights there, as well, so thank you very much.
    Chairwoman Stabenow. Thank you, Senator Baucus.
    I was holding up--I felt like Vanna White for a moment.
    Senator Baucus. There it is.
    Chairwoman Stabenow. I was holding up the book. Mr. LaSalle 
has given this to us and the committee.
    Senator Baucus. You have got it.
    Chairwoman Stabenow. We will keep it here in a place of 
honor and look forward to having a chance to look at it, as 
well.
    Senator Baucus. You bet.
    Chairwoman Stabenow. Mr. LaSalle, as I told you privately, 
nobody fights more for Montana agriculture than Senator Baucus, 
so thank you.
    I am going to turn now to Senator Donnelly and ask him to 
introduce our second witness.
    Senator Donnelly. Thank you, Madam Chair.
    Chairwoman Stabenow. Ranking Member Cochran, and other 
members of the committee, I am looking forward to us working 
together to address the important issues facing our nation's 
farmers and we are fortunate today to have with us Anngie 
Steinbarger. Anngie is a Hoosier corn and soybean farmer from 
Shelby County who took the time to come out here to Washington 
to share her perspective on conservation practices, crop 
insurance, and the risk management techniques critical to 
operating a farm in the 21st century.
    As the folks testifying before the committee today have 
made clear, we need to find the appropriate balance between 
strong crop insurance and disaster assistance programs that 
provide robust support for our producers when they need it, but 
are also fiscally responsible. As Anngie will tell you, last 
year's growing season was extraordinarily challenging. We had a 
very, very significant drought situation in Indiana. Anngie and 
her family faced it on their family farm and she is going to 
share some of that with us today.
    Anngie and her husband had always dreamed to farm, and 
through their hard work, dedication, and thrift, they have 
managed to grow their operation to 1,500 acres. She and her 
husband are a great example to us here on the committee. We owe 
it to the Steinbargers and every other agricultural producer in 
the country to roll up our sleeves and to get a farm bill as 
soon as possible, as well, Madam Chairwoman.
    Thank you, Anngie.
    Chairwoman Stabenow. Well, thank you very much. We are 
pleased to have you.
    I now want to introduce from Leelanau, Michigan, Jeff Send, 
who is a lifelong cherry farmer. And I do have to say that Mr. 
Send has given us chocolate-covered cherries that will not 
remain in the committee longer than the end of this day. They 
will be gone. So thank you. Thank you very much for bringing 
that.
    But Mr. Send is a lifelong cherry farmer who grew up 
working on his grandfather's 40 acres. He and his wife, Nita, 
have now expanded that farm to 800 acres of sweet and tart 
cherries. Mr. Send has also operated a receiving station for 
over 35 years with 35 growers bringing cherries to his station. 
He is currently the Vice Chairman of the Cherry Marking 
Institute Board of Directors and Vice Chairman of the National 
Cherry Growers and Industries Foundation. We are so pleased to 
have you here today.
    Last but certainly not least, Mr. Steffen, Ben Steffen, who 
was introduced earlier by Senator Johanns. He is President and 
co-owner of the production operation Steffen Ag, Incorporated, 
which milks 135 cows, raises crops on 1,900 acres, and has six 
full-time employees. He currently sits on the President's 
Advisory Board of his alma mater, the University of Nebraska, 
and serves as President Elect of the Ag Builders of Nebraska, 
and formerly the President of the Richardson County Farm Bureau 
and County Extension.
    So we welcome each of you and we will ask Mr. LaSalle to 
begin his testimony.

       STATEMENT OF LEON LASALLE, RANCHER, HAVRE, MONTANA

    Mr. LaSalle. Thank you, Chairwoman Stabenow, Ranking Member 
Cochran, Montana Senator Baucus, and members of the committee, 
for this opportunity to share my experiences regarding the 
Federal Livestock Disaster Programs.
    My name is Leon LaSalle and I am a Native American rancher 
from Rocky Boys Indian Reservation, approximately 100 miles 
northeast of Great Falls, Montana. I am President of LaSalle 
Ranch, Incorporated, a family ranch corporation including my 
wife, Shannon, my parents, Robert L. and Jenny, my brother, 
Robert W. and his wife Susie. Together, we raise Black Angus 
cattle near the beautiful Bears Paw Mountains and the 
reservation.
    I serve as a Board of Director for the Montana Stockgrowers 
Association and as President of the Rocky Boys Cattlemen's 
Association. My maternal grandfather, Frank Billy, and his sons 
were among the first residents of Rocky Boys to become cattle 
ranchers, and today, as in the past, we manage our ranching 
operation with future generations in mind.
    We have installed numerous conservation practices 
specifically designed to preserve and protect our natural 
resources. Even though we have implemented these conservation 
measures, there are times when my family's ranch has been 
struck so hard by weather-related disasters that we have sought 
economic assistance. The Federal Livestock Disaster Programs 
have been that assistance.
    We have participated in the Federal Disaster Program since 
the mid-1980s. One thing that has always been a problem was the 
need to have Congress pass legislation for these programs to 
proceed. That changed in the 2008 farm bill, where, for the 
first time, Livestock Disaster was included. Those years when 
we have used these programs to help offset the financial sting 
of a drought or a blizzard are tough years. I have known this 
is especially true for Native American ranchers.
    The Native American Livestock Feed Program is a great 
example of a program that helped when feed was short. In 
drought years, when there is little or no hay to feed our 
livestock, ranchers like me must purchase hay at a premium. 
Sometimes by the time the hay reaches the ranch, the freight is 
more than the cost of the hay itself. Our family has used the 
Emergency Livestock Assistance Program in 2008 when our ranch 
qualified for a payment to purchase replacement hay. We also 
currently have a Livestock Indemnity Program application 
pending. The loss resulted from a blizzard during the winter of 
2010-2011.
    These programs provide the only financial relief available 
when a rancher was faced with loss of livestock or forage to 
feed them. There is no insurance for catastrophic livestock 
losses, such as those experienced by Southeastern Montana 
ranchers during the horrific wildfires of 2012.
    I have helped neighbors prepare applications for LIP, and 
on one sad occasion, I participated as a third-party witness 
when several cattle fell through the ice and drowned while 
trying to shelter themselves from a stinging Montana blizzard.
    While these programs are a welcome relief, they also come 
with some frustration. Livestock producers like me typically do 
not work with the FSA on a regular basis and the FSA office is 
an unfamiliar experience with unfamiliar rules. For example, a 
ranch family in Blaine County lost 160 ton of hay when 
lightning struck their haystack. Their application was denied 
because the rancher had not purchased crop insurance on a small 
field of hay barley. There also is a rule requiring an operator 
to report a loss within 30 days. This time period needs to be 
extended. Losses may not have even been assessed in the 30 
days. When a disaster is occurring, seldom has the thought 
crossed my mind that I need to document my losses. I am 
normally just struggling to keep my calves from freezing to 
death. I will count them later.
    I believe these disaster programs should become continuous 
programs that have a stability that would benefit both the 
livestock producer and FSA. Many of the problems we as 
livestock producers have stem from FSA's documentation 
requirements and the failing of livestock producers to gather 
the type of data FSA requires. Program consistency would help 
with this.
    Mother Nature throws a variety of natural events in the 
path of a Montana rancher. Our weather is uncertain, sometimes 
severe. We find our markets are even vulnerable to the effects 
of drought, as well. Drought has reduced the number of cattle 
available, and processing facilities have closed as a result, 
thus affecting our price. If weather and markets are not the 
issue, then many of my fellow ranchers are challenged by the 
ever-increasing predator losses.
    In summary, I would suggest the following changes. One, the 
current system for determining drought needs to be revised. 
Droughts can be very local.
    Two, the whole crop insurance thing needs to be dropped 
from livestock eligibility criteria.
    Three, these programs need to be handled differently from 
other FSA programs. In most cases, they are working with an 
entirely different crowd than those historically served by FSA.
    Four, a streamlined process encouraging program 
participation would be a welcome change.
    Five, consistency. The program needs to be made permanent; 
six, the 30-day reporting deadline needs to be extended.
    In closing, I want you all to know that I am proud of my 
family and my Native American heritage, and I am equally proud 
to be a Montana rancher, working every day to deliver safe, 
healthy, environmentally wholesome beef to your families and to 
families throughout the world. Thank you.
    [The prepared statement of Mr. LaSalle can be found on page 
74 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Ms. Steinbarger.

  STATEMENT OF ANNGIE STEINBARGER, FARMER, EDINBURGH, INDIANA

    Ms. Steinbarger. I would like to thank you, Chairman 
Stabenow and Senator Donnelly, for that nice introduction, and 
the committee members for allowing me the opportunity to 
comment.
    My husband and I began farming the family farm in 1989, 
just after the last big weather event of 1988, which was the 
drought. Thanks to our ability to manage financial risk, 
management techniques, and off-farm income, we now farm 1,500 
acres of corn and soybeans as well as a small cow-calf 
operation in the State. We find our association with various 
farm organizations, such as the Indiana Soybean Alliance, 
invaluable to the success of our operation. The Indiana Soybean 
Alliance is an arm of the American Soybean Association, a trade 
organization that represents our nation's 600,000 soybean 
farmers on national and international policy issues.
    It has always been our dream to farm. My husband and I both 
knew that the only way to make our dreams a reality were to 
save our pennies and work off-farm incomes in hope that, one 
day, my father would give us the opportunity to participate in 
the farming operation. Mike worked in the seed, tile ditching, 
and bulk milk transport business while I worked in fertilizer, 
chemical, and crop insurance businesses.
    The drought of 1988 took a toll on my father. Poor health, 
no crop insurance, and no crop led us to the ability to 
participate into the family farm. We started farming 600 acres 
and have increased the operation to 1,500 acres. Roughly one-
half of our acres are on a share arrangement with our 
landlords. We continue to work off-farm, as it is still not 
self-supporting. Mike sold the milk truck to buy a school bus 
and I continue to work in the crop insurance and do the farm 
recordkeeping.
    To manage our thin, light soil types, we started our 
farming operation employing conservation tillage techniques, 
using such programs as CRP and NRCS cost share funding. To this 
day, we are still advocates of no-till farming as a way to 
preserve our soil and maintain soil moisture. As a result of 
our conservation efforts, our average yields are 150 bushels of 
corn and 50 bushels of soybeans.
    My father warned us that farming is very risky and we 
should prepare for the worst case scenario. We did not 
anticipate the record-breaking drought and heat when we planted 
our 2012 crop. The crop was planted timely and we were 
concentrating on installing an irrigation pivot on 35 acres of 
really sandy soils in hopes of raising 200-bushels-plus corn 
per acre under the pivot and around 170 bushels on our non-
irrigated soils.
    The middle of June, it became apparent that we were not 
going to realize our crop goals. The heat and drought had 
settled in to stay. It is so frustrating to watch the crop 
wither and die. I actually used our fields as training examples 
of permanent wilt and drought stunted corn. I just happen to 
have a couple pictures that I submitted to the committee.
    The race was on to get our irrigation pivot operating. Due 
to a storm, we did not water the crop until July 6. We also 
bought back some of the grain that we had contracted to the 
elevator for our landlords. We were concerned that our corn 
crop would not raise 40 bushels to the acre, and about 40 
bushels is the most we ever contract for a landlord per acre. 
Our best corn was on the farm with the pivot. Under the pivot, 
it was 200 bushels to the acre. And outside of the pivot, ten.
    This farm averaged 100 bushels to the acre, and that 
allowed us to meet our contracts. The rest of the crop was 
dismal. Needless to say, there was not anything to put in the 
grain bins. Due to the drought and heat, the grain quality was 
very poor and we even shipped our grain that was going to be 
fed for livestock.
    We always live on the proceeds of the crop year following 
the year we produce it, so we will be feeling those effects of 
the drought of 2012 in 2013.
    The number one barrier to increasing our yields is the lack 
of water. Dry weather in the months of July and August always 
limit our yield potential. We find crop insurance an effective 
tool in managing risk when we experience these weather events. 
We began using crop insurance in 1991 as a way to maintain our 
cash flow and prevent us from having to borrow money. I 
actually have lost money over buying crop insurance over the 
last 20-year time span. It was not until the last two drought 
years that it actually paid for us to have crop insurance.
    Using crop insurance as a risk management tool is not 
cheap. We have Revenue Plan 2 coverage and optional unit 
structure and insure 80 percent of our corn average yield and 
75 percent of our soybean average yield. This roughly costs us 
$38 an acre for corn and $20 an acre for soybeans. This plan 
does allow us to be covered for differences due to poor yield 
or a poor price or actually a price fluctuation that goes up.
    The yields from 2012 were the lowest on record for our 
farm. The average corn yield was 41 bushels to the acre. By the 
way, that is worse than 1988. And, actually, the soybeans 
averaged 30.4, which were marginally better. It ended up being 
one of our best decisions to purchase the irrigation pivot.
    As you can see, we paid a substantial premium for crop 
insurance, and that decision is keeping us in business for the 
2013 crop year.
    Thank you, Chairman, for this opportunity to testify and I 
look forward to your questions.
    [The prepared statement of Ms. Steinbarger can be found on 
page 117 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. Send.

   STATEMENT OF JEFF SEND, CHERRY FARMER, LEELANAU, MICHIGAN

    Mr. Send. Thank you, Senator Stabenow, and members of the 
committee, for inviting me to testify today and for your 
concern about a very important issue.
    I am Jeff Send. I am a cherry farmer from Northern 
Michigan, and I grew up working my grandfather's 40 acres. Now, 
my wife and I, Anita, farm 800 acres of sweet and tart 
cherries. Putting some of the land into the Federal Farm and 
Ranch Land Protection Program is one of the tools we use to 
expand our operation. Our youngest daughter and her husband 
work with us and they someday hope to take over the farm.
    I also have managed a receiving station for 37 years. I 
have a working relationship with 35 growers who bring me 
cherries to be weighed, inspected, shipped to ten different 
processors in Michigan, Wisconsin, and the State of New York 
that I work with.
    I currently am serving as Vice Chair of the Cherry 
Marketing Institute Board. CMI is a national organization for 
tart cherry farmers. I am also a Vice Chair of the National 
Cherry Growers and Industries Foundation, which is a sweet 
cherry organization.
    Year in and year out, Michigan produces 75 percent of the 
United States tart cherries. However, that was not the case in 
2012. Last year was the most disastrous year I and the cherry 
industry have ever experienced. Our winter was much warmer than 
normal, with little snow and ice on the Great Lakes. In mid-
March, there were seven days of 80-degrees temperatures, which 
is unheard of in Northern Michigan. Cherry trees began to come 
out of dormancy and began to grow. This left them completely 
vulnerable to the next 13 freezes in April. This extreme 
weather in Michigan was one of the worst disasters we had ever 
seen. Sweet cherries endured freezes slightly better than tart 
cherries. But to top things off, we were hit with a worst case 
bacterial canker I had ever seen. There is no treatment for 
this disease, which affects the fruit buds.
    In Michigan, we have the capacity to grow 275 million 
pounds of tart cherries. In 2012, our total was 11.6 million 
pounds. If this would have happen a year sooner, the SURE 
program would have been in place and we would have had some 
form of safety net. There is no tart cherry insurance available 
at all for our industry, so my fellow growers and I had no risk 
management tool to get through this very difficult year.
    NAP insurance is available, but the policy starts at 50 
percent loss and then pays out only 50 percent of that number. 
Farmers are left with only about 25 percent of coverage, and 
there is a $100,000 cap. This does not come close to covering 
our expenses. My costs on my farm alone are between three-
quarters and a million dollars.
    Tree fruits must be maintained whether there is a crop or 
not on them. You carry on with the same practices in order to 
keep them healthy. So expenses remain the same. Imagine working 
for a year-and-a-half with no paycheck and still having the 
same expenses.
    There is a pilot program for sweet cherries that is 
available in two counties. Fortunately, I live in one of the 
two counties. What it meant to me was 50 percent of my sweet 
cherries were covered. However, the farmers that I represent in 
neighboring counties did not have the option to purchase sweet 
cherry insurance.
    The Administrator of RMA visited last summer and we are 
working on a tart cherry program, which I hope will be up and 
running for the 2014 season.
    I worry about our young farmers, who haven't built up any 
equity. No income with all the same expenses is formula for 
disaster. There needs to be something to help farmers stay in 
business when natural disaster hits. A few days that we have no 
control over can put us out of business.
    In closing, I would like to thank you for being able to 
testify here today. I also would like to leave you with three 
points.
    Number one, disaster relief is very important to the tree 
crop industry.
    Number two, long-term crop insurance needs to be available 
to all farmers who grow food in the United States.
    Number three, where no crop insurance is available, we need 
to improve the NAP policies to provide farmers with better risk 
management tools.
    I am very worried about 2013 and what this year will bring. 
We must have a good crop so growers and the industry can get 
back on their feet. Another year with some form of safety net 
will put a lot of us out of business.
    Thank you for your time.
    [The prepared statement of Mr. Send can be found on page 98 
in the appendix.]
    Chairwoman Stabenow. Thank you very much. I know how 
serious this is.
    Mr. Steffen, welcome.

    STATEMENT OF BEN E. STEFFEN, FARMER, STEFFEN AG, INC., 
                       HUMBOLDT, NEBRASKA

    Mr. Steffen. Good morning, Chairwoman Stabenow, Ranking 
Member Cochran, and members of the committee. I want to thank 
Senator Johanns for his earlier introduction and I want to 
thank all of you for your leadership and hard work on behalf of 
our nation. I salute your commitment to public service.
    My family, our employees, and I produce milk, corn, 
soybeans, wheat, and hay on our farm at Humboldt in Southeast 
Nebraska. We milk 135 cows on 1,900 acres of non-irrigated 
dryland farm, and I have family members at home right now 
caring for and feeding animals so that I can be here today.
    This nation has benefited from a food supply that is 
plentiful, inexpensive, and of the highest quality, and 
securing that food supply for the future is clearly a 
responsible public policy. Facing a growing world population, 
it is a moral imperative.
    The impact of fire and drought has hit our farming 
operation and those of our neighbors. The price of high-quality 
dairy hay has gone up by 50 percent, and the price of lower-
quality hay suitable for beef animals has more than doubled. 
While we appreciated last year's release of Conservation 
Reserve Program acres for emergency haying and grazing, we 
would like to see efforts made for an earlier release date for 
those acres. This would dramatically improve the quality and 
the quantity of those forages.
    My neighbors in Western Nebraska have been dealt a 
particularly hard blow by wildfires, and nearly 400,00 acres, 
approximately half the State--equivalent to half the State of 
Rhode Island--were burned in 2012. On those ranches, feed 
supplies were wiped out, fences were destroyed, and cattle have 
been liquidated. I would urge you to consider some tax relief 
to help those ranchers regain their footing. Ladies and 
gentlemen, our nation's cattle herd is at a 61-year low and 
consumers will feel this damage for years.
    I would also note that the farm bill which passed this body 
addressed the reauthorization and funding of a number of 
important Livestock Disaster Assistance Programs which were not 
funded for 2012 or in the recent farm bill extension, and the 
funding of those programs should be a top priority for this 
committee as we look toward passing a farm bill this year.
    Livestock contributed $10 billion to Nebraska's economy in 
2011 and crop production contributed $11.7 billion. I have seen 
that in my own operation as well as in my community, where I 
sit on the Board of Directors of the Richardson County Bank, 
and that money moves through virtually every business and 
community in our State.
    In the crop production arena, we can all say with pride 
that the Federal Crop Insurance Program has worked well. For 
us, Federal crop insurance is not a fountain of free money. 
Until last year, our farming operation had an 11-year crop 
insurance purchasing history that showed us paying in more 
money in premiums than we received in indemnity payments. Last 
year, the insurance program appropriately covered a portion of 
our massive losses. We choose to participate and pay premiums 
every year to protect our operation from an event like the 
history losses of 2012, and producers across the nation have 
endorsed this program with their massive participation. I would 
urge you to consider changes that would allow the individual 
policies to be customized to more closely fit each farm, but 
maintaining the successful Federal Crop Insurance Program 
should be our highest priority.
    Risk management strategies that have contributed to our 
success include many tools, and the idea that Federal crop 
insurance alone guarantees a profit is simply not true. Other 
tools play a major role in controlling risk and increasing the 
chances of success. Education, hard work, and determination 
come to mind. My parents, Richard and Sue Steffen, both 
graduates of the University of Nebraska, ensured that their 
children would have a college education, as well. They set a 
high standard for education, for hard work, and determination.
    Another risk management tool that we employ is 
diversification. We include both livestock and crops in our 
business. In order to manage price risk, we constantly watch 
the changing world markets and the prices for the products we 
sell, and we accept the challenge of using futures and options 
contracts. But we, along with thousands of other producers and 
processors, were victimized by the genius of mismanagement at 
MF Global when our accounts were frozen in the subsequent 
bankruptcy. We continue to wait for the return of a slowly 
rising percentage of our funds.
    We work every day to find and apply the best management 
practices, and we have relied on the Land Grant University 
Research and Extension System established by the Morrill Act of 
1862 to help us move our business forward. This has led us to 
nearly 40 years of no-till farming, saving water, soil, and 
time. And thanks to Land Grant Research and Extension, we have 
dramatically improved the way we care for and feed our milk 
cows, leading to higher production, improved herd health, and 
better quality milk.
    To further protect our soil and water, we began using cover 
crops years ago. But participation in the Conservation Security 
Program gave us a push to go beyond the program requirements, 
and last year, we planted nearly 60 percent of our acres to 
cover crops. This practice holds great promise for conserving 
our soil, saving water, building quality, and sequestering 
carbon, but we need more research in this area. I urge Congress 
and this committee to prioritize funding for both basic and 
applied agricultural research and our Land Grant system of 
universities created by the Morrill Act of 1862. This research 
and development is the engine of our nation's food supply.
    I conclude as I began. This nation has benefited from a 
food supply that is plentiful and inexpensive and of the 
highest quality. Securing that food supply for the future is 
clearly responsible policy. Facing a growing world population, 
it is a moral obligation.
    Thank you.
    [The prepared statement of Mr. Steffen can be found on page 
112 in the appendix.]
    Chairwoman Stabenow. Thank you very much to each of you. 
You are all on the front lines of making sure we have a safe, 
abundant food supply in the riskiest business in the world, so 
we thank you very much.
    Mr. LaSalle, you talked about the livestock disasters and 
some changes you would like to see. I am very pleased to say 
that most of those, we put in the farm bill we passed in this 
committee and in the Senate, and we are going to continue to 
push for those.
    Mr. Send, as you know, we addressed disaster assistance in 
our farm bill.
    Mr. Steffen, I would just say, on MF Global, we are 
working. This committee also has oversight and we are laser 
focused on making sure you get every penny of your money back, 
so we are going to keep pushing on that.
    Mr. Send, talk a little bit more, if you could, about the 
difference in the coverage options for you--the limited 
coverage that you have under crop insurance right now with your 
sweet cherry insurance policy versus the current NAP program 
and how this all fits for you when you are trying to put it 
together with limited options.
    Mr. Send. Thank you, Senator. I think I touched on it a 
little bit when I said $100,000. A hundred-thousand dollars 
does not cover much. If I could have crop insurance like the 
Sweet Cherry Insurance Pilot Program, you would pick your 
policy. Your policy runs all the way from 50 percent coverage 
to 75 percent coverage. This last year, I had 50 percent 
coverage. I was very, very happy. I was very fortunate I lived 
in one of the two counties. Since the episode, I increased my 
coverage for next year because my fear is this possibly could 
happen again. So there will be more monies coming there.
    The NAP program, you know, the $100,000 just does not get 
it. We need a policy that we, as growers, can buy and set some 
form of coverage up for ourselves so we have some form of tool 
that we can fall back onto, because I, too, feel our climates 
have changed. I fear that it could affect all of us sitting at 
this table. But we have no crop insurance, and if we do not get 
it, it is going to put many of us out of business.
    Chairwoman Stabenow. Could you speak, also, just for a 
moment, about the costs of maintaining the orchards and so on 
regardless of the situation. Your costs do not go down just 
because you do not have a crop.
    Mr. Send. Well, I think on the long version that I wrote, I 
touched a little bit. Our costs will be the same--I should not 
say that. Let me restate. Our costs are a touch cheaper because 
we did not have to harvest product this year. But if you look 
in the long version, I think I made a statement, spring came 
early, which meant we started five weeks sooner than normal. 
Your first sprays, your first fertilizer, everything, are the 
very, very most important things that you can do, and you have 
to do them. If you are going to stay in this long-run, I have a 
theory. You have to keep them happy and healthy. And if you do 
not do it, it is going to catch up to you later.
    So expenses pretty much this year were down a touch, but 
you have to fertilize, spray, do it all. I mean, we ended up 
with four extra sprays this year, and let me tell you, it is 
not cheap.
    Chairwoman Stabenow. Thank you.
    I would like to ask, Mr. LaSalle, Ms. Steinbarger, and Mr. 
Steffen, you all talked about additional risk management tools 
related to conservation practices, and I wonder if you might 
each just touch on, briefly, what conservation practices you 
use and how it makes it more resilient for you managing the 
drought and other disasters. Mr. LaSalle.
    Mr. LaSalle. Yes. Over the years, we have installed many, 
many miles of livestock water pipeline across fences so we 
could manage our grazing in a manner where we always--we leave 
some grass in our rotation that we never use in case we have a 
drought. And through some of the cost-share programs that are 
available, that has enabled us to put the--to drill wells, 
develop springs, pipe the water, install tanks.
    One of the other things that we have done is, also, we have 
installed the permanent livestock shelters. We have actually 
built them out there, so that when cattle are in a blizzard, 
they can actually get to a spot that hopefully keeps them from 
going to like what my neighbor experienced, those types of 
practices.
    Chairwoman Stabenow. Thank you.
    Ms. Steinbarger.
    Ms. Steinbarger. Yes. Our conservation techniques, number 
one would be no-till farming. We are on thin, light soils. It 
does not hold moisture well. We found--started our farming 
operation using those no-till techniques where we do not 
disturb the soil, just plant into it, and that has worked very 
well for us. Also, we have used waterway projects, where we 
tried to make the best use of the water that we do have. And 
the other one would be filter strips, where you do farm near 
rivers and we find that--and we want to preserve all the soil 
that we can and those filter strips along the river not only 
allow us to maintain water quality, but also to maintain soil.
    Chairwoman Stabenow. Thank you.
    Mr. Steffen.
    Mr. Steffen. Thank you, Senator, for the question, and I 
would point--as I mentioned in my testimony, I would point 
again to the no-till techniques we have been using for 40 years 
on our operation, to save soil, conserve water, and improve our 
crops. I would also point out that we are making extensive use 
of cover crops, and those crops planted in conjunction with our 
traditional crops offer us a way to catch more moisture and 
snowfall, to improve the way water and rainfall percolates into 
the soil and it is absorbed so that we are able to capture and 
store more water in that soil by using those cover crops. It is 
a way to increase the organic matter levels in the soil, and 
that makes the soil more productive and increases its ability 
to hold water.
    So those are all techniques that we use, and I would 
mention, again, the value of long-term planning and thinking 
and foresight, and it is imperative that producers continue to 
look forward and plan ahead to be able to weather periods of 
stress and drought, and that we raise awareness, as you are 
doing today in this hearing, of the necessity for planning 
ahead.
    Chairwoman Stabenow. Thank you very much.
    Senator Donnelly.
    Senator Donnelly. Thank you, Madam Chair.
    Anngie, you had mentioned crop insurance allowed you to 
ensure that you had a budget for this year's expenses. Can you 
talk about any important ideas you would like this committee to 
consider as we examine crop insurance and disaster assistance?
    Ms. Steinbarger. Yes, I do have a couple items that are 
kind of on the forefront of my mind as we prepare for the 2013 
year. As you consider a new farm bill, I am very concerned that 
we maintain subsidy for crop insurance. Maybe I should say 
direct payments that we have had in the past reward a farmer 
regardless of his ability or desire to participate in risk 
management. I feel with the Crop Insurance Program that if you 
want to play, you are going to pay, and that is just exactly 
what we have chosen to do, and I hope that you consider that 
same type of idea as we go forward. I think that would probably 
be the most important one as of right now.
    Senator Donnelly. Thank you very much. And to all our 
panelists, I just want to tell you how much admiration we have 
for you. You are the people who feed our country, who have been 
an extraordinary positive part of our export program, who have 
been stewards of our land, and who have left our nation's lands 
in the extraordinary condition that they are in. To all of you, 
you have put your heart and soul into family operations. It is 
the epitome of American entrepreneurial spirit, of American 
enterprise, what you do. And so to all of you, thank you.
    Mr. Send, I will tell you, I happen to live up near the 
Michigan border. I am a proud Hoosier, but will tell you that 
our area is inundated with your products every year. So I just 
wanted to let you know that, as well.
    Thank you.
    Chairwoman Stabenow. Great.
    Senator Baucus.
    Senator Baucus. Thank you, Madam Chairwoman.
    Leon, a couple things. Following on Senator Donnelly's 
point, it has always struck me how farmers and ranchers have a 
better perspective on life. They are more philosophical, Why? 
Because they know they can't control their fate as much as some 
people in cities think they can, erroneously. You can't control 
the weather. You can't control price. Cost, you can't control. 
You take what you get, but you have got to manage it as well as 
you possibly can. It is very, very difficult and it is kind of 
humbling. It gives you a sense of life and the importance of 
hard work and doing one's best. Whereas on the other hand, I 
think a lot of people in the city get a little arrogant and 
they think they can control everything, and obviously, they 
can't.
    I was struck--I do not know if you saw it, the Super Bowl 
ad, a Paul Harvey ode, basically, to farmers and ranchers. It 
was very powerful. Now, it was an ad for Dodge Truck, but that 
was the main point.
    [Laughter.]
    Senator Baucus. The main point, it was just a powerful ode, 
statement, respect for the nation's farmers and ranchers. I 
urge all of us who haven't seen it to--or who did see it, just 
take that to heart, because it is so important.
    In our State, Madam Chairwoman, agriculture is our number 
one industry. It is number one. One out of five Montanans' 
income is dependent upon agriculture. It has been that way ever 
since I have been around, and I expect it is going to be that 
way for a long time. And I just think, therefore, it makes 
sense--not just Montana, but other States--to get a little more 
sanity in some of these programs. And, clearly, one is 
Livestock Disaster Assistance. I mean, it is just incredible to 
me how wrong-headed it has been that prior to 2008, about 30 
years, we have had this on again, off again, ad hoc disaster 
program. Farmers, ranchers do not know if Congress is going to 
act. Are they going to act? Are they not going to act? How much 
will they provide for? What years will it apply to? You have 
got to choose. It is just nuts.
    In my State, Madam Chairwoman, as we discussed, a lot of 
them are very inefficient. Sometimes, the farmer or rancher 
gets the payment when he or she should not just because the 
county got it, or vice-versa. It is just very inefficient.
    In fact, in the 30 years preceding the 2008 farm bill, 
about $60 billion was paid in disaster assistance. That 
obviously comes out to about $2 billion a year. In the four 
years from 2008 to 2011, I think about $8 billion. Excuse me. 
Four-point-six billion was spent. So, roughly, we are two times 
more efficient under the permanent program than we were under 
the ad hoc program, basically. So it is cost effective, 
permanent Livestock Disaster Assistance, and that is basically 
why, in 2008, I authored the provision to make it permanent. 
Regrettably, we did not have money to keep it going over the 
ten-year period, but it just goes to the point of permanence, 
so farmers and ranchers can count it and know that it is there.
    Madam Chairwoman, I would say, when I am home, a lot of 
farmers and ranchers come up to me and say, boy, that estate 
tax provision you put in, that is great. First of all, the 
numbers are good. Second, it is permanent. It is not on again, 
off again. It is not a one-year program. It is not five. It is 
not ten. It is permanent. It just makes it easier for people 
that farm and ranch to conduct their operations when they can't 
control the weather. You can't control price. You can't control 
cost. At least we can make things a little more stable for 
people.
    So I wonder if, Leon, you can just give us a sense of just 
all the problems you have been going through--you already did 
in your opening statement--because we do not have a program 
now. We did. It expired at the end of 2011. But currently, all 
these things you have to go through. You mentioned the FSA 
offices. You mentioned the 30-day wait and all that, just very 
good points that we have to address. But could you just kind of 
compare what life was like before 2008 compared with what life 
has been since and now afterwards when we do not have it? Just 
add some flavor, because this is your chance. Just tell it like 
it is.
    Mr. LaSalle. Great.
    Senator Baucus. Do not pull any punches. Let us know.
    [Laughter.]
    Mr. LaSalle. Okay. Yes. Well, I mean, I think you kind of 
alluded to it there. Before 2008, we were always at--we were at 
the mercy of Congress to enact legislation so we had a program, 
and a lot of times, you know, that might be six months, a year, 
two years down the road from when the actual disaster occurred 
and we were still bleeding at those times, so to say, and we 
were looking for some relief. Unfortunately, you know, some 
people did not get that and it set their operations back----
    Senator Baucus. You might explain, too, we have had floods, 
we have had droughts, we have had it all.
    Mr. LaSalle. We have had it all, yes, and actually, yes. 
What I alluded to here, we actually had the blizzard of 2010-
2011 where we lost numerous heads of livestock. Well, following 
that, the following spring, then, we had unprecedented 100-year 
rainfall events that actually completely changed the landscape 
of our ranch and neighboring ranches. So we went from one 
extreme to the other. And then last year, we were at the tail 
end of this nationwide drought, but we were starting to feel it 
in North Central Montana, also.
    But without permanency, we just do not have anything to 
really go to the bank with, so to speak, because bankers, they 
love it, too. They like to know that, yes, we have insurance on 
these or we have some way of knowing that when I go down there 
and ask for an operating loan of X-amount, that I can somehow 
back it up.
    There again, these droughts, a lot of times in the old 
program, we had a county-wide--we may have had a county-wide 
designation or contiguous counties, and there were cases when 
maybe people who did not really have a drought were able to 
participate and get these payments. Like you said, Senator 
Baucus, you were paying out maybe more to people who did not 
really necessarily fall into the same category. And we have--
our Montana Stockgrowers' policy, we have actually addressed 
that in a resolution, that we would like to see some changes 
made to how droughts are designated, also.
    Senator Baucus. Yes. Thanks for what you do. I mean, you 
speak well for an awful lot of people and we deeply appreciate 
it.
    Mr. LaSalle. Thank you.
    Chairwoman Stabenow. Well, thank you very much to each of 
you. And we have committed, and I will emphasize again, we did 
pass permanent Livestock Disaster Assistance as part of our 
farm bill, as Senator Baucus certainly was the leader in making 
sure that happened, and we are committed to having the right 
kind of farm bill again as we move forward.
    Let me just say, in conclusion, that we have heard from 
economic and weather experts about not only the drought of 2012 
that rivaled the Dust Bowl era, but unfortunately, it appears 
that we can expect conditions that could be even worse this 
year. So that is something that certainly is very sobering 
today. But we have also heard from each of you, from people on 
the front lines, farmers and ranchers who suffered through the 
weather disasters and are counting on us to put in place risk 
management tools going forward that will help you be able to be 
successful, whether that is strong crop insurance for every 
crop that is interested in crop insurance or whether it is 
Livestock Disaster Assistance or the permanency of a five-year 
farm bill. It is so important that we get that done. We are 
committed to doing that.
    I want to thank each of you for coming, particularly people 
who traveled a long way today to be with us, and for the 
committee, any additional questions for the record should be 
submitted to the Committee Clerk five business days from today. 
That is 5:00 p.m. on Friday the 21st.
    With that, the meeting is adjourned.
    [Whereupon, at 11:49 a.m., the committee was adjourned.]
      
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                            A P P E N D I X

                           FEBRUARY 14, 2013



      
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                   DOCUMENTS SUBMITTED FOR THE RECORD

                           FEBRUARY 14, 2013



      
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                         QUESTIONS AND ANSWERS

                           FEBRUARY 14, 2013




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