[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






 
    HEARINGS TO REVIEW USDA ORGANIZATION AND PROGRAM ADMINISTRATION

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

                                HEARINGS

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                         SEPTEMBER 15, 16, 2015

                               __________

                           Serial No. 114-26


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

RANDY NEUGEBAUER, Texas,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania         JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio                      SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee          ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York      RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan               SEAN PATRICK MALONEY, New York
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California             PETE AGUILAR, California
RODNEY DAVIS, Illinois               STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida                 ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana             GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia               BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi

                                 ______

                    Scott C. Graves, Staff Director

                Robert L. Larew, Minority Staff Director

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                             C O N T E N T S

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                                                                   Page

                      Tuesday, September 15, 2015

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     2
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     3

                               Witnesses

Taylor, Alexis, Deputy Under Secretary, Farm and Foreign 
  Agricultural Services; accompanied by Val Dolcini, J.D., 
  Administrator, Farm Service Agency; Philip C. Karsting, 
  Administrator, Foreign Agricultural Service; and Brandon 
  Willis, Administrator, Risk Management Agency, U.S. Department 
  of Agriculture, Washington, D.C................................     4
    Prepared statement...........................................     6
    Submitted questions:
        Taylor, Alexis...........................................    87
        Karsting, Philip C.......................................    87
        Willis, Brandon..........................................    90
Bonnie, Hon. Robert, Under Secretary, Natural Resources and 
  Environment, U.S. Department of Agriculture, Washington, D.C.; 
  accompanied by Jason Weller, Chief, Natural Resources 
  Conservation Service, USDA; and Mary Wagner, Associate Chief, 
  U.S. Forest Service, USDA......................................    37
    Prepared statement...........................................    39
Woteki, Ph.D., Hon. Catherine, Under Secretary, Research, 
  Education, and Economics, U.S. Department of Agriculture, 
  Washington, D.C.; accompanied by Chavonda Jacobs-Young, Ph.D., 
  Administrator, Agricultural Research Service, USDA; Sonny 
  Ramaswamy, Ph.D., Director, National Institute of Food and 
  Agriculture, USDA; Mary Bohman, Ph.D., Administrator, Economic 
  Research Service, USDA; and Renee Picanso, Associate 
  Administrator, National Agricultural Statistics Service, USDA..    65
    Prepared statement...........................................    67
    Submitted questions:
        Ramaswamy, Ph.D., Sonny..................................    91
        Picanso, Renee...........................................    91

                     Wednesday, September 16, 2015

Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................    93
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................   106

                               Witnesses

Mensah, Hon. Lisa, Under Secretary, Rural Development, U.S. 
  Department of Agriculture, Washington, D.C.; accompanied by 
  Brandon McBride, Administrator, Rural Utilities Service, USDA; 
  Tony Hernandez, Administrator, Rural Housing Service, USDA; and 
  Samuel H. Rikkers, Acting Administrator, Rural Business--
  Cooperative Service, USDA......................................    94
    Prepared statement...........................................    96
    Submitted question...........................................   195
Avalos, Hon. Edward M., Under Secretary, Marketing and Regulatory 
  Programs, U.S. Department of Agriculture, Washington, D.C.*; 
  accompanied by Anne L. Alonzo, J.D., Administrator, 
  Agricultural Marketing Service, USDA; Kevin Shea, 
  Administrator, Animal and Plant Health Inspection Service, 
  USDA; and Larry Mitchell, Administrator, Grain Inspection 
  Packers and Stockyards Administration, USDA....................   133
    Prepared statement...........................................   136
    Submitted questions:
        Avalos, Hon. Edward M....................................   195
        Alonzo, J.D., Anne L.....................................   195
        Shea, Kevin..............................................   196
Almanza, Alfred V., Deputy Under Secretary, Food Safety, U.S. 
  Department of Agriculture, Washington, D.C.....................   142
    Prepared statement...........................................   144
    Submitted question...........................................   197
Concannon, Hon. Kevin, Under Secretary, Food, Nutrition, and 
  Consumer Services, U.S. Department of Agriculture, Washington, 
  D.C.; accompanied by Audrey Rowe, Administrator, Food and 
  Nutrition Service, USDA; and Angela Tagtow, M.S., R.D., L.D., 
  Executive Director, Center for Nutrition Policy and Promotion, 
  USDA...........................................................   168
    Prepared statement...........................................   170
      
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    * Editor's note: the Administrators listed as accompanying Mr. 
Avalos are also accompanying Mr. Almanza. To avoid duplication they are 
not printed here.


     HEARING TO REVIEW USDA ORGANIZATION AND PROGRAM ADMINISTRATION

                                (PART 1)

                              ----------                              


                      TUESDAY, SEPTEMBER 15, 2015

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 1:30 p.m., in Room 
1300, Longworth House Office Building, Hon. K. Michael Conaway 
[Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Thompson, Gibbs, 
Austin Scott of Georgia, Crawford, Gibson, Benishek, Yoho, 
Allen, Rouzer, Abraham, Moolenaar, Peterson, McGovern, 
Plaskett, Adams, and Ashford.
    Staff present: Ashley Callen, Bart Fischer, Caleb 
Crosswhite, Callie McAdams, Chris Heggem, Haley Graves, Jackie 
Barber, Jessica Carter, John Goldberg, Josh Maxwell, Mary 
Nowak, Mollie Wilken, Paul Balzano, Patricia Straughn, Scott C. 
Graves, Skylar Sowder, Faisal Siddiqui, John Konya, Andy Baker, 
Anne Simmons, Evan Jurkovich, Keith Jones, Liz Friedlander, 
Mary Knigge, Mike Stranz, Nicole Scott, and Carly Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Part 1 of the hearing of the Committee on 
Agriculture, to review USDA organization and program 
administration, will come to order.
    I have asked Randy Neugebauer to open us with a quick 
prayer. Ready?
    Mr. Neugebauer. Father, we just come to You to praise You 
and thank You for the privilege You have given us to live in 
this great country. Father, help us to be good stewards of this 
country. You have blessed it in the past, and we pray that You 
continue to bless it in the future.
    I will just pray now that You would be with us as we have 
these discussions about how to make a better life for all of 
our country and, in many cases, things that impact the world. 
We ask this and all these things in the precious name of Your 
Son, Jesus. Amen.
    The Chairman. Thank you, Randy.
    The Committee will come to order. I appreciate our first 
panel of witnesses being here this morning. Since the Committee 
organized in January 21 of this year, we have had 24 meetings. 
We are keeping the commitment to hold a top-to-bottom review of 
a full range of issues and policies within our jurisdiction. We 
have held three executive briefings on trade, conducted 33 
hearings, and stemming from what we have learned in those 
hearings, we have had eight business meetings with the purpose 
of advancing legislation.
    I am very pleased with the Committee and the full House 
that we have successfully discharged all the legislation that 
required action, including addressing every program in our 
jurisdiction with an expired authorization.
    I am very proud of the work that each Member of the 
Committee has done to make this happen. I am particularly 
pleased that we work together in such a strong bipartisan 
manner. Today and tomorrow, we will have before us most of the 
Under Secretaries of the Department of Agriculture. Each of 
these witnesses are responsible for an important mission within 
USDA. And accompanying our witnesses are Administrators, who 
actually do the hard work--the deputies get all the credit--of 
managing these agencies and programs within the larger mission 
areas.
    These folks make up a network of nearly 100,000 USDA 
employees who carry out the laws that this Committee works to 
enact. We welcome each of you here today. I know that preparing 
for these hearings was time-consuming for our witnesses who 
already have plenty on their plate, so we are pleased that you 
would commit time and effort to bring your knowledge to us to 
help us, and your efforts and attendance will not go unnoticed. 
We appreciate the work you do.
    The primary purpose behind these hearings is to connect the 
Members of the Committee with the full bench at USDA. As our 
witnesses are aware, each Member of this Committee serves on a 
number of Subcommittees that cover issues of special interest 
to that Member. These interests, of course, line up with the 
mission areas and agencies administered by our witnesses.
    In short, this is a good opportunity for constructive 
dialogue between the Members of the Committee and the 
Department. It is an opportunity for our Members to gain an 
even stronger understanding of the policies and issues they 
focus on by getting under the hood, so to speak, to see how 
this smooth running machine operates.
    It is also an opportunity for our witnesses to gain a 
better understanding of our responsibilities and the issues and 
policies that we care about. In a sense, it is about team 
building. Whatever our political stripes may be, we have shared 
responsibilities.
    And insofar as possible, we ought to carry out these 
possibilities cooperatively and amicably. I think this goal is 
achieved more effectively when the members of each team know 
each other and respect each other. So while our work is always 
ongoing, I hope these 2 days together will allow us to learn 
how we might work better together more closely and more 
cooperatively for the good of the order.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    This hearing will come to order.
    Since this Committee formally organized on January 21 of this year, 
the Committee has met 44 times.
    In keeping with my commitment to hold a top-to-bottom review of a 
full range of issues and policies within our jurisdiction, we have held 
three executive briefings on trade and conducted 33 hearings. And, 
stemming from what we have learned in these hearings, we have held 
eight business meetings with the purpose of advancing legislation. I am 
very pleased that this Committee and the full House has faithfully 
discharged all of the legislation that required action, including 
addressing every program in our jurisdiction with an expired 
authorization.
    I am very proud of the work that each Member of this Committee has 
done to make this happen. I am particularly pleased that we have worked 
together in such a strong, bipartisan manner.
    Today and tomorrow, we have before us most of the Under Secretaries 
of the Department of Agriculture. Each of these witnesses is 
responsible for an important mission area within USDA. Accompanying our 
witnesses are Administrators who manage agencies and programs within 
these larger mission areas.
    These folks make up the network of nearly 100,000 USDA employees 
who carry out the laws that this Committee works to enact.
    We welcome each of you here today. I know that preparing for these 
hearings can be time consuming for witnesses who already have plenty on 
their plate. So, please know that your commitment of time and knowledge 
does not go unnoticed or unappreciated. We do appreciate you and the 
work that you do.
    The primary purpose behind these hearings is to connect the Members 
of this Committee with the full bench at USDA.
    As our witnesses are aware, each Member of this Committee serves on 
a number of Subcommittees that cover issues of special interest to that 
Member. These interests, of course, line up with the mission areas and 
agencies administered by our witnesses.
    In short, this is a good opportunity for constructive dialogue 
between Members of this Committee and the Department. It is an 
opportunity for our Members to gain an even stronger understanding of 
the policies and issues they focus on by getting under the hood to see 
how all, or at least more, of the parts work. It is also an opportunity 
for our witnesses to gain a better understanding of our 
responsibilities and the issues and policies we care about.
    In a sense, it is also about team-building. Whatever our political 
stripes may be, we have shared responsibilities. And, insofar as it is 
possible, we ought to carry out these responsibilities cooperatively 
and amicably. I think this goal is achieved more effectively when the 
members of a team come to know and respect one another.
    So, while our work is always ongoing, I hope that these 2 days 
together allow each of us to learn how we might work together more 
closely and more cooperatively for the good of the order.
    With that, I recognize my friend, the Ranking Member, for any 
remarks he may wish to offer.

    The Chairman. I recognize my good friend, the Ranking 
Member, for any remarks he might have.

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

    Mr. Peterson. Thank you, Mr. Chairman.
    And I thank the witnesses for being here.
    USDA's work covers a lot of ground, and given the size and 
scope of the Department, it is good that we understand the full 
picture of the work being done in the various mission areas.
    I look forward to hearing from our witnesses over the next 
2 days. The 2014 Farm Bill created some new programs for the 
Department to implement and administer, and I will be 
interested in the status update on this process. I am also 
hoping our witnesses can provide some guidance on the impact 
the budget sequester will have on farm program payments and 
what is being done to address other challenges in agriculture 
such as the threat of the recurrence of avian flu and the 
devastation caused by this summer's wildfires.
    So we have a lot of testimony, so let's get to it, and 
thank you, again, Mr. Chairman.
    I yield back.
    The Chairman. Thanks, Collin.
    The chair would request that other Members submit their 
opening statements for the record so our witnesses may begin 
their testimony and to ensure there is ample time for 
questions.
    The chair would like to remind Members that they will be 
recognized for questioning in order of seniority for the 
Members who were here at the start of today's hearing. After 
that, Members will be recognized in the order of arrival, and I 
appreciate Members' understanding.
    The witnesses are reminded to limit their oral 
presentations to 5 minutes. All written statements will be 
included in the record. And over the course of today's hearing, 
following the testimony of the Under Secretaries, the other 
Administrators will be here to answer questions.
    And, with that, I would like to welcome our first panel. We 
have Ms. Alexis Taylor, Deputy Under Secretary for Farm and 
Foreign Agricultural Services, USDA. Ms. Taylor is accompanied 
by Val Dolcini, Administrator of the Farm Service Agency; Phil 
Karsting, the Administrator of the Foreign Agricultural 
Service; and Mr. Brandon Willis, Administrator, Risk Management 
Agency.
    So, gentlemen, ladies, thank you for being here.
    Ms. Taylor, you may begin at your pleasure.

 STATEMENT OF ALEXIS TAYLOR, DEPUTY UNDER SECRETARY, FARM AND 
              FOREIGN AGRICULTURAL SERVICES, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
 ACCOMPANIED BY VAL DOLCINI, J.D., ADMINISTRATOR, FARM SERVICE 
               AGENCY, USDA; PHILIP C. KARSTING,
ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE, USDA; AND BRANDON 
                  WILLIS, ADMINISTRATOR, RISK
                    MANAGEMENT AGENCY, USDA

    Ms. Taylor. Chairman Conaway, Ranking Member Peterson, and 
Members of the Committee, I am pleased to be here today to 
provide information on the programs and accomplishments of the 
Farm and Foreign Agricultural Services at the U.S. Department 
of Agriculture.
    First, let me extend Under Secretary Scuse's apologies for 
not being able to join you here today and our appreciation for 
allowing me to testify in his place. Having started my career 
over a decade ago working for a Subcommittee Chairman on this 
very Committee, all I can say is it feels good to come home.
    FFAS helps keep American farmers and ranchers in business 
as they face uncertainties from weather and markets. We deliver 
commodity, credit, conservation, disaster, emergency, and 
export assistance programs that improve the stability and 
strength of the rural economy.
    Accompanying me today, as the Chairman said, is 
Administrator Val Dolcini of the Farm Service Agency; 
Administrator Brandon Willis of the Risk Management Agency; and 
Administrator Phil Karsting of the Foreign Agricultural 
Service.
    Mr. Chairman, over the past 2 years, much of our work has 
been focused on implementing the 2014 Farm Bill, work we are 
truly proud of at the Department. The farm bill introduced two 
new farm safety net programs for program crop producers through 
FSA: The Agricultural Risk Coverage Program, or ARC; the Price 
Loss Coverage Program, or PLC. As a result of our aggressive 
producer outreach efforts, over 1.7 million producers elected 
to participate in these new programs.
    FSA implemented the new Margin Protection Program for dairy 
last fall, and over 23,000 producers, over \1/2\ of all the 
U.S. dairy operations, enrolled for calendar year 2015 
coverage. FSA provides a broad range of additional services for 
American agriculture from disaster assistance to marketing 
assistance loans to conservation programs. FSA also invests in 
opportunities in rural communities, providing a variety of loan 
programs to farm families who are temporarily unable to obtain 
the credit they need.
    RMA has also been very successful in implementing the farm 
bill's crop insurance provisions. RMA released the actual 
production history yield exclusion option for 11 crops for the 
2015 crop year, and expansion has already been announced for 
the 2016 crop year.
    APH yield exclusion as well as the Supplemental Coverage 
Option are now available for all major crops and many fruits 
and nuts. In addition, the Stacked Income Protection Plan for 
producers of upland cotton, or STAX, is available for over 99 
percent of cotton acreage. The beginning farmers and ranchers 
incentives at FS--or excuse me, at RMA authorized in the farm 
bill have already been utilized by over 13,500 beginning 
farmers and ranchers, saving them over $13.5 million in 
premiums and administrator fees. In addition, the farm bill 
instructed RMA to develop a Whole Farm Revenue Protection plan, 
which was available for the 2015 insurance year, and it will be 
available for all counties in the U.S. for the 2016 insurance 
year.
    This is a first for the crop insurance program. The efforts 
of the FAS, combined with our market promotion programs and in 
collaboration with the agricultural community, have contributed 
to the strongest 6 years in history for U.S. agricultural 
exports. For many American products, foreign markets represent 
more than \1/2\ of total sales. These U.S. agricultural 
products support about one million jobs here at home.
    Over numerous farm bills, Congress has refined our 
agricultural market development programs, the largest of which 
is the Market Access Program, which benefits a diverse range of 
U.S. commodities. Also, the Market Development Program, like 
MAP, involves work with our agricultural cooperator partners. 
These programs are found to be highly effective. An independent 
study found that they provide $35 in economic benefits for 
every $1 spent by the government or industry.
    FAS leads USDA's efforts to help developing countries 
increase food security, improve their agricultural systems, and 
build their trade capacity. For example, the McGovern-Dole 
Program provides support to child nutrition projects. We are 
quite proud that since the program was established in 2002, it 
has benefited more than 30 million children in 38 countries.
    FAS trade negotiators are advocating on behalf of U.S. 
agriculture and the Trans-Pacific Partnership, or TPP, and the 
Transatlantic Trade and Investment Partnership, or T-TIP. FAS 
experts are a key part of our negotiating team.
    TPP and T-TIP are opportunities not only to address market 
access commitments but also non-tariff barriers that impede our 
agricultural exports. Once these agreements are in place, the 
United States will enjoy improved market access and increased 
competitiveness to \2/3\ of the global economy. I am proud to 
have the opportunity to work with such outstanding individuals 
in the FFAS mission area every day, individuals who I have seen 
work tirelessly over the past 2 years for the betterment of 
farmers and ranchers in rural communities.
    Thank you for the opportunity to be here today, and we look 
forward to any questions you may have.
    [The prepared statement of Ms. Taylor follows:]

 Prepared Statement of Alexis Taylor, Deputy Under Secretary, Farm and 
     Foreign Agricultural Services, U.S. Department of Agriculture,
                            Washington, D.C.
    Mr. Chairman and Members of the Committee, I appreciate this 
opportunity to provide information on the programs and accomplishments 
of the Farm and Foreign Agricultural Services (FFAS) mission area of 
the U.S. Department of Agriculture. The FFAS mission area is composed 
of the Farm Service Agency, the Risk Management Agency, and the Foreign 
Agricultural Service. Much of our work in the past 2 years has focused 
on implementing the Agricultural Act of 2014 (the 2014 Farm Bill) in 
record time, providing safety net assistance to producers in every 
state within just a few months of bill passage.
The Farm Service Agency (FSA)
    FSA programs encompass five of the twelve Titles of the 2014 Farm 
Bill, including Title I--Commodities, Title II--Conservation, Title V--
Credit, Title VIII--Energy, and Title XII--Miscellaneous. The 2014 Farm 
Bill made significant changes to FSA's commodity safety net programs, 
as well as many other key agency programs.
Commodity Programs
    The 2008 Farm Bill's Direct and Counter-Cyclical Program (DCP) and 
the Average Crop Revenue Election (ACRE) program were repealed and 
replaced by two new programs: Agricultural Risk Coverage (ARC) and 
Price Loss Coverage (PLC). FSA has completed the ARC/PLC ``election'' 
process, 1.7 million producers made an election--exceeding the number 
of producers who participated in DCP/ACRE. The ``election'' period was 
open to producers from November 17, 2014, through April 7, 2015, when 
they had the opportunity to make a one-time election of ARC or PLC for 
their 2014-2018 crops. During this period, base acres could be re-
allocated (although not increased) and program payment yields could be 
updated. We are currently in the ``enrollment'' phase, which ends on 
September 30, 2015, where producers are signing contracts associated 
with their 2014 and 2015 crops.
    The first ARC/PLC payments--for the 2014 crop year--will be made in 
October 2015, shortly after marketing year average price data starts 
becoming available, and will continue through the fall as price data 
for additional commodities is published. Given the significant drop in 
commodity prices since passage of the farm bill, our current projection 
is that about $6.5 billion in 2014 crop payments will be made, largely 
to corn producers who signed up for ARC.
    Implementing the 2014 Farm Bill in record time required an ``all 
hands on deck'' approach to reach producers, and close collaboration 
between our university and extension partners and, of course, the hard 
work of our dedicated FSA staff. We worked closely with our university 
partners at Texas A&M, the Food and Agricultural Policy Research 
Institute, the University of Illinois, and others, who developed on-
line web-based decision tools so that farmers could input their own 
farm data and explore various scenarios associated with adopting ARC or 
PLC, as well as the intersection of these programs with our crop 
insurance offerings.
    Further, FSA worked with extension specialists in virtually every 
state on an extensive ARC/PLC education and outreach effort. Over 
400,000 attendees participated in approximately 5,000 local ARC/PLC 
events that provided producers with valuable information on how to best 
manage risk on their farms. The ARC/PLC web tools were demonstrated at 
over 2,500 of these events and the tool developers hosted help desk 
``hotlines'' for producers who needed additional help. In addition to 
collaboration with our university and extension partners, we worked 
closely with our media partners who produced over 1,000 news stories on 
ARC/PLC.
    Under the 2014 Farm Bill, upland cotton is no longer a covered 
commodity and is not eligible to participate in ARC or PLC, but rather, 
is eligible for the new Stacked Income Protection Plan (STAX) offered 
by the Risk Management Agency. For counties where STAX was unavailable, 
upland cotton was eligible for the Cotton Transition Assistance 
Payments program (CTAP) for 2014 and 2015 crops. FSA paid about $540 
million to over 184,000 farms for 2014 CTAP payments; 2015 CTAP 
payments dropped off dramatically because STAX was available for over 
98 percent of cotton acres.
    FSA has implemented the new Margin Protection Program for Dairy 
(MPP-Dairy) and over 23,000 producers--over \1/2\ of all U.S. dairy 
operations--enrolled for calendar year 2015 coverage. We are now 
focused on 2016 calendar year enrollment, which closes on September 30, 
2015, and FSA has an intensive mailing effort underway, just like last 
year, to encourage as much participation as possible. The new MPP-Dairy 
offers dairy producers catastrophic coverage to participating producers 
when the national dairy production margin is less than $4 per 
hundredweight (cwt), at no cost to the producer after an annual $100 
administrative fee. Producers may also purchase higher coverage, for a 
premium, that provides payments when margins are between $4 and $8 per 
cwt. So far in 2015, producers who enrolled at the $8 coverage level 
received modest payments during three payment periods.
Disaster Assistance Programs
    Immediately after the 2014 Farm Bill passage, FSA focused on 
implementing the livestock and tree disaster assistance programs--
including the Livestock Forage Disaster Program (LFP); the Livestock 
Indemnity Program (LIP); the Emergency Assistance for Livestock, Honey 
Bees, and Farm-Raised Fish (ELAP); and the Tree Assistance Program 
(TAP). These programs, which had been expired for nearly 3 years, were 
resumed within 60 days following enactment of the 2014 Farm Bill. This 
assistance benefited a diverse array of producers who were hit hard by 
natural disasters, ranging from winter storms, to wildfire, to drought. 
So far, FSA has issued approximately 700,000 payments to producers 
since the spring of 2014, totaling over $5.6 billion. The LFP accounted 
for the bulk of these payments. Through its Livestock Forage Program, 
USDA projects it will provide at least $2 billion in assistance to 
livestock producers in Fiscal Year 2015.
    The Noninsured Crop Disaster Assistance Program (NAP) was expanded 
in the 2014 Farm Bill to include protection at higher coverage levels, 
similar to provisions offered under the Federal crop insurance program. 
NAP continues to offer coverage at the catastrophic level based on 50 
percent of expected production at 55 percent of the average market 
price for the crop. However, producers can now obtain additional 
coverage levels ranging from 50 to 65 percent of expected production, 
in five percent increments, at 100 percent of the average market price 
for the 2014-18 crops years. Beginning, limited resource, and other 
traditionally under-served farmers are now eligible for a waiver of the 
NAP service fee and a 50 percent reduction in premium for additional 
levels of coverage. The majority of 2015 NAP-eligible spring-seeded 
crops had an application closing date of March 15, 2015; additional 
crop application closing dates occur through the upcoming fall months 
as well.
    In addition to the ARC/PLC web tools noted earlier, the University 
of Illinois and their partners developed decision tools for both MPP-
Dairy and NAP. These tools help producers make decisions about the 
optimal level of coverage for their operations, and have been widely 
accessed by producers. Further, approximately 14,000 producers have 
participated in MPP-Dairy educational meetings and about 17,000 
producers have participated in NAP educational meetings.
Conservation Reserve Program
    The Conservation Reserve Program (CRP), one of USDA's largest 
conservation programs, allows USDA to contract with landowners so that 
environmentally sensitive land is not farmed or ranched, but instead 
used for conservation benefits. For 30 years, CRP has helped 
participants establish long-term, resource-conserving cover. In return, 
FSA provides participants with annual rental payments, incentive 
payments, and cost-share assistance. Contract duration is between 10 
and 15 years. CRP improves water quality, reduces soil erosion, and 
restores habitat for ducks, pheasants, turkey, quail, deer and other 
wildlife. In doing so, CRP spurs hunting, fishing, recreation, tourism, 
and other economic development across rural America.
    Currently, 24.2 million acres are enrolled in CRP contracts, 
including 18.1 million acres under general sign-up enrollment authority 
and 6.1 million acres under continuous sign-up enrollment authority. 
CRP general sign-up is a competitive process conducted on a periodic 
basis, while CRP continuous sign-up occurs on an on-going basis 
throughout the year and does not involve a discrete sign-up period and 
is non-competitive. CRP contracts on 1.8 million acres (combined 
general and continuous) are set to expire on September 30, 2015; 
program payments total approximately $1.8 billion annually.
    Earlier this year, the Secretary announced that the next CRP 
general signup offer period will begin on December 1, 2015, and that 
continuous sign-up for the new grassland component will begin on 
September 1, 2015. We will enroll sufficient CRP acreage to meet as 
closely as possible, but not exceed, the 24 million acre enrollment cap 
set in the 2014 Farm Bill, which is to be reached by Fiscal Year 2017. 
General sign-up program participants with contracts expiring September 
30, 2015, and less than 15 years in duration, have the option of a 1 
year extension. Those with continuous sign-up contracts are eligible to 
re-enroll in CRP.
    We are proud of the impact that CRP has had on the rural landscape. 
Since its inception, we estimate that CRP has prevented more than 8 
billion tons of soil from eroding and reduced nitrogen and phosphorous 
runoff by 95 percent and 85 percent, respectively, on enrolled lands. 
In addition, CRP has sequestered an estimated average of 50 million 
tons of greenhouse gases annually since 2008, which is equal to taking 
eight million cars off the road each year.
Farm Loan Programs
    Most farm loan programs are permanently authorized through the 
Consolidated Farm and Rural Development Act. However, the 2014 Farm 
Bill made several program changes, such as providing more favorable 
interest rates for joint financing arrangements, providing a larger 
percent guarantee on guaranteed conservation loans, increasing the loan 
limits for the down payment loan program, making youth loans available 
in urban areas, and eliminating term limits for guaranteed operating 
loans. All of these changes were implemented in the spring of 2014.
    Since then, FSA has implemented additional loan program changes 
authorized in the 2014 Farm Bill, such as increasing the maximum amount 
for direct farm ownership loans from $225,000 to $300,000, and 
eliminating the rural residency requirement for youth loans. FSA raised 
the borrowing limit of its popular microloan program from $35,000 to 
$50,000; updated the ``farming experience'' loan eligibility 
requirement to include military leadership positions, advanced 
agricultural education, or other non-farm management experience; and 
FSA is in the process of implementing a relending program to help 
Native American producers purchase fractionated interests of land.
    Farm loan programs through FSA constitute the Department's largest 
investment in beginning farmers. Since 2009, FSA has provided over $13 
billion in direct and guaranteed loans to beginning farmers. Beginning 
farmer loans now comprise over 55 percent of the Agency's direct loan 
portfolio, and the portfolio continues to grow. At the same time, loans 
to beginning farmers continue to perform well, with delinquencies below 
the portfolio average.
    FSA's work on microloans--of which 70 percent has gone to beginning 
farmers--was initiated prior to farm bill passage and has been a 
resounding success, due in part to the streamlined paperwork required 
of applicants. Microloan financing focuses on the farm operating needs 
of a wide variety of operations, most notably small, beginning, niche, 
and non-traditional farm operations, such as farms participating in 
direct marketing and farmers' markets. The microloan debt limit is 
$50,000 per borrower. Demand is up 58 percent over last year, and soon 
we will make our 15,000th microloan, just 2\1/2\ years after program 
initiation. Fifty-five percent of microloans go to first-time FSA 
customers.
    FSA also provides low-interest financing through our Farm Storage 
Facility Loan program, which helps producers build or upgrade storage 
and handling facilities, and it was announced in mid-August that we 
will now include dairy, flowers and meats as eligible commodities. 
Since 2000, more than 35,000 loans have been approved totaling $2 
billion in rural investments. On average, about 1,600 new loans are 
made each year.
Energy Programs
    Supporting the biobased economy is also a focus of FSA. U.S. 
farmers are producing record amounts of feedstocks for renewable fuels, 
although lower commodity prices have created uncertain times. FSA 
announced this June the availability of up to $100 million in grants 
under the Biofuels Infrastructure Partnership to support the renewable 
fuel infrastructure and build the market for ethanol. USDA announced 
finalists for awards on September 10, 2015; additional details will be 
announced later in the month. Interest in this program was very high 
and funding requests well exceeded the $100 million limit, with only a 
1 month application period.
    In addition, FSA announced that enrollment began for farmers and 
forest owners seeking assistance for growing biomass for energy or 
biobased products within designated projects areas under the Biomass 
Crop Assistance Program (BCAP), which was reauthorized by the 2014 Farm 
Bill. Biomass energy facilities or groups of producers may submit 
proposals for new BCAP project areas through November 6, 2015. In 
addition, FSA will allocate $7.7 million to four existing BCAP project 
areas in New York, North Carolina, Ohio/Pennsylvania and Kansas/
Oklahoma for biomass establishment and maintenance payments through 
Sept. 25, 2015. Overall, BCAP has provided incentives for producers 
across more than 48,000 acres in 71 counties and 11 different project 
areas since the program was first authorized by the 2008 Farm Bill.
The Risk Management Agency (RMA)
    RMA provides crop insurance to America's farmers and ranchers 
through a partnership with private insurance companies. In the year and 
a half since the passage of the 2014 Farm Bill, RMA has implemented 
almost all of Title XI (crop insurance provisions). From implementing 
the Actual Production History (APH) Yield Exclusion to offering a Whole 
Farm Revenue Protection insurance product that will be available in 
every county in the United States, I am proud of the accomplishments 
RMA has achieved over the past 18 months. While there is still work to 
be completed, farmers and ranchers have begun to take advantage of the 
new crop insurance options.
The Supplemental Coverage Option and STAX
    The Supplemental Coverage Option (SCO) and Stacked Income 
Protection Plan for Upland Cotton (STAX) were made available for the 
2015 crop year. SCO was available for corn, cotton, cottonseed, grain 
sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat 
in selected counties for the 2015 crop year--representing over 80 
percent of the program acres covered in the Federal Crop Insurance 
Program. RMA has continued expansion of SCO for the 2016 crop year with 
expansion to many fruit and nuts. RMA continues to research additional 
crops for suitability under SCO and will make additional announcements 
as the data becomes available.
    STAX is currently available in every county that had an existing 
crop insurance policy for cotton, representing over 99 percent of 
cotton acres in the United States. STAX is expected to be available for 
the remaining ``traditional'' cotton producing areas for the 2016 crop 
year.
Additional New 2014 and 2015 Offerings
    RMA was able to develop and release the APH Yield Exclusion option 
for 11 crops for the 2015 crop year. As a result, nearly \3/4\ of all 
program acres and liability in the Federal Crop Insurance Program was 
covered under this new option for the 2015 crop year. RMA has already 
announced expansion of APH Yield Exclusion for the 2016 crop year for 
many crops, including winter wheat. RMA continues to research 
additional crops for suitability under APH Yield Exclusion and will 
make additional announcements as the data becomes available.
    A Peanut Revenue Policy was also made available for the 2015 crop 
year. This policy was approved by the Federal Crop Insurance 
Corporation Board of Directors less than a year after the 2014 Farm 
Bill became law. As a result, peanut farmers now have the ability to 
manage risk for both yield and revenue losses.
    The beginning farmers and ranchers incentives authorized in the 
2014 Farm Bill were made available to farmers and ranchers for fall 
planted wheat in 2014. To date, over 13,500 new and beginning farmers 
and ranchers have taken advantage of these incentives on almost 49,000 
policies. Beginning farmers and ranchers have saved over $14 million in 
premiums and administrative fees because of this provision.
    The 2014 Farm Bill required RMA to offer a plan of insurance to 
cover diversified farms. Prior to the passage of the 2014 Farm Bill, 
RMA had already begun development of the Whole Farm Revenue Protection 
(WFRP) pilot policy and the Federal Crop Insurance Corporation Board of 
Directors approved the policy shortly after the 2014 Farm Bill was 
enacted. As a result, WFRP was available for purchase for the 2015 crop 
year. This option has been generally well received when presented to 
specialty crop and organic growers around the country. After reviewing 
comments from growers, RMA intends to make additional improvements to 
WFRP for the 2016 crop year. In addition, WFRP will be available in 
every county in the United States--a first for any policy under the 
Federal crop insurance program.
    RMA is also making progress in offering organic price elections for 
all crops, as required by the 2014 Farm Bill. Since 2010, RMA has 
eliminated the organic surcharge, added price elections for over 42 
crops, and created the contract price addendum, which is available for 
62 crops.
    The 2014 Farm Bill linked the ability of a producer to receive a 
Federal crop insurance premium subsidy to USDA highly erodible land 
(HEL) and wetland conservation (WC) compliance. In an effort to ensure 
that producers continue to receive the Federal crop insurance premium 
subsidy, RMA worked with the Natural Resource Conservation Service 
(NRCS) and FSA to develop comprehensive guidelines for farmers to 
comply with USDA conservation requirements. The three agencies 
collaborated to provide information to the respective field offices and 
developed material for all three agencies to inform Federal crop 
insurance customers of the new requirements. Successful outreach 
efforts continued well into this summer, and 98 percent of producers 
participating in the Federal crop insurance program have certified or 
requested determinations to comply with HEL and WC requirements.

          Each one of the aforementioned 2014 Farm Bill items was 
        completed by RMA within the past 18 months.
The Foreign Agricultural Service (FAS)
    The Foreign Agricultural Service (FAS) is USDA's lead international 
agency, linking U.S. agriculture to the world to enhance export 
opportunities and global food security.
    The efforts of FAS employees, both in Washington and around the 
globe, combined with 2014 Farm Bill authorized market promotion 
programs, and collaboration with the U.S. agricultural community, have 
contributed to the strongest 6 years in history for U.S. agricultural 
trade. From Fiscal Years 2009 to 2014, U.S. agricultural exports 
totaled $771.7 billion. For many American products, foreign markets now 
represent more than \1/2\ of total sales. U.S. agricultural exports 
support about one million jobs here at home, a substantial part of the 
11.7 million jobs supported by all exports across our country. Credit 
for record exports belongs to America's hardworking farm and ranch 
families.
    FAS supports those producers through a network of agricultural 
economists, marketing experts, negotiators, and trade specialists in 
Washington, D.C. and 95 international offices covering 167 countries. 
We are proud that our role in opening and maintaining markets has 
resulted in billions of dollars of additional U.S. agricultural 
exports. FAS also contributes to the Department's goal of enhancing 
global food security. The food assistance programs, technical 
assistance, and capacity building activities administered by FAS have 
provided assistance that has helped millions of people worldwide.
    Trade policy, trade promotion, and capacity building are the core 
functions at the heart of the programs and services that FAS provides 
to U.S. agriculture.
Trade Policy
    FAS expands and maintains access to foreign markets for U.S. 
agricultural products by removing trade barriers and enforcing U.S. 
rights under existing trade agreements. Our personnel have been 
instrumental in resolving numerous sanitary, phytosanitary, and 
technical barriers to trade. FAS works with foreign governments, 
international organizations, and the Office of the U.S. Trade 
Representative (USTR) to establish international standards and rules to 
improve accountability and predictability for agricultural trade.
    FAS trade negotiators are currently advocating on behalf of U.S. 
agriculture in two major negotiations: the Trans-Pacific Partnership 
(TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). 
FAS experts are an integral part of the negotiating team and USDA's 
economic analysis supports the negotiating strategy on agriculture. The 
TPP and T-TIP are opportunities to address not only market access 
commitments, but also non-tariff Sanitary and Phytosanitary (SPS) and 
Technical Barriers to Trade (TBT) issues that impede our agricultural 
exports. Once these agreements are in place, the United States will 
enjoy improved access to markets representing \2/3\ of the global 
economy.
Trade Promotion
    Over numerous farm bills, Congress has authorized and refined an 
effective combination of agricultural market development and export 
credit guarantee programs. These programs that are designed to develop 
markets, facilitate financing of overseas sales, and resolve market 
access barriers dovetail with the FAS mission. We must open, expand, 
and maintain access to foreign markets, where 95 percent of the world's 
consumers live. FAS partners with 75 cooperator groups representing a 
cross-section of the U.S. food and agricultural industry and manages a 
toolkit of market development programs to help U.S. exporters develop 
and maintain markets for hundreds of products.
    The largest market development program operated by FAS is the 
Market Access Program (MAP). MAP is a cost-share program that uses 
funds from USDA's Commodity Credit Corporation (CCC) to aid in the 
creation, expansion, and maintenance of foreign markets for hundreds of 
U.S. agricultural products. Through MAP, FAS partners with nonprofit 
U.S. agricultural trade organizations, U.S. agricultural cooperatives, 
nonprofit State Regional Trade Groups, and small-sized U.S. commercial 
entities to share the costs of overseas marketing and promotional 
activities, such as consumer promotions, market research, and trade 
show participation. A range of U.S. commodities from Texas beef and 
cotton, to Minnesota pork and soybeans, to California grapes and tree 
nuts, and apples and pears from the Pacific Northwest, all benefit from 
MAP. The 2014 Farm Bill makes available $200 million of CCC funds 
annually for MAP; that amount is matched with industry contributions.
    The Foreign Market Development Program (FMD) is another market 
development program reauthorized by Congress in the 2014 Farm Bill. FMD 
is a cost-share program that aids in the creation, expansion, and 
maintenance of long-term export markets for U.S. agricultural products. 
The 2014 Farm Bill makes available $34.5 million of CCC funds annually 
for FMD. The program fosters a market development partnership between 
USDA and U.S. agricultural producers and processors who are represented 
by nonprofit commodity or trade associations known as Cooperators. 
Under this partnership, USDA and each Cooperator pool their technical 
and financial resources to conduct overseas market development 
activities. FMD-funded projects generally address long-term 
opportunities to reduce foreign import constraints or expand export 
growth opportunities. For example, FMD supported projects might include 
efforts to reduce infrastructural or historical market impediments, 
improve processing capabilities, modify codes and standards, or 
identify new markets or new uses for the agricultural commodity or 
product. FAS has allocated funds to 22 trade organizations that 
represent U.S. agricultural producers in FY 2015. The organizations on 
average contribute nearly triple the amount they receive in Federal 
resources.
    Working with our agricultural cooperator partners, the programs 
have been shown to be highly effective. An independent study released 
in 2010 found that the programs provide $35 in economic benefits for 
every dollar spent by government and industry on market development.
Building Capacity and Food Security
    FAS leads USDA's efforts to help developing countries increase food 
security, improve their agricultural systems, and build their trade 
capacity. FAS's non-emergency food aid programs help meet recipients' 
nutritional needs and also support agricultural development and 
education.
    The McGovern-Dole International Food for Education and Child 
Nutrition Program (McGovern-Dole) provides agricultural commodities and 
technical assistance for school feeding and maternal and child 
nutrition projects in low-income, food-deficit countries committed to 
universal education. In August, USDA announced funding for seven school 
feeding projects to be supported by the McGovern-Dole in Fiscal Year 
2015 that will benefit more than 2.5 million children in Africa and 
Central America. For FY 2015, FAS is donating U.S.-produced corn, corn-
soy blend, lentils, green and yellow split peas, fortified rice, 
vegetable oil and pinto beans. The seven new McGovern-Dole projects are 
in addition to 28 projects ongoing in 21 countries. For FY 2016, USDA 
is requesting McGovern-Dole funding be maintained at $191.6 million. 
Since the program was established in 2002, it has benefited more than 
30 million children in 38 countries.
    Sustainability is an important aspect of McGovern-Dole. FAS and its 
partner organizations work to ensure that the communities served by the 
program can ultimately continue the sponsored activities on their own 
or with support from other sources such as the host government or local 
community. For example, the Government of Bangladesh has increasingly 
taken over responsibility for McGovern-Dole school feeding projects, 
pledging from 2015 onward to spend $49 million annually. By 2017, the 
Government of Bangladesh will manage school feeding in 50 percent of 
the schools currently receiving food under McGovern-Dole.
    Since Congress established the Food for Progress (FFPr) program in 
1985, it has been a cornerstone of USDA's efforts to support 
sustainable agricultural production in developing nations that are 
committed to free enterprise in the agriculture sector. Under FFPr, 
proceeds from the sale of donated U.S. agricultural commodities are 
used to fund projects that improve agricultural market systems and 
trade capacity. The 2016 Budget request includes an estimated program 
level of $135 million for this CCC-funded program. This year, FAS will 
donate more than 200,000 metric tons of U.S.-produced corn, rice, 
soybean meal and vegetable oil. The proceeds will assist six 
organizations that will work with local farmers, cooperatives, 
exporters and others on projects to improve agricultural production, 
food processing, food safety and quality, and marketing and 
distribution. The six new FFPr projects being supported by FAS in 
Fiscal Year 2015 are in addition to 66 projects ongoing in 26 
countries.
    For example, at the request of the Government of Jordan, USDA 
announced in May a FFPr agreement to provide 100,000 MT of U.S. wheat, 
valued at approximately $25 million. The Jordanian Government will use 
proceeds from the sale of the wheat to improve the country's 
agricultural productivity, specifically through water conservation 
(over 20 percent of Jordanians are water insecure). As one of our most 
steadfast partners in the Middle East, the Government of Jordan will be 
able to access the expertise of USDA to improve its agricultural 
productivity and therefore relieve some of the economic burden that it 
is facing as a result of nearly 630,000 refugees from Syria living in 
Jordan.
    USDA looks forward to implementing the new Local and Regional 
Purchase (LRP) program provided in the 2014 Farm Bill, based on the 
success of the LRP Pilot implemented under the previous farm bill. The 
Department's FY 2016 budget request includes $20 million to support the 
LRP program. LRP would provide for local and regional procurement of 
food aid commodities to complement existing food aid programs--
especially McGovern-Dole--and unexpected emergencies. In a non-
emergency situation, an LRP pilot implementing partner, Land O' Lakes, 
worked with local processors in Bangladesh who made cereal bars from 
chickpeas, peanuts, rice, and sesame seeds to supplement a school 
feeding program. Today, local processors have commercialized the cereal 
bar and are reportedly now sourcing from 15,000 farmers in Bangladesh, 
instead of importing ingredients. Requested funding is expected to 
support three to four development programs.
    I am very pleased with the outstanding 2014 Farm Bill 
implementation work performed by all FFAS mission area employees. This 
concludes my testimony. I will be happy to answer any questions you may 
have.

    The Chairman. Ms. Taylor, thank you for your opening 
remarks.
    And gentlemen, thank you for being here.
    Let me start with Mr. Willis.
    Brandon, can you talk to us a little bit about the--our 
Congressional intent, when we set up the enterprise unit system 
that had irrigated versus non-irrigated, our intent was to 
allow farmers to mix and match on this. I think the RMA has 
taken a little stricter definition.
    Is there an opportunity to have RMA reevaluate this idea 
about forcing all irrigated into one unit, all non-irrigated 
into another, and not allowing producers to come up closer to 
what we, at least in our minds, thought we were setting up for 
them to do?
    Mr. Willis. Certainly. I appreciate the question, Mr. 
Chairman. The farm bill provided a significant amount of new 
options for farmers in the crop insurance title, new programs, 
and overwhelmingly, farmers have reacted positively to those. 
The section you are talking about, separation of enterprise 
unit by practice, we have not issued a final rule yet. We 
issued the interim rule a little over a year ago.
    Where we struggle with that is we don't see where the 
authority is to provide anything more than the separation of 
coverage by irrigated or non-irrigated, and we have looked at 
the report language as well.
    So I guess the short way of saying it is we struggle to see 
where the authority comes from to go beyond where we are right 
now. Having said that, the final rule has not been issued yet 
either.
    The Chairman. Well, thanks, Brandon. I hoped we would be 
able to continue discussions because we have a little different 
interpretation of that as well.
    Ms. Taylor, you mention the current negotiations going on 
with T-TIP and TPP. We are also a little concerned with the 
Nairobi Round of Doha as an example where we think agriculture 
is a big piece of that, and from Randy and my perspective, the 
cotton guys have given at the office, so to speak, when you 
look at what happens to them, in particular with the 2014 Farm 
Bill. You mention STAX and others.
    Can you talk to us a little bit about what you think the 
instructions will be from y'alls perspective to the trade 
negotiators with respect to the Nairobi talks?
    Ms. Taylor. Certainly, Mr. Chairman.
    Thank you for that question. USDA has been in active 
conversations with our office in Geneva. FAS has employees at 
the mission there, and we have been very active and in 
conversations with Ambassador Punke, who heads the mission in 
Geneva, and Ambassador Vetter, who heads the Ag Office here. 
U.S. agriculture has really benefited from the WTO system 
having a rules-based international trading system. It has 
opened markets, and it has really helped contribute to last 
year being a record year of agricultural exports of $150 
billion. We have a strong interest in concluding Doha, the Doha 
Development Round in Nairobi; however, we are not interested in 
unilaterally making concessions, particularly on the side of 
domestic support where a growing problem internationally is 
really some of the increased support from emerging economies.
    We continue to have conversations through--and we will in 
the weeks and months to come, and we will certainly keep the 
Committee apprised. I think it is a little too early to know 
exactly how this will all come about in December.
    However, I do think it is important to highlight that the 
WTO hasn't been our only option, and that is why we have 
aggressively pursued agreements like the Trans-Pacific 
Partnership that really give our agricultural producers a lot 
of new market opportunities around the world.
    The Chairman. All right. Well, thank you, and obviously, 
that is at the front of a lot of our producers' minds as they 
watch those talks unfold.
    Val, could you talk to us a little bit about the 
interpretation on the AGI with respect to pass-through entities 
and the impact that not allowing a section 179 deduction to 
reduce the income there in terms of a separate application of 
the payment limit rule? Can you visit with us about the impact 
of that, and we are seeing it, a disproportionate impact of 
what we intended to have. Can you walk us through that a little 
bit?
    Mr. Dolcini. I appreciate the opportunity to answer that 
question, Mr. Chairman. We are taking it on a case-by-case 
basis. We have seen it come up in the Midwest in some cases. 
Most recently, I was made aware of a case in Iowa. We are 
making sure that our experts here in Washington are in good 
communication with the state office specialist. We haven't seen 
it in huge numbers, frankly, but we are ready for it.
    The AGI definition hasn't changed since 2002, but what we 
are seeing, in the field, is with good farm income over the 
last several years in some cases and a couple of years of 
payments, folks are taking advantage of their appreciation 
allowance a little bit more frequently than they had in the 
past. And so we are working with CPAs, with tax attorneys, and 
with other financial professionals that are working with our 
producers to make sure that they understand exactly what it is 
that we are doing, and to the degree we can offer greater 
clarification around that, we are happy to do that.
    The Chairman. Well, in specific, Val, the pass-through 
entity, typically the section 179 deduction does not reduce its 
individual income because those attributes pass through 
separately. So if you don't have, let's say, for example, 
$500,000 worth of immediate write-off under section 179, that 
is going to have a pretty dramatic impact at the income level 
of the entity itself. And so having you say that you are 
willing to look at the intended result was that the income 
would be actual income, AGI is, after all those deductions are 
out, if you are an individual. So the things that you have is 
that you are talking to two CPAs up here, but we just want to 
make sure that those pass-through entities get a fair treatment 
with respect to all the deductions; they don't somehow have an 
artificial restriction on the payment limits because their 
income appears to be bloated at that entity level.
    Mr. Dolcini. We are certainly keeping an open door, Mr. 
Chairman, in our state offices and here in Washington.
    The Chairman. All right. Thank you.
    I yield to the gentleman from Minnesota.
    Mr. Peterson. Thank you, Mr. Chairman.
    Mr. Dolcini, which FSA and RMA mandatory funded programs 
will be impacted by sequestration, and how soon will we know 
what level of cuts producers will be facing, or maybe Mr. 
Willis.
    Mr. Dolcini. Sure. I will take the first crack at that. All 
of the programs that we administer, with exception of CRP and 
Market Loan Gain Programs and the LDPs, will be affected by 
sequestration. We don't feel, obviously, that sequestration is 
a very good policy, and it doesn't offer much certainty to the 
producers that we work with all over the country. And we are 
working on a solution that we think will be an equitable one, 
and hopefully, we will be able to resolve that in the next few 
days, Mr. Peterson, but that is the universe of programs that 
will be covered, all but those three that I mentioned.
    Mr. Willis. The crop insurance program that producers deal 
with every day is not impacted by sequestration. Other minor 
programs would be, but what producers are used to as far as 
crop insurance would not be.
    Mr. Peterson. Mr. Willis, how do you decide whether to use 
RMA data as opposed to NASS data in the implementation of title 
I programs? As you may know, we recently had a situation in my 
district where there was a concern about the NASS county data 
being used for the ARC-PLC program.
    Mr. Dolcini. Sir, I will take that question as it relates 
to ARC and PLC. We use a cascading level of yield, so we start 
with NASS county data. If that is not available, we turn to RMA 
county data. If that is not available, we go to NASS district 
data. And, finally, if that is not available, we use data that 
the state committee develops.
    We feel like the methodology used in the NASS county data 
is pretty solid. We have looked at it around the country, and 
we found that it is accurate, by and large, and where it is not 
available, we turn to the next best data, but that is the 
methodology that we use for the ARC county program.
    Mr. Peterson. And where there are problems, there is no way 
to fix this or to----
    Mr. Dolcini. At this point, I don't believe that there is, 
sir. We feel like the methodology that we are using is pretty 
sound, this is, in some ways, the nature of a county-based 
program, in this case, that there may be some disparities in 
payments from one county to another, could be weather related, 
could be related to other things. But we found that in most 
cases, the NASS county data that we are using is pretty good.
    Mr. Peterson. I understand that USDA has just announced 
that we are going to allow milk handlers to deduct premium 
payments from their milk checks for the Margin Protection 
Program, and I am very glad to hear that. I have been 
advocating that from the start. But what coordination have you 
had with the cooperatives or other handlers to alert them to 
this change, and given that the signup deadline is in 2 weeks, 
do you think that that is enough time for them to incorporate 
that into their system, especially for the larger cooperatives?
    Mr. Dolcini. In most cases, the 2015 premium payments have 
been made, so the change that we have envisioned here, and we 
have worked a lot with cooperatives here in town and elsewhere, 
will be effective for the 2016 program year, and the result of 
that will be that 100 percent of the premium will be due on 
September 1 of next year as opposed to this year, where we had 
25 percent due on February 1, and the balance due later in the 
summer.
    So we think that this is a better option. We appreciate 
your support for it, and we think that it will make the program 
work a little bit more effectively in terms of getting premium 
payments made through the cooperatives.
    Mr. Peterson. These cooperatives are going to be on board 
then and be able to do this?
    Mr. Dolcini. That is my understanding, sir.
    Mr. Peterson. The current signup deadline is September 30, 
and I understand that at this point, only 30 percent of the 
producers that have signed up last year have signed up again. 
Is that true?
    Mr. Dolcini. The numbers are still quite fluid, and of 
course, in the last couple of weeks of any signup that we do, 
we see greater participation in the final weeks. We anticipate 
that that will be the case in this instance as well. We are 
going the plan on doing another mass mailing. We sent out a big 
postcard to generate signup for the first go-round of MPP, and 
we will do that again.
    We are also continuing to do local outreach in your home 
state and other places around the country. When I traveled in 
New England, we talked at lot about this as well, so we are 
hopeful that we can get as much interest in the program for the 
2016 year as we had in 2015.
    Mr. Peterson. So if we only end up with 30 percent, are you 
going to extend the deadline to try to----
    Mr. Dolcini. We will look at that, sir, as we get a little 
closer to the deadline. We are always mindful of the fact that 
producers are busy with other things, and there are lots of 
folks in the midst of harvest right now, and so we want to make 
sure that we are offering everyone the opportunity to get into 
the offices and sign up.
    Mr. Peterson. Are they going to be aware of the fact that 
they can have a month-to-month----
    Mr. Dolcini. They certainly were----
    Mr. Peterson.--premium taken out of their check?
    Mr. Dolcini. We are going to make every effort to make sure 
that everybody knows about that.
    Mr. Peterson. Thank you.
    Thank you, Mr. Chairman
    The Chairman. I thank the gentleman.
    Mr. Dolcini, just to clarify, did you give Mr. Peterson a 
percentage that the sequester cuts might be for this coming 
year? Have you all figured the percentage yet?
    Mr. Dolcini. We have not figured out the precise 
percentage, sir. For this year, it is 7.3 percent. For the 
fiscal year to come, it is 6.8 percent.
    The Chairman. Okay, 6.8 percent, thank you.
    Mr. Neugebauer, 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Mr. Dolcini, during the spring and the summer, we received 
a number of complaints from producers that were trying to get 
their financing through FSA, and in many cases, they were 
telling them that it would take months in some cases to process 
some of those applications. And that began to cause a problem 
for a number of those producers because they have planting 
deadlines, and so producers are worrying about planting 
deadlines, and they are worrying about financing. I was just 
wondering what do you see as to the current conditions? And 
then, more importantly, with these commodity prices in some of 
the areas so low--the farm income, and some commodities--it 
doesn't look all that favorable, and so then I get to thinking 
about next spring. Are we going to have the people in place to 
give them more timely help for some of these producers to get 
their financing?
    Mr. Dolcini. Mr. Neugebauer, that is an excellent question, 
and it is one that we spend a lot of time thinking about and 
working on at the Farm Service Agency both here and in your 
home State of Texas and, frankly, every other place where we 
have FLP teams around the nation.
    To address the issues that you raised earlier with me this 
year in Texas and other parts of the country, we sent jump 
teams in from other states that had a little more time on their 
hands to the degree that folks do have time on their hands and 
send them into Texas in 2 and 4 week details. We were able to 
address a lot of the backlog issues down there in Texas, and we 
were able to do that in Alabama as well.
    In the year to come, though, I think that we are going to 
have to continue to employ creative approaches to our workload 
issues like that. We have also brought on a number of new farm 
loan officer trainees around the country, and we are bringing 
them up to speed as quickly as we can so that they are able to 
jump in and help out wherever they are needed as well.
    We have had record years, as you probably know, on the farm 
loan program side at FSA over the last several years. In fact, 
in Fiscal Year 2015, we made nearly 27,000 direct loans and 
8,400 guaranteed loans for a total portfolio of about $5.2 
billion. That breaks the record last year, and we are likely to 
see continued interest in our programs in Fiscal Year 2016 as 
well.
    It is one thing, of course, to make those loans and it is 
another to service those loans, and servicing takes longer. It 
takes a greater degree of expertise, and so one of the things 
that I am going to be focused on in Fiscal Year 2016 is 
ensuring that our folks in the field today have the appropriate 
training and background to service those loans appropriately, 
and to the degree that I need to reallocate resources and bring 
people in from different states to focus on servicing issues in 
the Midwest or the Southeast or far West, I am going do that as 
well
    Mr. Neugebauer. I think it would be helpful if you 
anticipate those areas where you think you are going to have 
the higher participation rate and can get in there early for 
some of those folks as well.
    Something that you and I have discussed before is this 
payment limit issue where we have producers that have cotton in 
the loan program and their payment limits and not knowing 
necessarily exactly where they are. I think you said you all 
were working on that was the comment that you made last time. 
How is the work going?
    Mr. Dolcini. The work is going pretty well. I can't tell 
you today that I have a permanent solution, but we have worked 
closely with the Cotton Council to make sure that they have 
realtime information about pricing issues so that folks don't 
get caught in a bind and their members don't get surprised by a 
piece of financial news that comes out.
    We will hopefully have a permanent solution, sir, this 
fall. I would be happy to come back up and visit with you 
personally about what we are doing there.
    Mr. Neugebauer. Now, I know that you are currently going to 
be issuing the ARC and PLC payments, but as I understand it, 
you may be holding up the final distribution of some of those 
checks until you have done some of the work on determining 
whether people are in compliance with the limits or how----
    Mr. Dolcini. With regard to that specific question, sir, I 
am going to have to get back to you with a better and more 
definitive answer on that. I don't know that we have discussed 
that at this point, but it could be emanating from the staff 
level at the agency.
    Mr. Neugebauer. Well, it is my understanding, just so to be 
clear, is that you all are in the process of determining 
whether they are in compliance with the loan limits----
    Mr. Dolcini. That is true.
    Mr. Neugebauer.--before you issue the checks, and the 
question is: are you going to be able to do that in a timely 
basis so that those checks can go out on a----
    Mr. Dolcini. Yes, that is our intent, sir.
    Mr. Neugebauer. Okay. Quick question. The generic acres, in 
my district, we had some folks converting from one commodity 
and another, and in some of those commodities, there is not a 
lot of history on that, and there has been some concern making 
differentiation between dryland and irrigated, and what do you 
see doing to make sure we have good numbers?
    Mr. Dolcini. We have had some good conversations in the 
last couple of days at the staff level. Mr. Abraham raised this 
question with me as well when I was last here, and we have come 
up with a proposed solution for the 2014 and 2015 crop years 
where producers on any farm may agree to allocate their generic 
base according to the contractual agreement that exists, which 
is, a better way to approach it.
    For future years, we would likely want those producers to 
reconstitute their farms according to established policy, but 
in the near term, we see the need for some relief, and we are 
happy to provide that.
    The Chairman. The gentleman's time has expired. Thank you 
all.
    Mr. Ashford, for 5 minutes.
    Mr. Ashford. I am fine.
    The Chairman. Thank you.
    Mr. McGovern, for 5 minutes.
    Mr. McGovern. Thank you very much.
    This is toward Administrator Karsting. I am a big fan of 
the McGovern-Dole Program, which has been in operation now for 
slightly over a decade, and I remember when it first began. It 
just seems like yesterday. But the program has come a long way, 
and one of the things that I have been really impressed with 
USDA about is its ability to kind of adapt and adjust and to 
constantly make the necessary changes to the program so that it 
is the most effective that it could possibly be.
    Now, I just would be curious if you could describe what you 
think are the most important lessons that have been learned in 
implementing the program, and what are you most proud of?
    Mr. Karsting. Well, first of all, I am a big fan of the 
program too, and what makes me proud is when I go to places 
like Laos, as I did a few months ago, and I see kids whose 
teeth and skin and hair are better because they have the 
benefit of American nutrition support to their school nutrition 
programs and they go to school ready to learn, and that is a 
huge thing, especially in some really poor countries. As you 
know, we focus in areas where childhood stunting is very much a 
problem.
    Part of the success of McGovern-Dole is the relationship 
that we have cultivated with our cooperating organizations, the 
nonprofits that we work with. They go in consultation with our 
people at post. We have some really talented attaches all over 
the world and make sort of an individual regionalized 
assessment so they know what is going to work in one region 
because what works in one region isn't necessarily going to 
work in another.
    The next evolution that we are trying to do, in McGovern-
Dole, focuses on some authority that this Committee was kind 
enough to give us in the last farm bill, and that relates to 
local and regional procurement. And when we find places where 
the addition of a locally procured item to the mix might 
increase kids' ability or increase their nutrition, increase 
adoption of, or making permanent, school nutrition programs and 
begin to sow the seeds of a value chain in country, I think 
that is a really exciting thing to do.
    And if I could, just one more thing. We also have done some 
work on micro-nutrients, and that has had some measurable 
effects, not just in nutrition that kids get but in their 
cognitive abilities when they get to school
    Mr. McGovern. Well, I appreciate that. Again, I appreciate 
the innovation as well as the willingness to make the necessary 
adjustments to make the program as effective as it possibly can 
be.
    I just wanted to say that one of the things that has been 
very helpful has been with regard to Feed the Future, which 
falls under the USAID, but they have had a very proactive 
approach to try to remind Members what Feed the Future is all 
about and how it is evolving and all the things they are 
accomplishing, all the things it has accomplished.
    I would like to suggest that it would be great to see a 
similar effort on McGovern-Dole. Members would be very proud of 
this program. I am not sure how many people are really aware of 
all that it does, but if they were, the support would be even 
greater if they knew about the program and how the combination 
of U.S. commodities and purchased commodities, technical 
assistance and cash grants combine to feed and educate millions 
of some of the most vulnerable kids in the world, including a 
lot of girls who otherwise would never go to school if it 
wasn't for this program.
    It is one of the great success stories in our foreign aid 
programs, especially with regard to food assistance, and we 
ought to do more of it. I visited a McGovern-Dole Program when 
it initially happened in a displaced persons community in 
Colombia. And a young mother came up to me and the Ambassador 
and thanked us very much for this program because her son, who 
was 11 years old, every day was trying to be recruited by one 
of the armed actors, and in exchange, they promised the mother 
they would feed the kid.
    And now, with this program, the mother was able to put her 
son in school, but we need to figure out a way to make more 
people aware of it because that would translate to more 
support.
    Mr. Karsting. I appreciate that. We will take note of that. 
I would also invite any Members, if you travel internationally, 
if you have a moment, our staff overseas would love to show you 
some of those programs, whether it is in Mozambique or Cambodia 
or Laos or wherever, wherever we have them.
    Mr. McGovern. And that is part of kind of the proactive 
stance I am looking for so that when Members go on CODELs, they 
know enough to know that there are these programs, these school 
feeding programs for them to see because they would be very 
impressed, but thank you for all the great work that you are 
doing.
    The Chairman. The gentleman yields back.
    Mr. Austin Scott, for 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
    Mr. Dolcini, the USDA arbitrarily dropped the posted county 
price for peanuts by $170 a ton on August 18. This pushed the 
price below the loan rate. That is a big deal to farm families; 
it is no additional support to the producer. It counts against 
payment limits as a market and loan gain.
    And it seems that there was no real economic justification 
for this dramatic reduction. And I have seen a review from the 
University of Georgia's National Center for Peanut 
Competitiveness. They see no evidence that the reason for the 
drop justifies the amount of the drop, and I would just like a 
commitment that you would, if you will, review what was done 
there, review the report from the National Center for Peanut 
Competitiveness and that we take into consideration that this 
is a substantial drop, and it has a substantial impact on farm 
families. If you read the release from the agency, it was 
simply to move peanuts out of storage. And shellers aren't 
going to shell peanuts just for the sake of shelling peanuts 
when they have to pay cold storage versus a regular storage.
    And so have you received any comments on that, if you 
would, just kind of a general question maybe what happened 
there, what----
    Mr. Dolcini. I don't have a specific response for you, 
Congressman Scott, but I would be happy to review that report 
by the National Center, and I would also be happy to come up 
and meet with you and your staff here, along with the folks 
from the economic research division at the agency that work on 
peanut issues quite closely, and perhaps that can be a broader 
explanation of what the agency was doing.
    Mr. Austin Scott of Georgia. Well, I very much appreciate 
that, and we will work around your schedule, work to 
accommodate you in any way we can, and we will get that report 
to you as soon as possible.
    Mr. Dolcini. I appreciate that, sir
    Mr. Austin Scott of Georgia. And, Mr. Willis, just kind of 
a general comment. I know that the cotton industry and cotton 
producers have been meeting with you about a couple of 
different issues with regard to STAX. They are very 
complimentary of you and the relationship that they have with 
you. I want to thank you for that and for working with them.
    What kind of timeline do you expect that we will be 
operating under with notification of any changes for the next 
year?
    Mr. Willis. I would like to also express my appreciation to 
the cotton producers. Throughout this farm bill, we have had 
significant amount of conversations with these groups simply 
because the changes in the farm bill were pretty dramatic. 
There was a lot of changes that we needed to have. Some of 
these programs, area-wide programs are new, new to producers 
and sometimes new to the Risk Management Agency. So throughout 
it we talked to them and tried to take their input and take it 
to heart.
    There have been a few other issues. We have been talking 
about them lately, and I would anticipate very soon we will 
have any decisions made for the next year. Some of the requests 
they had were very reasonable, and we are trying to work with 
them to make that happen.
    The reality is, we want the safety net to work for the 
producer that it is intended to work for, and if they have 
reasonable ideas, we are willing to take them under 
consideration. That is one reason that we implemented many of 
our programs in the farm bill using kind of a pilot authority. 
That gives us the ability, if something doesn't work out 
perfect the first time, to make a few changes so that the next 
year it works better for the producers.
    Mr. Austin Scott of Georgia. Thank you for that. You said 
soon. Is that 30 days? Sixty days?
    Mr. Willis. I don't know exactly which changes you are 
referencing, but I know we have had conversations on allowing 
them to purchase STAX on certain practices and a lower percent 
on other practices. That issue there, in fact, we have already 
resolved it, and they are pleased with the result. Without 
knowing exactly any other issues, I don't know the timing, but 
we would know very soon.
    Mr. Austin Scott of Georgia. I have about 30 seconds left, 
so we will get you the list.
    Mr. Willis. Okay.
    Mr. Austin Scott of Georgia. And I certainly appreciate you 
working hand in hand with the industry.
    Mr. Chairman, I will yield the remaining 29 seconds.
    The Chairman. The gentleman yields.
    And the chair will take full notice of the time yielded 
back.
    Ms. Plaskett, 5 minutes.
    Ms. Plaskett. Thank you, Mr. Chairman, Ranking Member.
    Thank you, panelists, for your time and your tireless work 
on behalf of farmers.
    I have a question for Under Secretary Taylor. This is 
related to drought. This past year, the Virgin Islands was hit 
by a severe drought with rain levels very well below average 
since last October, and we had, as a result of that, we had 
enumerable livestock fatalities due to a lack of grazing and 
feed.
    I was encouraged that USDA was able to provide assistance, 
and an official drought disaster declaration was made for the 
Island of St. Croix, although it didn't happen for the Islands 
of St. Thomas and St. John, and I understand that was due to 
the acreage and the amount of farmers that were on those 
islands. And we are pleased that help is on the way, although, 
of course, our farmers would like a little more assistance than 
just loans at this time.
    One of the problems that we had in this process was that 
the Virgin Islands is not included in the U.S. Drought Monitor 
and does not have a Drought Monitor classification, which is 
part of your program eligibility requirements before disaster 
is declared. It took a great deal of special arrangements on 
behalf of our office and my staff to make that happen, and I 
want to know how this process is supposed to work and how can 
it be done more smoothly and why the Virgin Islands might have 
been kept off and what can we do to ensure that this is 
rectified in the future.
    Ms. Taylor. Thank you, Congresswoman. I appreciate that 
question.
    I will actually turn it over to Administrator Dolcini, who 
has worked really closely on this issue, so he can elaborate 
further.
    Ms. Plaskett. Okay. Thank you.
    Thank you, sir.
    Mr. Dolcini. Absolutely, Congresswoman, and it has been a 
pleasure to work with your staff on this issue here.
    As you are aware, the Drought Monitor does not cover the 
Virgin Islands, and so we were lacking a comparative rainfall 
analysis which allows us to make determinations about counties 
or regions that are eligible for, in this case, the Livestock 
Forage Program.
    We were able to make a comparative rainfall analysis using 
data from Caguas, Puerto Rico, and in the interim, and we are 
hopeful that we can work with the Drought Monitor to establish 
a more official presence on the Virgin Islands. The data from 
Caguas allowed us to extend 4 months' worth of LFP payments to 
affected livestock operations on the Virgin Islands. We are 
happy to continue to work with your office to make sure that 
folks better understand what the process is around our disaster 
assistance programs.
    As you know, the Virgin Islands is administered out of our 
Florida State office and the State Executive Director gets over 
to the VI from time to time. Perhaps I can take a trip down to 
better understand.
    Ms. Plaskett. You need to. You have an open invitation.
    Mr. Dolcini. Well, I appreciate that.
    Ms. Plaskett. As well as the Under Secretary, and come 
during the months of November to March. I think that will be 
the best time for you to come, don't you?
    Mr. Dolcini. If I can convince Deputy Taylor to sign the 
travel authorization, I will be happy to do that. But we are 
happy to work with you, and we have a good interim solution 
here on the----
    Ms. Plaskett. I appreciate that. And can I ask, with regard 
to those loans that were given to our farmers and for the loans 
that farmers have, we were talking about FSA monitoring their 
service. Are they servicing the loans? Are they able to buy/
sell those loans? How does that work?
    Mr. Dolcini. No, they are not sold on the secondary market. 
Our direct loans are made by the Farm Service Agency and 
serviced by the Farm Service Agency. That constitutes the bulk 
of our farm loan portfolio. We do have an extensive guaranteed 
program where we work with commercial lenders who participate 
in our guaranteed program, and we guarantee up to 95 percent of 
the body of the loan that is made.
    It is really one of the best deals that the U.S. Government 
offers, and our delinquency rates are very low for both 
programs. In the case of emergencies, we have an Emergency Loan 
Program that operates in a very similar way to most of our 
direct loan programs, and that is an option for producers 
impacted by natural disasters as well.
    Ms. Plaskett. Thank you. And then I had a question for Mr. 
Willis, and this is regarding in terms of the Risk Management 
Agency.
    One of the things that I note as one of the essential tools 
for farmers in anticipating and avoiding some of the things 
that we talked about, drought, disaster, is insurance. And 
particularly in the Virgin Islands, where we have small 
diversified farms, we recognize that this insurance is really 
helpful, particularly for new farmers as they are starting up.
    Can you talk about ways that RMA can help to strengthen and 
stabilize an island's farm economy as it is trying to build 
itself and grow?
    Mr. Willis. One of the new products that we are very proud 
of and we think has opportunities for helping everybody all 
across the United States and everywhere, because of its 
flexibility, is the Whole Farm Protection Program. The Whole 
Farm Protection Program is something that in many areas where 
you might not have a large agriculture presence, you don't have 
what we need to set a rate. Well, what the whole farm does, it 
allows the farmer to insure everything on their farm, their 
whole farm. It looks at their revenue. I think that would be a 
program where I would love to sit down and talk to you and see 
what options we have to put it out there in the Virgin Island 
because that could probably be the most flexible safety net for 
those producers.
    Ms. Plaskett. Thank you so much.
    And, Mr. Chairman, thank you for the time.
    The Chairman. Thank you. The gentlelady yields back.
    Mr. Crawford, for 5 minutes
    Mr. Crawford. Thank you, Mr. Chairman.
    Ms. Taylor, I am concerned about the actively engaged rule. 
What is the status of the rulemaking process and when can we 
expect a final rule?
    Ms. Taylor. Thank you for that question, Congressman. As 
directed by the 2014 Farm Bill, it gave us some clear direction 
to take a look at the actively engaged rule due to active farm 
management, but it also gave us some strict confines to really 
operate under. One was an exclusion for entities solely 
comprised of family members. This fall--or excuse me, this 
spring, we published a proposed rule. That time closed. We 
received just under 100 comments.
    Currently we are analyzing those comments, addressing them 
within the final rule. As the rulemaking process is continuing, 
we don't have an exact timeline for when the final rule will be 
published, but we will certainly keep your office and the 
Committee apprised as we go forward, and we are certainly 
cognizant of keeping producers informed of whatever the new 
rules may be but also not changing rules midstream for 
producers as well.
    Mr. Crawford. Okay. I want to make sure that we are 
incorporating those concerns about the number of managers that 
are allowed on large or complex operations. Is that something 
being taken into consideration?
    Ms. Taylor. As actually directed by the farm bill, they 
also put some requirements for USDA to consider the size of 
operations and also the complexity of certain operations. We 
received some comments to that effect. In the proposed rule we 
allowed additional farm managers, whether if the operation was 
large or if it was complex, and two additional if it was large 
and complex. We received some comments on those limits, and we 
are taking a look at those through the rulemaking process.
    Mr. Crawford. Okay. I understand that you are almost done 
with the implementation process for ARC and PLC with the 
payments for 2014 expected to go out in October. What are the 
lessons learned for the 2014 Farm Bill commodity program 
implementation and what issues do you have left on that?
    Ms. Taylor. I think some of the lessons that we learned is 
these were new programs to farmers. It was a whole different 
way for agricultural producers to really think about a farm 
safety net. For the first time, they had required options they 
were going to have to make, as opposed to the direct payment 
program beforehand.
    We certainly appreciated the money this Committee directed 
toward development of some online tool resources. We partnered 
with Texas A&M and the University of Illinois to develop two 
different online tools so producers could kind of run scenarios 
on what these programs may do in the future based upon 
different commodity scenarios.
    We also worked through extension to provide education 
throughout the country, in counties all over the country. I 
think those resources were extremely valuable in educating 
producers on brand new programs and a whole new concept to the 
farm safety net.
    Mr. Crawford. Okay. Thank you.
    Mr. Willis, on crop insurance, what steps are being taken 
to continue to educate farmers on crop insurance and the crop 
insurance providers on the provisions of the farm bill related 
to crop insurance as they continue to be rolled out?
    Mr. Willis. There are quite a few things going on right 
now, and many of them started immediately after passage. As 
soon as the farm bill was passed, we started working with our 
partners, the crop insurance companies. We held trainings. As 
different parts of the farm bill were available, they worked 
with crop insurance agents, we talked to producers, we educated 
producers. We also dedicated some funds through the Risk 
Management Education Program. We put a priority there to 
educate on new farm bill programs.
    The Risk Management Agency also partnered with Val's 
agency, the Farm Service Agency. They held hundreds of sessions 
all around the United States to educate on farm bill programs, 
and because of the close ties between title I and crop 
insurance, we attended many of those with them.
    We also partner with some of the private developers of 
products, such as peanut revenue and such as margin, to help 
train them as well. So it is quite a few partnerships, and we 
have also used technology. We actually have an app out and a 
little calculator on our website that helps producers go in 
when they have some time and identify how the programs work for 
them and determine what the safety net is and what they want to 
take advantage of.
    Mr. Crawford. How wide-spread is Supplemental Coverage 
Option for crop insurance now and specifically what crops are 
included and what aren't?
    Mr. Willis. It is easier to summarize. Once we make all our 
announcements for next year, 97.5 percent of acres within the 
crop insurance program will have an SCO policy available for 
them. The vast majority of crops that have enough data to run 
an area program will have SCO. The same also goes along with 
APH exclusion as well.
    I can certainly get you the list of crops, but it is a very 
long list. We have a few more announcements to make as far for 
next year, but we are very pleased. And I want to recognize my 
staff. They have done a tremendous amount of work making sure 
SCO is available for as much as we can.
    Mr. Crawford. Excellent. Thank you. I would like a list of 
that if you wouldn't mind providing that.
    And I yield back.
    The Chairman. The gentleman yields back in.
    Mr. Allen, for 5 minutes.
    Mr. Allen. Yes. Thank you, Mr. Chairman, and I appreciate 
your time this morning.
    Administrator Dolcini, the USDA--and I am talking about the 
actively engaged rule as far as you are currently in the final 
rulemaking phase to implement the farm bill language that 
modified the actively engaged provisions. I know that the 
Department has received extensive feedback as far as the 
comments and concerns from major commodity organizations 
regarding the impacts of the proposed changes.
    The farm bill provisions are pretty clear regarding 
concerns in how this proposed rule could impact farms that are 
largely made up of family members but we may have relatives 
involved not covered by the family member provision or others 
that serve a management function on the farm. In these 
circumstances, it is my understanding from the USDA proposal 
that all the members of the farm would then be subject to the 
new definition of actively engaged, even the family members of 
the farm, and I hope the final rule clarifies this issue.
    Can you tell me when the Department expects to release the 
final rule and for what crop year it will be affected?
    Mr. Dolcini. I appreciate the opportunity to answer, Mr. 
Allen. The rule will apply for 2016 and subsequent years. There 
won't be a retroactive application of this rule. As Deputy 
Under Secretary Taylor has noted, we are working on the final 
rule now, and we received a number of comments from around the 
nation, including many from commodity organizations that we 
have incorporated into the way we are approaching this rule. We 
are also trying to keep closely to what the farm bill directed 
us to do.
    And as you point out, there are exemptions for family 
members; there are exemptions for spouses, for others that are 
involved. And we really tried to focus on the large and 
complex--or large or complex--operations to determine how many 
payment limits would apply. But we are working on the rule as 
we speak, and we will certainly provide a good update to the 
Committee when that is in its appropriately final form.
    Mr. Allen. All right. Thank you.
    Administrator Willis, as far as the STAX program, I would 
like to commend the Department for their implementation of 
this, and would like to congratulate you on the implementation 
of the STAX income protection plan. This is a tremendously 
important insurance product for the cotton farmers, and I 
appreciate the time and effort the Risk Management Agency put 
into this timely implementation of this new insurance product.
    It is my understanding that RMA has received several 
suggestions of ways to improve STAX ahead of the 2016 crop 
contract change dates. Some of these changes, including 
allowing STAX purchase levels by practice, timing of any 
indemnity payments triggered by STAX in areas where data is 
available earlier, and offering STAX everywhere cotton is 
growing, including written agreement counties.
    It is my understanding that the cotton industry and RMA 
have had a very productive working relationship during the 
implementation of STAX, and I encourage this relationship to 
continue. Do you have a timeline for when these changes, if 
enacted, could be announced and implemented?
    Mr. Willis. Yes, sir. I apologize the order that the three 
changes that you mentioned, I do recognize, I believe, the 
first and the third we intend to do. I don't know if they have 
been announced. I know we have had discussions on them. I 
apologize, the middle one, I have to get back to you on as far 
as the timing of the STAX payments. I don't know if there was a 
lot of flexibility there in making those earlier. Certainly we 
have every desire to make them as quickly as possible, but I 
simply don't know the answer, if that was possible.
    But my understanding is that on the first and the third 
issue, we are moving in those directions. We believe those are 
reasonable ways to make STAX work better
    Mr. Allen. All right, sir.
    As far as the overall cotton situation with regard to trade 
and that sort of thing, what are we doing with regard to the 
worldwide situation on cotton as far as the market price? Any 
ideas about what you are working on there?
    Ms. Taylor. Thank you for that question, Congressman. Well, 
first off, I will state that cotton is one of our agricultural 
cooperators, and so we continue to partner with them through 
some of our market development programs on MAP and FMD, where 
we are able to help promote cotton into new markets or expand 
into existing markets, so we are continuously looking for new 
cotton markets for our U.S. grown cotton.
    Also, we continue to have conversations, in the larger 
overall WTO context on subsidies around the world and their 
impact on production around the world, that trade distorting 
subsidies from any country, not just the United States, have a 
market distortion impact, and so we continue to have those 
conversations within the context of the WTO.
    Mr. Allen. Well, I appreciate your work on that because we 
are losing acres, and we need to keep this product going. Thank 
you.
    Mr. Chairman, I yield back
    The Chairman. The gentleman's time has expired.
    Mr. Rouzer, 5 minutes
    Mr. Rouzer. Thank you, Mr. Chairman.
    And Ms. Taylor, great to see you again, as well as your 
colleagues and I appreciate you coming to join us here today.
    I have several different questions, so I am going to try to 
be brief as I ask them and if we have enough time to get 
through a few of these.
    Pork: Obviously, it is very important to the State of North 
Carolina. South Africa has significant potential for sales of 
U.S. pork, and I am just curious where we are with them in 
terms of opening up that market.
    Ms. Taylor. Thank you for that question, Congressman 
Rouzer. Pork is also very important to Iowa as well, my home 
state.
    Mr. Rouzer. I heard that.
    Ms. Taylor. I certainly understand the importance that you 
emphasize on that. We continue to have ongoing technical 
discussions and political discussions with our South African 
colleagues. Two weeks ago, I was in Gabon for the AGOA forum 
where we met with South Africa again. We actually have a 
technical team there this week continuing those discussions on 
the host of SPS issues we have with South Africa. And then also 
we have the ongoing out-of-cycle review under AGOA as well for 
South Africa.
    So we continue to press them at every venue we have 
possible on resolving our market access issues.
    Mr. Rouzer. Is there anything that we can do as a 
Committee, or Congress as a whole, to help spur that along any? 
Just curious.
    Ms. Taylor. I think the ongoing conversation that has been 
out there, it has been important for them to see that this is 
important for hosts, not just one industry, but all three, 
pork, beef, and poultry industries, that are being affected 
within the United States.
    Mr. Rouzer. Second question, MAP and FMD programs, there 
has been some concern that perhaps all the money that is 
appropriated and allocated by Congress for those programs isn't 
always necessarily used--I wouldn't say not used properly--but 
perhaps used for administrative and other costs perhaps. What 
is the Department doing to focus in on that?
    Ms. Taylor. First off I would just say, USDA believes MAP 
and FMD are critical tools to get into new markets or to expand 
into existing markets. The demand for these programs really 
continues to grow as new program participants come in, new 
commodities, new exports are showing interest in utilizing 
them. We continually look for the best options to manage the 
programs. We do take oftentimes a small portion for 
administrative fees, but also sometimes if we are not using 
those, we actually give them back at the end of the fiscal year 
like we did last year.
    So we are always looking for new opportunities to expand 
our agricultural mixes for exports that we are doing while 
maintaining the best management of the program possible.
    Mr. Rouzer. Mr. Karsting, the United States International 
Food Assistance Report, which is a joint product of USDA and 
USAID, is due April 1st of each year. Do you have any idea when 
we might be able to expect to see the report since it is about 
5 months past due, and is FAS, have you all completed your 
component of that?
    Mr. Karsting. Right. Just by way of background, the United 
States International Food Assistance Report covers the three 
farm bill authorized international food aid programs. So that 
is Food for Progress, McGovern-Dole Food for Education, and 
P.L. 83-480 Title II, or Food for Peace, which is an USAID 
administered program. So what we do between FAS and USAID is we 
try to merge our information. We are in the process of doing 
that so we can present one unified report. I am hopeful that we 
get that to you as soon as possible.
    What I can tell you today, is that that report will show 
that government-wide in 2014, we did about $1.8 billion in food 
aid with about 35 million beneficiaries in 65 different 
countries. For USDA-specific programs, McGovern-Dole in 2014 
totaled about 78,860 metric tons and about $164.8 million in 
work with our cooperators.
    We had six new grants covering 2.25 million recipients in 
nine different countries. On the Food for Progress side of 
things, that is where we send commodities and it is monetized 
for development in local countries, we did about 195,000 metric 
tons of commodities valued at $127.5 million, 1.6 million 
beneficiaries in ten countries.
    Bearing in mind the latter one, Food for Progress, if we 
are in a sequester situation, that will cut into the amount of 
money we can use for transportation; so we have gone from in 
the past about 12 annual projects under Food for Progress. Now 
we are down to about six per year or five. So we are trying to 
make those programs work as best they can and cover as many 
people in a responsible way as possible.
    Mr. Rouzer. Thank you, Mr. Chairman. My time has expired.
    The Chairman. The gentleman yields back. Mr. Abraham, for 5 
minutes.
    Mr. Abraham. Thank you, Mr. Chairman. Under Secretary 
Taylor, first thank you so much for your service in the U.S. 
Army and your time in Iraq. It is much appreciated.
    First question to you. It is my understanding that the USDA 
is going to commit about $100 million to fund some biofuel 
infrastructure. Can you explain what authority is being used to 
do that?
    Ms. Taylor. Thank you for that question, Congressman. As 
you mentioned, we recently announced $100 million in matching 
grants where about 21 states have delivered projects to match 
that on an over one-on-one basis. We are using authority under 
the Commodity Credit Corporation charter.
    What we have actually found is this will certainly boost 
the renewable energy economy, but it is also going to be able 
to bring more choices to consumers, and we have found that one 
out of ten cars on the road today are flex fuel. However, there 
is a limited infrastructure out there. So this is really giving 
more choice to consumers all over the country.
    Mr. Abraham. I am for it. We grow corn in Louisiana, too, 
just like you do in Iowa. But the authority is coming from the 
CCC?
    Ms. Taylor. Yes, sir.
    Mr. Abraham. Okay. Mr. Dolcini, could you bring us up to 
speed on the Microloan Program. How is it being serviced? What 
is the average size of the loan? Are they performing well? 
Those types of questions.
    Mr. Dolcini. That is a great question, sir, and I 
appreciate the opportunity to tell you a little bit about the 
Microloan Program as it has been one of the real shining stars 
in the Farm Service Agency loan portfolio since the program 
rolled out in January of 2013.
    We have made to date nearly 15,000 microloans from Maine to 
Hawaii. Most of them have been $35,000 or less, but the 2014 
Farm Bill increased the loan amount to $50,000, so now we are 
able to make loans of $50,000 or less; and we are also working 
on various new iterations of the Microloan Program as well. I 
like to think of it as 15,000 different American dream success 
stories because when I was the State Director in California, I 
saw firsthand the successes of the Microloan Program in 
building businesses, in adding jobs to rural economies, in 
allowing folks to expand their agricultural operations. And as 
Administrator in my travels, I have seen that all over the 
country, including recently in Louisiana.
    So the Microloan Program has been a real success story for 
our agency and the farm loan folks around the country that work 
on microloans as well as our entire----
    Mr. Abraham. And they are performing well----
    Mr. Dolcini. They are performing quite well. They are not 
performing at any level different than our direct and 
guaranteed programs. In fact, in some cases the returns have 
been better.
    Mr. Abraham. Okay. Thank you. And, Mr. Karsting, tell me 
your hopes or predictions on the American business or 
agribusiness outcomes in the TPP negotiations.
    Mr. Karsting. I had a boss one time that told me if you 
must predict, predict often, so at least a few of them would 
come true. I think we are going to have an outcome in TPP that 
is commercially meaningful across a wide swath of American 
agriculture. We look at sort of what the opportunities are out 
there. This is a great opportunity for us to bring tariffs 
down, to hopefully resolve technical barriers to trade and non-
tariff barriers, but also to set the rules of the road for a 
broader swath of the world.
    The countries engaged in the TPP negotiations represent 40 
percent of global GDP. And I like to remind people that the 
question isn't whether we have TPP and write the rules of the 
road or the status quo. If we don't do anything, somebody else 
is going to fill that vacuum. And that is why we think it is 
important for us to have a high-quality, comprehensive 
agreement, and that is what our negotiators are working on 
every day.
    Mr. Abraham. Do you see the same positive, hopeful outcome 
with T-TIP also, or is that going to be a little harder 
negotiation?
    Mr. Karsting. Well, T-TIP isn't quite as mature in the 
process, and if you want to weigh in on this, Deputy Secretary, 
we certainly have not been working on it as long, but there is 
some hopefulness that if we have a successful TPP conclusion, 
that that would lend momentum and urgency to T-TIP negotiations 
as well.
    Ms. Taylor. Thank you for that, Phil. I would just add, 
Congressman, that the issues are slightly different in T-TIP--
--
    Mr. Abraham. I understand.
    Ms. Taylor.--than what we experience in TPP----
    Mr. Abraham. Right.
    Ms. Taylor.--and are trying to resolve. I talk to Europeans 
consistently about this, and market access, reducing tariffs, 
is certainly something we have to address, but without 
addressing our SPS issues, the non-tariff barriers, that we are 
experiencing with Europe, those market access reductions, those 
tariff reductions, are meaningless; and so we really need to 
see progress on both within the context of T-TIP.
    With Europe we actually have a trade deficit, anywhere from 
$23 to $40+ billion in trade surplus on average from 
agriculture every year. We have a trade deficit almost every 
year with Europe because of some of these non-tariff barriers, 
so we are working hard to address those in the context of the 
negotiations.
    Mr. Abraham. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. Yoho, for 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman. Ms. Taylor, you brought 
up, let's see here, that there is $35 that we invest in 
research and development, or for every dollar we put in we get 
$35 return. Is that true? Did I hear that correctly?
    Ms. Taylor. Yes, sir. This is a study done independent 
several years ago by our cooperator groups, and they did find 
that for every $1 that the government or industry is spending 
in market development programs, we are seeing an additional $35 
in agricultural exports stimulated.
    Mr. Yoho. Okay. And I meant to thank you for your service 
to our country. I appreciate it.
    Mr. Willis, on the Asian fruit fly, I am sure you are well 
aware of it in south Florida in the Homestead area. I come from 
the great State of Florida, and it has been a problem down 
there. It is rapidly emerging. It is rapidly spreading, and 
right now it is contained to the Homestead area in the south. 
But what happens, the perimeters are 1,200 yards I believe, or 
400 yards, and anything within that area has to be destroyed, 
or it is quarantined and then obviously destroyed.
    And if it moves up to the Miami area, we are looking at 
about a $2 billion impact. What are you guys doing on that, or 
what do you see right now? Is there crop insurance to protect 
any of that?
    Mr. Willis. I think the best thing for me to do on that 
question, sir, is to get back to you in writing on that.
    Mr. Yoho. Okay. Thank you.
    Mr. Karsting, the Food for Peace program you were talking 
about, we all know the benefits of that. And one of the things 
that is real contentious, as you know, are GMOs. In your 
opinion, have you seen the beneficial effects of GMOs 
increasing production, increasing yields on these products, in 
your opinion?
    Mr. Karsting. Well, I grew up in Nebraska, and if you just 
look at what has happened to corn yields, particularly in 
dryland corn over the last few years, you have to be cognizant 
of the fact that yields have increased in a variety of 
different conditions.
    We have examples of eggplant in Bangladesh that are grown 
that are Bt that reduce producers' exposure to chemicals and 
grow more efficiently. We have other tropical fruits. There are 
a lot of opportunities out there. What I try to remind people 
is that we are going to have 9.6 billion people on this planet 
by 2050, and we ought not confront that challenge with our 
hands tied behind our back. And by saying our, I mean globally, 
global community so----
    Mr. Yoho. I am sure you will see us come back to hopefully 
engage you guys helping us market this because we all know the 
benefits of it, but there is that other side out there that is 
trying to squash this. And we just can't allow that to happen. 
There are too many good things that are coming out of this.
    Mr. Karsting. I would say I sit next to the Secretary on 
most of his meetings with international leaders, and it is a 
topic that he raises eloquently on a regular basis.
    Mr. Yoho. Well, since we are on this topic, and we are 
talking about trade with TPP, we get involved with these multi-
national trade agreements, and sometimes you have multiple 
countries saying, well, when they come together there will be 
multiple countries saying, no, we don't want the GMOs in here 
or certain insecticides. Do you think it is better to have the 
large multi-national trade agreements or more of the bilateral?
    Mr. Karsting. I think the more sort of uniformity and 
commitment we have to sound science and transparency that is 
recognizable from country to country, in general, the better 
off we are. That has been our goal in all of these negotiations 
is to make sure that we have trade rules that are based on 
science and not based on other things. And so to the extent we 
can do that among a broader spectrum of countries, we are 
better off.
    Mr. Yoho. Okay. And then Mr. Dolcini, you were saying there 
are $5.2 billion in loans that you give out? Is that correct?
    Mr. Dolcini. Yes, it is $5.2 billion worth of loans, sir.
    Mr. Yoho. Let me ask you because this is something that has 
come up in several meetings. You are obviously servicing these 
loans. Right? You are giving the money out, collecting the 
money?
    Mr. Dolcini. That is right.
    Mr. Yoho. And so essentially the USDA has become a bank in 
a certain sector of the economy. Would it be better to move 
these over to the GSEs like Farm Credit Service? You guys 
guarantee them but let them service them so that the government 
is not in the banking industry? What are your thoughts on that?
    Mr. Dolcini. Well, you are right to point out that we are 
one of the largest ag lenders in the country, and we serve an 
appropriate role. Frankly, our friends and collaborators in 
many instances in the Farm Credit System and commercial banks 
work well with us, take advantage of the guaranteed program we 
offer. But in some cases just aren't willing to make some of 
the agricultural----
    Mr. Yoho. But if the Federal Government guaranteed them and 
we got rid of the bureaucracy of collecting the money and 
allowed the GSEs or some other entity to do that with the 
government backing, I would like to have your thoughts, but I 
am out of time; and if we could get that in writing, I 
appreciate it. And I yield back.
    Mr. Dolcini. Absolutely. Thank you, sir.
    The Chairman. The gentleman yields back. Mr. Thompson, for 
5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Mr. Chairman, thanks 
for holding this 2 day marathon hearing here. Great 
opportunity. Thank you so much for this first panel.
    My question has to do with the ACRSI program. The report 
the Committee received on the accomplishments of ACRSI listed a 
number of key outstanding efforts that have not yet been 
completed. Now, we appreciate that these are complex systems 
and involve large amounts of data, but the report you sent to 
the Committee suggested that the program was, ``substantially 
complete,'' in spite of only covering 30 counties in a pilot 
program so far.
    So my question was what can you tell us about the 
outstanding issues for integrating systems across FSA, RMA, and 
the approved insurance providers, and how are they being 
addressed, and what kind of timeline can we anticipate for 
completing those?
    Mr. Willis. I will start out and if Administrator Dolcini 
wants to add anything because the two agencies are working 
together. It was our report that you were referencing as far as 
substantially complete. This past summer we did do a pilot. 
That was only a part of what we were doing with ACRSI.
    ACRSI obviously is the process of integrating what the two 
agencies do as far as sharing data between the two agencies. In 
large part it is trying to make lives for farmers easier so 
that they don't have to report the same data two times or more.
    The first major step was the pilot last summer. We are 
moving forward with a significantly expanded pilot this fall, 
and it will continue further next spring. The amount of 
progress we have been making is continually increasing at a 
much more rapid pace, so producers this fall will see a lot of 
improvements even over the summer. And next summer they will 
continue to see more.
    Mr. Scuse, Under Secretary Scuse, this is kind of in a way 
something that he talks about a lot because he is a farmer in 
Delaware, and he got tired of having to do the same report, one 
to his crop insurance agent and then to the Farm Service 
Agency. And I can tell you almost every day that I talk to him 
he asks how ACRSI is going. He is very intent upon seeing the 
success Congress envisioned when you put that language within 
the farm bill.
    Mr. Dolcini. Sir, I would just add that you are absolutely 
right to point out the complicated technical environment that 
we work in here. What Brandon and I have tried to do between 
our two agencies is do more data sharing, and we have done it 
both with the ACRSI program that you mentioned as well as 
things like conservation compliance as well, trying to break 
down some of the IT silos that exist between the various 
agencies at USDA.
    So, as Brandon said, you will see more rapid movement with 
regard to this particular initiative, but we are doing 
everything on the IT front at the Department of Agriculture in 
a more thoughtful and strategic and incremental way. We have 
learned a lot of lessons about how to implement big, 
complicated IT projects in the last several years, and we want 
to make sure that ACRSI is done right.
    Mr. Thompson. Thank you. There has been some mention from 
my colleagues about trade. That is obviously extremely 
important. It seems like trade is what kind of insulated our 
agriculture industry during difficult times, 2008, 2009, at the 
least to a degree was maintained in a robust form.
    So Mr. Karsting, it would be helpful, can you describe or 
clarify your role as an advocate of the agriculture industry in 
the context of international trade? And how does your role 
differ from that of USTR? And how do all of you coordinate your 
efforts?
    Mr. Karsting. Absolutely. I am glad to answer that. We work 
a great deal with USTR. As you may know, USTR is designated as 
the lead government-wide agency on trade negotiations; but the 
reality is that there are thousands of tariff codes relating to 
agriculture. Our people are at the negotiations supporting them 
with analytics and data on a host of those tariff sorts of 
issues as well as their expertise on non-tariff barriers to 
trade; so we are working with them all the time. We also do 
joint advisory committees with USTR. These are technical 
advisory committees appointed by Secretary Vilsack and 
Ambassador Froman, and so we work hand in glove with them all 
the time.
    For us, though, it is not just trade negotiations. We also 
have people at post in about 97 different countries around the 
globe, and they sort of serve as eyes and ears on emerging 
trade issues, resolving bilateral trade irritants where they 
can. So we work a lot in connection with USTR.
    Mr. Thompson. Very good. Thanks to all of you. Thank you, 
Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. Moolenaar, for 
5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman. I wanted to follow 
up on some of the discussions we have been having about TPP and 
T-TIP and specifically with respect to dairy. I am from 
Michigan, and dairy is a very important part of my district. 
And meeting with dairy producers in Michigan, one of the things 
we are concerned about is milk prices being depressed and 
oversupply. In fact, I guess in late August there was a report 
that dairies in the Northeast and Michigan dumped more than 30 
million pounds of milk because of the lack of capacity to 
process or markets to handle it.
    And so as you can understand, our producers are looking for 
new markets. And one of the concerns has been with respect to 
Canada. And I am wondering if you could comment on your 
thoughts on that, and also perhaps mention how you interact 
with the trade representative in working on these issues?
    Ms. Taylor. Congressman, if I may take that question, I had 
the opportunity to be at the last formal TPP ministerial, which 
was a few months ago in Hawaii.
    The dairy industry, we have been working very closely with 
the dairy industry and in a final deal that is commercially 
meaningful for them. Obviously, the U.S. is in a unique spot. 
We have offensive and defensive interests as it comes to dairy 
trade. But we are working very closely with them on a deal in 
not just Canada but also Japan, that is commercially 
meaningful.
    I think also when you look at some of the other trading 
partners, there is a lot of interest there in markets like 
Vietnam and Malaysia which have growing middle classes. Over 40 
percent in both of those countries, over 40 percent of their 
population is 25 years old or younger. And so as their 
populations age, they are going to be looking for a higher 
quality food, whether that is meat, dairy, fresh fruits and 
vegetables, things the United States really excels at 
producing.
    And as we have looked globally at competitive agricultural 
production, the U.S. cost of production has come much more in 
line with New Zealand or Australia, so we are much more 
competitive globally, and our exports in dairy are reflecting 
that. Today, roughly 15 percent of our dairy products produced 
are being exported globally.
    Mr. Moolenaar. And are you aware, did Canada make some 
agreements that they would open up markets to our dairy to 
enter into the TPP discussions?
    Ms. Taylor. We have long said that TPP needs to be a 
comprehensive agreement for the United States, but for all 
trading partners as well. What that is meaning for Canada is 
some of the supply managed programs, that we are going to need 
meaningful access there. That is dairy, but that is also in 
poultry and eggs as well.
    Mr. Moolenaar. And are there criteria that have been 
established that you can say, this meets our criteria in terms 
of opening access?
    Ms. Taylor. The ongoing negotiations are very fluid, and so 
saying what that might or might not be is hard at this stage, 
but certainly we are looking at the whole package, so there is 
definitely a Canadian component here; but it is much broader 
than that. It is also what market access we can get into Japan 
and some of the other countries I mentioned like Vietnam and 
Malaysia.
    But certainly are happy to keep the Committee apprised as 
the negotiations continue and near finalized agreement and what 
that dairy package actually looks like.
    Mr. Moolenaar. Yes. I guess one of the things that strikes 
me, and again I wasn't involved in the early stages of this, 
but my understanding was is that Canada, in order to become 
part of the TPP process, agreed to opening up their market to 
U.S. dairy products, and that was kind of a condition for them 
to be part of it. And I guess what I am wondering is, are there 
certain criteria that we are going to use to evaluate whether 
that has been met?
    Ms. Taylor. Congressman, from our perspective, Canada is 
going to need to offer commercially meaningful access into 
their dairy market. But what that criteria looks like, for the 
U.S. Government, but also our dairy industry, is looking at 
this a little more holistically for the entire agreement. And 
so what the exact Canadian criteria are, are very fluid because 
it is the overall trade picture through the 11 other TPP 
parties that we are negotiating with.
    Mr. Moolenaar. Is there a definition of commercially 
meaningful?
    Ms. Taylor. Not in this context. I don't know if that is 
necessarily exactly defined, but certainly something worth 
value to our producers in an economic way to our dairy 
processors in an economic way.
    Mr. Moolenaar. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. The gentleman's time has expired. Mr. Gibson, 
for 5 minutes.
    Mr. Gibson. Thank you, Mr. Chairman. I want to commend you 
and the Ranking Member for setting up these hearings. I 
appreciate the opportunity for oversight.
    I apologize to everyone, including the panel, that I am 
just getting here and getting situation aware, but I do have a 
question. It actually follows up on Mr. Moolenaar.
    Given where we are and where dairy has been, say, 24 months 
ago when that percentage was a little higher--it was about 17 
percent, maybe 18 percent at the highest--but also given the 
fact that production is up, I am just very interested to know 
raw numbers, if you will, the poundage in terms of how much now 
is being exported, controlling for the overproduction. So I am 
curious on that.
    Ms. Taylor. Congressman, I don't have those exact poundage 
numbers with us, but we will certainly be happy to follow-up 
with your office with the numbers after the hearing.
    Mr. Gibson. Well, thanks on that. Because, as I circulated 
in August, among the things I heard from my dairy producers, 
what came up, Russia came up in terms of some reactions that we 
took in relation to the ongoing international affairs, Russia, 
the aggressive action they took last year.
    Our dairy producers are of the mind that our actions have 
hurt them. And I am just curious your reaction to that?
    Ms. Taylor. Thank you for that question, Congressman. This 
is getting back to Administrator Karsting's point a little 
earlier about our presence all over the world. We have 
employees, the Foreign Agricultural Service has employees in 
roughly 96 countries, but they touched well over 150 countries 
through regional coverage as well; and they are our eyes and 
ears.
    While the Russia situation is ongoing, we are continually 
working to open markets all over the world within the context 
of TPP and T-TIP but also just bilaterally and working through 
a host of market access issues that arise every day. Whether it 
is facility registration for dairy products or things of that 
nature, we continue to work on a bilateral basis and a case-by-
case basis; and our footprint on the ground really allows us to 
react quickly to ensure markets stay open.
    Mr. Gibson. I appreciate that, and I look forward to 
getting that figure whenever it is available. And I look 
forward to continuing to participate in this as it unfolds, but 
that is all I have for now, Mr. Chairman. Thank you.
    The Chairman. The gentleman yields back. The Ranking Member 
has another 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman. Mr. Willis, this 
provision that was in the farm bill about the catastrophic 
insurance or whatever it was for poultry. It probably wasn't 
put in there for that reason, but you are doing a study on that 
or something? Are you getting close to having that done? When 
is that coming out?
    Mr. Willis. Yes. The study you are referencing should be 
available later this fall.
    Mr. Peterson. Later this month?
    Mr. Willis. Later this fall.
    Mr. Peterson. So that would be what, November?
    Mr. Willis. Probably around then, yes, sir.
    Mr. Peterson. Did you farm that out to somebody or?
    Mr. Willis. We did. We contracted for that study, yes.
    Mr. Peterson. Have you had any discussions with the 
industry about some work they have been doing with the 
reinsurers in terms of whether they would be interested in 
doing a business interruption insurance kind of a thing? Are 
you aware of that at all?
    Mr. Willis. I don't believe that I have had any 
conversations. I don't know if others have. There is also, in 
addition to the catastrophic study, there is a business 
interruption study that is also underway. We expect that early 
next year.
    Mr. Peterson. Yes, but that was a different situation. That 
had to do with the bankruptcy of some processor or something 
and some producers being put at risk because their processor 
was bankrupt. Is that----
    Mr. Willis. My understanding is yes. The two studies are 
different. The catastrophic will be available fall. The 
business interruption will be next spring, and it covers the 
issues such as what you referenced.
    Mr. Peterson. That will be in the spring?
    Mr. Willis. Yes, sir.
    Mr. Peterson. And that was also farmed out to somebody, 
some university or something?
    Mr. Willis. I believe a private contractor. There were 
numerous different studies requested, often looking at the 
feasibility of crop insurance on a sector of agriculture that 
previously hadn't had crop insurance coverage.
    Oftentimes to expedite implementation of the farm bill, we 
would offer these out as contracts to individuals who were 
experts in crop insurance, and they oftentimes write those. 
That allows us to focus a lot of our attention on 
implementation of the provisions that directly impact the 
farmers and not take resources away from that.
    Mr. Peterson. Well, I just had a meeting with some of the 
poultry folks. If it is okay, we need to get together next 
week. I need to talk to you about some of the discussions that 
I have been having with them and get your input on that. If you 
would be up for that.
    Mr. Willis. I would welcome that opportunity.
    Mr. Peterson. Thank you. Mr. Ashford, you had a question. I 
would yield to you.
    Mr. Ashford. Yes, I just had one follow-up. The question 
that we get, I get in Nebraska about the difference between TPP 
and T-TIP has to do with mainly the non-tariff-related issues. 
And would you mind going just in a general sense, explaining 
how you see those differences? I understand them generally, but 
if you could just kind of explain how you see the differences 
and the challenges between the two negotiations?
    We understand the tariff-reduction issue and eliminating 
tariffs in TPP; but what about the other, the non-tariff-
related?
    Ms. Taylor. Certainly, Congressman. Thank you for that 
question. I will talk a little bit about T-TIP specifically. I 
think the issues, the negotiations themselves are very 
different. In T-TIP you have two very mature economies, 
developed economies, where we already are doing a lot of trade. 
The EU is already our fifth leading trading partner, and that 
is with oftentimes high tariffs on agricultural products and a 
host of non-tariff barriers or SPS barriers that is preventing 
trade.
    Really what we are having conversations on during the T-TIP 
negotiations are about real predictability in the regulatory 
process with the EU. What we see oftentimes with the EU is they 
have a scientific process that works quite well. It is called 
the ESF Committee. And they go through their scientific review. 
They find similar to what our scientists find in our regulatory 
processes, whether it is on certain pathogen reduction 
treatments or washes for meats and poultry or through certain 
approval of events in biotechnology.
    But then they have this political layer, and oftentimes 
then that is when it gets stuck. We don't know the path 
forward. We don't know how long that path forward can take. So 
what we are trying to do is build a process around the 
negotiations that will bring certainty that once the science is 
done, we don't get stuck at that political layer.
    Mr. Ashford. That is not so much the case in TPP? It is 
less so.
    Ms. Taylor. In TPP, many of our trading partners are 
working through, they are setting up their food safety systems 
or revising the regulations that we see today. Vietnam recently 
did a complete overhaul of their food safety system and food 
safety laws and regulations. We actually had, through some of 
our technical exchanges, helped them in that process. So in 
TPP, we worked a lot about recognizing international science-
based standards, a rules-based process, having good regulations 
on the books. The same rules-based, science-based principles 
apply in TPP, just in a slightly different way.
    Mr. Ashford. Thank you.
    The Chairman. The gentleman yields back. Mr. Benishek, did 
you want 5 minutes on this panel?
    Mr. Benishek. No, thank you. I am just getting up to speed.
    The Chairman. Well, I want to thank, Ms. Taylor, thank you 
and the others for coming.
    As a transitional issue, our panelists have agreed 
graciously--thank you--to go down to 1306, for Members to go 
down and have a quick word if you want to while we are getting 
the next panel in. So to facilitate that, Ms. Taylor, you and 
your team, if you wouldn't mind going to 1306, and our Members 
will swing by there and talk to you if they want to.
    Thank you so very, very much, and we will stand in recess 
for a couple minutes while we reset, about 10 minutes, and we 
crank back up. Thanks everybody.
    [Recess.]
    The Chairman. All right. Good afternoon. We will welcome 
our second panel to the podium. I passed you guys in the hall. 
I wasn't trying to be rude, so we will have a chance to visit 
with you and transition to the next panel here in a minute.
    With us next we have the Honorable Robert Bonnie, Under 
Secretary of Natural Resources and Environment at the USDA. And 
accompanying him will be Jason Weller, who is Chief of the 
Natural Resources Conservation Service, and Ms. Mary Wagner who 
is the Associate Chief at the Forest Service.
    So, thank you for being here this afternoon. We appreciate 
it. Mr. Bonnie, the floor is yours.

   STATEMENT OF HON. ROBERT BONNIE, UNDER SECRETARY, NATURAL 
                RESOURCES AND ENVIRONMENT, U.S.
          DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
          ACCOMPANIED BY JASON WELLER, CHIEF, NATURAL
    RESOURCES CONSERVATION SERVICE, USDA; AND MARY WAGNER, 
           ASSOCIATE CHIEF, U.S. FOREST SERVICE, USDA

    Mr. Bonnie. Mr. Chairman, Ranking Member, and distinguished 
Members of the Committee, thank you for the opportunity to 
appear before you today to discuss the work of the Natural 
Resources Conservation Service and the Forest Service. This 
Committee deserves a great deal of credit for the 2014 Farm 
Bill, and I will focus much of my remarks on implementation of 
that law.
    In addition, given the seriousness of this year's fire 
season, I also want to discuss forest restoration and the 
impact of wildland fire on our budget. Implementation of the 
2014 Farm Bill is a top priority for USDA. With respect to NRCS 
programs, the agency is demonstrating that voluntary 
conservation, backed by strong science and done in concert with 
a variety of partners, can solve critical natural resource 
challenges for America's farmers, ranchers, and forestland 
owners.
    The agency has completed interim final rules for the 
Environmental Quality Incentives Program, the Conservation 
Stewardship Program, the new Agricultural Conservation Easement 
Program. NRCS has placed a particular priority on 
implementation of the new Regional Conservation Partnership 
Program. This new program has spurred new partnerships among 
producers, businesses, conservation groups, states, and others. 
In February, NRCS provided over $370 million in RCPP funding to 
115 projects, an investment that matched more than dollar for 
dollar. In May NRCS, announced a second funding availability, 
265 pre-proposals were submitted. Interest in RCPP is very 
high.
    Beyond this program, NRCS is spearheading a series of 
initiatives to address drought, water quality, wildlife 
habitat, and other issues. For example, our Mississippi River 
Basin Initiative is significantly increasing the adoption of 
critical water quality conservation practices. We are working 
with California farmers and ranchers to make their operations 
more resilient to drought. And NRCS is demonstrating through 
its Working Lands for Wildlife Program that farmers, ranchers, 
and forest landowners can voluntarily restore habitat for rare 
species so that they no longer need the protection of the 
Endangered Species Act.
    Let me now turn to the Forest Service. Increasing the pace 
and scale of forest restoration and management across our 
National Forests remains the top priority for the agency. The 
agency continues to invest in collaborative landscape-scale 
projects and has increased acres treated over the last several 
years. Timber sales have increased by 18 percent since 2008.
    The Forest Service has moved quickly to implement several 
provisions of the 2014 Farm Bill. Last year Secretary Vilsack 
designated over 46 million acres of National Forest System 
lands under the new insect and disease provisions of the farm 
bill. Twenty projects are moving forward, and 16 of those use 
categorical exclusions under NEPA. Working with states, the 
Forest Service has developed templates for use of the Good 
Neighbor Authority, and we have entered into agreements so far 
with Pennsylvania, Utah, and Wisconsin.
    Through our Joint Chiefs Landscape Restoration Partnership, 
NRCS and Forest Service are working together to restore forests 
on private lands adjacent to National Forests using farm bill 
dollars.
    Our biggest obstacle to increasing forest restoration and 
management is the wildfire budget. Longer fire seasons, 
increased fuel loads, and development into our wildlands are 
all significantly increasing the costs of fire fighting. In 
most years, the Forest Service is forced to transfer funds from 
nonfire programs to fund firefighting. This year we will 
transfer an estimated $700 million, but there is a long-term 
problem that goes well beyond these annual transfers. Fire 
programs now consume over 50 percent of the agency's budget, up 
from 16 percent just 2 decades ago. As a result, the agency has 
39 percent fewer employees working on nonfire programs. All 
agency activities are suffering, including recreation, 
research, range management, and, yes, forest restoration.
    The current budget system is cannibalizing the very 
programs that can help us reduce the threat of fire. To solve 
the fire budget problem, we must solve both issues, both fire 
transfers and the long-term shift of resources away from 
nonfire programs.
    The Wildfire Disaster Funding Act supported by several 
Members of this Committee would make significant in-roads. It 
is time that we treat fire as the natural disaster that it is 
and adopt an approach which will allow the agency to invest in 
restoration activities that will over time save lives, 
property, natural resources, and money. Thank you.
    [The prepared statement of Mr. Bonnie follows:]

   Prepared Statement of Hon. Robert Bonnie, Under Secretary, Natural
Resources and Environment, U.S. Department of Agriculture, Washington, 
                                  D.C.
    Mr. Chairman, Ranking Member, and distinguished Members of the 
Committee, thank you for the opportunity to appear before you today to 
discuss the role of the Natural Resources Conservation Service (NRCS) 
and the Forest Service at the U.S. Department of Agriculture. My 
testimony today will focus on farm bill implementation; wildfire 
response; and strengthening rural communities through voluntary 
conservation, resilient landscapes and recreational opportunities.
Farm Bill Implementation
    Implementation of the 2014 Farm Bill has been and will continue to 
be a priority across USDA. The new farm bill delivered a strong 
conservation title that makes robust investments to conserve and 
support America's working lands and consolidates and streamlines 
programs to improve efficiency and encourage participation. For the 
Forest Service, the farm bill expanded current authorities and provided 
several new authorities including Good Neighbor Agreements, expanded 
insect and disease designations under the Healthy Forest Restoration 
Act, and permanently reauthorized stewardship contracting. NRCS is 
focusing on implementation of the Environmental Quality Incentives 
Program (EQIP), Conservation Stewardship Program (CSP), Agricultural 
Conservation Easement Program (ACEP), Regional Conservation Partnership 
Program (RCPP), and Voluntary Public Access and Habitat Incentive 
Program (VPA-HIP).
Expanded Insect and Disease Designations
    The 2014 Farm Bill added authority to the Healthy Forest 
Restoration Act to authorize designation of insect and disease 
treatment areas and provide a categorical exclusion (CE) for insect and 
disease projects on areas as large as 3,000 acres. The Forest Service 
received letters from 36 states requesting designations under the 
insect and disease provisions and in response the Forest Service Chief 
designated approximately 46.7 million acres of National Forest System 
lands. Currently, 20 projects have been proposed under the provision; 
the Forest Service intends to use the CE for 16 of the projects and 
streamlined Environmental Assessments for the remaining four. The 
initial 16 projects will help the agency and its partners better 
understand and implement the new CE authority while additional projects 
are proposed, planned, and authorized. The Forest Service expects that 
planning and implementation of projects within designated areas will 
expand in FY 2015 and beyond.
Good Neighbor Agreement Authority
    The Forest Service completed the requirements under the Paperwork 
Reduction Act to approve the new Good Neighbor Agreement templates that 
will be used to carry out projects with the states. The Forest Service 
worked closely with the states to collaboratively develop the new 
templates, which were approved by the Office of Management and Budget 
on June 24, 2015. Since then, the agency has entered into agreements 
with Pennsylvania, Utah, and Wisconsin to carry out forest, rangeland 
and watershed health activities on the national forests in those 
states.
Stewardship Contracting
    The farm bill also provided permanent authority for stewardship 
contracting. Traditional timber sale contracts will continue to be a 
vital tool for the Forest Service in accomplishing management of the 
National Forests. At the same time, stewardship contracting is helping 
the Forest Service achieve land and natural resource management goals 
by funding forest health and restoration projects, stream restoration, 
hazardous fuel removal, and recreation improvements. In many areas, 
stewardship contracting will allow the agency to build larger projects, 
treating more acres, with broader public support. Since 2008, acres 
treated through stewardship contracts and agreements have nearly 
tripled.
Conservation Stewardship Program
    Since CSP started in 2009, the program has become a major force for 
agricultural conservation, and it continues to inspire action to 
enhance America's natural resources. All private or Tribal agricultural 
land and non-industrial private forestland is eligible, unless it is 
enrolled in the Conservation Reserve Program (CRP), ACEP--Wetlands 
Reserve Easements, or the Conservation Security Program. In FY 2014, 
NRCS enrolled about 9.6 million acres and now CSP enrollment exceeds 60 
million acres, about the size of Iowa and Indiana combined.
    The CSP Interim Rule was published in November 2014, reflecting 
statutory changes to the acreage enrollment cap, stewardship levels, 
contract modifications, and CRP and certain easement land eligibility. 
NRCS received nearly 500 individual comments; most related to small 
operations having access to the program, minimum payments, contract 
rates, and stewardship thresholds. We expect to publish the final rule 
this fall.
Environmental Quality Incentives Program
    Through EQIP, producers addressed their conservation needs on over 
11 million acres in FY 2014. EQIP provides financial and technical 
assistance to agricultural producers to help plan and implement 
conservation practices that address natural resource concerns. 
Conservation practices are designed to improve soil, water, plant, 
animal, air and related resources on Tribal land, agricultural land, 
and non-industrial private forestland In FY 2014, over $928 million was 
obligated in nearly 40,000 contracts to support this conservation work. 
EQIP has been instrumental in helping communities respond to drought as 
well, allocating $20million in 2015 for drought across the West.
    The EQIP Interim Rule was published in December 2014, reflecting 
statutory changes to incorporate the purposes of the former Wildlife 
Habitat Incentive Program and address the payment limitation and waiver 
authority, advance payments for historically under-served producers, 
and preferences to certain veteran farmers and ranchers. NRCS received 
over 330 individual comments; most related to the irrigation history, 
confined animal feeding operations, EQIP plan of operations, program 
administration, payment rates and limitations, application selection, 
and funding levels for wildlife practices. The final rule is targeted 
for publication in Fall 2015.
Conservation Innovation Grants
    Conservation Innovation Grants (CIG) are a component of the EQIP. 
They stimulate the development and adoption of innovative conservation 
approaches and technologies, while leveraging the Federal investment in 
environmental enhancement and protection in conjunction with 
agricultural production. CIG is used to apply or demonstrate previously 
proven technology in order to increase adoption with an emphasis on 
opportunities to scale proven, emerging conservation strategies. CIG 
funds projects targeting innovative on-the-ground conservation, 
including pilot projects and field demonstrations. In September 2014, 
NRCS awarded $15.7 million in CIG to 47 organizations that will help to 
accelerate innovation in private lands conservation. The FY 2015 
Funding Announcement was released in January 2015 offering up to $20 
million. Project selection is targeted for early Fall 2015.
Agricultural Conservation Easement Program
    Landowners participating in the Agricultural Conservation Easement 
Program (ACEP) enrolled an estimated 143,833 acres of farmland, 
grasslands, and wetlands through 485 new ACEP easements (88,892 acres 
in Agricultural Land Easements, and 54,941 acres in Wetland Reserve 
Easements) with the $328 million in FY 2014 funding. In FY 2015, $332 
million is available in ACEP for the purchase of conservation easements 
to provide long-term protection of agricultural and wetland resources.
    The ACEP Interim Rule was published in February 2015, reflecting 
statutory changes to consolidate the purposes of Farm and Ranch Lands 
Protection Program, Grassland Reserve Program (easement component 
only), and Wetlands Reserve Program and address the certification 
process for ACEP--Agricultural Land Easements; authority to 
subordinate, modify, or terminate an easement; grasslands of special 
environmental significance; and the agricultural land easement plan. 
NRCS is currently evaluating public comments and developing 
recommendations for the final rule. We expect to publish the final rule 
this winter.
Regional Conservation Partnership Program
    The RCPP created a new platform for engaging partners and 
leveraging the Federal conservation investment. RCPP promotes 
coordination between NRCS and partners to deliver conservation 
assistance to producers and landowners. NRCS provides assistance to 
producers through partnership agreements and through program contracts 
or easement agreements. The first RCPP announcement of over $370 
million in program funding was rolled out on May 27, 2014. Following a 
rigorous two-stage competitive process, 115 high-impact projects across 
all 50 states and the Commonwealth of Puerto Rico were selected in 
January 2015. Of those projects, $84 million is being used to fund 
high-impact conservation projects focused on water quantity and other 
drought-related resource concerns. The funded projects support many 
activities, from helping farmers improve their resilience to drought to 
protecting drinking water supplies. Partners brought forward an 
estimated $400 million in their own contributions for a total 
investment of nearly $800 million that will go to improve the nation's 
water quality and supply, support wildlife habitat and enhance 
agricultural production and the environment. The FY 2016 funding 
announcement was released in May 2015, making available up to $235 
million for new agreements. This round of RCPP will have an even 
greater emphasis on partnerships, leveraging, and diversity to achieve 
innovative solutions to locally identified issues. Selected pre-
proposal applicants were notified on September 4th if their project was 
invited back for full proposal submission.
Voluntary Public Access and Habitat Incentives Program
    The VPA-HIP assists states and Tribes to increase public access to 
private lands for wildlife-dependent recreation, such as hunting, 
fishing and hiking. In FY 2014, NRCS made $20 million available for 
VPA-HIP awards and was able to fund ten of the 30 proposals received. 
In February 2015, NRCS announced the availability of another $20 
million for VPA-HIP projects. Project selections were announced on 
August 17 and funding was used to award grants to projects in 15 
states.
Mitigation Banking Program
    The Mitigation Banking program provision will be implemented 
directly through an announcement of program funding. The implementation 
approach is being finalized with an expected announcement in early Fall 
2015.
    In addition to the major rule changes discussed above, minor 
statutory changes to Technical Service Providers; State Technical 
Committees; Healthy Forests Reserve Program; Small Watershed Program; 
Regional Equity; VPA-HIP, and Agricultural Management Assistance were 
published in a consolidated Interim Final Rule in August 2014. The few 
public comments received were addressed in the final rule published in 
April 2015.
Managing Wildland Fires
    Increasingly severe fire seasons are one of the greatest challenges 
facing the nation's forests. Already this fire season, we have spent 
weeks at National Preparedness Level 5--the highest level--meaning all 
available ground and air assets are committed to priority work. Severe 
drought across the west has increased fire severity in several states. 
Washington State, among others, has recorded a record season of severe 
wildfires. Drought-ridden California has also experienced tremendous 
fire activity. The Forest Service, in coordination with our fire 
response partners, mobilized thousands of firefighters along with 
numerous airtankers, helicopters, fire engines and other assets through 
our integrated, interagency suppression efforts. Every state and Puerto 
Rico, along with the military and international support, has provided 
people and equipment this season to respond to the severe fire 
activity. The Forest Service will continue to collaborate with its 
Federal, state, local, and Tribal governments, partners, and 
stakeholders on the implementation of the National Cohesive Wildland 
Fire Management Strategy.
    The Forest Service has one of the most effective fire organizations 
in the world and continues to keep almost 98 percent of the wildfires 
we fight very small. However, the few fires that do escape initial 
response tend to grow much larger far more quickly than ever before. As 
documented in a recently released report,\1\ the cost of fire 
suppression has soared in the past 20 years and is having a 
debilitating impact on the Forest Service budget and non-suppression 
activities of the Forest Service.
---------------------------------------------------------------------------
    \1\ http://www.fs.fed.us/about-agency/budget-performance/cost-fire-
operations.
---------------------------------------------------------------------------
    In 1995, fire made up 16 percent of the Forest Service's annual 
appropriated budget--this year, for the first time ever, more than 50 
percent of the budget will be dedicated to fire. Along with this shift 
in resources, there has been a corresponding shift in staff, with a 39 
percent reduction in all non-fire personnel. Left unchecked, the share 
of the budget devoted to fire in 2025 could exceed 67 percent.
Restoring Fire-Adapted Ecosystems
    Fire plays a beneficial role in maintaining the ecological 
stability of many landscapes, and the Forest Service is working with 
partners to restore healthy, resilient, fire-adapted ecosystems. Our 
goal, especially near homes and communities, is to prepare forests and 
grasslands to resist stresses such as drought and recover from 
disturbances, including wildfires. Our large-scale restoration projects 
are designed in part to restore fire-adapted forest types across large 
landscapes, including the reintroduction of periodic wildland fire 
where safe and effective.
    Developing new markets for the low-value woody materials we remove 
during restoration and hazardous fuels treatments will help offset the 
costs of these activities while providing new revenue streams for 
private landowners and remains a top priority for the Forest Service. 
We will continue to provide grants and other forms of assistance for 
wood-to-energy initiatives, and to help projects compete for other 
sources of funding. We will also provide technical assistance to help 
facilities that convert wood to energy become or remain financially 
viable.
Strengthening Rural Communities through Voluntary Conservation, 
        Resilient Landscapes and Recreational Opportunities
    Our National Forest System presents a range of recreational 
opportunities to connect people with nature in an unmatched variety of 
settings and through a plethora of activities. Spending by visitors 
engaging in recreation activities, including skiing, hiking, hunting, 
and fishing, supports more jobs and economic output than any other 
activities on the National Forest System. In 2012, outdoor recreation 
on the National Forest System supported around 190,000 jobs and 
contributed about $13 billion to the nation's gross domestic product.
    Through work on the 193 million acres of National Forest System 
lands, the timber and forest products industries, livestock producers, 
and minerals/energy production collectively support about 118,000 jobs. 
Each year, these industries contribute about $11.5 billion to America's 
gross domestic product. In rural areas in particular, these uses 
deliver sustained social and economic benefits to communities.
    The Forest Service works to build thriving communities across the 
nation by providing communities with the many economic benefits that 
result from sustainable multiple-use management of the National Forests 
and Grasslands, helping urban communities reconnect with the outdoors, 
and expanding the benefits that both rural and urban residents get from 
outdoor recreation. Jobs and economic benefits stem from our 
administration of the National Forest System, including its multiple 
uses, as well as from investments in the activities, access, and 
infrastructure needed to deliver essential public services such as 
clean water, electrical power, and outdoor recreational experiences.
    The right conservation practices put in the right places are an 
effective means to achieve cleaner more abundant water for farmers, 
ranchers, communities, and wildlife. Using farm bill programs through 
the Mississippi River Basin Initiative (MRBI), NRCS has invested 
significantly in high-priority water quality projects in the Basin 
delivering on the ground benefits. For example, as a result of MRBI 
conservation efforts, Arkansas was able to remove two stream segments 
from the State's Clean Water Act 303(d) impairment designation. Working 
with partners and using farm bill tools, farmers, ranchers and other 
landowners have helped remove nine more streams from Oklahoma's 303(d) 
list of impaired streams in 2014. Oklahoma ranks second in the nation 
for Environmental Protection Agency-recognized water quality success 
stories. In the region overlying the Ogallala Aquifer in the Central 
Plains, farm bill programs have allowed NRCS to partner with farmers to 
install water conservation practices that conserved an estimated 1.5 
million acre feet of groundwater over 4 years, or enough water to 
provide annual water needs for about 3.3 million households.
    If the widespread drought has shown us anything, it is the value of 
crop resilience through good soil health management systems. Using farm 
bill programs, NRCS has been accelerating adoption of soil health 
practices and helping producers build resilience in their production 
systems. Soil health management systems help increase organic matter, 
reduce soil compaction, improve nutrient storage and cycle and increase 
water infiltration and water availability to plants. These benefits 
lead to greater resiliency to adverse conditions but also boost yields. 
For example, a national survey of farmers documented an increase in 
yields of nine percent for corn following cover crops and ten percent 
for soybeans after cover crops.
    The StrikeForce for Rural Growth and Opportunity initiative targets 
farm bill programs in persistent poverty communities to assist farmers 
and ranchers in achieving economic and environmental objectives. Since 
2010, NRCS and other USDA agencies have focused assistance and outreach 
in over 880 counties, parishes, boroughs, and Census areas, and in 
Indian reservations in 22 states. In FY 2014 alone, NRCS invested $286 
million in partnership with producers in high-poverty communities to 
help their operations be more economically successful and 
environmentally sustainable. For example, NRCS in partnership with 
Tuskegee University has invested about $1 million to help nearly 40 
producers in Alabama StrikeForce counties to incorporate innovative 
practices on their farming operations, including retro-fits for current 
irrigation systems, new wells, solar powered wells, and drip irrigation 
systems that will make their operations more productive and 
sustainable.
Conclusion
    We are now facing some of the greatest ecological challenges in our 
history: invasive species, climate change effects, regional drought and 
watershed degradation, fuel buildups and severe wildfires, habitat 
fragmentation and loss of open space, and devastating outbreaks of 
insects and disease. In response, we are working with our public and 
private partners to increase the pace and scale of ecological 
restoration and promote voluntary conservation that is creating 
healthy, resilient landscapes capable of sustaining and delivering 
clean air and water, habitat for wildlife, opportunities for outdoor 
recreation, and providing food and fiber for the world. The Forest 
Service and NRCS provide the programs and services that help strengthen 
agriculture, the environment, and rural economies.

    The Chairman. Thank you, Mr. Bonnie.
    I recognize myself for 5 minutes.
    Mr. Weller, could you talk to us a little bit about the 
mandate--mandate is one word--but our farmers and ranchers are 
constantly facing more and more regulations, and they all want 
to take care of the land. They all want to be good stewards of 
the land. Can you talk to us about your efforts trying to look 
at EQIP and RCPP programs in terms of trying to streamline 
those regulations and helping our producers and landowners who 
voluntarily want to comply, but we just keep layering on more 
regulations.
    Can you talk to us about your efforts in helping those 
folks to weave that complicated system we have put in place?
    Mr. Weller. Yes, certainly, sir. So this Committee has 
afforded NRCS great tools. You talked about a few of them, the 
Environmental Quality Incentives Program, the new Regional 
Conservation Partnership Program, the basic authorities we have 
in our Soil Domestic Allotment Act go out and do conservation 
planning.
    And so there are examples now around the country, Under 
Secretary Bonnie referenced one of these a little bit, the 
sage-grouse work we are doing out West. It is not just out 
West. It is out in the Northeast. This last week we had a 
celebration in New Hampshire celebrating yet another species 
that through a collaborative voluntarily approach, landowners 
have helped head off the paths of potential listing in this 
case the New England cottontail rabbit. In the last 13 months 
alone, if you go around the country, starting last August in 
Montana, with the Arctic fluvial grayling, the Oregon chub in 
Oregon, the Louisiana black bear in Louisiana, the bi-state 
population of sage-grouse in the border between California and 
Nevada, the New England cottontail rabbit. The list goes on and 
on, and those are all the species either taken off the list or 
prevented from getting on the endangered species list because 
of the proactive actions of farmers and ranchers and forest 
landowners, and in large part assisted through the programs and 
authorities this Committee provides in NRCS.
    Beyond ESA is the Clean Air Act in California. So under the 
Clean Air Act, in the San Joaquin Valley, one of the most 
heavily regulated air sheds in the world, agriculture is a 
regulated sector, and they were under a requirement to reduce 
the amount of nitrous oxide emissions, NOX 
emissions, and so they had to reduce emissions by 10 tons per 
day by the year 2017. Well, agriculture, through the help of 
the programs again this Committee provides our agency met that 
goal 3 years ahead of schedule.
    And so through the EQIP program that this Committee has 
afforded us, we have invested over $120 million with voluntary 
actions in the San Joaquin Valley. And through the upgrading of 
diesel engines and retiring old tractors and off-road vehicles 
from operations, this Committee in the investment through EQIP 
has removed the equivalent of one million cars off the roads of 
California's highways every years, in effect reducing 7 tons of 
NOX emissions per day, meeting the requirements 3 
years ahead of schedule.
    So there are lots of examples around the country. Water 
quality in Arkansas, again is another example. Through EQIP 
assistance and conservation planning by targeting action 
working voluntarily with poultry producers in northwestern 
Arkansas, we have helped de-list two stream segments on the St. 
Francis River because of nutrient impairments, and those waters 
are now back to a fishable, swimmable condition because of the 
voluntary actions of farmers and ranchers.
    The Chairman. That is great information. Ms. Wagner, I try 
not to ask a question I don't already know the answer to. We 
have Forest Service lands and we have National Parks which have 
a great deal of forests on them. Can you walk us through how 
those two are managed. Are they managed the same? And if they 
are not, do you guys talk to each other; your best practices, 
do they share those? I mean, how do you guys co-exist among the 
trees?
    Ms. Wagner. The National Park Service is a Bureau within 
the Department of the Interior, and U.S. Forest Service, of 
course, is within the Department of Agriculture. We share many 
boundaries with the National Park Service. I can think of the 
Olympic National Forest as a good example on the Olympic 
Peninsula, which is surrounded by the Olympic National Forest. 
So the park and the forest are inextricably connected and 
connected with the communities that we serve, both on the 
forest and in the National Park. So we do a lot of 
collaborative work together.
    We coordinate well together. We share resources. We have 
authority from Congress called Service First which allows us to 
provide seamless visitor services so when people come into an 
office, they will be greeted by somebody and get information on 
both the National Park and the Forest Service.
    Our goals are a little bit different. The Park Service is 
focused on preservation and conservation. They interpret for 
visitors the scenic, cultural, historic values of a National 
Park. The National Forests are guided by the principles of 
multiple use management and sustained yield. So we like to 
think of the National Forests as working landscapes, as places 
where people not only get the benefits that accrue from having 
public lands called National Forests, but also they see them as 
working to provide things like wood fiber, livestock grazing, 
minerals development, energy development.
    The Chairman. In terms of specifics, though, there is no 
real difference between a healthy forest on National Forest 
land and a healthy forest on a National Park. I understand the 
difference in what the Park Service is doing, but do they 
manage their forests to a healthy level the way you do?
    Ms. Wagner. In the National Park Service they have a much 
more limited footprint in terms of active management of 
forests, though they do some hazardous fuels treatment and do 
manage forests to some degree by use of prescribed fire and 
natural fire in their parks. We tend to take a little bit more 
of a working stance on National Forests where we have timber 
sale contracts, stewardship contracts, as tools to help create 
resiliency in those forests.
    The Chairman. Thank you. Mr. Peterson, for 5 minutes.
    Mr. Peterson. Thank you, Mr. Chairman.
    Mr. Weller, as you are aware, the interest in my district 
of this small watershed program and the implementation, I don't 
know exactly what is going on, but I am getting the feedback 
from my district that things are not going as smoothly as 
people think they should.
    I don't know what you are hearing about it or whether this 
is an issue of not having enough staffing or just what is going 
on. It was initially moving pretty good, but now reports are 
that it is kind of bogged down. Have you gotten any feedback?
    Mr. Weller. Some feedback. There are a couple things 
happening. As you know, 20 years ago, 30 years ago, we had a 
much more robust watershed operations program. We had a lot 
more capacity. In our states we had engineering teams, whether 
it is Minnesota or throughout the country, where they really 
were experts at designing, building, constructing. In the end, 
ultimate zeroing out of the program, a lot of that capacity now 
is no longer--within each state, so now a lot of the capacity 
we have is a National Water Management Center.
    So while we still have in some states some residual 
capacity, particularly focused on a rehabilitation program this 
Committee has funded and we have had some success with over the 
last few years. With respect to the project in Red River and 
partnering with the authority, what I have been told there is 
that in Minnesota, there were 14 separate agreements or 
projects that are ongoing. And in North Dakota there are about 
six that are overall working as a system with the whole 
authority's plan to address the funding concerns.
    So out of those, what I have been told is that 13 out of 
the 14 agreements, these are with the cooperative agreements 
that actually start the work, are now with the partners for 
signature and review. Five of the six in North Dakota again are 
with the relevant partners for their signature and review. We 
hope within the next 30 to 60 days they will all be signed and 
be able to roll at that point. In the end it just comes back to 
where I started with that is the capacity.
    And so the authority and the partners there really should 
be commended with having everything ready to roll, and there is 
a lot of positive energy and they want to get a lot done. As to 
what you are sensing is a little bit on our end it is a 
bandwidth issue, and that is why we are having to bring in 
people from the national level and the National Water 
Management Center, as well as from national headquarters here, 
our national engineering team, to help support the folks in 
Minnesota and North Dakota to make sure we don't have choke 
points where we don't get in the way of the partners who want 
to proceed.
    Mr. Peterson. So you think 30 to 60 days we will have----
    Mr. Weller. We will have all the agreements signed, sewn 
up.
    Mr. Peterson. I appreciate the initiatives to improve 
foraging habitat for pollinators and especially this focus on 
honey bees. However, many of these plans apparently require the 
use of native plants only. In fact, I have had some personal 
experience with trying to plant some pollinator habitat. By 
doing that the feedstocks are hugely expensive, and they are 
very hard to get established. I have seen a number of these 
where they have attempted and the flowering stuff in a lot of 
cases doesn't survive.
    So I guess why aren't we more focused on using non-native 
plants like clovers and alfalfa and vetch and sunflowers where 
the seeds are a lot more available, a lot less expensive. It is 
a lot more easy to establish. Why aren't we more focused on 
that, and why are we kind of hung up on all this native idea?
    Mr. Weller. So at the national level, we do not prescribe a 
mandate to use native, and we don't prescribe the cocktails of 
the seeding mixtures. That is something we really allow our 
states because they are the closest to our customers and the 
closest to what is needed.
    Mr. Peterson. I get the impression from the state that they 
are being told by you guys.
    Mr. Weller. That is something we need to follow up with 
Minnesota on. There have been some recent discussions on this, 
and I have asked our National Plant Material Center folks and 
our ecologists who are working on this, and what they have 
advised me on is that while natives are sometimes preferable, 
there is not a mandate to use natives. And a lot of times non-
natives, to your point, alfalfa and clover, sunflowers, other 
species, are less costly, provide very good forage habitat, and 
are more appropriate.
    That is where then we really want to provide the 
flexibility for the local conservation planner to work with the 
producer to really figure out what is the right cost and 
performance they want.
    Mr. Peterson. But if you are going to plant pollinator 
habitat, you are not going to be allowed to plant these non-
natives. You are going to have to plant this mixture that they 
have under the NRCS CSP program and so forth. That is coming 
from the Federal, right, or from the top?
    Mr. Weller. So we have enhancements, yes, under 
Conservation Stewardship Program. But if they are specific 
enhancements focused on whether it is for--there are different 
types of pollinator habitat. So for honey bee habitat, yes, 
alfalfa and clovers are a very good varietal you want to plant 
but there are other pollinators that you are concerned about 
that are native then they are going to be adapted to and prefer 
native plantings, so it really depends upon what is the species 
that you are trying to provide the best habitat for.
    Mr. Peterson. Thank you, very much.
    The Chairman. The gentleman yields back. Mr. Neugebauer, 
for 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Weller, Chief 
Weller, I was so glad to hear you talk a little bit about the 
endangered species and Fish and Wildlife. As you know, earlier 
this month, a Federal judge overturned the listing of the 
lesser prairie chicken because they found that Fish and 
Wildlife had not followed its own rules in evaluating the 
conservation efforts when it added the species to the 
threatened list. And by the way, I completely agree with that 
judge. I know that NRCS operates one of those conservation 
efforts so with the lesser prairie chicken initiative which 
works with the Western Association of Fish and Wildlife 
Agencies, which has been a very successful program, by the way.
    So the question I have is that initiative started back in 
2010, I believe. So the first question I have, did Fish and 
Wildlife confer with NRCS about their efforts prior to the 
listing?
    Mr. Weller. Yes, we did as an agency, NRCS provided to the 
Fish and Wildlife Service information on the extent and the 
scale of the conservation investments that we had made in 
partnership with the producers. So my understanding is the Fish 
and Wildlife Service did take into consideration the NRCS 
contributions to the protection of the habitat.
    Mr. Neugebauer. And was that data based on, hey, we are 
having some success here? Give me a little idea of the kinds of 
information that you furnished them.
    Mr. Weller. So what we are trying to then roll up across 
the multi-state region that is important for the prairie 
chicken, much like we are doing with the sage-grouse, talk 
about the acreage, the locations of the acreage, the type of 
practices we have in place. But what is also in the partnership 
with Fish and Wildlife Service, what we did is we also then 
tried to identify what are the best practices to actually help 
the prairie chicken but then also work in a working lands 
landscape.
    So we identified 40 different practices that we felt were 
the best for whether you are a farmer or rancher that would 
also then benefit prairie chickens. Because we have done that 
pre-consultative with Fish and Wildlife Service, then we would 
come back and say we had several hundred producers using the 
preapproved practices that you agreed benefit the chickens. 
Here is then the benefits that roll up in terms of improved 
forage for the chickens, improved habitat. So we did some work 
ahead of the listing, but then when they were proceeding with 
their analysis, we provided them the data in terms of 
participation, acreage, and investments.
    Mr. Neugebauer. Why do you think--you were talking about 
the successes that you have had where you had some of these 
other partnerships in place. It is my understanding this is one 
of the larger partnerships and involves a lot more private land 
than some of the other ones. Why do you think that the Fish and 
Wildlife decided to proceed with that after you presented them 
with that data?
    Mr. Weller. It has been, I completely commend the ranchers 
and the farmers in Texas, Oklahoma, Kansas, New Mexico, and 
Colorado that contributed to this effort. They really have 
stepped forward and been very proactive. I can't speak to why 
in the end Fish and Wildlife Service made the decision. They 
make the analysis they have, the trends they are looking at, 
and in the end it is a trust species that they are responsible 
for protecting; and that is not something NRCS was privy to or 
I can't necessarily speak to what ultimately led to that 
decision.
    Mr. Neugebauer. Wouldn't you say there is a tremendous 
amount of benefit for having these kind of partnerships and 
coalitions?
    Mr. Weller. Absolutely, yes.
    Mr. Neugebauer. I think the concern I have is that this has 
been very successful. Since 2014, the population has increased 
20 percent in just 1 year. I think some of that is conservation 
efforts. Obviously, we started getting a little rain.
    What I am more concerned about is the disincentive that 
this kind of action sets where you go out and enter into these 
partnerships and bring these coalitions together, and the 
reward that they get for that behavior is that the Fish and 
Wildlife Service goes ahead and decides to list that. So I want 
to make sure you are doing everything you can to make sure that 
they have good science, good information, if you are working 
with these partnerships.
    Mr. Weller. Well one of the things, sir, I would just want 
to highlight is I agree with you, and that is a big concern. 
And so a lot of confusion, if not fear, around ESA, and so what 
we try to do with the lesser prairie chicken but also with 
sage-grouse and five other species around the country, is this 
concept of regulatory certainty, predictability; and what we 
are doing with the chickens is if you are a rancher and you 
want help, you come in and visit with your local NRCS. We will 
come out to your ranch, and we will provide you a conservation 
plan, which will look at the specific threat to the chickens. 
And as long as you are managing your ranch using that 
conservation plan, you don't even have to go into a contract 
with us. You can do it on your own. You don't need to work with 
the government any more.
    As long as you are managing your ranch according to that 
plan, what Fish and Wildlife Service has then said is that you 
get at least 30 years of certainty that you are not going to be 
asked to do anything more for the chicken basically because you 
have been recognized for your excellent stewardship.
    So we are trying to reward folks, to your point, who are 
willing to voluntarily take proactive actions benefit the 
ranch, but also in this case benefit at-risk species, they 
should get something in return, and that is to be able to sleep 
at night not worrying about ESA.
    Mr. Neugebauer. Well, I appreciate the regulatory 
certainty. I think the bigger bonus and the bigger incentive 
for cooperation is that if agencies and individuals and 
corporations and farmers and ranchers are working towards a 
reasonable conservation plan, that we should leave it at that.
    Mr. Thompson [presiding.] Mr. Scott from Georgia.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I 
would follow-up with that and say somebody from the farm--I 
remember the time when if you found a problem, you actually 
would call somebody from the government because you wanted 
help. Now I can assure you that that is the last person that 
most farmers want to call. When it comes to conservation, that 
is a problem. People don't trust us when we talk about prairie 
chickens and other things. It seems to me that it is not about 
the chicken as much as it is about stopping other industries in 
certain areas.
    I would just ask the one thing that we have heard about a 
lot recently, Waters of the U.S., what do you expect the 
workload for your agency to be if Waters of the U.S. becomes 
the system that you have to operate under?
    Mr. Weller. So first let me start with workload, and I will 
get to your question about the Clean Water Rule, Waters of the 
U.S. rule. In terms of workload, we have a lot. I am really 
proud of how much NRCS has stepped forward with the 2014 Farm 
Bill. In a matter of literally weeks after it was enacted into 
law we were ready to roll. We had EQIP stood up and running. We 
had CSP stood up and running. We did a nationwide sign-up. We 
got another 10 million acres enrolled. We launched the new RCPP 
in a matter of months. And that is on top of fewer people. So 
because of sequestration cuts, today there are 1,500 fewer 
professional NRCS employees than there were just 4 years ago. 
So we have a lot of workload.
    In regards to your question on the Clean Water Rule, at the 
end this is an EPA/Army Corps of Engineers rule. What we offer 
our customers when they want to work with us is advice. The 
Clean Water Rule will not impact our work. What we do is 
conservation compliance, but more importantly we do 
conservation planning and implementation of farm bill 
conservation programs.
    And the Clean Water Rule does not impact any of those 
authorities. So in instances where a producer is taking out a 
fence row, cutting some trees, making alterations on their 
operation, and our field folks think, well, maybe this is 
something you may need a field permit for, we would then 
recommend they go talk to the relevant Corps office. That is 
not something we would necessarily advise them on how to do it, 
how to fill out the permit, whether they are under jurisdiction 
or not.
    Mr. Austin Scott of Georgia. Let me interrupt for a second. 
But you would agree that a lot of the reasons for the programs 
that we have through your agency is so that there would be a 
way to reduce the need for more regulations. Is that a fair 
statement?
    Mr. Weller. It is a complex environment. Regulations, yes. 
It is a complex environment, particularly not just in Georgia, 
a lot of different states. And so where our folks are trying to 
help our customers navigate that, yes, it is challenging.
    Mr. Austin Scott of Georgia. Mr. Chairman, I don't have any 
further questions. I would just say it seems to me we have one 
agency telling another agency what they can and can't do, and 
then a tremendous amount of fear out there with the American 
citizens that, quite honestly, most of us want to take care of 
the environment, but I can tell you if I found something that I 
thought might be an endangered species on my property, I sure 
wouldn't call the Federal Government and let them know about 
it. With that, I yield the remainder of my time.
    The Chairman [presiding.] Probably not a bad idea before 
you get yourself in trouble confessing to something you didn't 
want to confess to. The gentleman yields back. Mr. Crawford, 
for 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. In Arkansas, the 
Mississippi River Basin Initiative has been a very effective 
program in giving people at the state and local levels the kind 
of tools that they need to deal with conservation challenges, 
particularly specific to our region. You actually mentioned 
that in your comments earlier.
    In the 2014 Farm Bill, though, we created the RCPP, which 
we had hoped would expand on that success, but it looks like a 
lot of the policies in the MRBI have been reversed, and I am 
being told there is actually a lot less local control and more 
deference to national groups in what types of conservation 
activities should be funded. Why the change in direction?
    Mr. Weller. So with RCPP, I am a little bit surprised by 
your comments, sir, in that it really affords maximum control 
to those partners.
    Mr. Crawford. If that is the case, why would I be hearing 
from my folks at home? We have two projects in particular that 
fall under this, and we are not hearing positive feedback with 
respect to local control.
    Mr. Weller. Then that is a real concern, and I need to 
follow up with the Arkansas State Conservationist, because the 
whole purpose of the program is to put the partners in at least 
a co-equal lead with NRCS, if not in the lead, to devise the 
project, to design what needs to happen, and then to really 
deliver the assistance as needed.
    There are different pots. There are different funding 
pools. There is a national pool. There are what are called 
critical conservation areas, and then there is the state pool. 
And applicants from within Arkansas itself can focus on 
projects just specific to certain communities, counties in 
Arkansas; or it could be a multi-state project that would 
include Arkansas and perhaps Louisiana and Mississippi or go up 
river, up in Missouri.
    So it depends on what the purpose of the original project 
was. It is a very competitive program. But in the end if there 
is a concern from local folks that there is less local control 
than there was previously, that is something I need to follow 
up with Arkansas on.
    Mr. Crawford. Perhaps we can communicate offline and 
address that problem.
    Mr. Weller. Yes, sir.
    Mr. Crawford. Let me expand on something that my colleague 
from Georgia mentioned. The perception at home among farmers, 
the NRCS has been up to this point the kind of agency that 
farmers felt comfortable with in terms of asking for help, 
technical help, funding help; for example, surface water 
retention projects, tailwater recovery, irrigation reservoirs 
and things like that. Not only did they get technical consult, 
but in many cases were able to secure funding not necessarily 
in total, but cost-share on a lot of projects. I have seen 
these projects.
    I have seen these projects, and they are great projects.
    But because of WOTUS, the perception at home is now the 
NRCS has been roped into this regulatory role that has 
fundamentally redefined the dynamic of the relationship between 
the NRCS and farmers. Your thoughts on that?
    Mr. Weller. It is an unfortunate view. In my experience, in 
my opinion, our role has not changed at all, and we need to do 
a better job of communicating what our role is.
    Mr. Crawford. Okay. So from a perspective of WOTUS, you 
have no regulatory authority under WOTUS at all?
    Mr. Weller. We do not, no.
    Mr. Crawford. Okay. The perception is that you do, and I am 
still not convinced that in some form or fashion, that you 
don't, in some way, have a roundabout, maybe a reporting 
requirement or something like that that may possibly impact the 
relationships that up to this point, farmers have found very 
favorable. The NRCS has been a very good agency to work with up 
to this point.
    But I just want you to know that the perspective of 
farmers, at least in my district, is that the trust there is 
not going to be there anymore, because of the relationship to 
the EPA and WOTUS.
    Mr. Weller. So to your point, sir, we hold the information 
that a producer gives us voluntarily as sacrosanct. And this 
Committee gives us privacy provisions that are even more 
strenuous than other agencies. A lot of other agencies wish 
they had privacy protections that USDA has with our customers. 
We don't share that with anyone.
    Mr. Crawford. Okay. Let me ask you this--I only have 30 
seconds left--can you tell me, unequivocally that you don't 
have any requirement to report to the EPA under any 
circumstance as it applies to WOTUS or potential violation or a 
significant nexus or connectivity or anything like that?
    Mr. Weller. Unequivocally, we do not report our customers 
to EPA. In fact, yesterday, in the Chesapeake Bay region, we 
were highlighted by the newspaper because three states in the 
Chesapeake Bay region, their departments of environmental 
quality are calling us out for not cooperating, for giving them 
farmers' information.
    Mr. Crawford. Okay.
    Mr. Weller. So we do not share information on farmers with 
regulatory agencies.
    Mr. Crawford. All right. Thank you. I appreciate that. My 
time has expired. I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman.
    And just real quickly, the RCCP program I have constituents 
that, with the new farm program, there is an opt-out provision 
in the new farm program. And I have been trying to get an 
answer from USDA on this thing for some time, and the last 
thing we heard from them was that they can't opt out because 
the loblolly pine is now considered a hardwood. How did the 
loblolly pine get to be a hardwood?
    Mr. Weller. I am going to defer to my Under Secretary, who 
is an expert in trees. But what I know, it is not hardwood. 
That is the first I have heard that, sir. I could look into 
what is going on.
    Mr. Allen. Okay. Good. Well, maybe we could have a 
discussion about that because you all are in the forestry 
business. And I don't know how that happened, but anyway, that 
was the letter that they received from the USDA is they could 
not opt out because the loblolly is now considered a hardwood. 
And so, well, that is good. I am glad that you all know that 
that is the case. That is wonderful news.
    Also, real quickly, you had announced the final projects 
for consideration for the Regional Conservative Partnership 
Program, RCPP, second signup. What lessons have you learned 
from the first signup, and what types of partners are 
participating in these projects? Are the goals of the program 
being met? And what changes do you think Congress needs to make 
with regards to this program?
    Mr. Weller. So the first round, as I said a little bit 
earlier to your previous question, we are moving, for us, at a 
pretty quick pace. And as a result, we didn't leave a lot of 
time for partners to put proposals together. I think we caught 
people flatfooted. They didn't expect us to move as fast as we 
did. And then we only gave them 45 days to throw together a 
proposal, and then they didn't have a lot of time.
    So that was the first thing we learned is that we needed to 
give everyone, starting with ourselves, but more importantly 
the partners, more time to put together comprehensive projects, 
to call different partners to the table, and really design 
something they really want to invest in. And that then also 
gives them more time to leverage.
    So what we are seeing with the second round, what we 
invited back out of 265 applications this next time, we invited 
back 164 projects, at least one in every state. Most states had 
several. And what we saw is a higher level of quality in terms 
of what people were proposing, because they had more time. They 
had more experience. They had a feel for how the program works, 
and, in some cases, how it doesn't.
    And so people were even more careful in devising really 
what they want to do. So if you are worried about fish passage 
in the Northwest, if you are worried about soil quality, if you 
are worried about irrigation efficiency, if you are worried 
about endangered species habitat, they really were careful 
about designing projects that would really bring a solution for 
their community, for their area. And then what was very 
impressive is they had a lot of matching contributions.
    So in this next round, while out of the 164 we invited 
back, the total what their request is from the Federal 
Government from NRCS is about $540 million. They are actually 
bringing to the table a total potential contribution of $780 
million, so well over a one-to-one match, which is really 
impressive, which just shows there is a real pent-up demand out 
there for this type of assistance.
    And when you, as an agency, step back and you invite people 
to the table to design their own project, to really take the 
lead, it is impressive what people bring forward.
    Mr. Allen. And to follow up on that, because we have heard 
comments about there seems to be some disconnect out there. Of 
course, we go out in our districts, we have town hall meetings. 
Do you have listening sessions throughout the country with 
different farm agencies as far as what our farmers are having 
to deal with out there versus what you are demanding that they 
do?
    Mr. Weller. Absolutely. In every state, we have what are 
called a state technical committee where they meet once a month 
and they invite in farm organizations, the public state 
agencies, conservation groups, and they really talk about what 
are the priorities in a given state. So what are their 
concerns, whether it is drought, whether it is disease, pests, 
soil erosion. It is a forum for the agricultural industry to 
really talk directly to NRCS to say what their priorities are, 
where they need help, and they meet regularly.
    I personally get out and meet with farm groups. I travel a 
lot. Wherever I go, I always want to meet with local producers 
but also state associations. We have a national leadership 
team. They are constantly engaging with regional groups, state 
associations, corn grower association, cattlemen associations--
you name it. We really want to stay very connected to our 
customers.
    Mr. Allen. Well, as a son of a farmer, our farmers want to 
protect the land, the forest. That is how they make their 
living. And so we can work on that collaboration and do a much 
better job. Thank you.
    I yield back.
    Mr. Weller. We will find out about soft wood becoming 
hardwood, sir.
    Mr. Allen. Good. I am glad I got you recorded on that.
    The Chairman. I think there would be a lot of people 
interested in how you convert loblolly pine to hardwood.
    Mr. Abraham, 5 minutes.
    Mr. Abraham. Thank you, Mr. Chairman.
    Chief Wagner, I will ask you this question, but certainly 
the other two may have answers. Hurricane Katrina hit Louisiana 
about 10 years ago. We just, unfortunately, recognized that 10 
year anniversary. Forest Service came in, did an NEPA study 
within 60 days. I think within a month or 2, we were salvaging 
timber. Things were working well, a very efficient process.
    And I guess the question is, why has the timeline now gone 
from the 2 months to over a year for an environmental analysis? 
Because I have people in my district that are asking for an 
analysis, and it has been over a year in some cases. So what is 
the difference between 10 years ago, 2 month timeline for 
environmental analysis, and now over a year? Is there different 
personnel? What is going on?
    Ms. Wagner. It may be that with a situation that Hurricane 
Katrina brought on the landscape, we had provisions to deal 
with emergency treatment and----
    Mr. Abraham. But, if I remember right, and I can certainly 
look back, that that contract was done without any 
extraordinary clauses in the contract. It was just a, pretty 
much a normal day at the office, so to speak, as far as getting 
that done within that 2 month period.
    Ms. Wagner. And so is it comparing emergency response to 
just basic forest management and forest restoration today that 
you are----
    Mr. Abraham. I think that is the point, is back 10 years 
ago when the Forest Service came in, there were no 
extraordinary clauses, so it wasn't designated as an emergency 
response even though we all know it was. But we move forward 10 
years and now, also not deemed an emergency response. It has 
taken well over a year just to get the analysis back. And I am 
just asking for my constituents, because we get the calls, what 
is the difference? How can we facilitate to expedite that 
process for you guys?
    Ms. Wagner. Excellent question. We are very committed to 
using all of the tools available to us under the National 
Environmental Policy Act to act quickly, to be adaptive, to use 
the right kind of analysis for the right kind of situation. We 
found that in the last 4 years, we have actually reduced the 
number of NEPA analyses done and decisions done, so we are 
getting better at larger-scale, fewer decisions. And we are 
reducing the amount of time.
    Now, that is nationally. I would be happy to follow up and 
get you some more detail relative to----
    Mr. Abraham. I appreciate that. We have some issues down in 
the southern part of my district. Their perception is that they 
are getting stonewalled, and I would just like to give them a 
good, logical explanation to open up the discussion.
    Another question that whoever wants to answer. I understand 
the Chairman here and Chairman Lamar Smith back on the 1st of 
July this year requested documents on the EPA's recent NAAQS 
rule and its effect on the Forest Service burning. My 
understanding, and please correct me if I am wrong, that they 
got a response but they haven't received any documents. Is 
there any timetable as to when those documents may be 
forthcoming on this NAAQS rule?
    Mr. Bonnie. I know the issue here is the ozone rule, right, 
and the potential impacts on prescribed fire.
    Mr. Abraham. Right. Right. Yes, on the controlled burn.
    Mr. Bonnie. I don't know the exact--I know we have provided 
a good bit of information to you all. We would be happy to go 
back and check and make sure we have been responsive to your 
requests. I will say, lots of conversations back and forth with 
EPA on how to deal with this so that we can invest and 
prescribe fire.
    Mr. Abraham. I appreciate that.
    And Chief Weller, I will ask you, what is the current 
backlog for wetlands right now and the determinations as to 
what determines a wetland or not, and how is that being 
handled?
    Mr. Weller. We have made a lot of investments in 
accelerating in trying to reduce the backlog. Nationally, off 
the top of my head, I do not know. I know where there has been 
a lot of focus is a little bit north of this area, up in the 
Prairie Pothole Region, where there has been a lot of focus of 
this Committee and a lot of Members. The current backlog there 
is around 4,000. That sounds like a lot and it is. It is not 
acceptable. But where we were, 3 years ago, is the high as 
12,000.
    But what also folks have to understand is we have, since 
that time, not only made a lot of progress, but we have also 
processed tens of thousands of requests. So over that time 
period has well been over 60,000 wetland determinations we have 
made in that time, just in the Prairie Pothole Region, plus 
reduced the backlog from 12,000 down to 4,000.
    So it is sort of like being on a treadmill that is set at 
sprint pace and still standing on the treadmill, if not getting 
closer to the controls to hopefully hit the stop button. So we 
are making progress, and we are on the track to get rid of the 
backlog within the next 2 years.
    Mr. Abraham. Great. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman.
    I appreciate you all being here today.
    Mr. Bonnie, you were talking about there were some 
practices that you would recommend to prevent or decrease the 
negative effect of forest fires. What are those? And then the 
second question is, why aren't they being done now, and what do 
you need to facilitate that?
    Mr. Bonnie. So we have increased the number of acres for 
treating across the National Forest System. We are doing more 
projects out on the ground through collaborative, larger-scale 
efforts.
    Mr. Yoho. Projects like controlled burns?
    Mr. Bonnie. Doing more prescribed fire, but as well, 
thinning treatments, other types of restoration to remove 
underbrush, small-diameter timber. As you know, in your part of 
the world, we have taken fire out of a lot of the ecosystems. 
In addition to getting the fire back in, we also need to do a 
lot of mechanical treatment and thinning, and we are trying to 
do that in a collaborative, larger-scale effort to increase 
both the number of acres treated and the amount of board-feet 
that come off of the National Forests.
    Mr. Yoho. Okay. I live in the Southeast and we are blessed, 
I mean, pine trees grow in 15, 20 years, whereas out West it is 
a different story. And we do a really good job in the managing 
of the forest. And one of the things we see out West, you have 
the high wind velocities and all that and it is harder to do 
your prescribed burns. What are you doing to address that 
situation?
    And along with that, we have heard from a lot of the 
loggers that they can't go in and harvest the board-feet that 
is already down. I don't know if it is the rules and 
regulations of the permitting process, but there is a lot of 
timber that is down that could be utilized that is not and that 
leads to the underbrush in the fire. What are you doing to 
alleviate that and expedite that process?
    Mr. Bonnie. So let me hit the salvage piece first. There 
are a number of things we can do--to get at a little bit the 
question earlier--using some expedited procedures to try and 
move, particularly near roads and trails, timber that can cause 
a safety problem.
    We moved a 300 million board-foot salvage sale in the wake 
of the 2013 Rim Fire out on the Stanislaus through an expedited 
NEPA process. We are trying to pilot efforts to do large-scale 
salvage operations in places like that. We will have a 
significant salvage issue in the wake of this fire season, and 
so we are looking at ways to be creative to move those but to 
do it with the best sound science as well.
    Mr. Yoho. You just created another question for me. When 
you are doing that and you are going down that road to harvest 
those down trees, do you run into issues with the EPA and you 
are fighting against them, or Army Corps or any other agency?
    Mr. Bonnie. No.
    Mr. Yoho. All right. So nobody else is restricting you, 
right?
    Mr. Bonnie. No. The bigger issue for us is to build a 
collaborative effort to bring environmentalists, timber 
industries, and others to the table so that we can create these 
larger-scale projects that will have more public support.
    Mr. Yoho. All right. You brought up the environmentalists, 
and I want to go back to what Mr. Scott brought up when he 
bowed out gracefully early. I have the same problem in my 
district. I mean, we have gopher tortoises, we have the 
rattlesnakes, we have the fox squirrels, and we have farmers 
that have farmed for generations, 100 year farms. And they have 
pretty much the same practices, obviously have gotten better at 
best management practices.
    But yet, now the government comes in and says, well, we 
need to monitor these fox squirrels or this. And the farmers 
don't want anything to do with it because they come in, they 
being the government, say, ``We are here to help you,'' and we 
all know how they run from that. And we are seeing the same 
thing. It is, We don't want your help. Whereas before, people 
came to the government.
    And that is an attitude change. And you brought up the 
environmentalists, and yes, we want the clean environment, we 
want clean water, and we want clean air, but sometimes there is 
a political agenda that we see driving a lot of this that is 
counterintuitive or productive to our producers who are out 
there trying to make a living. And it increases the costs and 
it reduces the usability of their land. And that is something I 
hope you guys take back in your discussions and say a little 
bit of this is good, but a little bit is too much. We need to 
back off here.
    I have another question I wanted to ask. On the lands that 
are going into the easements and the conservation easement, and 
Mr. Weller, feel free to weigh in on this. What is the 
percentage of land that has gone from the private sector back 
to the government and off the payrolls? Because what we are 
seeing in our state is we see a lot of this being put into the 
conservation easements. And I don't want to get in a situation 
in my state where we have PILT payments, payment in lieu of 
taxes, and that lands are off the tax rolls.
    Mr. Weller. So nationally, NRCS has either co-invested with 
other land trusts and state agencies or on its own through the 
wetland programs about 4 million acres of conservation 
easements. Most of those are permanent, or is the maximum 
allowed under state law. Those are still taxed but they are 
just at a reduced rate. So it is no longer taxed at the 
development potential. So if it was converted from an ag use to 
non-ag use, you understand probably better than I do. It is 
less of a PILT issue in terms of just not having any taxes at 
all come off those lands.
    Mr. Yoho. I yield back. I am out of time, Mr. Chairman. 
Thank you.
    The Chairman. Sure. The gentleman yields back.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Mr. Bonnie, it is good to see you. I want to follow up on 
the catastrophic wildfire season. It has been a terrible 
season, obviously, and the loss of life of some very 
outstanding Forest Service employees. We are certainly keeping 
them and their families in our thoughts and prayers.
    The Administration has been very vocal for the need to 
provide more funding to combat wildfires and also to stop fire 
borrowing from the Forest Service budget. As a matter of fact, 
I see there is a press release today regarding the 
Administration's letter to Congress addressing the budget 
issue. And I agree there needs to be a solution, but fixing the 
budget is not the final solution, certainly not the full 
solution. However, addressing fire borrowing will not solve the 
issue.
    It is also very important the Forest Service have the 
ability to expediently treat National Forest acres for forest 
health and wild fire prevention. The Committee passed through 
the House H.R. 2647, the Resilient Federal Forest Act of 2015. 
Now, the legislation was an earnest attempt to give the Forest 
Service more authority and much needed flexibility to deal with 
these challenges of process funding, litigation, necessary 
timber harvesting, and much needed act of management.
    Now, the Obama Administration strongly opposes this 
legislation, despite the fact in your testimony when you were 
talking just most recently about a fire. You were using words 
that were in that bill, collaborative, expedited, NEPA. I mean, 
you were kind of describing the bill that your boss or your 
boss' boss opposes, I guess, or you oppose. And so can you 
explain the Administration's opposition to the bill?
    Mr. Bonnie. I am happy to. So first, the most important 
thing we can do to increase pace and scale is clearly to fix 
the budget. Our criticism of the budget provisions in the 
legislation is that they don't go far enough. You have done a 
good job of solving the transfer problem, but the long-term 
impact of fire in our budget, we expect that in 10 years we 
will spend not 50 percent like we do now on fire programs, but 
\2/3\ of our budget. That is going to impact our ability to do 
all kind of things, including restoration.
    Mr. Thompson. So let me cut to then--I get it. You want 
more money. Is there anything in this legislation or are there 
other ideas the Administration can support--and I am going to 
say beyond money, okay. Not to say that we don't need to look 
at that, but I am looking for ideas beyond that that would 
assist the Forest Service in actively treating forest acres?
    Mr. Bonnie. Absolutely. We welcome the conversation. As the 
Statement of Administration Policy said, we have some concerns 
with sort of the design and scale of some of the provisions 
related to NEPA, some other things. But we are willing to have 
a conversation. I put things maybe in a few different buckets. 
One is a conversation about NEPA categorical exclusions, maybe 
similar to the insect and disease provisions.
    Mr. Thompson. I think we had categorical exclusions in this 
bill that you oppose.
    Mr. Bonnie. I think we would design them differently. 
Second, there are things we can do to promote larger landscape 
scale projects. There are some things there we can do. 
Promoting markets is another key thing that we can do. There 
may be some flexibility around----
    Mr. Thompson. I agree wholeheartedly. But this was a forest 
management bill. Certainly markets and doing things to increase 
value timber to support the markets, those are the things we 
can do and certainly are going in the trade agreements being 
negotiated. But I still--you are not convincing me--I haven't 
heard a good reason to oppose this bill yet.
    Mr. Bonnie. Well, I guess my message to you would be, we 
have to do a lot more on the budget side, and the budget piece 
we design is budget neutral.
    Mr. Thompson. Yes. Let me share some numbers with you. And 
these are numbers actually from your testimony or from, maybe 
it was a press release, but although you made reference to it. 
1995, \1/6\ of the Forest Service budget was used for fighting 
forest fires; August of 2015, \1/2\ the budget, and then you 
made a projection for the future.
    I would happen to agree with you, the trajectory we are on. 
And I know part of it is warmer temperatures, but part of it is 
just sort of allowing the fuel load to build up way too high.
    Mr. Bonnie. Absolutely.
    Mr. Thompson. I want to go back and readdress the numbers. 
1995, where you spent \1/6\ the Forest Service budget, you 
harvested 3.8 billion board-feet. Just in 1987, prior to that, 
7 years prior we harvested 12.7 billion board-feet. In August 
of 2015, where this year, \1/2\ the Forest Service budget is 
consumed in wildfire fighting, you only harvested 2.4 billion 
board feet.
    I really want to look at the root cause of this. What are 
those implications in terms of, number one, fuel load? And 
number two, I would put on the table that I don't know what the 
average--and I know there is a wide range--the average value of 
a board-foot saw log harvested from a National Forest. I know 
it is a wide range, but certainly there is a number there. 
Whatever that number is, I mean, it has to be a huge amount of 
lost revenue when you think that we have lost, based on the 
high, we are not harvesting this year 10.3 billion board feet.
    You know, you were looking for more revenue? You are 
sitting on a resource that produces revenue if you are doing 
the job. And if you are producing a revenue, you are taking 
away the fuel load. And I would argue that is the biggest 
problem we have.
    And so those are--I know I am way out of time, but I will 
look forward to talking with you more about those. This is 
obviously--we are going to be doing a hearing in the 
Subcommittee on Forestry, on October 6, coming up here soon. So 
we will----
    Mr. Bonnie. I know I am out of time. I would just share, we 
share your interest in increasing the pace and scale of 
restoration absolutely and welcome the conversation. We think 
the budget is obviously a critical part of it, but there are 
other pieces as well.
    Mr. Thompson. Restoration is surrender treatment. The word 
treatment is surrender, because that means you have allowed a 
problem to be created. We need to be proactive. That is saw log 
harvesting.
    Mr. Bonnie. That is certainly part of it.
    Mr. Thompson. Well, I would say it is a big part of it. It 
is preventing problems from occurring and developing.
    Sorry, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Moolenaar, 5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    I wanted to ask you, are you the lead agency when it comes 
to designating wetlands? Would that be your role?
    Mr. Weller. I have to be careful how I answer that 
question. It depends on, if it is for participating in a USDA 
program, we are the agency that determines whether it is a 
wetland or not, yes. For purposes of the Clean Water Act, no, 
we are not the agency that determines whether that is a 
wetland.
    Mr. Moolenaar. Okay. So that is where, when you said that 
you don't have expanded responsibilities with the Clean Water 
Act, that is that differentiation, okay.
    Would you agree that under the new EPA rule that their 
jurisdiction has expanded?
    Mr. Weller. I can't speak to their jurisdiction. I really 
have to defer to EPA and their definition of their 
jurisdiction.
    Mr. Moolenaar. But I mean, you talk to a lot of farmers. 
You probably talk to a lot of people. Wouldn't you say their 
jurisdiction is expanded?
    Mr. Weller. I have heard a lot from producers of concerns 
about the jurisdiction and the potential expansion of that. And 
I know EPA and the Corps are trying to put together 
information. They have done a lot of outreach with the 
producers, with the farming community and ranching community to 
help provide education, provide more information about what is 
or is not covered by this proposed or now the final rule.
    But in terms of whether jurisdiction has expanded or not, I 
really--I have to defer to EPA on that.
    Mr. Moolenaar. Okay. And what are you hearing from people 
when you hear about this rule? Is it positive? Because the EPA 
would say that their goal is to clarify. Is that your sense? 
Are you hearing that?
    Mr. Weller. I know EPA's goal was to try and clarify 
jurisdiction. I have heard from producers across the country a 
lot of concerns and questions about what is or is not covered.
    Mr. Moolenaar. Would you estimate that there will be a 
greater need for Federal permits because of this rule, if you 
are a home builder or someone who isn't participating in the 
program that you oversee? Do you think this will lead to a need 
for greater permitting?
    Mr. Weller. With respect to agriculture, I do not expect 
there to be a significant increase in the amount of permitting 
required. All the protections for farming that have been in 
place previously are still in place. All the protections for 
conservation, particularly uplands, conservation practices are 
still in place and are exempted.
    So by and large, there is not a significant expansion of 
need to do permitting. But at the end of the day, we are not 
the permitting agency. That is going to have to be the Corps or 
EPA to determine what is or is not.
    With regard to home building or general construction or 
other expansion of infrastructure, again, I am not an expert in 
that arena. I can't speak to that.
    Mr. Moolenaar. And it seems like they have introduced some 
new definitions that many people in the--when I talk to the 
farmers in my district, they are worried that the EPA is going 
to regulate the mud puddles, the ditches, everything. They are 
very concerned about it. And are you saying that they aren't 
going to have jurisdiction over those areas in agriculture?
    Mr. Weller. EPA has tried to define what is a ditch, first 
of all, and what is covered. I think from EPA's standpoint, 
they don't have the capacity, interest, or they do not want to 
have to go out and regulate mud puddles or ditches. They know 
that is beyond their capacity, and that is not really the 
issues they are trying to address with the Clean Water rule.
    They try, to the best of their ability, and I guess from 
your line of questioning, it seems like they have a little bit 
of ways to go--but they try to the best of their ability to 
really make it as clear as possible what is covered and what is 
not. But, again, I have to defer to EPA as to how well of a job 
they did on that. And the feedback that you are receiving 
apparently and that I have heard also from the agricultural 
community, they have some work yet to do.
    Mr. Moolenaar. Well, I guess that would be my question to 
you is, to what extent can you advocate for agriculture in this 
regard? Because, as I look at my district and hear from farmers 
in my district, this is the number one concern. And I don't 
think they believe that EPA is speaking for them. And the 
question would be: is that something, a role that you can take 
on?
    Mr. Weller. We do advocate for agriculture at U.S. 
Department of Agriculture, and we have provided technical 
assistance to EPA and to the Corps when they were designing the 
rule. Some aspects of that assistance they took; some they did 
not. But throughout the rulemaking process, we did, as a 
Department, NRCS, the Secretary's Office, other offices and 
agencies within USDA, did engage with and try to provide 
technical advice to EPA and the Corps as they designed the 
rule.
    And then throughout that, we really tried to bring a 
commonsense approach in, here is what production agriculture 
looks like, here is the facts on the ground, and here are the 
implications of what--in terms of different decisions they are 
considering, here are the implications for agriculture. So we 
really did, as a Department, try to advocate for and speak for 
agriculture.
    Mr. Moolenaar. And do you believe it is successful for 
agriculture, this new rule?
    Mr. Weller. I guess it remains to be seen at the end how 
well it is implemented and what its true impacts are. I have to 
take EPA, from their comments, that they really do view this as 
not impacting agriculture significantly, but that, I guess, 
remains to be seen.
    Mr. Moolenaar. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Gibson, 5 minutes.
    Mr. Gibson. Well, thanks, Mr. Chairman.
    I appreciate the panelists being here today.
    The first question I have, really a comment, we have in our 
district a major EWP project. NRCS, thank you very much for 
your help on that. This is in Schoharie County in upstate New 
York, and a $24 million investment. I want to thank you for 
that.
    Our area was devastated by Hurricanes Irene, Lee, and to a 
degree, Sandy. And so clearly we need to take some proactive 
measures to help protect people and property, going forward. So 
I really want to express my gratitude that you agreed and were 
working this project.
    I suspect you probably know we are having some challenges 
with the project. I am working as a broker in this to really 
get this done. You guys are rightfully ensuring that we are 
going to do this to the standard, and I appreciate that after 
29 years in the military.
    And from my local folks, they are feeling a little bit 
picked on from time to time. We are sorting through the details 
of that to make sure that they understand what the standards 
are with the ultimate goal of making sure this gets done. What 
I am just looking for today is just acknowledgment of how 
important this project is and that you are in, you are 
committed with us to getting this done.
    Mr. Weller. Absolutely, sir. We are provided this program 
and these resources to help communities. They are locally-led 
projects, and we are there, but for the invitation to help 
those communities. So we want this project, in particular, to 
be successful. And we do appreciate your help in helping to be 
that intermediary to help us understand, but also to help work 
with the local project sponsors as well, and we are committed 
to seeing this be successful.
    Mr. Gibson. Well, I appreciate that, because rumor control, 
as I hear that every now and then. Some folks on the ground 
think that you are going to leave them, and I assure them that 
you are not; that you are insisting on standards--and again, I 
understand standards--but that you are committed to working 
together to make sure we get done to standard.
    Mr. Weller. And the standards are really important. 
Sometimes they may sound bureaucratic, but at the end, they are 
actually for people's protection; that if we are putting in 
structural implements, if they fail, that could be a risk to 
people's property or their lives. They have to be designed and 
something that we can stand behind.
    Mr. Gibson. And we understand that. And thank you for your 
assurances that we are committed to working together on that.
    The second question I have has to do with the Forest Legacy 
Program. So I have a bill that looks explicitly at the 
management of easements for forest legacy with the move in the 
bill to allow for more local control for states to make the 
decision as to whether or not they want land conservancies to 
manage these easements. I am familiar with the history of this 
in the last 10, 15 years or so, and some reports that were 
rendered with regard to challenges.
    From my research, it appears that we have learned from 
those challenges and that it may be to the benefit of all, that 
being those that support this program, those that benefit from 
this program, and the taxpayer, that a bill thusly designed 
should become law. I am curious to know if you know of it and 
what your thoughts are on these ideas?
    Mr. Bonnie. So, I am aware of the issue. Obviously, haven't 
seen the specific piece of legislation, so don't want to 
comment on that. We have had a number of people approach us 
about this issue and interest in the role that local land 
trusts and others can play in the Forest Legacy Program. We 
welcome the conversation.
    Frankly, there have been folks on both sides of this issue. 
The Forest Legacy Program has worked well to keep forests and 
forestry, and we want to continue that. I think we would 
welcome the conversation to sit down with you and explore this 
further.
    Mr. Gibson. Well, I look forward to that. The analysis that 
I have and the testimonial I have received is that we can 
actually get more value out of this and allow this money to go 
further, and to really get a fuller benefit in there. So thank 
you for your interest in that, and I will work with my great 
Chairman on that one as well.
    So Mr. Chairman, with that, I yield back.
    The Chairman. The gentleman yields back.
    Mr. Benishek, 5 minutes.
    Mr. Benishek. Thank you, Mr. Chairman.
    Thank you all for being here this afternoon.
    I want to follow up on a few questions that my colleague, 
Mr. Abraham and Chairman Thompson mentioned as well, because 
they are concerns to me. I represent the northern half of 
Michigan. We have three Federal forests. It is a big part of 
our economy, not only our recreation, but the timber 
management.
    And some of the things we see in value for the resource of 
the forest, which you all are managing for the American people, 
to me, this is a resource that provides income and jobs for the 
community. I would like an answer to a couple questions. In 
response to Mr. Abraham's question about the forest and then 
the salvage of the fire, so how many acres of timberland have 
burned in the last 10 years? And then how many of those acres 
have actually been treated for salvage?
    Mr. Bonnie. I can't give you an answer to that question off 
the top of my head. I will say, this year we burned 8.8 million 
acres, that is forestland and rangeland as well. The numbers 
are high. And, in some cases, it makes sense to do salvage; in 
other places it is either too remote or otherwise to think 
about it.
    Mr. Benishek. Well, that would be a great answer for me to 
understand that a little better, because it seems to me that 
some of the things that came up today related to the salvage 
issue.
    The other question I have is similar. To me, this fuel load 
is an issue, okay, and how many acres of burn compared to how 
many acres that we have harvested in the last 5 years? What is 
the story there?
    Mr. Bonnie. Annually, we are burning north of 7 million 
acres a year. In terms of treatments in the Forest Service, I 
look to my left a little bit, we are in the neighborhood of 2.9 
million acres somewhere.
    Ms. Wagner. Across all restoration, it is probably around 
250,000 of mechanical treatment for timber sales.
    Mr. Benishek. So much more land is burned than has been 
harvested, sounds like----
    Mr. Bonnie. That is right.
    Mr. Benishek.--that order of magnitude.
    And to Mr. Thompson's question about getting more harvest 
into the forest, what have you done? What I hear from different 
people in your agencies and outside is that because of 
budgetary issues, they can't get more harvesting done. And 
because of the way that the cuts are mandated to be done, it 
actually costs the Forest Service more money than they make by 
selling trees. And I always thought when you sell trees you 
make money, but apparently the Forest Service does not.
    And what have you done in the last 3 years to improve the 
process by which sales occur to maximize the resource of the 
American people? Because I don't want to see this--the process 
cost more money than the actual, when I am a forest owner and 
people own land elsewhere that harvest the forest in a very 
satisfactory way the third party observations and all that and 
they actually make money. But you folks can't seem to do that.
    So to me, it should be easy to harvest the trees because 
you can be making money at the same time. So can you go into 
that a little bit for me, please?
    Mr. Bonnie. So I will start off and then Mary can fill in. 
So we have increased the amount of timber harvest since 2008 by 
about 18 percent. Last year we harvested about 2.8 billion 
board-feet. And we have clearly stated that we need to do more. 
We agree with you; there is more land to treat.
    In terms of new things that we have done, we have invested 
in a larger-scale landscape projects. We have done a project 
across 1 million acres in Arizona. I mentioned earlier the Rim 
Fire project, so we are trying to----
    Mr. Benishek. Let me just comment on that right away, that 
in my district, it is difficult for the people that want to 
harvest to get into a deal because they can't make a deal for 
10,000 acres. They need some smaller deals----
    Mr. Bonnie. Yes.
    Mr. Benishek.--that the loggers can get into easier. So I 
applaud your effort there, but it has made it harder for people 
in my district to actually cut trees down in the Federal forest 
because of maybe rules like you are talking about.
    Mr. Bonnie. Well, so we can choose the sale. We can do 
smaller sales. I didn't mean to suggest we are only doing 
larger. Absolutely right.
    The other thing I would say about value is there are 
clearly places where timber sales are going to pencil out in a 
positive way. I would also say that there are places where 
either the markets aren't robust or we have small diameter 
timber that we have to go in and remove, that the economics 
aren't as good. There aren't places----
    Mr. Benishek. Everybody understands--I mean, at least, I 
understand the forest. You cut areas out you can make money in. 
But there are a lot of those areas in the forest that aren't 
being harvested now. So how can you improve that process, going 
forward, and then how can I improve it?
    Mr. Bonnie. I agree with you that we need to do more work. 
As I noted earlier, I am willing to have a conversation about 
are there authorities and things we can look at. I will come 
back to the point that the most important thing, most of the 
biggest constraint on our ability to do work is the lack of 
capacity. And that lack of capacity comes from the shift of 
non-fire resources into fire. And if we don't do something 
about that problem, it is going to be harder for us to do all 
kinds of things, including forest management.
    Mr. Benishek. I think I am out of time though.
    The Chairman. The gentleman's time has expired.
    Chief Wagner, one final comment real quick. We need to get 
to the other panel.
    Ms. Wagner. I might just add that timber harvest does 
increase despite the fact that our staff has decreased by \1/3\ 
since 1998. We are finding a lot of efficiencies to sell a 
board-foot of timber at reduced costs, so we found efficiencies 
internally.
    With our National Environmental Policy Act efficiencies, we 
have also, based on scale collaboration, we have exciting 
ventures where we are using adaptive approaches with insects 
and disease where we are forecasting a future 5 to 10 years out 
without having to do additional NEPA.
    Congress has also given us authority for the collaborative 
Forest Landscape Restoration Program, 23 projects across the 
nation. They are accelerating the reduction of fire risk, 
improving forest health, eradicating noxious weeds and 
producing board-feet, creating jobs as well. So those are on 
track to meet their 10 year goals.
    And the authorities through the farm bill, insects and 
disease authority, good neighbor authority, and permanent 
stewardship contracting authority. So we have a great set of 
tools, and we are making the most of the resources that we 
have.
    The Chairman. I want to thank Secretary Bonnie; thank you, 
Chief Weller; and Chief Wagner, thank you. I think you have all 
so graciously agreed to meet with Members privately in 1306 
while we transition. So, again, thank you very much for coming 
in today. I know it is a hassle. We appreciate it. If you all 
will go down to 1306, Members who want to have a quick 
conversation with you individually will do that, and then we 
will get the other panel in.
    So we stand in recess while we swap out the panels. Thank 
you all very, very much.
    [Recess.]
    The Chairman. Okay. Let's go ahead and start.
    I want to welcome my third panel. The good news is, the 
Department of Labor's overtime rules aren't going into effect 
until January. So it probably wouldn't apply to you guys 
anyway. I think some of us are going to try to stop that 
anyway.
    So anyway, I want to welcome our third panel. Thank you 
very much for being here this afternoon. We have today with us 
the Honorable Catherine Woteki, who is the Under Secretary for 
Research, Education, and Economics, USDA. Thank you for being 
here.
    We have Dr. Chavonda Jacobs-Young, who is Administrator at 
the Agricultural Research Service. Thank you; Dr. Sonny 
Ramaswamy, who is the Director of National Institute of Food 
and Agriculture; Dr. Mary Bohman, who is the Administrator for 
Economic Research Service; and we have Renee Picanso, Associate 
Administrator for the National Agricultural Statistics Service. 
So thank you very much for being here today.
    Under Secretary, the floor is yours.

        STATEMENT OF HON. CATHERINE WOTEKI, Ph.D., UNDER
SECRETARY, RESEARCH, EDUCATION, AND ECONOMICS, U.S. DEPARTMENT 
               OF AGRICULTURE, WASHINGTON, D.C.;
          ACCOMPANIED BY CHAVONDA JACOBS-YOUNG, Ph.D.,
   ADMINISTRATOR, AGRICULTURAL RESEARCH SERVICE, USDA; SONNY 
              RAMASWAMY, Ph.D., DIRECTOR, NATIONAL
 INSTITUTE OF FOOD AND AGRICULTURE, USDA; MARY BOHMAN, Ph.D., 
   ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, USDA; AND RENEE 
                       PICANSO, ASSOCIATE
 ADMINISTRATOR, NATIONAL AGRICULTURAL STATISTICS SERVICE, USDA

    Dr. Woteki. Thank you, Chairman Conaway.
    The Chairman. Microphone. The microphone. You will need to 
pull it closer.
    Dr. Woteki. I know how to operate these things, yes.
    The Chairman. We will have to have you up here more often 
so you can get better trained.
    Dr. Woteki. Chairman Conaway, distinguished Members of the 
Committee, it is really our honor to be testifying before you 
this afternoon about the research, education, and economics 
mission area.
    As you noted, Mr. Chairman, I am accompanied by the leaders 
of the four agencies within this mission area, and I request 
that our written testimony be entered into the record, and I 
will briefly summarize that testimony.
    The Chairman. Without objection.
    Dr. Woteki. The United States, as well as the world, is 
facing a food security challenge. Investments in research are a 
critical factor in our ability to provide the future 
generations with food and provide the additional services that 
will be demanded of agriculture.
    The REE mission area agencies conduct and sponsor research 
our country needs to keep our food supply safe, secure, and 
abundant; to ensure profitability to our farmers and ranchers; 
to improve nutrition and food safety for lifelong health; to 
reduce pollution related to agricultural practices; to 
safeguard natural resources, and to address our nation's energy 
needs.
    The four REE agencies play important and complementary 
roles in developing the scientific understanding to tackle 
these issues. ARS, with its network of 2,000 scientists at 90 
different locations across the country, works to protect 
agriculture and transfer its research results to the 
marketplace.
    NIFA funds research at universities that integrates 
research, education, and extension to ensure that 
groundbreaking discoveries go beyond the laboratory and make 
their way to farmers, ranchers, classrooms, and communities 
where Americans can put this knowledge into practice to improve 
their lives.
    ERS performs economic research and analysis that guide 
program and policy decisions throughout the Department, and 
NASS conducts numerous surveys as well as a Census of 
Agriculture issues over 400 reports annually that provide 
accurate, timely, and useful official statistical data on 
national, state, as well as county levels about production, 
supply, price, and other aspects of U.S. agriculture.
    The land-grant universities are valued partners in all 
these research, education, and statistical activities. REE's 
work in the food and agricultural science is based on the 
premise that the Federal Government has a role in advancing 
scientific knowledge to promote our nation's social and 
economic well-being. REE does this by investing in areas in 
which for-profit industry does not invest, and a good example 
of this is fundamental science, or also called basic research. 
It also collaborates with the public-sector academia and the 
private-sector to amplify research outcomes and impacts.
    The 2014 Farm Bill has been very important to us. In it, 
Congress underscored its interest in developing public-private 
partnerships in the agriculture, research, education, and 
extension realm through four different initiatives: Matching 
funds provision that encourages prospective NIFA grantees to 
partner with land-grant universities; the facilitation of 
commodity promotion boards participating in NIFA's competitive 
grants program; incentivizing a research consortia to form 
centers of excellence and to apply for selected NIFA grants; 
and also, Congress created a new private not-for-profit 
foundation for food and agricultural research.
    In keeping with the Administration's effort to break down 
silos, the REE agencies are actively encouraged to seek 
efficiencies, collaborate, and to form partnerships. And one 
example of this approach is the way that we have been 
addressing highly-pathogenic avian influenza. ERS has been 
assessing the impacts of this disease on domestic and global 
poultry markets.
    NIFA has been supporting university researchers in 
extension education to develop new tools that help producers 
better prevent, control, and manage this year's outbreaks. And 
ARS scientists have been working in connection with APHIS, not 
only to identify the specific strains involved, but also to 
develop a vaccine against the virus as well as better detection 
technologies.
    Our written testimony provides additional examples.
    In closing, Mr. Chairman, despite the significant efforts 
by recent farm bills and the annual spending bills to 
restructure, reorganize, reauthorize, repeal outmoded 
provisions, agriculture science in the United States is really 
at a crossroads. It is no secret that the American research 
enterprise needs additional resources.
    Our written testimony makes reference to an ERS analysis, 
indicating that a small increase each year in real term, about 
a one percent increase in the research of that investment, 
would yield an 80 percent increase in agricultural productivity 
by the year 2050.
    So, Mr. Chairman, we thank you for the interest that this 
Committee has in agricultural research, education, and 
economics. And my colleagues and I are eager to answer any 
questions you might have. Thank you.
    [The prepared statement of Dr. Woteki follows:]

  Prepared Statement of Hon. Catherine Woteki, Ph.D., Under Secretary,
  Research, Education, and Economics, U.S. Department of Agriculture, 
                            Washington, D.C.
    Chairman Conaway, Ranking Member Peterson, and distinguished 
Members of the House Agriculture Committee, I am pleased to appear 
before you to provide an overview of the activities of the Research, 
Education, and Economics (REE) mission area of the United States 
Department of Agriculture (USDA), highlight some of our recent success, 
and share some insight on the priorities for the coming years.
    I am accompanied by the leaders of our four agencies: Dr. Chavonda 
Jacobs-Young, Administrator of the Agricultural Research Service (ARS), 
Dr. Mary Bohman, Administrator of the Economic Research Service (ERS), 
Ms. Renee Picanso, Associate Administrator of the National Agricultural 
Statistics Service (NASS), and Dr. Sonny Ramaswamy, Director of the 
National Institute of Food and Agriculture (NIFA).
    The United States and the world are facing critical problems and 
opportunities. Global population is expected to reach nine billion 
people by 2050, almost two billion more people than today. At the same 
time we are seeing the impacts of climate change, impacts that will 
only get worse. These are among the challenges that all of us face. 
Investments in research are a critical factor in meeting these and 
other challenges and opportunities, and it is the REE mission area 
agencies that support the critical research our country needs to keep 
our food supply safe, secure, and abundant, ensure farm profitability, 
improve nutrition and food safety for lifelong health, reduce pollution 
and improve the environment through climate friendly practices, 
safeguard sustainable use of natural resources, including an abundant 
and safe water supply, and address our nation's energy needs. For 
instance, ARS with its network of 2,000 scientists at nearly 90 
laboratories across the country works to enhance and protect 
agriculture as well as transfer research results to the marketplace 
where they serve the needs of a wide range of users. By funding 
research at land-grant universities, as well as other universities and 
organizations, NIFA integrates research, education, and extension to 
ensure that groundbreaking discoveries go beyond the laboratory and 
make their way to the farms, ranches, classrooms, and communities where 
Americans can put this knowledge into practice and improve lives. The 
economic research and analysis work of ERS guides policy throughout 
government and provides vital information to consumers, other 
researchers and the marketplace. NASS conducts numerous surveys and 
issues over 400 reports that provide accurate, timely, and useful 
official statistical data on national, state and county agricultural 
estimates covering production, supply, price and other aspects of the 
U.S. agricultural economy. Farmers and ranchers, governments, commodity 
markets, businesses, and researchers are among those who depend on 
these statistics to make informed decisions.
    We have a rich history of the agricultural sciences in the United 
States and I would like to provide you some context for the ongoing 
work within the mission area.
    The agricultural research and education system of the United States 
started in 1862 with President Abraham Lincoln signing into law the 
creation of a new Department of Agriculture with the mission to promote 
scientific agriculture and the propagation and distribution of seeds. 
The passage of the Morrill Act in 1862 established the land-grant 
university (LGU) system. In creating the land-grant system, a whole new 
generation was allowed to gain access to post-secondary education in 
the United States, ensuring that higher education would nevermore be 
only for the elites. Congress expanded this family of land-grants in 
1890 to serve the educational needs of the African American communities 
and, in 1994, to serve Native Americans in welcoming Tribal 
universities and colleges. Just 2 months ago, on July 15, 2015, this 
Committee hosted the Presidents of 1890s land-grant universities at a 
historic hearing to celebrate the 125th anniversary of the passage of 
the Second Morrill Act.
    Congress passed the Hatch Act of 1887, which created the State 
Agricultural Experiment Stations. These experiment stations contributed 
to many key discoveries in agricultural science. In 1914, the Smith-
Lever Act was signed into law, which created the Cooperative Extension 
Service as a unique Federal, state, and local partnership to translate 
knowledge into innovations and solutions that advanced economic and 
social progress in American agriculture and rural America.
    REE's work in the food and agricultural sciences is based on the 
premise that the Federal Government has a role in advancing scientific 
knowledge to promote our nation's social and economic well-being. REE 
does this by investing in areas in which for-profit industry does not 
invest, such as basic research. It also collaborates with the public-
sector, academia, and the private-sector to amplify research outcomes 
and impacts. Underinvestment or the absence of investments in food and 
agricultural sciences diminishes the needed foundational knowledge-base 
and impacts our nation's global preeminence and economic well-being. It 
is with these goals in mind, that the REE mission area agencies 
establish their priorities and conduct their work.
    These priorities are determined through a rigorous and extensive 
process that incorporates the direction provided by this Committee 
through its 5 year authorizing farm bills, the annual appropriations 
bills, and related governance statutes set in place by Congress and 
guidance provided by the President. REE agencies have their 5 year 
strategic plans, which are aligned with the Department's plans. Input 
is also solicited from many different types of stakeholders throughout 
the planning process. These stakeholders conduct or use agricultural 
research, education, and economics services provided by or for the 
agencies and include representatives from commodity groups, industry, 
interagency Federal working groups, scientific societies, and 
university partners. Stakeholders also include the Congressionally-
established REE external advisory committee, the National Agricultural 
Research, Extension, Education, and Economics Advisory Board 
(NAREEEAB).
    In the 2014 Farm Bill, Congress underscored its interest in 
developing public-private partnerships in the agricultural research, 
education, and extension realm through three different policy 
provisions discussed below. These provisions enable the REE agencies--
in particular, NIFA--to partner with its stakeholders and foster 
increased collaboration between academia and the private-sector.
    Three specific examples of these provisions are: (1) the matching 
funds provision which encourages prospective NIFA grantees to partner 
with land-grant universities when applying for a NIFA grant; (2) the 
facilitation of commodity promotion boards' participation in NIFA's 
signature competitive grants program, the Agriculture and Food Research 
Initiative; and (3) the incentivizing of research consortia to form 
`centers of excellence' and apply for selected NIFA grants in a 
collaborative manner. In addition, Congress created the new, private, 
nonprofit Foundation for Food and Agriculture Research which must match 
its initial Federal seed contribution of $200 million with an equal 
amount from non-Federal sources before underwriting research. The 
Office of Technology Transfer (OTT) nested within ARS serves all of 
USDA in its work with the private-sector. Organizing public-private 
partnerships, as the 2014 Farm Bill has done, ensures that more public 
funds are leveraged with private-sector dollars to make the most of the 
taxpayer investment.
    As important as identifying priorities are in providing strategic 
direction, this represents only part of REE's success model. The 
ultimate measure of success is not just the number of research projects 
we are working on, the number of surveys in the field, or the number of 
grants awarded. The REE agencies measure their success by the outcomes 
of their work. This evidence-based orientation forces us to examine how 
our efforts are helping change the landscape of the American food and 
agriculture enterprise.
    Take for example the efforts of ARS, which views its work as 
bookending the research spectrum--exploring fundamental topics that can 
eventually be transferred to the private-sector in order to be 
commercialized as a way of improving the public good. Examples include 
the mosquito repellent DEET, Lactaid for the lactose-intolerant, the 
variety Roma tomatoes (which is still the main variety used for tomato 
paste), red seedless grapes, and disease-resistant, high-yielding 
sugarcane, are additional examples of ARS's contributions. In Fiscal 
Year 2013 alone, ARS scientists advanced 75 inventions towards the 
patent process and were responsible for over 4,400 scientific 
publications.
    In the same vein, NIFA measures its success through the impacts of 
its grants on the public good. Through the integration of research, 
education, and extension programs totaling about $1.5 billion, NIFA 
ensures that innovative solutions are found to problems in food and 
agriculture and that these solutions go beyond the laboratory, into the 
classroom and into our communities. For example, a team of NIFA-funded 
scientists from the land-grant universities, ARS, and the dairy 
industry have developed a new genetic test that can assess an animal's 
traits immediately after birth. About 10,000 animals were genotyped, 
and researchers used the data to develop a new breeding selection 
method called genome selection. The genome selection method 
simultaneously reduced animal selection time (from 5 years to 1 week) 
and increased prediction accuracy by more than 30 percent for most 
traits. The dairy industry quickly adopted this technology and has 
since genotyped more than 500,000 dairy cattle for estimated annual 
benefits of $100 million per year. Success in this Maryland-based 
program has led to projects that aim to develop similar genotyping 
tests for beef cattle. As another example, NIFA's impacts include a 5 
year project at Iowa State University to investigate how heat stress 
affects a pig's metabolism and performance. Heat stress is one of the 
costliest issues in the U.S. pork industry. Researchers at ISU are 
investigating how heat stress can influence a pig's fetal development 
and postnatal life, including the ability to develop and grow. The 
knowledge this study provides will become increasingly valuable as 
producers work to mitigate severe summer temperatures.
    Finally, NIFA research investments at Oregon State University have 
resulted in the creation of an environmentally friendly wood adhesive 
made from soybean flour. By replacing conventional adhesive, plywood 
production plants have reduced the emission of hazardous air pollutants 
by 90 percent.
    These are just a few examples of results from two of the largest 
REE mission area agencies. Despite their relatively smaller size, the 
remaining two REE agencies--NASS and ERS--provide an essential service 
that policymakers, regulators, markets, and academics rely on every 
day.
    For instance as I mentioned earlier, NASS's mission is to provide 
timely, accurate, and useful official statistics in service to U.S. 
agriculture. NASS achieves this through two separate appropriated 
program areas: the Agricultural Estimates program and the Census of 
Agriculture and its follow-on studies. The Agricultural Estimates 
program provides critical supply, production and price data that is the 
foundation of the commodities market and critical to the coordination 
of damage and loss assessment of the crop insurance program and 
disaster assistance. The Census of Agriculture serves as the benchmark 
of the structure of agriculture in the U.S. and is critical to 
formulation of agriculture policy. The Agricultural Estimates program 
issues over 400 reports annually, providing U.S., regional and state 
estimates on a wide range of crop and livestock commodities, in 
addition to estimates of environmental issues, economics and 
demographics. The quinquennial Census provides very detailed statistics 
at the county, watershed and Congressional district level. Additionally 
under this program, NASS conducts in-depth studies on topics like 
irrigation, horticulture, organic farming and aquaculture.
    The Economic Research Service also reaches far beyond the borders 
of USDA. The mission of ERS is to inform and enhance public and private 
decision making on economic and policy issues related to agriculture, 
food, the environment, and rural development. Although ERS research 
programs are aimed at the information needs of policymakers, its 
information and analysis is also used by the media, trade associations, 
public interest groups, and the general public. ERS studies are widely 
recognized in the research community for its credibility, timeliness, 
and use of cutting edge data, models, and methods.
    Rather than make recommendations, ERS designs its research to 
demonstrate to its users the consequences of taking alternative policy 
or programmatic pathways. In fact, in recognition of this `arms-length' 
role, along with NASS, ERS is also another of the 13 OMB officially 
designated Federal statistical agencies. As principal Federal 
statistical agencies both NASS and ERS provide data that are relevant 
to policy issues, maintain credibility among data users, maintain the 
trust and confidentiality of data providers and the independence from 
political and other external influence.
    In keeping with the Administration's effort to break down silos, 
REE agencies are actively encouraged to seek efficiencies, 
collaborations, and partnerships with other agencies in the REE mission 
area and the Department. For example, ERS relies on NASS data for its 
Farm Income Estimate research; ERS provides ARS with social science 
research and analysis that guides some aspects of ARS' priority 
setting; ARS and NIFA routinely work together on research projects that 
have both intramural and extramural components. The REE mission area 
works broadly across the Department and with other Federal agencies on 
agricultural literacy, food safety, pests and diseases, bioenergy, 
natural resources, and nutrition programs in order to ensure REE 
programs provide the science backbone to support budget and program 
policy decision makers.
    Mr. Chairman, up to this point, I have presented some information 
on the mission of REE agencies, provided some background on how 
priorities are coordinated in the mission area, and featured some of 
the results of the agencies' work in these longer term investments. I 
would like to round out my discussion with a word on current 
initiatives and a look forward at agricultural science in the coming 
years.
    Part of the portfolio approach to finding solutions to the 
challenges that confront us includes efforts to mitigate and resolve 
the challenges that are before us today. Here are three such examples.
    The REE agencies have been working to combat the highly-pathogenic 
avian influenza (HPAI) virus. ERS continues to monitor and assess the 
impacts of this most devastating disease on domestic and global poultry 
markets, while NIFA supports university researchers to develop new 
tools that help better prevent, control, and manage future outbreaks of 
HPAI. ARS scientists have been working in concert with the Department's 
Animal and Plant Health Inspection Service (APHIS), which is in the 
forefront of actions to combat HPAI, and the poultry industry to 
identify the specific strains of the virus, develop a test to detect 
the virus in poultry, and develop a vaccine against the virus. While 
ARS vaccine development efforts look promising, much more work needs to 
be done before a licensed vaccine could be available for use as an aid 
to HPAI eradication.
    In the last few years, the issue of antimicrobial resistance (AMR) 
has emerged as a serious health threat to both animals and humans. 
While our understanding of the development and spread of antimicrobial 
resistance remains incomplete, the REE agencies have worked with the 
Department-wide One Health Working Group to make strides in our 
knowledge on AMR. The action plan for combating AMR takes a voluntary, 
comprehensive, systems approach to surveillance, research and 
development, and outreach activities. In implementing this action plan, 
USDA intends to provide researchers, producers, and consumers science-
based, quantitative information about drug use and resistance in food 
animals and their relationship to livestock management practices.
    A final example of current work is the REE support of a multi-
agency effort on pollinators. As proposed in the President's FY 2016 
budget request, the Pollinator Health Initiative will focus on the 
decline of honey bees and other pollinators. The continued loss of 
commercial honey bee colonies stands to have profound implications 
throughout the food and agriculture enterprise. In collaboration with 
the U.S. Environmental Protection Agency, university scientists, and 
private-sector partners, the Pollinator Health Initiative will make 
advances in our understanding of the complex factors--like poor bee 
nutrition, loss of forage lands, parasites, pathogens, and the exposure 
to pesticides--and provide a path forward to arrest continued 
pollinator losses.
    Mr. Chairman, despite significant efforts by recent farm bills and 
annual spending bills to restructure, reorganize, reauthorize, or even 
repeal provisions, agricultural science in United States is at a 
crossroads. It is no secret that American research needs additional 
resources.
    This underinvestment will have grave consequences. Projections by 
ERS compare the scenarios where public R&D investment remains the same 
in nominal terms versus a world where public R&D investment has 
increased by just one percent each year in real terms. ERS estimates 
that a one percent increase in investment each year until 2050 yields 
an 80 percent increase in agricultural output.
    As well, resources are not always monetary. In May 2015, the 
results of an employment outlook report developed by Purdue University, 
with support from NIFA, revealed a deep chasm between the demand for 
college graduates with a degree in agricultural programs and jobs 
available. The study found that annually, there are 57,900 jobs in 
food, agriculture, renewable natural resources, and environment fields 
in the United States. Further, the study found that there is an average 
of 35,400 new U.S. graduates with a bachelor's degree or higher in 
agriculture related fields, 22,500 short of the jobs available 
annually. However, grants provided by NIFA help to address these issues 
by assisting educational institutions fix shortfalls in curricula 
design, material development, instruction delivery systems, student 
experiential learning opportunities, scientific instrumentation for 
teaching, and student recruitment and retention.
    Mr. Chairman although REE has made significant strides, there is 
still much to be accomplished. Our storied legacy of discovery, 
innovation, and international leadership in agricultural research, 
education and economics is in jeopardy by insufficient investments in 
both money and minds. This is a challenge we must all rise to meet and 
I look forward to redoubling our efforts together in the coming years. 
Thank you.

    The Chairman. Well, thank you. I appreciate it. Again, I 
appreciate you being here.
    Ms. Picanso, the RMA and FSA collect a great deal of data 
as they do their work on the title I programs as well as crop 
insurance. I mean the actual data reference to county-level 
information. Can you talk to us about efforts at how you review 
the data that you collect year in and year out? How have you 
morphed those or reduced those as a result of data that is 
collected elsewhere so that you don't have duplication of 
efforts. Can you talk us a little bit about data collection and 
how you keep vetting your data to make sure you have the most 
recent current data that you need?
    Ms. Picanso. Yes, sir. We collect data via surveys of 
farmers and ranchers and agricultural businesses, and we have 
over 400 reports we put out every year. So we are constantly 
collecting data on crops, livestock, prices, production, grain 
stocks, an assortment of things. A lot of the statistics that 
we do collect are in support of USDA programs, such as FSA and 
RMA and are widely used by them.
    The Chairman. I understand that, that you collect.
    Ms. Picanso. Right.
    The Chairman. But do you look at what you are collecting 
versus what the other agencies are already collecting so that 
if RMA, for example, is collecting all the necessary data 
collected for county-wide information, do you need to also 
collect against that county or could you use RMA data?
    Ms. Picanso. We do use RMA and FSA data as administrative 
data, but our surveys are as of the first of the month. In most 
cases, their survey data, their data they collect from farmers 
does not coincide with the timeline where we are required to 
produce estimates as of the first of the month. So even though 
we can use their data, we have to supplement with surveys of 
farmers and ranchers in order to get a statistically-reliable 
estimate as of the first of the month.
    The Chairman. Give me a sense of what you think that your 
reports can move markets in the data that you are collecting, 
particularly those monthly reports that you are talking about. 
Can you talk to us a little bit about your efforts to make sure 
you are using the very best information available, as new 
techniques evolve, those kind of things to make sure that 
whatever it is you report that potentially could move a market 
in the interim is based on as good of information that you 
would have?
    Ms. Picanso. Yes. We are constantly updating our 
statistical methodology to be sure we have the most up-to-date 
statistical models and methodology. We are constantly looking 
for ways to use more administrative data so we aren't burdening 
the farmers and ranchers as often as we have in the past. But 
with the increasing demand for data, we are asked to do more 
and more surveys; and we are also asked to do a lot of 
publications down to the local level, which means we have to 
increase sample sizes in order to get the data, which involves 
contacting more farmers.
    And as far as the volatility in the reports, our reports 
are as of the first of the month. We usually don't release the 
report until about the 10th. So sometimes between the first of 
the month and the 10th of the month, there may be a weather 
condition that occurs and our estimate may be a little 
different than what the analysts are predicting, and that is 
usually when the markets either go up or down.
    We also release data in conjunction with the World 
Agricultural Outlook Board, which is international data. So 
sometimes when the reports are released, it isn't the U.S. data 
that is affecting the markets. A lot of times it is an 
international situation that can occur as well.
    We do track this, though, and how many times prices go up 
after a report and how many times prices go down and then how 
many times they stay the same; and it is usually about 45 
percent of the time they go up and about 45 percent of the time 
they go down and about ten percent of the time they stay the 
same. So it does even out over the course of time.
    The Chairman. All right. Thank you.
    Under Secretary, you mentioned a small increase in research 
would have a dramatic increase in ag production. Can you reduce 
that to dollars for me, because you spend about--total of your 
agency is about $2.5 billion each year. That is all in. That is 
not just research. That is everything. But what--could you 
reduce the--help me understand the magnitude of money that you 
are talking about.
    Dr. Woteki. Yes. So the report that I am referring to is an 
analysis that ERS has done that has shown that projecting out 
to mid-century, when the expected food demand is going to 
demand an increase in productivity not only in the United 
States, but around the world, that a one percent real increase 
in the appropriation going to agricultural research will result 
in a productivity increase of about 80 percent over that period 
of time.
    The Chairman. So there is a direct line between dollars 
spent and productivity increases and research?
    Dr. Woteki. Historically that has been the case.
    The Chairman. Okay. So it is just--okay.
    Dr. Woteki. And increasingly, in the United States, in the 
past decades, our increases in agricultural productivity have 
come directly from scientific innovation, and our farmers know 
how to implement that. So it is essentially a combination of 
research, innovation, and education.
    The Chairman. Yes. It is not all at the Federal level. 
There is a lot of private research done as well, scientific 
dollars that are spent as well, right?
    Dr. Woteki. That tends to be more commercialization of----
    The Chairman. The basic science.
    Dr. Woteki.--basic science that the private-sector is 
doing.
    The Chairman. Okay. Ms. Fudge, 5 minutes. You are the 
ranking Democratic Member on the Committee today.
    Ms. Adams. Adams. I think you said Fudge.
    The Chairman. Oh, I am sorry. Ms. Adams.
    Ms. Adams. Thank you very much, Mr. Chairman, and I thank 
you all very much for being here.
    My first question is to Dr. Ramaswamy. Is that the correct 
pronunciation? As many of you know, North Carolina A&T State 
University is my alma mater and an 1890 institution found in 
North Carolina and the 12th District that I represent. It is my 
understanding that NIFA is conducting an investigation into 
1890 institutions not being able to offer the full level of 
matching funds needed to qualify for grants available through 
land-grant institution and research programs.
    And I would appreciate it if you could share any comments 
regarding the 1890 institutions not submitting the sufficient 
matching funds for these programs, if you would do that.
    Dr. Ramaswamy. Thank you very much, Mr. Chairman, for 
having us here. And Congresswoman Adams, thanks very much for 
that question. And as you know, you participated in this room 
right here, and thanks to the chair here for inviting our 1890s 
and the co-chair, Collin Peterson, as well. Congressman 
Peterson to invite our 1890s institutions to come here and to 
highlight the wonderful work that is undertaken in the area of 
food and agriculture in those institutions, the 19 institutions 
across America.
    And so, indeed, to your point, some of the institutions are 
finding it difficult to have the state matches. So for every 
dollar that USDA provides, the National Institute of Food and 
Agriculture provides, there is a requirement that there is a 
dollar that is matched from other sources.
    And we say that these other sources, based on what Congress 
has told us, we say that these other sources are non-Federal 
sources. So they could be from the state, they could be from 
the sale of commodities, they could be from donations given to 
the institution, et cetera, but not from tuition that is 
charged to students. Tuition dollars cannot be utilized for 
that match.
    And it turns out that a number of institutions, 1890s 
institutions are not able to get their matches, and again, 
Congress has said that the Secretary is vested with the 
authority to do a waiver up to 50 percent. So an institution 
can contact us, and they can ask for a waiver of up to 50 
percent, and there are three reasons under which we do provide 
the waiver, one of which is a natural disaster such as a 
hurricane or tornado or some such thing; second is financial 
exigency at the state or at the institutional level; and the 
third is that they make an honest effort to find the resources 
to get the match.
    And we get these requests coming in from all the 
institutions, and we look at them, and if they are meeting at 
least one of those criteria, we will go ahead and provide a 
waiver of 50 percent.
    So if they come in with ``50'' in quotes, we provide $1 of 
the Federal match. If they come in with less than 50, let's 
say they come in only with 40, then we only provide 90, and 
the remaining 10 is available to be provided to other 
institutions, providing they can come up with a match as well.
    So that is the sort of the situation that we are in. A 
number of institutions do come in with waivers, and what we 
have done now is to--we have staff that is going to be 
investigating the situation in the 18 states where we have the 
19 institutions, and not just the 1890s institutions. We are 
also going to look at the 1862 institutions as well. Because we 
want to know the entire construct as to how these land-grant 
universities are dealing with the matching requirement that we 
have, and we hope to undertake that analysis in the next 2 or 3 
months or so, the data gathered and there is an analysis done, 
and then we will develop a report, then go through the 
clearance process within USDA and make that available.
    And in that final report that we provide, we will also, 
depending on what we learn, make some recommendations as a path 
forward.
    Ms. Adams. Okay. Let me quickly ask another question--and 
thank you for your answer. What grant opportunities are 
forthcoming related to supporting small scale minority or women 
producers?
    Dr. Ramaswamy. There are a number of funding opportunities 
that will be coming here with the start of the new fiscal year, 
and we hope that this body here and the rest of Congress will 
indeed provide us the funding necessary.
    And we do have several funding opportunities for women and 
minority farmers and small farmers as well that are part of the 
opportunities we provide. And if you wish, I can send you 
separately a listing of the ones that we have done in the 
previous year.
    Ms. Adams. Yes, sir, I would appreciate that.
    Thank you, Mr. Chairman. I am out of time.
    The Chairman. Thank you. Ms. Adams. The gentlelady's time 
has expired. Mr. Crawford, 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. This is in general 
to whoever might want to respond to this. A lot of our growers 
obviously rely on USDA estimates of commodities supply and 
demand for market information and outlook. What role does ERS 
play in the development of the monthly WASDE reports, and how 
is that involvement distinct from the efforts of other services 
of the USDA?
    Dr. Bohman. The Economic Research Service, has long played 
an important role in USDA's commodity outlook program. It is 
over 50 years at this point, and our expertise is to bring in 
the economic knowledge. We are all economists, how the markets 
work. We also have research behind the economists to 
participate in these committees, and we have data systems that 
are used to produce supply, demand, and utilization tables.
    So we are some of the sort of intellectual horsepower 
behind the committees and draws on our infrastructure. After 
the WASDE report comes out every month, ERS produces 
newsletters for the major commodities that show the reasoning 
behind the WASDE estimates, and this is a unique contribution.
    A final element that we produce is a periodic report such 
as on China's cotton stocks, U.S. trade with Cuba, or the 
implications of lower energy prices for the farm sector which 
document the modeling and economic logic behind the WASDE 
reports.
    Another contribution ERS makes is leading USDA's 10 year 
agriculture baseline. We really drive that process in 
collaboration with the Office of the Chief Economist.
    Mr. Crawford. Okay.
    Dr. Bohman. We are committed to continuing excellence in 
this area.
    Mr. Crawford. I appreciate that. I heard a lot of 
complaints from growers back home that the recent WASDE report 
had a huge impact on the price of soybeans in particular. 
Apparently, Arkansas average yield forecasts are published at a 
much higher rate than anyone is even capable of at this point, 
so considerably higher than record yields.
    Can you walk me through what controls you might have in 
place to ensure accuracy because there seems to be a huge 
difference of opinion on what our producers back home are 
telling us that they are expecting versus what was published.
    Dr. Bohman. Well, ERS analysts bring to the table, along 
with analysts from the Farm Service Agency, from NASS, from the 
World Board itself, a process where they have data from the 
past, they have the NASS statistics that are about to be 
released, and they also have expertise from talking to other 
people in the industry.
    So they bring the best knowledge to produce these 
forecasts. They regularly go back and check the accuracy of 
their forecast, the ones that are predicting, how do they do 
when the market clears in the future, and so there is a robust 
system of checks and balances, but I will turn to my NASS 
colleague because they are a big part of the process.
    Ms. Picanso. Yes. In addition to getting yield data from 
producers on surveys, we also go out into the fields, and we 
actually do objective measurements, and the objective 
measurements on the crops are combined with the producer yields 
and put into models, and that is how we come up with our 
forecasts.
    Mr. Crawford. Okay. I don't mean to cut you off, but I just 
have been kind of trying to be up to speed on my data here, and 
University of Arkansas cooperative extension service, which 
most states rely pretty heavily on their land-grant 
institutions, cooperative extension services, and those 
economists.
    And our economist at the University of Arkansas said USDA's 
report was extremely bullish, and we are basing that on a 
pretty big increase year over year that the farmers in our 
district don't think they are capable of meeting that level, 
and so let me move on to the next thing.
    Again, we have heard these repeated concerns from growers 
in the industry about the accuracy of these crop progress 
reports and the impact that those reports can have on market 
prices, particularly for corn and soybeans. Can you talk about 
the methodology that helps you get there, and throughout the 
growing season, what efforts NASS has undertaken to review its 
methodologies for yield estimates, and what changes, if any, 
you think, need to be made?
    Ms. Picanso. I am not aware of any changes that need to be 
made, but we do use methodology, like I said before, with our 
models. We actually do get out into the field once the crops 
starts producing fruit, and we do measurements, we take weights 
of the fruit, and that combined with what the producers are 
telling us is how we get our yields that are published every 
month.
    And as the season goes on, the data we get on the objective 
measurements become more accurate because, sometimes, depending 
on the maturity of the crop, which go out September 1, October 
1, some years the crop is more mature than others, and the more 
mature the crop is, the more reliable our actual counts of the 
objective measurements are.
    So in years where the crop matures a little early, we tend 
to do better on the yield forecast, but we do have a 
publication that comes out every year that compares all of our 
forecasted yields to the final yield, so it does show the 
accuracy. It is available on our website. We also host dozens 
of people each month into our actual ag statistics board 
process where they go through and see how all of the yields and 
acreage and production are actually developed, and it is really 
a pretty impressive process with all of our statisticians.
    And if you sit down and go through the process, you will 
realize that we are using sophisticated models to come up with 
the data. Some people think we are just guessing or maybe we 
are just basing it on a handful of reports, but we do get 75 to 
80 percent response on our surveys as well as our objective 
yield to complement it, and we do use some satellite data 
towards the end of the growing season as well.
    Mr. Crawford. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Scott, 5 minutes.
    Mr. Austin Scott of Georgia. Thank you Mr. Chairman.
    Dr. Ramaswamy, how are you? It has been a while.
    Dr. Ramaswamy. It has been a while.
    Mr. Austin Scott of Georgia. With regard to ag research, we 
talk a lot about research, but would you speak to the value of 
extension along with the research?
    Dr. Ramaswamy. Indeed, Congressman Scott, and good to see 
you again, sir, after several months now. And cooperative 
extension service, which we celebrated the 100th anniversary, 
as you know----
    Mr. Austin Scott of Georgia. Yes, sir.
    Dr. Ramaswamy.--last year, and you hosted a hearing for 
that particular event as well, is the very American approach to 
translating knowledge into innovations and solutions to address 
problems people are facing. And this is the only country on 
Earth that doesn't dissuade the connectivity between the 
research discovery enterprise and the translational enterprise 
and then to deliver it to the end-users. No other country has 
been able to do anything like it. And I truly believe that our 
nation's preeminence, global preeminence is, in large measure, 
that ability to translate knowledge and to deliver to the end-
users.
    And we have a history of it over the last 100 years, and 
when we look at the situation now and as we project out, as we 
go forward as well, we need this sort of ability to translate 
and to deliver that knowledge more so today than we have ever 
needed it before; in part, because of the burgeoning population 
with pressures that we have; in part, because our ability to 
ensure food security, nutritional security specifically.
    And in the context of diminishing land and water resources, 
changing incomes and diets, et cetera, et cetera, it is driving 
the need to come up with better more efficient ways to produce 
food and to get it to where it is needed and to address those 
problems as well.
    Extension is absolutely a must if we are to be able to 
achieve what we need to achieve.
    Mr. Austin Scott of Georgia. Things seem to change faster 
now than they have in the past with regard to chemicals and 
pests and other things, and certainly there is a tremendous 
amount of information and there is even more misinformation out 
there, and so that extension aspect, along with the research, 
is something that I don't think we talk about extension enough.
    Dr. Ramaswamy. Indeed.
    Mr. Austin Scott of Georgia. But thank you for that.
    One other question I have. The 1890s land-grant 
universities, there are reports that they have not been 
receiving as much funding as some of the other universities. 
What suggestions do you or anybody else on the panel have for 
us in correcting that so that 1890s universities received the 
funding?
    Dr. Ramaswamy. Indeed. We do have a situation where the 
1890s institutions are not being able to meet the matching 
requirement that we have the dollar-for-dollar matching 
requirement that we have and they ask for a waiver from us, 50 
percent waiver, and based on three criteria, natural disasters, 
financial exigency, or that they are making a commitment to 
find the resources, then we give them a waiver. And we have 
developed that path forward, and it is a challenging situation 
for them.
    So what we have embarked on right now is to undertake a 
complete detailed data gathering and analysis in all 18 states 
for the 19, 1890s institutions and their 1862 counterparts. So 
we don't want to just go and find out what is the situation 
with the 1890s. We need to know what is happening in 1862s, use 
that to develop a path forward.
    Mr. Austin Scott of Georgia. So I am down to 1 minute. I 
want to follow up on that if I can, sir. So if I understand 
you, a 50 percent waiver was granted?
    Dr. Ramaswamy. Yes.
    Mr. Austin Scott of Georgia. So is that in the difference 
in what they--the 50 percent is the difference in what they 
would have gotten had it been matched and what they did get?
    Dr. Ramaswamy. Indeed. So for every dollar, they are only 
able to come up with 50.
    Mr. Austin Scott of Georgia. Right.
    Dr. Ramaswamy. That means they are short 50.
    Mr. Austin Scott of Georgia. Right.
    Dr. Ramaswamy. And that prevents them from deploying the 
kind of research that they need, deploying the kind of 
extension they need, et cetera.
    Mr. Austin Scott of Georgia. I am interested in suggestions 
on how we resolve that. That is something that Fort Valley 
State is actually just outside my district but something that 
is important to a lot of the people that are in my district.
    Dr. Ramaswamy. Indeed. I met with the Congressional Black 
Caucus staffers and other staffers as well and shared with them 
this process that we have just embarked on, and we hope to get 
it completed and come up with an analysis and a path forward on 
how we might address this, so----
    Mr. Austin Scott of Georgia. Would it be possible on some 
of these to grant them an absolute waiver instead of the 50 
percent waiver?
    Dr. Ramaswamy. No, sir. You would not allow us to do that. 
Congress does not allow us to do it.
    Mr. Austin Scott of Georgia. Thank you. Thank you, Doctor. 
Good to see you again, and thank you for your work.
    Dr. Ramaswamy. Indeed. Thanks so much.
    The Chairman. The gentleman yields. Just following up, Dr. 
Ramaswamy, how many Federal dollars are not claimed as a result 
of lack of match?
    Dr. Ramaswamy. We believe approximately about--well, for 
every dollar that we send, if they don't----
    The Chairman. The question is, I understand that the state 
or the private-sector has to come up with their share, but of 
the Federal dollars available to be matched against, how many 
of those Federal dollars are not matched?
    Dr. Ramaswamy. I would like to get back to you on that with 
a specific answer, Congressman Conaway.
    The Chairman. Okay.
    Dr. Ramaswamy. Because I can tell you approximately what 
the numbers are, but I want to get back to you----
    The Chairman. All right.
    Dr. Ramaswamy.--specifically with the numbers.
    The Chairman. All right. There are some Federal dollars 
that aren't claimed?
    Dr. Ramaswamy. Yes.
    The Chairman. Okay. That would be the problem.
    Dr. Ramaswamy. Absolutely.
    The Chairman. You want to make sure that whatever Federal 
dollars we do have available to them, that gets claimed, and 
then the private-sector or states have to come up with their 
share.
    Dr. Ramaswamy. Sure.
    The Chairman. Mr. Allen, 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you for being 
with us today.
    In looking through the opening comments, I was interested, 
obviously, in the 80 percent return on the invested dollars as 
far as the--and also you mentioned to ensure farm 
profitability. As you probably know, the farmers are going to 
be going through a difficult time this year relative to 
commodity prices, and corn is down. I mean, everything is down.
    I would appreciate whatever you would have to say as far as 
what research we need to do to figure out this problem.
    Dr. Woteki. Well, thank you, Congressman, for asking about 
the return on investment as well as what are the implications 
for farmers today, because I know that is constantly on the top 
of our mind.
    There have been a variety of studies that have been done 
over the years about, well, what is this investment in ag 
research actually returning to the economy. And a recent 
analysis by Dr. Phil Pardy at the University of Minnesota has 
taken all of these studies together and re-analyzed them to 
look at what is the annualized rate of return on the research 
investment in agriculture science, and this recent analysis 
indicates that that return on the investment is about ten 
percent, which is pretty good.
    And it is also similar to returns on investment from other 
areas of science. Agriculture tends to have more historical 
data associated with our scientific investment, so there has 
been quite a bit of this type of economic analysis done.
    To your question about what does that mean for the farmer 
today. It means a lot of different things. Agriculture is so 
diverse in this country, the week before last in Salinas, 
California I met with a group of lettuce and leafy green 
farmers, and they are really worried about water issues, and 
they are also constantly battling new diseases that have 
emerged. And from research that ARS has done over the years, 
just over this past year, they have introduced about a dozen 
new lettuce varieties that are resistant to downy mildew, a big 
problem in the lettuce industry.
    For the citrus industry, they have introduced a new root 
stock that is resistant to the citrus greening disease. We have 
also, through the investment that we have just been talking 
about that NIFA makes to the land-grant universities, provide 
funding that supports cooperative extension that allows these 
wonderful research universities to be able to prepare and 
actually provide to farmers a synthesis of what we know about 
the problem that they themselves are facing.
    So there is a variety of different ways that farmers are 
getting a real return on investment right now.
    Mr. Allen. Well, I mean, we are growing lettuce in Burke 
county, in Georgia, south Georgia, so I know a little bit about 
diverse--we are getting more diverse in our farming in our 
districts.
    And our yield per acre, we are extremely productive but it 
seems like the marketplace or the commodity price or the 
investment side is not cooperating from the standpoint we have 
this incredible ability to produce this great cotton, this 
great corn, and everything else, but then again, from the world 
standpoint, when we go out and price this in the market, we are 
getting killed.
    You have public-private businesses working together and you 
collaborate, you get a lot of information and that sort of 
thing, the bottom line is it is great to produce, but then you 
have to get something for what you are producing. Have you all 
done any research on that, as far as how we are much more 
productive than the world in our agriculture, but for whatever 
reason, that has got to relate to the bottom line?
    Dr. Woteki. Well, we agree with you that American 
agriculture is enormously productive, and we are, remember, the 
research arm of the Department. We do have in the statistical 
agencies, NASS and ERS, the capability for generating the kind 
of information that will provide a lot of insights into markets 
and that also are very useful to you in making policy 
decisions.
    There are, through the Economic Research Service, in 
particular, a variety of different studies that shed some light 
on these questions of U.S. competitiveness in the marketplace, 
and I would commend those to you.
    Mr. Allen. Okay. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Rouzer, 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman.
    Dr. Jacobs-Young, my question would be most appropriate 
probably directed to you, although any of you that might have 
some insight, feel free to share. I am interested in avian 
influenza. In the southeastern part of the country, obviously, 
we are bracing for that potential possibility this fall as the 
birds migrate south. Can you tell us where we are in terms of 
development of a vaccine or vaccines that are available, what 
you are hearing from other countries as it relates to that or 
any interaction that you are having with other government 
agencies as it relates to this issue?
    Dr. Jacobs-Young. So thank you for that question. 
Absolutely. Right away, when we had the issues in the Midwest 
with avian influenza, ARS partnered with APHIS and began to 
redirect our scientists to help them, first of all, determine 
what we are dealing with, what type of strains we are dealing 
with. We developed the diagnostic test, and then we began right 
away on work on a vaccine to address the two strains that we 
have been facing.
    And so ARS has developed a vaccine, and we are now working 
with the Department as they determine the potentials for 
commercialization of that vaccine, which addresses the two 
strains that we experienced this year.
    Mr. Rouzer. How much of that vaccine has been produced? Is 
production of it an issue at all in terms of quantity of birds 
that might be affected?
    Dr. Jacobs-Young. It has not been transferred to a 
commercial partner as of yet for production, and so that is 
part of the negotiation. As my colleague just said, we are the 
research side, we develop the science, and so we work with our 
partners to negotiate the commercialization.
    Mr. Rouzer. I'm curious just how much vaccine would be 
needed. That is really my question. That is just a question I 
am curious about, if anybody knows?
    Dr. Jacobs-Young. We do not. At this time what we can 
certainly submit some information for the record on what we 
think would be the approximate need for the country.
    Mr. Rouzer. Switching gears, Madam Under Secretary, I am a 
big picture guy, and it was mentioned earlier in the hearing 
that we will have a population of 9.6 billion by the year 2050. 
It is hard to believe it is already the year 2015, and 
according to my little Google search here, we have 7.3 billion 
people in the world today. Of course, by 2050, in addition to a 
couple billion more, there will be a lot less land to produce 
our food and fiber on.
    What is our long-term strategy? What do we need to be doing 
now in terms of the basics and as relates to our research 
infrastructure and everything else to meet that demand?
    Dr. Woteki. Well, we need to take a two-pronged approach 
towards our research activities to really be able to face that 
demand for food, and as I mentioned in the testimony, all of 
the other services that are going to be demanded of 
agriculture; clean water, contributing to the bioeconomy, and 
beyond that, being sustainable into all of the future 
generations to come after that.
    So the two-pronged approach is, first of all, to focus on 
agricultural productivity and to do the kind of fundamental 
research that is going to provide us with insights into how we 
can increase productivity, given less inputs, less land, less 
water, perhaps less fertilizer and to be able to produce a wide 
variety of health promoting foods with that type of input.
    The second prong is to focus on agricultural systems at the 
landscape level, and how can we be promoting the long-term 
thinking as well as the adaptations that our rural communities 
are going to have to make to support these systems of 
integrated livestock and crop production that will be long-term 
sustainable.
    So we are approaching the research towards increasing 
productivity by following those two pathways. If you look at 
the way that we have structured our research priorities, they 
reflect that, so that is, very briefly, how we are looking to 
structure our agricultural research program to meet all of 
those demands.
    Mr. Rouzer. Thank you, Mr. Chairman. I see my time has 
expired.
    The Chairman. The gentleman's time has expired.
    Mr. Abraham, 5 minutes.
    Mr. Abraham. Thank you, Mr. Chairman, and I thank the panel 
for being here.
    Dr. Jacobs-Young, just go back to the avian influenza 
vaccine. I am from northeast Louisiana. We have large poultry 
farms in that area, and we are in the season where ducks and 
geese are migrating down as we speak.
    You say ARS and APHIS, you identified the two strains, got 
the vaccine spooling up. Your best guess, best estimate as to 
when it will be turned over to commercial buyers that will make 
this vaccine and what are the hurdles preventing that now? Why 
isn't that vaccine already being produced commercially, because 
going to Mr. Rouzer's point on his question, we are going to 
need hundreds of thousands, if not, millions of doses of this 
vaccine?
    Dr. Jacobs-Young. All right. So thank you for the question. 
So, sir, what I do know is that we are currently in 
negotiations to identify a commercial partner.
    Mr. Abraham. What is holding--I mean, do you expect that to 
happen pretty quickly? Time is running out on this year.
    Dr. Jacobs-Young. Yes. That is a good question. I know that 
they are in conversations, and I know that the urgency is very, 
very much appreciated right now. We are all very concerned 
about being prepared, and so with the temperatures, and I 
understand that there are some conditions right now that we 
have some window to work with a commercial partner to be 
prepared, but the best I could do is get some information for 
the record to get back to you.
    We are working with APHIS, and so they are our partner in 
this.
    Mr. Abraham. Are there certain commercial entities that are 
better spooled up, better to facilitate making this vaccine, 
and is that under part of the negotiation as to who can do it 
the fastest and the best?
    Dr. Jacobs-Young. Well, when we develop vaccines in ARS is 
typically we try to develop vaccines that can be retrofitted 
into existing pharmaceutical vaccine-type production processes, 
and so we have done the same thing in this case.
    At this point, the best answer I can give you is I can give 
you some information for the record. We are the science agency, 
we do not do the negotiations with the commercial partner.
    Mr. Abraham. Okay. Let me switch gears a little bit, but I 
will stay with you. Where does ARS--give me an update on y'alls 
relationship at MARC,
    Dr. Jacobs-Young. Okay. Fantastic.
    Mr. Abraham. How is that doing?
    Dr. Jacobs-Young. So ARS has really had an opportunity to 
strengthen the infrastructure for our animal research inside 
the agency. Should I talk a little bit about the panel review, 
the external panel review?
    So we have had an external panel review at MARC. It has 
been published and shared with many Members on the Hill. In 
that report, they found no evidence of animal abuse and made 
some recommendations on things that we can strengthen at MARC, 
and we have taken those recommendations, and we have 
implemented each one of them.
    Mr. Abraham. That is a voluntary reporting to the 
institutional animal center, right?
    Dr. Jacobs-Young. The report did not recommend voluntary 
reporting to the Animal Welfare Act, but we are working with 
APHIS to voluntarily have an inspection register each one of 
our animal research locations, and we have already started a 
pilot program. APHIS has already inspected, I believe, two of 
our locations, and so we are working with APHIS to determine 
how this would be implemented. They do this with the National 
Zoo, and there are other Federal properties that they partner 
with, and so we are working with them to register each one of 
our locations.
    But we have identified an animal care ombudsman here at 
headquarters so that if anyone had any concerns about animal 
welfare, that they could contact that individual anonymously, 
confidentially. We hired an officer, an animal care and use 
officer for ARS.
    What the panel found is that we had adequate policies and 
procedures. There just wasn't one person that had the 
responsibility to ensure that they were being followed across 
this huge centralized agency, and now we have that person in 
place.
    We have implemented formal training for all of our 
employees involved in animal research and some of our 
administrators. Those will all be completing the training. The 
first phase really focus on the IACUC members, and so those 
IACUC members have been trained, and we have also updated our 
policies and procedures and our Memorandum of Understanding 
with the University of Nebraska because we have--if you 
remember, that location has 50 percent ARS employees and 50 
percent University of Nebraska employees, and so we clarified 
some things and really cleaned up our partnership with Nebraska 
in terms of this brand new MOU.
    So there has been a lot of work under way. That panel went 
on to review some of our other locations. So they had an 
opportunity to review four other locations, including several 
in Georgia, down in our Athens location. Once again, that panel 
came back saying that they found no evidence of animal abuse 
and that they were impressed with our care of our animals, and 
so we are awaiting the OIG investigation and expecting an 
interim report very soon.
    Mr. Abraham. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Mr. Yoho, 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. And I appreciate 
everybody being here this late afternoon.
    Dr. Woteki, you were saying that the funds research to take 
these advancements in the research you are doing to the 
consumer, to the farmers, to increase production--I am adding 
this--decrease chemical usage, conserve resources, feed 
millions here at home and around the world, I mean, that is 
what we are doing with our research, and you are a researcher. 
Dr. Ramaswamy, you are a researcher, and Dr. Jacobs-Young, you 
research. Dr. Bohman, do you do research also? And Ms. Picanso, 
is that correct?
    Ms. Picanso. Yes.
    Mr. Yoho. That is good. Do you do any research?
    Ms. Picanso. We do.
    Mr. Yoho. You analyze the research.
    Ms. Picanso. We have a small research----
    Mr. Yoho. Okay. Well, first, I come from the great State of 
Florida, and you are well aware of citrus greening, and I 
appreciate you bringing that up. And I know you have seven 
initiatives that you are working with, and I just want to thank 
you from our state. My Governor, Rick Scott, he wants to thank 
you, Commissioner Adam Putnam, and our producers for what you 
have done.
    My question is this. USDA funds and conducts researches at 
our land-grant universities and other places, that produces 
extremely important research for the advancement of 
agriculture, veterinary science, and it winds up feeding people 
around the world, and the advancement of medicine.
    But yet we get researchers that call us--I can't tell you 
how many times they call us, and they are getting hammered 
because of FOIA. In fact, I have a letter right here from a 
doctor, and I won't mention his name, but he says I am one of 
43 scientists that have been attacked using public records law. 
We are forced to surrender our e-mails in the name of 
transparency. However, our own words are distorted, twisted, 
and our reputations harmed when we did nothing wrong.
    Now I have been FOIA'd by so-and-so, and he goes on to say, 
should we allow activists and pseudo-celebrities to have access 
to our records with the sole purpose of causing reputation harm 
for an agenda based on personal views, beliefs, or hyperboles, 
and the pseudo-science versus the science that you are 
supporting and the American taxpayers are funding?
    What is your thoughts on that, and what can we do? Because 
we have these researchers doing all this work, but they are not 
going to come out and talk about it. And citrus greening, one 
of the things on the table is a genetically modified orange, 
and 10 years ago there was a genetically modified papaya that 
has a ringspot virus, and they got rid of it 10 years ago. EPA 
has released it, but nobody has the political will to say it is 
okay.
    But yet we are funding this kind of research, and why are 
we funding this kind of research if we don't have the political 
clout and the research of you guys standing up? So I want to 
hear your thoughts on that, please.
    Dr. Woteki. Well, I have been following the recent 
controversies that have involved some of the faculty at the 
University of Florida, I was visiting last week with the Dean 
of Agriculture at Iowa State University, some of their faculty 
have also been FOIA'd, and quite frankly, it is a situation 
that we in the government research agencies also face all of 
the time with frequent FOIA requests.
    Mr. Yoho. What I would request from you is to come up and 
help us come up with a policy where we need to protect it. We 
had an 18 year old student from one of our universities, her 
name was put out there, her address and all that, and I can 
just see it squelching the research, and the scientists won't 
back up to advance this. So go ahead, I cut you off. I am 
sorry.
    Dr. Woteki. Well, what I was going to go on to say is that 
we do live in a very open society, and one of the premises of 
our government is transparency. So the open access laws at the 
state level and the Federal level are being now being used in 
some ways that perhaps make us uncomfortable and also make it 
difficult for us to respond.
    But I do believe that one of the best ways for the 
scientific community to operate in this kind of environment is 
to continue to be open about our science, to participate and 
have activities like cooperative extension that can provide the 
kind of messaging off of the science to the general public 
about what this investment is actually bringing to them.
    Mr. Yoho. And that is thing that we need to do, and if you 
could come out, when you see these attacks, just come out with 
a response from the USDA and saying, ``No, this is the facts 
behind the science, and the science is good, and it benefits 
all.'' I appreciate your time.
    Mr. Chairman, I yield back.
    Dr. Woteki. Thank you.
    The Chairman. The gentleman yields back.
    Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman. Thanks to all the 
members of this panel. If there is probably two words that 
define agriculture today, and it is science and technology, and 
so I really appreciate the research, evidence-based research, 
the information, the data. That is the other thing.
    You know, we need good data. If you don't have good data, I 
see that all too often here in Washington, we are making 
decisions based on myth or a notion and the research and the 
data that is provided.
    So my question for you, and I struggled with this my first 
term. I saw a number of different research prospects that the 
taxpayers funded, but it seemed like they didn't go anywhere. 
They may have gotten great outcomes, but they sat on the shelf 
and it seemed like it maybe contributed towards tenure, but the 
mindset was, and I get it, especially our university-based 
research at times, it is once you do a great research study, it 
is time to do the next one.
    And so what are we doing in terms of assuring that we take, 
what I think are some pretty exciting outcomes and findings, 
from much of the research that taxpayers pay for, how do we 
make sure that is being commercialized, that the outcomes are 
actually going for the public good, and how can we improve 
that, because I actually believe that whatever we are doing 
now, we can raise the bar on that and improve it?
    Dr. Woteki. Well, that has already been a particular 
interest of ours to increase the commercialization of research 
findings, results, products of our research, and also to use a 
lot of the research that is done to inform the program and the 
policy decisions that other parts of the Department are making.
    The research can also find many applications in improving 
the decisions, the Food Safety Inspection Service, or FSIS 
makes as well. But on commercialization side, we talked a 
little bit about already about ARS. They do have an Office of 
Technology Transfer that actively seeks to patent and then 
license the research that ARS is doing, and they are also 
working to develop a more entrepreneurial skilled scientific 
workforce within ARS.
    NIFA, in the work that it supports at universities, has 
also been very much promoting the idea that universities should 
be trying to commercialize the results of the research 
investment that the agency makes, and I know both Dr. Ramaswamy 
and Dr. Jacobs-Young can give you some specific examples of 
programmatic activities they have under way.
    Mr. Thompson. That would be great.
    Dr. Jacobs-Young. Yes, so just some quick examples, things 
that will resonate with each of you, especially if you have 
children and you spend some time at McDonald's. If you noticed 
it now, the Happy Meal comes with fresh apples. That technology 
was developed by ARS that permits children to enjoy those fresh 
apples and they are not brown and they still taste crispy. I 
have had them a couple of times myself.
    DEET, Lactaid, mashed potatoes, those flaked potatoes, the 
ability to have frozen foods in your grocery stores, all of 
those technologies began at ARS. So part of our entire mission 
is to deliver the innovation, and so the office of technology 
transfer, as Dr. Woteki said, is critical.
    On last year alone, we filed 110 patent applications. We 
had 28 licenses executed. So it is just a part of who we are. 
We don't patent the patent, so some people say why don't you 
have more. We only patent when it is necessary to disseminate 
the information and get it out there. We released 348 new 
varieties of plants last year. So the entire goal is to deliver 
it, and so we have a few things to show for the work.
    Dr. Ramaswamy. And if I might add, Congressman Thompson.
    Mr. Thompson. Please.
    Dr. Ramaswamy. Indeed, the production practices that we 
follow today, for example, no-till is the result of the 
research that was undertaken in this country, or the 
development of value-added products from whether it is corn or 
sugarcane or cotton or whatever else we have, those are the 
result of the research undertaken by ARS and land-grant 
university scientists with the funding that we provided.
    And water use, for example, that is an existential threat, 
as I like to say, and already the work that has been done at 
multiple land-grant universities and ARS labs has resulted in 
billions of gallons of water being saved right now, so there 
are a whole bunch of examples that we can send you about the 
outcomes that are happening that actually are very impactful 
right now.
    Mr. Thompson. Very good. Thank you very much.
    Thanks, Mr. Chairman.
    The Chairman. I thank the panel. Dr. Ramaswamy, you had a 
clarifying comment on the claiming of Federal dollars with 
respect to the matches?
    Dr. Ramaswamy. Indeed, Mr. Chairman. Thank you very much 
for that opportunity. Yes, so if an institution submits to us 
the waiver and it is less than the 50 percent waiver, so if it 
is less than 50 percent waiver, it is 50 percent waiver, they 
get the dollar from us, so there is no loss of those Federal 
dollars. But if they are asking for less than 50--or pardon 
me, they come in with less than 50.
    The Chairman. Right.
    Dr. Ramaswamy. Let's say it is 40, we only give them 90, 
but there is remaining 10. We make that available to other 
institutions that can come up with that match as well.
    The Chairman. Still within the 1890 school group?
    Dr. Ramaswamy. Yes, sir.
    The Chairman. Okay.
    Dr. Ramaswamy. Only within the 1890s, and we try to make 
sure that we don't return these things to Treasury.
    The Chairman. All right. I am looking forward to your study 
that would include both sets of land-grant schools and the 
impact there because I do think it is important, Dr. Woteki, as 
we look at ways to increase that small little piece of research 
you were talking about, that we are able to match up those 
Federal dollars at 100 percent from the private-sector, the 
states, whatever, that they recognize that they are getting a 
big bang for their buck.
    This panel, in particular, is a great example of why we 
should have been doing this more often and the opportunity for 
you to share with us the great things that you are doing. We 
probably ought to reverse the role. Next time we will bring you 
guys in first next time and save Farm Service Agency for dead 
last, but I want to particularly recognize the Members who were 
here today.
    Today is a day we would normally be home in our districts, 
working with folks and doing all that kind of stuff, and so the 
folks who came in today a day early will have a group in the 
morning that will be here. They are actually coming in a half a 
day early, but I want to recognize Members who showed up today 
to be a part of this, but thank you, the panel, for your 
staying all afternoon and being here.
    I know it was logistically a bit of a challenge to get 
everybody up and down the street, and I want to thank you for 
that effort and the preparation that you did coming in here 
this afternoon. I think all of our Members will leave, 
particularly this panel, today, better informed as to what you 
are doing and why you are doing it, and I, for one, and I speak 
on behalf of the others on the Committee, I want to thank you, 
and let you know how much we appreciate the work that you do 
day in and day out to improve production agriculture across the 
spectrum.
    So I would like to thank our witnesses, remind everybody we 
will pick up on Part 2 of our hearing tomorrow morning at 10 
a.m. When we hear from the representative remaining four 
mission areas of USDA.
    Under the rules of the Committee, the record of today's 
hearing will remain open for 10 calendar days to receive 
additional material, supplementary written responses from the 
witnesses to any questions posed by a Member. This hearing of 
the Committee on Agriculture is adjourned. Thank you, 
everybody.
    [Whereupon, at 5:34 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
                          Submitted Questions
Response from Alexis Taylor, Deputy Under Secretary, Farm and Foreign 
        Agricultural Services, U.S. Department of Agriculture
Questions Submitted by Hon. Bob Goodlatte, a Representative in Congress 
        from Virginia
    Question 1. Blender Pumps: We understand that USDA's Biofuels 
Infrastructure Partnership will be providing $100 million in grant 
funds for the installation of biofuel blender pumps in 21 states. 
Considering that for the last 10 years, consumers have already been 
forced to ``foot the bill'' for the higher levels of ethanol blended 
into their gasoline, is it fair to ask them to pay another $100 million 
in order to prop up the ethanol industry?
    Answer. The U.S. Department of Agriculture (USDA) is undertaking 
the Biofuel Infrastructure Partnership because of infrastructure 
constraints limiting the distribution of renewable fuels. Approximately 
80 to 85 percent of the 250 million vehicles registered in the United 
States are able to use fuels containing 15 percent ethanol, E15. Also, 
14 million flex-fuel vehicles can use E85, which contains more ethanol 
than gasoline. However, most of the Nation's fueling pumps can deliver 
only fuels containing a maximum of 10 percent ethanol, E10.
    The Biofuel Infrastructure Partnership is investing up to $100 
million, to be matched by states and private entities at a more than 
one-to-one ratio, for the installation of nearly 5,000 pumps offering 
higher blends of ethanol. USDA believes this infrastructure not only 
will provide consumers with cleaner fuels and more options at the pump, 
but also will expand markets for America's farmers and will boost rural 
economic growth and jobs.

    Question 2. COOL: As you know, the House has passed legislation to 
repeal Country-of-Origin Labeling (COOL) for meat products, and the 
Senate is considering similar legislation. If COOL legislation is 
enacted into law, what would be the cost and timeline for USDA to 
implement the changes?
    Answer. The time and cost of implementing legislation altering or 
repealing COOL would vary depending on the final legislation passed by 
Congress.

    Question 3. Dairy: Average dairy margins in 2015 have been just 
under $8.00--the highest coverage level available under the new Dairy 
Margin Protection Program. Have payments been made to producers 
enrolled at that coverage level, and if so what was the approximate 
total of those payments? How much has been deducted from those payments 
due to sequestration?
    Answer. As of November 25, 2015, approximately $648,782 has been 
paid, net of sequester, to dairy producers enrolled in the Margin 
Protection Program for Dairy (MPP-Dairy) at the $8.00 coverage level 
for calendar year 2015. As required by Congress pursuant to the 
Balanced Budget and Emergency Deficit Control Act of 1985, MPP-Dairy 
payments approved in Fiscal Year 2015 are sequestered at a rate of 7.3 
percent.
Response from Philip C. Karsting, Administrator, Foreign Agricultural 
        Service, U.S. Department of Agriculture
Questions Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question 1. Administrator Phil Karsting, the Livestock and Foreign 
Agriculture Subcommittee has launched a review of food aid programs to 
identify ways to make these programs function more efficiently for both 
the American taxpayers and for the people around the world that they 
are designed to help while also continuing to help protect the proud 
legacy of food aid. Can you briefly highlight the role that USDA plays 
in providing food aid overseas? I understand that USDA administers some 
of its own food aid programs, but can you also explain USDA's 
involvement in implementing Food for Peace?
    Answer. The USDA Foreign Agricultural Service (FAS) administers two 
food assistance programs, the Food for Progress Program (FFPr) and the 
McGovern-Dole International Food for Education and Child Nutrition 
(McGovern-Dole) Program. USDA's FY 2016 Budget also proposed $20 
million in funding to take steps towards implementing the Local and 
Regional Procurement (LRP) Program that was authorized in the 
Agricultural Act of 2014 (the 2014 Farm Bill).
    The principal goals of FFPr are to improve agricultural 
productivity and to expand trade of agricultural products in developing 
countries. To achieve these goals, USDA donates U.S. agricultural 
commodities that it procures commercially or that are in Commodity 
Credit Corporation inventory. Proceeds from monetization, the sale 
abroad of these commodities, fund FFPr agricultural development 
projects. Proceeds may also be used for humanitarian projects targeted 
at hunger and malnutrition. FFPr projects range in scope from training 
farmers and public officials in animal and plant health systems, 
implementing new farming methods appropriate to the land, building or 
improving road and utility systems, establishing producer cooperatives, 
providing microcredit, and establishing agricultural value chains.
    McGovern-Dole provides for the donation of U.S. agricultural 
commodities, and financial and technical assistance, to support school 
feeding and maternal and child nutrition projects in developing 
countries. The primary objectives of the McGovern-Dole are to reduce 
hunger and improve literacy and primary education, especially for 
girls. The program is projected to assist three million women and 
children worldwide in 2016.
    Funds appropriated for LRP through McGovern-Dole in FY 2016 will 
support the production of local and regional commodities that can be 
procured to provide nutritional complements to U.S. commodities for 
school feeding programs and boost incomes of smallholder farmers. Local 
and regional procurement tends to be cheaper and faster than shipping 
U.S. commodities overseas, allowing the funding to reach more families, 
feed more children, and improve nutrition. While the program will focus 
primarily on development programs, the 2014 Farm Bill also authorizes 
the use of the LRP Program for emergency responses if needed, in 
consultation with U.S. Agency for International Development (USAID).
    The Food for Peace Title II food aid program is administered by the 
Office of Food for Peace (FFP) in the USAID. USAID/FFP provides 
emergency food assistance to those affected by conflict and natural 
disasters and provides development food assistance to address the 
underlying causes of hunger. During an emergency response using Title 
II resources, USAID principally uses U.S. in-kind food aid, and a small 
amount of Title II is available for locally or regionally procured 
food, food vouchers and transfers to ensure communities have access to 
food. In FY 2014, USAID reached more than 31 million people in 32 
countries with Title II resources.
    USDA's Farm Service Agency coordinates the purchases of U.S. 
commodities and transportation provided under U.S. overseas food 
assistance programs. In FY 2014, 1.45 million metric tons of U.S. food 
assistance were delivered at a cost of $1.81 billion.
    USDA and USAID coordinate our food assistance programs to be 
complementary and reach the largest number of beneficiaries.

    Question 2. Administrator Phil Karsting, what regions of the world 
is FAS prioritizing for the next 5 years?
    Answer. FAS' global network of agricultural economists, marketing 
experts, negotiators, and trade specialists in Washington, D.C., and 95 
international offices covering 167 countries support U.S. agricultural 
exports to all regions of the world. In FY 2014, exports of U.S. 
agricultural products reached a record $152.3 billion, supporting 
nearly one million American jobs. FY 2015 was another exceptional year 
with U.S. agricultural exports of $139.7 billion, the third highest 
level on record.
    Over the next 5 years, FAS will use the full range of tools at its 
disposal to help expand market opportunities in all major regions of 
the world. Our global presence and our consequent flexibility to adapt 
to emerging situations are among our core strengths. Three geographic 
areas stand out for their short-to-medium term opportunities, and these 
are priorities for FAS as we move ahead.
    China. U.S. agricultural exports to China have boomed from $2 
billion in 2001 (the year China joined the WTO) to over $25 billion in 
2014, but we see significant additional potential. FAS is strongly 
committed to that market and to simultaneously holding China to its 
existing trade agreement commitments. We currently have six offices in 
five cities in China, by far our largest overseas presence. FAS leads 
USDA efforts to engage with China, both bilaterally (via the Strategic 
& Economic Dialogue and the Joint Commission on Commerce and Trade, 
both of which are annual events in which Secretary Vilsack participates 
and multilaterally (within APEC [the Asia Pacific Economic Cooperation 
forum]), to promote agricultural biotechnology and other innovative 
technologies, thereby advancing global food security, fostering better 
climate adaptability, and paving the way for increased U.S. 
agricultural exports.
    The Trans-Pacific Partnership (TPP) provides tremendous new 
opportunities for our stakeholders. TPP is a big win for U.S. 
agriculture in priority markets like Japan, Vietnam, Malaysia, and 
Canada. Not only does it create tariff preferences to keep us 
competitive, it also sets new benchmarks for trade agreements and will 
change the discussion on non-tariff issues like geographic indications, 
agricultural biotechnology, and sanitary and phytosanitary (SPS) 
measures. We see this agreement as precedent-setting. We expect our 
focus in the Pacific Rim to be on implementation of this agreement. We 
want to raise the bar on trade commitments to the level that the United 
States already meets through its own rules-based systems.
    The Transatlantic Trade and Investment Partnership (T-TIP) holds 
out the promise of substantially improved access to the European Union 
(EU), one of the world's largest economies, whose consumers are among 
the highest per-capita income earners in the world. The United States 
is currently one of only a very small number of countries that does not 
have preferential access to the EU market under existing trade 
agreements or preference programs, and we need to level the field for 
our exporters competing in this lucrative market. In FY 2015, U.S. 
exports of agricultural products to the EU were valued at $12.3 
billion, making the EU as a whole our fifth largest export market. For 
the past 13 years, the United States has had an agricultural product 
trade deficit vis-a-vis the EU.
    Around the globe FAS will continue to provide unbiased public 
reporting on the outlook for a full range of agricultural commodities, 
provide constituent servicing on the ground, advise and oversee our 
market development Cooperators, monitor and enforce our existing 
obligations under trade agreements, address SPS barriers to trade, and 
help developing countries establish science-based regulatory systems. 
Each year FAS develops specific strategies for each country covered by 
an FAS office. The strategies identify strengths, weaknesses, 
opportunities, and concerns there. These strategies enable FAS to 
quickly adapt to new conditions that might influence FAS' promotion of 
U.S. agricultural products.
    FAS food aid and capacity building programs help developing 
countries increase their capacity to feed vulnerable populations and 
engage in international trade. In soliciting for Fiscal Year 2016 
awards, priority countries for the McGovern-Dole program were 
identified in Asia, Africa, and Central America and the Caribbean. For 
the Food for Progress program awards, priority countries were 
identified in Asia, Africa, and Central America.
Questions Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question 1. Local and Regional Procurement. According to a 2013 
Cornell study of three countries, food aid recipients were 
unconditionally more satisfied with LRP compared to U.S. shipped 
commodities. This sentiment was most pronounced among the poorest 
``less-well-off'' recipients. What steps are being taken to ensure that 
commodity foods shipped are compatible with local tastes and dietary 
needs? If U.S. shipped commodities are not found to be compatible with 
local tastes and dietary needs, what steps are taken to address this 
problem and ensure beneficiaries are actually utilizing U.S. 
commodities?
    Answer. With respect to USDA's programs, in FY 2013, USDA began 
offering enhanced guidance to applicants seeking funding through the 
McGovern-Dole International Food for Education and Child Nutrition 
Program (McGovern-Dole) related to nutritional and micronutrient 
deficiencies of intended beneficiaries. McGovern-Dole applicants are 
now required to provide a detailed explanation of how the requested 
commodity and ration size will help address these deficiencies. In 
addition, recipients of awards under McGovern-Dole choose the 
commodities that are donated under the program based on their in-
country work experience and familiarity with the culture, including 
local diets. In the case of those commodities that perhaps are less 
familiar to the school children, the project implementers often will 
provide training to the beneficiaries on how to best use and prepare 
the newly introduced product in the local diet. Additionally, during 
the proposal review process prior to making an award, FAS seeks input 
from nutritionists and, often, local nationals, who understand the 
cultural food preferences.
    As an example, in Nicaragua, a private voluntary organization 
called Food for the Poor, with the help of the United States Potato 
Board and the Fabretto Children's Foundation, reevaluated the school 
meal menu to find different ways to incorporate dehydrated potatoes, 
combined with local food resources. Over 600 parents and teachers were 
trained on proper storage, nutritional benefits, and preparation of 
dishes using dehydrated potatoes with local affordable ingredients.
    The local communities responded well to the product, given its 
versatility and ability to substitute for corn to produce dishes 
similar to the local diet. Local recipes were adjusted to substitute 
dehydrated potatoes for corn or rice. These recipes included Dehydrated 
Potato Enchiladas with Beans, Dehydrated Potato Tortillas and 
Dehydrated Potato Dumpling Soup.
    With respect to USAID's programs, USAID's Office of Food for Peace 
(USAID/FFP) determines the best means of responding to food security 
emergencies-whether that assistance is provided with U.S. in-kind 
commodities, locally and/or regionally procured commodities, food 
vouchers, or cash transfers for food--based on the context of each 
individual humanitarian response. This decision making process is based 
on the timeliness for each modality; local market conditions; cost 
effectiveness; feasibility and scale; beneficiary targeting and gender; 
security; program objectives; and beneficiary preferences--including 
compatibility with local tastes and dietary needs. Most USAID food aid 
is provided through U.S. in-kind commodities in Food for Peace Title II 
programs, and few of these funds can currently be used for cash-based 
food assistance such as local and regional procurement or food 
vouchers, although the Budget seeks to increase our flexibility within 
Title II to use the most appropriate tool for each emergency.
    USAID/FFP relies primarily on limited funds in the International 
Disaster Assistance (IDA) account currently to support cash-based 
assistance programs. For example, in Syria, USAID is using IDA 
resources to support an electronic food voucher program to reach 
millions of refugees across five countries, many of whom are living in 
cities and towns with functioning markets. This approach enables 
refugees to have more diversity of choice, enabling preparation of 
meals with more nutritious foods.

    Question 2. Local and Regional Procurement. When coupled with 
existing programs that strengthen local community systems and 
infrastructure, LRP can be easily adopted by knowledgeable 
beneficiaries with minimal impact on local markets. Given that most 
food assistance programs include a local capacity building component 
(McGovern-Dole FFE, Title II non-emergency programming) has there been 
any consideration for use of LRP to help transition to locally 
available products in these programs? If appropriated, how would the 
$20 million for LRP be utilized? Besides working with McGovern-Dole 
programs, do you see an opportunity to pair the new LRP program with 
Title II non-emergency programs?
    Answer. Local and regional agricultural procurement programs can 
help build sustainable production of locally grown food and strengthen 
local value chains, developing appropriate supply chains for the 
procurement of commodities from local producers. School meals using 
locally purchased foods will add locally preferred complementary 
commodities to the meals, which will make them more appealing to the 
children and help increase nutrition. In countries where supply chains 
need to be strengthened in order to support a workable and reliable 
supply of food, the recipients of awards under USDA's Local and 
Regional Procurement Program (LRP) can work with producers, school 
authorities, and local municipalities in communities around schools to 
provide technical and management expertise to build reliable supply 
systems, as well as to procure commodities. The FY 2016 Budget 
requested $20 million for the LRP program to serve as a complementary 
tool to support existing food aid programs, especially for the 
McGovern-Dole program.
    There may be potential opportunities for USDA to pair projects 
under LRP with USAID's Title II non-emergency programs. In FY 2015, for 
example, USAID targeted two countries, Bangladesh and Mali, for 
development programs in numerous agriculturally-related topics, 
highlighting access to food, nutrition, and improving agricultural 
productivity. USDA has not only worked in both countries but also 
funded Food for Progress and McGovern-Dole projects there. USDA's LRP 
Program could be implemented to assist smallholder farmers in enhancing 
their productivity with methods that mitigate climate change and 
prevent environmental hazards.
    In the 2014 Farm Bill, USAID received meaningful flexibility 
through Section 202(e) in the Food for Peace Act to enhance Title II 
programs, including through the use of local and regional procurement 
and other market based food assistance interventions. With this new 
flexibility, for example, USAID has been able to integrate local food 
items towards the end of the 5 year development programs in order to 
facilitate a smoother transition for beneficiaries, support local 
markets, and enhance the overall sustainability of the programs.
Response from Brandon Willis, Administrator, Risk Management Agency, 
        U.S. Department of Agriculture
Question Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question. Administrator Brandon Willis, the 2014 Farm Bill directs 
FCIC to study a variety of topics that could lead to additional 
insurance policies for animal agriculture. FCIC is required to enter 
into contracts to conduct research and development on policies for 
poultry business interruption insurance for poultry growers, including 
losses due to bankruptcy of an integrator (owner-processor). FCIC is 
also required to contract for studies on insuring swine producers for a 
catastrophic event and insuring poultry producers for a catastrophic 
event. Can you please provide an update on how these studies are 
progressing?
    Answer. The Risk Management Agency (RMA) has contracted to provide 
feasibility studies for poultry catastrophic disease losses, poultry 
business interruption, and swine catastrophic disease losses, as 
required by the farm bill. RMA expects to submit these reports to 
Congress this winter.
Response from Sonny Ramaswamy, Ph.D., Director, National Institute of 
        Food and Agriculture, U.S. Department of Agriculture
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. The 1890 Appropriation for the Expanded Food and 
Nutrition Education Program (EFENP) has increased over the years, 
however the funds are minute in comparison to the 1862 Institutions. 
The limited amount of money makes it difficult to develop a significant 
enough program to demonstrate widespread impact. Are there plans to 
increase the funding appropriations of 1890 Institutions?
    Answer. The Expanded Food and Nutrition Program allocations to 1862 
and 1890 institutions are based on a statutory formula distribution 
provided in the authorizing legislation. As such, NIFA does not have 
the authority to alter the proportion of EFNEP funding that is provided 
to 1890 versus 1862 institutions. The current formula provides that 
1862 institutions shall receive a base in an amount equaling their FY 
1981 allocation, and a minimum of $100,000 is distributed to each 1862 
and 1890 land-grant institution including the University of the 
District of Columbia. The remainder is distributed based on formulas 
that use the latest Census data for population living at or below 125 
percent of the poverty level. Specifically, a percentage of the 
increase in funding that exceeds the FY 2007 appropriated level is 
distributed to the 1890 Land-Grant Institutions according to the pro-
rata population for each institution at or below 125 percent of the 
poverty level; and the remainder to the 1862 land-grant institutions 
according to the pro-rata population for each institution at or below 
125 percent of the poverty level.
Response from Renee Picanso, Associate Administrator, National 
        Agricultural Statistics Service, U.S. Department of Agriculture
Question Submitted by Hon. Alma S. Adams, a Representative in Congress 
        from North Carolina
    Question. The Ag Census data seems to provide an inaccurate 
(duplication) for the number of producers. As an example, a husband and 
wife may both be listed as the primary operator, which increases the 
overall number of farmers. This methodology makes it difficult to 
determine the true number of farmers. Are there plans to modify the 
current data collection methods to reduce duplication?
    Answer. The Census of Agriculture collects data both on the number 
of farms and the number of people who operate the farms. An operator is 
defined as a person making day to day decisions for the farm operation. 
Since the 2002 Census of Agriculture, the Census allows respondents to 
report the total number of operators involved in day to day decision 
making, as well as detailed demographic characteristics for up to three 
of those operators. One of these operators is defined as the principal 
operator or senior partner. The number of principal operators is equal 
to the number of farms. For the 2012 Census, there were 2,109,303 
farms, 2,109,303 principal operators, and 3,233,358 total farm 
operators.
    NASS is currently in the process of testing and updating the Census 
report form for the 2017 Census of Agriculture. In response to 
recommendations received from an outside panel commissioned to look at 
collection of demographic data on the Census, NASS will collect 
detailed demographic data on up to four operators per farm, and allow 
the respondent to designate multiple principal operators. As in 
previous Censuses, NASS will show information separately for the count 
of farms, and the count of persons operating those farms.



     HEARING TO REVIEW USDA ORGANIZATION AND PROGRAM ADMINISTRATION

                                (PART 2)

                              ----------                              


                     WEDNESDAY, SEPTEMBER 16, 2015

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1300, Longworth House Office Building, Hon. K. Michael Conaway 
[Chairman of the Committee] presiding.
    Members present: Representatives Conaway, Neugebauer, 
Goodlatte, Lucas, King, Rogers, Thompson, Austin Scott of 
Georgia, Crawford, DesJarlais, Gibson, Hartzler, Davis, Yoho, 
Walorski, Allen, Rouzer, Abraham, Moolenaar, Kelly, Peterson, 
Fudge, McGovern, Plaskett, Adams, and Ashford.
    Staff present: Anne DeCesaro, Bart Fischer, Caleb 
Crosswhite, Callie McAdams, Haley Graves, Jessica Carter, John 
Goldberg, Josh Maxwell, Mary Nowak, Mollie Wilken, Paul 
Balzano, Skylar Sowder, Jadi Chapman, John Konya, Andy Baker, 
Anne Simmons, Evan Jurkovich, Keith Jones, Lisa Shelton, Liz 
Friedlander, Mary Knigge, Mike Stranz, Nicole Scott, and Carly 
Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. This hearing of the Committee on Agriculture, 
to review USDA organization and program administration, will 
come to order. I have asked Rick Crawford to open us with a 
prayer. Rick.
    Mr. Crawford. Thank you, Mr. Chairman.
    Heavenly Father, we bow humbly before you. We are thankful 
for every blessing of life and thankful for this nation that 
you have given us and thankful for the opportunity to represent 
those citizens of this great nation in our work here today. 
Father, we just ask for your wisdom, guidance, and discernment 
in all that we say and to be pleasing to you. In Jesus' name. 
Amen.
    The Chairman. Thank you, Rick. Ranking Member Peterson is 
en route. He had a speech at 9:30, so he said to go ahead and 
start this morning on time, and he will get here as quickly as 
he can. We will pick up where we left off. I ask that any 
Member who wants to submit an opening statement for the record 
so the witnesses may begin the testimony to ensure there is 
ample time for questions.
    The chair will remind Members they will be recognized for 
questioning in the order of seniority for Members who were here 
at the start at the hearing. After that Members will be 
recognized in order of arrival. I appreciate Members' 
understanding.
    Witnesses are reminded to limit their oral presentations to 
5 minutes. All written statements will be included in the 
record. Over the course of today's hearing, following the 
testimony of each witness everyone at the table will be made 
available for questions. So once Lisa finishes, then we will 
open the questions, and I hope to get responses from the 
appropriate administrator.
    I would like to welcome our first witness group to the 
table. The Honorable Lisa Mensah, who is Under Secretary of 
Rural Development, USDA. Accompanying her today is Brandon 
McBride, who is the Administrator of Rural Utility Service; 
Tony Hernandez, who is the Administrator for Rural Housing. And 
pinch hitting is Samuel Rikkers, who is the Acting 
Administrator for Rural Business--Cooperative Service.
    Lisa, the microphone is yours.

     STATEMENT OF HON. LISA MENSAH, UNDER SECRETARY, RURAL 
                DEVELOPMENT, U.S. DEPARTMENT OF
         AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
BRANDON McBRIDE, ADMINISTRATOR, RURAL UTILITIES SERVICE, USDA; 
TONY HERNANDEZ, ADMINISTRATOR, RURAL HOUSING SERVICE, USDA; AND 
   SAMUEL H. RIKKERS, ACTING ADMINISTRATOR, RURAL BUSINESS--
                   COOPERATIVE SERVICE, USDA

    Ms. Mensah. Thank you also to the other Members and Ranking 
Member Peterson when he arrives. I want to thank you for the 
opportunity to discuss the program successes, challenges, of 
the Department of Agriculture's Rural Development mission area. 
I am accompanied this morning by Rural Development 
Administrators Brandon McBride, Sam Rikkers, and Tony 
Hernandez.
    Rural Development manages a loan portfolio of more than 
$200 billion through nearly 50 programs and services organized 
into three distinct areas: Rural business and cooperative 
services, rural utility programs, and rural housing and 
community facilities programs. Together we are focused on 
increasing economic opportunities and improving the quality of 
life for all rural Americans.
    Some of our resources finance large, long-term loans to 
develop and grow businesses. Other resources are invested in 
smaller, more specific projects targeted at the smallest 
producers. Further, support is offered by our agency to address 
underlying utility, housing, or community needs of large rural 
areas. All of these investments offer hope and support needed 
to encourage economic development. I am deeply appreciative of 
the authorities provided to our agency by Congress through the 
2014 Farm Bill.
    You renew our ability to deepen our work in our core 
programs on behalf of rural America, and those programs are so 
important. For example, Rural Development provided a business 
and industry guaranteed loan to a Somerset, Pennsylvania 
company to purchase equipment to return manufacturing 
operations from China to the U.S. The company manufactures and 
distributes respiratory medical devices and products such as 
nebulizers, oxygen concentrators, and CPAP equipment. USDA's 
rural development assistance means that these products are now 
proudly stamped made in the USA by American workers.
    We are also supporting more basic needs like access to 
clean water or to food. Second Harvest of Georgia is a 
nonprofit that feeds hungry people in 30 south Georgia 
counties. We provided funding to build a distribution facility 
with a commercial kitchen that can produce up to 10,000 meals a 
day for south Georgia residents in need. Since 2009, Rural 
Development has helped more than 900,000 rural families to buy, 
repair, or refinance a home. We provided funding for 3,000 
multi-family housing developments, and we are successfully 
delivering new or improved broadband service to 1.5 million 
households, businesses, schools, libraries, and community 
facilities.
    We helped modernize rural electric infrastructure for about 
8\1/2\ million rural businesses and families, and we provided 
grants and loans for water and wastewater projects to help 
safeguard the health of more than 14.5 million rural residents.
    We understand the need to invest wisely and stretch our 
limited resources. Our portfolio is full of examples of Rural 
Development working with others to understand the needs of the 
region and support projects that encourage development. Over 
the past 2 years, Rural Development leveraged over $2 billion 
in Community Facilities direct funds with $1.2 billion from 
institutional investors in the capital credit markets.
    Partnership projects are spurring economic growth and job 
creation while providing access to health care, education, and 
other critical services. True public-private partnerships are 
built on shared vision and mutual trust. Our job is to be fair, 
reliable, and consistent partners.
    Thanks to Congress, Rural Development is a uniquely 
structured agency with resources to encourage and support 
successful systems that are already at work in communities or 
to help develop those that are desperately needed.
    In the time I have been with USDA, I have witnessed rural 
resiliency on a very personal level. I watched the town of 
Floresville, Texas turn out in force to launch their improved 
water treatment system.
    I visited the Peoples Rural Telephone Cooperative in 
Jackson County, Kentucky, which built a state-of-the-art 
network that offers isolated rural residents the same 
educational and cultural opportunities available to residents 
in urban areas.
    I toured a manufacturer in Brundige, Alabama that is 
expanding its business with support from Rural Development. 
Each of these investments made in rural communities is an 
investment in our country's future.
    I am a passionate advocate for tapping the potential of 
rural areas; so the communities located in every holler, 
hilltop, plain, and prairie are part of America's story of 
growth and prosperity.
    I look forward to working with you in the coming months to 
ensure continued support for rural development, and I very much 
appreciate the opportunity to testify, and I am happy to answer 
your questions.
    [The prepared statement of Ms. Mensah follows:]

    Prepared Statement of Hon. Lisa Mensah, Under Secretary, Rural 
     Development, U.S. Department of Agriculture, Washington, D.C.
    Chairman Conaway, Ranking Member Peterson, and Members of the 
Committee, thank you for the opportunity to discuss the programs, 
successes and challenges of the Department of Agriculture's Rural 
Development mission area. I am accompanied this morning/afternoon by 
Mr. Brandon McBride, Mr. Sam Rikkers, and Mr. Tony Hernandez, 
Administrators for Rural Development's Utilities, Business and 
Cooperatives and Housing and Community Facilities Programs, 
respectively.
    The Rural Utilities Service (RUS) has funded basic infrastructure 
services for 80 years and provides the critical financial support for 
electric infrastructure, broadband to offer access to the digital 
economy, and clean, safe water to help healthy rural communities grow 
and prosper. Our Rural Business--Cooperative Service (RBS), in 
partnership with other public and private-sector stakeholders, are 
critical to improving lives of rural Americans. RBCS program not only 
promote rural business employment opportunities and support key energy 
project investments, but enable rural Americans to compete in the 
global economy. Last, our Rural Housing Service and Community 
Facilities (RHS and CF) make critical loans and grants to support rural 
residents and the communities in which they live. Congress has defined 
for us a tremendous set of housing and community development programs 
to ensure that rural families have access to safe, affordable homes and 
thriving communities.
    The men and women of my Agency, and the programs we administer on a 
daily basis, are committed to increasing the economic opportunities and 
improving the quality of life for all rural Americans. Approximately 15 
percent of the population of the United States is considered rural. Yet 
that comparatively small percentage belies a far more relevant 
statistic: nearly 75 percent of our land mass is rural. So that 15 
percent--which happens to represent forty-six million American 
citizens--feeds the world. Rural Development works on a daily basis to 
determine and support the needs of that ``15 percent.''
    The 5,000 Rural Development professionals I lead work daily to help 
maintain and upgrade infrastructure investments that are so important 
to the modernization of rural America; to connect citizens to the video 
and data-intensive world of broadband; to build a cleaner, greener 
future through renewable power and energy efficiency; to reduce child 
poverty; to cope with growing healthcare needs of an aging population; 
and to make rural communities a place where young people will want to 
stay, start families, build businesses and create futures.
    Rural Development has a loan portfolio of more than $200 billion 
and invested upwards of $28 billion in 2014 alone assisting rural areas 
throughout the United States and its territories. We maintain a program 
delivery structure that Congress has supported since our founding, and 
our customers appreciate. Rural Development has financed large, long-
term loans to develop and grow businesses. Other resources are invested 
in smaller, more specific projects targeted at the smallest producers. 
Further support is offered by our Agency to address underlying utility 
housing or community facility needs of rural communities. All of these 
investments offer the hope and support needed to encourage economic 
development.
    For example, Rural Development provided DeVilbiss Healthcare, LLC 
with a Business and Industry guaranteed loan to purchase equipment and 
machinery and to transfer manufacturing operations from China back to 
the United States. DeVilbiss manufactures and distributes respiratory 
medical devices and products such as nebulizers, oxygen concentrators, 
and CPAP equipment. The assistance preserves 92 jobs and creates 20 new 
jobs in rural Pennsylvania.
    This is just one example of many forward-leaning projects that 
Rural Development is proud to encourage. Our fundamental mission is to 
support thriving self-sustaining and prosperous rural communities. 
We're doing so through the authorities provided to our Agency by 
Congress and through the added resources afforded in the annual 
appropriations legislation and the 2014 Farm Bill. The farm bill 
renewed our authority to deepen our work in our core programs for rural 
America. And for that, I am deeply appreciative.
    As Members of the Committee on Agriculture, you know better than 
most the challenges that face rural Americans. Rural communities are 
characterized by their isolation from population centers and product 
markets. These communities benefit most from initiatives that integrate 
local institutions and businesses with state and Federal agencies that 
have intimate knowledge of local needs. At the same time, these same 
communities have an enormous amount of importance to the health and 
well-being of our entire nation. The report, Promoting Growth in all 
Regions, released by the Organisation for Economic Co-operation and 
Development (OECD), indicates investments in infrastructure and human 
capital in rural places are vital for national growth.
    For more than 80 years, Rural Development has doggedly pursued 
success for rural America. We are committed to working with partners to 
best serve rural areas. We understand that solid public-private 
partnerships and well-placed intentional investments can--quite 
literally--mean life or death for some communities.
    Pikeville Medical Center in Kentucky is a private, nonprofit 
(501(c)(3)) organization that provides comprehensive health care 
services through its 261 bed acute care and in-patient rehabilitation 
hospital. The Hospital primarily serves patients from persistent 
poverty areas. To meet a growing demand for services, Pikeville Medical 
Center used the Community Facilities (CF) program to construct ea new 
medical office building containing research facilities, outpatient 
surgery suites, endoscopy facilities, physical exam space, labs and 
lecture halls.
    Building on this success, and working with others to understanding 
the needs of the region, Rural Development provided a $40 million 
Community Facilities loan to the University of Pikeville (UPIKE) for 
the construction of a health professions education building that 
provides both instruction and demonstration for the new College of 
Optometry, School of Nursing, and other student support services. This 
funding enabled USDA to establish a public-private partnership for the 
new facility whereby UPIKE provided an additional $5.5 million, $3.7 
million in private donations were raised, the Appalachian Regional 
Commission provided a $1.5 million grant, and the U.S. Economic 
Development Administration provided a $1.3 million grant.
    This partnership resulted in a facility that added 75 direct jobs 
to the local economy and created a distributed community-based clinic 
model, adding 25 to 30 jobs in local clinics. In addition, the 
community benefited from the facility as there was no College of 
Optometry serving that state or many of its neighbors previously.
    USDA Rural Development, through its Community Facilities programs, 
has taken a leadership role in facilitating and strengthening public-
private partnerships to ensure that rural residents have the 
opportunity for a brighter future with good schools, quality health 
care and other critical community infrastructure needs.
    In communities like Pikeville, public-private partnership has 
bought together critical financial, project development and technical 
expertise, resources and innovation to large complex community 
infrastructure projects at a time when Agency staff resources have been 
reduced; it has strengthened underwriting with another set of eyes 
thereby reducing Agency credit risk and has provided the Agency with a 
long term partnership for servicing loans along with another avenue for 
communication with the borrower. More importantly, it has allowed USDA 
to assist more rural communities, invest in more essential community 
facilities and help more rural residents.
    From Fiscal Year 2012 to Fiscal Year 2014, Rural Development 
invested in 335 Public-Private Partnership community infrastructure 
projects across rural America in 49 states. The Agency leveraged over 
$2 billion in community facilities direct loan funds, with $1.2 billion 
from institutional investors and the capital credit markets to 
strengthen investment in critical community infrastructure projects 
spurring economic growth, job creation and access to improved health 
care, education and other critical services. These Community Facility 
investments are projected to create or save approximately 75,000 
quality paying jobs.
    True public partnerships are built on shared vision and mutual 
trust. Our job is to be fair, reliable and consistent partners. Thanks 
to Congress, Rural Development is a uniquely structured Agency with the 
resources to encourage and support successful systems already at work 
in communities or develop those that are desperately needed.
    Today, we are using lessons learned in our more established 
programs to capitalize on opportunities in other areas within the 
mission too. Consider our work in the rapidly expanding area of local 
and regional food systems. The concept behind the ``Know Your Farmer, 
Know Your Food'' initiative now includes more women, more people of 
color, and more veterans.
    In Poplarville, Mississippi, Ivory Smith, a veteran of the wars in 
Iraq and Afghanistan, is trying his hand at hydroponics by growing 
rainbow radishes and pea shoots.
    Funded in part by USDA Rural Development, an ``Armed to Farm'' 
workshop helped Ivory learn to better manage the business side of his 
operation. After shadowing working agribusinesses, he says he now feels 
more confident about the future of his company, SmithPonics.
    I am deeply moved by seeing taxpayer dollars at work in rural 
communities. There is something extraordinary about rural America's 
ability to survive and thrive. It is a place where values count and 
where stewardship is a meaningful obligation. Financing businesses like 
SmithPonics, which helps Ivory put food on the table and contribute to 
the local economy, is an amazing privilege.
    Over the course of the last couple of years, we have chosen to be 
proactive in identifying and pursuing areas of greatest need in rural 
America, rather than waiting for those places to find us. We're doing 
so through StrikeForce, Promise Zones, Stronger Economies Together and 
other such initiatives that you are well familiar with. These efforts 
are just a few of the many reasons that I am so fiercely proud of the 
5,000 Rural Development professionals nationwide. Our Agency and its 
partners are willing to help us move much needed assistance to the 
places that need it most.
    In the time that I've been with USDA, I've witnessed rural 
resiliency on a very personal level. I watched the town of Floresville, 
Texas turn out in force to launch their improved water treatment 
system. I visited the Peoples Rural Telephone Cooperative in Jackson 
County, Kentucky which built a state-of-the-art, fiber-to-the-premise 
network that offers isolated rural residents the same economic, 
educational and social opportunities available to residents in urban 
areas. I toured a condiment manufacturer in Brundige, Alabama that is 
expanding its business and market share with support from Rural 
Development. Each of these investments made in rural communities is an 
investment in our country's future.
    Throughout all of these visits, it was clear to me that giving our 
rural children a reason not to leave was extremely important to local 
community leaders, family members and businesses. More importantly, I 
know it can be done. Jeanne and Dan Carver own and operate Imperial 
Stock Ranch in Wasco County, Oregon. This family business supplied wool 
for Ralph Lauren-designed sweaters worn by United States athletes at 
the Sochi Winter Olympics. Later, they launched a ``ranch-to-runway'' 
line of clothing with award-winning fashion designer Anna Cohen. They 
did all of this nearly three thousand miles removed from the frenetic 
pace of New York City's fashion district. The Carvers have benefited 
from USDA's Value-Added Producer Grant (VAPG) program since 2008, using 
the funds for planning and capital assistance. In this instance, the 
VAPG program--one of nearly 50 programs and services administered by 
Rural Development--is helping breathe life back into the textile 
industry and creating jobs right here in the United States.
    Another critical need for economic growth in rural areas is access 
to affordable water and wastewater services, electricity and broadband. 
Once again, Rural Development is working with partners to provide rural 
areas with these modern day necessities of business.
    We provided grants and loans for water and wastewater projects to 
help safeguard the health of more than 14.5 million rural residents 
since 2009. To support water utilities and households coping with 
drought in California, in June 2015, we pledged to provide at least $7 
million to address the drought-related needs of water utilities and 
households.
    Since the creation of the Rural Electrification Administration 
(REA), we have worked to provide reliable electric infrastructure for 
rural residents and businesses. Rural Development has funded over $1.1 
billion in smart grid technology during the Obama Administration. A 
recent loan to Minnesota Valley Electric Cooperative, for example, 
includes $1.9 million for smart grid projects to better manage electric 
load and equip consumers with information to enhance energy efficiency.
    Furthermore, broadband investments help rural communities attract 
new businesses; allow schools to improve educational opportunities 
through distance learning; and improve healthcare by providing cost-
effective remote diagnosis and care. In many cases, the risks 
associated with building broadband infrastructure in rural areas can be 
too cost prohibitive for the private-sector. The Federal Government 
plays a necessary role in partnering with local institutions and 
communities in these instances. USDA works to carefully balance the 
need to provide broadband service to under- and unserved areas with the 
risks associated with funding large infrastructure projects in rural 
areas with low population density. Just as REA brought electricity to 
rural areas, Rural Development's commitment to bringing high speed 
Internet to rural areas will make businesses more competitive ad bring 
opportunities to rural citizens that have long been afforded to urban 
citizens.
    Under the American Recovery and Reinvestment Act of 2009, Congress 
gave us the authority to continue to support delivery of broadband to 
remote and hard-to-serve areas. We are proud to share with you that 244 
of the 255 funded projects are complete and are successfully delivering 
new or improved service to nearly 260,000 rural households, more than 
17,000 businesses, and approximately 1,880 schools, libraries and 
health care facilities. These new projects will continue to attract 
subscribers as they deliver educational and health care services and 
strengthen rural economies through connections to the global 
marketplace. In total, USDA investments in all broadband programs has 
delivered service to 1.5 million households, businesses, schools, 
libraries, and community facilities since 2009 while also being good 
stewards of taxpayer dollars. Rest assured, we are committed to the 
work that remains to be done. Fewer than 50 percent of those who live 
in rural areas have access to the same high-speed Internet services 
that those who live in urban areas enjoy. We expect the White House 
later this month to release a report submitted by USDA and the 
Department of Commerce on ways to continue to bring broadband to 
unserved areas. We believe that the Farm Bill Broadband Loan Program 
will be an important resource in this effort.
    A special point of pride for Rural Development is our housing 
programs. Since 2009, Rural Development has helped more than 900,000 
rural families buy, repair or refinance a home and provided funding for 
3,000 multi-family housing developments. Access to safe, modest, 
affordable housing is vitally important to the health and growth of 
rural areas. Helping to make the American Dream a reality is a 
tremendous responsibility. I am delighted that through our work Rural 
Development housing programs are often stepping stones on the journey 
to homeownership which will help build wealth and security for rural 
families. We offer one of the best home mortgages in the United States 
and boast a low default rate.
    In this, the 50th year of Rural Development's Mutual Self-Help 
Housing Program, we also completed 50,000 homes through partnerships 
and sweat equity. In fact, several Members of Congress and 
Congressional staff participated in self-help builds this year to help 
us mark this important milestone.
    Rural Development is committed to continually testing new ways to 
address housing needs in rural America. The USDA Energy Efficiency 
Manufactured Home Pilot Program was introduced this summer in New 
Hampshire and Vermont. A low income home-buyer interested in purchasing 
a high-performance modular home and placing it in a mobile home park 
would be eligible for a 30 year mortgage at a 3.25 percent interest 
rate. Very low income home buyers may be eligible for an interest 
subsidy down to one percent. The mortgage is the first of its kind for 
residents of mobile home parks, where home buyers face high interest 
rates and short loan terms.
    The Agency continues to make tremendous gains--and took on a decade 
of needed upgrades--to its systems and processes. As of this spring, 
our guaranteed Single Family Housing loan program is now paperless. Not 
only are we saving 37,500 REAMS of paper every year, we've lowered 
postage costs, saved printer ink, and are moving loan guarantees out 
the door much more quickly. We estimate a 1 year savings of more than 
$4.2 million. [See attached infographic] *
---------------------------------------------------------------------------
    * Editor's note: The testimony is published as received, there was 
no attached infographic.
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    We are also in the process of modernizing the delivery of the 
Single Family Housing direct loan program through automation. Beginning 
Fiscal Year 2016, the Agency will implement an automated underwriting 
system nationwide, permit third parties to submit applications 
electronically, and move from paper-based to electronic customer files. 
These improvements will provide underwriting consistency nationwide, 
additional security features, and the ability to seamlessly transfer 
work when states experience increases in applications.
    In other rural areas, we are supporting organizations that are 
addressing more basic needs and on the front lines of fighting to 
alleviate poverty. Second Harvest of South Georgia is a nonprofit that 
feeds hungry people in 30 Georgia counties and is the largest in 
Georgia outside of the Metro Atlanta area. USDA provided funding 
through a $5.2 million Community Facilities loan to build a 
distribution facility in Thomasville. Its commercial kitchen can 
produce up to 10,000 meals a day for South Georgia residents in need.
    I appreciate your continued interest and support of Rural 
Development programs. When countries cannot make rural infrastructure 
work, it impedes not only their rural places and people; it holds back 
the growth of the entire nation. This is true for industrialized 
countries like the United States, as well as developing nations like my 
father's homeland of Ghana. Investments in roads, the electric grid, 
water systems are what ignite the rural economy. USDA Rural Development 
and our partners address the unique needs of communities often lacking 
large populations or other support mechanisms. Rural investments are 
shared investments for all. Together, we can coordinate and leverage 
our resources to turn Rural Development's transactional work into 
transformational work.
    I am a passionate advocate for tapping the potential of rural areas 
so that communities located in every holler, hilltop, plain, and 
prairie are part of America's story of growth and prosperity. I look 
forward to working with you in the coming months to ensure continued 
support for USDA Rural Development.
    I appreciate the opportunity to testify before the House 
Agriculture Committee. At this time, I am happy to answer your 
questions.

    The Chairman. Thanks, Lisa. I appreciate that.
    You have also been proud of the community of Robert E. Lee, 
Texas which had a water problem, and so they had to lay a line 
of about 12 miles; and the citizens actually pitched in and got 
in the ditch and helped put the plastic pipe together for that 
12 miles, so that is a great example; and your agency pitched 
in.
    I don't think either you or Brandon were here during the 
stimulus program in which about $7 billion was earmarked for 
broadband and rural access. As a part of that, there was some 
$300 million that was earmarked for a survey to be done across 
the United States to tell us where it was and where it wasn't, 
in other words where it needed to go. That survey was done, 
completed months after the $7 billion was committed, 
unfortunately. A bit of a history lesson. Can either one of you 
give us an update on, was the survey completed? And then I will 
go from there.
    Ms. Mensah. I am going to ask Administrator McBride to 
speak to the survey, and while neither of us were in these 
spots at the time of the stimulus, I do want to say we are very 
proud of the stimulus dollars that reached and helped build our 
broadband work.
    The Chairman. Okay. Brandon.
    Mr. McBride. Thank you for the question, Mr. Chairman. I 
believe that the FCC has completed that survey, and we are in 
touch with them frequently----
    The Chairman. Okay you were about to answer then. Given 
your comments in the opening statement that we are still not 
done, and given that I represent a rural district in which I 
have an AT&T phone and a Verizon phone, and I am out of 
contact, unfortunately, often in my rural district. What are 
your efforts compared to what that survey showed needed to be 
done? How did the $7 billion accomplish what we wanted it to?
    Mr. McBride. With the stimulus funding that we had, we were 
able to expand broadband into a number of rural areas, and that 
was a historic investment. We continue to work with the FCC and 
NTIA to make sure that we are reaching areas that do not have 
service.
    The 2014 Farm Bill instructed us to work with the FCC to 
update maps and make sure that we were sharing information to 
update those and ensure that the communities that do not have 
broadband, that we would get to those.
    The Chairman. So we have entire communities or just folks 
living out in the countryside that don't have it?
    Mr. McBride. We have both.
    The Chairman. The testimony stated we have six projects yet 
to be completed under the stimulus program?
    Mr. McBride. I am sorry?
    The Chairman. I read in Ms. Mensah's testimony that 244 of 
the 250 projects were done. This is 6 years later; we have six 
of those projects that aren't yet done? That may be unfair to 
ask you that question.
    Mr. McBride. There are less than a dozen projects that are 
still working on construction, and we hope to have those 
completed by September 30.
    The Chairman. Okay. Lisa, can you talk to us about the 
Community Facilities investment? You partner with a bank, and I 
guess the bank services those loans, or how does that work?
    Ms. Mensah. I am going to ask Administrator Hernandez to 
speak to all aspects of our Community Facilities because we 
have both direct and guaranteed programs.
    Mr. Hernandez. Thanks, Mr. Chairman. We are very excited 
about the----
    The Chairman. Is your microphone on?
    Mr. Hernandez. It is now. Mr. Chairman, we have a program 
that really capitalizes on the private-sector so they can do 
what we call our guaranteed lending, and so we guarantee the 
loan up to 90 percent; so the lenders do that loan and then we 
also have a product which we call the direct loan, and so we 
use both those financing to both mitigate----
    The Chairman. The direct loan, do you service those?
    Mr. Hernandez. We do those directly.
    The Chairman. What is the default rate on that?
    Mr. Hernandez. Our default rate is less than one percent, 
sir.
    The Chairman. All right. That is a full out default. How 
many do you have that are not current on their payments?
    Mr. Hernandez. Sir, we are very fortunate that almost all 
of our loans are current. We have folks that we are working 
with to make sure they stay current. Part of it goes to our 
underwriting. We try to make sure we are picking projects that 
are successful.
    The Chairman. I hear that, Tony, but how do you avoid 
competing with banks. It seems to me--we all want these 
projects done. We prefer to have the private-sector do it 
first. How do you not step on their toes?
    Mr. Hernandez. That is a great question, sir. As a matter 
of fact, the partnership between the private-sector and public-
sector, a lot of these projects in the private-sector would not 
lend if we were not part of that lending. They are looking to 
mitigate their risk. And that is why we do more on the direct 
side than we do on the guaranteed side because a lot of these 
projects a lender would not do. So they look to us----
    The Chairman. Let me understand. You said you do extensive 
due diligence on it, which I appreciate, but you have already 
had a bank look at it and say we can't commit our shareholder 
money for this. What steps do you, in the 30 seconds left, kind 
of what steps do you have to go through to look at it to decide 
to put taxpayer money against it, a direct loan?
    Mr. Hernandez. Sure. The first thing we do, sir, is try to 
find the right project; they have the capacity to pay it back. 
But a lot of times a lender won't lend there because they don't 
want to have that much risk in that deal. So they look to do a 
minimum investment.
    The Chairman. So in the direct loans you would have a bank 
partner with you in those as well?
    Mr. Hernandez. As a matter of fact most of our projects 
have both private and us in them, sir.
    The Chairman. So give me real quickly how many of those 
direct loans are 100 percent USDA loans versus one where you 
have a blend of other outsiders in it?
    Mr. Hernandez. Great question sir. I don't have that 
information with, me.
    The Chairman. Would you give us kind of a report on 
portfolio, 100 percent direct loans, and how much of those are 
blended loans in the sense where you have private folks coming 
in. I appreciate your help to make it happen. I am a former 
banker, so if you wouldn't mind giving me kind of a read on 
where the current status is on the portfolio?
    Mr. Hernandez. I can do that for you, sir.
    The Chairman. Thank you very much. Mr. Peterson, for 5 
minutes. Ms. Fudge, for 5 minutes.
    Ms. Fudge. Thank you very much, Mr. Chairman. And since I 
don't know you well enough to call you by your first name, I 
will call you by your title.
    Under Secretary Mensah, does your Department have the 
resources to provide the loans and the grants needed to help 
all of Americans in rural areas to thrive?
    Ms. Mensah. Thank you, Congresswoman Fudge. This farm bill 
was very good to us, and we started this year very strong. We 
had strong performance in all three of our portfolios, our 
housing, our utilities, and our business loans.
    But probably the thing I have talked the most about since I 
got to USDA is our people and our core programs. As long as 
those two things stay strong, we have nearly 5,000 people that 
work for us; my biggest hope is that we can retain all of those 
jobs and keep those people productive because they are the ones 
that will allow our core programs to move forward. It is a 
powerful staff. It is a field-based staff, and I am most 
concerned that we are able to keep our people and our core 
programs strong.
    Ms. Fudge. Well thank you. Two of the people you have to 
thank for that are sitting right here. Of course, Mr. Peterson 
and Mr. Lucas, who worked so diligently to make sure that we 
did receive a farm bill.
    Ms. Mensah. Absolutely. Thank you.
    Ms. Fudge. Further, Know Your Farmer, Know Your Food 
initiative you cited an example of a veteran who benefited from 
this effort in your testimony. Could you tell us a little bit 
more about that?
    Ms. Mensah. Know Your Farmer, Know Your Food is a way we 
talk about the entire local food economy. It is about getting 
more for your food dollar. In the example in my written 
testimony we had a veteran that was growing microgreens, what 
you can grow and what you can make on microgreens, even when 
you are beginning farmer, exceeds trying to be a row crop 
farmer when you are starting out.
    What we have seen is in our agency is that in our core 
programs, our programs like our Community Facilities, our 
programs such as our Business and Industry Loans, we are able 
and are Value-Added Producer Grant, all those things that were 
renewed in the farm bill, that allows us to strengthen this 
what we call the local food.
    So many Americans want to eat locally and buy locally, and 
they are willing to pay a little more. And this is an 
opportunity to strengthen the whole economy around. It is not 
just a little thing. I love the program. I tour and see the 
kind of food hubs, the storage facilities we have been able to 
build with our Community Facilities dollars, so it is really an 
important wedge into the rural economy and to renewing that.
    Ms. Fudge. Thank you. Administrator Hernandez, in the Under 
Secretary's testimony, she stated that Rural Development offers 
one of the best home mortgages in the United States and it 
boasts a low default rate. What is the default rate and why is 
it so successful?
    Mr. Hernandez. Thank you, Congresswoman, for the question. 
We are very proud of our program that really creates an 
opportunity for people to own homes. And the reason it is so 
good is we work with our borrowers to make sure they stay in 
the house. So we have two products, one that is called the 
guaranteed product, which is where we work with the lenders; 
and for both of our products, customers have to not to be able 
to get access to capital someplace else.
    What makes the product so good, it is 100 percent 
financing, zero down payment. If they can qualify for a down 
payment program someplace else, we encourage them to go to FHA 
or someplace else. So most of our customers want to be a home 
buyer, but their incomes are lower, and so they have our 
product which is zero percent down, 100 percent financing. That 
is on the guaranteed.
    On the direct, we work with them directly, meet with the 
customers, we are their lender. If they have challenges with 
making their payments, we work with them. We call them, that is 
how we work to make sure they can be successful. And so it is a 
one on one. We do this in 47 different states. All over the 
country we have offices that really work with the customers. We 
find the customers working with our favorite nonprofits, and 
they are favored because they are successful in bringing good 
customers to us. So I think that is one of the reasons we are 
so successful with a lower default rate.
    Ms. Fudge. Thank you. Administrator Rikkers, I want to talk 
a bit about HFFI. And we know that many projects have been 
funded through the existing framework, and there is a real 
opportunity to build on the success of this enterprise level 
funding at the national level. Recognizing the uncertainty of 
the appropriations we have coming in 2016, how does USDA plan 
to implement HFFI, and why can we not move forward at this time 
on a national fund manager?
    Mr. Rikkers. Representative Fudge, thank you for the 
question. HFFI, as you note, is a critical program that 
supports healthy food and financing across the country. Many of 
our programs, not just within the Rural Business--Cooperative 
Service, but also across other parts of the USDA are integral 
to that program. We are looking for guidance.
    We have not yet had funding within that program within the 
RBCS, or Rural Business--Cooperative Service. As Under 
Secretary Mensah cited just moments ago, the importance of 
healthy, local foods in our rural communities is something that 
we are attempting to address with other programs we have within 
RD, but certainly something we are looking to Congress for 
support for funding.
    Ms. Fudge. Thank you. I yield back.
    The Chairman. The gentlelady yields back. Mr. Neugebauer, 
for 5 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman. Administrator 
Hernandez, one of the things that I have an opportunity to do 
is sit on this Committee as well as the House Financial 
Services Committee, and one of the things that we have been 
working on is housing reform. And one of the things, and I 
don't have the number in front of me, but when I had an 
opportunity to chair the Housing and Insurance Committee, we 
were talking about the number of housing programs that exist 
across the entire government. And it is a substantial number of 
housing programs.
    As we are in a situation where we are borrowing money to 
keep our government operating. One of the issues that has been 
discussed is why are we doing so many housing programs across a 
broad number of different agencies, and why don't we do housing 
in one location? So I would welcome your thoughts to why that 
is not a good idea?
    Mr. Hernandez. Great. Thank you, Congressman. Congress was 
very smart and strategic when they created USDA to do housing 
because housing in rural America is different than housing in 
urban areas. The incomes for folks in rural areas are much 
less. It is harder to find jobs in rural America. Which means 
if you have a product that requires a down payment, they would 
not be able to get into housing.
    That is where Congress created USDA and, boy, we were so 
lucky because of that forethought to say we have a program that 
has zero percent down and 100 percent financing and we have it 
in every state, where we have staff that meet with customers 
and our staff meet with the nonprofits that are there. We are 
different than any other housing organization in our Federal 
Government. We are customer-based. We talk to the customers.
    The other reason the customers are so good with us is 
because we have that product, zero percent down, 100 percent 
financing. Our foreclosure rates and default rates are lower 
than almost any other program in the Federal Government. 
Congress did a great thing. We are going to build on that 
success and change people's lives more with homeownership 
through USDA.
    Mr. Neugebauer. Well, I don't disagree that you have some 
programs that people are utilizing. I think what I am saying is 
when you have programs in the government, you have duplicative 
overheads; so you are paying people to administrate that 
program, but we are also paying people at HUD to administer 
some very similar programs where they offer either low or no 
down payment programs.
    And so the question, and it is a legitimate question, is I 
am sure you have very capable people. Those people, if there 
was some consolidation would be welcome to be a part of, 
possibly that consolidation; but to me it doesn't make a lot of 
sense to have all of these different housing programs spread 
across the entire government, particularly at a time when those 
direct loans you are making, the taxpayers are having to go out 
and borrow that money for you to make those direct loans to 
those individuals. So to the extent that we can figure out a 
way to do that more efficiently, is appropriate.
    Ms. Mensah, you mentioned in your testimony that Rural 
Development has been working with various partners to best 
serve America and with these private-public partnerships. Can 
you give me a few examples of what kinds of partnerships that 
you are talking about?
    Ms. Mensah. Sure. Thank you, Congressman. I would like to 
return to the Communities Facilities Program and tell you about 
a recent hospital construction that I saw in North Dakota, and 
in this case our private partner was a banking partner to do 
the construction piece of the financing, and then we would come 
later and take on a kind of risk that is very long-term tenor 
of a loan; for those of you who have been in finance, 40 year 
money. And that kind of partnership where a private bank often 
comes in first, does the interim financing, and then we come in 
later, that allows a lower income community, in this case for a 
kind of facility that cash is modest, if we can stretch out the 
tenor of that loan to 40 years, we have everybody in their best 
box, and so I would speak to that as one kind of partnership 
where we are in partnership with the private financial sector.
    Mr. Neugebauer. I want to go back to something that 
Congressman Conaway, Chairman Conaway, was talking about, and 
it is something I am interested in as well. That is a great 
public-private partnership, but there is not a lot of risk to 
that bank if they have the Federal Government to be the take 
out for the permanent financing. So I get that.
    What I am looking for is those partnerships that want to 
share some of the risk with the taxpayers. In this particular 
case basically the taxpayers are taking most of the risk. What 
I would think more is a public-private partnership is where 
there is risk sharing. If you all have some examples of where 
there is some risk sharing, based on Mr. Conaway's questioning 
and my thoughts as well, we would like to see that.
    Ms. Mensah. I think it would be appropriate for us to come 
back to because we have partnerships in our utility work, with 
our housing work, and with our business work. But what is 
important here is that in many cases we do have credit 
elsewhere tests where we have to be the sole source. We are 
asked not to compete directly, perhaps though if I could just 
ask for an example from Administrator Rikker's portfolio in 
some of our business and industry programs where we are 
explicitly taking not a full guarantee of the loan and where 
the bank is making the loan.
    Mr. Neugebauer. Mr. Chairman, just for the record, the GA 
reported to Congress that 20 different Federal Government 
entities administer 160 different programs on housing in our 
government. I think that is too many.
    The Chairman. Quickly, Mr. Rikkers.
    Mr. Rikkers. Thank you. One of the flagship programs within 
the business programs that we have at RBS is the Business and 
Industry Loan Guarantee Program. Certainly it can guarantee 
loans up to 80 percent, but as those projects get bigger, it is 
only guaranteeing in some cases up to 60 percent. What those 
B&I loan guarantees are able to do is really extend credit into 
rural communities where lenders by themselves without that 60 
percent guarantee may otherwise not be ready or available to 
lend those dollars.
    And I was in South Dakota in May and went into an industry 
park and visited two of those projects where we extended that 
capital in a town just outside of Sturgis, South Dakota, and 
watched the work of these local lenders, met local lenders that 
with our loan guarantee were able to extend that credit, grow 
jobs, and create the economic development that the program is 
intended to do.
    The Chairman. Thank you. The gentleman's time has expired. 
Mr. Peterson, 5 minutes.

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

    Mr. Peterson. Thank you, Mr. Chairman. I don't know who can 
answer this or if you want to. But somebody at USDA, I guess 
the Economic Research Service, came out with a study about the 
best and the worst places to live in America. Actually you fare 
pretty well down there.
    Anyway, one of the things that Under Secretary Mensah was 
talking about is providing young rural entrepreneurs a reason 
to stay in rural areas, which we all want to do. But is it 
helpful for somebody to publish this map? My county is in the 
Red River Valley where Red Lake County was declared the worst 
county in America to live in. It was 3,111. So a reporter that 
picked up on this did this story. To his credit he came out to 
Red Lake County and spent 2 days, and he came back and 
basically said this information they came up with was a bunch 
of nonsense.
    Are you familiar with this, and why are we spending money 
on stuff like this? I mean, how is this helping your situation.
    Ms. Mensah. I share the frustration with you because I have 
to answer questions about why are you championing rural 
America? Just give folks bus tickets. Let people leave. Why are 
you trying to make something happen? I so disagree with that. 
What I see is that the 15 percent of America's population that 
lives in rural areas, they understand why they are there. They 
would love their communities to thrive. And we as Americans 
need rural areas to thrive.
    My father comes from Ghana, and in that country when you 
don't invest in rural, the whole country suffers. And I believe 
that that is part of our job here in Rural Development, to make 
the case. Many of the communities that I know you and I know, 
are absolutely beautiful places to live. When we can bring the 
broadband, the housing, the businesses, they will thrive, and 
they will help us all thrive. So I love being on the message of 
thriving. And I am familiar with your map. I wouldn't like it 
at all.
    Mr. Peterson. You better tell the Economic Research Service 
your view on this. So, when I am back home in August, in 
addition to going over and defending Red Lake County, I also 
went to another little town. This one is second to the bottom 
in the country. They have struggled. They had a flood in 1997 
and we rebuilt the town; but they have a business going on 
there that is just phenomenal. It kind of started out of 
nowhere, a retired farmer and his wife. And they are booming. 
They are doing business in 56 countries. They are making some 
kind of little pieces that are used in jewelry, and they are 
shipping them all over the world. But part of the problem is 
they can't get adequate broadband in that community. And I run 
into this all over the place. I don't know how much money we 
have spent on this, putting money into broadband and the farm 
bill, the stimulus. We gave $2 billion to you guys in the 
stimulus bill for broadband.
    It seemed like the money that we spend gets sent out there 
to overbuild existing systems and does not get out to the rural 
areas where they are needed. Don Young and I have been working 
on trying to get rid of the Universal Service Fund, take that 
away from telephones and put it into broadband which needs to 
happen, but the telephone companies apparently are geared to 
the other thing or something, whatever it is. But how are we 
going to get past this and get these communities, like Ada, 
Minnesota where I was, broadband that they need?
    Ms. Mensah. Okay. I am going to ask Administrator McBride 
to speak to that. If I can just say that this is the thing I 
hear the most. What 80 years ago was the telephone and its 
importance; today it is broadband, and we are not giving up on 
those communities.
    Mr. McBride. Thank you for the question, Congressman. 
Certainly we would be happy to meet with folks in your 
community to see what we could do to be helpful. There was a 
survey done of rural businesses in Michigan that found that the 
annual revenues were $200,000 greater for rural businesses that 
were connected as opposed to those that were not. So certainly 
we are aware of the importance of getting broadband out into 
those communities.
    We do have a grant program community connect that might be 
a fit for the community you are referring to if they do not 
have existing service. With regard to overbuilding, the farm 
bill does include restrictions on how many service providers 
can be in a particular applicant's area before we fund a loan; 
so we do try to be diligent about going into communities that 
do not have service.
    Mr. Peterson. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. 
Thompson, for 5 minutes.
    Mr. Thompson. Thank you, Chairman. Madam Secretary, 
Administrators, thank you so much for being here, and thanks 
for what you do as well. I heard the word thrive being used. I 
would have to say that the only way that urban America, and I 
know that is the 25 percent of the land mass that we are not 
really talking about today--it is the 85 percent of the 
population--the only way urban America thrives is if rural 
America thrives.
    We provide their food; we provide their building materials; 
we provide their natural resources; we provide their energy. 
And people work hard to do that, those of us who live in rural 
America. So my personal experience with your agency has been a 
very positive one. I appreciate how when the communities work 
hard and they apply for these loan funds, I give them all the 
credit because it is their due diligence. It makes a difference 
to those communities, and they have gone the route of looking 
to the private-sector first. They have exhausted those 
opportunities and resources.
    Many times it is a collaboration. It is a true great 
examples of public-private partnerships. And so I want to thank 
you for what you do, and the fact is that if, how you serve 
rural America, because once again, if rural America fails, this 
country fails because those are just basic fundamental needs.
    A couple of specific questions, starting with Administrator 
McBride, rural electricity, I am hearing a lot about the 
President's Clean Power Plan, and I am just curious, how will 
that, the President's Clean Power Plan, affect your loan 
portfolio?
    Mr. McBride. Right now we are not sure exactly how the plan 
will affect our portfolio because the states need to develop 
their plans now in response to the EPA's rule. We are in 
contact with our borrowers, with rural electric. We have a 
strong partnership with them. So we are trying to watch this 
situation as it evolves and make sure that we are ready to help 
our borrowers respond to the end result of the new rule.
    Mr. Thompson. I have significant concerns. I work very 
closely with the rural electric cooperatives. They provide some 
of the most affordable kilowatt hour rates. They use a very 
diverse portfolio. They need to be able to do that. They have 
already been impacted with the war on coal, the closing of 
coal-fired power plants, even the closing of waste coal power 
plants, which essentially are cleaning up some scars from 100 
years ago. It makes no sense. So I have tremendous concerns on 
that. I look forward to keeping in contact with you on that 
issue.
    Mr. McBride. Yes, sir.
    Mr. Thompson. Administrator Hernandez, once again just 
revisiting the Community Facilities grants and loans program, 
which I have seen a lot of success in my rural communities. And 
the gentleman that runs Pennsylvania does such a great job, a 
former staffer here on the Hill for a Democratic Congressman, 
and so I appreciate his communications. The President's Fiscal 
Year 2016 budget request zeroed out the Community Facilities 
Guaranteed Loan Program and substantially increased the 
Community Facilities Grant Program.
    So my question is, what was the rationale behind this, and 
do you view grants as more efficient use of taxpayer resources 
than guaranteed loans; and can you compare the workload for the 
approval process for a grant to that of a loan guarantee?
    Mr. Hernandez. Thank you, Congressman. The Community 
Facilities program has both grants and loans as you know. A lot 
of our communities can't take all of the loans, so they look 
for other ways to reduce their burden by getting a grant. And 
so we give grants also to increase their capacity so they can 
apply for more loans. So we do both.
    We want people to have access to lower cost money. That is 
up to 40 years. But the grants sometimes give them the capacity 
so they can apply for the loan dollars. So we are actually 
training folks how to compete better for the loans, and that is 
why we do both. It is usually the same people that are doing 
the loans that are doing the grants, sir.
    Mr. Thompson. Any insight as to why the President's budget 
request would have zeroed out the guaranteed loan program?
    Mr. Hernandez. From what I understand from our customers, 
they keep asking for lower cost dollars. When we do a 
guaranteed loan it is a little higher because that is the 
market that is setting the price. And so when we do a direct 
loan, we have the flexibility to do both; and that is why a 
lender sometimes only wants to do part of the risk, so we work 
with them to reduce the risk so we can partner in both.
    So we always need more dollars in the direct side because 
that is where we actually have more funding available.
    Mr. Thompson. Okay. Thank you. Thank you, Mr. Chairman. I 
yield back.
    The Chairman. The gentleman yields back. Ms. Plaskett, for 
5 minutes.
    Ms. Plaskett. Yes thank you, Mr. Chairman. Good morning 
everyone. I had a question for you, Administrator Rikkers about 
REAP, about Rural Energy for America Program projects. It has 
had a good bit of history under its belt by this time, and I 
wanted to ask you what do you find to be the projects that you 
are focusing most on; and how does that differ from projects 
potentially 5 years ago? What is the trend now?
    Mr. Rikkers. Thank you, Ms. Plaskett, and its Rikkers for 
the record.
    Ms. Plaskett. Rikkers. Thank you.
    Mr. Rikkers. Yes thank you. First I want to thank this 
Committee for its commitment to the Rural Energy for America 
Program, REAP as we know it as. You asked specifically what is 
the status of REAP today, and what does it look like compared 
to 5 years ago?
    We have had a year where we have had more than $80 million 
in REAP grants and a record number of REAP loan guaranteed 
dollars obligated that we will do this fiscal year, and I am 
proud of the work of our staff both in the national office and 
the field for that work.
    Just touching on the point that has been made a couple 
times about the private-public partnerships even with the REAP 
grants, that is only 25 percent of a project; and so every time 
the Federal Government invests $25 in REAP dollars in a grant, 
that is leveraging $75 in private investment into those rural 
small businesses and agricultural producers that are using 
those dollars to make investments in renewable energy systems 
and energy efficiency improvements.
    Ms. Plaskett. And what are farmers and your applicants, 
what kind of projects are they most interested in right now?
    Mr. Rikkers. The projects really span a gamut of renewable 
energy systems and energy efficiency improvements, whether that 
is solar, wind, anaerobic digestion. We have geothermal and 
hydro.
    I think part of when you really make the comparison between 
now and 5 years ago, what we see is because of the outreach of 
our staff, we are reaching further and are more geographically 
diverse. That is we are spending the REAP dollars not in just 
one area of the country. Five years ago REAP dollars were 
investing probably predominantly in the Midwest. We really have 
seen 36 states this year alone have used their entire REAP 
allocation on the grant side. And so we are really proud to see 
the REAP dollars going across the country to the various 
different types of technologies.
    Ms. Plaskett. Well, I am very interested in the project 
particularly in an area like the Virgin Islands which has 
limited resources in terms of fossil fuel energy that we are 
able to use. The cost is really astronomical. And we have the 
natural resources that would make alternative energies a really 
good place.
    And how do we capitalize on that for our farmers to be able 
to be much more productive. We have a 31 percent child poverty 
rate, and we have rural farmers who are really committed to 
getting the technical assistance and support to be able to be 
part of some of our nutrition programs and support for their 
own communities rather than also feeding those outside to 
really make that leap, so your program would be something that 
I know we would be interested in.
    Madam Under Secretary, one of the questions I had for you 
was in terms of the large portfolio of loans that you do, $200 
billion invested, upwards of $20 billion alone assisting rural 
areas throughout the United States. I addressed and spoke with 
your Secretary, Secretary Vilsack, written to him about the 
support that is needed for those areas which really have a 
great need of rural development areas. Most of my colleagues 
here who come from rural areas understand the need for your 
agency in particular and how important it is for basic 
infrastructure and support, not just in terms of utilities, but 
municipal buildings, schools and such.
    Can you tell us a little bit--I know that my time is 
running out--how that can be helpful to places like the Virgin 
Islands and others which are really isolated. We haven't had a 
school built in over 30 years because we just cannot on our own 
support budgets like that.
    Ms. Mensah. Thank you for your question. My focus on core 
programs and on our people is exactly the way we are going to 
get to our poorest areas, to what I like to call our last mile, 
the unfinished work.
    Our core programs like our Community Facilities are the 
kinds of programs that can be used for a school, for a 
hospital, for a police station. Those are the things I have 
toured. And our investments that you have enabled us to make in 
our staff allow us to keep people local so that they can reach 
places. They understand. They live in those communities 
themselves, our own team.
    So the two areas, core and our people, really has allowed 
us to focus to get that kind of core development and not just 
skim the surface but to go deeper.
    Ms. Plaskett. I am looking forward to working with you on 
that and any support that you can give. And thank you very 
much, Mr. Chairman, for the time.
    The Chairman. The gentlelady yields back. Mr. Scott, for 5 
minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. Madam 
Secretary, I want to thank you for mentioning Second Harvest of 
south Georgia. My colleague Sanford Bishop and I have both had 
the privilege of representing the communities that they serve, 
and we were both there for the ribbon cutting; and that is a 
wonderful mission that those people take very seriously, and 
they take action to make sure that people have the food that 
they need across a large geographical area. And while it might 
be the second largest in terms of meals served, it probably 
serves the largest geographic area of most of the food banks in 
the country. So thank you for acknowledging them.
    Many of my questions have been asked. I look forward to the 
responses on the risk-sharing and the percentage of risk that 
we are taking versus the private-sector and the loans that we 
guarantee. I had questions about the zeroing out of the 
President's budget which were asked by Mr. Thompson just before 
it came over to me.
    I guess one of the questions I have, when we look at the 
budget, is there a difference in the workload of the agency 
among the direct lending, the participation lending, or a 
grant? Or is it about the same amount of work per procedure?
    Ms. Mensah. Let me ask my colleagues to give a couple of 
examples. But let me start by saying, direct lending, that is 
our toughest when we take on all the underwriting 
responsibilities, and whether that is in our housing program or 
the way we run our water program or the way we underwrite a 
business loan.
    We have actually had some great successes in the way we 
have reduced workload, and I want to ask Administrator 
Hernandez to speak to the way we changed processes in our 
guaranteed housing program. That is our biggest program. We 
will nearly do $20 billion of guarantees this year, and we have 
been able to streamline that efficiently and really change the 
workload. Can you speak to that.
    Mr. Hernandez. Sure can. Congressman, one of the major 
feedback we receive from our customers is getting more 
predictability in how we deliver services. What they have asked 
us to do is to come into the 21st century with automation. We 
are one of the only agencies that has a housing program that 
hasn't automated like other agencies. We are moving that 
direction now. We now with our process improvement save more 
than 37,000 reams of paper and can get an answer back in 48 
hours. Where before it used to take us 8 weeks, 12 weeks to get 
an answer back because we didn't have the automation.
    Just this last year we have implemented this what we call 
loan net guarantee and automatic loan closing. It saves the 
private-sector a significant amount of money but allows us to 
share the risk with the private-sector. The other reason that 
is so good is that there are more lenders out there that have 
access to capital for our customers that would not get it any 
other way if our lenders weren't there because our customers 
would not qualify for any other mortgage products. So we have a 
nice distribution system. We save them time. We save them 
money. And we are focused on the customer.
    Mr. Austin Scott of Georgia. My question was does one take 
longer than the other from the standpoint of the workload of 
the people that work in your agency? And one other thing, these 
loans are still originated from a mortgage broker or a bank 
when they happen; right? The average American citizen doesn't 
know this loan is available to them unless somebody that they 
are relying on to advise them tells them about this. Correct?
    Mr. Hernandez. That is correct, sir.
    Mr. Austin Scott of Georgia. So a bank or a mortgage 
broker----
    Mr. Hernandez. That is correct, sir. The loans are easier 
to do on the guarantee side because we have the automation that 
is there. The direct side, we don't have the automation yet. We 
will have that automation for the direct side in about 12 
months.
    Congress was very good to invest additional dollars for us 
to have automation. The reason we need both products because 
people who may not qualify for the guarantee, but they qualify 
for the direct. That is where Congress has given us more 
product variety to help more folks become homeowners, so it 
takes longer to do a direct loan than it does a guarantee, sir.
    Mr. Austin Scott of Georgia. So if I can make one further 
point, is that the American citizen who needs this loan doesn't 
know about it. It is a bank or it is a mortgage broker or 
somebody who advises them of the ability to get this loan.
    One of my concerns, one of the things that has held the 
economy back, quite honestly, has been a position towards those 
industries from the Administration at a global picture, not 
necessarily in your agency. Do you see any potential 
restrictions on who can help originate those loans?
    Mr. Hernandez. There are restrictions. We are actually 
expanding how we are helping more and more customers by working 
with nonprofits, so they go out and find customers for the 
direct loan because we have had a reduction in staff over a 
number of years now. So we need to find another way to do 
outreach. So we need the trusted advisers like you are talking 
about. The realtors are very important, the lenders, but also a 
nonprofit to try to find the customers and educate them both on 
their options and do home buyer education. So we are trying to 
expand our outreach so we can get more customers.
    On the direct side we usually go through 20 customers until 
we find one that is qualified, sir, on the direct side. We have 
to work real hard to find the right customers who have the 
ability to pay back. But we are expanding our resources by 
using our nonprofits, lenders, and realtors. And with the 
investments you have given us, we are doing automation to make 
that program more effective and more efficient.
    Mr. Austin Scott of Georgia. Mr. Chairman, I would just ask 
that we not push the private-sector out simply because we want 
to bring nonprofits in, sir.
    The Chairman. Thank you. The gentleman's time has expired. 
Mr. Ashford, 5 minutes.
    Mr. Ashford. Thank you. I would like to just talk about 
two--the Vice Chairman made a great point about housing, I 
thought, and about the number of programs that exist in the 
Federal Government on the HUD side and on the Rural Development 
USDA side. I ran a housing authority in Omaha for 3 or 4 years 
and was familiar with those differences and those 
jurisdictional boundaries.
    It really causes--it seems to me, and the point that was 
made by the Vice Chairman is a really good one, is are there 
not, Administrator Hernandez, more opportunities, should be 
more opportunities for collaboration between rural housing 
opportunities and urban housing opportunities, especially in a 
place like Omaha, Nebraska, where what we want to do, 
economically, is we want to provide opportunities for urban 
people who are now living in an urban area to live in more 
rural areas to provide----
    One of the things that is really holding our economy--our 
economy is doing very well. We have the lowest unemployment in 
the country and a lot of it is because of our ag-based sector.
    But we see opportunities to bring urban people into the 
rural areas to help increase the economy of our state and 
especially hopefully as we increase trade through TPP and some 
of those programs, we need workers, and housing is a critical 
element to that, the point was made very well by the Vice 
Chairman to say, why do we have these--I know why we have 
them--but isn't there an opportunity for a collaboration 
between the two?
    Mr. Hernandez. Thank you Congressman. There is tremendous 
opportunity for collaboration, and we do that all the time. We 
have a number of committees trying to find ways, task forces to 
see what we can do better together. The difference really is 
who the customer is. USDA focuses only on rural. We are the 
only agency that has a mission just for rural America. We are 
the only one. So our expertise is better than anybody else in 
trying to solve problems in rural America.
    So we look forward to giving advice to other agencies, how 
we do it so well so they can find the efficiency and 
effectiveness that we have and maybe they can model what we are 
doing.
    Mr. Ashford. I think the point though is to just say we 
have rural America and urban America and draw those lines in 
the world that we are living in now with technology; we are 
talking about the Internet and about economies being not wedded 
to an urban area and rural area, that bifurcation, it doesn't 
make any sense to me.
    And in practice, in a city like Omaha, where we want people 
to go back and forth between rural areas and urban areas where 
the jobs are, housing is a problem there. That is all I am 
saying.
    And I think the more we could--you are right. Your agency 
does very innovative things, and I am aware of that, of those 
things, and housing authorities under HUD could learn from 
those things. But it is about people, not houses.
    So what we really need to do is figure out a way to get 
people into rural Nebraska where really we need workers and 
provide housing for them and some of these programs that you 
do, interfacing with just letting people know who live in a 
housing authority, to letting them know that there are jobs out 
in Skyler, Nebraska, or Red Cloud, or wherever it is. And the 
housing, there is just that communication would be tremendously 
helpful to our state.
    Mr. Hernandez. I agree, sir. We need to find a way to 
enhance education for our customers so they have a better 
opportunity to see which products work for them.
    Mr. Ashford. Right. And second, it is on another topic, and 
I want to get the names right here because I don't want to miss 
the names. Our Agriculture Marketing Services State Director, 
Maxine Moul, who was the Lieutenant Governor of Nebraska and a 
great friend, and I served with her, and of yours as well. We 
had a great marketing collaborative session in Omaha, and 
talking about the opportunities for expanding food production 
in urban and rural Nebraska, and Maxine did a great job.
    But I want to compliment Anne Alonzo who was there as well 
who did a great job explaining all the opportunities. We really 
are doing some great initiatives in urban food desert things, 
and Anne was super as was, and I don't want to get this name 
wrong because she did such a great job so I am going to take my 
time and look, but my time is almost up.
    Anyway, I just want to thank the Department for what was 
really a great session: 150 people participated thinking about 
what we could do to bring urban and rural Nebraska together 
using food as the catalyst. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. 
Crawford, for 5 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. And Madam Under 
Secretary, thank you, and the Administrators for being here.
    I am going to start with Administrator McBride. In February 
Politico published an article highlighting the 116 percent 
default rate for Broadband Loan Program. Since then we have 
been informed this was a miscalculation, and comparing 
government loans to loans in the private-sector is actually not 
a true apples-to-apples comparison. Can you expand on that 
situation and give us a better understanding of what the true 
default rate is for that program?
    Mr. McBride. You are referring to the farm bill loan 
program? That program was originally authorized in the 2002 
Farm Bill and subsequently updated in the 2008 Farm Bill. Under 
those authorities we have made 100 loans. The default rate is 
21 percent. Most of the defaults occurred very early on in the 
program. We have learned a great deal of lessons since then, 
and that is reflected certainly when you look at the other 
programs that we run and the defaults have decreased under that 
program.
    We have two other loan programs that support broadband 
expansion. One is our Telecommunications Infrastructure Loan 
Program. Since 2009 we made 161 loans under that program with 
only one default, and under the stimulus program we have funded 
255 construction projects and expect to have only one default 
at this time.
    Mr. Crawford. Where did they come up with that number, 116 
percent default? I mean that seems, based on what you are 
telling me, that seems pretty out in left field.
    Mr. McBride. The number was not intended to reflect a 
default rate. It should not have been in that, in the place 
where it was in the chart. It was not intended to reflect our 
default rate.
    Mr. Crawford. Okay. Thank you for clearing that up. Now 
that the new regulations for farm bill loan program has been 
published, what kind of loan demand are you seeing?
    Mr. McBride. The program is open right now and is open 
until September 30. We expect the program to be oversubscribed 
this year. As the stimulus winds down, there are a number of 
service providers who are looking to come back to the farm bill 
loan program.
    Mr. Crawford. There was a report in May of last year, a GAO 
report, the agency recommended that USDA do a better job of 
identifying the characteristics of loans that may be at risk of 
rescission or default and that the Department align the goals 
in its annual performance report to the loan program's purpose.
    Recently the Department issued a proposed interim final 
rule to revise the current broadband program regulations. Did 
the Department take into account the GAO recommendations when 
developing the new proposed rule?
    Mr. McBride. Yes, and we also tried to follow the 
instructions that Congress gave us in the farm bill.
    Mr. Crawford. Okay. What changes, if any, are being made, 
and how do you expect the new rules to improve the 
administration of the broadband program and the accountability 
for taxpayer dollars?
    Mr. McBride. The key change to the program that was 
actually provided in the farm bill is the reporting 
requirements where applicants, the applications and the service 
areas that they intend to provide service to will be posted 
online; so taxpayers, Members of Congress, whoever, can go 
online and look at the applications that we have received and 
where the service areas will be.
    Mr. Crawford. Okay. Excellent. Let me ask you about rural 
water, a couple of things here. In order to provide safe, 
healthy, and affordable drinking water and comply with the Safe 
Drinking Water Act and other Federal statutes, rural 
communities require technical expertise. I hear about this all 
the time at home, the circuit riders that are relied upon. How 
does USDA ensure rural communities have access to technical 
expertise to operate, maintain, and manage rural water systems?
    Mr. McBride. Congress gives us funding for two different 
programs that support that kind of assistance. One is the 
technical assistance program, and the other is the circuit 
rider program. And we work closely with the different 
organizations that provide those types of services and make 
sure to connect them with communities who need assistance. And 
our state offices do a great job of helping with that.
    Mr. Crawford. Are you seeing an increase in demand for 
those services?
    Mr. McBride. Yes, Congressman.
    Mr. Crawford. Okay. In the time I have left, it is our 
understanding that changes at the Census have driven changes to 
the formula that the agency uses to determine eligibility for 
rural water programs. Can you talk about those changes, how the 
Department is trying to mitigate the impact of those changes on 
rural communities and how the Department is working to 
publicize those options for those who might be affected?
    Mr. McBride. The changes in the Census data can have two 
different--there can be two ways that can affect us. One is if 
a community exceeds the 10,000 population limit, and we usually 
know the communities who are looking to submit an application, 
and we try to share information on other Federal programs that 
could assist them with their project.
    The other change could be the median household income which 
we take into account when determining grant-to-loan ratios, so 
those are the two potential impacts from the Census data.
    Mr. Crawford. Thank you. I yield back.
    The Chairman. The gentleman yields back. Ms. Adams, for 5 
minutes.
    Ms. Adams. Thank you, Mr. Chairman. And thank you for being 
here to our panelists.
    Rural Development administers the Business and Industry 
Guaranteed Loan Program which--and this question will be to the 
Secretary--for local and regional food projects.
    And a few weeks ago, staff from the B&I program 
participated in a call to discuss the program with my staff and 
the fundraising staff for a local food retail in my district, 
the Renaissance Community Co-Op. It has broad community 
support. It is an important opportunity for improving food 
access in one of the food deserts in East Greensboro, but 
unfortunately Renaissance cannot qualify for the B&I program 
because they are not borrowing from a USDA preferred lender 
such as a chartered bank or a credit union.
    Instead they are borrowing from a Treasury Department 
Certified Community Development Financial Institution. They 
chose this route for financing the food co-op because the cost 
of borrowing is lower than through a traditional bank. And my 
question is, what is USDA's rationale for excluding CDFIs as a 
preferred lender from the B&I program?
    Ms. Mensah. Thank you, Congresswoman Adams, and I will ask 
Administrator Rikkers to speak to this. As someone who has 
worked with Community Development Financial Institutions for 
most of my professional life, we certainly understand their 
importance. They work with us in other parts of the program, 
perhaps not in the B&I program. Administrator Rikkers, are you 
familiar with a case of----
    Mr. Rikkers. Representative Adams, I am not familiar with 
that specific case, but I understand the issue. CDFIs are an 
important partner across many of our programs, and we have used 
them under the B&I loan guarantee program.
    If a CDFI is connected or partnered with a traditional 
lender and bank or a credit union, which many CDFIs are, then 
we can work with a CDFI.
    In those cases where a CDFI is not connected to a 
traditional or regulated lender, there is a route for CDFIs to 
qualify under the B&I program as a nontraditional lender. And I 
am happy to circle back with your staff and work with our staff 
to see if those avenues have been explored.
    Ms. Adams. Thank you. It seems that the B&I program is 
oriented toward rural areas with fewer lending options, and we 
have a concern about that.
    But for food deserts in urban areas in the Twelfth 
District, the B&I program is one of the few funded programs 
that can improve food access, and we have a serious problem in 
the Twelfth District, particularly in the triad area in terms 
of food insecurity.
    So I hope to work with USDA, going forward, to make sure 
that my district can better utilize this program, which is 
authorized to improve food access in both urban and rural 
communities; but it seems like we are kind of getting the short 
end of that stick, so we would be happy to talk to you further 
about it.
    Thank you very much. Mr. Chairman, I yield back.
    The Chairman. The gentlelady yields back.
    Mr. Yoho, for 5 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate it. I 
appreciate the panel being here.
    Chairman Peterson and I grew up in Minnesota, and I can 
understand why that is. I remember two seasons up there: winter 
is coming and winter is here. And I remember the state bird 
being a mosquito. It was so big, it had feathers.
    Getting back to the question here. Administrator McBride, I 
want to thank you for the work you did with our office in our 
district for the rural broadband. I would encourage anybody in 
here to reach out. You guys did a stellar job helping to solve 
or to bring up solutions to get that into our area, and I just 
want to thank you for that.
    I want to kind of go back to Mr. Thompson's question. In my 
district in north central Florida, I have more EMCs municipal 
cooperative power companies than anywhere else in our state. 
And these companies rely heavily on RUS loan program which 
helps keep energy affordable in my rural district and districts 
across the country.
    Due to the President's new Clean Power Plan, I have been 
hearing concerns from my folks back home, the cooperatives. And 
I want to kind of go off of his question: How do you expect the 
CPP to affect your loan portfolio? That was asked specifically. 
What will happen if the coal power plants with outstanding RUS 
loans cannot meet the requirement by the EPA? And if they have 
to shut down their doors, how is that going to affect you? 
Because we have some plants that are scheduled to run for 
another 15 years.
    Mr. McBride. Thank you for the question.
    We have about $4.5 billion invested in coal power plants 
that may be affected by the EPA rule. At this time, it is 
unclear exactly what the impacts will be and how the state 
plans will be developed. We are in touch with our co-ops and 
want to work with them as they transition into this.
    Mr. Yoho. If a state does not adopt a plan and we see our 
power plants close with these active loans, is that a 
possibility for default for you guys? Has that happened before?
    Mr. McBride. I am not sure. I don't want to speculate on 
what the state plans will be.
    Mr. Yoho. Was your agency in communication with the EPA on 
the rule writing in saying we have a certain amount of these 
plants that are in existence, they have a life span of 10 to 15 
more years, is there a way they can be grandfathered in and 
weaned out of that so that they can adapt?
    Mr. McBride. Yes, sir, we were in contact with them and 
they developed the rule.
    Mr. Yoho. Under Secretary Mensah and Mr. Hernandez, to 
reiterate, that you said we have $200 billion in loans and your 
default rate is very small, on your zero down, 100 percent 
financing, if I go back to the housing bubble--and we heard a 
lot of horror stories how this led partly to that--how long has 
that program been back in existence, or did it ever go out of 
existence? Did it ever go out zero down, 100 percent financing?
    Mr. Hernandez. Congressman, we are very fortunate this 
program was created under the Farmers Home Administration, so 
we have been in existence for over 40 years, and the program is 
still being very successful. But it is a small part of our 
program. The largest program is one we use with the private-
sector. That is our guarantee program.
    Mr. Yoho. Let me ask you this: Do you hold those loans in-
house?
    Mr. Hernandez. We do.
    Mr. Yoho. You don't rebundle them, repackage them, and sell 
them to the private-sector?
    Mr. Hernandez. We do not, sir.
    Mr. Yoho. That leads up to a question I had yesterday. The 
USDA is doing these loans, so you are the servicer of these 
loans too, and it is a duplication of the private-sector, it is 
competition with the private-sector. Is there a way to devolve 
from the Federal Government, and do what you do as far as 
guaranteeing them and stand behind them, but yet, let the 
private-sector do them so you don't have a bank within the USDA 
and the bureaucracy that goes with that? What are your thoughts 
on that?
    Mr. Hernandez. Sir, the larger problem we have with the 
guarantee program is that private-sector service those. So we 
do about 140,000 loans a year. The private-sector does all 
those.
    Mr. Yoho. These are the ones that are 100 percent 
guaranteed by you?
    Mr. Hernandez. Both of our products are 100 percent 
guaranteed. The largest one, the private-sector does for us. 
They originate it and they service it. So that is 140,000 loans 
every year. We do a smaller part, which is 7,000 loans per 
year, which is the direct loan. That is the smaller part. So 
the biggest one, we are not competing with the private-sector 
at all. We are actually partnering with the private-sector. 
Because when they cannot do a loan, they refer it to our direct 
program so we can find another way to help that customer if 
they can pay back the loan.
    Mr. Yoho. So what is the purpose holding that within in-
house instead of once you guarantee that loan, transition it 
out, so, again, you are not a bank, the Federal Government is 
not acting as a bank?
    Mr. Hernandez. Well, Congress has to give us some authority 
so we can do something that way. Right now, if we were to sell 
those loans, which we don't and cannot, all that money goes 
back to the Treasury and doesn't come back to the agency. So if 
that is what Congress wants to do, Congress can write the loan 
so we can do that.
    Mr. Yoho. I just want to give you guys a thank you because 
you guys have financed so many things--a rural water treatment 
system in our area, rural hospitals--and you do a great job. 
Thank you.
    I yield back.
    The Chairman. The gentleman yields back.
    Mr. Allen, for 5 minutes.
    Mr. Allen. Thank you, Mr. Chairman. And thank you, panel, 
for joining us today and all that you do. Also, I want to thank 
you for, as my colleague mentioned, the Second Harvest of 
Georgia. We have met with them many times and are looking 
forward to seeing the great work that they do, and thank you 
for that.
    There is one thing. In the 12th District of Georgia, we 
just need better cell service. I am telling you, it is tough 
traveling to that district when you keep breaking off calls, 
and, of course, we stay on the phone a good bit. So if we can 
keep working on that. I know you are.
    And, also, as Congressman Yoho mentioned, we have a lot of 
EMCs in our district, and they have put a lot of money into 
many of these coal plants meeting the current requirements as 
set by the Congress. And, of course, we know the EPA has 
stepped over that. But they have a tremendous investment there. 
They are very concerned about, again, retiring that debt and 
getting the life out of those plants. So we need to be sure 
that the other folks know that, and know what a critical 
situation that is. They are very concerned about that.
    As far as the, Mr. McBride, in 2013, USDA finalized the 
Energy Efficiency and Conservation Loan program that was 
designed to help co-ops promote energy efficiency and renewable 
energy to their consumers. This saves energy while also saving 
consumers money on their energy bills. Do you have a success 
story that you would like to share with this program and how 
can we make this program more successful?
    Mr. McBride. Thank you for the question. We have two great 
stories, one in Arkansas and one in North Carolina, where they 
took advantage of the Energy Efficiency and Conservation Loan 
program. We are able to help their customers make improvements, 
new heat pumps, weatherization practices. The Roanoke 
Cooperative in North Carolina actually has an on-bill fee that 
they charge their customers, and the customers' bills are 
actually lower with these new energy efficiency improvements. 
So we have seen success in those two projects.
    We are working with the different electric cooperatives to 
expand the program. I think something like 96 percent of the 
electric cooperatives have some kind of energy efficiency 
program. And so we feel they will have a great interest in 
this. We are trying to communicate with them and provide 
information that they might need as they develop their 
potential applications.
    Mr. Allen. That is good. And, again, thank you for your 
assistance with that program.
    As you know, in 2008 and 2014, the farm bill has included 
ways that RUS could help their co-ops increase energy 
efficiency for the benefit of their consumers. How is RUS 
helping co-ops increase energy efficiency and what more can RUS 
do to promote these efficiency programs and make them 
successful?
    Mr. McBride. The primary way that we are working with them 
right now is through the EQIP program and sharing information 
about that program, success stories in Arkansas and North 
Carolina, and making sure that they have the information that 
they need. We have a special partnership with the electric 
cooperatives. Our agency talks with them frequently and shares 
as much information as we have and try to help them as they 
consider potential energy efficiency improvements.
    Mr. Allen. Have you ever been to one of their annual 
meetings?
    Mr. McBride. Yes, sir, I have. I was there last week.
    Mr. Allen. Really? That does your heart good, doesn't it? I 
will tell you what, those folks are doing a great job for us.
    Well, thank you, and I yield back, Mr. Chairman.
    The Chairman. The gentleman yields back.
    Trent Kelly, for 5 minutes.
    Mr. Kelly. First of all, Madam Under Secretary, you have in 
your testimony about a gentleman, or a person, Ivory Smith, of 
Poplarville, Mississippi, and what a success story they are in 
the Armed to Farm program. Of course, that combines two of the 
things that I love the most, which is my State of Mississippi, 
although not in my district, and also our veterans.
    So I just wanted to thank you for that and thank you for 
recognizing that success story and which we hope will continue 
to be a success.
    I spent the entire month of August in town hall meetings, 
being the newest Member up here, doing nothing but town halls 
or being engaged in all 22 of my counties which I represent, 
and over and over, whether it be large or small towns involved. 
And over and over again, the main concern that I got was the 
amount of regulation which we are getting across the board, 
whether it be in agriculture, or whether it be in banking or 
whatever, that just our small, local regular businesses can no 
longer perform and it is shutting them down and taking away 
opportunities. Whether that be a Dodd-Frank or whether that be 
waters of the U.S. or whether that be a number of other things 
that we have the Clean Power Plan, all those things are 
regulations which are putting restrictions on our most rural 
customers, who, a lot of times, don't have the technology, or 
don't have the access to technology, or don't have the income, 
or don't have the education, in order to comply with these 
regulations which seem like a good idea at a high level, but 
they are not at the end-user level.
    What are you doing to help, or what is Rural Development 
doing to help them not only to comply with the regulations but, 
first of all, to understand what regulations they have?
    Ms. Mensah. Thank you, Congressman.
    My first trip as Under Secretary was to your state. And 
what I saw that our agency is in a special place to do is that 
we are on the ground with the kind of citizens who are trying 
to borrow from us. Most of our programs are loan programs. And 
so our team--we have state offices, area offices--are able to 
sit with the people who come to us for water loans, for 
broadband loans, for community facilities. And while the 
applications can be long, we don't just leave people alone. We 
are able to work with them. I was able to announce one of our 
intermediary relending programs, where we are lending to an 
intermediary who then is making a grant to an intermediary who 
then makes more loans. So we try hard to be in a position that 
is forward looking to work with the local borrowers.
    I am appreciative of everything this Committee has done to 
invest in our core programs and in our people to do that job.
    Mr. Kelly. Thank you again. I want you to just know how 
grateful I am for what Rural Development and USDA as a whole 
does for my state, and I appreciate that.
    On the broadband issue, Administrator McBride, I have a 
specific incident, and I won't mention names and those kind of 
things, but they got in on the pilot program of the broadband. 
And because they were involved in the pilot program, they are 
no longer eligible for any other programs for any loan things--
this is what they are told--is because they were part of the 
pilot, they are not--do not have. Some of the later programs 
are better programs. And they are very important. They have 
been very successful. They brought broadband to areas in my 
district which otherwise would not have any Internet service 
whatsoever.
    What, if anything, can you in your job do to make sure that 
if we have success stories where we are using the taxpayers' 
money wisely to bring those services to the people that were 
intended, that they are able to go out and not to forfeit on 
their loans, which they haven't done yet, but at the rate they 
are going they will, unless they can get more assistance to 
help them to ensure that they are doing it. Because they have 
been successful, but the amount of rates go down over time that 
you get back. And the bottom line is the big companies are not 
going to come in there and run broadband, so there is no one to 
replace it, so there is no service. So when the rates get so 
high that they no longer get the credit from USDA, or from 
Rural Development, then they just lose service because they 
just forfeit and can't pay it anymore.
    Mr. McBride. Thank you for the question, Congressman. I 
would be happy to visit with the folks that you are referring 
to and see if there is anything that we can do. As the Under 
Secretary referenced, we want to work with all of our potential 
applicants in all the rural communities that we deal with. And 
while we are working very hard to follow instructions from 
Congress and our regulations, we also want to work with folks 
to be as selectable as we can to make sure that their projects 
are successful and see them provide the kind of services that 
they want to provide to rural America. So I would be happy to 
visit with the folks that you are referring to.
    Mr. Kelly. I thank the panel, I thank you, Mr. Chairman, 
and I yield back the remainder of my time.
    The Chairman. The gentleman yields back.
    Mr. Abraham, for 5 minutes.
    Mr. Abraham. Thank you, Mr. Chairman. And I thank the 
panel. Under Secretary Mensah, thank you for your support of 
rural development. I will echo my esteemed colleague, Mr. 
Thompson's comments, that the good people of rural America, 
without them, the good people of urban America would be cold, 
tired, and hungry every day of their life.
    My district is very rural. I live myself in about the 
middle of a soybean field. So we appreciate USDA's presence. 
Most of what we hear is very positive on our end from the USDA.
    I want to also echo Mr. Kelly's, and some other comments 
here about the broadband. We certainly lack it. For our state-
of-the-art businesses, they can't do business as they should, 
not as quickly and not as efficiently. I was in Lake 
Providence, Louisiana, this past Sunday at a prayer vigil for 
our law enforcement and Lake Providence is a quaint town on the 
banks of the Mississippi River. And I looked down at my cell 
phone and had no service, didn't even have a bar. And this is a 
city that has basically no service at all. So that is near and 
dear certainly to my constituents that we need that and we need 
it very quickly.
    The question on these public-private partnerships, very 
much needed, again. We are Louisiana Delta. We are in poverty 
in much of where my district is. So we look for any method of 
funding, and public-private partnership seems to be one of 
those. But like has already been said here, we certainly want 
the private enterprise to assume some of the risk because they 
will certainly assume some of the benefit if it works, and we 
don't want the taxpayers on the hook for the whole shebang, so 
to speak.
    So I guess my question is, what specifically are we doing 
to keep the public aware and show them that these public-
private partnerships are out there? What kind of dialogue are 
you guys having?
    Ms. Mensah. Thank you so much, Congressman, for raising the 
importance of broadband, but also asking what we are doing to 
keep the public aware of the kind of partnerships we are 
working on.
    So much involves lender outreach for us--how we talk to our 
lending partners, how we reintroduce programs. This, again, has 
been such a strong year for us because of the authorities in 
the new farm bill.
    I would like to ask Administrator Rikkers to speak more to 
some of the new outreach that we have pushed, particularly 
around some of our newer facilities, our REAP facilities, our 
renewed B&I, where we do ask people to come in, put their own 
skin in the game, yes, get our guarantee, but they are on the 
hook too.
    Mr. Rikkers. Representative Abraham, thank you for the 
question. There is also a project in Louisiana that is a 
modeling of the partnerships that the Under Secretary is 
referencing. There is a biodiesel facility that took a grant, 
it was a REAP grant, about $370,000 in REAP grant--and, 
remember, that is only \1/4\ of the grant cost--so a level much 
larger that was invested by the private company that was asking 
for that.
    In addition, they combined that REAP grant together with 
the $10 million B&I loan guarantee. And so if there is a 
project in your state where they were taking multiple programs 
from RD together with a private biodiesel firm and a private 
lender, all packaging it together, ultimately opening up new 
industries and developing an economy, a really vibrant economy 
for rural communities.
    Mr. Abraham. Thank you. Another quick question that kind of 
ponies off of Mr. Crawford's question on this rural water 
system. We have that issue also in my district. And I know 
there has been a change in Census that actually affected the 
change in eligibility of rural water systems. How are you guys 
mitigating that? Again, how are you reaching out to the 
stakeholders and keeping them informed, that type of deal?
    Ms. Mensah. Things have changed.
    Again, Mr. McBride, please speak to the Census change in 
our water program.
    Mr. McBride. Our water programs are actually run out of our 
state offices. And so we have state staff who are in frequent 
contact with the communities who would apply. And, of course, 
you have organizations like the National Rural Water 
Association who work with the communities to make sure that 
they are aware of any changes, and work with them to find 
alternatives in case their population now exceeds our 10,000 
population cap.
    Mr. Abraham. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Mr. Moolenaar, for 5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman, for having this 
hearing, and also for all of you for being part of this panel. 
I find it very informative.
    I wanted to follow up specifically with you, Administrator 
McBride. I am from Michigan, and you had mentioned a Michigan 
report on broadband that you referenced. One of the questions 
that has been going through my mind is, when you think of a 
state like Michigan, when you think of my district, which is 15 
counties, fairly rural, in wanting to know kind of where we 
stand relative to broadband and the needs of our local 
communities, and then how we would work with your office to 
advance these goals--obviously, you have a state office--and I 
am just kind of wondering, it is more of a process question is, 
how do local communities find out about the resources, how do 
they work with your office, the state office, how would they 
work with my office, so that we can all be working together to 
kind of advance an agenda?
    Mr. McBride. Sure. Thank you for the question. I would 
encourage your constituents to start with our state office in 
Michigan. We also have several regional offices in the various 
states. I would encourage them to start there, and discuss the 
type of programs that we have available. And then once there is 
a consensus at the local level of how the communities would 
like to proceed, we can meet with them and our state staff to 
make sure that everyone is on the same page. Our state staff is 
really the first point of contact because they can provide 
information on the different loans and grant programs, 
eligibility requirements, things of that nature, that would 
help your constituents as they put a plan together.
    Mr. Moolenaar. And if we wanted to share information about 
the resources to start that dialogue, would we work with your 
office to send something out or to have forms, those kinds of 
things?
    Mr. McBride. Yes, sir, we would be happy to work with you 
on that.
    Mr. Moolenaar. When you mentioned the Michigan report, I 
have heard that as well in terms of just how just to be 
competitive, you need access to those resources. Where are we 
in this whole--and I guess rural America, not just Michigan, 
not just my district--but where are we, if our goal was 100 
percent coverage, where are we in that?
    Mr. McBride. The SEC released a report earlier this spring 
that showed that about 50 percent of rural America had access 
to the same high-speed Internet that is available in urban 
areas. So we have some work to do. We made a lot of progress, 
but there is still work to do.
    Mr. Moolenaar. And what would be the elements of a plan to 
get to that 100 percent goal? Is it all a financial issue?
    Mr. McBride. In a lot of instances, getting into the most 
remote rural hard-to-reach regions is very expensive. And so, 
we try to work with potential borrowers who want to do that 
work and give them the resources that they would need. But 
there is a lot of work that goes into that, both on the part of 
the provider that would go into those communities and with the 
agency to make sure that we are making loans that are 
sustainable.
    Mr. Moolenaar. Thank you very much, Mr. Chairman. I yield 
back my time.
    The Chairman. The gentleman yields back.
    Mrs. Hartzler, for 5 minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman.
    As being part of the 15 percent that you reference, I 
appreciate your focus on rural communities in this country 
because I am a little partial, but it is the best place. And, 
as you say, I appreciate, Under Secretary, you saying that we 
feed the world, and that is so true. What you do is so 
important.
    And I wanted to start with Mr. McBride there. We talked a 
lot about broadband. But we have a rural electric cooperative 
in my district who is just doing some amazing things putting in 
broadband, and has provided over 2,000 customers now with high-
speed broadband that they wouldn't have had before. And I just 
wondered how widespread is the use of rural electric 
cooperatives to help fill this gap, and how can we promote it, 
as well as what are some of the barriers to being able to 
encourage them to reach out and provide this service?
    Mr. McBride. Thank you for the question. A number of the 
rural electric cooperatives are starting to provide this 
service because there is a synergy between their smart grid 
technology and high-speed Internet. And so we have seen a 
number of our borrowers start to think along these lines to see 
what they can do to expand broadband access.
    From our perspective at Rural Development, we realize that 
no one is working in rural America in a silo. Our communities 
will be much more successful if we have partnerships between 
the rural electric cooperative, between the telecommunications 
cooperative, and the other utilities and industry in those 
communities. So we try to encourage all of our partners, and we 
try to work together as an agency to make sure that we are 
working with communities to reach their full potential and 
build out their infrastructure.
    Mrs. Hartzler. Are you providing several loans to rural 
electric cooperatives to pursue this?
    Mr. McBride. We have made some loans on smart grid 
technology, and I can follow up with you on the specific 
number.
    Mrs. Hartzler. I was wondering, just in general, do you 
have maps in the United States showing places where people have 
access to broadband and not?
    Mr. McBride. Yes, ma'am.
    Mrs. Hartzler. I would like one for my district, or 
Missouri. I think that would be very helpful.
    This is just a general question, Under Secretary Mensah. 
Since your agency deals a lot with loans, there has been a lot 
of change as to how loans are processed for private commercial 
banks since Dodd-Frank. And I visited with them ever since I 
have been elected to serve here and it is very, very, very 
onerous. Getting a housing loan used to take five pages. Now, 
on average, it is 50 pages that a homeowner has to go through. 
And I just wondered--and maybe this would be also a question 
for Administrator Hernandez--but after Dodd-Frank passed, have 
you seen any changes to the paperwork that you have to do to 
give a loan for housing?
    Mr. Hernandez. Congresswoman, thank you.
    Dodd-Frank is an important part for us to be in compliance 
and so we work with our lenders. And part of our process is 
trying to make sure that we automate our processes. And that is 
why lenders have come to us and said if you change the way you 
do business, it will make our participation a lot easier. So 
there is more, we think more compliance, but we think it is 
appropriate for us to make sure we are doing good loans and 
there is good lending being done.
    Mrs. Hartzler. So what changes, though, have you seen to 
how loans are done before and after Dodd-Frank?
    Mr. Hernandez. The major change is more education to the 
home buyer to make sure they know what responsibility they are 
taking on. That was the whole purpose of that, just trying to 
make sure home buyers only sign the dotted line when they know 
there is good lending and there is good compliance from the 
lender's point of view. That is very important. So we spend 
lots of time doing home buyer education with our customers 
trying to make sure they know what they are doing is the right 
thing and they can pay back the loan.
    I can get you more specifics on what additional paperwork 
or things that we are going through, so I can do that for you 
if you would like.
    Mrs. Hartzler. Have you had to hire more people in order to 
comply?
    Mr. Hernandez. Actually, we had lost a number of staff for 
a number of years, over 20+ percent less staff. That is why 
automation is so important to us. As we invest the dollars that 
Congress has given us to automate more, it saves our lenders' 
time, which a majority of our program is for private-sector due 
to lending. So with that investment in technology, we can save 
more time.
    Mrs. Hartzler. Very good. And I have only 30 seconds left.
    Administrator McBride, a lot of my small communities are 
having trouble changing the way they treat their water, the 
water treatment systems, because of the changes from EPA. So 
what has EPA done that has caused this to happen?
    Mr. McBride. Thank you for the question. I am not sure 
exactly which regulation that you are referring to.
    Mrs. Hartzler. There are so many.
    Mr. McBride. I would be happy to work with your community 
to see what we can do to help them comply.
    Mrs. Hartzler. Thank you. I yield back.
    The Chairman. The gentlelady yields back.
    Mr. Gibson, for 5 minutes.
    Mr. Gibson. Thank you, Mr. Chairman. I appreciate the 
witnesses too. It is a very informative and helpful hearing. I 
just want to express my gratitude. These programs are essential 
to my district, and generally we are very pleased with your 
responsiveness and the way things are going, so thank you for 
that.
    The broadband issue is one we have been involved with in my 
office--2011, an amendment on restoring funding for the low 
interest loan program involved in the farm bill with some of 
these reforms that Mr. Crawford was mentioning earlier. I 
appreciate your responsiveness to all this. And, really, I 
agree with your point that we have certainly learned from some 
earlier challenges and looking to perfect the program.
    So my question really is that I was encouraged to see you 
have a report coming soon, the collaborative work that is being 
done between USDA and Commerce. This is one of the things that 
I have learned in my time. I was in the military until about 
5\1/2\ years ago. And I have found that there have been times 
when I am having to perform a role like a liaison who used to 
be a chief of staff--when we had the storms Hurricanes Irene 
and Lee and Sandy and we were getting aid out--and there really 
wasn't a synchronizer, somebody who was integrating these 
programs.
    So I was encouraged to see that you are collaborating with 
Congress because, candidly, this has been among my 
frustrations, is that out there in the 19th District in New 
York in upstate, we are working with the Rural Utilities 
Service--thank you very much for that--and also the Connect 
America Fund. And so I would like to hear more about that 
process, about how you are working together, because we seem to 
hit the end of one program and the possibilities of another.
    And so I am looking for a little bit of inspiration that 
you guys are looking at that problem, too. I realize I put you 
in an uncomfortable position because you are sort of at the 
edge of your authority and at the beginning of somebody else's, 
but this is really where the real advantages or the real 
progress we can make when we actually integrate these programs 
better.
    Ms. Mensah. Thank you. I will let Administrator McBride 
speak to the collaboration between Commerce and USDA.
    I will say that there are times when our regulations 
prevent us from going to a community that is of a certain size. 
And then that collaboration is even more important because we 
can cover a broader swath of the country.
    Mr. McBride. Thank you for the question, Congressman.
    The White House Rural Council actually gives us a framework 
to work across agencies and communicate and make sure that we 
are sharing information on our programs with different agencies 
who maybe can't fund a project through one of their programs. 
So we are trying to do the best that we can to coordinate at a 
Federal level. As difficult as that can be sometimes, we are 
trying to coordinate to make sure that we are actually getting 
the information to the folks that can use it.
    I grew up in rural Arkansas, and so I am very familiar with 
the challenges that small communities can have, and oftentimes 
they don't have grant writers, oftentimes they don't have folks 
who can identify the programs that they might be able to 
access. And so that is something, with the Under Secretary's 
leadership, that we have worked very hard to do in Rural 
Development, to make sure that we are sharing information with 
people who would be interested in that, and also making sure 
that we are aware of things that are going on in other 
agencies, or there might be some synergies and we can 
collaborate.
    Mr. Gibson. Thank you. To put a finer point on this, so in 
our district, electrical co-ops are also in the space of 
broadband expansion doing yeoman's work on it. I call your 
program sort of like the ground game. We get 2 or 3 yards and a 
cloud of dust. And then we have the real possibility with the 
Connect America Fund, but the first round wouldn't let the 
electrical co-ops get access to that program.
    It does seem encouraging now that we are getting a review 
of that and our co-ops are now going to get access to that. But 
that is really the question that I am raising here is, is 
somebody sort of looking at this from an integrator standpoint 
and saying, ``Look, there are a lot of efforts that are trying 
to expand broadband.'' In rural America, we have disparate but 
yet complementary programs. Is anybody working to maybe tie up 
some of the fine point details of these regulations so that we 
can get the maximum value out of it?
    Mr. McBride. Yes, sir. We have about, $55 million this year 
in the farm bill loan program. Then we have our infrastructure 
program, then we have Community Connect. All of these programs 
tend to be oversubscribed. And so we are aware of the need to 
work with other agencies and make sure that we are connecting 
dots there.
    Mr. Gibson. Thank you. I will submit for the record really 
just an observation. Visiting my food banks, I was very 
encouraged to hear about Second Harvest. It is a great story.
    I just wanted to share with you. In some of my visits, I 
have found cans of goods on the shelves, a lot of imported food 
from China. I don't know if you knew about that. We have food 
banks that have canned goods from China or not, but I wanted to 
share that with you. I don't know if you have a reporting 
element that picks up on that. But I am just a little concerned 
about that.
    Thank you for your great work.
    The Chairman. The gentleman's time has expired.
    Mr. Rouzer, for 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. And, Madam Under 
Secretary, I appreciate you and your Administrators coming to 
join us today. As you may know, I used to be at USDA Rural 
Development, and so, perhaps, learned a little more than maybe 
even I wanted to while I was there. I see some of my old bosses 
in the crowd back there with smiles on their faces, so great to 
have you here today.
    A question for you. I am curious about the Rural Business--
Cooperative Service reorganization there and what is taking 
place, and very curious about the state of the value-added 
program. That was of great interest of mine when I was there at 
the Department.
    Ms. Mensah. Thank you for both questions. We tend to, as 
you know, we are always looking for ways to continue to do our 
work in the most efficient way possible. And your former area 
of Rural Business--Cooperative Service is so important to us, 
both in the way it handles its business in cooperative loans 
and the way it handles the new energy work and our renewed 
focus on community economic development.
    And I will let Administrator Rikkers speak to that and to 
your concern also with Value-Added Producer Grants, one of my 
favorite programs because of what it is able to do in unlocking 
more potential. I think it is thriving.
    If you could say a little more, Administrator Rikkers.
    Mr. Rikkers. Thank you, Congressman Rouzer. It is a unique 
opportunity to speak to someone who was at least close to where 
I am today. It is special. So thank you for your question.
    To your first question of the reorganization draft plan 
that we have now, it is a proposed reorganization within the 
Rural Business--Cooperative Service that is working its way 
through the Rural Development review. Before starting this 
review, we made sure, first and foremost, that we made sure 
that we communicated effectively and had spent time with the 
staff of both the appropriations staff of the Senate and House 
and the authorizing staff of both the Senate and the House. And 
have also met with stakeholders that have an interest in the 
reorganization.
    The reorganization is minor in the functioning of RBS. What 
it does is it makes some changes to our program so that we can 
better manage the responsibilities that, first, Congress has 
given us in our energy programs through the 2014 Farm Bill. It 
also changes and improves the management so that the important 
work that we do for cooperatives is better integrated with the 
core programs that we deliver. All of the functions that are 
currently being done now at RBS will continue to be performed. 
Although we think that through this reorganization, that we 
will be able to manage it more effectively.
    To your point about the Value-Added Producer Grant, it is a 
coveted program within RD, first, for the Committee, and the 
Committee instructed the USDA in the 2014 Farm Bill to make 
sure that it prioritized new and beginning farmers, as well as 
veteran farmers. And so in the new regulation that was 
published earlier this year, those priorities are reflected in 
the new regulation.
    We are working diligently, and we will be making awards by 
the end of this fiscal year, and we look forward to the 
results. And we know that they will reflect those priorities 
that this body had us incorporate into the regulations. So 
thank you.
    Mr. Rouzer. The B&I program has always been the flagship, 
obviously. How is our default rate looking on that these days?
    Mr. Rikkers. We are at a historic low, I am proud to 
report. The default rate, or delinquency rate, nationally is 
under five percent. It is 4.87 as of this morning. So thank 
you.
    Mr. Rouzer. Mr. Hernandez, Community Facilities program was 
a popular one in my district. I have a lot of rural areas, a 
lot of small towns, a lot of fire stations, medical clinics, 
town halls, et cetera, that are always needing a little help. I 
remember when I was there, the demand for that program was just 
astronomical. I am just wondering what your dollar amount is, 
what the demand is these days? How large is your backlog?
    Mr. Hernandez. The demand, Congressman, for this program is 
just outstanding. We get an appropriation of $2.2 billion. This 
year we think we are probably close, close to $1.1 billion. 
Forty-six percent of that is invested in rural health care. 
That is where a lot of the rural towns are looking for ways to 
any type of access to health care for facilities, equipment, 
and buildings; 20 percent is for education; and 50 percent for 
public infrastructure. People love this program. It helps 
change and build the community that you need to do with 
housing. You have to do both. Because what happens is people 
have to drive too far and so they need the facility, but they 
also need housing, both.
    Mr. Rouzer. Mr. Chairman, unfortunately, I see my time has 
expired.
    The Chairman. The gentleman's time has expired.
    Mr. Goodlatte, for 5 minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman. I appreciate your 
holding this series of hearings. And I want to welcome all of 
our witnesses.
    To the Under Secretary and to Administrator McBride, I want 
to reiterate what a number of folks have said here about the 
importance of the services for economic development in rural 
areas. About \1/3\ of the population of my district is in rural 
areas, and your work has had a tremendous impact on promoting 
and, in some instances, stabilizing economic development that 
might not take place but for your help.
    One of those areas, Administrator McBride, is the issue of 
rural broadband services. It is very, very important, but also 
has to be done very, very delicately. This is not like 
originally delivering telephone services or rural 
electrification where it was either there or it wasn't there. 
In the old monopoly days where there was either one phone 
company providing services or there was no phone company 
providing services, that was a fairly easy call. But today, 
broadband services are provided from a multitude of different 
sources, and you can inadvertently destroy existing competition 
by providing government subsidies to entities that enter the 
marketplace, not to provide strictly new service to an area 
that doesn't have any, but also to make their business more 
profitable and go into areas where there is already 
competition. Tell me, how are you handling that and how is it 
working?
    Mr. McBride. Thank you for the question, Congressman.
    The 2014 Farm Bill actually instituted an unserved 
requirement for the first time for our potential applicants. So 
for any applicant that is successful through the farm bill loan 
program, at least 15 percent of that proposed service territory 
will be unserved.
    Mr. Goodlatte. What is happening in the other 85 percent?
    Mr. McBride. Well, the second piece of this in terms of 
determining eligibility is that there is a requirement that 
there can be no more than three existing service providers. 
That is also in statute, and so we are careful to make sure 
that we are following that.
    Mr. Goodlatte. What kind of complaints have you received 
from some of those existing providers who may be, for example, 
providing what had historically been broadband services, but as 
these speeds increase and increase and increase, it no longer 
is, and now there is the subsidy for a new competitor coming 
in?
    Mr. McBride. Part of the farm bill requirements that 
require us to post potential applications online will give 
existing service providers the ability to see who is applying, 
and they can contact us with any concerns that they might have.
    Mr. Goodlatte. Is there any effort to balance this out? So 
if an existing provider comes in and says, well, you just gave 
this financing to this company that come in and provide this 
service, what opportunity do they have to get loans in order to 
upgrade their services to be competitive?
    Mr. McBride. Assuming that the existing service provider 
met the eligibility requirements under the program, they could 
potentially apply as well.
    Mr. Goodlatte. What if they didn't want to go into the 15 
percent new file, they just wanted to be able to compete with 
somebody that you subsidized to compete with them?
    Mr. McBride. We would need to look at their application and 
discuss with them the possibilities that they are considering.
    Mr. Goodlatte. Well, could they qualify if they didn't have 
that 15 percent requirement?
    Mr. McBride. We are required to include a 15 percent 
unserved territory under the farm bill.
    Mr. Goodlatte. Should there be an exception for these type 
of circumstances where you have let a new entrant into the 
market, they are competing very effectively in an already 
existent marketplace to the disadvantage of people who used 
private capital to invest in that same area?
    Mr. McBride. I wouldn't speculate on exceptions. I don't 
think I have that authority under the statute.
    Mr. Goodlatte. I am just asking your opinion, I am not 
asking you to make the decision.
    Mr. McBride. I would want to see the potential applicants 
and the concerns that they raised and consider that fully 
before offering an opinion.
    Mr. Goodlatte. Let me ask you one other subject area with 
regard to rural electricity. How will the President's Clean 
Power Plan affect your loan portfolio?
    Mr. McBride. Right now, the action has moved to the states 
as they develop their plans. As I mentioned earlier, we are in 
frequent contact with all of our borrowers, and will want to 
work with them to make sure that they have the tools that they 
need to respond to the plan.
    Mr. Goodlatte. Do you not have any concerns that some of 
the loans that you have outstanding may be jeopardized by the 
massive change in this policy?
    Mr. McBride. Without seeing the specific plans put forward 
by the states, I would hesitate to speculate on the impacts on 
individual borrowers.
    Mr. Goodlatte. So you are going to put us off?
    Mr. McBride. We will be in touch with you as we move 
forward on this.
    Mr. Goodlatte. All right. Thank you very much.
    The Chairman. Mr. King, for 5 minutes.
    Mr. King. Thank you, Mr. Chairman. I thank the witnesses 
for your testimony.
    A couple of things come to mind as I listened to Mr. 
Goodlatte. One of them is--and I pose my first question to Mr. 
McBride--there is a model out there that has emerged, or is 
emerging, that sees rural water systems incorporating septic 
systems, rural septic systems. I shouldn't use that word 
incorporate, but incorporate into their business model, not 
into the water system, where they would go in and build a 
system and then lease that system back to the property owner so 
that the property owner is no longer in ownership of their own 
leach field, but they are paying a monthly fee in order to 
avoid their requirement that is likely an EPA requirement that 
they upgrade their system.
    Could you comment on what that looks like for a business 
model, and what that might look like if much of the United 
States that is served by rural water would end up also being 
served by a rural water system that also does the sewer system?
    Mr. McBride. Thank you for the question, Congressman. That 
is not a specific issue that has been brought to my attention, 
but I would be happy to follow up with you after the hearing 
and discuss the instances that you are referring to and look at 
that.
    Mr. King. I appreciate that direct response, and I look 
forward to a comment further on that. I just don't know that 
anybody has looked into that very far to contemplate what that 
means for, let's say, a county, a state, a nation. I think that 
goes a lot further than what this Congress imagined. So I would 
ask you to take a look at that.
    Mr. McBride. Yes, sir.
    Mr. King. I thank you for that.
    I would like to, then, turn to Under Secretary Mensah. And, 
again, thank you for your testimony.
    I am thinking in terms of rural development, and have many 
times, from this platform, said that all new wealth comes from 
the land. And you can mine it out of the Earth, and you can 
seine a few fish out of the ocean, but it is fields and mines, 
and the wealth, actually renewable wealth, comes out of the 
land itself. So when we talk about rural development, I know 
that there has been a concerted effort on the part of the USDA 
to focus on, especially development of our small towns and 
communities. I do think that is admirable, and it is about the 
second best way that you can raise children. If you can't raise 
them on a family farm, you can raise them in a small town or 
rural area. It is a pretty good thing to promote.
    But I am concerned about the regulation we have on top of 
us now, the waters of the United States. And I lay that 
foundation for the economic development side of this because 
the utilization of this land has been driven by a desire for 
profit from people who are good stewards of the land. And the 
waters of the United States regulation turns this thing on its 
head, where it puts our producers in a position where they have 
to ask permission in order to utilize their property that they 
have invested in, either in their lifetime or in previous 
generations.
    I wonder if you would comment on what you think the impact 
is of an EPA that has a reach that--just a moment. I should 
probably lay a little more foundation on this.
    I am in Iowa. So the waters of the United States 
regulations, according to the map that has been delivered to 
me, would cover 96.7 percent of Iowa. We don't have an ocean, 
some say we don't have a beach; 96.7 percent of the state, and 
the balance of that is in the prairie pothole region that looks 
to me like they are already designated wetlands.
    So it could be that the Federal Government has reached out 
to put special regulations on nearly every square foot of my 
state. And there are some 50+ practices that are essentially 
approved by this proposal, but many of those practices have 
been developed in my lifetime. So new practices they would have 
to have permission for.
    And I just ask you if you could comment on the threat that 
this is to put the Federal Government in a position to control 
crop inputs, to control nitrogen, for example. If they can do 
that, they can control production, they can limit the value of 
your land, and that affects rural development. So I would ask 
if you could comment on waters of the United States.
    Ms. Mensah. Congressman, thank you for your clear passion 
for where wealth comes from, wealth from the land, and your 
passion for your producers.
    I do not have a role in the waters of the U.S. rule. But 
what I can tell you is that Rural Development has been standing 
by the small communities, the producers, the people that need 
broadband, that need housing, that need businesses, and that is 
really our role, and I look forward to seeing that continue.
    Mr. King. I would just ask you to couple that into your 
thinking because the well-being of the people in these 
communities is going to be directly tied to the profitability 
of the land that surrounds them.
    I appreciate your comments and your testimony.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    I want to thank our panel today for coming up and sharing 
with us. We appreciate your testimony and your candor. I 
appreciate what you do. The four of you supervise an important 
part of the farm bill and the work that it does, but rural 
America and production agriculture can't prosper without each 
other. So I appreciate the work you do and I appreciate this 
morning's testimony.
    [Recess.]
    The Chairman. Good morning. Welcome to our second panel.
    Before I introduce our panel, administrative business. 
Given the really strong showing of Members today, I want to ask 
unanimous consent that we take the questioning time to 4 
minutes instead of 5. We had hoped to have both panels done 
this morning by 12:30 so we would have time for the afternoon 
panel. So we will go to 4 minutes for questions for everybody. 
And rather than taking a formal lunch break, Members are 
advised that we have food in 1302, so come and go as you please 
to take care of that, and we will move on to the panel.
    I would now like to welcome our second panel. We have the 
Honorable Ed Avalos, Under Secretary, Marketing and Regulatory 
Programs, USDA; Mr. Alfred Almanza, Deputy Under Secretary for 
Food Safety, USDA; and then joining both Under Secretaries 
Avalos and Almanza, we have Ms. Anne Alonzo, Administrator, 
Agricultural Marketing Service; Mr. Kevin Shea, Administrator, 
Animal and Plant Health Inspection Service; and Mr. Larry 
Mitchell, Administrator, Grain Inspection, Packers and 
Stockyards Administration.
    Let me, again, thank the panel for coming this afternoon. I 
appreciate your patience with the morning panel which went a 
little longer. We are now ready for the report from you on the 
good work that you do. So, Mr. Avalos, if you would start us 
off, we will be good to go.

           STATEMENT OF HON. EDWARD M. AVALOS, UNDER
 SECRETARY, MARKETING AND REGULATORY PROGRAMS, U.S. DEPARTMENT 
   OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY ANNE L. 
 ALONZO, J.D., ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE, 
   USDA; KEVIN SHEA, ADMINISTRATOR, ANIMAL AND PLANT HEALTH 
 INSPECTION SERVICE, USDA; AND LARRY MITCHELL, ADMINISTRATOR, 
            GRAIN INSPECTION, PACKERS AND STOCKYARDS
                      ADMINISTRATION, USDA

    Mr. Avalos. Mr. Chairman and distinguished Members of this 
Committee, I am pleased to appear before you to discuss 
activities of U.S. Department of Agriculture Marketing and 
Regulatory Programs mission area, which includes the 
Agricultural Marketing Service, AMS, Animal and Plant Health 
Inspection Service, APHIS, and the Grain Inspection, Packers 
and Stockyards Administration, GIPSA.
    With me today are Mr. Kevin Shea, Administrator for APHIS; 
Ms. Anne Alonzo, Administrator for AMS; and Mr. Larry Mitchell, 
Administrator for GIPSA.
    Agriculture is an engine of growth and prosperity, directly 
or indirectly supporting 16 million jobs. MRP programs 
contribute significantly to the success and development of 
domestic and international markets in a variety of ways. Each 
of our agencies has unique responsibilities that are crucial to 
this work. Today, my colleagues and I are here to discuss some 
of these responsibilities and how we contribute to the success 
and profitability of American agriculture.
    APHIS' primary mission is to safeguard health and value of 
U.S. agriculture and other plant and animal resources. The 
agency's programs protect U.S. livestock, poultry, and 
specialty crops which are worth more than $191 billion. Also, 
they assure well-being of animals covered under the Animal 
Welfare Act. APHIS employees come to work every day across the 
country and around the world to serve the diverse array of 
customers and stakeholders and respond to challenges and 
threats as they arise, such as avian influenza. These customers 
include ranchers, farmers, poultry producers, licensed animal 
dealers, importers, exporters, and many, many others.
    While APHIS is engaged in this crucial work, the agency is 
also doing so much more with less. We have lost over $400 
million in appropriations over the last 4 years.
    One area where APHIS has made significant strides is with 
its biotech petition review process. In recent years, this 
process has taken more than 3 years for review, and preparation 
of evaluations necessary to make the decisions. Such delays 
added to a growing backlog of petitions. To address this 
situation, APHIS undertook a business process improvement 
review, which allowed APHIS to eliminate the backlog and to cut 
review times down to about 18 months. And in the near future 
when the process is fully implemented, the review time will be 
down to around 15 months.
    USDA and APHIS have been confronting the largest animal 
health emergency in this country's history. APHIS is dealing 
with an unprecedented outbreak of highly pathogenic avian 
influenza, taking a heavy toll on the poultry industry. Mr. 
Chairman and Members of this Committee, I can assure you, 
however, that this disease has USDA's fullest attention and we 
are committed to standing with our producers, poultry industry, 
and the rural communities to get them back on their feet.
    In Fiscal Year 2014, APHIS requested and received funding 
from Congress to initiate the National Feral Swine Damage 
Management program. These animals cause damage estimated at 
$1.5 billion every year and pose risks to agriculture, natural 
resources, property, animal health, human health and safety. 
APHIS is working to remove animals in 41 states, and together 
with our partners, APHIS established state-level management 
control plans that outline our management goals and objectives 
with regard to feral swine in each state. Depending on local 
conditions, these range from total elimination of feral swine 
populations to management of individual populations.
    We also appreciate Congress' support of the Huanglongbing, 
HLB, Multi-Agency Coordination group. With support from 
Congress, the HLB MAC has been able to approve $20 million in 
projects to put practical tools to work in the field now while 
longer-term solutions are being developed. MAC is working very 
hard in support of the citrus industry to fund near-term 
practical tools and solutions for the industry to use in 
combating citrus greening.
    APHIS has made significant progress in addressing a variety 
of other plant pests, including our successful work with the 
State of California to address and to keep the European 
grapevine moth from maintaining a foothold.
    I am also proud of the work that APHIS has done towards 
eradicating the boll weevils from the United States. Through 
the agency's work with state partners, the cotton industry and 
our counterparts in Mexico, APHIS has worked to eradicate boll 
weevils from over 99 percent of the 16 million acres of U.S. 
cotton.
    APHIS also used funding provided by the 2014 Farm Bill to 
continue to enhance plant health through two important 
programs--the Plant Pest and Disease Management and Disaster 
Prevention program and the National Clean Plant Network 
program. Since 2009, APHIS has funded more than 1,800 projects 
in 50 states and two U.S. territories.
    The ability to export is key to the growth, profitability, 
and continued success for our U.S. farmers, ranchers, and 
related agricultural businesses. For some crops, 50 percent or 
more of our production is exported, including 80 percent of 
U.S. cotton, 70 percent of tree nuts, 50 percent of wheat, and 
50 percent of rice. Agricultural exports were a record $152 
billion last year, and have climbed more than 58 percent in 
value since 2009.
    Last year, APHIS, in cooperation with other agencies, 
successfully negotiated and resolved a total of 170 sanitary 
and phytosanitary trade-related issues involving U.S. 
agricultural exports, with an estimated value of $2.5 billion. 
APHIS also successfully intervened in 273 situations where U.S. 
cargo was being held up in foreign ports of entry, which 
prevented and rejected shipments worth more than $49 million.
    The mission of AMS is to facilitate the efficient, fair 
marketing of U.S. agricultural products, including food, fiber, 
and specialty crops. AMS administers programs that create 
domestic and international marketing opportunities for U.S. 
producers. AMS also provides the agriculture industry with 
valuable services to ensure the quality and availability of 
wholesome food for consumers across the country.
    AMS carries a wide range of programs under the 
authorization of the Agricultural Marketing Act of 1946, as 
well as over 50 other statutes. More than \1/2\ of the funds 
needed to finance AMS activities are derived from voluntary 
user fees. AMS also provides services for private industry and 
state and Federal agencies on a reimbursable basis. In 
addition, AMS conducts several appropriated program activities 
through cooperative agreements with State Departments of 
Agriculture and other agencies.
    AMS employees work every day to support the country's 
diverse agricultural operations. The agency's workforce 
includes marketing specialists, commodity graders, economists, 
Market News reporters, scientists, and analysts who support the 
marketing of American agricultural products and work in 
industry-specific processing plants, terminal and shipping 
point markets, production facilities, and office environments. 
AMS provides services and awards millions of dollars in annual 
grant investments that create opportunities by supporting 
economic development in small towns and rural communities 
across the United States.
    Much of the agency's support for agriculture is provided 
through commodity-specific efforts, such as its dairy; food and 
vegetable; livestock, poultry and seed; and cotton and tobacco 
programs. AMS also oversees the National Organic Program; 
Science and Technology Program; and the Transportation and 
Marketing Program. Further, AMS provides oversight for 20 
research and promotion programs.
    I would like to provide a few examples of how AMS 
activities touch and benefit U.S. agricultural producers and 
consumers. One of the most widely used programs is Market News. 
This year marks the 100 year anniversary for AMS Market News, 
which provides agricultural stakeholders with information they 
need to evaluate market conditions and trends, to make 
marketing decisions, and to assess movement of products across 
the nation and across the world.
    Another key AMS activity is purchasing nonprice supported 
commodities, such as meats, fish, fruits, vegetables, poultry, 
and egg products in order to stabilize market conditions 
pursuant to Section 32 and in support of nutrition assistance 
programs within USDA.
    The AMS grant programs also play an important role in 
facilitating marketing, assisting states in exploring new 
market opportunities for U.S. food and agricultural products 
both locally and internationally.
    The Chairman. Mr. Avalos, you are a little past the 5 
minute mark. Do you want to go ahead and finish up?
    Mr. Avalos. Well, okay, Mr. Chairman. This was turned in, I 
guess the Members will read it?
    The Chairman. The written report, your written comments, 
will be in the record, of course. Any last couple thoughts?
    Mr. Avalos. Mr. Chairman, let me just say this: I want to 
thank you and the Committee for an invitation to be here. We 
stand ready to answer any questions you might have on the MRP 
mission area.
    [The prepared statement of Mr. Avalos follows:]

Prepared Statement of Hon. Edward M. Avalos, Under Secretary, Marketing 
 and Regulatory Programs, U.S. Department of Agriculture, Washington, 
                                  D.C.
    Mr. Chairman and distinguished Members of this Committee, I am 
pleased to appear before you to discuss the activities of the U.S. 
Department of Agriculture (USDA) Marketing and Regulatory Programs 
(MRP) mission area, including the Agricultural Marketing Service (AMS), 
the Animal and Plant Health Inspection Service (APHIS), and the Grain 
Inspection, Packers and Stockyards Administration (GIPSA).
    With me today are: Mr. Kevin Shea, Administrator of APHIS; Ms. Anne 
Alonzo, Administrator of AMS; and Mr. Larry Mitchell, Administrator of 
GIPSA. They will answer questions regarding specific agency activities.
    Agriculture is an engine of growth and prosperity, directly or 
indirectly supporting 16 million jobs. MRP programs have contributed 
significantly to the success as well as the development of domestic 
markets in a variety of ways. For example, both AMS and GIPSA certify 
the quality of agricultural commodities and provide industry with a 
competitive edge earned by the USDA seal of approval for grading and 
inspection. AMS also facilitates marketing by reporting essential 
market data, upholding strong organic standards, and supporting the 
ongoing growth of local and regional food systems. GIPSA works to help 
ensure that livestock producers have a fair and competitive market 
environment. APHIS also protects the health of plants and animals, 
enhancing the competitiveness of U.S. producers by keeping production 
and marketing costs low. All three agencies help resolve international 
issues to maintain and open markets around the world for U.S. products, 
thus supporting American families.
    As you can see, each of our agencies has unique responsibilities, 
and today my colleagues and I are here to and discuss the important 
work our agencies are engaged in and how the agencies contribute to the 
success of American agriculture.
APHIS
    APHIS' primary mission is to safeguard the health and value of U.S. 
agricultural and other plant and animal resources. The Agency's 
programs protect U.S. livestock, poultry, and specialty crops worth 
more than $191 billion (based on data from the 2012 Census of 
Agriculture), as well as the well-being of animals covered under the 
Animal Welfare Act. APHIS employees come to work, every day, across the 
country and around the world, to serve a diverse array of customers and 
stakeholders and respond to challenges and threats, such as Avian 
Influenza, as they arise. These customers include ranchers, farmers, 
poultry producers, citrus producers, licensed animal dealers, importers 
and exporters, and many others. While APHIS is engaged in this crucial 
work, the Agency is also doing more with less. APHIS has lost more than 
$400 million in appropriations over the last 4 years. This means there 
are 225 fewer staff for APHIS' veterinary services program from 2009 
levels at a time when it is facing the continuing threat of HPAI.
    Several core beliefs form the foundation of this mission. First, 
healthy and profitable agriculture is good for America; it provides 
food and clothing for countless people worldwide and is a key pillar to 
a thriving economy. Second, as a Federal agency, APHIS' role is to take 
actions that no one state or individual entity has the capacity to take 
on their own. And third, APHIS has a special role to carry out in 
caring for vulnerable animals.
Biotechnology
    One area where APHIS has made significant strides is with its 
biotechnology petition review process. In recent years, this process 
was taking more than 3 years for review and preparation of evaluations 
necessary to make regulatory decisions. Such delays added to a growing 
backlog of petitions. To address this situation, APHIS undertook a 
business process improvement review, has developed a process that when 
fully implemented will take 13 to 15 months for the review of petitions 
that do not require an environmental impact statement (EIS). The Agency 
is now nearly through the entire list of backlogged petitions and has 
reduced petition review times to an average of 18 months without 
compromising the quality of the analyses. The Agency expects to fully 
meet the new timeframes for new petitions received in FY 2015. For 
petitions that do require an environmental impact statement, additional 
resources are being devoted to these intensive analyses so they can be 
completed in a timely manner.
HPAI
    USDA and APHIS have been confronting the largest animal health 
emergency in this country's history. APHIS is dealing with an 
unprecedented outbreak of highly pathogenic avian influenza (HPAI) that 
is taking a heavy toll on the poultry industry. People have lost their 
jobs and have seen their livelihoods put in grave danger by this 
outbreak, and our hearts go out to them. I can assure you, however, 
that this disease has USDA's fullest attention, and we are committed to 
standing with our producers, the poultry industry, and the communities 
they live in and support, to get them back on their feet.
    USDA has been and will be there every step of the way with 
producers, industry, and our state partners. APHIS has worked closely 
with them to respond quickly and decisively to this outbreak. More than 
400 USDA staff and nearly 3,000 USDA-contracted personnel have been 
working around the clock in every affected state on the response. We've 
delivered over $190 million in indemnification payments to producers to 
control the spread of disease, and to help them recover from it. Should 
the need arise, we have the authority to request even further funding. 
All told, USDA has received around $1 billion in Commodity Credit 
Corporation (CCC) funding to address this outbreak. We've seen trade 
cut off by trading partners concerned about the devastating effects of 
this disease, causing over $1 billion in poultry products to be 
directed to other markets at a cost to producers. We understand the 
devastating impact this outbreak has had upon all, and we are committed 
to helping those affected. And we will help protect those producers who 
have not yet been--and we certainly hope, will not be--impacted by this 
disease.
    Despite the difficulties we've faced, we've had some good news. 
APHIS has not had a single detection of the disease since June 17, and 
of the 211 commercial premises affected, cleaning and disinfection has 
been completed on 178, and 133 are eligible to restock. The restocking 
guidelines that the Agency and the states have put in place provide 
assurance that the premises and the local environment are free from the 
disease, and that enhanced biosecurity measures are in place to reduce 
the threat of re-contamination.
    APHIS HPAI emergency response activities in the spring were largely 
based on existing emergency response plans the Agency and its partners 
developed prior to the outbreak. As the Agency began planning for the 
fall, it spent a lot of time meeting with states and industry to 
determine what worked and what needed to be improved so that the 
response for any potential fall outbreaks could be improved.
    In addition to weekly planning and information-sharing calls with 
state and industry partners through the spring and summer, USDA 
participated in several conferences and workshops to discuss these 
issues and plan for the fall. Two important workshops were held in 
Riverdale, Maryland and Des Moines, Iowa. Industry and Animal Health 
officials discussed worst case scenarios, and preparation efforts going 
into the fall season.
    Based upon those conversations and the lessons APHIS identified, 
the Agency prepared and presented to the Secretary a comprehensive and 
updated emergency response plan for the fall outbreak. The plan 
outlines steps the Agency and its partners will take, including 
enhancing biosecurity, increasing surveillance efforts, and improving 
efforts to identify and deploy personnel.
    Other actions that APHIS has identified or implemented as a result 
of our fall planning:

   Conducted a nationwide review of emergency resources to 
        identify state and local resources that could contribute to a 
        response and reduce response time.

   Emphasized the need for stronger biosecurity and worked with 
        states and industry to prepare additional materials to educate 
        producers.

   Prepared to deploy vaccines, including issuing a request for 
        proposals to stockpile vaccines and holding discussions with 
        trading partners about how USDA would use them.

   Increased wild bird surveillance with Federal and state 
        partners to more quickly identify where the virus may strike.

   Initiated the hiring process to bring additional 
        veterinarians and employees to USDA on a term basis to assist 
        with any potential outbreak.

   Worked with state partners to identify disposal options in 
        each state, such as landfills, to allow for more rapid 
        depopulation and disposal of sick birds.

   Set a goal to more rapidly depopulate sick birds, within 24 
        hours if possible, which will reduce the amount of virus in the 
        environment and help reduce potential lateral spread.

   Started work on developing a new virus elimination process 
        to more rapidly and cost-efficiently provide funding to 
        producers to remove the virus from their barns.

    APHIS has encouraged states to update their response plans, and has 
worked with them to identify depopulation and disposal options 
available in their states. APHIS has also begun an inventory of 
necessary depopulation and disposal equipment and will work to stage 
equipment in strategic areas.
Feral Swine
    In FY 2014, APHIS requested and received funding from Congress to 
initiate the National Feral Swine Damage Management program. These 
animals cause damage estimated at $1.5 billion annually and pose risks 
to agriculture, natural resources, property, animal health, and human 
health and safety. APHIS is working to remove animals in the 41 states, 
and with our partners, has established state-level management control 
plans that outline our management goals and objectives for each state. 
Depending on local conditions, these range from total elimination of 
feral swine populations to the management of individual populations.
Plant Protection Issues
    We also appreciate Congress' support of the Huanglongbing (HLB) 
Multi-Agency Coordination group (MAC). The MAC is working diligently 
with the citrus industry to find near-term practical tools and 
solutions for the industry to use in combating HLB. It has brought 
unprecedented coordination and cooperation across Federal and state 
agencies and industry in an effort to speed progress on methods to 
fight this disease. With support from Congress, the HLB MAC has been 
able to approve $20 million in HLB-related projects to put practical 
tools to work in the field now while longer term solutions are 
developed. Some of the tools being developed include delivering thermal 
therapy to citrus trees (to kill the bacteria that causes HLB) on a 
grove-size scale, increasing production of biological control agents to 
manage Asian citrus psyllid populations (which spreads HLB), and 
training detector dogs to find trees newly infected with HLB, among 
other exciting projects. In addition, in FY 2015, with Congress' 
support, APHIS was able to commit more than $48.5 million to Citrus 
Health Response Program activities with an emphasis on HLB and Asian 
citrus psyllid.
    APHIS also has made significant progress in addressing a variety of 
plant pests, including our very successful work with the State of 
California and industry to keep the European grapevine moth (EGVM) from 
establishing a foothold. APHIS detected more than 100,000 of these 
moths in FY 2009, the first year of the program. Last year, on track 
with expectations, APHIS found a single moth. It meant the Agency could 
free all of Solano County and portions of Sonoma and Napa counties from 
Federal quarantine in time for the fall grape harvest. Although we 
can't claim just yet that we've completely eradicated this pest, this 
progress is a tremendous win for all of us.
    I am also very proud of the work APHIS has done toward eradicating 
boll weevil from the United States. More than 30 years ago, you could 
find boll weevils in every cotton-producing state from Virginia to 
Texas. Through cooperative work with state partners, the cotton 
industry, and counterparts in Mexico, we have eradicated boll weevils 
from 99.5 percent of the 16 million acres of the U.S. cotton crop. In 
Fiscal Year 2014, the number of boll weevils captured decreased in the 
Lower Rio Grande Valley by more than 32 percent. This effort helped 
growers in the Valley have the option to plant 55,000 more acres of 
cotton than they did the previous year.
    APHIS has also used the funding provided by the Agricultural Act of 
2014 (2014 Farm Bill) to continue to enhance plant health through two 
important programs, Plant Pest and Disease Management and Disaster 
Prevention and the National Clean Plant Network (NCPN). Since 2009, 
APHIS has funded more than 1,800 projects in 50 states and two U.S. 
territories, strengthening the Agency's abilities to protect U.S. 
agriculture and natural resources from foreign pest threats. In support 
of the NCPN, which provides reliable sources of pathogen-free planting 
stock of high-value specialty crops, APHIS and cooperators have also 
provided funding and other support to 20 clean plant centers and 
associated programs in 16 states representing five specialty crops 
including fruit trees, grapes, citrus, berries, and hops.
Exports
    The ability to export is key to the growth, profitability, and 
continued success of U.S. farmers and ranchers and related agricultural 
businesses. For some crops, 50 percent or more of our production is 
exported, including 80 percent of U.S. cotton, 70 percent of tree nuts, 
and 50 percent of wheat and rice. Agricultural exports surpassed $152 
billion in FY 2014, and have climbed more than 58 percent in value 
since 2009, totaling $771.7 billion over the past 5 years. They have 
increased in volume as well as monetary value, demonstrating world-wide 
demand for high-quality U.S. grown products.
    APHIS plays a significant role in continuing to help U.S. farmers 
and ranchers access new markets. Last year, APHIS, in cooperation with 
other agencies, successfully negotiated and resolved a total of 170 
sanitary and phytosanitary (SPS) trade-related issues involving U.S. 
agricultural exports, with an estimated market value of $2.5 billion. 
This includes continuing efforts to eliminate all remaining bovine 
spongiform encephalopathy (BSE)-related restrictions on U.S. cattle and 
beef. In FY 2014, APHIS achieved success with several countries 
agreeing to remove all BSE restrictions and grant access to U.S. beef 
and beef products. These include major markets such as Mexico and Hong 
Kong, among others. APHIS also successfully intervened in 273 
situations where U.S. cargo was held up at foreign ports-of-entry, 
which prevented the rejection of shipments worth more than $49 million.
Animal Welfare
    APHIS' Animal Welfare program carries out activities designed to 
ensure the humane care and treatment of animals covered under the 
Animal Welfare Act (AWA) through inspections, enforcement, and 
education. The program ensures that proper care is provided for certain 
animals that are: exhibited to the public; bred for commercial sale; 
used in medical research; or transported commercially. Facilities using 
regulated animals for regulated purposes must provide their animals 
with adequate housing, sanitation, nutrition, water and veterinary 
care, and they must protect their animals from extreme weather and 
temperatures.
AMS
    The mission of AMS is to facilitate the efficient, fair marketing 
of U.S. agricultural products, including food, fiber, and specialty 
crops. AMS administers programs that create domestic and international 
marketing opportunities for U.S. producers. AMS also provides the 
agriculture industry with valuable services to ensure the quality and 
availability of wholesome food for consumers across the country.
    AMS carries out a wide range of programs under the authorization of 
the Agricultural Marketing Act of 1946, as well as over 50 other 
statutes. More than \1/2\ of the funds needed to finance AMS activities 
(excluding commodity purchase program funds) are derived from voluntary 
user fees. AMS also provides services for private industry and state-
Federal agencies on a reimbursable basis. In addition, AMS conducts 
several appropriated program activities through cooperative 
arrangements with State Departments of Agriculture and other agencies.
    AMS employees work every day to support the country's diverse 
agricultural operations. The Agency's workforce includes marketing 
specialists, commodity graders, economists, market news reporters, 
scientists, and analysts who support the marketing of American 
agricultural products and work in industry-specific processing plants, 
terminal and shipping point markets, production facilities, and office 
environments. AMS provides services and awards millions of dollars in 
annual grant investments that create opportunities by supporting 
economic development in small towns and rural communities across 
America.
    Much of the agency's support for agriculture is provided through 
commodity-specific efforts, such as its Dairy; Fruit and Vegetable; 
Livestock, Poultry and Seed; and Cotton and Tobacco Programs. AMS also 
oversees the National Organic Program; Science and Technology Program; 
and the Transportation and Marketing Program. Further, AMS provides 
oversight for over 20 research and promotion programs, also known as 
checkoffs, which are responsible for well-known advertising campaigns 
such as ``Got Milk'' and ``Beef: It's what's for dinner.'' In addition, 
AMS enforces other Federal regulations such as the Perishable 
Agricultural Commodities Act (PACA) and the Federal Seed Act.
    I would like to provide the Committee with a few examples of how 
AMS activities touch and benefit U.S. agricultural producers and 
consumers. One of our most widely used programs is Market News. This 
year marks 100 years of AMS' Market News which provides agricultural 
stakeholders with the information they need to evaluate market 
conditions and trends, make purchasing decisions, and assess movement 
of products across the nation and the globe. Every year, AMS issues 
more than 250,000 reports that get more than 53 million views. 
Agricultural stakeholders around the country rely on USDA Market News 
as a trusted source for timely, reliable, unbiased data.
    Market News is constantly evaluating the evolving needs of the 
agriculture industry to better serve our stakeholders. For example, AMS 
is increasing reporting on organic commodities and on locally and 
regionally marketed products in response to market demand. The Agency 
recently released an innovative, enhanced version of the Market News 
Portal with simplified navigation, giving users easier access to the 
wealth of timely and reliable data.
    Another key AMS activity is purchasing non-price supported 
commodities such as meats, fish, fruits, vegetables, poultry, and egg 
products in order to stabilize market conditions pursuant to Section 
32, and in support of nutrition assistance program needs within USDA. 
The 2002 and 2008 Farm Bills established minimum levels of specialty 
crop purchases. All purchased commodities are distributed by FNS to 
schools or to other domestic nutrition assistance programs. In 2014, 
AMS' Commodity Purchase Program purchased a total of over $1.5 billion 
worth of food from our nation's producers. These purchases support 
producers in rural America, while helping meet government nutrition 
goals.
    AMS grant programs also play an important role in facilitating 
marketing. The Federal-State Marketing Improvement Program (FSMIP) 
provides matching funds to states to assist in exploring new market 
opportunities for U.S. food and agricultural products, both locally and 
internationally. Recent FSMIP projects have supported efforts to 
bolster local and regional food systems through farmers' markets and 
community supported agriculture operations, while other projects have 
focused on building international markets for pine lumber, pork, and 
more.
    With the Specialty Crop Block Grant Program, AMS helps states 
strengthen markets for their specialty crops, such as fruits, 
vegetables, tree nuts, horticulture and nursery crops. In FY 2014, all 
50 states, the District of Columbia, and four U.S. Territories were 
awarded Specialty Crop Block Grants that funded a total of 839 
projects, totaling approximately $66 million. AMS expects to award 
approximately $63 million in FY 2015. These grants address issues 
ranging from food safety to research needs to increased access to 
fruits and vegetables, all benefiting specialty crop producers and 
consumers across the country. With additional funding from the 2014 
Farm Bill, we are able to do even more to help specialty crop growers 
increase profitability and sustainability.
    Farmers Market and Local Food Promotion Program grants are 
available annually to support local and regional food systems through 
two competitive programs: the Farmers Market Promotion Program (FMPP) 
and the Local Food Promotion Program (LFPP). FMPP grants fund farmer-
to-consumer direct marketing projects such as farmers' markets, 
community-supported agriculture programs, roadside stands, and 
agritourism. LFPP grants fund local and regional food business 
enterprises that serve as intermediaries to process, distribute, 
aggregate, and store locally or regionally produced food products. 
Projects also provide technical assistance and outreach, including 
planning grants for local food businesses. For Fiscal Year 2015, AMS 
expects to award over $27 million in competitive grants to expand 
marketing through these two programs.
    AMS, along with other USDA agencies, is helping producers tap into 
growing consumer demand for locally-grown food. According an Economic 
Research Service report, the value of local food sales, defined as the 
sale of food for human consumption through both direct-to-consumer 
(e.g., farmers' markets) and intermediated marketing channels (e.g., 
sales to institutions or regional distributors), topped $6 billion in 
2012. Secretary Vilsack has identified strengthening local and regional 
food systems as one of the four pillars of USDA's work to help 
revitalize the rural economy and create jobs. Recently, AMS launched a 
new set of Local Food Directories to help consumers find Community 
Supported Agriculture enterprises, food hubs, and on-farm stores, 
making it easier for consumers to find local food. AMS research and 
technical assistance contribute to our efforts to provide farmers and 
ranchers around the country with tools to reach consumers, strengthen 
ties between urban and rural communities, and help meet the growing 
demand for locally and regionally produced food.
    As demand for certified organic food products continues to grow, 
AMS plays a key role in setting and enforcing meaningful standards. In 
2014, AMS partnered with 13 organizations to develop tools that will 
identify and remove barriers to certification and streamline the 
certification process. The projects will be completed by September 
2015. Tools, resources, and technical assistance--including educational 
materials, training videos, and more--will be widely available to help 
farmers and businesses that are new to organic production. The 2014 
Farm Bill added additional resources to support organic certification, 
research, and market development. AMS quickly made organic 
certification cost-share funds available to help producers pay for the 
cost of certification, and we have already published a proposed rule to 
expand the organic exemption for producers paying into commodity 
checkoff programs.
    Within five of the twelve titles of the 2014 Farm Bill, there were 
nearly 30 provisions related to AMS. The agency has made great strides 
toward implementation including the timely awarding of grants, 
providing several reports to Congress, establishing the Unprocessed 
Fruit and Vegetable Pilot in eight states, and moving to a hearing on a 
proposed California Federal Milk Marketing Order.
GIPSA
    The core mission of GIPSA is to facilitate the marketing of 
livestock, poultry, meat, cereals, oilseeds, and related agricultural 
products, and promote fair and competitive trading practices for the 
overall benefit of consumers and American agriculture. GIPSA plays an 
integral role in ensuring the economic viability of America's farmers 
and livestock producers, and in turn, of rural America. GIPSA 
administers two programs that are very import to American agriculture: 
the Packers and Stockyards Program (P&SP) and the Federal Grain 
Inspection Service (FGIS).
Packers and Stockyards Program
    Under the Packers and Stockyards Act (P&S Act), GIPSA's P&SP 
regulates businesses that market livestock, poultry, and meat. Congress 
passed the P&S Act in 1921 to address serious concerns of unfair and 
deceptive practices in the meatpacking industry. Over the years, 
Congress has amended and supplemented the P&S Act to keep the Act 
relevant to the changing livestock, poultry and meat industries. For 
instance, in 1976, Congress added authority for the Secretary to assess 
civil penalties for violations. In 1987, Congress added financial 
protection for poultry producers, and as recently as 2008, Congress 
added the right of producers growing poultry or swine under contract to 
decline arbitration clauses in the contracts and established the forum 
for resolving disputes.
    Today, the P&S Act promotes fair and competitive marketing in 
livestock, poultry, and wholesale meat for the benefit of American 
agriculture and consumers. By fostering fair competition, the P&SP 
helps assure that meat and meat products are available to consumers at 
fair prices. Fair competition, payment protection, and prohibitions 
against deceptive and fraudulent trade practices in livestock markets 
assure producers that they will receive competitive prices and timely 
payment for livestock.
    The P&S Act provides specific protections for poultry growers and 
swine production contract growers including the right to cancel 
production contracts, the right to be informed of the possibility of 
additional capital investments, the right to resolve contract disputes 
in the Federal judicial district in which the principle part of the 
performance takes place under the contract, and the right to decline to 
be bound by the arbitration provision in a contract.
    The P&S Program investigative work is handled by three regional 
offices located in Atlanta, Georgia, Des Moines, Iowa, and Aurora, 
Colorado. The regional offices include a staff of auditors, marketing 
specialists, resident agents, economists, investigating attorneys, and 
legal specialists some of whom are assigned to the regional office and 
others whose duty stations are their personal residences. These 
employees conduct investigations and regulatory activities such as 
business audits, weighing verifications, and day-to-day industry 
monitoring. The P&SP Washington, D.C. staff provides litigation support 
through investigation review, sanction recommendation, hearing 
preparation, settlement negotiations, and testimony at hearings. The 
headquarters staff also processes and summarizes industry data and 
develops policy and information materials and drafts notices and 
regulations under the P&S Act.
    By protecting fair-trade practices, financial integrity, and 
competitive markets, GIPSA promotes marketplace fairness for livestock 
producers, buyers, sellers, swine contract growers, and poultry growers 
for the benefit of all market participants and American consumers.
    GIPSA maintains a toll-free hotline (800-998-3447) to receive 
complaints and other communications from livestock producers, poultry 
growers, and other members of the industry or general public. The 
hotline allows callers to voice their concerns or file a complaint 
anonymously. GIPSA responds to all calls received. In 2014, GIPSA 
initiated 86 investigations or reviews of livestock market operations 
in response to complaints. Although this was less than four percent of 
all investigations and reviews of market agencies that year, complaints 
from injured parties or the general public are important sources of 
information about fairness and financial integrity in the livestock 
sector.
Federal Grain Inspection Service
    FGIS facilitates the marketing of U.S. grain, oilseeds, and related 
agricultural products by providing official U.S. grading standards, as 
well as methods to assess product quality; maintaining the integrity of 
the marketing system by enforcing the U.S. Grain Standards Act (USGSA) 
and the Agricultural Marketing Act of 1946 (AMA); and administration 
and oversight of America's national grain inspection system, a network 
of third-party Federal, state, and private laboratories that provide 
impartial, user-fee funded official inspection and weighing services 
under the USGSA and the AMA. Grain standards established under the 
USGSA and AMA and maintained by FGIS are used to facilitate the 
marketing of approximately 301 million metric tons of grain, rice, and 
pulses for export around the world by the way of ships, trucks, rail, 
and containers worth approximately $50 billion. In 2014, there were 
more than 3.3 million inspections. This amounted to approximately one 
out of every four rows of corn raised in the U.S., one out of every two 
rows of soybeans and two out of every five truckloads of wheat.
    FGIS is recognized worldwide as the gold standard for grain 
inspection. From October 1, 2014, to July 31, 2015, FGIS grain 
inspection accuracy was 96.5% based on a review of 3,782 samples 
covering a total of 7,144 factors. FGIS resolves grain quality and 
weight discrepancies, by promoting domestic grain and commodity 
standards and marketing infrastructures in other countries. FGIS also 
assists importers in developing quality specifications and complements 
international trade by training foreign inspectors in U.S. inspection 
methods and procedures.
    During 2014, GIPSA personnel met with 49 teams from 32 nations. 
This year FGIS inspectors traveled to China to certify grain shipments, 
as well as Columbia and Algeria to conduct workshops on U.S. inspection 
methods for corn, soybean, and wheat. These activities foster a better 
understanding of the entire U.S. grain marketing system and enhance 
purchasers' confidence in U.S. grain. Ultimately, these efforts are 
instrumental in moving our nation's harvest to end-users around the 
globe.
Conclusion
    In closing, MRP supports the Department of Agriculture's key role 
in growing the rural economy and supporting producers and consumers 
across the nation. As Federal agencies tasked with regulating and 
facilitating the agricultural industry, MRP agencies must perform this 
work at the speed of commerce. To do this, AMS, APHIS, and GIPSA must 
have strong relationships and partnerships with state agencies, 
industry groups, universities, and other Federal agencies, among 
others. Further, we are constantly seeking new opportunities to 
leverage the capabilities of other USDA mission areas to meet the needs 
of producers and consumers.
    In addition, I would like to take this opportunity to thank 
Chairman Conaway, Ranking Member Peterson, and the Members of this 
Committee and their staff for their leadership in the efforts to 
reauthorize the U.S. Grain Standards Act and the Mandatory Price 
Reporting Act. We are grateful for the Committee's efforts and look 
forward to the completion of this important work before September 30, 
2015.
    Mr. Chairman and Members of this Committee, this concludes my 
statement. Thank you for the opportunity today and I look forward to 
continuing to work with you. At this time, my colleagues and I will be 
glad to answer any questions you may have regarding the MRP mission 
area.

    The Chairman. Mr. Almanza, 5 minutes.

          STATEMENT OF ALFRED V. ALMANZA, DEPUTY UNDER
           SECRETARY, FOOD SAFETY, U.S. DEPARTMENT OF
                 AGRICULTURE, WASHINGTON, D.C.*
---------------------------------------------------------------------------

    * Editor's note: the Administrators listed as accompanying Mr. 
Avalos are also accompanying Mr. Almanza. To avoid duplication they are 
not printed here.
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    Mr. Almanza. Thank you. Mr. Chairman, Ranking Member 
Peterson, and Members of the Committee, I am the Deputy Under 
Secretary for Food Safety at the United States Department of 
Agriculture, and I would like to thank you for the opportunity 
to come before you here today to discuss our food safety 
mission. To start, I would like to thank you, Chairman Conaway, 
for joining me on the plant tour this past year, and I would 
also like to extend the invitation to any of you to accompany 
me on a tour in the future. A plant tour is really the best way 
to see what our inspectors do on the line and what they are 
doing on a daily basis to protect the public's health. I look 
forward to continue working with Representatives Rouzer and 
Davis, as well as all Members of the Agriculture Committee.
    Sometimes it is easy to forget that the meat on your plate 
has undergone a thorough process of inspection and testing to 
ensure that you don't get sick, but if you are one of the 
millions of Americans who consume meat, poultry, or processed 
egg products, your food is inspected every single day by the 
dedicated man and women of FSIS who are present in all these 
plants throughout the county.
    Additionally, FSIS administers a labeling program to 
protect consumers from misbranded and economically adulterated 
meat, poultry, and processed egg products. We are modernizing 
the way we do things, and carcass-by-carcass inspection remains 
a cornerstone of our work. Our system of inspection is the most 
reliable in the world, and I take great pride in the inspection 
process after having begun my own career nearly 40 years ago as 
a line inspector in Dalhart, Texas.
    Today, billions of pounds of meat, poultry, and liquid egg 
products are produced, transported and sold every year. A 
system of this magnitude requires constant vigilance to prevent 
the possibility of foodborne contamination. FSIS is legally 
required to have inspectors present across the country in every 
plant that processes meat, poultry, and processed egg products. 
The agency employs approximately 9,000 employees, and 80 
percent of them work in establishments across the nation. FSIS 
cooperates with 27 states to develop and administer state meat 
and poultry inspection programs that implement food safety 
requirements that are at least equal to Federal requirements at 
over 1,600 small and very small establishments.
    During Fiscal Year 2014, FSIS personnel inspected almost 
150 billion head of livestock, nine billion poultry carcasses, 
and over 3 billion pounds of processed egg products. Last year, 
FSIS conducted nearly seven million food safety and defense 
procedures. Some highlights of our achievements this year 
include the implementation of our new poultry inspection 
system, which will prevent an estimated 5,000 illnesses each 
year. We also launched stronger performance measures to reduce 
pathogens like Salmonella and Campylobacter in poultry 
products, which could prevent an estimated 50,000 illnesses 
annually. In addition, we announced a best practices guidance 
for controlling Listeria monocytogenes in retail delis to help 
prevent cross contamination in deli counters.
    We spend much of our time educating the millions of 
Americans who consume our products every single day. Over the 
past year, we have partnered with the Ad Council on public 
service announcements, conducted outreach to at-risk and under-
served populations, and developed our own Smart Phone 
application, the FoodKeeper App, in conjunction with Cornell 
University and the Food Marketing Institute. As we move 
forward, our focus on modernization also has us looking at ways 
to modernize pork and beef slaughter.
    Our focus on science will increase our use of whole-genome 
sequencing, sampling, and the use of new performance standards 
to address Salmonella in chicken parts and comminuted poultry. 
We are closely coordinating with other Federal agencies, like 
the Food and Drug Administration and the Centers for Disease 
Control to discover sources of illnesses more quickly and to 
respond more effectively during recalls and outbreaks.
    In Fiscal Year 2015, we developed harmonized attribution 
estimates for Salmonella, E. coli O157:H7, Listeria 
monocytogenes, and Campylobacter for major food categories.
    Improved estimates of foodborne illness source attribution 
can inform efforts to prioritize food safety initiatives, 
interventions, and policies for reducing illness outbreaks. 
These types of collaborative efforts help FSIS work with our 
partner agencies to ensure that food safety is better informed, 
better targeted, and more effective. As a public health agency 
committed to achieving excellence, FSIS continuously tracks 
performance, modernizes methodology, and applies science-based 
approaches to the work that we do.
    I began my career at FSIS as a line inspector, and I know 
firsthand the hard work that these dedicated men and women 
perform every day to ensure that we have the safest food supply 
in the world. It is because of this work that millions of 
Americans can sit down at their table and enjoy safe, wholesome 
meals every day.
    Thank you for your support, and I hope you will soon join 
me in a plant tour to see what FSIS is doing to protect the 
American food supply. Thank you.
    [The prepared statement of Mr. Almanza follows:]

 Prepared Statement of Alfred V. Almanza, Deputy Under Secretary, Food 
        Safety, U.S. Department of Agriculture, Washington, D.C.
Introduction
    Mr. Chairman, Ranking Member Peterson, and Members of the 
Committee, my name is Al Almanza, Deputy Under Secretary for Food 
Safety at the U.S. Department of Agriculture (USDA). Thank you for the 
opportunity to come before you today to discuss the Food Safety and 
Inspection Service, our mission, and our people.
Who We Are
    FSIS is the public health agency in the U.S. Department of 
Agriculture (USDA) responsible for ensuring that the nation's 
commercial supply of meat, poultry, and processed egg products, whether 
domestic or imported, is safe, wholesome, and correctly labeled and 
packaged. FSIS inspection personnel inspect each and every livestock 
and poultry carcass before it can enter commerce, and Agency inspectors 
inspect every processing plant at least once per shift. No meat or 
poultry product can enter commerce unless we can find that it is not 
adulterated and apply our mark of inspection. In addition, FSIS 
approves the labels of meat, poultry, and egg products and ensures that 
they are truthful, not misleading, and contain the requisite 
information. We also take action should misbranded or economically 
adulterated products manage to enter commerce.
    After publication in 1906 of Upton Sinclair's The Jungle, which 
described in detail the unsanitary working conditions in a Chicago 
meatpacking house, Congress passed legislation providing for the 
inspection of meat. Ultimately, this legislation became the Federal 
Meat Inspection Act (FMIA). Subsequently, Congress passed the Poultry 
Products Inspection Act (PPIA), the Humane Methods of Slaughter Act 
(HMSA), and the Egg Products Inspection Act, all of which the Food 
Safety and Inspection Service (FSIS) enforces.
What We Do
    As stated above, FSIS is mandated to have inspectors present in 
virtually every meat, poultry, and processed egg products plant in the 
country. To meet this obligation, as of September 30, 2014, the Agency 
employed 8,676 permanent full-time employees, including 625 in the 
Washington, D.C. area, and 8,051 in the field. These employees work in 
approximately 6,426 federally regulated establishments, three FSIS 
laboratories, 127 ports-of-entry, and 150,000 in-commerce facilities 
nationwide. During FY 2014, FSIS personnel inspected about 148 million 
head of livestock, nine billion poultry carcasses, and about 3.2 
billion pounds of processed egg products. In FY 2014, FSIS conducted 
6.84 million food safety and defense procedures and condemned over 465 
million pounds of poultry and more than 205,000 head of livestock 
during postmortem (post-slaughter) inspection.
Federal Inspection of Exports and Imports
    FSIS regulates all imported meat, poultry, and processed egg 
products intended for use as human food. Before FSIS-regulated products 
can enter the country, the Agency determines whether the food safety 
regulatory system of any country that wishes to export to the U.S. is 
equivalent to that of the U.S. Once FSIS finds a foreign country's 
system for meat, poultry, or egg products to be equivalent, FSIS 
inspects eligible products from that country at U.S. ports-of-entry.
    The Agency evaluates an exporting country's food safety system on 
an ongoing basis. Each year, FSIS reviews any changes in the foreign 
country's food safety system. In addition, FSIS may conduct an in-
country audit of the system and will review the country's performance 
in port-of-entry inspections. Based on these reviews, the Agency 
decides whether the country is maintaining equivalence, or whether 
additional action by FSIS is warranted. This performance-based approach 
allows FSIS to direct its resources to foreign food regulatory systems 
that potentially pose a risk to public health and makes its 
international program more consistent with its domestic inspection 
system. Finally, it improves the linkage between port-of-entry re-
inspection and on-site audits.
State Inspection
    FSIS also assesses the safety of state-inspected meat and poultry 
products through agreements with State Departments of Agriculture. FSIS 
works with 27 states to develop and administer state meat and poultry 
inspection (MPI) programs that implement food safety requirements that 
are ``at least equal to'' Federal requirements at more than 1,600 small 
and very small establishments. These establishments can only ship or 
sell products within their respective states. State MPI programs must 
ensure that livestock are treated humanely by imposing humane handling 
requirements that are ``at least equal to'' those FSIS has established 
under the Humane Methods of Slaughter Act of 1978.
    In 2014, FSIS completed comprehensive reviews of the meat or 
poultry inspections programs of Kansas, Missouri, Minnesota, North 
Dakota, Wisconsin, and Wyoming. The Agency also obtained self-
assessment reviews of the other 21 MPI programs.
    FSIS also cooperates with four states--Ohio, North Dakota, 
Wisconsin, and Indiana--to operate a fairly new interstate shipment 
program, as provided for in the 2008 Farm Bill. This approach 
eliminates barriers and allows small state-inspected businesses to 
expand their customer base and explore new markets, by making these 
establishments eligible to ship meat and poultry products in interstate 
commerce.
Assistance to Small Plants
    With more than 90 percent of the 6,000 FSIS inspected plants 
considered small or very small operations, FSIS has a Small Plant Help 
Desk that serves to assist plant owners and operators with questions. 
Many of these questions involve technical expertise, information, and 
providing advice on FSIS regulations and policies. During FY 2014, the 
Small Plant Help Desk received and responded to 2,042 inquiries in 
person, over the phone, and via e-mail. In addition, FSIS publishes 
Compliance Guides that help small plants comply with new or modified 
FSIS regulations.
Strategic Planning for Accountability
    Every 5 years, FSIS adopts a new Strategic Plan that sets out the 
Agency's goals and initiatives. The FSIS Strategic Plan is the 
foundation for both the long range and day-to-day operations of the 
Agency.
    A main driver of the Strategic Plan is the desire for the Agency to 
continue to be an ever more trusted and successful public health 
agency--an Agency that adapts to the changing nature of food safety 
risks. Outlined in the Agency's current strategic plan are three themes 
and eight goals within those themes. The themes are ``Prevent Foodborne 
Illness,'' ``Understand and Influence the Farm-to-Table Continuum,'' 
and ``Empower People and Strengthen Infrastructure.''
    Each year, FSIS also develops an Annual Performance Plan that sets 
out three or four key results that each of the Agency's ten offices 
intends to accomplish to advance the Strategic Plan. At the end of each 
year, we publish a report that sets out how well we did in achieving 
key results.
    We are now operating under our third Annual Performance Plan (APP) 
under the FY 2011-2016 Strategic Plan, and we have already begun 
drafting the Strategic Plan for FY 2017-2021. The APP provides the 
American public and FSIS employees with a clear list of Agency 
priorities and a detailed roadmap of the steps we intend to take to 
achieve our goals. It provides an operational plan that we are 
following in order to steer the Agency as we work to prevent foodborne 
illness and protect public health. It is traceable and transparent, so 
that we can be accountable to the Congress and the American public.
    A major theme of our current Strategic Plan is Cultural 
Transformation. Cultural Transformation is a commitment to work in 
collaboration with USDA on civil rights and equal employment 
opportunities (EEO), embrace a respectful and diverse workforce, and 
strive for a highly effective, collaborative work environment. FSIS 
fosters an inclusive workforce by recruiting and hiring skilled 
applicants that reflect America's diversity. FSIS eliminates barriers 
to equal employment and allows employees to advance based on merit.
    Managers and supervisors lead by example to ensure that the work 
environment is free from discrimination, hostility, intimidation, 
reprisal, and harassment.
    In developing the 2017-2021 Plan, we are involving not only our 
headquarters leadership but employees in a range of positions across 
the Agency. In addition, we have consulted with external stakeholders 
so that we have broad input to guide our progress forward.
Modernization
    A key theme for FSIS is modernization. Inspection changed from a 
sight, smell, and touch approach to a more science-based method when 
FSIS implemented its Hazard Analysis and Critical Control Points 
(HACCP) regulations between January 1997 and January 2000. Our 
inspection is supported by sampling programs such as testing ready-to-
eat meat and poultry products for Listeria monocytogenes, testing for 
Salmonella and Campylobacter in raw poultry, and testing for seven 
serogroups of pathogenic E. coli (including E. coli O157:H7) in non-
intact raw beef, and by performance standards to assess how well plants 
are controlling these hazards.
    FSIS also has recently adopted its New Poultry Inspection System 
regulations, which focuses the efforts of FSIS inspection personnel on 
food safety much more than has previously been the case. FSIS is also 
considering changes to how it does inspection in hog and cattle 
slaughter plants.
Consumer Outreach
    To keep the public safe, we spend much of our time conducting 
outreach and educational awareness efforts to the millions of Americans 
who consume our products every single day.
    Just as FSIS is focusing on modernizing our inspection techniques, 
we also are modernizing the way we communicate with our consumers. We 
recently celebrated the 30 year anniversary of the USDA's Meat and 
Poultry Hotline, which enables consumers to ask questions or report 
incidents of foodborne illness. The Hotline receives more than 80,000 
calls each year and helps prevent foodborne illness by answering 
questions about the safe storage, handling and preparation of meat, 
poultry, and processed egg products.
    The Food Safety Education Staff (FSES) has had some great successes 
in consumer food safety outreach throughout FY 2015 thus far. Some of 
these initiatives include: partnering with the Ad Council, partnerships 
for reaching at-risk groups, Hispanic outreach, social media, and our 
new smartphone application, the Foodkeeper App.
FY 2014-2015 Accomplishments
    As I stated previously, FSIS's main goal is to protect the public 
health and reduce foodborne illness. Thus, it is a significant 
indication of our success that the All-Illness Measure that we have 
created, which combines the number of illnesses attributable to meat, 
poultry, or egg products caused by Salmonella, E. coli O157:H7, and 
Listeria, showed a reduction of about 41,000 estimated illnesses 
between FY 2013 and FY 2014, from 427,171 in FY 2013 to 386,265 in FY 
2014. Further, in FY 2014, FSIS ``met'' or ``exceeded'' 81 percent of 
our annual performance measures.

    Our successes have continued in FY 2015. Here are just a few of our 
accomplishments:

   Began the implementation of the New Poultry Inspection 
        System after the release of the final rule;

   Asked for public comment on performance measures to reduce 
        Salmonella and Campylobacter in chicken parts and comminuted 
        poultry. These new standards could help prevent an estimated 
        50,000 illnesses annually;

   Issued a best practices guideline for retailers to help them 
        to protect public health by decreasing the potential for 
        Listeria monocytogenes contamination;

   Completed an economic analysis for expanding the testing for 
        non-O157 STEC in ground beef and components other than trim;

   Continued to implement the Public Health Information System 
        (PHIS) by increasing plant connectivity and enhancing 
        information sharing capabilities, thus aligning our efforts to 
        modernize food safety through technological enhancements;

   Strengthened humane handling in plants;

   Developed new in-plant activities, such as the new Food 
        Safety Assessment (FSA) methodology;

   Issued a proposed rule on non-ambulatory disabled veal 
        calves, which, if adopted, would require that veal calves that 
        are unable to rise at the time of ante-mortem inspection be 
        euthanized. Under the proposed rule, all non-ambulatory 
        disabled veal calves that are brought to slaughter will be 
        promptly and humanely euthanized, and prohibited from entering 
        the food supply; and

   Finalized the proposed mechanically tenderized beef rule 
        that makes it easier for consumers to understand what they are 
        buying at supermarkets, and what steps they must take in the 
        kitchen to keep their families safe.
Looking Forward
    As we move forward, our focus on modernization also has us looking 
at ways to modernize inspection, improve our web-based Public Health 
Inspection System (PHIS), improve our system for ensuring the safety of 
imports, and improve the traceability of products as they move to the 
consumer. As mandated by Congress, FSIS is responsible for the 
regulation of Siluriformes and Siluriformes products. As soon as the 
rule is final, we will begin taking steps to implement this inspection 
program. Our focus on science will increase our use of whole-genome 
sequencing, increased sampling, and the use of new performance 
standards to address Salmonella in chicken parts and comminuted 
poultry. We will be ensuring that plants properly validate their HACCP 
plans, and we intend to improve how our inspection personnel verify how 
sanitary dressing is done, to minimize the possibility that 
contamination will occur during the slaughter process. With regard to 
illness investigations, we are also coordinating closely with other 
Federal agencies, like the FDA and the CDC. Increased communication 
with our partner agencies makes FSIS more effective and improves our 
responses during recalls and outbreaks. In 2011, we created the 
Interagency Food Safety Analytics Collaboration (IFSAC), which brings 
together senior leaders and technical experts on food safety 
attribution from CDC, FDA, and FSIS to improve coordination of Federal 
food safety analytic efforts and address cross-cutting priorities for 
food safety data collection, analysis and use.
    In FY 2015, one of IFSAC's major successes was developing 
harmonized attribution estimates for Salmonella, E. coli O157, Listeria 
monocytogenes, and Campylobacter for major food categories and hosting 
a public meeting, with over 200 people in attendance in-person and 
online, to share those findings.
    These improved estimates of foodborne illness source attribution 
can inform efforts to prioritize food safety initiatives, 
interventions, and policies for reducing foodborne illnesses. These 
types of collaborative efforts help FSIS work with our partner agencies 
to ensure that food safety is better informed, better targeted, and 
more effective.
Conclusion
    These are some of the ways we are holding ourselves accountable for 
achieving positive results and outcomes on critical food safety issues. 
We continuously track performance, modernize, and apply science in 
developing our approach to the problems we face.
    I began my career at FSIS as a line inspector. I know first-hand 
the hard work that the dedicated men and women who make up FSIS's 
inspection force perform every day to ensure that we have the safest 
food supply in the world. It is because of this work that millions of 
Americans can sit down at the table and enjoy safe, wholesome meals 
each day. Thank you for your support for our vital work as a public 
health agency.

    The Chairman. Thank you, gentlemen. I appreciate both of 
your testimonies. Mr. Avalos, I was privileged to see your 
feral swine program at work in central Texas. We had a great 
example of the state agency and your agency working together to 
provide that service. And we had landowners who were the 
beneficiaries of having the feral swine taken care of. 
Obviously, you have some landowners in central Texas who 
provide hunting opportunities, but you also have other 
landowners that the feral swine is a nuisance and a pest and a 
predator, so I appreciate the good work that you are doing 
there. Mr. Almanza, thank you also for your tour at the packing 
plant in San Angelo, and the work that went in that day to get 
you down there and have you join me with the good work there. 
You let me actually see your inspectors doing their job. I 
don't think you had set up the carcasses to go through at the 
appropriate place so there wouldn't be anything wrong; but your 
guys looked like they were taking care of business.
    Recently, we had a Consumer Reports article out that ground 
beef contains harmful bacteria, and that 18 percent contains 
bacteria resistant to more than three classes of antibiotics. 
The report claimed that the numbers are far less if they are 
from a sustainable beef, whatever that means. Could you give me 
your take on that consumer report and what it means to 
consumers?
    Mr. Almanza. Yes, sir. The recent Consumer Reports study 
was what I would say an unfortunate article that serves to 
scare consumers. The most deadly pathogens that FSIS routinely 
tests for were not found in the report sampling. Rather, the 
study focused on generic bacteria. The Consumer Reports article 
confirmed that there were no Shiga toxin producing E. coli 
STECs present in the ground beef samples; and so these STEC 
strains have been declared adulterants by FSIS because they can 
cause severe illness. So we believe that the article overlooks 
many requirements and achievements that FSIS and USDA 
inspection and testing programs for meat products right now.
    The Chairman. I appreciate that. Mr. Avalos, you mentioned 
significant budget cuts to your team. Can you help the 
Committee understand what the impact has been on your ability 
to do what you are doing?
    Mr. Avalos. Mr. Chairman, most of the cuts that were made 
to my mission area were at APHIS. And what we did was to look 
for ways to do as much work, in many cases, more work, with 
less money; and we looked for efficiencies, and Administrator 
Shea and his team did a really good job in finding ways to be 
more efficient and do the same job, in many cases more work 
with less money.
    So I am going to ask Administrator Kevin Shea to expand on 
my response.
    Mr. Shea. Thank you, Mr. Under Secretary. We did several 
things. As Mr. Avalos said, first, we looked for efficiencies. 
Second, we looked for programs that were no longer as effective 
or we could not be as effective at as we would like to be. For 
example, we were spending a lot of money or the Emerald Ash 
Borer, a significant forest pest, but we simply lacked the 
tools to have great success against it; so we reduced spending 
in that kind of program.
    The most damaging thing was we did have to leave over 800 
positions unfilled, so we lost over ten percent of our 
workforce; and that does mean that it is more difficult for us 
to respond quickly when we have a new pest or disease outbreak. 
It means it is more difficult for us to have full surveillance 
around the country so we can find these outbreaks faster, and 
simply, more difficult to carry out all of our activities.
    But as Mr. Avalos said, people pitched in, did more, and 
the people who were left behind continue to work hard.
    The Chairman. Thank you for that. The first couple things 
you did, about finding efficiencies and looking for programs 
that may have outlived their usefulness, I wouldn't call those 
damaging. I would say those are appropriate for every 
organization to go through. But helping policymakers understand 
the other side of that where you are having shortfalls that 
might affect health and safety would be helpful. So I 
appreciate your work.
    Mr. Peterson, for 4 minutes.
    Mr. Peterson. Thank you, Mr. Chairman, and I thank the 
panel for being here. I have been to the plants and seen your 
people in action. You are right. They do a great job. I want to 
focus in the little bit of time I have on this avian influenza 
which hit my district more than anyplace in the U.S. First of 
all, I might say APHIS, by and large, did a pretty good job 
given what we were dealing with, but there were problems, and I 
am sure you know that, in the process.
    So now, one of the things I am hearing from my egg layers 
is that you have been responsive to some of these requests on 
the changes in the indemnification formula, but there are still 
some unanswered questions about what goes into the formula. I 
just met with some of them yesterday. Is USDA going to release 
that formula so that everyone is on the same page about what it 
covers and what it doesn't? Is that going to be released so we 
can see it? Mr. Shea?
    Mr. Shea. Absolutely, Mr. Peterson. We will be happy to 
post on our website and release anything that has to do with 
any of the formulas----
    Mr. Peterson. That hasn't been done yet, or haven't you 
finalized it?
    Mr. Shea. Well, I would say this: We do adjust the 
indemnity formula as market conditions change, because the 
indemnity intends to pay fair market value. Fair market value 
can change, but the basic formula remains pretty much the same. 
And to the extent that is not well known, we will make it 
better.
    Mr. Peterson. Yes. And then the part of it that has to do 
with paying for the depopulation and cleaning and all of that 
stuff, there are some issues with that. And it seems like that 
is kind of a moving target. Has that been finalized, or is that 
still a work in progress?
    Mr. Shea. That is still somewhat a work in progress. We 
appreciate what people are saying. What we want to do is move 
toward a standard formula for compensation for cleaning and 
disinfection.
    Mr. Peterson. What I am hearing is there a lot of 
bureaucracy as there was in this current situation, people 
wanting to go to some sort of simplified method, where it is 
maybe so much a square foot, so much a bird or something and 
then to have people being able to compete for that business, 
and maybe letting the people themselves do the work as opposed 
to bringing in all these contractors, which might have spread 
the disease. Are you working on that?
    Mr. Shea. Absolutely. We think that is a great idea, and we 
want to move toward that kind of formula. Indeed, in many 
cases, the owners themselves are in the best shape to do the 
work, and, additionally, it helps keeps their workers employed, 
who otherwise may not continue being employed, and also local 
folks.
    Mr. Peterson. Where are you in that process? Are you 
anyplace to be able to come out and start talking about that or 
putting out information on how you are going to do this?
    Mr. Shea. We are not quite there yet because we want to 
make sure that we have tabulated what all the costs were so far 
this year, so we can get this formula correct. As I mentioned 
earlier, there are kind of two different formulas here, one for 
indemnity for the birds themselves and then one for this work. 
And this is the work that we still need a little bit more 
information to complete, but it is coming very, very soon.
    Mr. Peterson. We are going to probably ask you to come up 
and talk to us about some questions that have been raised 
there. One last thing. On the depopulation, I appreciate your 
goal of 24 hours. I think the sooner you can depopulate, the 
sooner you stop the virus. As soon as the birds are dead, as I 
understood it the virus does not continue. I think in turkeys 
it is one thing, but when you get into these layer operations, 
I don't know how in the world you are going to kill or 
depopulate those in 24 hours, unless you shut off the 
ventilation, which has not been supported, and I guess the AVMA 
doesn't support it. So where is that whole process at?
    Mr. Shea. If, indeed, we see another large outbreak like we 
did, and, of course, we hope we don't, but if we do, we are 
going to have to look at all the tools available and make those 
decisions at the time. But everything needs to be on the table, 
but we still need to look through all the possibilities.
    Mr. Peterson. So you haven't made any--everything will be 
open then as you go forward?
    Mr. Shea. I think we will be reaching very final decisions 
very, very shortly. Literally in a matter of days as opposed to 
weeks, we hope to have the final touches on our fall planning 
that will address all the various depopulation options.
    Mr. Peterson. Thank you, and, again, thanks to the USDA. 
You guys have really stepped up to the plate, and our people 
appreciate it.
    The Chairman. The gentleman's time has expired. I recognize 
Mr. Neugebauer, for 4 minutes.
    Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Shea, last 
fall, 27 Members of the Texas Congressional Delegation wrote to 
GAO expressing concern about the transparency of APHIS' site 
reviews in their decision to allow fresh meat from the regions 
of north Argentina and Brazil with historical risk for foot-
and-mouth disease that had been recognized. Specifically, we 
asked the GAO to open a review of the methodology and the 
management controls used when APHIS conducted their site visits 
to determine animal health information. And thankfully, the GAO 
agreed to do that. I wondered if you could kind of give us an 
update on the progress that has been made in the GAO review?
    Mr. Shea. Mr. Congressman, I am not aware that the GAO has 
directly contacted us yet to start the specifics of the review, 
but we are certainly very prepared and happy to cooperate with 
them as soon as they do.
    Mr. Neugebauer. Can you kind of walk us through the process 
of why this review is in question, because a lot of people were 
concerned about where we had a presence of foot-and-mouth 
disease in that region, that the decision was made to allow us 
to import that.
    Mr. Shea. I understand why there is a lot of concern. Foot-
and-mouth disease, of course, is probably the biggest concern 
for livestock industry in the United States; and, indeed, there 
have been cases of foot-and-mouth disease in Brazil and 
Argentina in the past, but there haven't been any since 2006, 
and we did several site visits. We reviewed all the literature. 
We looked at their veterinary infrastructure, and proposed a 
rule that would be just like the one we have applied to 
Uruguay, which would require that there be inspection before 
and after slaughter, that the animals be deboned, and that the 
lymph nodes be removed, and that the pH level is moved to a 
level where foot-and-mouth disease can't exist.
    These are the same kind of mitigations that the European 
Union uses, the same ones that OIE uses, and they have not 
found any movement of foot-and-mouth disease from countries 
where they apply these mitigations.
    But all that said, I understand the concerns because foot-
and-mouth disease is, indeed, our number one livestock concern, 
so I can understand why people wanted to know more about it, 
and, again, we certainly welcome GAO to look at it.
    Mr. Neugebauer. So you have not been contacted by GAO about 
beginning this process?
    Mr. Shea. I am not aware that we have been, no.
    Mr. Neugebauer. Can you double check with your folks and 
get back to us on that?
    Mr. Shea. I will be very happy to do that.
    Mr. Neugebauer [presiding.] I will yield back my time and 
now recognize the gentleman from Virginia, Mr. Goodlatte, for 4 
minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman, and I want to 
welcome this panel as well. Under Secretary Avalos, as USDA 
marketing orders fall under your authority, I am sure you are 
aware how very different our dairy and specialty crop markets 
are today than they were in 1937 when the Agricultural 
Marketing Agreement Act was passed. As evidenced by the recent 
Horne case in which the Supreme Court ruled against USDA and 
aspects of the Raisin Marketing Order, farmers are increasingly 
doubtful about the utility of these antiquated programs.
    I am sure that marketing orders will gain even more 
scrutiny now that the USDA is in the midst of considering 
California's bid for a Federal Milk Marketing Order. Therefore, 
considering that the California dairy industry represents 20 
percent of all U.S. milk production, it is obvious that 
California's entry into the Federal system will deeply impact 
dairy markets nationwide. Can you give us a summary of the 
impact of such an Order on the rest of the country, and have 
you taken steps to analyze the impact of everyday consumers?
    Mr. Avalos. Congressman, I am very much aware of the 
proposal, the request for marketing order from California. 
There is another marketing order that we are working on at this 
time, that is a U.S. Pecan Marketing Order. We received a 
proposal last month. So anyway, marketing orders are still 
ongoing, two marketing orders in progress right now to create a 
marketing order. As far as implications from the Horne case, I 
am going to ask our Administrator Alonzo to answer your 
question.
    Ms. Alonzo. Good morning, Mr. Congressman. Yes, in June, 
the U.S. Supreme Court decided against USDA in the Horne case, 
regarding personal property, taking without just compensation. 
But we believe that the Supreme Court's decision in Horne 
addresses a very narrow situation where under the Raisin 
Marketing Order, the government, through an administrative 
committee, takes title to a crop held in reserve and may 
physically appropriate that crop. The decision, we believe, 
does not address other types of volume controls or reserve 
programs. There is no other administrative committee currently, 
physically appropriating or taking title to the agricultural 
product, so we believe that this is a very narrow reading, and 
it is applicable to this case and not to other marketing 
orders.
    Mr. Goodlatte. And would one of you answer my question, 
which was, can you give us a summary of the impact that such an 
Order, meaning the California Dairy Marketing Order, will have 
on the rest of the country? And have you taken steps to analyze 
the impact on everyday consumers?
    Ms. Alonzo. Yes. California--in fact, next week, well, the 
2014 Farm Bill allowed California producers to request a 
Federal Milk Marketing Order. And next week, September 22, 
there is going to be a hearing in Clovis, California to 
consider the establishment of a California Federal Milk 
Marketing Order. The hearing is going to take a few weeks. We 
have received proposals, and we have economic analyses from 
some of those proposals; but the hearing that is expected to 
take several weeks is going to be very important and pertinent 
to our ability to go forward. And so we don't have a concrete 
analysis, but based upon----
    Mr. Goodlatte. Let me interrupt you because my time is 
expiring. Mr. Chairman, if I might ask one more question as 
follow-up. After the Supreme Court issued the Horne decision, 
the USDA amended general regulations for Federal fruit, 
vegetable, and specialty crop marketing agreements and 
marketing orders to accentuate that antitrust laws do apply to 
these marketing order programs. Could you explain why the 
Federal Milk Marketing Orders were not covered under this same 
final rule?
    Ms. Alonzo. Can we get back to you on that because I don't 
quite think----
    Mr. Goodlatte. Pretty glaring if you change the marketing 
orders in several other areas, fruit, vegetable, specialty 
crops, but you don't change it from milk, there has to be a 
reason why milk was left out.
    Ms. Alonzo. We haven't completed the California. We are 
just going to a hearing.
    Mr. Goodlatte. We are talking about something different 
than California now. We are talking about all Federal Milk 
Marketing Orders.
    Ms. Alonzo. Can we respond to you on the record later on 
about that?
    Mr. Goodlatte. When will you be able to do that by?
    Mr. Avalos. We can do it today.
    Mr. Goodlatte. That would be fine.
    Mr. Neugebauer. I thank the gentleman. I want to apologize 
to the gentleman from Nebraska. I didn't see him sitting down 
there in that hole position, and I skipped over him, and I 
apologize. You are now recognized for 4 minutes.
    Mr. Ashford. I am fairly low down here. Thank you, Mr. Vice 
Chairman. I just want to move a little bit away from where we 
are in the question and talk a little bit about what is 
important to us in Omaha, which is an urban area obviously. My 
district is urban, but we are in a very ag state. We had the 
conversation with Mr. Mitchell earlier, having been to Nebraska 
many times.
    Administrator Alonzo, you were there as well, and I want 
you to know, personally, how much I appreciate your efforts on 
the panel, what a significant event that was. We talked about 
the Know Your Farmer, Know Your Food Initiative. It is very 
important to our city that our population be, first of all, 
exposed to products from the farm obviously, both because it is 
good for the young people to understand their state, but most 
importantly, on the nutrition side. Where do you see this 
initiative going, and obviously the demand and interest in 
Omaha, Nebraska is significant. Could you just generally 
describe how you see this happening, being rolled out? Where it 
is going?
    Ms. Alonzo. Sure. And congratulations to you, Congressman 
Ashford, for your leadership in putting together that 
conference, which was probably the first of its kind. Many of 
our agencies at USDA participated, NRCS, the FSA, RD, and AMS; 
and so we thought it was so well attended and so well done and 
really underscoring just how important this sector is and how 
it is growing. According to industry estimates in 2014, local 
food sales topped $11.7 billion. People, as you know, and this 
was discussed during the conference, want to know where their 
food is coming from. They want to know their farmers. They want 
to keep money in their local communities. They want to create 
jobs and access to healthy foods, and in the case of Omaha, how 
do you bridge the rural and urban communities?
    And at the Department, and as we mentioned at the 
conference that day, Secretary Vilsack from the Department is 
very aware of this interest and its growing dynamic. We 
identified this area as one of the four pillars of the work 
that we are doing to revitalize the rural economy. You 
mentioned the Know Your Farmer, Know Your Food Initiative, and 
that is the coordinating tool that we use at the Department by 
which we all work at.
    And in the past 6 years, in fact, under this initiative, we 
have invested more than $800 million in more than 29,100 local 
businesses in the last 6 years as mentioned. I think where we 
are going is that we are trying to be even more responsive to 
the needs of the marketplace. We recently had the Farmers' 
Market Week, and throughout the nation, many states were 
celebrating Farmers' Market Week. We have about 8,500 farmers' 
markets now in the U.S., and it continues to grow. There is 
also other business models that are opening up, community-
supported agriculture, food hubs, and so we are going to 
continue within our auspices to support this. My agency is part 
of the Know Your Farmer, Know Your Food group, and what we do 
is primarily in the area of technical assistance. Last year, we 
fielded something like 2,000 calls and requests for help. We 
also, via the farm bill, were supported with many grants, 
several grants, one of them called the Farmers' Market and 
Local Food Promotion Program, of which I know many of Members 
here, their constituents have taken advantage of.
    Also the specialty crop block grants also focusing a lot on 
local and regional foods, and these are block grants to the 
states that the State Departments of Agriculture work with. We 
just announced this week, or last week, a multi-state project 
across states, $3 million; and these are competitive grants, 
the State Departments of Agriculture to work on a lot of these 
issues in terms of local.
    We are also doing all that we can to put resources 
together. A lot of folks don't know where to go for their 
farmers' market or their food hubs, so we have direct----
    Mr. Ashford. I think my time has expired.
    Ms. Alonzo. I get very passionate.
    Mr. Ashford. No. Just, also thank Eleanor Starmer as well 
for coming out. Thank you, Mr. Vice Chairman.
    Mr. Neugebauer. I thank the gentleman, and now the 
gentleman from Georgia, Mr. Scott, is recognized for 4 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and 
ma'am and gentlemen, thank you for being here today. Mr. 
Peterson asked about the potential for insurance for poultry 
growers. I, too, am concerned about the growers of poultry, so 
that is a bipartisan issue and I look forward to a review of 
those answers. I want to ask about something that has been 
brought up before, the pecan order. We have a tremendous number 
of pecan growers in my area. When I had cows, I paid a dollar 
every time we sold one into the beef industry and certainly 
thought that was money well spent as a cattleman. And I 
understand the hearings are complete on the Pecan Marketing 
Order, and what is the status of the proposal for pecans, and 
when do you estimate we will see the next action on this issue?
    Mr. Avalos. Congressman, being from New Mexico, also a 
major pecan-producing state, and having so many friends in the 
pecan industry, not only New Mexico, but in Texas, and now, I 
have quite a few friends in your State of Georgia, it is 
absolutely amazing that we took these growers, who at one time 
actually didn't get along, seeing them work together, seeing 
them work towards a marketing order for the benefit of the U.S. 
pecan industry, not for Georgia, not for New Mexico, not for 
Texas, but for the U.S. pecan industry, is absolutely 
incredible.
    So anyway, three hearings were held, one in New Mexico, one 
in Texas, and one in Georgia. Tremendous attendance; received 
tremendous input from the industry. So now we are in the 
assessment stage, and I am not sure what the next steps are 
exactly, but I am going to ask Administrator Anne Alonzo to 
expand, but I just wanted to emphasize that if this marketing 
order, if it is voted on and goes through, will be a landmark 
accomplishment for the pecan industry, and it is all about 
obtaining market share and staying on top of the nut industry 
in the world.
    So I will turn it over to Ms. Alonzo.
    Ms. Alonzo. Thank you, Under Secretary. Yes, a proposal was 
submitted on behalf of the pecan industry by the American Pecan 
Board, and so as mentioned, we had three hearings this summer; 
and the next steps, that based on the hearing record, and the 
briefs that we have received, we are going to move forward in 
the formal rulemaking process, which includes a recommended 
decision, a public comment period, a Secretary's decision, a 
grower referendum, and a handler sign-up. And so those are the 
next steps in the process for the Pecan Marketing Order.
    Mr. Austin Scott of Georgia. Thank you for that. I know one 
other thing that would very much help that industry is if we 
were able to get the trade barriers with India removed. 
Certainly a tremendous market there, and anything that the 
people in your agency can do to help in removing those trade 
barriers, I would certainly appreciate.
    With that, Mr. Chairman. I will yield back the remaining 35 
seconds.
    The Chairman [presiding.] The gentleman yields back. Mr. 
Crawford, 4 minutes.
    Mr. Crawford. Thank you, Mr. Chairman. Thank you 
Secretaries and Administrators. Mr. Shea, from what I 
understand, APHIS is coming close to finalizing an SPS 
agreement with China for the import of U.S. rice. Throughout 
the process there have been some hang-ups on protocols like 
trapping, labeling, and segregation and varieties, but it seems 
like these issues have slowly been resolved. Can you give us an 
update on how this process is moving along and shed some light 
on how China is generally, when it comes to adhering to SPS 
protocols? I know they have a tendency to kind of move the goal 
posts, and I just want to get your assessment.
    Mr. Shea. Congressman, as you said we are very, very close. 
I think we have been working with them and they have been 
working with us in good faith on this particular issue. And we 
are very close. We had hoped to have been there already, but we 
are not. Things move slowly in negotiations with the Chinese as 
always, but we think we are very, very close to an agreement, 
but not quite there yet.
    Mr. Crawford. Thank you. Mr. Almanza, we met with 
Ambassador Froman last week to discuss the status of TPP 
negotiations, and I asked him why USTR has been intervening 
with OMB to hold up on issuing the final catfish inspection 
program rules. His response was that they were worried about 
making sure the rules are consistent with WTO protocols, and 
they want to make sure it is implemented without any objections 
from our trading partners, but what is confusing to me in this 
whole debate is don't these new rules follow the same 
equivalency standards as we have for chicken, livestock, and 
poultry in general? So why would a system we have had in place 
for decades cause a trade dispute?
    Mr. Almanza. I would say it is because we have never 
inspected catfish, so that is probably a nuance there, but, 
yes, the equivalence process for other countries remains the 
same as with any other products that are imported through FSIS.
    Mr. Crawford. Did Ambassador Froman or staff at FSIS work 
with you during the development of the catfish inspection 
program so you could arrive at a product that is acceptable to 
everyone?
    Mr. Almanza. Yes.
    Mr. Crawford. And if so, I don't understand what the 
concerns are on the back end.
    Mr. Almanza. There are a number of issues that we have gone 
back and forth with them on, which is typical for a proposed 
rule, and this one, like I said, has a little bit of an added 
nuance in that it is going to be a totally different type of 
inspection protocol than we have ever had for catfish; and so 
meat, poultry, processed eggs, and catfish, catfish is just a 
different species that we have never done, and that is part of 
it.
    Mr. Crawford. Okay. Early on, I--I am going to shift gears 
a little bit here--I supported original, proposed new poultry 
inspection system rules which changed the role of food safety 
inspectors and increased line speeds. We have a few pilot 
plants in my district, and poultry companies there reported 
tremendous success on all fronts. I was disappointed when the 
rules were finalized that only food safety protocols were 
changed while the line speeds were not permitted.
    So a couple of problems there, incentive for plans to move 
the new inspection models impaired because they don't have the 
opportunity to increase production speeds; and if the incentive 
isn't there, we are not making important steps toward improved 
food safety. It seems like a lose-lose. Can you report to the 
Committee in terms of how many plants have begun participating 
in the new model, and do you see any way to get back to the 
original proposed line speed?
    Mr. Almanza. So we currently have 49 plants that have 
expressed an interest to opt in, which includes the original 20 
that we had under what was a HIMP models project. So those 
plants are able to maintain the line speed which we thought was 
going to go along with this rule at 175 birds per minute. But 
what we are looking at is the food safety value, and to me 
right now, companies, for the first time, we are having them 
address Salmonella and Campylobacter control and required to do 
their own testing, which we hadn't done before. So that is a 
public health food safety advantage.
    The other side of it, we believe, that with time, we will 
see what the plants that are opting in develop data as to how 
they are performing, and then we will look down at the future 
and see how that measures up to the plants that are running at 
175 and see if there is any difference.
    Mr. Crawford. Thank you. I yield back.
    The Chairman. The gentleman yields back. Mr. Yoho, for 5 
minutes.
    Mr. Yoho. Thank you, Mr. Chairman. I appreciate the panel 
being here. Mr. Shea, when you started off with talking about 
the decreased number of inspectors as dangerous in general, but 
especially in the face of an outbreak; and we in Florida with 
our Florida orange juice here--I hope this is not our last 
crop--with citrus greening and now with the Asian oriental 
fruit fly, I am sure you are aware of the damage it has done.
    Adam Putnam, our Commissioner of Agriculture, has called a 
state of emergency for our state. And if that gets up in the 
Miami area, we are looking at a $1.6 billion economic impact, 
and we appreciate the research and work that you guys have 
done. Knowing that, and you had brought up about the foot-and-
mouth disease, how they haven't had an outbreak in South 
America since 2006, knowing the difficulty we have of exporting 
cattle that have been exposed to blue tongue, or the threat of 
BSE going into other countries and we know the economic impact 
and the danger that foot-and-mouth disease could have here in 
America with all cloven livestock, it is estimated to be 
between $150 to $250 billion is what I have heard, different 
estimates.
    When I look at the benefit of importing beef from any 
country that has had that or they are using a modified live 
vaccine, I would like to hear your thoughts on that. And then 
also another question is, and I want to commend the USDA and 
APHIS in the Plum Island Research for coming up with a leader 
list of foot-and-mouth disease vaccine. It is cutting edge 
technology. Being such a safe vaccine, will that be rolled over 
in production in the United States and have a provisional 
release on that where they can manufacture it here in the 
private-sector?
    Mr. Shea. I will take the second part first. Our colleagues 
in the Agricultural Research Service did, indeed, come up with 
a new vaccine that we are now working with them on to see how 
it can be tested and whether or not it can be produced in the 
mainland in mass quantities. We are certainly not at that point 
yet. We can't even bring a vaccine onto the mainland without 
special approval from the Secretary, so we are still working 
through that process; and indeed, foot-and-mouth disease, of 
course, is also a select agent, so we have to work through our 
select agent regulation.
    Mr. Yoho. How long have we been waiting on that approval?
    Mr. Shea. We are just now getting to that point. So that 
has great promise, and you are absolutely right. We would be 
better off having more FMD vaccine available and more kinds 
available, and so we are certainly going to be working with our 
colleagues in ARS to pursue that.
    As to your first question about the beef from Argentina and 
Brazil, I understand that importing some beef from Brazil or 
Argentina might have limited impact, or limited benefit to the 
U.S., but we in APHIS see it somewhat differently. We need to 
do rules like this so we can have credibility going around the 
world to, as you say, get our beef into other countries. So if 
we want other countries to treat us the same way, we need to 
apply the same kinds of principles.
    Of course, we believe, with foot-and-mouth disease, it is a 
special threat. I understand that completely, and that is why 
before we would let beef in from Argentina or Brazil, the 14 
states of Brazil, we have all those mitigations required that I 
mentioned earlier. So that is our thinking of why we think it 
is appropriate to do it while still understanding your very 
valid point.
    Mr. Yoho. I know the Administration is trying to allow that 
beef to come into this country, but before the rules and all 
the studies have been done, I would hope that APHIS would stand 
strong to protect the domestic beef population so we don't have 
that threat. I yield back. I am out of time. I look forward to 
talking to you down the road.
    The Chairman. The gentleman yields back. Mr. Rick Allen, 4 
minutes.
    Mr. Allen. Thank you, Mr. Chairman. I thank the panel for 
your testimony here this morning. And just thinking about the 
process, dealing with everything that you have to deal with, I 
know our state commissions, their budget is about a little 
north of $51 million, and particularly dealing with the avian 
flu and some other things, and realizing that we are all 
stretched budget-wise, has there been any attempt at overall 
collaboration? I know the states are sensitive to Federal 
intrusion, and I understand that as far as, particularly from a 
regulatory process. But it looks like when we have a situation, 
say in Iowa, in Minnesota, it looks like it ought to be kind of 
all hands on deck across the country, because eventually we are 
going to all possibly be affected by that.
    And I hear from our farmers' and our producers often about 
the regulatory environment and kind of what the, okay, yes, and 
we appreciate your help very much, but there always seems to be 
a price to pay for that.
    Have you all thought about some overall, and I will ask 
both the Under Secretaries, any overall collaboration across 
the country when we have these events, whether it be foot-and-
mouth disease or avian flu or whatever and say all hands on 
deck; we need to deal with this problem?
    Mr. Avalos. Congressman, we actually have quite a bit of 
cooperation working together with our stakeholders throughout 
the country. For example, at APHIS, vet services, we have 
cooperative agreements for most of our diseases, for different 
pests, with the states, animal disease traceability. We 
implemented a national program where we have complete 
cooperation nationwide with the states, and a lot of the 
funding that the states receive, they received from USDA.
    So some of this is already ongoing. I understand what you 
are saying absolutely because I know that state budgets are 
tight, and when a major outbreak like, in this case, high-path 
avian influenza; in other cases we had Asian long-horned 
beetle; we had European grapevine moth, and we can go on and 
on. So we do look for ways to be more efficient, look for ways 
to work with our stakeholders across the country.
    Another example, we mentioned the feral swine program. We 
received money from Congress, Federal money, but it is not 100 
percent Federal program. Every state is a stakeholder, and 
every state puts money into this, and the private-sector puts 
money into this, so some of this is ongoing.
    Mr. Allen. Right. Certainly it is a big country. We have 
tremendous resources. Obviously, the poultry industry is the 
largest industry. I mean, Georgia is number one in that 
industry. We have tremendous. We have a poultry research center 
there at the University of Georgia. And I would think across 
this nation, including USDA, we would have the resources 
available to deal with these matters, even when you are, as you 
say, stretched. I certainly think that collaboration in all 
instances is very important. I would also like a quick update 
on the, Administrator Shea, on the various aspects of the high-
path avian influenza.
    The Chairman. Mr. Allen.
    Mr. Allen. Timed out?
    The Chairman. Yes. We will do a second round if you need 
to. Mr. Thompson, for 4 minutes.
    Mr. Thompson. Mr. Chairman, thank you. Thanks to all the 
Secretaries, Administrators, for your service, for being here 
today. I wanted to, Administrator Shea, APHIS has made some 
very firm commitments about how long it takes to make 
regulatory decisions for biotechnology products, which 
obviously are very important. This is something this Committee 
has worked on. My question is pretty straightforward. Are you 
meeting those goals? Can you talk about the process a little 
bit?
    Mr. Shea. Yes, we are absolutely making the goals. We had 
23 deregulation decisions pending 3 years ago. Twenty of those 
23 have been made. Since that time, 11 more deregulation 
requests came in. We have completed seven of those and expect 
to complete three more of those within the next month. So there 
are only seven pending decisions right now, and that should be 
down to four within a few days. So we made some tremendous 
improvement there.
    I think one thing we simply did was, something that a lot 
of folks kind of miss, in processes, that there are a lot of 
internal deadlines; and you have to enforce each internal 
deadline with all the various people that have to approve 
something, and just by doing that, we made great progress. We 
also are focusing on novel or new kinds of technologies that we 
are looking at so that we can take our prior analysis and 
decision-making on more standardized biotechnology and make 
those decisions more quickly. So we are really doing very, very 
well with this.
    Mr. Thompson. Thank you very much. Mr. Secretary, you 
recently proposed very stringent, new performance standards for 
ground turkey and chicken products. Do you think the industry 
as a whole can even be able to meet those new standards, and 
are you certain that their implementation will result in 
quantifiable benefits to American consumers that will 
ultimately outweigh the cost to both the industry and the 
consumers?
    Mr. Almanza. Yes, we do believe that they would be able to 
meet those standards. I think they have made significant 
strides since we have been talking about this, and we proposed, 
they understand about more stringent performance standards that 
we are going to have. We do believe that they will be able to 
meet them ultimately. They have met them before, and we do 
believe that there is going to be a quantifiable advantage to 
the American consumer just based on some of the problems that 
we have had in the past with those products.
    Mr. Thompson. So you will be able to measure, and at some 
point, share with us, the cost-benefit analysis of the cost of 
implementing the regulations versus the benefits?
    Mr. Almanza. Certainly we can provide that to you if you 
would like that.
    Mr. Thompson. Sure. I think that is important any time we 
are looking at regulation.
    Mr. Almanza. Absolutely.
    Mr. Thompson. I appreciate what you are doing. 
Administrator Mitchell, at times, livestock market owners have 
been told by GIPSA they may not exclude people from their 
places of business. When can a livestock market exclude someone 
for financial reasons, and how can they go about it?
    Mr. Mitchell. Well, we expect markets to admit all willing 
sellers and buyers. The exception helps to ensure livestock 
producers who cosign livestock will have the widest possible 
pool of potential buyers. Further, the United States Supreme 
Court held that the Packers and Stockyards Act makes stockyard 
market agencies public utilities with a duty to serve all 
impartially and without discrimination.
    At the same time, the Act makes the responsibility of every 
stockyard owner to prescribe rules and regulations to require 
those persons engaging in the purchase, sale, or solicitation 
of livestock, to conduct their operations in a manner, which 
will foster, preserve, and ensure an efficient, comprehensive 
public market. GIPSA expects market agencies to take those 
reasonable steps to assure that those who bid on livestock have 
the financial ability to pay for the livestock and to assure 
that the market personnel and market participants behave 
appropriately.
    Occasionally, a market may find it necessary to exclude a 
buyer because the individual has failed to pay for livestock. 
Even less frequently, a market may determine that a market 
participant's presence is disruptive to the conduct of business 
and act to exclude that individual. GIPSA has not addressed the 
statutory requirements through regulations. Rather, the agency 
has relied on the livestock markets to conduct their business 
fairly and with professionalism. In the rare instances where a 
problem arises, GIPSA would investigate a complaint that an 
individual has been unlawfully excluded from market and 
determine whether the actions of the market violate the Act.
    Mr. Thompson. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. Kelly, 
for 4 minutes.
    Mr. Kelly. Deputy Under Secretary Almanza, I just want to 
follow. I share the sentiments from the gentleman from Arkansas 
as to the catfish. What other meats are not inspected that 
either come in or don't have similar inspection patterns that 
come into the United States that we export?
    Mr. Almanza. What other?
    Mr. Kelly. Meat. There is for poultry. There is for beef. 
What other meat, other than catfish, is not inspected that we 
export that does not have a dual inspection role, either going 
in or coming out?
    Mr. Almanza. Right. The only thing that FSIS is responsible 
for is meat, poultry, and processed eggs. Everything else is 
basically inspected by FDA.
    Mr. Kelly. Okay. And this is for Administrator Shea. While 
high-pathogen avian influenza hasn't affected the southeastern 
United States of which Mississippi and several other states are 
there, our poultry producers and resources are doing all they 
can to prepare. What lessons have you learned at APHIS about 
the spring's avian influenza outbreak that will make it better, 
make you better able to respond to that when and if it hits the 
Southeast?
    Mr. Shea. First, of course, we know there needs to be 
better biosecurity. Biosecurity in poultry farms is really 
good, but not good enough for this kind of outbreak, so we need 
to step that up. That is the lesson. But once an outbreak does 
occur, we have learned a lot of lessons. First, we need to 
depopulate the sick and exposed birds as quickly as possible; 
two, we need to compensate those owners quickly so they can get 
back on the road to recovery, get back into business; we need 
to very quickly determine how to dispose of the carcasses. That 
was something that was a cause of delay before. We need to know 
whether we are going to compost them in the hothouse, compost 
them in the field, bury them, incinerate them, or take them to 
a landfill; but we need to make that decision very, very 
quickly. In the Southeast with lots of broilers, composting in 
the house would probably work well; but we need to make that 
decision on a case-by-case basis.
    I know in Georgia, they would prefer to not do that, so we 
need to work with everyone on that. We also know we need 
consistency on how we are going to clean and disinfect each 
facility once we are done.
    Mr. Kelly. Mr. Under Secretary, I am not sure who to 
address this question to, but one of the issues I had come up 
while I was back home in district, was between the grower and 
the owner of broilers, a lot of times the grower does not have 
insurance or cannot get insurance and it goes to the owner of 
the broilers, not to the grower. Are there any provisions, or 
has USDA, or has anyone looked at how do we take care of the 
grower who not only loses his crop that he doesn't get paid 
for, but also is not capable of growing crops in the future or 
for a long time?
    Mr. Avalos. Congressman, that question has come up before 
in conversation, and I do not have an answer for you but 
Administrator Shea can explain the process to you.
    Mr. Shea. It is kind of ironic, but for low-pathogenic 
regulations, we do require that the grower gets some of the 
compensation; and we do not have that in our current 
regulations for highly-pathogenic avian influenza, but we are 
looking to correct that.
    Mr. Kelly. Thank you both for your answer. Mr. Chairman, 
thank you again for allowing me, and thank the panel, and I 
yield back the balance of my time.
    The Chairman. The gentleman yields back. Mr. DesJarlais, 4 
minutes.
    Mr. DesJarlais. Thank you, Mr. Chairman. Mr. Shea, you and 
I have talked a few times by letter and otherwise regarding the 
walking horse industry, and I wanted to speak with you a little 
bit today. I sent you a letter on August 10, and you were very 
gracious to give me a response by August 20, and I appreciate 
that. I have had a lot of calls from constituents over concerns 
about the objectivity in the inspection process on the walking 
horses, and the numbers grew to the point that I decided to 
hold a town hall during the week of the celebration in 
Shelbyville. They had set aside a room for 450 people which 
ended up overflowing and had to be moved into an arena, and we 
had over 1,100 people in attendance. And I don't think in 5 
years I have ever had that many people turn out for a town 
hall, so it is important that we talk a little bit about it.
    What is your current opinion about the state of the walking 
horse industry; is it improving and does it have a right to 
exist in its current form?
    Mr. Shea. It certainly has a right to exist in its current 
form. And we certainly believe that the industry can exist 
without soring. And, indeed, despite the understandable 
controversy at the celebration, nearly nine out of ten horses 
passed inspection. So it is, indeed, possible to train a horse, 
to compete in the celebration and other Tennessee walking horse 
shows without soring. So we believe that certainly the industry 
is in better shape than it was many years ago when soring was 
openly blatant. That is not the case now, I don't think.
    Mr. DesJarlais. Okay. And I was just looking at some 
numbers and there were VMOs and DQPs at 39 shows through the 
first 8 months of the year. And over 4,300 horses were 
inspected and there was a turndown rate of about one percent. 
So I would say that is pretty good, wouldn't you?
    Mr. Shea. I am not sure that I can concur with those 
statistics. I believe that the disqualification rate was 
somewhat higher than that. But it is----
    Mr. DesJarlais. With the celebration, I agree. The 
celebration is kind the Super Bowl of horse shows. So it is 
kind of in the NFL--they play all the games all year long to 
get to the Super Bowl so people can come and watch the best 
athletes, if you will. But at the celebration this year there 
was about 1,200 horses inspected--or 2,000 horses. No, 1,200 
entries and there was about a ten percent turndown rate.
    How can you explain one percent through 8 months of August, 
same horses, same inspectors, same BMOs, and then they get to 
the big Super Bowl of shows and it jumps tenfold?
    Mr. Shea. There are any number of reasons why it can 
increase.
    For one, scarring and soring can take place throughout the 
entire year. And by the time the horses get to the celebration, 
the soring and the scar caused by the soring is more apparent 
and easier to see, is one thing.
    Second, because the stakes are so high at the celebration, 
our experience is that, perhaps, owners and trainers are more 
willing to try to get a sored horse through inspection than 
they might at a lower stake show.
    Mr. DesJarlais. It seems like they would know that there 
would be more people watching there, so I don't necessarily 
agree with that. Do you think that a biopsy is an appropriate 
objective form of testing for scarring? Let's say a horse gets 
turned down for scarring and a biopsy is performed and it shows 
no scaring, would that be insignificant to you?
    Mr. Shea. Well, certainly, if a biopsy were to prove that, 
it would be something we should look at.
    Mr. DesJarlais. Okay. Is thermography capable of detecting 
scarring?
    Mr. Shea. Thermography does not detect a scar, but it 
indicates where a scar may be.
    Mr. DesJarlais. Okay. Now, like if there were 200 horses, 
or whatever I said, turned down, 126 were turned down, how many 
of these are followed up on an issued citations? The whole 
Horse Protection Act is to get rid of bad actors, and I think 
it should be and I think that is great. How many are followed 
up on and issued citations?
    Mr. Shea. We either issue a citation or issue a warning 
letter to all of them. But because there are so many, we simply 
can't follow through and file a Federal case against literally 
each and every one.
    Mr. DesJarlais. Okay. I thank you for your time. Mine has 
expired, but I hope we can visit some more about this later.
    Mr. Shea. I would be happy to.
    The Chairman. The gentleman's time has expired.
    Mr. Abraham, for 4 minutes.
    Mr. Abraham. Thank you, Mr. Chairman. And I thank the panel 
for being here. I actually think you men and women are an 
integral part of our national security because food safety is 
utmost on all of our minds, and certainly a place where our 
enemies could do us harm if they so choose. So thanks for doing 
a good job on that.
    I will address my question to you, Secretary Almanza. I am 
both a veterinarian and a human physician, so the use, or lack 
of use, of antibiotics in our food chain is somewhat important 
to me, and I will hit it from two questions real quickly.
    On the veterinary side, I understand the withdrawal times, 
but the use or the lack of use of antibiotics in the feedlots 
in our poultry farms, have there been studies or what's the 
discussion on y'alls level as to animal welfare and mortality 
morbidity as far as use and lack of use of antibiotics and 
that? And on the human side, you mention in your opening 
statement several food pathogens: E. coli, Salmonella, 
Listeria, and Campylobacter. Those we know about.
    Any studies or discussions, again, at your level, as far as 
whether antibiotic use or lack of use does promote resistance?
    Mr. Almanza. That is primarily at FDA, what I would say is 
in their bailiwick for setting standards. I will tell you that 
we are very active in testing for residues. If we have 
veterinarians in each of our slaughter plants, in addition to 
food inspectors as well, but at any time if we see any 
injection sites, anything that appears to be abnormal, we 
certainly test those animals to see whether they have any 
residues, that they haven't met any withdrawal times and things 
of that nature.
    Now, we also work very closely with FDA and with CDC, as 
well, to look at the prevalence of these types of issues and 
concerns certainly in the biosecurity arena as well.
    Mr. Abraham. Thank you, Mr. Chairman. I yield back.
    The Chairman. The gentleman yields back.
    Mrs. Walorski, for 4 minutes.
    Mrs. Walorski. Administrator Shea, I am thrilled that you 
are here. I have additional questions about the avian flu.
    I appreciate your answers to Mr. Kelly. I just have a 
couple of additional questions on that. For example, so in 
Indiana, obviously, we are in the Midwest. We had a brief 
skirting of this with only 77 birds destroyed. But certainly in 
my district, in northern Indiana, where we have a large amount 
of poultry providers and egg production, I have worried 
constituents. And what you were talking about just a second ago 
with biosecurity, depopulating very, very rapidly and things 
like that, in some cases it took 2 weeks to put down all those 
birds. And we were embroiled in that conversation about this 
question. Then what? What are they going to do with all these 
birds and how are they going to disintegrate them or what is 
going to happen? You are alluding to all of that.
    So when you looked at these states that were wiped out, did 
you look at states like Indiana as well that had these 
skirmishes, and when you are looking at setting policy are you 
going to include states like Indiana, these professional 
growers as well, since we have already dealt with that. There 
is a lot of stress in my district about what happens in spring 
with these migratory populations. Can you speak to that?
    Mr. Shea. Sure. I think that every state is pretty much in 
the same boat. As was mentioned earlier, we are all in this 
together, and every state needs to have pretty much the same 
approach to it, no matter what kind of poultry you have or how 
large a poultry industry it is. We are all in this thing 
together. So we definitely have looked at how it can work in 
every state.
    One of the things we did to plan for the fall was ask every 
state to tell us the state of their readiness for an outbreak 
in the fall, and each one did that. And many are in very good 
shape, others learned through this survey that we sent them 
that they need to do more.
    Certainly, Indiana has a very vigorous and robust animal 
health operation with Dr. Marsh for many years.
    Mrs. Walorski. Absolutely. He did an incredible job, by the 
way.
    Mr. Shea. And so I am pretty confident that Indiana will be 
prepared better than maybe even some other states would be 
should there be an outbreak.
    Mrs. Walorski. I appreciate that, and I agree.
    Do you feel APHIS has the authority to do what it needs or 
do you feel Congress needs to make legislative changes?
    Mr. Shea. I think we have the authority we need. And also 
kind of getting back to something that was mentioned earlier, 
much of the regulatory action that takes place in a program 
like this is really under state power. The state imposes the 
quarantine, the state actually issues depopulation orders. So 
we have to work hand in hand with states on these programs.
    Mrs. Walorski. I appreciate it. I appreciate your efforts 
as well.
    I yield back, Mr. Chairman.
    The Chairman. The gentlelady yields back.
    Mrs. Hartzler, for 4 minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, 
everyone.
    I wanted to reference some of the other questions on 
catfish, Deputy Under Secretary, in that this species has been 
successfully inspected for years through the FDA, correct? 
There has been no major human health risk, isn't that right?
    Mr. Almanza. Not that I am aware of.
    Mrs. Hartzler. Right. And are you aware that moving forward 
with this rule is jeopardizing the TPP as it relates to Vietnam 
and that they believe that it violates the WTO agreements and 
it opens up all the rest of the agricultural products in 
America to retaliation?
    Mr. Almanza. I have certainly read that. But as a regulator 
at FSIS, I am basically about food safety, and I can't pay 
attention to that rhetoric.
    Mrs. Hartzler. Sure. How much money has the agency spent 
already on trying to implement this rule?
    Mr. Almanza. Well, implement is probably a little over the 
top because basically what we have done is we have tried to set 
up what catfish inspection would look like. I could get you an 
exact number so that you can have that, but we can provide that 
to you.
    Mrs. Hartzler. Sure. I have heard already we have spent $20 
million. And I don't know if that is the case or not, but we 
have invested already and it is not even set up. And we have 
another agency that we are spending hard-earned tax dollars on 
that is already doing it successfully.
    Mr. Almanza. Well, one of the things I will say is that it 
is different in that the way FSIS inspects, we are there every 
single day, FDA isn't. They may get there once every year or 
every 3 years.
    So having a robust inspection system of every single 
catfish that is slaughtered--if you want to call it 
slaughtered--and having direct oversight over that every single 
day is significantly different than just having somebody come 
audit your plant.
    Mrs. Hartzler. Sure. And it is going to cause a lot 
additional cost without necessarily a need there.
    But anyway, I want to move on, but thank you for that.
    Administrator Mitchell, I want to thank you for being so 
prompt in replying to a letter that I wrote to you about some 
concerns with the livestock marketing facilities in my district 
as relates to the auditing process.
    And I was really thrilled and I know all of my livestock 
markets at home are very appreciative of getting the 
information back to them now in a timely manner after an audit 
so there is some closure. So I just wanted to thank you for 
that.
    And just generally in reference, though, can you give me a 
little more background about the way that GIPSA strategically 
decides who to audit and when?
    Mr. Mitchell. Well, most of our work is done by our 
resident agents. Many years ago, we reduced the number of our 
offices from 13 down to three. So a lot of our agents are in a 
locale. They will have an entire state, they may have part of a 
state, or they may have several states. They do ride a circuit. 
It is not etched in stone on what year or what month they are 
going there, but they are on the ground. And they have to go on 
some of the information that they may pick up at other sales or 
from producers. And, of course, we have an 800 number hotline 
that comes in for people to call in that might get someone 
reviewed.
    But it is fairly well at random. But when you have a 
facility that hasn't been reviewed in many years, they probably 
will be coming up for review very soon. We take it very 
seriously. We want to make sure that they are in business. Our 
livestock barns, they are rural for the most part, they are 
certainly local, they are small businesses, and they are just 
absolutely vital to ensuring that we do have price discovery 
within the market.
    So, I don't have a formula for you on exactly when it is 
going to come up, but it has a lot to do with those folks that 
are on the ground out there.
    Mrs. Hartzler. Thank you. My time has expired.
    The Chairman. The gentlelady's time has expired.
    Mr. Rouzer, for 4 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. I appreciate each of 
you coming before the Committee today.
    Mr. Shea, I have been advised there is a pretty serious 
shortage of FMD vaccine needed to manage an FMD outbreak. Can 
you share with us what the Administration's plan is for that?
    Mr. Shea. Well, indeed, there is not a huge vaccine bank 
for foot-and-mouth disease. But I want to emphasize that our 
first reaction, God forbid we ever did have a foot-and-mouth 
disease outbreak in this country, would not be to vaccinate. We 
would immediately try to stamp that disease out through 
depopulation and movement restrictions because we don't want to 
move immediately to a vaccination program because that could 
lead to export restrictions. And we want to eradicate the 
disease, not live with it through vaccine.
    We are looking at all the options for vaccine. I think it 
was alluded to earlier, our colleagues in the Agricultural 
Research Service have been working on a leaderless vaccine 
which has great promise. So we are, indeed, looking at other 
possibilities.
    Mr. Rouzer. Given all that, do you have any idea what type 
of cost estimate if we are going to try to tackle this from all 
quarters, what type of cost estimate we would be looking at for 
a vaccine?
    Mr. Shea. I hesitate to say what that cost may be until we 
can see how this leaderless vaccine works out. Traditional FMD 
vaccine currently used around the world is very, very 
expensive, certainly.
    Mr. Rouzer. I have heard some reports that should we pursue 
that route, the industry might be required to help cover the 
cost of it. Has there been any discussion of that or any 
insights you can share on that front?
    Mr. Shea. We haven't made any kinds of policy decisions 
like that. We have had some very generalized discussions with 
industry about the vaccine issue. We certainly agree with them 
that we would be better off to have a good supply of effective 
vaccine for foot-and-mouth disease, but we haven't really 
gotten to any kind of details how to pay for these very high 
numbers that would be involved.
    Mr. Rouzer. Thank you very much. Mr. Almanza or Almanza, 
which do you prefer?
    Mr. Almanza. Al is fine with me.
    Mr. Rouzer. Well, I get asked all the time, do I like 
Rouzer or Rouzer and I say Rouzer so----
    I have a question for you. What sorts of tools and 
assistance can FSIS provide to assist smaller producers or 
facilities? What is the best way for those businesses who are 
looking for answers to get those answers?
    Mr. Almanza. We have an extensive outreach program for 
small and very small plants. And at the beginning, I kind of 
covered our food safety app that we developed, that Food Keeper 
app. We think that that is really helpful for not only small 
and very small plants, but it is just general outreach that we 
did with Cornell.
    But we have a USDA small plant help desk that fields calls. 
Last year, we had over 1,400 inquiries. We had 1,400 inquiries 
just through the third quarter of this fiscal year. And then we 
also have a small and very small plant web page that received 
close to 12,000 views through the third quarter of 2015.
    So we tend to do a lot of outreach to small and very small 
plants because they don't have the resources available to them 
to get those kind of answers.
    Mr. Rouzer. And real quickly, I understand you all are 
updating the way you carry out inspections. If you want to talk 
about that for a second and any updates on any proposals to 
modernize hog slaughter?
    Mr. Almanza. Yes. So the whole modernization effort, I 
spoke to that about what we did with our new poultry inspection 
system. Right now we are gathering data and analyzing that data 
in the five plants that we currently have under the HIMP 
project in swine plants. What we are looking to do is develop 
enough of the data, analyze it, and have a proposed rule to 
implement that, or just to have a proposed rule by the end of 
the year.
    Mr. Rouzer. Thank you, Mr. Chairman. My time has expired.
    The Chairman. The gentleman's time has expired.
    Let me follow up. I think all the Members have talked.
    Mr. Shea, can you talk to us a little bit about if we had 
an FMD outbreak in Texas and it migrated into the feral hog 
population, one, is that likely or not, but if it did happen, 
how do we control that?
    Mr. Shea. Well, certainly, we would hope that wouldn't 
happen and we would find it quickly.
    The Chairman. I mean, that is the problem I am dealing with 
as we look at this issue with Argentina and South America, is 
that this is a high stakes deal. If it were just animals that 
were under pen and you knew where they were and could handle 
them, that would be one thing. Mr. Avalos has a great program 
going, but we create more feral hogs every day than we are 
killing, so what would happen to us?
    Mr. Shea. Well, certainly, if we started seeing foot-and-
mouth disease circulating in feral swine, that might be the 
point where vaccination is going to have to become the next 
tool. Because, obviously, we can't capture and depopulate all 
the feral swine. There are at least five million in the United 
States now and \1/2\ of them are in Texas.
    The Chairman. Ms. Fudge, did you want to ask questions of 
this panel.
    Ms. Fudge. No.
    The Chairman. Gentleman and ladies, thank you very much for 
being here this afternoon. We appreciate it. This was very 
educational. Again, as for the other panels, we really 
appreciate what you do day in and day out. Your team goes to 
work every day to work on your issues and to make sure that the 
American consumer has the, when we talk about the cheapest, 
most abundant, and safest, you are on the safe side for the 
most part, and we appreciate everything that you do to make 
that prediction fulfilled every single day, so thank you very 
much.
    If you wouldn't mind transitioning down to 1306, we will 
let the Members swing by and say a quick word to you 
individually if they want to, while we transition to our third 
panel. But again, thank you very much for your testimony today 
we appreciate it.
    We will take a break for about 3 or 4 minutes.
    [Recess.]
    The Chairman. I would like to welcome our third panel to 
the witness table today. We are joined by the Honorable Kevin 
Concannon, who is the Under Secretary for Food, Nutrition, and 
Consumer Services at USDA. He is accompanied by Ms. Audrey 
Rowe, Administrator, Food and Nutrition Service; and Ms. Angie 
Tagtow, who is the Executive Director, Center for Nutrition 
Policy and Promotion.
    Ms. Rowe, did I get your name right?
    Ms. Rowe. Yes, sir.
    The Chairman. Terrific. I made it through that one. Mr. 
Concannon, you have the microphone for 5 minutes.

            STATEMENT OF HON. KEVIN CONCANNON, UNDER
    SECRETARY, FOOD, NUTRITION, AND CONSUMER SERVICES, U.S. 
  DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY 
 AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION SERVICE, USDA; 
AND ANGELA TAGTOW, M.S., R.D., L.D., EXECUTIVE DIRECTOR, CENTER 
                              FOR
              NUTRITION POLICY AND PROMOTION, USDA

    Mr. Concannon. Thank you, Mr. Chairman. Since time is 
short, I will highlight a few key points, but I ask the 
Committee to review my full written statement.
    As the economic recovery continues to strengthen, we remain 
acutely conscious of the impact of nutrition programs in the 
lives of Americans and supporting institutions, such as 
schools, volunteer organizations, and the health care system.
    The program works through partnerships in communities 
across the country with national standards for eligibility and 
benefits, but considerable state and local flexibility, a 
combination that is critical to success. These successes also 
reflect a partnership between Congress and Administrations of 
both parties that we must continue.
    President Nixon established the Food Nutrition Service. 
Senators Dole and McGovern, with others on both parties, fought 
for food stamps and WIC in the 1970s. And Members of this 
Committee from both parties championed the Agricultural Act of 
2014.
    When I travel, I visit not just government offices, but 
schools, food banks, WIC clinics, and employment programs to 
see firsthand how services are delivered and who receives them. 
The Committee's informative and useful hearings on SNAP, 
chaired by Congresswoman Walorski, have affirmed, through the 
testimony of most witnesses, the program's value in the lives 
of Americans aligning with the positive impacts I see on the 
ground. Let me briefly outline a few.
    As SNAP provides needed food assistance, it lifts millions 
of people out of poverty and lessens poverty's impact on food 
insecurity effects supported by research. And while SNAP has 
not solved food insecurity, it has contributed to its decline 
between 2011 and 2014.
    SNAP also supports work. I rely on my experience as a State 
Commissioner overseeing food stamps and other safety net 
programs in three states, but the statistics confirm it too. 
Today, 31 percent of households, including 42 percent of 
recipients, have earnings--a major shift from 20 years ago.
    SNAP requires able-bodied adults to register for work, 
deducts part of their earned income to incentivize work and 
lessens the benefit cliff and helps recipients get jobs. We all 
agree that meaningful work is the right way to reduce demand on 
nutrition assistance, and strengthening this part of SNAP is a 
priority.
    Our new Office of Employment and Training is reenergizing 
SNAP E&T to help recipients get good-paying jobs. We promote 
fuller E&T efforts in meetings with states, urging engagement 
with organizations such as Goodwill, food banks, and job 
centers. And the farm bill E&T pilots will help us define and 
scale up the most effective strategies.
    Nutrition is the link between agriculture and health, and 
USDA Foods, formerly called USDA Commodities, support both good 
diets and our nation's farmers, who have reduced sodium, fat, 
and added sugars in the products we buy, increase the variety 
of fruits and vegetables available.
    Though I am pleased by these results, I know we can do 
more. We have refocused SNAP on evidence-based nutrition and 
healthy weight strategies, including farm bill authorized 
efforts to expand and test incentives to encourage healthier 
food choices.
    We have brought more farmers' markets into SNAP--a win-win 
for farmers and SNAP recipients. As of July, more than 6,400 
farmers' markets and farmers are SNAP authorized--a seven-fold 
increase since 2008. The farm bill authorized pilots to use 
USDA food funds flexibly to enhance schools' ability to buy 
locally.
    Our Center for Nutrition Policy and Promotion choose 
MyPlate Resources are widely used by dietitians and recognized 
by American consumers. The center develops the USDA food plans, 
tracks the nutrient content of U.S. food supply, and produces 
the annual Cost of Raising a Child report.
    We are working with the Department of Health and Human 
Services on the next addition of the Dietary Guidelines for 
Americans, which will remain within our mandate to quote 
``provide nutrition and dietary information and guidelines 
based on the preponderance of the scientific and medical 
knowledge.'' In the future, the 2020 Guidelines will include 
guidance for infants, babies, and women who are pregnant or 
breastfeeding.
    Public trust demands our ongoing commitment to improve 
integrity. We must also stop the unfortunate misinformation 
that these programs are rife with abuse. This too undermines 
public trust and does nothing to help Americans. SNAP's 2014 
payment accuracy rate is one of the best in the government, but 
any improper payment is too much so we must continue to 
improve. Trafficking the sale of benefits for cash has been 
reduced from four percent down to 1.3 percent. Again, we are 
not satisfied. We continue to push states on that issue.
    We recently reorganized and created a retail operations 
division that focuses on high risk areas around the country 
while enhancing customer service. Last year, we permanently 
disqualified 1,400 stores or storeowners, the most ever in 1 
year. New rules will stiffen penalties on those who try to 
exploit the program. But most people follow the rules. We work 
closely with our state partners to fight recipient fraud.
    Let me turn briefly to disaster nutrition assistance, not 
one of our larger functions, but a critical one, especially 
these days. I received a report yesterday on the fires out 
West. Over the past month, we have been very much involved 
helping people out in the CNMI, Congressman Sablan's area, 
where, again, they were affected by a terrible set of storms. 
So it is important to know that we have that capacity as well.
    While I have discussed the major farm bill authorized 
programs, my written statement includes results and priorities 
for nutrition programs authorized through other laws. I thank 
you for your time and attention and the opportunity to appear 
before you today.
    [The prepared statement of Mr. Concannon follows:]

   Prepared Statement of Hon. Kevin Concannon, Under Secretary, Food,
   Nutrition, and Consumer Services, U.S. Department of Agriculture,
                            Washington, D.C.
    Thank you, Mr. Chairman, and Members of the Committee, for the 
opportunity to update you on the work of the U.S. Department of 
Agriculture's (USDA) Food, Nutrition, and Consumer Services (FNCS) 
mission area, and to highlight our current priorities. I am joined 
today by Audrey Rowe, Administrator of the Food and Nutrition Service 
(FNS), and Angie Tagtow, Executive Director of the Center for Nutrition 
Policy and Promotion (CNPP), the two agencies within our mission area. 
The programs administered by FNS touch one in four people in this 
country over the course of a year, improving food security and diet 
quality for children and low-income people throughout the United 
States, while CNPP reaches Americans of all income levels with 
information to help them improve their health and well-being.
    While FNS' nutrition assistance programs have helped millions of 
Americans meet their nutritional needs during tough economic times, I'm 
pleased to join you at a time when the economy is recovering to the 
benefit of more and more Americans. The official unemployment rate has 
been below six percent since last September. It also appears that the 
economic improvement has started to yield decreases in participation in 
the Supplemental Nutrition Assistance Program (SNAP) from the levels we 
saw as a result of the recession. SNAP continues to respond to changes 
in the economy precisely as it was designed to do. There are currently 
about 1.3 million fewer participants in SNAP than there were 2 years 
ago and the reductions in participation are geographically dispersed. 
As of May, SNAP participation was lower in more than \3/4\ of the 
states and Territories that operate the program as compared to 1 year 
earlier, and the downward trend in participation is expected to 
continue, with more than 1.9 million fewer people receiving SNAP in 
2016 than in 2013. While the recovery has not yet reached every 
American, there are encouraging signs.
    We are making good progress on the economic front. But despite the 
many people who have benefited from the recovery, there remain millions 
of American families in need. The nutrition assistance programs remain 
vitally important to help these struggling families put food on the 
table.
    We have a great responsibility to continue our bipartisan work to 
ensure the safety net programs remain an important part of our 
country's social compact to serve those who need it. President Richard 
Nixon convened the 1969 White House Conference on Hunger and 
established the Food and Nutrition Service at USDA. Senators Bob Dole 
and George McGovern, along with others from both parties, fought for 
the expansion of the Food Stamp Program and Special Supplemental 
Nutrition Program for Women, Infants and Children (WIC) in the 1970's.
    The commitment to these programs has endured and grown under 
bipartisan leadership from both ends of Pennsylvania Avenue, as was 
evident in the passage of the Agricultural Act of 2014 (farm bill) 
thanks to the efforts of former Chairman Lucas and Ranking Member 
Peterson. I want to thank you, Chairman Conaway and Ranking Member 
Peterson, as well as the other Members of the Committee, for carrying 
on that legacy of bipartisanship. I am proud of the accomplishments 
shared by the Administration and Congress related to the nutrition 
assistance programs.
    I have watched with interest the series of hearings that the full 
Committee and Chairwoman Walorski of the Nutrition Subcommittee have 
convened to review the operations and impact of SNAP. These have been 
informative and useful hearings, and have underscored the evidence base 
underlying SNAP and other nutrition assistance programs. It is also 
important to pause and examine the accomplishments of the nutrition 
assistance programs in offering critical support to those in need. Let 
me review a few key points in this regard. Research on the long-term 
impacts of the introduction of SNAP (formerly the Food Stamp Program) 
showed that young children who had access to the program when it was 
first rolled out county-by-county saw long-term health benefits. They 
were less likely to suffer from high blood pressure, heart disease, 
obesity, and diabetes, and the study also found that SNAP participation 
increased educational attainment, employment, and earnings.
    We know that SNAP, in addition to helping millions of low-income 
Americans put food on the table, more than \1/2\ of whom are children, 
the elderly, or individuals with disabilities, also lifts millions of 
people out of poverty. The Census Bureau indicates that SNAP lifted 
over five million Americans--including nearly 2.2 million children--out 
of poverty in 2013. The Supplemental Poverty Measure, based on 
recommendations from the National Academy of Sciences, shows that SNAP 
reduced child poverty by three percentage points in 2012--the largest 
child poverty impact of any safety net program other than refundable 
tax credits. We also know that SNAP effectively mitigates the effect of 
poverty on food insecurity. A recent USDA study found that 
participating in SNAP for 6 months is associated with a significant 
decrease in food insecurity. The temporary increase in SNAP benefits 
provided in the Recovery Act resulted in a sharp decline in the number 
of households experiencing very low food security (meaning that one or 
more household members had to skip meals or otherwise reduce their food 
as a result of insufficient resources).
    We also know that SNAP supports work. Today, \1/2\ of SNAP 
households with children have earnings. This includes 42 percent of 
female-headed, single-parent households, and 70 percent of married-
couple households participating in SNAP. This reflects a dramatic 
transformation over the past 20 years. As you are aware, SNAP requires 
able-bodied adults to register for work, allows a deduction for earned 
income to incentivize work, reduces benefits gradually as income 
increases to avoid a ``benefit cliff,'' and provides employment and 
training services to help participants prepare for and get jobs.
    Though the results are impressive, we all know there is more to be 
done to make these programs even more effective. We are working 
vigorously on a number of fronts, and I look forward to continue to 
work with you and the Committee toward our mutual goals. Let me briefly 
review some of our most

   In SNAP, we continue to work with states to implement 
        evidence-based approaches to nutrition education and prevention 
        of obesity to support and facilitate healthy eating choices 
        among SNAP participants. For example, the farm bill provided 
        $100 million for us to work with retailers, including farmers' 
        markets, on incentives to encourage healthier food choices and 
        increase access to fruits and vegetables. We are also 
        developing new standards for retailers to stock a wider array 
        of healthful offerings, as required by the farm bill.

   We are expanding SNAP participants' access to farmers' 
        markets to improve access to fresh and nutritious food. This is 
        a priority not only of mine, but also of the Secretary. This is 
        a win-win for farmers who experience an increase in customers, 
        and for SNAP clients who have better access to healthy food. In 
        2008, there were only 753 SNAP-authorized farmers' markets and 
        direct-marketing farmers. I am happy to report that as of July 
        2015, there were more than 6,400 SNAP-authorized farmers' 
        markets and farmers. That is over a 750 percent increase.

   The farm bill authorized us to provide SNAP Employment and 
        Training Pilot grants to ten states to demonstrate and evaluate 
        new and innovative ways to help SNAP participants prepare for 
        and get meaningful work, and help them move toward self-
        sufficiency. The ten pilots, selected in March 2015, are now 
        underway, and Secretary Vilsack and FNS have made it a priority 
        to assist all states in making more effective use of regular 
        SNAP Employment and Training funding that is available.

   In our food distribution programs, we are enhancing services 
        to participants in a variety of ways. We implemented a farm 
        bill-authorized pilot that is allowing schools in eight states 
        to flexibly use their USDA Foods entitlement to buy unprocessed 
        fruits and vegetables for school meals, and to make those 
        purchases locally if they choose. We are providing ground 
        bison, a healthful traditional food, for the first time in a 
        number of years for use in the Food Distribution Program on 
        Indian Reservations (FDPIR). We transitioned the Commodity 
        Supplemental Food Program (CSFP) to an elderly-only program, as 
        required by the farm bill, and expanded it to an additional 
        seven states with funding provided by Congress in the Fiscal 
        Year 2015 appropriations bill, allowing over 600,000 low-income 
        senior citizens to be served nationwide. And so far this year, 
        we've purchased over $160 million in additional USDA Foods for 
        bonus distribution through The Emergency Food Assistance 
        Program (TEFAP), including apples, fruit juice, cranberries, 
        cherries, carrots, chicken, and lamb, which are then 
        distributed to families in need through food banks and local 
        organizations.

   CNPP is working with the Department of Health and Human 
        Services on the next scientific update to the Dietary 
        Guidelines for Americans (DGA), which provide science-based 
        recommendations to help prevent disease and promote health for 
        people aged 2 years and older. As we develop the 2015 DGA for 
        release at the end of this calendar year, we will examine all 
        recommendations and public comments. The 2015 DGA will be 
        developed within the scope of our statutory mandate to provide 
        ``nutrition and dietary information and guidelines . . . based 
        on the preponderance of the scientific and medical knowledge.''

   CNPP is working on a number of other initiatives. We are 
        beginning to build the framework for gathering evidence to 
        support dietary guidance for birth to 24 months of age and 
        women who are pregnant or breastfeeding. By 2020, we expect to 
        be able to provide dietary guidance for every American. Our 
        SuperTracker online diet and physical activity assessment tool 
        has over 5.6 million registered users. Our other healthy eating 
        tools, such as MyPlate, are used by parents, educators, and all 
        Americans to improve their diets and their health.

   And although it falls under the jurisdiction of your 
        colleagues on the Education and the Workforce Committee, 
        Members of this Committee may also be interested to know that 
        FNS continues to make progress working together with states and 
        local school districts to implement the Healthy, Hungry-Free 
        Kids Act (HHFKA), ensuring our nation's children receive 
        nutritious meals at school and during the summer months when 
        school is out.

    I am pleased with the coordination we have had with you, Mr. 
Chairman, and Members of this Committee in enacting and implementing 
the farm bill, which preserved the fundamental structure of nutrition 
assistance while also making needed improvements. As you know, prompt 
and robust implementation of the farm bill is a top Departmental 
priority. Most provisions of Title IV that impact SNAP eligibility and 
benefits were implemented in the first few months after enactment. We 
are working energetically, and as quickly as possible, to codify these 
provisions in our regulations, some of which we completed just this 
month, and to implement a number of other Title IV provisions, many of 
which impact our partners in the retail food industry.
    I remain committed to integrate science and evidence-based 
improvements into all of the programs for which I am responsible. Like 
many of you, I am not a scientist. That is why we work with 
organizations like the National Academy of Medicine (formerly the 
Institute of Medicine) and our colleges and universities, who provide 
us the evidence and analysis we need to make sound policy.
    I am further committed to making continued improvements in the 
integrity of these programs--one of my, and the Department's, most 
important responsibilities, and one I know we share. As I have 
testified previously, Americans expect and deserve a government that 
ensures that the significant public investment in nutrition assistance 
is managed wisely. We must continue to earn and maintain the public's 
trust through the proper administration of these programs--for a lack 
of public confidence could threaten the programs' very survival. We 
must also debunk the myths about SNAP and other nutrition assistance 
programs--that they are rife with fraud, or that benefits are going to 
people who are not eligible. These mischaracterizations of the programs 
also undermine public trust.
    Maintaining payment accuracy is a nationwide commitment between 
USDA and our state partners and supports President Obama's Executive 
Order to reduce improper payments. The Department uses a rigorous 
quality control process to find payment errors in SNAP--which can 
result from administrative mistakes or intentional violations--and 
require states to recover over issued benefits and provide under issued 
benefits. The SNAP national payment accuracy rate for Fiscal Year 2014 
was 96.34 percent. Achieving high rates of payment accuracy is the 
result of years of aggressive work and a nationwide commitment to 
reduce improper payments and improve administration of SNAP. Since 
2000, we have reduced the rate of improper payments by more than \1/2\, 
and the SNAP error rate is among the lowest in the Federal Government. 
That said, we are constantly working to do even better. That is the 
kind of government the American taxpayer deserves.
    With regard to trafficking--the sale of SNAP benefits for cash--we 
are actively investigating and punishing this illegal activity. We use 
data analytics to track retailers and participants who are potentially 
defrauding the program. The penalties for trafficking are severe, 
ranging from permanent program disqualification and monetary fines, to 
criminal prosecution. Over the last 15 years, FNS has implemented 
measures to reduce retailer trafficking dramatically, from an estimated 
four percent down to about 1.3 percent currently. Rules now being 
finalized at USDA will stiffen penalties so that fines are truly 
reflective of the harm done--strengthening the disincentive for 
retailers who may be thinking about trying to make a quick buck off the 
program. This year, we are on track to increase penalties by 29 percent 
for violations.
    We are also working closely with our state partners to fight SNAP 
participant fraud. Participants who commit fraud are subject to 
disqualification and repayment of benefits. In Fiscal Year 2012, states 
conducted nearly 730,000 investigations, disqualified over 42,000 
individuals, and collected over $72 million in fraud claims from 
households. And since 1992, the Federal Government has collected more 
than $1.3 billion in delinquent SNAP participant claims. But there is 
still more to do. Those seeking to commit crimes are always seeking new 
opportunities, so we must continually adapt to these new challenges in 
order to make sure that public investments are protected. This year, 
our joint SNAP initiative with Inspector General Fong's team is drawing 
on our respective offices and the strengths and responsibilities of 
Federal, state, and local law enforcement partners to identify and 
prosecute SNAP fraud, and also to prevent it in the first place.
    The President's budget builds on existing efforts and provides 
strategic increases, including funds to strengthen Federal training, 
oversight, and monitoring of state quality control processes and data, 
to ensure that states are meeting the highest standards in program 
administration and payment accuracy. We will continue to confront error 
and abuse head-on to make sure that benefits go to those who truly need 
them.
    While I have focused my remarks on SNAP and the other nutrition 
assistance programs authorized under the farm bill, such as TEFAP, 
FDPIR, and CSFP, a number of our other major programs are authorized 
under other laws, under the jurisdiction of the Education and the 
Workforce Committee. I would like to mention them briefly here, since 
they make up such a large part of the work we do in FNCS. The Child 
Nutrition Programs, including school meals, child care and after school 
meals and snacks, and summer meals, give children the nutrition they 
need to develop and grow and become future leaders of this country. In 
school, students across the country are experiencing a healthier school 
environment with balanced meals that reflect nutrition recommendations 
by pediatricians and other child nutrition experts. The latest data 
shows that today, over 95 percent of school districts have been 
certified as meeting the new standards. And the average number of 
students eating a school breakfast each day has increased by almost 28 
percent since 2008, meaning more children are ready each day to learn.
    WIC is one of the nation's premier public health nutrition 
programs. WIC leads to better pregnancy outcomes--fewer infant deaths, 
fewer premature births, and increased birth weights--and saves money. 
Every dollar spent on prenatal WIC participation for low-income women 
on Medicaid saves as much as three times that in health care costs 
within the first sixty days after birth. And a study by the Centers for 
Disease Control and Prevention found that rates of obesity among low-
income U.S. preschool children have stabilized or improved in a number 
of states, suggesting that recent changes to the WIC food packages may 
have contributed to this positive trend.
    Thank you again for the opportunity to appear before you today. I 
look forward to answering any questions you may have.

    The Chairman. Thank you, Mr. Concannon. I appreciate your 
being here today.
    Ms. Tagtow, your agency has done the Dietary Guidelines 
work for 2015. We will have the Secretaries up next month. But 
I would like to visit with you about just the volume of work, 
some 29,000 comments received this time versus 1,300 last time. 
And we are told that some of these, or many of those, may have 
been duplicative, form letters like the ones that Members of 
Congress get.
    Can you walk us through those numbers? How many discrete 
comments did you get? And did your team, as well as the team at 
HHS, go through them in appropriate detail to be reflected in 
the final output?
    Ms. Tagtow. Absolutely. Thank you, Chairman Conaway, for 
the question.
    As a registered dietitian in public health nutrition, it is 
absolutely thrilling to see the level of interest in the 
Dietary Guidelines, and really an unprecedented time for the 
Dietary Guidelines.
    Just to reflect on the opportunities for public comment, 
during the 19 months in deliberation of the Dietary Guideline 
Advisory Committee, the public did have opportunity to provide 
response to the scientific committee during their 
deliberations. And then once the Dietary Guidelines Advisory 
Committee submitted their report, their set of recommendations 
to both departments, USDA and HHS, earlier this year, there was 
a subsequent public comment period of an additional 75 days.
    As a result of that, we had just over 29,000 comments 
submitted in response to the Dietary Guidelines Advisory 
Committee Scientific Report. And, yes, you are correct, a 
majority of them, at least 70 to 75 percent of those public 
comments, were duplicative in nature. They were either form 
letters or in the ways of a petition and things.
    When we received those public comments through the 
www.dietaryguidelines.gov website, there was a thorough review 
by both agencies and a reposting of those public comments. So 
all of the public comments that were submitted are available at 
www.dietaryguidelines.gov. Very few of them were not posted due 
to inappropriate language and things like that.
    Both agencies are in the process of thoroughly reviewing 
all of the public comments and taking those into consideration 
while developing the 2015 Dietary Guidelines for Americans. And 
just to emphasize the role of science in this process, Mr. 
Chairman, we, of course, are very interested in those public 
comments that are supported by scientific justification, and so 
those are very helpful in moving forward with our process at 
hand. Thank you.
    The Chairman. Thank you.
    Ms. Rowe, would you discuss with us about the IG's recent 
report about the need for FNS to strengthen SNAP management 
controls and the recommendations that were in that report. 
Where might we see you guys going with those recommendations 
should we have this hearing this time next year?
    Ms. Rowe. I would be happy to answer the question, Mr. 
Chairman.
    We have reviewed all of the OIG's recommendations. There 
are some that we are still talking to OIG about because as we 
approach and look at those recommendations we have some 
disagreement on the findings.
    What we are moving forward to do is look very seriously at 
how states make a determination as to whether an error is, in 
fact, an error and not an error and what we need to do about 
that, whether it is something that the OIG has recommended, 
should there be a Federal review process rather than a state 
review process, should we have a two-tier process. So there are 
several issues that we are looking at, and we will have the 
final agreement on that report in the next 2 weeks.
    The Chairman. I look forward to improvements for next year. 
As a CPA, we typically give those kind of reports to our 
clients when we do internal control reviews. I think it would 
be important for the taxpayers to be able to see, even if you 
disagree, that there is a rationale for doing it and just don't 
ignore the report, but actually adopt those that need to be 
adopted and then take the other actions as you and your team 
agrees.
    With that, Ms. Fudge, for 4 minutes.
    Ms. Fudge. Thank you very much, Mr. Chairman. And thank you 
all for being here today.
    Secretary Concannon, what is your opinion about the use of 
categorical eligibility and direct certification as options to 
increase efficiency and to streamline the application process 
for SNAP? And further, just as a point of clarification, just 
because someone is eligible, is categorically eligible, does 
not necessarily mean that they receive SNAP, is that accurate?
    Mr. Concannon. That is correct on both fronts, particularly 
that last one. Let me mention that 42 states avail themselves 
of categorical eligibility status. It simplifies the process 
for states and reduces the number of errors.
    The principal benefit to consumers, as well as to state 
agencies, is states have the option of disregarding the assets. 
The household must still meet the income test, but their assets 
are set aside. And the underlying rationale for that was, 
particularly during the recession, to not force families to 
exhaust their household resources while they might be 
unemployed or going through a difficult period.
    But I also should point out that historically--and I 
reflect on this in my own time as a state director--the area of 
eligibility determination most fraught with errors or mistakes 
is when state staff try to assess the value of certain assets. 
So it has actually contributed to the reduction in payment 
error rates as a result, but its ultimately benefit is it does 
simplify the process, it gives us better assurance of, in fact, 
the eligibility of the person, and it is an option that states 
have under law.
    Ms. Fudge. Thank you very much.
    Administrator Rowe, the Congressional Budget Office has 
forecast a leveling off of SNAP enrollment and a decline of 
recipients. Can you just elaborate a bit on that and tell me 
what you foresee over the next 5 years?
    Ms. Rowe. Thank you for the question, Congresswoman.
    Yes, we do continue to see and anticipate a continued 
decline. We have seen somewhat of a decline right now as the 
economy has improved. We are seeing fewer people coming in to 
apply, but we are also seeing a reduction of those who are 
currently on the rolls. It is our anticipation that as the 
economy continues to improve, we will continue to see a 
reduction of participation in the SNAP program.
    But also as we get our employment and training programs 
into full gear, identifying job opportunities for individuals 
to move from the SNAP program into full employment. So we 
continue to anticipate a decline in the overall enrollment in 
the SNAP program.
    Ms. Fudge. Thank you.
    Under Secretary, I want you to reiterate. I know you said 
it just briefly in your comments, and I know it is in your 
written testimony. But I certainly hear an awful lot about we 
are spending more money and the numbers are not going down and 
they are never going to go down. I hear things about waste, 
fraud, and abuse. I want you to address it again for this 
Committee the small amount of waste, fraud, and abuse in this 
program, as well as the fact that the numbers actually are 
going down.
    Mr. Concannon. To the first question, the numbers are down 
by two million people from what I call a high water mark. They 
have gone down at the rate of about a million a year. I think 
most forecasts we predicted continued to be reduced. And I 
believe the latest forecast that I have seen shows by 2020 it 
would be in the high 39+ million individuals across the 
country.
    On the question of the program integrity, meaning, one, are 
people who apply for the program, in fact, who they say they 
are and is their income properly reported, are they receiving 
the proper benefit, we have one of the lowest rates of payment 
error rates in the Federal Government.
    And on the question of fraud, the most serious abuse of the 
program in my view is trafficking the sale of benefits. We are 
very focused on that. That is 1.3 percent of the benefits. So a 
small percentage. But, in fact, when you apply that 1.3 
percent, it is a large amount of money. So I don't minimize it 
in any way. I am very focused on it.
    Ms. Rowe and her staff are very much focused on it. And we 
have been using and increasing not just the undercover people 
across the country, but data analytics where we look at the 
transaction amounts and the time of day and where the consumer 
lives versus the store. And as I mentioned, last year we took 
out 1,400 stores permanently. Those owners are out for a 
lifetime, a number of them have been prosecuted, but even if 
they weren't prosecuted they are out of the program for a 
lifetime.
    Ms. Fudge. Thank you very, very much.
    I yield back, Mr. Chairman.
    The Chairman. The gentlelady yields back.
    Mr. Crawford, for 4 minutes.
    Mr. Crawford. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary and Administrators for being here.
    Ms. Rowe, my district is home to a large swath of the Delta 
region. And while the Delta is heavily agricultural, 
paradoxically we have some pretty serious issues as it relates 
to the low-income population and their access to healthy 
nutritious foods. I am proud of some of the work we have done 
on the farm bill that targeted this problem, such as expanding 
the Farmers' Market Promotion Program, but I want to get a 
sense as to what your agency does specifically to improve 
access to nutritious foods in hard hit rural areas like the 
Delta, and how do you approach the unique challenges that rural 
areas like the Delta present that are much different from the 
challenges faced in heavily populated areas?
    Ms. Rowe. Thank you for the question.
    We have worked very closely with the state agency within 
the Department of Human Services within the State of 
Mississippi or in the Delta areas. We have worked with 
community-based organizations and others that create more 
access points that get more information out to individuals on 
what programs that are available and how they can access those 
programs.
    There have been a number of grant programs, some recently 
that we will be announcing in the next few weeks which will be 
focusing on farmers' markets and SNAP participation. We have 
worked with Rural Development in rural housing developments to 
expand, for example, access to summer feeding opportunities. We 
have worked with schools to expand information and access to 
not only feeding opportunities or where they can go and have 
access to programs, but also healthy eating, healthy 
lifestyles, healthy nutrition.
    We have worked with farmers and we have expanded our work 
with farmers. Our regional office recently held meetings in the 
Delta area with a number of farmers to talk about opportunities 
for them to work with schools to sell new produce and make 
produce available to children in our schools.
    Mr. Crawford. Thank you. One quick question.
    SNAP is a state-administered program but has heavy Federal 
oversight in how states operate their programs. Can you talk 
about your relationship with the states, and you mentioned that 
a little bit in your previous answer, but how that plays out 
during various times of the year? And how do you resolve 
differences in state plans or thoughts about what is within the 
scope of SNAP?
    Ms. Rowe. Through our regional offices, we work very 
closely with our states in planning their SNAP program and 
reviewing their SNAP program and providing technical 
assistance. It is a collaborative, cooperative working 
relationship. We try and make sure that as the state is 
developing its plans, that we are sharing with them best 
practices that may exist in other states that could improve 
both the administration of the program and access to the 
program.
    We continue to provide working sessions. We bring all of 
the state SNAP directors and others together to do technical 
assistance and to provide technical support. We do webinars. 
Our view is to work cooperatively with the state to ensure that 
we are reaching the largest population increasing 
participation.
    Mr. Crawford. Do you keep a pretty open mind with respect 
to ideas that emanate from the states on how they can more 
efficiently administer programs?
    Ms. Rowe. Absolutely. The state understands their 
environment, what it takes in that state to make it work 
effectively, and we are always open to working with states in 
trying to achieve those objectives.
    Mr. Crawford. Just real quick, can you give me an example 
of one state that may have jumped out and done something that 
was maybe a little bit unconventional but that you guys have 
decided was a good idea?
    Mr. Concannon. If I might jump in on that, we promote 
something with state agencies across the country that we refer 
to as business process reengineering, BPR, where we help pay 
for that--small consulting groups that come in and try to 
simplify the process so that they will actually put on a board 
literally every step of the way when a consumer comes in the 
front door. And the idea behind it is to cut down on some of 
the bureaucratic steps that are involved.
    We have a program or a budget item that has been 
authorized, and relatively small by national standards, but it 
is referred to as a state exchange. When a state runs into a 
problem and we are aware of a state, let's say Colorado or a 
state up in the Northeast, we can either bring the staff from 
the state agency in that state to Mississippi or to a state 
that is struggling with it, or conversely put people on a plane 
from that state and bring them up and say this is how it is 
done.
    The state exchange is one of the most powerful tools that 
we have. And states I know appreciate that because often state 
budgets don't allow people to travel. They may just have a 
broad prohibition against travel out of state. And we think it 
is important for them to see this is how it is done 
effectively.
    Mr. Crawford. BPR?
    Mr. Concannon. Business process reengineering.
    Mr. Crawford. I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. McGovern, for 4 minutes.
    Mr. McGovern. Thank you very much.
    Let me begin by expressing my gratitude to all of you for 
what you do and for the millions of people in this country who 
benefit from the work that you and your agencies do. The 
programs that you oversee represent the best of this country. 
And I think that one of the things that was said, you made this 
point that the number of people on the SNAP rolls is 
decreasing, but the reality is that there are still a lot of 
people on SNAP. And a lot of people on SNAP are working people 
because, quite frankly, they are working and they don't earn a 
decent wage so they still qualify for government assistance.
    But there is a lot of talk in this Committee and in 
Congress about the need for more flexibility when it comes to 
SNAP. And I always worry that flexibility is a code word for 
block grants. That would be a terrible mistake and would lead 
to increasing hunger in this country.
    We already have a case study of what block granting SNAP 
looks like. It is in the Northern Mariana Islands. When 
Congressman Sablan was a Member of this Committee, he 
passionately advocated for full SNAP for all of his 
constituents. And right now we are seeing the shortcomings of 
block grants. The islands were devastated by a recent typhoon 
and thousands of residents are in need of food assistance. But 
with a fixed pot of money, the SNAP block grants simply can't 
keep up with the demand.
    So can you talk a little bit about what we are learning 
from the situation in the Northern Mariana Islands right now, 
and what are the limitations of a block grant in cases of 
natural disasters or other emergency situations, and is this 
really the kind of flexibility that we ought to be expanding?
    Let me just say one final thing. If I have one critique of 
the program, it is that the benefit is not adequate to meet a 
family's needs. When I go to food banks at the end of each 
month, a lot of the people that are in line are families who 
are on SNAP because their benefit has run out. Granted, the 
mood in this Congress is not going to expand SNAP. I wish it 
would. But we have to understand that this benefit is not 
adequate to meet the nutrition needs of a family. I yield to 
you on that and on the issue of block granting.
    Mr. Concannon. Let me say I agree with you. I think in the 
food banks, the food pantries, that testimony may have come 
before the Subcommittee, but food banks across the country, 
food pantries, my wife volunteers at one at a church here in 
the District, toward the end of the month the numbers who come 
in for those suppers go way up because people, whether they are 
working or on fixed incomes, they run out of money. So that is 
a fact of life that we are very mindful of.
    On the question of block grants, to me, the most powerful 
evidence about the inadequacy of it at times of real change in 
the American economy, is what has occurred in the TANF or cash 
assistance program. For many years, I was a State Health and 
Human Services Commissioner. For most of those years when it 
was either called food stamps or later called the SNAP program, 
in the early years of SNAP about 30 percent of the households 
who were receiving food stamp benefits were also receiving cash 
assistance through the TANF program.
    Now we have on the current SNAP caseload, the percentage of 
households receiving cash benefits is in the single digit. It 
is six or seven percent. Even though we have just gone through 
from 2008 to 2010 or 2011, you pick your years, the deepest 
recession since the Great Depression of the last century, and 
that is what accounts for the fact that even though Congress in 
2008 changed the name of the food stamp program to the 
Supplemental Nutrition Assistance Program purposefully to say 
it should supplement, it should not be the only source of 
benefit, some 22 percent of the households now on SNAP have no 
other source of income whatsoever.
    So I have a real worry about the inability of block grants 
to respond to whether it is a natural disaster or a deep dive 
in the economy.
    The Chairman. The gentleman's time has expired.
    Mr. Thompson, for 4 minutes.
    Mr. Thompson. Mr. Chairman, thank you. Thanks to all of you 
for your service.
    Ms. Rowe, I wanted to continue to talk about SNAP. As we 
all know, it is a federally-funded state administered program, 
meaning the states are responsible for administering, being the 
boots on the ground basically of the SNAP program. They are the 
ones down on the ground making the program happen with FNS 
providing guidance and support.
    So my question I have, first one, in your budget request 
for Fiscal Year 2016 there was a request for 373 employees just 
for SNAP at the Federal level, in addition to overall nutrition 
program administration staff of nearly 1,000 employees. Now, 
the request is more than double the employees from 2013 when 
the program peaked at 47.6 million. As we just heard, 
thankfully, the need is coming down. So we should meet that 
need, no doubt about it, but it is good though when we see that 
need come down.
    And I know within testimony I hear a lot about technology 
and the recognition that we use technology for efficiency, we 
need to apply what I consider originated manufacturing, the 
whole lean approach to greater outcomes, greater productivity, 
with fewer resources. But this represents more than double the 
employees from 2013 when the program peaked the demand for it. 
Back then, there were only 170 employees. Why the significant 
increase of needed employees for SNAP?
    Ms. Rowe. Most of that increase has been in our program 
integrity area. As the Under Secretary mentioned, we have 
organized and centralized our retail operations division so 
that we can be more effective and more efficient. Training of 
staff, individuals who can go out and we actually do undercover 
buys. We engage in review of lots more documents. We have 
expanded the number of documents that storeowners have to 
provide, particularly those that we identify that may be in 
high trafficking areas.
    So to be able to make sure that we are achieving the goals 
that we have set, we have set specific goals within our various 
program areas that we intend to achieve. We need the staff to 
make sure that we are properly implementing these programs and 
addressing the taxpayers' issues of trafficking or fraud in our 
program.
    Mr. Concannon. Why don't I jump in on that as well. A 
significant increase as well is the focus on employment and 
training. As was mentioned earlier, during the downturn in the 
recession, 40+ states were granted waivers around employment 
and training. In addition to what the farm bill or the 
Agricultural Act of 2014 provided to us, when I go out or when 
we go out to meet with states we urge them to do more on the 
employment and training side.
    And they get two categories of grants from us. They get 100 
percent Federal funding, about $90 million nationally, and then 
they get several hundred million more. But that several hundred 
million more that is matched with state funds goes to roughly 
10 or 11 states.
    There are a handful of states that are very active in 
employment and training. The other states are not on the 
playing field so to speak. And so we have been very focused on 
urging those other states to say, look, there are opportunities 
in your state to help people. I am very mindful--it has come to 
my attention in a number of ways over the last year--we have 
people who have come out of the correctional system. And 
because they are not bondable or because they committed a 
felony maybe when they were 19 years of age they have trouble 
getting into the workforce.
    And so we have said to state agencies, you should use some 
of that employment and training money for folks who are in the 
SNAP program to say, what else can we do to help you with truck 
driver training or training in the food industry? Help them 
actually get into the economy in a constructive way.
    Mr. Thompson. I see my time has expired, but I certainly 
agree. I think anything that we can do to take these supports 
and make it a workforce development program that is a 
springboard toward greater opportunity for people.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Scott, for 4 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I 
apologize for being late. I had a general in my office from my 
Air Force base.
    I want to follow up on what you just mentioned, only 
because I have a situation back home I am working right now. A 
gentleman that was arrested when he was younger. He works full 
time now, he makes around $12 an hour, his wife doesn't make 
quite that much, but they would normally qualify for food 
stamps. But because of his criminal record, even though he is a 
deacon in the church now and has no arrest or charges or 
anything in the last probably 10 years, is being told that he 
is not eligible, is that for the duration of his life that he 
would be prohibited from receiving the benefit?
    Mr. Concannon. I am familiar with the prohibition. And, 
unfortunately, that goes back to a law that was passed way back 
by Congress that said if you have a felony drug arrest you are 
not eligible for the, what was then the food stamp, now SNAP 
program, unless your state legislature takes an affirmative 
vote to overcome that.
    Now, 23 states across the country, the legislature, for 
example, Maryland near here and the District of Columbia would 
be two examples, they have taken votes to say, okay, you are 
still eligible if you meet the other income eligibility 
requirements.
    But Virginia, next door to us, if you have that same 
history, you are not eligible. So it depends. It is the state 
legislature that could pass a law that says we will 
affirmatively allow persons with prior felony drug arrests to 
participate. The State of Texas, I am not familiar with the 
details of it, but the legislature in Texas, just within the 
last month, has taken steps to allow certain prior felons with 
drug arrests----
    Mr. Austin Scott of Georgia. If I may, I just kind of 
wanted a yes or no, if I could, on that.
    But I am from Georgia, and I will look into the state law 
with regard to that. I assume that they could say if after 5 
years you haven't had another arrest or something along those 
lines then----
    Mr. Concannon. The state legislature would have to approve 
it, but they could do that.
    Mr. Austin Scott of Georgia. So my state is one of ten who 
received the SNAP pilot and just a couple quick questions on 
that. How are you working with the states on that, and what is 
your expectation, and when will we start to hear more about the 
actual implementation, and are some states further along than 
others. If you could just speak generally to that issue, I 
would appreciate it.
    Mr. Concannon. Yes, indeed. The pilots are, as Congress 
directed us, are diverse in terms of they are from different 
parts of the country. Some are work attachment right away. Some 
are more fuller assessments. Some are mandatory. Some are 
voluntarily. So there are a variety of strategies and 
approaches. We have hired through competitive process the top 
policy groups, research groups, in the country on outcomes, 
because at the end of the day, all of us, you want to know, we 
want to know, what works best. We are working with those states 
right now as they are gearing up to get their program set up. 
We expect by November, all ten of the projects will be 
established, and they will, because it is a, it requires a 
control group as well an experimental group. I mean, it is 
going to be the strongest science, and the full-scale 
implementation of it starts in the spring. We are very much in 
dialogue and contact with the states.
    Now, apart from the pilot projects, states like Georgia can 
be doing even more in the traditional employment training 
program, and that is where I urge them to say you can talk to, 
like, Goodwill Industries. You can talk to Lutheran Services if 
it is in your area. The food banks themselves are doing a lot 
of training. I was at one in Albuquerque where they are 
training people for long distance truck driving because there 
is a shortage of truck drivers in that part of the country.
    So you don't even have to wait for the full stepping on the 
gas of those ten projects. You can do more, and we are more 
than happy to work with states. We keep bringing this up to 
them to say do more on the training E&T, or the employment and 
training side.
    Mr. Austin Scott of Georgia. Thank you all for your 
service. I think the key is finding that balance and access and 
integrity in this program as in any of the programs that we 
have. And with that, Mr. Chairman, I will yield the remaining 
46 seconds that I don't have.
    The Chairman. The gentleman's time has already expired. Mr. 
Yoho has graciously allowed Mrs. Walorski to go next, so Mrs. 
Walorski is recognized for 4 minutes, Chairwoman of the 
Subcommittee on Nutrition.
    Mrs. Walorski. Thank you, Mr. Chairman. Thank you, 
Representative Yoho. Administrator Rowe, I so much appreciate 
all of you being here, and I am the Chairwoman of the 
Subcommittee, and we have looked at past, present and future 
when it comes to SNAP. We have talked about the economic ladder 
and really assisting people climbing up into this economic 
ladder, and we need to be clear, though, just one little item 
of interest here. When we talk about SNAP, and we talk about 
the decrease, we also have to remember that since 2009, or you 
alluded to before, 2008, 2009 with the recession and the 
stimulus policy changes, that is where the 81 percent increase 
in SNAP came from.
    So while we are looking at a decrease of single digits, we 
are talking about an increase of 81 percent, and I just want to 
make sure we are all talking about the same thing here. I 
believe we can be good stewards of the American taxpayer money. 
I really do. And we can assist people climbing up an economic 
ladder. And with that, Administrator Rowe, I am concerned that 
we are looking at 17 programs, 14 in one area, and the other in 
the areas of aging, three other programs. What is the USDA 
doing to address duplication and duplicative efforts on all 
those programs together?
    Ms. Rowe. Well, we spend a great deal of time at the 
beginning of every fiscal year taking a look and strategically 
planning what our priorities are going to be and how those 
programs are going to work together, and whether we are going 
to target certain programs in certain areas or how we are going 
to increase participation in programs in certain states, as the 
Under Secretary has talked about, the employment and training 
initiative. So the way in which we manage is through a 
strategic planning process. That process allows us to identify 
our goals, our priorities, the tasks and steps that we need to 
undertake to achieve those goals and priorities.
    We have a major dashboard that is available in each one of 
our priority areas that we report on every month, so we are 
looking and we are constantly looking at how well we are 
integrating the programs from one particular area with the 
needs in another.
    Mrs. Walorski. I have a further question there. So does FNS 
look at data points? For example, we are looking at kind of 
like a holistic look at people. Does FNS have the ability to 
track well-being, economic security, as the recipients go 
through the program, or are you just simply tracking numbers 
served?
    Ms. Rowe. We are talking both. We are tracking well-being. 
Through much of the research in our operations and policy 
division; we look at changes in behavior; we are looking at 
increased access as well as nutrition changes in people's 
behavior. So we look on both sides of the question, how well we 
are administering the program, and is it making a difference? 
Are we moving the dial as it relates to people's well-being?
    Mrs. Walorski. Okay. I appreciate that. My final question 
is this: We work with a lot of outside agencies as you do as 
well with these international feeding programs like Feed the 
Children. One of the things we had chatted with them about is 
they were telling us about their outcome measures that they use 
in every country around the world. My question is, the data 
points that we just talked about, helps better discern what 
approaches work and don't work. It certainly would help us in 
Congress, as we have the role of oversight, in understanding 
are people really making it, or are we just rolling numbers and 
filling slots on those numbers. It gives us a better picture of 
oversight. Does FNS have that similar kind of outcome measures, 
and I guess if not, why not--and they are certainly a standard.
    Ms. Rowe. As a matter of fact, I am very familiar with what 
Feed the Children is doing. We have had earlier conversations 
with them about how successful their approach has been. We do 
have outcome measures. We continue to get better at defining 
what we are looking for, what we want to measure, and what 
outcomes we are looking at. We can provide you with an overview 
of how we go about measuring that----
    Mrs. Walorski. I appreciate that.
    Ms. Rowe.--and looking at the outcomes in all of our 
programs.
    Mrs. Walorski. That would be great. Thanks. I yield back, 
Mr. Chairman.
    The Chairman. Mr. Yoho, 4 minutes.
    Mr. Yoho. Thank you, Mr. Chairman. And, panel, I appreciate 
you being here. You took my question. That was great. You did. 
You got me the answer I was looking for about the 81 percent 
increase and the slow dropdown. What do you think accounts for 
that? Is it the quality of jobs out in the marketplace that 
people just aren't getting enough high paying jobs? I know 
everybody wants to raise the minimum wage, but in some 
industries, you can't raise the minimum wage to that level to 
get them off of this. We need quality jobs to come back here, 
and that addresses the bigger picture about Tax Codes and 
things like that, incentives for manufacturers to come back.
    Mr. Concannon. Just the increase, which was significant, 
about \2/3\, the way we generally characterize it, \2/3\ of it 
was directly attributable to what was going on in the economy; 
and about \1/3\ of it was associated with states simplifying 
the process, places like California, where if you move from one 
county to another, you had to reapply all over again. It was 
like moving from one state to another. So we got rid of some of 
those barriers in that regard. That accounts for about \1/3\. 
Two-thirds are really, to your point and your question, 
associated with the jobs.
    I mentioned that in my testimony, that, again, my own 
experience that for all those years, we have a 50 percent 
increase right now, from 20+ percent of the households in the 
food stamp era that had earnings, to now over 30 percent that 
involves over 42 percent of the recipients. So we have a much 
higher rate of people with earnings. You say how can this be, 
then, that we still have them on the program? It is that they 
are either part-time jobs, or they are in the lowest quartile. 
They are very poorly paid.
    And it is a challenge. That is part of our effort in 
employment and training to say what can we do to help position 
people so they can move up in the workforce? I remember this 
from my state days, the old dictum that he or she who has a job 
is more likely to be the person to get a job. So how can we 
help people move up?
    Mr. Yoho. I think that is one of the big concerns, and one 
of our goals is to get people in, up and out. Secretary 
Concannon, you had talked about the waste, fraud, and abuse was 
mainly in the trafficking of EBT cards, if I understood you 
correctly?
    Mr. Concannon. It is partly, it is multiple use of EBT 
cards. And mainly what I was talking about was trafficking, 
that is when I sell my card.
    Mr. Yoho. I bring this up because we had USAID in here, and 
they were talking about the 2.5 million Syrian refugees getting 
EBT cards. Through USAID, they said that right here.
    Mr. Concannon. They might through USAID. They can't get EBT 
cards.
    Mr. Yoho. I would like to talk to you about that, but the 
point is, they said what they were doing was biometrics where 
they had a picture ID on there and some other form of 
biometrics, and it really cut that down as far as the illegal 
use of them. In this country, I asked him if he could elaborate 
if that would be a good thing here. Would that prevent the 
trafficking of cards, if there was a picture ID on them or 
somebody had to show a picture ID to use those or it was tied 
to some kind of----
    Mr. Concannon. Unfortunately it wouldn't, because it takes 
two to tango, as I described it; and these are fraudulent store 
owners who then would, they are indifferent to whether your 
picture is on the card. They know perfectly well if they are 
trafficking in cards. They don't care who owned the card.
    Mr. Yoho. I am glad to hear you say that when you catch 
them, they are out permanently.
    Mr. Concannon. For a lifetime.
    Mr. Yoho. That is something that we need to advertise, and 
I commend you for doing that. With that, Mr. Chairman, I yield 
back. Thank you.
    The Chairman. The gentleman yields back. Mr. Allen, for 4 
minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you panel, 
and just to elaborate on my fellow Georgian, Congressman 
Scott's question, to make sure I understood this correctly, on 
the E&T training, getting these people into the workforce, 
because everywhere I go in my district, and I know we are 
blessed in our district, but there are a lot of jobs available. 
Of course, they require skills. As I understand it, you said 
the states can ramp up this program on their own?
    Mr. Concannon. Yes, they can. Again, there are two, this is 
the traditional, what I call the core employment and training 
program. States across the country receive $90 million and 100 
percent state money. If I recall now, and I will have to 
confirm this, but I believe the State of Georgia received about 
$3 million, or $3.5 million, and 100 percent Federal money on 
E&T. But then over and above that, they can go to Goodwill 
Industries--I often point them in that direction--or Lutheran 
Services, Catholic Charities, the agencies in the area, and to 
the extent, it can't be--volunteer time can't be appropriated, 
but if they have paid staff time that is being used to train 
staff recipients, that--50 percent of that can be matched.
    And I have seen examples of it. I mentioned the example in 
the Albuquerque food bank that I was at probably 8 weeks ago, 
where they are training long distance truck drivers because 
that is the shortage in the State of New Mexico.
    Mr. Allen. We have the same thing. The state administrators 
have been made aware of the fact that they can ramp this thing 
up.
    Mr. Concannon. Every time I meet with them, I pitch that to 
say there is an opportunity for you.
    Mr. Allen. Good. Great. Ms. Tagtow, I guess this is for the 
benefit of my wife, but she is a nutrition animal or whatever; 
but she really knows a lot about it. She would love to advise 
folks on what they buy in a grocery store. I think she would 
volunteer her time to do that, to be honest with you, because 
she is so adamant about what you eat is what you are. And she 
sees a lot of abuse from the SNAP program as far as that is 
concerned. Folks don't know exactly what to buy, and she just 
thinks that with some advice, that they could not only get the 
necessary food they need, but they could eat very nutritiously 
which would then cut down on thing like Type 2 diabetes and 
things like that which is an epidemic in Georgia. Any comments 
on that?
    Ms. Tagtow. I will start, and then I will refer it back to 
the Under Secretary. Excellent question. One of the charges of 
the Center for Nutrition Policy and Promotion, first and 
foremost, is to promote the Dietary Guidelines for Americans. 
And what we are seeing is that the average quality of diet, and 
the Under Secretary's earlier remarks about the healthy eating 
index, we actually measure the average diet quality of 
Americans; and any guesses as to what our average intake index 
is? It is 57 on a scale of 1 to 100.
    Mr. Allen. How would you relate that into average calories 
per day?
    Ms. Tagtow. What I was going to say is, we know the 
research does provide us with sufficient evidence that if we 
can start shifting people to healthier diets, to a diet that is 
more closely aligned to the Dietary Guidelines, we can 
significantly reduce the relative risk of developing diet-
related chronic diseases in this country. So that is the answer 
to the first question.
    As far as educating and informing and better supporting 
nutrition attitude, knowledge, and behavior of SNAP 
participants, I am going to shift that over to the Under 
Secretary.
    Mr. Allen. I am out of time, so one of my colleagues may be 
able to address that question as well. I yield back, Mr. 
Chairman.
    The Chairman. The gentleman yields. Mr. Kelly, for 4 
minutes.
    Mr. Kelly. Mr. Secretary, if you would address that 
briefly, and then let me get to my questions, please.
    Mr. Concannon. Thank you very much, both Members. We have a 
major opportunity in that regard called SNAP Ed, or it is 
nutrition education. To the Member's comments, we are in the 
middle of a crisis in this country in terms of public health 
with the problems of obesity; and it translates into work 
opportunities, or a lack thereof, health care costs, quality of 
life. So we are very focused on that, and we promote something 
called MyPlate, not only in schools, but in food banks, in the 
farmers' markets where we are encouraging them, but we have 
also let, in the last year, a contract with the Duke University 
and UNC Chapel Hill to use the research of behavioral 
economists. We have a lot of nutritionists with us. We have 
tremendous nutrition capacity and potency. We know a lot less 
about what actually motivates somebody to reach for a certain 
product in the store.
    So we are very focused on saying what else can we learn 
that actually influences people to more consistently buy 
healthier foods? Some of it obviously relates to where you 
live. I live in the D.C. area out in the Maryland suburbs where 
there are a lot of supermarkets around me, but on the other 
side of the Anacostia River here, there is probably one 
supermarket. So where you live makes a difference, rural or 
urban; but we need to do a better job, and we are focused on 
trying to say what else can we do to educate people. And we are 
hopeful that what we are doing in schools, and in Georgia by 
the way--I was just in Savannah--is doing great work in the 
schools to promote healthier eating. And my hope and 
expectation is these school students as they grow up into 
adulthood, will have been socialized to eat healthier, and that 
is one of the best things we can do.
    Mr. Kelly. Thank you, again, Mr. Chairman, and panel for 
being here. My question is, I understand that it is just not--I 
know there is a lot of fraud, or there is some fraud that goes 
on. And like many things in life, the few punish not only the 
end-user, but they punish your department, and they punish us 
all because of what a few do. That being said, I understand 
that. What initiatives are you doing or working with the states 
to make sure that we reduce the amount of fraud and that we 
continue to focus on that so that those few don't disparage all 
of us by the way that they act?
    Mr. Concannon. Exactly. I appreciate the question. As I 
mentioned earlier, to me the most serious--first of all, states 
and counties where they administer it, pay special attention on 
the front end. So the USAID reference that was made here, that 
just isn't the case. You have to be a U.S. citizen and you have 
to prove it in a variety of ways. We don't have anything near 
that in terms of fake people showing up and getting SNAP 
benefits. My concern is on the other end. Once they get the 
card, we have this 1.3 percent of trafficking. It takes as I 
say, two to tango. These are stores, mostly small stores, 
rarely, rarely a supermarket. These are small stores.
    Thankfully in the farm bill that you passed, you gave us 
more authority to increase the requirement on those small 
stores in terms of their food variety, because I am hopeful 
that it will result in fewer of those stores that have the ads 
of liquor, cigarettes, and something else. That is where our 
problems come in so many cases.
    One, we are very focused on data analytics. We have 
undercover people, but we catch most of those stores by looking 
at redemption data electronically. We are much more astute that 
way. We also have hired a consulting group, Accenture. We have 
sent them around to states to say we took out these stores last 
year. Now we want you to analyze the actual redemption data to 
see what are some of the associations. One of the associations 
we found, for example, in the first state we went to was 
multiple cards. If I am in a household and I keep calling the 
state saying I have lost my card, our alert goes up to say wait 
a minute, what is going on here?
    Another would be redemption amounts late at night in round 
figures. I don't want to say too many of the variables and tip 
people off, but there are ways to identify, we are redeploying, 
as Audrey Rowe mentioned, redeploying our people into the high-
risk places in the country. As I mentioned, the chair picked up 
as well, when you traffick, sell benefits, you as a store or a 
store owner, you are out for a lifetime.
    Mr. Kelly. Thank you, Mr. Chairman. I yield back the 
balance of my time that I don't have.
    The Chairman. The gentleman's time has expired. Mr. 
Abraham, for 4 minutes.
    Mr. Abraham. Thank you, Mr. Chairman. Let's continue, Under 
Secretary, on this fraud issue because we all are in districts 
that have more people on the program than I am sure they desire 
or we desire, because of this poor economy that we have had for 
the last few years is driving that. The 1.3 percentage, convert 
that on the fraud issue. Convert that into dollar amounts for 
me.
    Mr. Concannon. That is 1.3 of about $75 billion, so it is 
close to $1 billion a year.
    Mr. Abraham. Wow. Walk me through on this exchange or this 
fraud issue, if somebody obtained a card fraudulently, and they 
take it to one of the stores that you just referenced, the 
under-the-radar-type store, can they present that card and buy 
something of low value and get the cash back? How does the 
fraud issue, how do they take that card and fraudulently use 
it?
    Mr. Concannon. Typically what happens, we refer to it as 
trafficking. In other words, let's say I had $100 benefit on 
this card. I go to the store and either I tell the store owner 
that I have $100 on this card. If you will give me $50 in cash, 
I will give you my card, or you can run the card as though I 
bought $100 in food here. That is referred to as trafficking. 
That never literally does not happen \2/10\ of 1 percent times 
in supermarkets. There is too much at risk. It happens in more 
than 96 or 97 percent of the cases in small stores. It is a 
minority of those small stores, but that is where we go after 
them.
    And I have been meeting with states to say we are taking 
stores out, that I referenced it earlier, 1,400 stores 
permanently out last year, over 10,000 stores in the last 10 
years permanently out of the program. I have said to states, 
when we take a store out, you need to go back through the 
redemption history in that store for the previous 6 months. 
Now, not everybody who redeemed benefits there is trafficking, 
but you need to look at that in order to get the other side of 
the equation here.
    Mr. Abraham. Thank you. Let me switch gears just a little 
bit. I will stay with you, Mr. Secretary, or anybody. I, in my 
district, as I am sure everybody has these farmers' markets. 
You guys have made it possible for them to benefit the SNAP 
customer, but most of them are hooked up wireless. They are 
paying a pretty good premium to play the game, so to speak. And 
I know in the farm bill with the FINI there was money dedicated 
to breach that technology gap. What is going on today? What are 
you guys doing to facilitate that, make it better, make it so 
these farmers' markets can work efficiently?
    Mr. Concannon. We are very committed to that. I just met 
with the National Association of Farmers Markets when I was 
down in Savannah, Georgia here, just within the last week at 
their national meeting. As I mentioned in my testimony, we are 
up to 6,400 farmers' markets, direct marketing farmers. We 
still have a ways to go. On record, there are like 8,300 or 
8,400 farmers' markets across the country. We have been working 
with them to keep up with technology. We provided the 
technology devices to close to 2,000 of those markets, but 
there is also, as you know, a monthly charge, processing fees.
    So we are very much engaged with them to say are there less 
expensive ways to meet that processing charge for the farmers' 
markets, and we have simplified the application process for 
them. When we first started here 6 years, 7 years ago, farmers' 
markets had to fill in the same application as a supermarket; 
and they are a lot less formal.
    These are growers, farmers. They don't have the time for 
that. We simplified that. So we are very committed to it 
because it speaks to an earlier question. We believe farmers' 
markets are a way to nudge people into healthier eating, but 
also keeps those dollars in the local economy. That is 
important to us.
    Mr. Abraham. Thank you. I yield back, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mrs. 
Hartzler, for 4 minutes.
    Mrs. Hartzler. Thank you, Mr. Chairman, as a former 
nutrition teacher, I really appreciate the Dietary Guidelines 
that you all come out with and have for years. It started off 
as the basic four group. I am showing my age, basic four, and 
then we went to the food pyramid, and now MyPlate; and so I am 
interested, certainly, in seeing what you are going to come up 
with here pretty soon for us moving forward.
    I was concerned, though, with when the advisory committee 
came out with their recommendations. I have a copy of that 
report here. I can hardly pick it up; it is so heavy because it 
is far larger than in the past. One of the main reasons for 
that is that it seems like, to me, it goes far beyond just your 
basic scientific nutrition recommendations of what should be in 
the diet, and it is still called Dietary Guidelines.
    So as you know, I authored and headed up a letter that 70 
of my colleagues signed on to expressing our concerns with some 
of these things that goes beyond such as including 
sustainability recommendations and physical activity behavior 
change, and food environment and environmental impact, and 
making recommendations on what we eat based on environmental 
impact and things rather than sound science and what really 
should go into our bodies as far as nutrition.
    And so I am looking forward to meeting with Secretary 
Vilsack next month and visiting with him. I did appreciate his 
letter back saying that he believes as far as what you are 
going to come out with, it is going to stay and color within 
the lines. So I appreciate that. I appreciate your being 
responsive to our concerns.
    But, Director Tagtow, I see that you are a dietitian, so 
you seem like a perfect person to help lead this effort. I was 
just wondering with these concerns, what steps will the USDA 
take during the selection process of the next Dietary 
Guidelines Advisory Committee member selection process to 
ensure that the next advisory committee will stick to their 
Congressional charter and focus solely on providing useful 
health and nutritional information to all Americans?
    Ms. Tagtow. Thank you, Congresswoman Hartzler. Excellent 
questions. Thank you for your letter expressing your concerns 
as well. I first want to make very clear that the Dietary 
Guideline Advisory Committee is an independent entity overseen 
by FACA, Federal Advisory Committee Act, and they provided 
simply recommendations to both HHS and USDA. And we are taking 
those recommendations into consideration along with the wide 
array of public comments that we received, as well as agency 
comments as well. And so looking forward, I don't want to 
speculate as to the procedures for 2020; but, again, just 
emphasizing that they provided a very independent, science-
based review of the evidence and provided recommendations back 
to both agencies for consideration in developing the 2015 
Dietary Guidelines.
    Mrs. Hartzler. As it relates to the law that you referenced 
which establishes the committee, do you see any need for ways 
that we could help in changing the law to help it make sure 
that the people on the advisory committee in the future give a 
report that is just strictly dealing with nutrition?
    Ms. Tagtow. I might defer that to the Under Secretary. As 
far as changing the law, perhaps not. The use of a Federal 
advisory committee is not determined by the law. The law 
doesn't dictate that we actually use an independent body to 
provide a thorough review of the scientific evidence and 
provide recommendations back to both agencies. The law does 
specifically state that what we develop, what the two agencies 
put forth, is based on the preponderance of the current 
scientific and medical knowledge. It is released within 5 
years. It addresses food-based recommendations for ages 2 and 
above, and we need to do it every 5 years.
    Mrs. Hartzler. Thank you very much.
    The Chairman. The gentlelady's time has expired, and I now 
recognize the gentleman who I skipped twice rudely. I apologize 
to you. You can ask for 5 minutes if you want it.
    Mr. Ashford. Thank you, Mr. Chairman. I am speechless 
actually. I just wanted to follow up on what Representative 
Hartzler was talking about. If there is one issue I hear about 
in Omaha from our schools, we have one entity that provides all 
of the school meals for one public high school and all of the 
parochial schools; and then we have a few others that provide 
the meals to the other public schools, so it is not a massively 
large group of providers.
    And essentially, what the refrain is, and I am sorry if I 
am repeating myself, or repeating what others have said, but 
the refrain really is we are concerned that the young people 
simply won't eat what we are giving them, and that is a real 
concern, and this is given to me by people I know that have 
been doing this for 25, 30 years. And nutrition is their 
concern. They are nutritionists. They just want the kids to be 
able to get a meal that they can eat or will eat. I am sure you 
have answered this, but would you mind just, Under Secretary?
    Mr. Concannon. I am happy to receive the question. As I 
mentioned in my testimony, when I travel out to states, I 
always try to go to a school. I just did down in Savannah 
within the last 10 days. And I do so because it is the best 
part of the job, but also to see how kids are doing and to talk 
to teachers. There are real challenges in the meal pattern 
because remember, it is the first time there are menu changes, 
science-based, in more than almost 2 decades, so it represented 
a big change; and I don't, in any way, underestimate the 
challenge it is, and particularly so for children coming into 
the school system, especially older kids. High school kids, in 
the best of times, may be challenging around diet.
    But we have been working consistently with schools to say 
what else can we do to help you? Ninety-five percent of 
American schools are meeting these new standards. We are not 
satisfied with that in this sense. We know that it is a 
challenge for school food service personnel, so we have a 
number of programs. One we have something called Team Up, where 
we worked with the University of Mississippi with their 
resource staff, but we brought school systems together with 
those schools that are successfully implementing, pair them up 
with a similarly-sized school where they are struggling to say 
this is what we are doing to make sure that the kids are 
consuming those foods, because having a healthy menu is only 
part of it. We want to make sure it is consumed.
    The second area that we are working on is we have a group 
up at Cornell University in New York, in Ithaca, that is 
working on what they call the Healthy Lunchroom and where they 
recommend to schools, they are in about 30,000 schools across 
the U.S. It is free to the school or to the school system. They 
have a whole set of ideas, low-cost ideas, that can result in 
students more likely consuming the food. As an example, with 
younger children, one of my favorite aspects, and I have seen 
it all over the country, they add an adjective or a noun. So 
they will say championship carrots, X-ray vision carrots. They 
add words, and young kids see that and they think, man, this is 
for me.
    Mr. Ashford. That might help me to eat carrots, I don't 
know.
    Mr. Concannon. But the idea to use behavioral economics, 
where they place the salad bar, or for high schools, how they 
design the cafeteria to make it look more like a restaurant 
that kids would look for.
    Mr. Ashford. Thank you, and I would like to loop some of 
our people into your team because to the points that have been 
made, your point, these are very good people that are doing it; 
they are nutritionists, they get it. I think they are more 
concerned about the consumption part and the kids not having 
enough.
    Mr. Concannon. We will definitely follow-up with Omaha, you 
mentioned.
    Mr. Ashford. Definitely. The other point, and I made it to 
the last panel, but just to focus on it again, our SNAP 
authorized farmers, we have a lot of farmers in Nebraska still, 
and our SNAP authorized farmer numbers have gone from 750 to 
6,400 to do from farm to market. It is an exceptional program. 
I have been listening today about the farm bill, and I wasn't 
here obviously when it was passed; but it sounds like a 
remarkable piece of work by this Committee and the Congress, 
the Chairman and the Department to really do some amazing 
things. The pilot projects, there are ten of them or 12 of 
them.
    Mr. Concannon. Yes. Farmers' markets. FINI grants, the 
grants that are out there to really encourage more, to 
facilitate more use of farmers' markets, doubling up bucks. I 
was up in Rochester, New York, recently, and they have a 
farmers' markets that has been around since 1904. It is a large 
farmers' market, 300 stalls on a weekend; but they do almost 
$900,000 a year in SNAP benefits there. I always look at the 
price of the food----
    Mr. Ashford. I am over my time, but I thank you for your 
work, and obviously for this Committee in getting the farm bill 
where it is, so thank you.
    Mr. Concannon. It was a great bill.
    The Chairman. The gentleman's time has expired. Mr. Davis, 
for 4 minutes.
    Mr. Davis. Thank you, Mr. Chairman. Sorry I am late. Just 
arrived at the airport and had the chance to come down here and 
get the tail end of the discussion on the school nutrition 
program. This is an issue that Secretary Vilsack has sat in 
your seat numerous times, and I have brought it up. I have some 
concerns with the reauthorization process, with the sodium 
level requirements, and with the sheer fact that many of my 
constituents who attend school are not even a part of the 
school nutrition program any longer because some of the rural 
school districts in my district in central Illinois have pulled 
out because what used to be a profitable part of their 
portfolio is now costing them upwards, as in the case of 
Monticello, Illinois, upwards of $100,000 a year because kids 
that can pay are not eating food.
    So it was interesting to hear you talk about the placements 
of salad bars, other tips and procedures; but the sheer fact is 
we have a lot more plate waste. You have less kids, in my 
district--you may shake your head, but in my district, I am 
hearing from superintendents that the plate waste is going up. 
I am hearing that less kids are eating the school lunch, and 
that there is a concern as we see new requirements go forth, 
that we are going to see more school districts, especially in 
areas like mine, pull out; and I don't want to see that. And 
can you, and I don't mean to make you repeat yourself, but can 
you let me know some tips of what we can do to help?
    Mr. Concannon. Yes, indeed, and I appreciate the candor in 
your question frankly. We are never happy to hear that schools 
have dropped out of the program because it is, by intent, for 
all American students, the numbers of noontime lunch 
participants in the School Lunch Program went down by 
1,300,000. It has stabilized now. At the same time it was going 
down, the numbers of students participating in the National 
Breakfast Program went from 10.3 million to 14 million. So we 
are actually serving more meals to kids right now across the 
United States. I recognize that some systems had challenges 
with it, so that as I mentioned earlier, we have a great 
partnership with the University of Mississippi.
    Senator Cochran, championed the development of a center 
down there that really matches schools across the country that 
are struggling to say, okay, let us match you up with a school 
that has similar demographics, because it probably is going to 
be very useful to match the Dallas independent school district 
with a rural school district in another state. We are more than 
happy to provide that kind of technical assistance.
    Actually I am confident that we are going to see additional 
growth this year in the meals participation. The significant 
reduction was lost mostly in that paid meal category, and part 
of that was everybody I work with, every school nutritionist, 
has said in their schools in the past, whenever they would 
raise the price on the paid meal, they would lose 
participation. And by the way, the National School Lunch Meals 
Program was losing participation going back to 2008. So it 
didn't just start with the new meals pattern.
    Mr. Davis. Well, I can only address this as somebody who 
has listened to many superintendents in my district and as a 
parent who coaches football, and I have heard kids talk about 
how they are hungry when they leave school and they are coming 
to practice.
    So I guess my request to you is the same request I offer to 
Secretary Vilsack every time he is here. Come talk to my 
district. Come talk to the folks who are telling me that this 
is a problem in their school districts. Secretary Vilsack was 
in Champaign, Illinois, just I believe last week; and that is 
an area that is a center point of most of the concerns with my 
superintendents. I wish we could have had a chance to get him 
in front of those superintendents, and I would ask that you do 
that for him at some point, and I would love to work with you 
to make that happen.
    Mr. Concannon. I will personally, or I will make sure our 
Chicago office, but I will try to personally go up there to 
meet with them as well.
    Mr. Davis. I know my time has expired, but your Chicago 
office and your regional office has participated in a round 
table with me, but I want somebody from D.C. to come out and 
hear from my constituents. So with that, thank you, Chairman. 
My time is expired.
    The Chairman. The gentleman's time has expired. Everybody's 
talked. Thank you, Under Secretary and Ms. Rowe and Ms. Tagtow. 
I appreciate it. I recognize it takes a significant amount of 
time for you to be here. Just a couple of points. I am 
encouraged greatly about your comments about data mining and 
the emphasis there. I am familiar with a program that we have 
at Charleston State University that does a great deal of data 
mining, and just looking for out of ordinary conduct that 
doesn't make any sense. So reliance on that will improve the 
system as well.
    A \1/10\ of a percent improvement in the error rate is $75 
million, and so it is a meaningful number. You talked about one 
of your training programs in which you had about $45 million 
that you used to help training, a \1/10\ of percent improvement 
in the error rate, so it is a big deal; and I know you have 
committed to it and I appreciate that.
    I want to offer up for the record my thanks to Secretary 
Vilsack and his efforts at putting all this together the last 2 
days. It didn't happen just by accident. The Under Secretaries 
and Administrators and Chiefs across the system pitched in and 
made this work. The staff sitting behind you and all the other 
staff that were here all yesterday and today sitting behind 
their bosses made that happen. My team is here as well, and I 
want to make sure they know how much I appreciate them doing 
all they did. This is a historic 2 days, quite frankly, to have 
every one of those Department agencies come up here and pitch 
their wares and make themselves available for criticism or 
comments or bragging, or whatever it was, our team is better 
educated today as a result of your efforts over the last few 
days. We will figure out ways to maybe not necessarily do 
everybody all in the 2 days, but nevertheless to replicate this 
kind of process where Members, new and old, have a chance to 
visit with Administrators and the leadership of these 
organizations other than Secretary Vilsack.
    I suspect he will appreciate sharing the Congressional load 
of it as well. We are better off as a result of all of the 
testimony from all of the program areas, and let me just 
officially thank you so very, very much for making that happen, 
and everybody behind you who really made it happen and all my 
team who really, really made it happen, so thank you all very 
much.
    I also thank the membership. I did not anticipate the 
participation we would have. I know it is a little thin right 
now, but we have had great participation. Yesterday was a day 
in which most folks would have been back home working the 
district or mowing the lawn as Rodney was doing. So it is a 
good exercise.
    Under the rules of the Committee, today's hearing will 
remain open for 10 calendar days to receive additional 
material, supplementary written responses from witnesses to any 
questions posed by a Member. This hearing on the Committee of 
Agriculture is now adjourned. Thank you.
    [Whereupon, at 2:43 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
                          Submitted Questions
Response from Hon. Lisa Mensah, Under Secretary, Rural Development, 
        U.S. Department of Agriculture
Question Submitted by Hon. Eric A. ``Rick'' Crawford, a Representative 
        in Congress from Arkansas
    Question. There has been long standing bipartisan support for a 
government role in expanding broadband services to rural America. Such 
access is essential to educating our young and for participating in a 
21st century economy, but I am concerned with the slow pace of progress 
towards that goal. Last year, Congress authorized $690 million for the 
Rural Utilities Service (RUS) to bring broadband services to rural 
America, yet only about a third of that amount was loaned out. Despite 
these shared goals, it is my understanding that RUS continues to place 
unrealistic barriers before applicants--in some cases the barriers 
erected seem to contradict both the law and your own regulations. For 
example, I have heard from an Arkansas phone company, Walnut Hill, 
which operates in one of the poorest rural areas of the country, the 
Mississippi Delta. They tell me that RUS has indicated that it will not 
refinance existing phone company debt even if it is needed in order for 
a construction loan to move forward. Yet the law and your own 
regulations indicate that such refinancing is permitted when it is 
``incidental and necessary'' to furnishing broadband services. I would 
appreciate your looking into this application and seeing if this can be 
resolved.
    Answer. RUS continues to support the mission of providing new and 
improved telecommunications services in rural areas. In fiscal year 
(FY) 2015, RUS obligated approximately \1/3\ of the $690 million in 
funding appropriated for this purpose One reason for this low 
obligation level is that there has been low, but steadily increasing, 
demand for the RUS Broadband loans since 2011.
    In meeting the mission of providing new and improved 
telecommunications services in rural areas, RUS must ensure that loans 
are being made in conformance with the statute and regulations. With 
regard to the Walnut Hill example, the applicant requested funding to 
support refinancing outstanding debt from another lender.
    Under existing regulations and in accordance with statute, RUS may 
consider refinancing outstanding loans, but only if those loans were 
for something RUS could have originally financed such as construction 
of telecommunications or broadband facilities. In this case, the debt 
that they were asking RUS to refinance was originally held by the 
parent company, Townes Telecommunications. RUS cannot refinance debt of 
other entities. The application did not provide evidence that any of 
this debt was associated with construction improvements at Walnut Hill. 
As such the debt was ineligible for refinancing. RUS has continued to 
express our willingness to consider a loan for system improvements, 
subject to agreement by the other lender to share a lien with RUS for 
loan security purposes.
Response from Hon. Edward M. Avalos, Under Secretary, Marketing and 
        Regulatory Programs, U.S. Department of Agriculture
Question Submitted by Hon. Bob Goodlatte, a Representative in Congress 
        from Virginia
    Question. Avian Flu: I appreciate all the hard work your agency has 
done with its HPAI emergency response. While I know there were some 
hiccups in preparations, I know you've all worked hard to improve. What 
lessons have you learned in this response that will assist us if we see 
further outbreaks this fall? Are we prepared to deal with another large 
outbreak of the magnitude that we saw last spring?
    Answer.
Response from Anne L. Alonzo, J.D., Administrator, Agricultural 
        Marketing Service, U.S. Department of Agriculture
Question Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question. Administrator Anne Alonzo, I have heard from growers in 
my district that there are inconsistencies with policies at the Tobacco 
Administrative Grading Service (TAGS). Can you please provide an 
analysis of how TAGS sets the price and details on how TAGS ensures 
that USDA standards are being strictly applied?
    Answer. Tobacco Administrative Grading Services (TAGS) is a private 
entity created by the Burley Tobacco Growers Cooperative Association 
and a third party consultant organization, AgWin, with input from 
USDA's Risk Management Agency (RMA) and Agricultural Marketing Services 
(AMS). TAGS provides administrative services by collecting and 
notifying AMS electronically of producers' name, farm number, number of 
bales, location, weight, grading confirmation number, and request of 
scheduled date of grading service. AMS tobacco grades are used for 
quality loss adjustment for the tobacco crop insurance program. TAGS 
itself does not set prices for tobacco crop insurance, nor is it 
involved in the process of making quality adjustments or payments to 
the producers through the RMA crop insurance program. AMS does not have 
an agreement with TAGS. The Agency has a business/billing agreement 
with the Burley Tobacco Growers Cooperative Association. This is not 
covered in the Tobacco Inspection Act.
    AMS is solely responsible for grading tobacco, and these AMS 
tobacco grades are the only grades that can be used for the crop 
insurance program. AMS acts as an independent third-party. In doing so, 
AMS uses USDA certified tobacco graders to ensure that tobacco 
standards are applied properly, consistently, and in accordance with 
USDA Official Grade Standards (published at 7 CFR Part 29). AMS has no 
authority over the operations, policies, or pricing of TAGS itself, nor 
does AMS have authority over RMA's crop insurance program, the 
determination of quality loss adjustments, or payments made to tobacco 
producers or their representatives. For its services, AMS charges user 
fees based on the total volume of tobacco submitted. After grading the 
tobacco, AMS provides the grades to RMA electronically who in turn 
provides them to the crop insurance companies for their respective 
policies.
    AMS is committed to ensuring that tobacco grades are applied fairly 
and uniformly across the program. Tobacco grading operations are 
managed by AMS personnel without any input from outside entities. AMS 
personnel utilize USDA grade standards to assess the quality of the 
tobacco and provide supervision of the services requested. Random 
samples are collected periodically and stored in a secured storage unit 
at the AMS facility in Raleigh, North Carolina. These samples are 
examined by AMS supervisors for accuracy, which contributes toward each 
tobacco grader's performance appraisal. In addition, supervisors make 
random visits to grading locations during heavy grading periods to 
observe procedures, provide guidance, and ensure quality 
determinations.
Response from Kevin Shea, Administrator, Animal and Plant Health 
        Inspection Service, U.S. Department of Agriculture
Questions Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question 1. Administrator Kevin Shea, the challenges that APHIS has 
faced in controlling this devastating outbreak of High Pathogenic Avian 
Influenza is alarming to our animal agriculture industry. Is APHIS 
prepared to deal with an even more devastating outbreak of a disease 
such as foot-and-mouth disease (FMD) that affects multiple species? Can 
you assure this Committee that you have the resources and tools 
necessary to control an outbreak of FMD?
    Answer. Safeguarding against significant animal diseases, including 
FMD, is vital to protecting industry, producers, and consumers. It 
remains a top priority for APHIS and USDA, and we have rigorous 
emergency procedures in place.
    Our plan to protect the country starts with our existing regulatory 
import controls that includes overlapping safeguards to reduce the risk 
of the disease coming from imports of agricultural products to an 
extremely low level. It includes extensive surveillance to detect any 
presence of the disease, should it make its way to our shores, as well 
as sanitary/phytosanitary requirements to which exports must adhere. If 
disease is suspected, we investigate the case immediately.
    In the extremely rare chance that FMD is confirmed, our first 
priority would be to immediately contain and stamp out the disease 
through depopulation and movement restrictions. We would work closely 
with our state and industry partners to pool resources to expand our 
ability to respond to and eradicate this disease.
    In the event of an outbreak, USDA would be able to use its 
emergency transfer authority under the Animal Health Protection Act to 
obtain funding to combat the disease, just as it did with the outbreak 
of HPAI.
    Recently, APHIS has begun discussions with our partners about the 
use of vaccines in an emergency FMD response. While the response to an 
FMD detection would depend on several factors, vaccination is a key 
tool to have available should FMD enter the country. Accordingly, we 
maintain a supply of about 25 million doses of vaccine across multiple 
strains in the North American Vaccine Bank. However, this amount of 
vaccine on hand is not sufficient to respond to a large outbreak of the 
disease, if we must make the policy decision to use vaccine. This would 
limit the tools we have available to reduce disease spread.
    Estimates of the amount of vaccine needed to address an outbreak of 
FMD in the United States vary. APHIS has set a preliminary goal of 
increasing to 35-40 million doses of vaccine across multiple strains. 
APHIS' 2016 appropriations request included $1.2 million for the North 
American Vaccine Bank. This amount is a continuation of baseline 
funding and would maintain the vaccine bank at its current size.
    Given the mismatch between estimates of vaccine need and what APHIS 
currently has access to, the Agency has had discussions with industry 
about how best to address the gaps in vaccine coverage. Those 
discussions have included a range of alternatives, including Federal-
industry cost-sharing, to fund efforts to eliminate the shortage, and 
those conversations with industry are ongoing. APHIS and industry 
recognize the need for an increased vaccine stock, and we are committed 
to working with our partners to identify solutions.

    Question 2. Administrator Kevin Shea, this year, the appropriations 
bill did not allot extra funding for the CARB (Combating Antibiotic 
Resistant Bacteria) initiative. Can you clarify your plans in support 
of the research portion of the CARB initiative? Are you anticipating 
cuts to other programs to fund CARB?
    Answer. Antimicrobial resistance (AMR) is considered a serious 
health threat to both animals and humans. To address this threat the FY 
2016 Budget for USDA included a total of $77 million (+$57 million), of 
which $66 million (an increase of $47 million) is for the Research, 
Education and Economics (REE) Mission Area and $10.7 million (+$10 
million for surveillance) is for APHIS. The enacted FY 2016 Budget for 
USDA is $25 million for REE for intramural and extramural research and 
$730,000 for APHIS for surveillance.
    USDA intends to continue to provide science-based, quantitative 
information about antibiotic drug use and resistance in food animals 
and their relationship to livestock management practices through 
existing work and available funding. This funding severely restricts 
our capability to implement initiatives described in the USDA 
Antimicrobial Resistance (AMR) Action Plan and Combating Antibiotic 
Resistant Bacteria (CARB) National Strategy. That plan may be found 
here: http://www.usda.gov/documents/usda-antimicrobial-resistance-
action-plan.pdf.
    USDA's AMR Action Plan takes a voluntary, comprehensive, systems 
approach for surveillance, research, education, extension, and 
outreach. This approach would include the development of partnerships 
with stakeholders and work through the existing programs and mission of 
APHIS (as well our sister agencies at USDA).
    USDA, along with FDA, has continued to gather input from 
stakeholders to further refine plans for on-farm antibiotic use data 
collection contained in the AMR Action plan. Although no additional 
funding was provided in FY 2016, USDA has again requested additional 
funding for FY 2017 to conduct this voluntary on-farm monitoring of 
antibiotic-use practices and antibiotic resistance.
    USDA will also solicit applications for competitive extramural 
funding to support research, education, and extension/outreach through 
the Antimicrobial Resistance Initiative program in FY 2016. This will 
continue to add to the portfolio of the AMR program that began in FY 
2012. Funded scientists are generating and will continue to obtain 
science-based data, knowledge, and information to be used by relevant 
stakeholders to inform policy and other decision-making activities 
related to antibiotic stewardship and across the food chain.
Response from Alfred V. Almanza, Deputy Under Secretary, Food Safety, 
        U.S. Department of Agriculture
Question Submitted by Hon. David Rouzer, a Representative in Congress 
        from North Carolina
    Question. Deputy Under Secretary Alfred Almanza, Congressman Lucas 
and I sent you a letter earlier this year regarding several U.S. 
processing plants and storage facilities that were barred from 
exporting pork to China last summer. Can you please update us on FSIS 
requirements for exports to China and is China still barring any U.S. 
facilities that have been approved by the guidelines of the Ractopamine 
Residue Program or the Never Fed Beta-Agonist Program?
    Answer. The Food Safety and Inspection Service (FSIS) is working 
with China to get the fifteen establishments delisted by China 
reinstated as soon as possible, and is engaged in a thorough review of 
the circumstances that led to the establishments being suspended.
    FSIS has emphasized to Chinese health officials that all raw U.S. 
pork products exported to China are produced either under the Never Fed 
Beta Agonist Program or a Ractopamine Free Residue Program. Both of 
these programs are administered by the United States Department of 
Agriculture's Agricultural Marketing Service, and any company seeking 
to export to China must participate in one of these two programs before 
FSIS will certify these products. The companies have taken corrective 
actions that FSIS has verified, and FSIS has requested that the 
establishments be allowed to resume exporting to China.

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