    [Senate Hearing 114-644]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-644

                                A REVIEW OF THE
                      U.S. LIVESTOCK AND POULTRY SECTORS:
                         MARKETPLACE OPPORTUNITIES AND
                                   CHALLENGES

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

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON AGRICULTURE,
                            NUTRITION, AND FORESTRY

                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  MAY 26, 2016

                                   __________

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

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

      Available via the World Wide Web: http://www.agriculture.senate.gov

                                    __________

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               COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

                         PAT ROBERTS, Kansas, Chairman

    THAD COCHRAN, Mississippi            DEBBIE STABENOW, Michigan
    MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
    JOHN BOOZMAN, Arkansas               SHERROD BROWN, Ohio
    JOHN HOEVEN, North Dakota            AMY KLOBUCHAR, Minnesota
    DAVID PERDUE, Georgia                MICHAEL BENNET, Colorado
    JONI ERNST, Iowa                     KIRSTEN GILLIBRAND, New York
    THOM TILLIS, North Carolina          JOE DONNELLY, Indiana
    BEN SASSE, Nebraska                  HEIDI HEITKAMP, North Dakota
    CHARLES GRASSLEY, Iowa               ROBERT P. CASEY, Jr., Pennsylvania
    JOHN THUNE, South Dakota

                   Joel T. Leftwich, Majority Staff Director

                    Anne C. Hazlett, Majority Chief Counsel

                        Jessica L. Williams, Chief Clerk

                   Joseph A. Shultz, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page

    Hearing(s):

    A Review of the U.S. Livestock and Poultry Sectors: Marketplace
      Opportunities and Challenges...................................     1

                                  ----------

                             Thursday, May 26, 2016
                        STATEMENTS PRESENTED BY SENATORS

    Roberts, Hon. Pat, U.S. Senator from the State of Kansas,
      Chairman, Committee on Agriculture, Nutrition, and Forestry....     1
    Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan...     2
    Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota....     4
    Heitkamp, Hon. Heidi, U.S. Senator from the State of North Dakota     6
                                  ----------

                                   WITNESSES

    Brunner, Tracy, President, National Cattlemen's Beef Association,
      Cow Camp Feedyard, Inc., Ramona, KS............................     7
    Truex, Ronald, Chairman, United Egg Producers, Creighton
      Brothers, LLC, Atwood, IN......................................     8
    Hill, Howard, Past President, National Pork Producers Council,
      Breeze Hill Farms and H&K Enterprises, Cambridge, IA...........    10
    Goggins, Joe, Producer, U.S. Cattlemen's Association, Vermilion
      Ranch Co., Public Auction Yards, & Northern Livestock Video
      Auction, Billings, MT..........................................    12
    Zimmerman, John, Producer, National Turkey Federation/Minnesota
      Turkey Growers Association, P&J Products, Northfield, MN.......    14

                                  ----------

                                    APPENDIX

    Prepared Statements:
        Leahy, Hon. Patrick J........................................    42
        Thune, Hon. John.............................................    45
        Tillis, Hon. Thom............................................    49
        Brunner, Tracy...............................................    50
        Goggins, Joe.................................................    57
        Hill, Howard.................................................    64
        Truex, Ronald................................................    77
        Zimmerman, John..............................................    81
    Document(s) Submitted for the Record:
    Roberts, Hon. Pat:
        Written letter to Hon. Tom Vilsack concerning rules proposed
          by Grain Inspection, Packers and Stockyards Administration
          (GIPSA), April 19, 2016....................................    88
        Written letter to Hon. Gene Dodaro concerning Foot-And-Mouth
          Disease (FMD), April 28, 2016..............................    90
        ``A Review of the U.S. Livestock and Poultry Sectors:
          Marketplace Opportunities and Challenges'', written
          testimony of Livestock Marketing Association (LMA).........    92
    Question and Answer:
    Brunner, Tracy:
        Written response to questions from Hon. Pat Roberts..........   100
        Written response to questions from Hon. Joni Ernst...........   101
        Written response to questions from Hon. Thom Tillis..........   101
        Written response to questions from Hon. John Thune...........   103
        Written response to questions from Hon. Patrick J. Leahy.....   103
        Written response to questions from Hon. Robert Casey, Jr.....   107
    Goggins, Joe:
        Written response to questions from Hon. Pat Roberts..........   108
        Written response to questions from Hon. Joni Ernst...........   108
        Written response to questions from Hon. John Thune...........   109
        Written response to questions from Hon. Patrick J. Leahy.....   111
        Written response to questions from Hon. Robert Casey, Jr.....   114
    Hill, Howard:
        Written response to questions from Hon. Pat Roberts..........   116
        Written response to questions from Hon. Thom Tillis..........   116
        Written response to questions from Hon. John Thune...........   119
        Written response to questions from Hon. Patrick J. Leahy.....   120
        Written response to questions from Hon. Robert Casey, Jr.....   125
    Truex, Ronald:
        Written response to questions from Hon. Pat Roberts..........   127
        Written response to questions from Hon. John Thune...........   128
        Written response to questions from Hon. Patrick J. Leahy.....   129
        Written response to questions from Hon. Robert Casey, Jr.....   132
    Zimmerman, John:
        Written response to questions from Hon. Pat Roberts..........   135
        Written response to questions from Hon. Thom Tillis..........   136
        Written response to questions from Hon. John Thune...........   137
        Written response to questions from Hon. Patrick J. Leahy.....   138
        Written response to questions from Hon. Robert Casey, Jr.....   142

                                A REVIEW OF THE
                      U.S. LIVESTOCK AND POULTRY SECTORS:
                    MARKETPLACE OPPORTUNITIES AND CHALLENGES

                                  ----------

                             Thursday, May 26, 2016

                                  United States Senate,
             Committee on Agriculture, Nutrition, and Forestry,
                                                         Washington, DC
        The committee met, pursuant to notice, at 10:03 a.m., in
    room 216, Hart Senate Office Building, Hon. Pat Roberts,
    Chairman of the Committee, presiding.
        Present or submitting a statement: Senators Roberts,
    Boozman, Hoeven, Ernst, Tillis, Sasse, Grassley, Thune,
    Stabenow, Brown, Klobuchar, Bennet, Gillibrand, Donnelly,
    Heitkamp, and Casey.

     STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE STATE OF
    KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND
                                FORESTRY

        Chairman Roberts. Good morning. I call this meeting of the
    Senate Committee on Agriculture, Nutrition, and Forestry to
    order.
        We have a variety of farmers and ranchers from across the
    country here today to give us their perspectives on marketplace
    opportunities and challenges in the livestock and the poultry
    sectors. Who better to testify before this committee than
    producer leaders representing these industries that play such
    an important role in the economic stability of rural America
    and certainly in my home State of Kansas and in the state of
    every member that is privileged to serve on this committee.
        It has been five years since our last committee hearing on
    the state of the livestock and poultry sectors. Thank you to
    Senator Heitkamp for making this suggestion, and we agreed some
    time back that it was time. I know everyone is interested to
    hear about the many events that have taken place during this
    period that have impacted the economic standing of your
    industries as well as future opportunities and challenges for
    growth.
        Now, the livestock industry and the poultry sectors,
    weather ebbs and flows every day. One could argue that recent
    years have seen greater volatility and unpredictability than
    most. Today's livestock and poultry producers are operating in
    a highly cyclical marketplace. One year, they may receive
    record prices for their animals, and then the next see a
    dramatic drop in value, like we have seen recently in the beef
    sector. Other events, like the diseases that have ravaged the
    egg, pork, and turkey sectors, can leave our producers with
    little to no income for months on end.
        Unfortunately, we know there has been significant erosion
    in farm equity due to these disease outbreaks and marketplace
    volatility. Some producers were unable to weather that storm.
    Add into this equation the reality that this is an industry
    where the good times are typically composed of margins of just
    a few cents or a few dollars per animal and you begin to
    understand what a tough business animal agriculture is.
        This reality demonstrates just how savvy today's farmers
    and ranchers must be in order to make a living, and that this
    is a livelihood not for the risk averse or the faint of heart.
    Yet I am confident that even in the face of today's challenges,
    the industries represented here will continue to lead the world
    in delivering safe and affordable meat products to our
    consumers.
        The importance of this sector to my home State of Kansas is
    immense, not to mention the home states of everybody on the
    Committee. Eastern Kansas is known for its rolling Flint Hills,
    spotted with grazing cattle. Western Kansas is home to some of
    the country's largest and most modern beef feedlots. Kansas is
    the third largest beef producing state in the country, with
    deference to Texas and Nebraska. I hate to say that, really,
    but that is true.
        Senator Sasse. You are welcome.
        Senator Stabenow. Uh-oh.
        [Laughter.]
        Chairman Roberts. It is also experiencing growth in pork
    production, which is a boon to many of our small rural
    communities.
        These sectors present here today are a significant driver
    of our rural economies. In fact, according to the most recent
    USDA Agriculture Census, the beef, pork, and poultry sectors
    account for 36 percent of the total agriculture sales on an
    annual basis, and that number is only going up. Sales of
    cattle, hogs, poultry, and eggs also accounted for $141 billion
    annually. That is a billion with a ``B'', not an ``M.'' These
    are impressive numbers.
        Thank you for taking the time away from your farms and your
    ranches and your businesses to educate your elected officials
    about your industries.
        I ask unanimous consent to include in the record, testimony
    submitted by the Livestock Marketing Association.
        [The statement of the Livestock Marketing Association can
    be found on page 92 in the appendix.]
        Chairman Roberts. I now recognize the Ranking Member, the
    distinguished Ranking Member of our committee, Senator
    Stabenow.

    STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
                              OF MICHIGAN

        Senator Stabenow. Well, thank you very much, Mr. Chairman.
    This is a very important hearing and we welcome all of our
    witnesses and appreciate the chance to highlight a very
    important part of the agricultural economy.
        As we know, the last several years have been challenging,
    as the Chairman said, for livestock producers, and it is one of
    the reasons why the 2014 Farm Bill made many of the important
    investments that help support and bolster this important
    segment of American agriculture. In fact, one of the first uses
    of the 2014 Farm Bill was the activation of the livestock
    disaster programs, which have paid out more than $5.8 billion
    to date and helped producers across the country when they faced
    extreme weather conditions, like droughs, blizzards, and
    wildfires.
        The Farm Bill also expanded the voluntary conservation
    programs that give our farmers and ranchers the tools they need
    to address issues on their own instead of regulation. USDA
    voluntary conservation programs make it easier for a rancher in
    Kansas or a turkey producer in Michigan to improve wildlife
    habitat, livestock forage, and water quality through programs
    like the Environmental Quality Incentive Program or the
    Agricultural Conservation Easement Program. In addition, the
    new Regional Conservation Program provides opportunities for
    locally led conservation solutions to issues like improving
    water quality in our Great Lakes and addressing endangered
    species issues like the sage-grouse in the West.
        However, for USDA conservation efforts to be successful, I
    would ask today for your continued help to encourage more
    producers to take advantage of these opportunities and tell
    their story about why voluntary conservation is the best way to
    address resource concerns.
        As we look to other issues impacting our livestock
    industry, we know how important it is to make investments in
    agriculture research. In fact, this need was underscored by
    last year's rapid emergence of highly pathogenic avian
    influenza, which affected more than 48 million birds in 15
    states, and we know what that meant. This type of animal health
    crisis has devastating economic impacts on our producers,
    drives up the cost of food for consumers, and threatens
    international trade. That is why the investments we made
    through the Farm Bill to establish the new Foundation for Food
    and Agriculture Research are so important, and I look forward
    to seeing the Foundation begin to roll out new programs shortly
    to support your efforts.
        Despite these challenges, however, there are also plenty of
    reasons for the livestock sector to be optimistic. As I look to
    my home State of Michigan, I see livestock producers breaking
    new ground on processing facilities, expanding into new value-
    added markets like organics.
        Just last summer, the Clemens Food Group broke ground in
    Coldwater, Michigan, on one of the first new Michigan pork
    processing facilities in decades. They are expected to create
    800 jobs and will source from producers in Michigan and
    throughout the Midwest.
        Nationwide, the demand for organic eggs has more than
    doubled since 2012, and producers like the Herbruck's in
    Michigan have continued to step up to meet the need. Now is the
    critical time to ensure that we continue to support these
    organic producers so organic eggs can continue to be available
    and affordable for American families.
        Lastly, Mr. Chairman, I want to highlight action by this
    committee last year to unanimously pass and get signed into law
    a reauthorization of mandatory price reporting, which we did
    together. This authorization made important advances that were
    supported by producers to increase market transparency, and I
    am pleased we are able to do this in an overwhelmingly
    bipartisan way.
        Mr. Chairman, I appreciate you holding this hearing. Again,
    I stand ready to work with you and our colleagues on the
    Committee to ensure our farmers and ranchers have the tools
    they need to be successful. Thank you.
        Chairman Roberts. I thank the Senator.
        A study was just conducted a while back saying that members
    of the Senate are supposed to be in two or three places at the
    same time.
        [Laughter.]
        Chairman Roberts. That explains a lot.
        Senator Klobuchar is supposed to be at the Judiciary
    Committee. I note that Senator Grassley is supposed to be, as
    well. We have provided him a muffin and a cup of coffee, but he
    has not shown up----
        Senator Sasse. Can I have his muffin?
        Chairman Roberts. --demonstrated by the distinguished
    Senator from Nebraska, who took time from reading from the
    Constitution to demonstrate that. I am going to get in trouble
    for that.
        [Laughter.]
        Chairman Roberts. Senator Klobuchar, I know that you want
    to introduce John Zimmerman, who is a turkey grower, on behalf
    of the National Turkey Foundation from Northfield, Minnesota.
    Why don't you proceed with that?

    STATEMENT OF HON. AMY KLOBUCHAR, U.S. SENATOR FROM THE STATE OF
                               MINNESOTA

        Senator Klobuchar. All right. Well, thank you very much,
    Mr. Chairman and Ranking Member Stabenow, and also Senator
    Heitkamp for suggesting this hearing. I think it is so
    important, and the work that we have done in the Farm Bill on a
    bipartisan basis for our livestock and poultry industries has
    been key, but also there is a lot of work to be doing going
    forward and I am glad we are doing this.
        Minnesota is number one for turkeys. I just always like to
    say that. We are number one for turkeys, as Mr. Zimmerman
    knows, in the country, and number two for hogs, which sometimes
    surprises people. So, this is pretty important to us.
        John Zimmerman is a second generation Minnesota turkey
    farmer who also raises corn and soybeans on his farm with his
    wife, Cara, and son, Grant. He has previously served as
    President of the Minnesota Turkey Research and Promotion
    Council and he is a current board member of the National Turkey
    Federation. He is also the current Board Chair of the River
    Country Co-Op.
        He is a graduate of Iowa State University, which we will
    not hold against him, being from Minnesota, where he earned a
    Bachelor's Degree in animal science.
        Thank you for being here, John, and I know the Committee
    will benefit from the expertise that you will bring to a turkey
    farmer, and also as a turkey farmer, and also as an industry
    leader. We look forward to hearing from you.
        Chairman Roberts. I would like to now proceed with the
    introduction of the witnesses.
        I am very proud to introduce Mr. Tracy Brunner, President
    of the National Cattlemen's Beef Association. Mr. President, I
    am not going to go any farther with that.
        Tracy is a fourth generation rancher from Ramona, Kansas.
    He has served as President of his family corporation since its
    inception in 1988, where he manages the feed yard, the yearling
    grazing operation, cattle and grain marketing decisions,
    commodity risk management, and customer relations. He is a busy
    guy. Tracy's family also operates a seedstock enterprise,
    raising bulls and replacement heifers for many ranchers all
    throughout the United States.
        Tracy graduated from Kansas State University, home of the
    ever-optimistic Fighting Wildcats, with a degree in animal
    science and a Master's of agribusiness. He has held many
    leadership positions in the U.S. beef industry, including
    Executive Committee Member and President of the Kansas
    Livestock Association, a member of the Kansas Beef Council
    Executive Committee, a member of the Kansas Governor's
    Agriculture Advisory Board, as well as Policy Division Chair,
    Executive Committee Member, and Board member for the National
    Cattlemen's Beef Association for nearly 20 years.
        Tracy, you have been a true leader for our Kansas
    agriculture and the U.S. beef industry. I am very pleased, very
    proud to welcome you to the Committee today.
        [Pause.]
        Chairman Roberts. We will proceed with your statement in
    just a moment. We will introduce the rest of the witnesses.
        Ron Truex, who is Chairman of the United Egg Producers,
    Atwood, Indiana. Mr. Truex's career in the egg industry began
    over four decades ago when he joined Creighton Brothers, LLC,
    an egg production, processing, grading, and marketing company.
    Ron has held positions in sales and operations and has served
    as President and General Manager of Creighton Brothers since
    1998.
        Ron has held several leadership positions within state and
    national agriculture organizations, including President of the
    Indiana State Poultry Association, President of the Indiana Egg
    Board, past Chairman of the American Egg Board, and as chairman
    of several committees within the United Egg Producers.
        Thank you so much for being here today Ron, I look forward
    to hearing your views of the egg industry.
        Senator Grassley was supposed to be here to introduce Dr.
    Howard Hill. He is obviously over at the Senate Judiciary
    Committee. Dr. Hill is the Past President of the National Pork
    Producers Council from Cambridge, Iowa. Dr. Hill is a pork
    producer and a veterinarian from Cambridge, Iowa, where he runs
    a farrow to finish hog operation, raises Angus cattle, and
    grows 2,700 acres of corn, soybeans, and alfalfa.
        Dr. Hill earned his Bachelor's and Doctorate of Veterinary
    Medicine degrees from the University of California-Davis and a
    Master's and Doctorate degree from Iowa State University in
    veterinary microbiology and preventive medicine. He has worked
    as a veterinary practitioner, a fellow for the National
    Institutes of Health, head of the Microbiological Section of
    the Iowa State University Vet Diagnostic Lab, head of
    veterinary services for Murphy Family farms, and Director of
    Production and Chief Operating Officer for Iowa Select Farms.
        Dr. Hill is the Past President of the National Pork
    Producers Council and the American Association of Swine
    Veterinarians, a former Board member for the Iowa Pork
    Producers Association, and was recently appointed to serve on
    the U.S. Department of Agriculture's Advisory Committee on
    Animal Health.
        Dr. Hill, that is quite a distinguished career. I look
    forward to your testimony.
        Senator Heitkamp, I recognize you to introduce Joe Goggins,
    a producer on behalf of U.S. Cattlemen's Association from
    Billings, Montana.

     STATEMENT OF HON. HEIDI HEITKAMP, U.S. SENATOR FROM THE STATE
                            OF NORTH DAKOTA

        Senator Heitkamp. Welcome, Joe. Joe is a rancher and
    auctioneer from Billings, Montana. He is a native Montanan who,
    in addition to working on his family's ranch, has auctioneered
    for some of the top purebred sales in America and remains
    directly involved in his family's livestock auction market. He
    is the owner of J&L Livestock, which merchandises from 3,000 to
    5,000 top bred commercial Angus females annually. His family's
    three livestock auction yards and Northern Livestock Video
    Auction is often cited as a primary influencer in the cash
    cattle market across the nation.
        We are proud to have him, because he is not only an active
    Montanan, he is also a regular at North Dakota's bull sales,
    most notably Ellingson Angus in St. Anthony, Frey Angus in
    Granville, Prairie Pride in Enderlin, Schaff Angus Valley at
    St. Anthony, and Stuber Ranch in Bowman, and we really
    appreciate your involvement in North Dakota, and I know that
    you know that we produce some of the best bulls in the world.
        His reach into the cattle industry extends nationwide with
    his family's widely subscribed publication The Western Ag
    Report. Continuing to be an active member in the livestock
    industry, he served one term as President of Montana's
    Livestock Marketing Association and two terms as President of
    Montana Angus Association. He is currently the Director of the
    Livestock Marketing Association and a member of the United
    States Cattlemen's Association.
        Joe remains very involved in the ebb and flow of the cattle
    market. With all of that on his plate, he and his family are
    still able to help market 600,000 head of cattle annually,
    along with his wife, Linda, and his three children and 250
    employees who help him through that process. Quite a record of
    achievement.
        Welcome to the Committee. We look forward to your
    testimony.
        Chairman Roberts. Thank you, Senator Heitkamp.
        We thank you all again for taking the time to join us
    today. We appreciate your sharing your expertise, firsthand
    experience as leaders of the livestock and poultry sectors.
        Mr. Brunner, Tracy, could you tell me in your perspective
    how we get past this recent downfall in the beef sector.

      STATEMENT OF TRACY BRUNNER, PRESIDENT, NATIONAL CATTLEMEN'S
       BEEF ASSOCIATION, COW CAMP FEEDYARD, INC., RAMONA, KANSAS

        Mr. Brunner. Well, thank you, Mr. Chairman, members of the
    Committee. Good morning to everyone.
        Always at the mercy of Mother Nature, our industry is
    rapidly recovering from extensive drought. Herd rebuilding and
    expansion are taking place at a rate where U.S. cattle numbers
    will soon be equal to 2012. Additionally, American cattle
    producers continue to be more efficient in producing beef.
    Today, we can produce the same amount of beef that we produced
    in 1977 at one-third less cattle and land.
        The beef supply chain is always focused on the consumer.
    Our cow-calf ranchers tell their seedstock suppliers what they
    need and also ask their stocker and feeder calf buyers what
    they will pay the most for. Cattle feeders, likewise, look to
    packer processors for signs of greatest value, who in turn have
    an ear for retail and food service needs.
        Cattle prices have been a topic of focus for NCBA and our
    members. In early 2015, we saw record high cattle prices, but
    soon those started back down. One factor was the increase in
    overall protein supplies. Last year, U.S. per capita red meat
    and poultry supplies increased by nearly ten pounds per person.
    In addition, the strong U.S. dollar has impacted our ability to
    ship beef to our international customers.
        All of this additional supply puts downward pressure on our
    markets, but we are used to the ups and downs of the cattle
    cycle. In order to manage this cycle, we need risk management
    tools that work. We currently rely on market forums like CME
    Groups, cattle futures contracts, to add transparency to our
    price discovery process. Changing technologies and a transition
    to automated trading and commodity futures have increased
    market volatility, making interpretation of those price signals
    different than what we are accustomed to in the past. The
    integrity of our market forums is very important to us, for
    without futures contract integrity, our industry will abandon
    their use.
        We have recognized the volatility and are working directly
    with the CME Group to find ways to address it. We have a joint
    NCBA-CME working group which is analyzing potential changes,
    such as slowing down the market to help ensure a level playing
    field for producers who are using these tools to manage their
    price risk.
        Today, we ask for no direct action from our government in
    our cattle marketing systems and forums. In fact, I am
    concerned at some of the action that we have seen.
        Secretary Vilsack has announced he is going to dust off the
    proposed GIPSA marketing rule that resulted from language
    included in the 2008 Farm Bill. This is very concerning to us,
    because bipartisan efforts already resulted in appropriations
    language which defunded any additional work on or
    implementation of the ideas included in the draft rule. The
    proposed GIPSA rule would have made USDA the ultimate arbiter
    on how cattle are marketed. We urge USDA to enforce the Packers
    and Stockyards Act as it exists now. We do not need them
    dictating how we can or cannot market our cattle.
        We have worked for years to find ways, new and innovative
    ways to market cattle. Alternative marketing arrangements have
    been studied by USDA and independent groups and the results
    show that these alternative marketing arrangements benefit
    producers and consumers alike. Any Congressional or executive
    action to interfere will only add to our price problems, not
    solve them.
        Solving our price problems relies on addressing the true
    issues of consequence in our industry. We have capitalized on
    the growing demand for U.S. beef overseas, and Japan has become
    our leading export market. But Australia now has a ten percent
    tariff advantage over us, resulting in a loss of $300 million.
    The tariff advantage for Australia will continue to grow until
    we pass TPP.
        In closing, I would say you could also help our bottom line
    by easing the regulatory burden that our industry is under.
    Taking action to reform the Endangered Species Act and helping
    us keep the EPA at bay would go a long way in easing the
    pressures on our industry.
        Again, thank you very much for this opportunity to be with
    you.
        [The prepared statement of Mr. Brunner can be found on page
    50 in the appendix.]
        Chairman Roberts. Thank you, Tracy, for a very good
    statement.
        Mr. Truex.

    STATEMENT OF RONALD TRUEX, CHAIRMAN, UNITED EGG PRODUCERS, AND
          PRESIDENT, CREIGHTON BROTHERS, LLC, ATWOOD, INDIANA

        Mr. Truex. Thank you, Mr. Chairman. My name is Ron Truex
    and I am an egg producer from Atwood, Indiana. I am also
    Chairman of United Egg Producers and we appreciate being
    invited to this hearing.
        I would like to talk about two major events that have had a
    dramatic impact on our industry in the past year. Then I would
    like to mention two current issues where we could use the
    Committee's help.
        The first event was last year's devastating outbreak of
    highly pathogenic avian influenza. I have some statistics in my
    written testimony, but I am sure I do not need to tell anyone
    on this committee what a difficult experience that was.
    Thankfully, my farm was not directly involved, but every single
    egg producer was affected one way or another, from much more
    stringent biosecurity to a loss in demand for egg products,
    which we hope is temporary. We are still dealing with the
    aftermath of the HPAI crisis.
        This year has brought another challenge. Our customers in
    food service, food manufacturing, and retail grocery sales are
    announcing their decisions to source only cage-free eggs in the
    future. In most cases, they have specified a transition period,
    often as much as ten years.
        There are about 300 million hens in the U.S. egg laying
    flock. Today, about 30 million of those, just under ten
    percent, are cage-free housing. Of those 30 million hens, just
    under half of those are on organic farms, with the remainder in
    non-organic production. The remaining 90 percent of the U.S.
    flock is cared for in cages, the vast majority of which comply
    with our UEP Certified Program, which provides space
    requirements for each hen. A small but important portion are
    kept in enriched cages, where space allowances are greater and
    enrichments like perches and nest boxes are provided.
        According to the estimates by USDA, if you add up the
    current egg usage of all companies that have publicly made
    cage-free commitments, by 2030, 60 percent of the nation's egg
    laying flock, not the current ten percent, but 60 percent, or
    174 million birds, will need to be in cage-free housing. USDA
    also added up the number of egg producers that have publicly
    announced plans to convert some or all of their operations to
    cage-free status. However, those commitments only add up to 63
    million hens, about a third of the 174 million requested by our
    customers.
        Our industry is highly competitive and we will always try
    to produce what our customers want, but it will be extremely
    difficult for us to meet the cage-free demand. The new
    construction, capital investment, additional land acquisition,
    and higher production costs will all be daunting.
        UEP believes, and science shows, that hens can be humanely
    housed in a variety of ways, through conventional cages,
    enriched cages, and in cage-free environments. Good management,
    not production technique, is the most important variable in hen
    welfare.
        Now, in the time I have left, let me conclude with two
    recommendations for Congressional action. Like most other farm
    groups, we are hoping for a national standard on GMO labeling
    that will override state laws. We appreciate the hard work that
    the leaders of this committee are continuing to do and we fully
    understand it is not an easy task. We would simply like to
    point out that while most of our hens consume genetically
    engineered feed, the corn and the soybeans, neither the hens
    nor the eggs they lay are genetically engineered. Therefore,
    eggs should not have to be labeled as GE or GMO merely because
    they were laid by hens that consumed GE feed.
        A second way that we hope Congress will help us is by
    encouraging USDA to carry out a better economic analysis before
    finalizing a new proposed rule on organic livestock and poultry
    production. For the egg sector, USDA is proposing to ban
    production systems that have been approved by that Department
    since 2002. These so-called porch systems provide outdoor
    access to hens on solid floor structures that are open to the
    air and the sunlight on the sides, but have roofs in order to
    keep out predators and avoid contact with wild birds, which are
    carriers of avian influenza.
        Our farm is not organic, but a number of our UEP members
    have entered organic production in recent years and this is a
    major issue for them. They believe the economic impact of this
    proposed regulation will be well in excess of $100 million and
    perhaps more. Besides banning porches, the proposed rule has an
    outdoor space requirement that will be impossible for many
    producers to meet without expensive new land purchases. It also
    requires that outdoor areas be at least 50 percent soil, which
    increases the possibility of contact with salmonella as well as
    animals that carry it, like rodents.
        If this rule is finalized, the supply of organic eggs for
    consumers will fall substantially and many producers will exit
    organic production. This committee's Chair, Ranking Member, and
    other members have already been very helpful in questioning
    USDA's factual basis for this rule and we hope you will
    continue asking questions, filing comments, and asking USDA for
    an extension of the comment period for at least an additional
    60 days so the Department will have a better factual basis for
    the final rule.
        Egg producers appreciate this committee taking a strong
    interest in animal agriculture, and thank you for the
    opportunity to testify.
        [The prepared statement of Mr. Truex can be found on page
    77 in the appendix.]
        Chairman Roberts. Dr. Hill, you are recognized next, but I
    want to just say something on behalf of the Ranking Member and
    myself on this latest rule with regards to chickens and this
    whole exercise we are talking about, the big yard and sort of
    an over-leverage.
        Senator Stabenow. Perches.
        Chairman Roberts. We have been talking--I think we might
    include a requirement that we play Mozart to just sort of calm
    the chickens down. I do not know if that would be helpful or
    not.
        [Laughter.]
        Chairman Roberts. On this comment period, I sure hope you
    are standing up, and I know we are, to make sure that the
    Department hears that this is just--sometimes it is hard to
    understand what happens in our federal government. This is one
    of those cases. So, thank you for your comments on that, and
    all of us are working to solve the GMO problem. I did not mean
    to interrupt the flow of the witnesses here, but thank you for
    those comments.
        Dr. Hill.

    STATEMENT OF HOWARD HILL, D.V.M., PAST PRESIDENT, NATIONAL PORK
       PRODUCERS COUNCIL, BREEZE HILL FARMS AND H&K ENTERPRISES,
                            CAMBRIDGE, IOWA

        Dr. Hill. Good morning, Chairman Roberts, Ranking Member
    Stabenow, and members of the Committee, and thank you for this
    opportunity to visit with you. I am Dr. Howard Hill, a
    veterinarian and pork producer from Cambridge, Iowa, and Past
    President of the National Pork Producers Council.
        The U.S. pork industry is in pretty good shape right now
    economically. In the past couple of years, it has overcome some
    disease issues and weather-related record-high feed grain
    prices and now appears to be moving into a period of cautious
    calculated expansion.
        Pork production is forecast by USDA to increase this year
    by two percent, to almost 25 billion pounds, and in 2017 by 2.6
    percent, to more than 25.5 billion pounds. Of course,
    producers' fortunes can be affected for good or bad by any
    number of factors, some controllable and some not so
    controllable, such as disease and weather.
        I am going to first address an opportunity that would be
    very positive for hog farmers like me and that Congress can
    control, the Trans-Pacific Partnership, or TPP. But another
    issue recently has come up that if not addressed would wipe out
    any of the benefits we gain from TPP.
        Pork producers are very concerned about the so-called GIPSA
    rule, which you have heard about from Mr. Brunner. As many of
    you know, the rule was borne out of the 2008 Farm Bill, which
    includes five specific issues, mostly related to the poultry
    industry, but Congress wanted USDA to address. But the Grain
    Inspection, Packers, and Stockyard Administration in 2010
    proposed an expansive rule that would have had a significant
    negative impact on the livestock industry.
        In November 2010, an Informa Economics study of the rule
    found it would have cost the pork industry more than $350
    million annually. Tens of thousands of comments, including
    16,000 from the pork producers, were filed in opposition to the
    rule, and Congress several times included riders in the USDA's
    annual appropriation bill to prevent it from finalizing the
    regulation. Such an amendment was not included in the USDA's
    fiscal year 2016 bill.
        Now, the agency is moving forward with the rule and we have
    grave concern it will mirror the 2010 proposal. If it does, the
    livestock industry would be fundamentally and negatively
    changed and the increased exports and jobs created from TPP
    will be negated.
        Additionally, the fact that we have to deal with the GIPSA
    rule issue is diverting valuable resources away from the pork
    industry's top priority, and that being the approval of TPP.
    TPP, the benefits of which will exceed all past Free Trade
    Agreements, represents a great opportunity for U.S. pork
    producers and for the entire U.S. economy. TPP includes the
    United States and 11 Pacific Rim countries, and those nations
    include nearly a half-a-billion consumers and represents 40
    percent of the world's GDP. The agreement has become the de
    facto global trade vehicle and other countries in the region
    already are lining up to be part of TPP. Because other Asia-
    Pacific trade agreements are being negotiated, such as China-
    led 16-nation regional comprehensive economic partnership, the
    United States cannot afford either to economically or
    geopolitically walk away from the fastest growing region in the
    world.
        To give you an idea of the importance of Free Trade
    Agreement to the U.S. pork producers, the United States now
    exports more pork to the 20 countries with which we have an FTA
    than it does to the rest of the world combined. Congress must
    pass TPA and it must do so soon.
        Finally, a challenge that would be out of everyone's
    control but that could be tempered through preparedness is a
    foreign animal disease outbreak, specifically an outbreak of
    Foot and Mouth Disease. A foot and mouth outbreak in this
    country would be economically devastating to the pork producers
    and other food producers. USDA and the livestock industry has
    been working on a plan to combat an outbreak, but the only
    practical way is through the use of vaccination. Unfortunately,
    we currently do not have the ability to produce the number of
    doses needed for an initial outbreak or the capacity to produce
    more vaccine.
        The U.S. pork industry believes, consistent with Homeland
    Security Presidential Directive 9, that an adequate Foot and
    Mouth Disease vaccine bank must be established. This would
    require, one, an offshore vendor maintained bank that would
    have available antigen concentrate to produce against all 23 of
    the most common Foot and Mouth Disease types currently
    circulating in the world. Two, a vendor managed inventory of
    ten million doses, which is the estimated need for the first
    two weeks of the outbreak. Third, a contract with an
    international manufacturer or manufacturers for the surge
    capacity to produce at least 40 million additional doses.
        Given the costs of dealing with a Foot and Mouth Disease
    outbreak and the economic impact on the livestock industry and,
    indeed, on the entire U.S. economy, Congress should appropriate
    enough money to set up such a vaccine bank.
        Those are a few of the opportunities and challenges pork
    producers face and I will be happy to answer any questions at
    the appropriate time. Thank you.
        [The prepared statement of Dr. Hill can be found on page 64
    in the appendix.]
        Chairman Roberts. Thank you, sir.
        Mr. Goggins.

         STATEMENT OF JOE GOGGINS, PRODUCER, U.S. CATTLEMEN'S
      ASSOCIATION, AND VICE PRESIDENT, VERMILLION RANCH COMPANY,
     PUBLIC AUCTION YARDS, BILLINGS LIVESTOCK COMMISSION COMPANY,
        WESTERN LIVESTOCK AUCTION, AND NORTHERN LIVESTOCK VIDEO
                       AUCTION, BILLINGS, MONTANA

        Mr. Goggins. Good morning. It is truly an honor to be here
    on behalf of the livestock industry addressing this
    distinguished committee and the great people you represent.
        In the next 15 to 20 years, when you look at the massive
    population growth not only in this country but worldwide, the
    deal maker for the United States of America when it comes to
    trade with our world partners will not be our technology or our
    energy, it will be our food.
        The American producer, feeder, and packer have the know-
    how, work ethic, and pride to produce the highest quality, most
    affordable, and safest protein in the world. This is why we
    must demand that we in America do everything in our power to
    keep an open, fair, competitive marketplace for our producers
    and feeders of all sizes. Another key component is to assure
    our domestic livestock herd remains safe and free from both
    domestic and foreign diseases.
        There have been many success stories in the previous Farm
    Bill programs, for example, the voluntary conservation effort
    that kept the sage-grouse from being listed, the beginning
    farmers and ranchers program, the disaster funding program that
    aided the producers in the Dakotas after the Atlas blizzards of
    2013, just to name a few.
        In the years 2013 and 2014, we all saw our once-in-a-
    lifetime up in the cattle market. Since then, in the last year,
    I hope we have seen our once-in-a-lifetime down. The last year
    represents the largest loss in equity in the history of the
    U.S. cattle industry.
        Following are some concerns and challenges that need to be
    looked at and addressed by this committee. We need to find a
    fairer and more competitive way of determining a weekly cash
    price on live fed cattle. There are many avenues by which to do
    this, but we undoubtedly need to create more transparency and
    competitiveness at the fed cattle level.
        Volatility in the marketplace is causing huge problems for
    everyone in the industry. The Futures Board has always been a
    very good tool for producers and feeders to manage risk. At the
    present time, it no longer can be used because of violent moves
    in the market, mostly due to, in my opinion, the expanded
    limits, and high frequency algorithmic trading. It is a
    speculator's market. For example, just two weeks ago, we sold
    fed cattle at a $134 to $136. The Board the same morning went
    near limit down on the front month June to $121-something. That
    is a $15 basis Now, that is proof fundamentals do not have much
    to do with this market.
        However, my biggest concern about the volatility in this
    market is how it affects the average producer and young
    producers that have to borrow most of their money from the bank
    to purchase and feed these cattle. The lenders, in turn, are
    almost 100 percent of the time requiring these people to hedge
    75 percent of those cattle they buy in order to acquire such a
    loan. These massive, violent moves on the Futures Board cause
    people to pay huge margin calls, which drains their available
    cash, forcing them to get out of the hedge at a very
    unfavorable position.
        I know in our own family feeding operation, currently, we
    background and feed near 50,000 head of calves a year. The
    Futures Board is no longer a viable tool for us due to the
    volatility of the market and the amount of money it takes to
    hold a position. This may allow us only to feed half as many
    cattle going forward.
        We need to modernize and update the Packers and Stockyards
    Act of 1921. This 95-year-old Act needs to be modernized.
        Another challenge I would encourage the Committee to be
    conscientious of is the concerns that come with over-
    regulation. Too much government on the farm and ranch is a
    major concern in the country. One example is the uncertainty
    surrounding the EPA's Waters of the U.S. rule.
        I would also suggest caution on making too stringent
    requirements on the trucking and interstate movement of
    livestock. Livestock are a highly perishable commodity. If we
    hamper the ability to move livestock quickly and efficiently,
    we might actually limit opportunities for producers in parts of
    this country.
        In closing, as a producer of protein, I challenge this
    committee to address the concerns and issues I have just laid
    out. Restructure restrictive laws. Update outdated laws. Ensure
    that we have some transparency and competitiveness in our
    industry. Last but not least, put some sideboards on the
    futures market and the influence the Board has on the cattle
    market.
        Keep in mind, in the years to come, trade policies and
    currency values will heavily play on our markets and the
    nations with the capabilities to produce an abundant quality,
    high quality safe and affordable food supply will be the
    powerhouses in the global economy.
        [The prepared statement of Mr. Goggins can be found on page
    57 in the appendix.]
        Chairman Roberts. We thank you, Mr. Goggins. Thank you for
    the challenge. We accept it.
        I would just note that I have been to 18 Kansas counties
    here recently. I was way out there in Western Kansas, in St.
    Francis, and a good friend of mine who I have known a long time
    put on a cowboy hat like Tracy has there, pulled it down, and
    said, ``Pat, you have done a good job, but I have got news for
    you. I am done.'' He just said, ``I feel ruled. I do not feel
    governed.''
        I think that pretty well sums up some of the concerns that
    you raised. Those of us who serve on this committee in a
    bipartisan fashion want to address all of these concerns, and I
    thank you for pretty well summing them up.
        Mr. Zimmerman.

        STATEMENT OF JOHN ZIMMERMAN, PRODUCER, NATIONAL TURKEY
    FEDERATION/MINNESOTA TURKEY GROWERS ASSOCIATION, P&J PRODUCTS,
                         NORTHFIELD, MINNESOTA

        Mr. Zimmerman. Good morning, Chairman Roberts, Ranking
    Member Stabenow, and members of the Committee. I appreciate the
    opportunity to testify on behalf of the 63,000 men and women
    who put their boots on every day to keep the turkey industry
    working. Our industry raises approximately 238 million pounds
    of turkey annually, and USDA's latest forecast puts 2016 turkey
    production at an all-time record of 6.4 billion pounds, 14
    percent above 2015.
        This year, the turkey industry has made significant strides
    and learned a lot in recovering from high path avian influenza
    after suffering through the worst animal disease outbreak in
    U.S. history last year. However, our preparation was tested
    earlier this year in Indiana when a small outbreak occurred in
    a commercial turkey flock. This outbreak was small precisely
    because of the lessons we have learned.
        The important lesson is that immediate action needs to be
    taken at the local level to limit virus spread. No matter how
    good the intentions are at the state and federal level,
    industry must be given clear permission to act within minutes,
    not hours or days, to protect other nearby farms from becoming
    infected. I must emphasize the need for rapid stamping out
    procedures and methods that ensure humane treatment while
    eliminating virus spread. Currently, there is no one method
    that achieves perfect results in all circumstances.
        NTF is deeply appreciative of the indemnification program
    implemented by USDA/APHIS, strongly supported by Congress, that
    helped us manage through this crisis, and I would be remiss if
    I did not take a moment to personally thank my fellow
    Minnesotan, Senator Klobuchar, on behalf of myself, the NTF,
    and the entire turkey industry for all you did to help us last
    year. Thank you.
        Finally, the billion dollars in losses are well documented.
    In order to prevent future outbreaks, the U.S. needs to adopt a
    forward looking mandatory animal pest and disease prevention
    program designed to limit the impacts of foreign zoonotic
    diseases on livestock and poultry producers, and we look
    forward to working with Congress to get this accomplished.
        All poultry exports were severely damaged by the trade
    restrictions that resulted from the 2015 outbreak.
    Specifically, last year's turkey exports declined 34 percent
    and over 33 countries enacted some form of ban on U.S. poultry.
    Without the hard work of APHIS, it could have been a lot worse.
    They reopened closed markets as well as continue to establish
    protocols that will limit bans to regional levels in the
    future.
        We also continue to see high path outbreaks in Europe,
    Asia, and South America, and now is the time to reengage with
    our trade partners to discuss how HPAI can be treated moving
    forward. This is a global disease, and working with the
    government, we can develop a plan that minimizes export
    disruptions now.
        With regard to non-scientific trade barriers, it is
    important that USDA's FAS continue to work with both APHIS and
    the turkey industry to fully understand how we differ from
    chicken and livestock production. For example, while never
    covered under U.S. COOL regulations, turkey has now been
    subjected to COOL-like regulations by both Korea and South
    Africa, who banned U.S. turkey raised and processed in the U.S.
    just because it was hatched in Canada. This is not science-
    based and is a problem for many companies that hope to expand
    sales into these promising growth markets.
        Finally, we support TPP as an important step forward in
    reducing trade barriers and opening new markets for the turkey
    industry and we encourage Congress to approve this agreement as
    soon as possible.
        Recently, USDA proposed a rule to amend the organic
    livestock and poultry production requirements based on
    recommendations by the National Organic Standards Board. NTF is
    concerned about the potential disruption to existing organic
    producers and their supply chains as well as the impacts this
    proposed rule may have on ensuring animal health. Before moving
    forward with the rule, the turkey industry feels that USDA
    should conduct a thorough assessment of the costs of
    compliance, increased animal health and welfare risks, and
    alternatives for existing organic growers, producers, and
    supply chains to ensure minimal impact.
        Six years ago, USDA proposed sweeping rule changes on
    farmer contracting. With the expiration of a Congressional
    prohibition on implementing these changes, USDA is once again
    threatening to fundamentally change the rules by which our
    members operate. We believe that the changes would increase
    costs, reduce productivity, and possibly lead to increased live
    production ownership by integrated poultry companies to the
    detriment of independent farmers. We support the continued
    prohibition of USDA's implementation of these proposed changes.
        A recent report by the National Academy of Sciences found
    that foods made from genetically engineered crops are as safe
    to eat as those made from conventional crops. Regarding food
    labeling, NTF actively supports two critical components of any
    GMO bill. One, that the bill maintains federal preemption for
    meat and poultry labeling, which is already regulated by USDA/
    FSIS, and two, that it ensures that animals fed GE feed should
    not have to be labeled GE. We look forward to a bill that
    prevents a patchwork of state rules that create a labeling
    nightmare for food producers, but these two conditions must be
    met.
        Finally, we have a worker shortage all across this country
    and meat and poultry producers are no different in feeling the
    pain of this shortage. The turkey industry supports immigration
    reform that addresses the needs of year-round meat and poultry
    producers and processors. Our members need access to a pool of
    legal general labor immigrant workers and a visa program that
    can address these needs. However politically difficult it
    seems, we must get this job done.
        Once again, thank you for the opportunity to testify today
    on behalf of the U.S. turkey industry and I would be happy to
    answer any questions.
        [The prepared statement of Mr. Zimmerman can be found on
    page 81 in the appendix.]
        Chairman Roberts. We thank you all for taking the time to
    join us today and appreciate your sharing your expertise, your
    first-hand experience as leaders within the livestock and
    poultry sectors.
        Tracy, tell me, in your perspective, what is the best thing
    we can do to get this recent downfall in the beef sector
    addressed?
        Mr. Brunner. Well, Mr. Chairman, the current situation, as
    I have said, is one of growing supplies and we need growing
    markets, growing market access for our beef to match. Trans-
    Pacific Partnership is the trade agreement of the day. As was
    said earlier, 40 percent of the world's economy. It will level
    the playing field. Currently, we are paying 11 percent higher
    tariff going in to our best customer, Japan, $300 million loss
    already, and that is only going to continue to grow until we
    pass TPP.
        Then, very briefly, the increasing regulatory burden from
    EPA, Endangered Species Act, and other government agencies.
        Chairman Roberts. I would also like to hear your
    perspective on what you have already brought up, along with
    many of the witnesses here, on the real world impacts of the
    proposed GIPSA rule. I have sent a letter to the Secretary, I
    think it has been about a month ago. Maybe the letter was too,
    a little too much for him to take, but anyway, we have not
    gotten a reply back. In the House, they have taken action on
    the GIPSA rule and I would expect the same effort when we
    consider agriculture appropriations on this side.
        But, I have heard value-added programs stand to face a lot
    of legal threat due to the premiums they pay to producers
    potentially being considered as unfair. In your business, do
    you utilize any unique or niche marketing that you think could
    be jeopardized by the implementation of the GIPSA rule, or do
    you have other examples like this that you could share?
        Mr. Brunner. Mr. Chairman, the GIPSA rule as it was written
    into the 2008 Farm Bill would have severely restricted our
    ability to participate in alternative marketing arrangements.
    As I had said earlier, research has shown that those
    alternative marketing arrangements, value-based marketing, if
    you will, has encouraged our industry and allowed individual
    producers to meet and be rewarded for consumer demand.
        As a very brief example, our family actively participates
    in marketing most of our cattle through a value-based marketing
    system. Over time, this has allowed us to not only meet
    consumer demand by developing and producing products that
    consumers want and are willing to pay for, but also receive an
    average of $50 a head premium to the cash market.
        Chairman Roberts. Dr. Hill, can you describe in a little
    more detail some of the recent outbreaks of FMD that have
    occurred in other countries, how your industry and the
    Department came to the conclusion that the best way of
    addressing an FMD outbreak here in the United States is to
    vaccinate animals rather than trying to stamp out the disease.
        Dr. Hill. Two of the most notable outbreaks have been the
    recent outbreak in Korea and then several years ago the
    outbreak that was in Great Britain. In the past, APHIS has used
    the approach of destroying animals and disposing of the
    carcasses, and if you look at the recent outbreak of high path
    AI, that was one of the big challenges, was how they got rid of
    the carcasses. So, working with APHIS, the industry has come to
    the conclusion that slaughtering these animals, killing these
    animals and burying them or burning them or however you dispose
    of them is not practical.
        We have about a million pigs on the road in the United
    States every day and about 400,000 cattle. If we have an
    outbreak of Foot and Mouth Disease, we do not think it is going
    to be an isolated, small outbreak.
        Chairman Roberts. No, it will not.
        Dr. Hill. So, the only really practical way to try to
    control the disease is to have available vaccines. Fortunately,
    this is a disease that does not affect the humans, so the meat
    is usable, and if we had a vaccine bank available, we could
    have an aggressive vaccine program and try to limit the losses
    to producers and basically live for another day.
        Chairman Roberts. I thank you for that. I had a little
    experience with that as Chairman of the Intelligence Committee
    when we were discussing agroterrorism. Not many people wanted
    to hear about that. We had an exercise exactly as you have
    described. Acting as President at that particular time--there
    was not anybody else in town--but in doing that exercise, all
    hell broke loose and all of our exports stopped. Then we faced
    the dilemma of what to do with the diseased animals. I am not
    going to go into the rest of it. It just turned into an
    absolute disaster. But one thing happened. People discovered
    that their food did not come from grocery stores and there was
    panic everywhere. It shows you just how important this research
    is.
        I am over time here. I will get back to some of the rest of
    you later.
        Senator Stabenow.
        Senator Stabenow. Well, thank you very much, Mr. Chairman,
    and welcome again. We appreciate your testimony.
        Let me start with Mr. Truex. I wonder if you might speak a
    little bit more about what you talked about in your testimony
    in terms of the organic livestock standards rule, and if you
    could share some of the additional potential costs and impacts
    beyond purchasing additional land. When we look at those
    issues, I know that the producers most impacted are those that
    are actually producing 70, 80 percent of the organic eggs, and
    do you think there will be a sufficient number of new egg
    producers transitioning into organics to meet the rising
    demand?
        Mr. Truex. Thank you. I do not. What we are concerned about
    is that, as you said earlier, a large majority of the organic
    production is relatively new. The facilities are new because of
    the great increase in organic consumption in the past few
    years. So, the producers have a significant investment in
    relatively new facilities that was totally accepted by USDA
    until this proposed rule. So, they are going to be faced with a
    lot of changes.
        The other thing that we are concerned about is this rule
    that protects the birds from rodents and birds and all the
    other things, our current practice supports the FDA Egg Safety
    Rule, and we have concerns that if you put the birds out on the
    ground, let them out where they can get access to other birds
    and rodents, it is going to be a real challenge to protect
    those birds.
        In addition to that, you have the thought that, well, if
    there is an avian influenza problem, we will just put them back
    inside, but unfortunately, as we learned in Indiana this
    spring, sometimes you do not know you have avian influenza
    until the second day and then it is too late.
        So, if you take that in, all those things and add it
    together with the problems in local permitting and building and
    cost, our members are telling me, and, of course, I am not in
    organic production. In a commercial for your state, I buy my
    organic eggs from Herbrucks----
        Senator Stabenow. Great.
        Mr. Truex. But, the problem is, to maintain the production
    you have, will be impossible with the added space. So even the
    producers that are in organic are going to have to build
    additional buildings and get additional land, and I think it is
    going to be very challenging for the others that are not
    currently doing it to get the funding and the land purchases
    and the buildings and the permits to build that. So, I believe
    we would limit the amount of organic eggs for the consumer.
        Senator Stabenow. Thank you very much.
        Dr. Hill, the Iowa Pork Producers Association is a leading
    member, I know, of the Iowa Ag Water Alliance, and working with
    the Iowa Corn Growers and Soybean Association, you are working
    to improve farm conservation and water quality through the
    locally led efforts that we have put together. I wonder if you
    could explain how the Iowa Pork Producers and Iowa Ag Water
    Alliance have worked with other partners using the new Regional
    Conservation Partnership Program to further your water quality
    goals.
        Dr. Hill. Yes. Well, thank you. The Iowa Pork Producers, of
    course, have worked closely with that group and also with the
    Department of Agriculture. There are state funds that help
    producers with some technologies, like cover crops. In my area,
    five, six years ago, we saw very few farmers using cover crops.
    Today, it has just had an exponential growth. Some of that is
    partially supported by government funds, but most of it is, I
    believe, just producers trying to do the right thing,
    especially on highly sensitive soil.
        If there is an ask, I would say the ask would be for more
    funding for research to develop new technologies, different
    technologies, maybe things that we are not doing today that we
    had not thought about. I think there is a big need to--you are
    not going to solve the water quality thing with one technology.
    Cover crops is not going to do everything we want it to do. So,
    added funding for research, I think, is very, very important,
    and we appreciate the support you have given us so far.
        Senator Stabenow. Well, thank you, and I hope we are going
    to be able to see more producers get involved in these efforts.
    I think that is very, very important.
        Finally, let me ask, for everyone on the panel, and maybe I
    will start--Dr. Hill, you are a veterinarian, I understand----
        Dr. Hill. Yes.
        Senator Stabenow. --so let me start with you, as well,
    again. The FDA has taken several steps, as we know, like the
    Veterinary Feed Directive that goes into effect in December, to
    ensure that antibiotics are used judiciously and only when
    appropriate for animal health. This is going to require more
    regular relationships between veterinarians and producers and
    this is an area I have worked a lot in, supporting efforts to
    get more people into veterinary medicine.
        When you look at this, large producers may very well have
    veterinarians on their staff. I am concerned about smaller cow-
    calf producers or people in remote areas and so on. So, when we
    look at--earlier this month, the USDA announced $2.4 million
    available through a new Veterinary Services Grant Program that
    I authored in the last Farm Bill to support veterinarians in
    underserved areas, and Senator Crapo and I have just introduced
    another bill, a Veterinary Medicine Loan Repayment Program, to
    provide even more incentives.
        But, I am wondering what you think. I mean, what is
    happening here? I continue to hear concerns about not enough
    veterinarians to serve the need, and what more should we be
    doing to help with that?
        Dr. Hill. Yes. Well, first of all, our industry has fully
    supported 209 and 213 and producers have already, for the most
    part, reduced or eliminated feed additives that are of medical
    importance from the diets.
        The concern you have is a real concern, not necessarily in
    Iowa, where I am, because we have a lot of veterinarians. Your
    concern is valid in more remote areas, particularly, I think,
    in the cattle industry out West. I think any support that you
    can give for veterinarians working in these under-supply areas
    would be very, very important.
        We work closely, though, to get some of the things with the
    Feed Directives in place, like electronic rather than hand-
    written things. So, there are some ways that we have, working
    with the government officials, that we expedited the process
    that will make it easier. But I think there are still some
    challenges.
        The groups that are working on this on the pork side are
    the American Association of Swine Veterinarians, the National
    Pork Board and NPPC all working together to try to help
    producers. There is a lot of education going on right now about
    what to expect and be ready for January 2017.
        Senator Stabenow. I do not know, Mr. Chairman, if I might
    just ask--Mr. Brunner.
        Mr. Brunner. Yes. I just might briefly add, our
    organization worked hand-in-hand with FDA in the formulation of
    the Veterinary Feed Directive to try and make it as workable as
    possible for the cattle and beef industry. I would also like to
    point out that our even larger concern is with the jeopardy
    that is being placed on some very important technologies that
    are classified as antibiotics but are not--have no application
    in human medicine, specifically ionophores. Ionophores are very
    important to increasing the efficiency in beef production, but
    they have been classed as antibiotics. We are working with FDA
    to get clearer interpretation on that, as well.
        Then I might summarize by saying that it seems that over
    time, an increasingly higher share or percent of veterinarians
    seem to be going into companion animal practice versus large
    animal practice and a more robust and growing animal
    agriculture should show more opportunity for veterinarians
    there, as well.
        Senator Stabenow. Thank you.
        Thank you, Mr. Chairman.
        Chairman Roberts. Senator Grassley.
        Senator Grassley. Thank you, Mr. Chairman. It is very
    important that you have a hearing like this. A big industry,
    agriculture, it is very important.
        So, I would first welcome my fellow Iowan, Howard Hill. He
    has been involved with the pork industry probably most of your
    life.
        Dr. Hill, in your testimony, you mentioned the Waters of
    the U.S. rule, that is a major concern to the pork industry. It
    is also a major concern to most every agricultural group in
    Iowa and every agricultural organization. Could you share with
    the Committee a few examples of just common practice within
    your industry that you--where there is uncertainty regarding
    the Waters of the U.S. rule.
        Dr. Hill. Thank you, Senator Grassley. We do have a lot of
    concern about it. You know, the swine industry and the cattle
    industry is highly regulated with state requirements with
    manure application. The way we interpret what the EPA is
    proposing, it would impact severely how we would be applying
    manure. It, depending on how far they go, it could impact crop
    production just because of waterways that we use, setbacks. So,
    in our opinion, it is an overreach by EPA that we would
    strongly oppose.
        Senator Grassley. Mr. Brunner, I have a question for you,
    because I have heard from numerous Iowans about what has been
    going on in the beef market, and some of these people in Iowa
    would blame industry structure. Others would blame futures
    contracts. In your testimony, you state that only five or six
    percent of cattle are owned by packers. In addition, we know
    that nationally, only about 21.3 percent of the cattle are
    traded in the cash market, according to USDA data. The percent
    of cattle traded in the cash market has dropped significantly
    since 2005, when 52 percent were traded cash. While cash traded
    cattle have dropped 30 percent since that 2005, the formula
    based sales with packers are up 23 percent.
        Do you have any concern that the drop in the amount of cash
    traded cattle has contributed to that contract being more
    volatile, since it is less liquid and represents such a small
    percentage of the overall cattle market today?
        Mr. Brunner. Well, thank you, Senator. The increased
    volatility in the futures market, we believe, comes from the
    advent of and administration of new technology, high frequency
    trading. As I said before, our organization is working directly
    with the CME Group, trying to identify possibilities of
    dampening the effects of the high frequency trading on the
    cattle market. You know, you cannot deny the application of an
    emerging technology. Technology will go on regardless and
    practices will move beyond borders. So, we have to be cognizant
    that we cannot stop progress.
        What we do believe is that we need some data. We need to
    have information from CME. We have asked them to share data and
    information with us the effects of high frequency trading and
    are working to get that information so that we can better work
    with them on what changes might need to be made in the cattle
    contract.
        Senator Grassley. Okay. That is my last question, but I
    have a minute left. Let me take a couple seconds for summation.
        In the cattle market today, only 21 percent of the market
    is traded on the cash market, even though the price discovery
    from that 21 percent is utilized for nearly 60 percent of the
    cattle that are marketed through formulas. So, to me, it seems
    like the cattle market has experienced a structural change over
    the last decade where the tail wagging the dog situation has
    developed. So, I will continue, Mr. Chairman, to watch this
    situation. I have heard a great deal from cattle producers in
    Iowa about the current structure of the beef industry.
        Thank you, Mr. Chairman. I yield.
        Chairman Roberts. I thank the Senator.
        With apologies to Senator Klobuchar, it is your time----
        Senator Klobuchar. Okay.
        Chairman Roberts. --but on WOTUS, I think everywhere we go
    in farm country, whether it be Kansas or wherever we are, the
    number one issue that comes up, Waters of the U.S. I am talking
    about dry creek beds and farm ponds where no self-respecting
    duck would ever land, and it goes on and on.
        I remember the meeting that we had with the Administrator
    of EPA, Gina McCarthy. There were two pages in this bill where
    it said normal farming operations are exempt. Then it had
    parentheses and it said, see regs, and then there were 88 pages
    of regulations, probably eight-point. You can hardly read it
    without a magnifying glass. I defy anybody in this room, any of
    you, any of us, any farm organization and any commodity group,
    any CPA, any lawyer, to define what the heck was in those regs.
        We were not successful in the Senate with what we thought
    was an answer to it. We have not given up and we will continue
    that effort. It is before the courts. But, it is the number one
    issue that has been brought up all throughout farm country. We
    are very cognizant of this and we are trying very hard to find
    an answer.
        Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Mr. Chairman.
        I was proud to introduce Mr. Zimmerman earlier, and I guess
    I will address my first questions to you and Dr. Hill, and it
    is about the importance of investment in animal health
    research. We have seen some issues with our turkeys. You
    brought up the scourge, the health scourge that we had where so
    many producers were hit.
        But, Mr. Hill, you spoke about the need for more investment
    in the vaccine bank. Can you elaborate on how the industry has
    worked with APHIS to address this need and how APHIS has--and
    if APHIS has engaged at all with the Department of Homeland
    Security, as you suggested in your testimony?
        Dr. Hill. Well, I believe APHIS has engaged. Right now, the
    amount of money that is in this bank is a drop in the bucket
    compared to what is really needed.
        Dr. Roth at Iowa State University has done extensive
    studies on what would happen in an outbreak and how much
    vaccine we would need. The current bank of, not vaccine, but of
    the virus that would make the vaccine, is held at Plum Island.
    There are 23 strains that circulate in the world, and I think
    Plum Island has about 14 of those available.
        What would happen is, because we cannot have a live virus
    in the United States, there is a contract to ship that to
    Europe. They would make the vaccine there and ship it back to
    the United States. The company that has that contract says that
    they can do that in a matter of four days. But we are talking
    about basically two million doses.
        Dr. Roth's study says we would need ten million doses in
    the first two weeks and we would need an expansion of that to
    40 million doses within the first month to try to control the
    disease. This is based off of studies that say that we are not
    going to probably have a small little outbreak.
        Senator Klobuchar. Okay. All right. Thank you.
        Mr. Zimmerman, could you just bring me up to speed quickly
    on what is happening with the flocks and the repopulation of
    flocks since last year.
        Mr. Zimmerman. We are almost approaching normal now. It
    took about a year to get our breeder flocks back online, and as
    of this spring, I would say we are back to close to 100 percent
    production in the turkey industry.
        Senator Klobuchar. Yes.
        Mr. Zimmerman. I would like to just take a moment to echo
    Mr. Truex's thoughts on the organic rule. We talk about avian
    influenza and all we did with APHIS to limit the possibility of
    introduction of this virus into our barns, and here AMS brings
    up a rule to increase the outdoor requirements of our birds,
    which flies in the face of everything we have been doing with
    APHIS to try to limit the exposure of our birds to waterfowl
    and other diseases, so it is----
        Senator Klobuchar. Right, which appeared to have been one
    of the factors. I was just going to ask you about that, so
    thank you.
        One last topic here, and I think I will put some questions
    about beginning farmers, which has been important, on the
    record. But Cuba, I am carrying the bill in the Senate, along
    with Senator Flake and many others, Senator Heitkamp has worked
    on this issue, lifting the embargo and ways to lift the embargo
    to Cuba. While Cuba is by no means our biggest export market,
    it is 11 million people 90 miles off our shore. Estimates are
    five million Americans a year would visit, and my fear is that
    if we do not lift this embargo, our five million Americans are
    not only going to be sleeping in Spanish hotels, but they are
    going to be eating food from China and Venezuela and other
    places.
        Could you comment about how--the beneficial effect lifting
    the embargo could have on the industry and poultry in general,
    as well as, I know, beef and other forms of food that we want
    to send over there.
        Mr. Zimmerman. To reiterate what you said, it is a very
    close market, and any time you can open up a new market to
    our--turkey is the perfect protein and we would be happy, more
    than happy to sell that product to a new market, such as Cuba.
    So, my understanding is there needs to be some infrastructure
    put into place and building their tourist industry would help
    tremendously to get more people to that country that would,
    therefore, eat our turkey.
        Senator Klobuchar. Yes. Does anyone else want to comment on
    Cuba?
        Dr. Hill. I recently visited Cuba, and the big--after the
    2004 hurricane, the government allowed food and medical
    supplies to be exported to Cuba. The big problem we have right
    now, we can export pork, we can export beef, but the problem is
    the credit, because our government does not let----
        Senator Klobuchar. That is part of the embargo, right?
        Dr. Hill. Yes. So, that is why we are not exporting pork
    there right now.
        Senator Klobuchar. Exactly, and Senator Heitkamp has a
    targeted focus on that, on the financing, and, obviously, the
    easiest way to do it overall would be to just lift the embargo,
    but we are looking at compromises to try to get some of our
    fellow Senators on board, although there is just growing
    support. Representative Emmer, who is a Republican over in the
    House from Minnesota, is carrying one of the bills in the
    House. So, we just see a lot of growing support for this effort
    and I want to thank you.
        Thanks.
        Chairman Roberts. Dr. Hill and Senator, I just want to say
    I have been to Cuba here recently and talked to the Ag Minister
    there, whose main concern was access to our export programs,
    which I would agree that if that would work, certainly it would
    work out very well. However, they are not receiving any help
    from Russia, and I do not think that is going to start any time
    soon. On Venezuela, my question to him is, will you pay it
    back, and that was never answered. So, that is one of the
    concerns that I have. I think we ought to proceed on the best
    way possible, but that is a worry that I have.
        Senator Tillis.
        Senator Tillis. Thank you, Mr. Chairman. Thank you for
    holding this important hearing. I know that committees
    pertaining to this subject matter are few and far between and I
    think it is very important. We can talk about trade
    opportunities, we can talk about a number of other things, but
    if we do not start lifting this regulatory burden and the
    additional barriers that we have, trade expansion will be a
    moot point because our farmers will not be able to produce
    protein and export it. We are reaching a very dangerous point.
    That is something I want to focus on.
        When I travel across North Carolina, back in the day, you
    would be talking about the cost of feed, you would be talking
    about the prices of beef and pork and poultry. Now you talk
    about EPA regulations. You talk about FDA regulations. You talk
    about USDA regulations and all the impediments that are making
    it virtually impossible for farmers to continue to do what they
    want to do, which is to produce the most abundant, safe food
    supply in the world.
        If I appear to be a little bit angry about it, I am. I
    mean, we have had a few committee hearings that almost focus on
    who is in Grant's tomb. We know who is in Grant's tomb. We know
    what regulations need to be changed. We know a number of things
    we have to get focused on and Congress has to act.
        Dr. Hill, I want to start with you on the GIPSA rule. I
    would like for you, if you could, to explain it in kitchen
    table terms, so people can understand how this rule affects
    farmers and potential consumers.
        After you do that, I would like for you to tell me whether
    or not the USDA has reached out to you and your organization
    about the latest livestock marketing practices and how the 2010
    rule, which we successfully pushed back, will be updated for
    2016 modern practices.
        Also, if you have an opportunity, give me an idea of
    whether or not USDA has indicated to you or your organization
    what will be included in the rule.
        Dr. Hill. Well, thank you. Anticipating this might be a
    question, I contacted the CEO of the National Pork Producers
    Council and asked him if USDA had contacted our organization or
    the National Pork Board, and to his knowledge, we have not had
    any direct contact with USDA----
        Senator Tillis. So we have a sweeping regulation, and have
    not consulted with major organizations to understand what the
    modern rule would need to look like to not be disruptive.
        Dr. Hill. Does that surprise you?
        Senator Tillis. Not at all.
        Dr. Hill. No.
        Senator Tillis. It angers me, but it does not surprise me.
    This is just another example of why these regulators need to
    get out. They need to go and talk to farmers and understand
    that this regulation is disruptive in a time when we have so
    many other disruptive forces. They need to actually go and talk
    to the people that are producing safe food and modernizing
    their practices because they cannot continue to disrupt what
    our farmers are doing.
        We will submit another question for the record for you to
    follow up.
        Mr. Brunner and Dr. Hill, I also want to talk about biotech
    with regards to the Vermont law and the patchwork of another 20
    or 30 states that could come into effect. I'm afraid that if
    proteins are not exempted from these labeling practices the
    food companies are going to reformulate. Can you give me some
    sense of what this is going to do to the industry in terms of
    reformulation practices? You know, we had to beat down the COOL
    regulations last year. This could be another mandatory product
    labeling initiative that will place another burden on our
    farmers. If we do not act, can you give me an idea of how this
    is going to affect your business operations and future prices?
        Mr. Brunner, we will start with you.
        Mr. Brunner. I think that is a very good example. The
    mandatory country of origin labeling, failed experiment, left
    us with increased industry costs and facing $1.1 billion in
    tariffs from our two best trading partners. I believe there is
    a huge lesson to be learned there, from trying to furnish
    something to consumers that they are not willing to pay for.
        Specifically to the beef industry, it takes somewhere in
    the neighborhood of 70 to 100 bushel of corn per animal to
    finish those animals----
        Senator Tillis. 90-plus percent of the corn produced in the
    United States is a product of biotech engineering, is that
    correct?
        Mr. Brunner. Exactly, sir.
        Senator Tillis. So you are not going to reformulate since
    there is not enough non AE corn grown to feed these cows.
        Mr. Brunner. There is no way to identify preserve without
    adding very significant cost. It would--it is just commercially
    impossible.
        Senator Tillis. Dr. Hill, do you have anything to add to
    that?
        Dr. Hill. Well, I would think it would have the opposite
    effect on what I think the USDA wants. It would cause--the
    packers would be so fearful of all these regulations, they
    would increase their own production. So, we have a lot of
    programs, as Mr. Brunner pointed out, that add value for the
    producer, antibiotic-free, ractopamine-free, housing, all
    different kinds of, like, genetics that we get premiums for,
    and if the GIPSA was--if they implemented what was in 2010,
    that would be a huge problem for those kind of programs and
    would be detrimental to the profitability of not only large
    producers, but small producers, because small producers are the
    ones that really take advantage of some of these niche markets.
        Senator Tillis. Well, thank you.
        Mr. Zimmerman, I am going to submit for the record some
    questions on HPAI for you. I know that my state's Agriculture
    Commissioner, Steve Troxler, sent officials to Minnesota, to
    learn from practices that were established up there during the
    outbreak. I have got a couple of questions that I will follow
    up on, but I want to personally thank you for your leadership
    and dedication in this area.
        Mr. Chairman, if I appear to be a little bit frustrated, it
    is because I think that time is running out. We have had enough
    discussions and we know what the issues are. We have got to
    solve the biotech labeling issue in the near future. We have
    got to beat back GIPSA again. All of these disruptive forces
    that do not add value, do not do one thing to accomplish any
    progress on food safety. Instead, it puts another burden on our
    farmers that they cannot possibly afford to have lopped on
    them. Thank you.
        Chairman Roberts. Senator Tillis, I have not noticed any
    change in your demeanor at all.
        [Laughter.]
        Chairman Roberts. Senator Stabenow has a brief question.
        Senator Stabenow. Mr. Chairman, I want to follow up on
    this----
        Chairman Roberts. Senator Heitkamp, you are next.
        Senator Stabenow. --if my colleagues would indulge me,
    because, obviously, the issue was raised and biotech is a very
    difficult issue for all of us who support biotechnology and
    production agriculture, and at the same time, through no
    creation of ours, there is a growing demand and actions coming
    from consumers.
        So, I just think it is important as we are wrestling with
    this to be clear, and Mr. Brunner, maybe you can tell us how
    you are affected by the Vermont law.
        Mr. Brunner. You know, I would not be expert on the Vermont
    law. We have not spent a lot of time studying it. I do know
    very----
        Senator Stabenow. It is my understanding you are exempt.
    Meat is exempt, correct?
        Mr. Brunner. That would be a very important aspect of any
    efforts into genetic labeling. You know, as I----
        Senator Stabenow. But I just think it is important to know
    that you are exempt, so there is a different kind of urgency
    around this because you guys are exempt from Vermont.
        Mr. Brunner. Well, we might also be concerned about what
    might follow, and the press----
        Senator Stabenow. No, I understand. I just think this
    complicates the issue for us as we are looking.
        But, I also wanted to just ask anyone who would want to
    respond, I think there is a general exemption around feed that
    is very important, the feed exemption, but the challenge that
    is being debated is from a consumer standpoint. If we have a
    can of soup that is vegetable soup or a can of soup with beef
    broth and meat in it, one would be labeled and one would not
    be, which I think is probably more of a challenge if we were
    following the Vermont labeling law, which from a consumer's
    standpoint or from a grocery manufacturer's standpoint is a
    different issue, when you are having to go through and sort of
    figure that out with two cans of soup and one is exempt and one
    is not exempt.
        So, I wonder if anybody would want to speak to how we deal
    with that or why that is a good idea.
        Mr. Brunner. Senator, very briefly, could not the voluntary
    labeling program that we already have serve that need and find
    out if there is a willingness for a significant enough portion
    of the market to pay for the cost?
        Senator Stabenow. Well, Mr. Chairman, I am not going to go
    on and debate this more at this point in terms of voluntary and
    mandatory. I think what we are trying to do is how to figure
    out at this point what is coming at us, which is something that
    is a requirement, and how do we put together a balanced
    coalition that is going to allow us to get something done in a
    reasonable way that addresses very different requests and very,
    very different needs, and this is a tough one. So, just wanted
    to get your perspective on this one issue that has been an
    issue of concern and trying to work through. Thank you.
        Mr. Goggins. Senator, if I may add----
        Senator Stabenow. Yes, sir.
        Mr. Goggins. I think, speaking in that regard, I think we
    should--I mean, something needs to be done to get some
    uniformity----
        Senator Stabenow. I agree.
        Mr. Goggins. --and less confusion for the consumer.
        I think as far as the beef goes, on probably a different
    note here, but I do think we have to remember that these cattle
    that do eat GMO feed are not genetically modified themselves by
    eating it.
        Senator Stabenow. I agree, and I think there is general
    agreement on that, so thank you.
        Chairman Roberts. Well, Tracy and Mr. Goggins, thank you so
    much for your commentary. It is exactly what I think is
    appropriate. If any of you are into wine production, maple
    syrup, ice cream, dairy, meat, you do not have to worry about
    it. So, that is an example of what happened in Vermont, which
    means every state could exempt their home products and have
    about 30 or 40 labels and the entire food industry would
    collapse. We are trying our very best to reach an accommodation
    and the Committee has already spoken to this and we have
    already had an attempt on the floor of the Senate. The House
    has already spoken. So, we hope that we can find an answer just
    as soon as we possibly can. Tempus is fugiting. Time is a
    factor. So, thank you for your commentary.
        Finally, Senator Heitkamp.
        [Laughter.]
        Senator Heitkamp. Thank you, Mr. Chairman and Ranking
    Member. It has been an interesting dialogue.
        I want to make maybe a couple points before I start getting
    into high frequency trading, and one of the reasons why I
    particularly was interested in this hearing, which is the
    cattle market.
        First off, a lot of the challenge here is your relationship
    to your consumers, whether we are talking about new regulations
    on organics, whether we are talking about antibiotic
    regulations, we have got to have more informed consumers and
    that has been one of our challenges, which is try and maintain
    a readily available, high quality food source in this country
    that people accept as high quality and accept as available to
    them.
        You know, I would challenge you that as we are dealing with
    these challenges, you need to deal directly with consumer
    challenges, because even if we eliminate the regulation, I have
    a feeling that consumers are going to continue to demand a
    label that then becomes voluntary and takes us to a place where
    we erode the availability of high quality food. I think there
    are some real challenges in all of this.
        But where everybody points a finger at government, I would
    suggest that this movement did not start at USDA. It did not
    start in this committee. This movement started as a consumer
    information movement. If your only response to this is, ``you
    do not need to know,'' I will tell you, as producers, you will
    lose. You know, if we said that to our constituents, well, you
    do not really need to know what our position is on that, we
    would probably lose, too.
        These are challenges. I have supported the Chairman and I
    have supported trying to get to some kind of preemption for a
    label. But, I remain frustrated that we have not been able to
    really drill down and do a better job involving consumers in
    this discussion.
        I also, Mr. Brunner, would tell you I held a hearing, or a
    meeting last week, and one of the answers to the concerns about
    the cattle market was reestablishing COOL. So, we know that is
    not a unanimous opinion within the cattle industry.
        But, my main focus, I hope, will be on how do we get trust
    back into the cattle market. I know you have just been--your
    organization, Mr. Brunner, has done yeoman's work with Chicago
    Mercantile. They are trying some things right now that they
    think may help kind of correct the market. I think, Mr.
    Goggins, you know what this has cost cattlemen in my country
    and in Montana. You understand what these fluctuations have
    meant.
        What else should we be doing with the cattle markets to
    bring people back into the markets and stop what I think is
    speculation and start getting to a real cash price that
    reflects fundamentals? I am going to start with you, Mr.
    Brunner.
        Mr. Brunner. Well, as I said in my opening comments, we are
    in the situation of growing cattle numbers, growing beef
    supplies, and not access, not competitive market access to the
    markets that we need. Trans-Pacific Partnership would increase
    our ability to compete on a competitive basis with Australia
    into Japan. We have already lost $300 million into that market
    and the disparity will continue to grow, because Japan and
    Australia have a bilateral agreement that grants them
    preferential treatment. So----
        Senator Heitkamp. I start every one of my discussions about
    trade saying 95 percent of all potential consumers in the world
    do not live in this country.
        Mr. Brunner. I believe that is very accurate.
        Senator Heitkamp. If you think we can continue to be a
    country that is a dominant economic power without accessing
    markets, we are wrong. If you do not think we need to lower
    trade barriers, you are wrong, especially for the products that
    we grow in North Dakota.
        Mr. Goggins, can you just offer some insights on the
    current problems that we have in the cattle market and what we
    should be doing to fix them.
        Mr. Goggins. I think there are quite a few things that are
    contributing to what we have gone through. I mean, I think the
    strength of the U.S. dollar right now has prohibited our
    ability to export our product, not just beef, but commodities
    in general. I think there is--a huge problem has been the
    volatility in the Futures Board market. I just----
        Senator Heitkamp. So, how do we fix that?
        Mr. Goggins. I am not really sure. I think we do things
    like NCBA and people within the industry are doing as far as
    working with CME and coming up with some way to slow the market
    down.
        Senator Heitkamp. So, would you not agree that it is a
    problem when--I think the number that was used was about a
    fourth of all cattle actually move through the market this way
    on a cash basis but yet establishes the price, and that is a--
    when you have a thin market, there is always room for mischief
    in a thin market when you do not have enough participation. So
    my question is, how do we expand participation?
        Mr. Goggins. I think there are several things going on.
    Today, right now when we are having this hearing, they are
    having their first Internet sale. There are feedyards putting a
    certain percent of their show list on the sale today and they
    will be sold across that video auction, trying to get a truer,
    more immediate, more transparent way of seeing what these
    cattle are actually worth. Hopefully, we can get more cattle
    sold on a cash basis, because it is--the cash basis then
    forwards on to the Futures Bond and that is how we are supposed
    to make our market on the Futures Board.
        Right now, there is--the Futures Board just does not follow
    the fundamentals of what cash is bringing. It is really
    becoming a serious problem, I think, especially from a risk
    management side, because I think there has been--I do not think
    any of us know the amount of equity that is going to be lost
    and has been lost, but it is going to be unbelievable----
        Senator Heitkamp. Yes. When----
        Mr. Goggins. --what we see in this deal. These bankers,
    when I go in or a young person goes in and wants to get a loan,
    these bankers, the lenders are definitely going to make them
    get a hedge position on that Board. So we have to make it a
    more stable market.
        Senator Heitkamp. Well, I do not think there is any doubt
    about it, or people are going to move out of the cattle
    business, which is just going to compound this.
        Mr. Brunner, I will give you the last comment, but I do
    want to applaud your work and your Association's work with the
    market. You suggested in the beginning of your testimony that
    you were not interested in any changes. You guys are going to
    watch it. But I want you to know that we are watching it very
    closely. I associate myself with Senator Grassley's remarks. We
    want to know what more we can do to push for a fair and open
    market so that we do not lose equity and that we do not lose
    producers.
        This is a tough business. Anyone who thinks it is easy
    being a rancher in North Dakota, you are wrong. I mean, when
    you are pulling a calf at 2:00 in the morning and there is a
    snowstorm on the way, that is not an easy life, but it is a
    life they want to continue living. But if they cannot make a
    living, that is bad for all consumers, it is bad for America,
    so----
        Mr. Brunner. Senator, very quickly, I think one thing that
    we are discovering is high frequency trading is utilized
    throughout all financial markets and the CFTC has told us that
    they have been observing it, as well. I think in many other
    markets, it gets covered up, because cattle are a somewhat
    unique commodity. We are a perishable commodity. We cannot put
    the grain back in the bin and wait until the market stabilizes.
        I would also like to give due respect to Senator Grassley's
    figures, or information that he supplied. I would not directly
    contest any of those, but those are symptoms of an evolving
    industry that is trying to maintain and increase its
    competitiveness in the global economy. As we work to try and
    achieve efficiencies within our industry, relationships develop
    as we coordinate up and down the value chain. So those
    decreasing number of animals trading on a cash market or spot
    market is bound to diminish.
        But, it is an industry question. We are very concerned
    about it. I have been thinking about this, worrying about it.
    It has been going on for 20 years and we are going to continue
    to work on it and we will solve it.
        Chairman Roberts. Senator Hoeven.
        Senator Hoeven. Thank you, Mr. Chairman. I appreciate our
    witnesses being here today.
        First question, just--well, actually, the first one is for
    Mr. Brunner and Mr. Goggins. What is the number one thing we
    can do to help our cattle producers right now with low prices?
    What is the number one thing we can do to help them?
        Mr. Goggins. I think the number one thing would be, I
    really think, passing of the TPP will open up our trade with
    Japan and lower our tariffs. I really think that would be a
    huge thing.
        I also think helping us with stabilizing this market as far
    as the Futures Board would--some way or another, getting it to
    where it is a more viable risk management tool, I think would
    be huge for this industry and for the way we can go forward.
        Senator Hoeven. Meaning what when you say stabilize the
    futures market? That would mean doing what?
        Mr. Goggins. Well, I think maybe getting the limit--right
    now, the feeder cattle limits are four-and-a-half, and I
    personally, and a lot of us within the industry that trade it
    every day, believe that limit does not fit the industry. The
    algorithmic trading along with that, it causes huge violent
    moves and it--I mean, when feeder cattle move $13 in one week
    one way or the other, it might go $15 one way or the other,
    there is no way these feeder cattle move that much on a cash
    basis consistently the way it has done the last year.
        Senator Hoeven. Mr. Brunner.
        Mr. Brunner. What Mr. Goggins has proposed might help and
    it might not. Our organization believes that it would be
    fruitless and maybe foolish to try something without really
    studying what effect it might have, and that is why we need the
    data. We need data from the CME on what is going on in the
    futures market, what the high frequency trading is really doing
    to the market, how prevalent it is, and how it is moving the
    market on these large move days.
        So, in direct answer to your first question, though, I
    agree with Mr. Goggins. The one thing that you could do is help
    us pass TPP. We need expanded markets for the expanding
    supplies that we have in our industry.
        Senator Hoeven. So, my next question is for whoever wants
    to take a swing at it, but whether it is cattle or poultry or
    other livestock, we are seeing growing exports, but at the same
    time, we are seeing prices continuing to go down. So we have
    low inputs, so you have got low feed cost. You have got growing
    export. How come our price continues to go down? We are down
    about 15 percent, I think, since the start of 2015. But think
    about it. You have got cheap feed and you have got growing
    exports. Why is the price going down?
        Mr. Brunner. We do not have----
        Senator Hoeven. It is not just cattle now, you know.
        Mr. Brunner. I think I said earlier, we had ten pounds of
    total protein available to the domestic consumer last year than
    we had the year before, and this year it will be even an
    increase. We have growing supplies of all proteins, pork,
    poultry, as well as beef, and our export markets are not
    growing fast enough to take those up. Part of the reason, the
    value of the dollar has been cited. I cannot help but go back
    to TPP. We are on unlevel playing field. Australia has----
        Senator Hoeven. I think the value of the dollar is the
    biggest problem in terms of our--all exports, certainly ag
    exports, but all exports. The dollar being so strong is really
    tough on us.
        Mr. Goggins. Senator, may I add, according to the USDA,
    through 2015, as far as beef production goes, we had a 500
    million pound increase over 2015 in our imports. We had a 250
    million pound decrease in our exports. That is 750 million more
    pounds that is being put on the domestic----
        Senator Hoeven. So you are saying import volume is part of
    this price depression, import volume.
        Mr. Goggins. I really do.
        Senator Hoeven. Well, that is important.
        Mr. Goggins. I think that is about a three percent
    increase. So, it takes, according to the USDA, it takes--for
    every one percent sway one way or another in supply, it affects
    your price one-and-a-half to two percent. So, I really think
    that extra 750 million pounds of beef product that we had on
    the domestic, it is our trade deficit.
        Senator Hoeven. Let me--one final question. I am about out
    of time. WOTUS, Waters of the U.S., how does it affect your
    producers? I would like all of you to take a swing at that one.
        Mr. Brunner. It affects our producers' ability to enjoy
    their private property rights in the most efficient, economical
    manner for their operations. It is a massive federal government
    overreach. It goes far beyond clean water and navigable waters
    of the United States. It is an intrusion into private property
    rights.
        Mr. Truex. I agree with that. In our industry, it limits
    the amount of land we can apply manure on. It has all kinds of
    restrictions. There is a lot of overreaching burden that goes
    with the current regulations.
        Dr. Hill. Yes. The only thing I would add is that I think
    it will be a boom for environmental lawyers because we will be
    sued until who knows what happens.
        Senator Hoeven. Mr. Goggins.
        Mr. Goggins. It affects every sector of agriculture, the
    rule, and it is basically--it touches every state, every corner
    of this country, and I think it takes--it will take due
    consideration and time for the review. I mean, the voluntary
    conservation has been a really good success. I think the best
    stewards of the land are those of us on the land. I think it
    really affects our property rights, as well.
        Senator Hoeven. Mr. Zimmerman.
        Mr. Zimmerman. I would concur. Manure management plans will
    be much more difficult and still the unknowns. We really do not
    know how it is going to affect us. There is too much
    uncertainty there.
        Senator Hoeven. Thank you.
        Chairman Roberts. Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        I would like to thank Mr. Truex for being here. He is a
    leader in Indiana agriculture. He is someone we are very, very
    proud of, and I will tell you, Mr. Truex, since you told the
    Ranking Member, Senator Stabenow, that you buy your organic
    eggs from Michigan, she has become a big fan of yours, as well.
        [Laughter.]
        Senator Stabenow. That is right.
        Senator Donnelly. I know you have had your hands full with
    the avian flu outbreak. I am very, very proud of how we
    responded in Indiana, how we have worked on this. Can you tell
    us some of the things that you think that were done right in
    responding to that.
        Mr. Truex. Yes. I think government, USDA, and the industry
    learned a lot of lessons from the Iowa situation, and as we
    were preparing for this, we had our state vet, Dr. Marsh, speak
    to the entire UEP organization in October of last year about
    how Indiana is prepared for this in our state. Then,
    unfortunately, as this spring, Indiana had its own high path AI
    outbreak in Southern Indiana, and I think it is a testimony to
    the lessons that USDA learned, that the states learned, that we
    were able to control that outbreak rapidly. It was put away.
        I think the lessons learned are there is a way to control
    it, and I think as Mr. Zimmerman said, the key is instant
    response. You have got to have a plan. You have got to know
    what you are doing. You have got to have it all prepared so you
    do not get the different agencies fighting with each other over
    what you can do in a state, what you can do in a county, and
    what needs to be done.
        So, I think the industry and USDA is much more prepared to
    deal with any future outbreaks and keep it contained in a much
    smaller area with fewer bird numbers.
        Senator Donnelly. So, do you think, and it sounds like this
    is one of the keys, that it is not the moment that you learn
    about the fact that avian flu has arrived as it is, in effect,
    almost preparing for the worst, hoping for the best, but having
    every single thing you can think of lined out and ready to go.
        Mr. Truex. Absolutely. Our state Poultry Association and
    our state vets' office have worked together very, very hard and
    they have really put the effort in and we are prepared in the
    State of Indiana too, when we find we have a problem, we will
    deal with it quickly, rapidly, and control it.
        Senator Donnelly. Let me ask you just to pick up on some of
    the other questions that have come before us so far. I was just
    wondering the difficulties that you will face and the industry
    will face logistically if we cannot find a federal solution to
    the labeling of GE materials as we move forward, if we are not
    able to get that done.
        Mr. Truex. Well, our industry is very concerned, and as the
    Ranking Member pointed out, thankfully, meat, milk, and eggs
    are exempt at this point in time and we hope it continues that
    way. A patchwork of different states would be a nightmare when
    it comes to--we sell our product in probably 40 or 50 different
    states, along with export. So, a standard has to be set. You
    cannot label your cartons on 30 or 40 different standards. So,
    a federal level that overrides all state regulations has to
    happen.
        Senator Donnelly. Thank you.
        Thank you, Mr. Chairman.
        Chairman Roberts. Senator Thune.
        Senator Thune. Thank you, Mr. Chairman.
        Thank you to the panel for being with us today. I
    appreciate your testimony and your responses to all the
    questions, and I am sure a lot of these issues have been
    probably beat to death by now, but I did want to just follow up
    a little bit on the labeling issue.
        As you know, and I am sure it has been discussed that the
    Senate is considering a path forward on biotech labeling, and
    the question I guess I have is does anyone on this panel
    believe that animal products should be included in mandatory
    labeling of biotech products, or should meat, dairy, and other
    animal products all be exempt from biotech labeling?
        Let me just say that I know that there has been this
    argument made that consumers really want meat to have mandatory
    biotech labeling, but I guess my question is, is that what they
    really want or is that what they are being told they want by
    labeling supporters, because that strikes me as that is not
    something that I certainly hear from my constituents out there.
        But, tell me what you all think about whether or not the
    labeling issue that we are having the discussion about here
    ought to apply to meat, dairy, and other animal products, or
    whether they ought to be exempt.
        Mr. Brunner. Well, very quickly, our organization does
    significant consumer market research and the consumers that we
    talk to, they are not telling us that, either.
        Senator Thune. Okay. Anybody else?
        Mr. Truex. We would just like to say that the science of
    the animals that eat genetically modified grains, there is no
    scientific evidence that passes through the meat or the
    product, the egg or the milk. So, we would like to stand behind
    that very firmly.
        Senator Thune. All right.
        Dr. Hill. Yes, and that is a view that the Europeans take,
    too. So, I think that tells us a lot right there----
        Senator Thune. Yes.
        Dr. Hill. --because they tend to be more reactive on these
    issues.
        The other thing is that, the more and more sorting that we
    ask the packing industry to do, the less efficient they become,
    and there is just so much sorting that they can do. If we had
    non-GE and GE meat, it would be a nightmare for them to try to
    track that product through the whole meat chain. That would be
    a disaster.
        Senator Thune. Well, it strikes me that, yes, I guess that
    pretty much answers the question. When we are getting to the
    left of Europe on some of these issues, we are probably out of
    the mainstream when it comes to this country.
        One of the things when I visit with cattle producers in
    South Dakota, one concern I hear quite often is regarding the
    consolidation across the beef industry. So, I guess I would
    direct this to Mr. Goggins. What role does consolidation play
    in the competition in the markets, and what trends and producer
    marketing strategies are you seeing in response to
    consolidation?
        Mr. Goggins. Well, I think as far as our organization, I
    mean, with our auction markets, with our video company, we are
    promoting the highest--and actually in this part of the world,
    the United States, we raise the highest quality, as good of
    beef cattle as there is in the world, and we are putting a
    pretty good show list up. I mean, I grew up in the auction
    business, not only the ranching business, but went to the
    stockyards every morning and kind of grew up there, and as my
    father always said, competition is good. We need competition in
    the marketplace. We promote it every day and we do the best we
    can to get competition and buyers in the seats every day. We
    work at it. I think we need to move that up the chain as we go,
    at the fed cattle level, as well. But, we do everything in our
    power to do that.
        Senator Thune. On a scale of one to ten, regulatory burden
    of government. I know it has all been talked about probably at
    some length today. In terms of the issues that you have to deal
    with or the issues that concern you with regard to the future
    of the livestock industry in this country, where would that
    rank?
        Mr. Goggins. Twelve.
        [Laughter.]
        Senator Thune. Okay.
        Mr. Brunner. Ten.
        Mr. Goggins. It is high. Since you brought that regulatory
    up, in the feeder cattle business, especially in your part of
    the world, South Dakota, Montana, you get especially our way
    West and South, you get further away from the corn belt. You
    get in the East Coast, Florida, where a lot of feeder cattle
    are, I think we need to be real conscious of--we have had the
    livestock haulers exempt, I mean, the movement of these--the
    interstate movement of these feeder cattle, livestock in
    general. If you load a set of cattle in Western Montana and go
    clear to Kansas with them, it takes more than ten hours----
        Senator Thune. Right.
        Mr. Goggins. --and I think if you get those cattle loaded
    up, you have got to unload them somewhere ten hours down the
    road and then let them stand in a dry old lot, not taken care
    of very well for another ten hours, load them back up. I mean,
    we always base our death loss as far as the feeder cattle that
    we buy from one to two percent. Now, we start unloading these
    things, because the trucker has got to have ten hours of sleep,
    I think it becomes a real animal welfare issue. I think these
    cattle are--instead of a one or two percent death loss, we are
    going to be looking at ten, 20, 30 percent death loss on these
    cattle, which, in turn, it is going to affect the value of
    these feeder cattle in those areas that are quite a way from
    the feed, and I think it is something that we really need to
    address.
        Senator Thune. You referenced, I think, in your testimony,
    the commercial livestock hauling, and I want to point out,
    because I serve as Chairman of the Commerce, Science, and
    Transportation Committee, that we were involved in leading the
    successful effort to make hours of service exemption from rest
    breaks permanent for those who are carrying livestock and bees
    and it--the provision takes into account the health of the
    livestock, which--and the practical reality that these animals
    should not be left on the roadside.
        So, the exemption was granted, I think, on multiple
    occasions by the FMCSA, the trucking agency, and we made it
    permanent to prevent the need for repeated consideration of
    these same facts. So, there is--it is in Section 5206 of the
    FAST Act and hopefully that will provide some relief on that
    front.
        But, I know that in terms of regulations, and I am sure it
    has been covered, as I said, at length, Mr. Chairman, but I
    just have to say that when you are trying to make a living in
    production agriculture these days and the government is
    constantly your biggest enemy, something is wrong. We just see
    it on every front, and I hope that changes. Obviously, we are
    going to do everything we can at this branch of the government
    to keep that from becoming the biggest liability to making a
    living in agriculture. But we could certainly use some help
    from a lot of the agencies who evidently have way too much time
    on their hands around here, because it just seems like every
    day, there is something new coming out that makes it more
    expensive and more difficult to do what you do and to help us
    feed the world. So, that has got to change.
        Thank you. Thank you, Mr. Chairman.
        Chairman Roberts. Senator Ernst.
        Senator Ernst. Thank you, Mr. Chairman.
        I would like to thank all of our witnesses today for being
    here, especially Dr. Hill. Thank you for coming out from Iowa.
    It is really good to see you again, so thank you. We have got a
    lot of important topics that have been discussed today and I
    want to thank all of you for your input.
        I am glad that you have highlighted the challenges that
    your sectors are facing right now, whether it is from market
    volatility, burdensome agency regulations--jeepers, how many
    times have we talked about WOTUS--foreign animal diseases,
    international trade barriers--I am going to come back to that--
    or labeling requirements that would disparage our products. Let
    us talk a little bit about--I know everybody has wanted to talk
    about it, TPP.
        About a year ago, I was in Vietnam and Singapore and the
    topic of discussion there, of course--and this was a defense
    conference that I had traveled to in that region--but they
    wanted to talk about TPP, because a number of those world
    leaders, the military leaders, they really wanted to have the
    United States as a primary trade partner, and the push-back was
    that if you are not our primary trade partner, there is another
    country in the region that does want to be our trade partner,
    and that, of course, is China.
        So, I would like to hear your thoughts on that in relation
    to if we are not stepping up to the plate, what are the other
    players out there that might fill in the gaps if the United
    States is not involved in trade with these nations, or expanded
    trade with these nations. Mr. Brunner, if you could start,
    please.
        Mr. Brunner. Well, China has their own 16-nation potential
    trade agreement that they are actively promoting in the advent
    that the United States does not go forward with TPP. As has
    been said, TPP would include 40 percent of the world's
    economies. It is also based on ethical standards and sanitary
    standards that are dictated by the United States and I do not
    believe we want to abdicate our role in the global community
    and the Pacific Rim to China. You know, it has been pointed out
    to me, and I firmly agree, that we do not maintain world peace
    and competitive position in the world economy by shirking our
    responsibility. So, we firmly believe TPP now.
        Senator Ernst. Very good.
        Mr. Truex.
        Mr. Truex. I really do not have a comment on that because
    of our industry does not really play into that so much. Thank
    you.
        Senator Ernst. Wonderful.
        Dr. Hill, of course.
        Dr. Hill. Well, I would agree with what Mr. Brunner said.
    You know, it is obviously important from an economic
    standpoint, but I think it is equally important from a
    geopolitical standpoint. Countries that work together, trade
    together, are going to be able to sit down and talk and work
    out problems a lot better than if they are not trading. So, I
    think it--I do not know if you could say the economic impact or
    the geopolitical impact of TPP is more important, one than the
    other, but they are both very, very important, and----
        Senator Ernst. Very good.
        Dr. Hill. --we would encourage the Senate to work hard to
    get it passed as soon as possible.
        Senator Ernst. Absolutely.
        Mr. Goggins.
        Mr. Goggins. Yes. I think it is a very positive thing, if
    we do get it passed, for the U.S. cattle producers. I mean, I
    think it opens up the export market back to Japan and reduces
    our tariffs. I do think we need to--there need to be measures
    in place, though, to address the cyclical and the perishable
    nature of the cattle and beef in addition to protections
    against dumping.
        Senator Ernst. Very good.
        Mr. Zimmerman.
        Mr. Zimmerman. Well, I have a specific trade barrier
    example that we are dealing with currently and it involves
    Canada. A lot of our poultry, baby turkeys, come from Canada.
    They are hatched in Canada, but then they cross the border and
    are raised and processed in the United States. Currently, that
    poultry, when it comes in the United States, can no longer be
    exported to South Africa. But if that poult, baby turkey, stays
    in Canada and is raised and processed in Canada, it can be
    exported to South Africa.
        So, technically, it bans all U.S. turkey from the South
    African market and it is just an incredibly silly rule, and we
    mix our birds. One of my flocks may be ten percent Canadian and
    90 percent U.S. hatched, but they are all no longer eligible
    for South African use. So, it is an incredibly silly trade
    barrier that we would really appreciate your help in revisiting
    and removing.
        Senator Ernst. Absolutely. Thank you.
        I see that my time is expiring, but I do appreciate it. I
    think we do need to look very carefully at the TPP, not only as
    trade, but also as a way to leverage cooperation with other
    nations out there. So thank you very much, Mr. Chairman.
        Chairman Roberts. Thank you, Senator Tillis for another
    round.
        Senator Tillis. I am not going to ask any questions, just
    maybe a comment, and Mr. Chairman, I hope, without objection, I
    can submit my opening statement for the record.
        [The prepared statement of Senator Tillis can be found on
    page 49 in the appendix.]
        Chairman Roberts. Without objection.
        Senator Tillis. Thank you. I just want to go back and maybe
    lower the temperature a little bit, but maybe focus on the one
    theme that I hope comes out of this meeting.
        First, the TPP and trade with Europe and Africa is
    absolutely essential to our future in farming, and I completely
    get that. I voted for TPA. I hope that we can get the TPP to a
    point where we get support and I will be working to that end.
        Mr. Zimmerman, I will be submitting a question that touches
    on a comment or an answer that you gave to Senator Ernst on the
    sort of barriers to entry with South Africa. I think we have
    another issue with Korea, where the HPAI seems to be used as a
    pretext for them putting up protectionist measures. We will be
    submitting a question for you so that we can better educate our
    staff and other members on those challenges.
        But, I want to go back again to the biotech labeling and
    something Mr. Brunner said. Mr. Brunner, you said you have not
    had a chance to study the Vermont law in particular. It does
    turn out that in the Vermont law, beef, poultry, milk and eggs
    have been exempted. As a matter of fact, a piece of pizza that
    has meat on it is exempted, but its vegetarian equivalent is
    subjected to the rule.
        This is the sort of mentality that is being used by the
    states to create a patchwork of regulations that will be
    absolutely burdensome on food companies if Congress does not
    act. Back to the point that Senator Heitkamp made, regarding
    labeling but doing it in a consistent, high value way for the
    consumer, but with a low impact to the producer. That can only
    be done if Congress does its job and acts on preemption.
        On GIPSA, we need to work very hard to see if we can
    accomplish this Congress what was accomplished in 2010. Either
    get the regulations to a point that you think are fair and can
    be dealt with or do our very best to try and disallow them so
    that we are not adding just another burden on an industry that
    really cannot afford more burdens.
        Thank you, Mr. Chairman.
        Chairman Roberts. I thank the Senator.
        I think both the distinguished Ranking Member and myself
    have additional comments we would like to make with regards to
    the agriculture biotechnology situation. It is called ABT. It
    is not called a GMO.
        We had a hearing with the USDA. We had a hearing with FDA
    and the EPA, all three. I raised the question, is our food
    safe? Are GMOs safe? The answer was yes, yes, yes. This is not
    a human health problem. This is not a safety problem. This is a
    marketing challenge, and you all know what I am talking about.
    But, it has been very difficult to get this pulled together. We
    had over 800 organizations come to this committee and ask us to
    settle this.
        We passed a bill 14 to six in this committee.
    Unfortunately, we were not able to go to the bill. That takes
    60 votes in the Senate and that has posed--our Founding Fathers
    wanted us to go a little slow as opposed to those folks who
    were closest to the people, the House of Representatives. I
    understand that, and that is not going to change, I hope.
        So, we have 60 votes to overcome to at least go to the
    bill, which was the second bill that we introduced that we
    tried to draw some folks over. The distinguished Ranking Member
    and I have been meeting overtime on this issue. So, I want you
    to know that this committee wants to get an answer.
        I also want you to know that every person on this
    committee, I do not know of any exception, are standing behind
    efforts to get TPP done. Tough atmosphere. Every trade bill
    that I have ever been associated with has been over-criticized
    and it has been oversold, and it takes hard work.
        Senator Tillis and I were in Australia, Indonesia,
    Singapore, Japan, did not have time to get to South Korea
    before we could get back. That was the number one issue. By the
    way, the second issue was do you have our back, but that is
    another whole discussion.
        So, with regards to TPP, and now we call it agriculture
    biotechnology, or just biotech, we are determined to get an
    answer and we will keep working on it.
        I want to thank you all for sharing your experiences
    related to the opportunities and challenges that your
    industries face. You are all leaders of the livestock and
    poultry sectors and your testimony today has been invaluable to
    this committee.
        To my fellow members, we ask that any additional questions
    you may have for the record be submitted to the Committee Clerk
    five business days from today, or 5:00 p.m. next Friday, June
    3.
        This concludes our hearing----
        Senator Stabenow. Could I say something?
        Chairman Roberts. --except for the comments by the
    distinguished Ranking Member.
        Senator Stabenow. Well, thank you, Mr. Chairman.
        I just want to say thank you to everyone again and to the
    Chairman for the hearing and just indicate we are working very
    hard on a difficult issue that both Democrats and Republicans
    voted no on when it came to the floor. There was bipartisan
    support and bipartisan opposition. Because of the nature of the
    Senate, we are looking for that common ground and magic number
    to be able to get to 60, and I remain, as I have been saying
    now for I do not know how many years now, that from my
    perspective, this is about making sure that we stop a 50-state
    patchwork. We know biotechnology is safe. Thirdly, we have
    consumers that are moving at the state level and are asking for
    transparency and we have to find that, as well.
        This is not an easy issue, because, frankly, we have people
    coming from very different worlds. Depending on who you talk
    to, it is like a totally different issue, which is one of the
    challenges as we move through all of this. But in the interests
    of agriculture in our country and production agriculture, we
    need to find a way to come together and have common ground and,
    frankly, be willing to compromise in order to be able to get
    there, and that is what the Chairman and I are working on and
    we need everybody here being willing to do that, as well.
    Otherwise, it is going to be very difficult to get there.
        We are willing to do that and we are working hard and we
    are being asked to basically step up and take on the consumers
    on behalf of the industries involved and wrestle back and forth
    with this. I am hopeful that part of what happens long term is
    that we have an education effort I have been suggesting to
    folks for years, to be able to truly talk about what
    biotechnology is so that people understand that. Ignoring that
    discussion, or not having it in a way that addresses the world
    we live in, in terms of communicating with people, it is just
    not going to work.
        We have to engage people so we understand the positive
    side, what has happened in terms of moving agriculture forward
    and the positive benefits of biotechnology in that process. I
    would just encourage everybody to make a commitment to tell
    that story, because if that story is not told, this is going to
    be very difficult going forward, I think. So, thanks.
        Chairman Roberts. I thank the Senator for her comment. I
    would offer only one observation. The best, most effective form
    of communication from consumers is their pocketbook, perhaps
    not government mandates.
        Senator Stabenow. Sure.
        Chairman Roberts. That concludes our hearing. The Committee
    is adjourned.
        [Whereupon, at 12:10 p.m., the Committee was adjourned.]

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                                A P P E N D I X

                                  MAY 26, 2016

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                       DOCUMENTS SUBMITTED FOR THE RECORD

                                  MAY 26, 2016

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                             QUESTIONS AND ANSWERS

                                  MAY 26, 2016

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