[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE FUTURE OF AMERICA'S SMALL FAMILY FARMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MARCH 23, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 115-011
Available via the GPO Website: www.fdsys.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
24-674 WASHINGTON : 2017
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HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
DON BACON, Nebraska
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
VACANT
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Staff Director
Jan Oliver, Chief Counsel
Adam Minehardt, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Rod Blum.................................................... 1
Hon. Brad Schneider.............................................. 2
WITNESSES
John D. Lawrence, Ph.D., Associate Dean and Director for
Extension and Outreach, College of Agriculture and Life
Sciences, Iowa State University, Ames, IA...................... 4
Mr. Tim White, Owner, TA White Farm LLC, Lexington, KY,
testifying on behalf of the National Cattlemen's Beef
Association.................................................... 6
Ms. Sarah Rickelman, Manager, Degener-Juhl Farms, Hudson, IA,
testifying on behalf of the Iowa Farm Bureau................... 7
Mr. Chuck Conner, President & CEO, National Council of Farmer
Cooperatives, Washington, DC................................... 9
APPENDIX
Prepared Statements:
John D. Lawrence, Ph.D., Associate Dean and Director for
Extension and Outreach, College of Agriculture and Life
Sciences, Iowa State University, Ames, IA.................. 28
Mr. Tim White, Owner, TA White Farm LLC, Lexington, KY,
testifying on behalf of the National Cattlemen's Beef
Association................................................ 35
Ms. Sarah Rickelman, Manager, Degener-Juhl Farms, Hudson, IA,
testifying on behalf of the Iowa Farm Bureau............... 42
Mr. Chuck Conner, President & CEO, National Council of Farmer
Cooperatives, Washington, DC............................... 45
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Statement from Pete Gurr, Deputy Director of the American
Samoa Department of Agriculture............................ 56
THE FUTURE OF AMERICA'S SMALL FAMILY FARMS
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THURSDAY, MARCH 23, 2017
House of Representatives,
Committee on Small Business,
Subcommittee on Agriculture, Energy, and Trade,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360, Rayburn House Office Building, Hon. Rod Blum
[chairman of the Subcommittee] presiding.
Present: Representatives Blum, Chabot, King, Radewagen,
Comer, Bacon, Lawson, and Schneider.
Chairman BLUM. I call this meeting to order.
Welcome to the first hearing of the Subcommittee on
Agriculture, Energy and Trade in the 115th Congress. This is my
first hearing as chairman of the Subcommittee, and I am pleased
to be focusing on a topic that is important to both my district
and America's heartland, small family farms.
Small farms have always been a part of our nation's fabric.
It can not be stressed enough that the small family farm is
also a small family business. Many of our country's Founding
Fathers started out as small family farmers. In a letter to
George Washington, Thomas Jefferson even referred to
agricultural as, quote ``our Nation's wisest pursuit.''
Although the industry has changed over time, agriculture is
still a driving force in American America's economy.
Forty-one percent of all land in the United States is used
for farming. U.S. agriculture has a $45 billion trade surplus
with other countries. Let me repeat that. U.S. agriculture has
a $45 billion trade surplus with other countries. While it may
be surprising, over 93 percent of America's farms are still
small family farms. Our nation's smallest farms continue to
produce a significant amount of our nation's cattle, eggs,
soybeans and other goods.
Small family farms are also at the forefront of the
emerging sectors of agriculture. For example, direct to
consumer sales through farm stands and farmer's markets have
greatly increased in recent years. And small family farms
account for almost 60 percent of those sales.
But more importantly, small family farms provide a living
for people in places with limited opportunities and put food on
the table for families across the world. And as I was saying
earlier in discussions, sometimes I have to remind my
colleagues from the cities that I like food and food is not
grown in grocery stores.
While small family farms are a vital part of America's
economy and food supply, historically low food prices have made
it harder than ever to run a family farm. Since 2013 net farm
income has dropped by 50 percent. And while larger farms are
better equipped to handle periods of lower prices, small family
farms get hit the hardest. In addition to low prices, small
family farms have a multitude of other issues to worry about,
from high taxes, increasing regulations and trouble selling
their products internationally, it would seem like government
bureaucracy is only making it harder to run a small family
farm.
Today's hearing will be a tremendous opportunity to hear
directly from the agriculture industry experts and even some
firsthand accounts about what it is like to run a small family
farm in 2017. Through the panel's testimony, this Subcommittee
hopes to further understand how policies can be developed to
help, not hurt, help small family farms succeed.
I now yield to the ranking member for his opening
statement, Mr. Schneider of Illinois.
Mr. SCHNEIDER. Thank you, Mr. Chairman. And like you, this
is my first hearing as ranking member. I am very excited not
just to be on this Committee, but to be working with you,
working to help small businesses and small farms across our
country to continue to be the engine of our economy and I want
to thank the witness for being here.
Agriculture is one of America's oldest and most important
industries where family farmers and small businesses serve as
the lynchpin. Most importantly it is a vital part of the
Nation's economy, providing food and natural resources to
millions. Although production has shifted to larger farms,
small farms maintain significance in our economy. Based on data
from the 2012 Census on Agriculture, there were 2.1 million
farms in the United States and 97 percent were small, family
owned operations.
U.S. farms income experienced a golden period from 2011
through 2014, driven largely by the strong commodity prices and
agricultural exports. But since then, the state of the farming
economy has weakened. Low commodity prices and high costs have
posed concerns for many farmers across the country, market
forecasts predict that that these trends will continue. As a
result of these concerns, small family farmers may face
difficult choices in how to maintain their businesses.
Small farmers experience many of the same concerns that
other small businesses face. For example, even though USDA
programs provide lending options specifically for farmers,
access to capital remains difficult for certain subsets of
agriculture, mainly startup and socially disadvantaged farmers
and ranchers. Similarly, small farmers stress the need for
comprehensive tax reform to reduce the complexity and burden
that exists in the current tax system. And in order to continue
to create jobs which drive the economy, many farms would
benefit from sensible immigration policies to hire the workers
they need. These policies are critical in helping our Nation's
small farms remain competitive in domestic and global markets.
Small farmers need a strong commitment from Congress to
assure them that agriculture remains a viable industry,
especially as the gap between small and large farms become more
divided.
Today's hearing offers the opportunity to gain a better
understanding of their needs and the challenges they face. It
is my hope that we will devise solutions today that will help
small family farms thrive.
I thank the witnesses again for being here today and I look
forward to hearing your comments.
I yield back.
Chairman BLUM. I would just like to take a second to
explain the opening statements and the timing. If Committee
members have an opening statement prepared, I ask that it be
submitted for the record.
Your timing lights you should have in front of you. You
will have 5 minutes to deliver your testimony. The light starts
out as green and when you have 1 minute remaining, the light
will turn to yellow. And at the end of your 5 minutes, the
light will turn to red. And we ask that you try to adhere to
your time limit. We are not going to shut your mike off, we are
friendly here but try to stick to the 5 minutes.
With that, I would like to introduces our distinguished
panel of witnesses today. Our first witness is Dr. John
Lawrence, Associate Dean and Director of the College of
Agriculture and Life Sciences at Iowa State University.
Welcome. Dr. Lawrence is also a director of the Iowa Nutrient
Research Center at the Iowa State University Beginning Farming
Center which coordinates educational programs and assess the
needs of beginning and retiring farmers. He received his Ph.D.
in economics from the University of Missouri, and received both
his masters and bachelor's degree from Iowa State. Thank you
for coming to testify today, doctor.
Our next witness is Tim White, owner of White Farm, located
in Lexington, Kentucky. He is vice president of the Kentucky
Cattlemen's Association and will be testifying this morning on
behalf of the National Cattlemen's Beef Association. White
Farms have been operated by Mr. White and his wife for 27 years
and is primarily a cattle operation with corn and soybean crops
as well. Mr. White is a graduate of Eastern Kentucky University
with a degree in beef cattle management. Thank you for
testifying this morning, Mr. White, and welcome.
Our third witness is Sarah Rickelman, a manager of Degener-
Juhl Farms--did I pronounce that right--a hog farm in my
district in Hudson, Iowa. Last fall Ms. Rickelman was selected
to participate in the Iowa Farm Bureau Agriculture Leaders
Institute, congratulations, which brings Iowa's leaders in the
agricultural industry to meet with agriculture policy experts
here in Washington, D.C. She graduated from Iowa State
University, in agricultural studies, and will be testifying
this morning behalf of the Iowa Farm Bureau. Thank you very
much for being here. It is always great to see one of my
constituents.
And I will now yield to Ranking Member Schneider to
introduce the minority witness who I happen to know very well.
Mr. SCHNEIDER. Thank you. It is my pleasure to welcome
Chuck Conner. Mr. Conner is president and CEO of the National
Council of Farmer Cooperatives where he oversees the
organization's work to promote and protect the business and
public policy interest of America's farmer owned cooperatives.
Prior to joining NCFC, Mr. Conner served as deputy
secretary at the U.S. Department of Agriculture. He also served
as special assistant to President Bush and as an adviser to
Senator Richard Lugar. Mr. Conner is a graduate of Purdue
University, which I will mention is in the Sweet 16 and I
welcome Mr. Conner, thank you for being here.
Mr. CONNER. Thank you, Congressman.
Chairman BLUM. Dr. Lawrence, you are now recognized for 5
minutes.
STATEMENTS OF JOHN D. LAWRENCE, PH.D, ASSOCIATE DEAN AND
DIRECTOR FOR EXTENSION AND OUTREACH, COLLEGE OF AGRICULTURE AND
LIFE SCIENCES, IOWA STATE UNIVERSITY, AMES, IA; TIM WHITE,
OWNER, TA WHITE FARM LLC, LEXINGTON, KY, TESTIFYING OF BEHALF
OF THE NATIONAL CATTLEMEN'S BEEF ASSOCIATION; SARAH RICKELMAN,
MANAGER, DEGENER-JUHL FARMS, HUDSON, IA, TESTIFYING ON BEHALF
OF THE IOWA FARM BUREAU; AND CHUCK CONNER, PRESIDENT & CEO,
NATIONAL COUNCIL OF FARMER COOPERATIVES, WASHINGTON, D.C.
STATEMENT OF JOHN D. LAWRENCE, PH.D
Mr. LAWRENCE. All right, thank you for the opportunity to
speak to you today about family farms. You will be hearing from
individual farmers this morning and their important
perspectives on this panel. My comments are going to focus on
the demographics and economics of family farms and the
challenges they face, and then finally I will share with you
some of the programming at Iowa State University that works to
help sustain family farms across the generations.
I am going to speak initially here using USDA definitions
of farms on size. We are going to talk about resident farms,
intermediate farms, and commercial farms, all of which would
be, depending on your definition, may be small. Almost
certainly most of them in Iowa are family owned.
I don't want to get too much into the distinctions, but it
is important to note that of the 87,000 farms in Iowa, nearly
half of them are considered resident farms, meaning that they
are not farmers. Their primary occupation is off farm or they
are retired. They still live in communities, they still
contribute to the farm economy.
Intermediate farms, those that have gross sales less than
$350,000, a year make up about 30 percent of our farms, 26,000
of them. Yet 70 to 90 percent of their household income comes
from our farms sources. The commercial farms, those with sales
over about $350,000 or about 600 acres of corn-soybean
rotation, make up about one-fourth of the farms, they control
67 percent of the land, and they account for 80 percent of the
value of production. Again, family owned, family operated,
small on some scales but larger in others. They still have off
farm income in their household of about $100,000 a year on
average.
The policy that impacts markets and helps farmers manage
risk are going to be more important to these commercial farmers
because they have more acres and more animals. Policies that
impact rural employment are beneficial to all farmers but in
particular those more dependent on off farm income.
The rural businesses obviously need those people for
employees. Thus it is a symbiotic relationship between farms
and the rural businesses. The current conditions, and you will
hear more about that from our farmers on the panel, but as was
said commodity prices have dropped dramatically since their
peak in either 2013 or in the case of livestock 2014. That has
had an impact on financial conditions. I work with a ``canaries
in the coal mine'' group that meets to discuss has financial
health of farmers in recent years. Most farmers came into the
situation in a strong equity position, yet that has been
deteriorating. Many have been able to refinance to cover short-
term debt needs, and spread the debt out over a longer period
of time, and most but not all have been able to get financing
and continue to operate.
If prices continue as forecast, farmer equity will continue
to slowly deteriorate. Certainly the most vulnerable are the
younger producers who did not have a cushion going into this
downturn.
As we look at the challenges to sustaining family farms I
am going to talk about three of them.
First, is just managing a business in a globally
competitive environment such as agriculture, dealing with
variable weather, variable markets, evolving technology,
regulations and narrow margins.
Second, is to be able to grow that business to not only
support one family, but at times support two families as you
think about a transfer of the business from one generation to
the next.
Third, and often the most difficult and challenging, is
simply the communication about the future of the farm. Farmers
by nature do not like to talk about things like this, and yet
it is important to plan ahead so everybody has a common vision
and a common timeframe.
Iowa has the first in the Nation beginning farmers center,
it was created by the Iowa legislature in 1994 to assist
facilitating the transition of farming operations from
established farmers to beginning farmers. That center is part
of the extension program and the College of Agriculture and
Life Sciences at Iowa State University.
I want to talk about two programs in particular, one we
call returning to the farm, which is for farmers who know who
their successor will be, oftentimes a relative, a child--to get
them together in a pair of two day workshops and really start
the communication process that will set the footing for the
coming years of discussion.
A second one called ag link works with farmers who do not
have an heir already identified but is a matching service of
sorts. But unlike a dating service, where we simply give each
others names, this is an interview process, a facilitated
discussion over several months to make sure we pair up the
right people and we continue to work with them into the future
to try to move that business into the future intact rather than
in pieces. There are many other programs working with these
farmers and I look forward to answering questions about that,
thank you.
Chairman BLUM. Thank you, Dr. Lawrence. Mr. White, you are
now recognized for 5 minutes.
STATEMENT OF TIM WHITE
Mr. WHITE. Thank you, Chairman Blum, Ranking Member
Schneider for allowing me to testify today on behalf of the
future of America's small farm, family farms.
My name is Tim White, my wife, Amy and I own and operate TA
White Farm, LLC in Lexington, Kentucky. We have a pure bred
Angus operation and a commercial cow calf operation, and I am
currently the vice president of the Kentucky Cattlemen's
Association.
Cattle producers in this country are small business owners,
by in large with the average cow herd in the United States at
40 head. The current state of the farm economy is very much
weakend. The cattle market has been in a slump. It has many
producers struggling. According to the USDA's economic research
service, this year marks the fourth consecutive year of farm
income dropping on a national scale.
Congress plays an important role in several areas that
impact cattle producers, including regulation, tax, trade, and
the farm bill. While these issues alone can be managed by
producers, when combined with the losses of natural resources,
urban encroachment and natural disaster we have a real hurdle
that producers must overcome to be successful.
The biggest concern of our small business is
overregulation. The EPA's WOTUS rule is such an example. The
overreach of this regulation would require many beef producers
to get permits, and to comply with those permits, which would
be a huge burden and not to mention it would open up lawsuits
for activist groups.
As a small-business owner, I am particularly concerned
about the lack of outreach to the small business community by
Federal agencies such as the EPA. As a family owned business, I
know that this regulation would have had a negative impact on
my operation. The positive news is President Trump signed an
executive order requiring the EPA to go back and revise the
WOTUS rule.
We want to work together with the EPA so that we can get
clarity, that we need, in the WOTUS replacement that works for
cattle producers, protects our water quality, and follows the
rule of the law.
U.S. livestock producers understand and appreciate the role
that taxes play in maintaining and improving our Nation.
However, they also believe that the most effective Tax Code is
a fair one. For this reason, a full immediate repeal of the
estate tax must be a top priority as Congress considers
comprehensive tax reform legislation.
As you may know, in 2012 Congress permanently extended the
estate tax exemption level to $5 million per individual and $10
million per couple. While this was a positive step, the current
state of our economy has left many agriculture producers
guessing about the ability to plan for estate tax liabilities.
When it comes to trade, cattlemen have always been strong
believers in international trade. We support positions at open
markets and remove trade barriers intended to keep our products
out of foreign markets. The most dependable way to secure
access to foreign consumers is through free trade agreements
because they remove tariff and nontariff barriers.
Another major item on the agenda for small family farms is
the creation of the 2018 farm bill. With the farm bill in mind,
cattle producers oppose the involvement of the Federal
Government in determining how they market their cattle. We are
strong in opposition to the GIPSA rule on competitive injury.
If this rule is implemented we are led to believe that the
packers would offer one price for all cattle regardless to the
quality. As they are not willing to open themselves up to
frivolous lawsuits.
NCBA would also like to reiterate the opposition to the
mandatory, government run, country of origin labeling or COOL.
Repeal of the previous mandatory program was necessary as it
provided no market benefit to producers or consumers.
I also would like to mention today the need for a stronger,
more sufficient foot and mouth disease vaccine bank. Estimates
show that if an FMD outbreak happened in the United States, it
would cost our livestock producers billions of dollars in the
first 12 months. NCBA also requests the support for funding of
$150 million a year over the next 5 years. This is important to
the beef industry as countries across the globe continue to
grapple with foot and mouth disease.
Again I would like to thank you for your time today and I
look forward to working with you and answering any questions
that you might have.
Chairman BLUM. Thank you for your testimony, Mr. White.
Ms. Rickelman, you are now recognized for 5 minutes.
STATEMENT OF SARAH RICKELMAN
Ms. RICKELMAN. Good morning. I am Sarah Rickelman, manager
at Degener-Juhl Farms in Hudson, Iowa. Let me begin by thanking
Chairman Blum, Ranking Member Schneider and members of the
Committee for allowing me the opportunity to share my story
with you today.
I especially want to thank my House Member Representative
Blum for inviting me to testify. Thank you for the warm
introduction and this opportunity to talk about small family
farms in Iowa.
Iowa Farm Bureau members from Black Hawk County and rural
Iowa, where I along with my husband, help manage a 1,700 head
farrow to finish pig farm. My husband and I are two of several
producers who provide the hands on daily work to generate a
safe, nutritious and affordable product that is consumed by
families across the United States and around the world.
My passion for agriculture started as a young girl, growing
up on a small acreage and being heavily involved in the local
4-H club, learning about agriculture, caring for my animals and
preparing them for county fair year after. This was the
beginning of my love story with agriculture.
Wanting to continue my education at agriculture I attended
Iowa State University, taking classes in agricultural studies
with an emphasis in swine production.
ISU empowered me to learn the skills and obtain the
knowledge that I use on the farm every single day. Some of my
daily duties include animal observations, recordkeeping, and
training employees on public relations work. I love being
inside the barn every day, working closely with the animals and
ensuring they are given the best possible care. From the early
morning to late night, work on the farm is never done and I
wouldn't want it any other way.
My goal in college was to find a career that would balance
farm work with local, State and national agriculture advocacy.
I got involved with Farm Bureau 3 years ago and I really
enjoyed the opportunity to share my story of how I got started
in farming and how important agriculture is to my family and
rural Iowa. I truly believe that being on the family farm is
the best career choice I could have ever made.
While I couldn't be happier with my decision to farm with
my family, we face significant challenges and threats to our
livelihood. Being a young farmer, I am concerned about the
ability to continue this profession and one day pass it along
to my children. I am concerned about the ability--excuse me,
with commodity prices depressed over the past several years,
net farm incomes have decreased by 46 percent over the past 3
years with another 8 percent decrease projected for 2017. While
grain and livestock prices have a major effect on our
operations, the laws and policies that are enacted in D.C. also
have a significant impact on the success of small family farms.
In these challenging, economic times it is more important
than ever that we have a strong and adequately funded farm
bill. The farm bill provides a basic level of risk protection
in bad economic times and in years with poor weather. Federal
crop insurance in the farm bill has been successfully proven
and essential safety net for family farms across the country. I
hope that Congress will continue to appreciate the importance
of the farm bill and pass it before the current farm bill
expires.
Another way that D.C. is affecting the family farm is
through current tax policy. As Congress looks to reform our
Nation's tax policy, I hope that lawmakers will consider the
impact any change will have on the thousands of family farms
across the country. While lowering individual tax rates is a
positive reform, family farms will ultimately pay more taxes if
essential tax policies for small businesses are eliminated.
Agriculture is a capital intensive business and being able
to deduct business expense a critical tool. This should include
the ability to deduct interest expense. As a young farmer, I am
extremely concerned about the ability for the next generation
to purchase their first piece of ground or expand their
operation if they can't deduct interest expense. A tax reform
package that doesn't include these provisions will ultimately
increase taxes on family farms. On that same note, I hope
Congress will finally and permanently eliminate the death tax
while maintaining stepped up basis. These tax provisions are
essential to survival of the family farm.
As I mentioned before, the pork we raise on the farm not
only feeds families in Iowa but also feeds people across the
world. I am blessed to farm in an area of the world that is
immensely fertile and productive. Our country grows far more
food than we could ever use, with 98 percent of the world's
consumers living outside of our borders.
Agriculture is a growth industry and expanding export
opportunities is vitally important to the success and future of
the family farm. I hope that Congress and this administration
will push for expanded trade opportunities and work with other
countries to negotiate trade deals that lower tariffs so we can
sell more of products to those markets.
We face many challenges as farmers grow fewer and the
divide between the general population and agriculture grows
wider, but I am optimistic that if we continue to share our
story we can shine a light on the work we grow safe,
affordable, and sustainable food for the world. Being a family
farmer isn't just is a career, it is a lifestyle of which I am
extremely proud.
Now pregnant with my first child, I look forward to the day
when our little one can come out to the barn to see the baby
pigs with me and my husband, to enjoy agriculture as much as we
do. With a strong safety net, progrowth tax policies, and
increased trade opportunities I know America's small family
farms have a bright future. Thank you.
Chairman BLUM. Thank you for your insights, Ms. Rickelman,
and congratulations.
Ms. RICKELMAN. Thank you.
Chairman BLUM. That is great news. I would also like to
being a knowledge of the chairman of the full Small Business
Committee, Representative Chabot down at the end there. Thank
you, chairman, for honoring us with your presence at this
Subcommittee meeting.
Mr. CHABOT. Don't screw it up.
Chairman BLUM. Tell that to the President today.
Thank you, Ms. Rickelman. Mr. Conner, I would like to
recognize you now for 5 minutes.
STATEMENT OF CHUCK CONNER
Mr. CONNER. Chairman Blum, Ranking Member Schneider, and
members of the Subcommittee, thank you for holding today's
hearing on the future of the family farm.
I am Chuck Conner, president and CEO of the National
Council of Farmer Cooperatives and I am honored to be here
today on behalf of America's nearly 3,000 farmer owned co-ops
and their nearly 2 million producer owners.
The focus on the future of America's family farms is
especially timely today. As we work our way through the bottom
of the price cycle, producers are looking to improve their
margins in any way possible. In today's ag economy, the
difference between making small profits or harboring very big
losses is controlling your costs down to the very penny.
Producers know that many of these costs are simply beyond their
control, some are driven by markets, others by mother nature,
but some costs are also driven by public policy. These policies
can act either as investments that help lower costs or as
regulatory hammers that raise them.
Our common goal, ultimate goal, is to preserve the
productivity of our farms. Today I would like to focus on three
issues before Congress with a direct impact on our members and
their farmer owners. Tax reform, immigration and trade.
NCFC supports pro growth tax reform. However, some aspects
of the House tax reform blueprint could profoundly impact
farmer co-ops and their members. For example, the border
adjustability tax, it includes a 20 percent tax on imported
goods. This would be detrimental to cooperatives, cooperatives
that import fertilizer, fuel, farm machinery components, other
items.
The blueprint also eliminates the deduction for net
interest expense, repealing the deduction for interest on debt
would cause harm to farmers and their co-ops by hindering
business expansion, new hiring and product development.
Additionally, the blueprint calls for the repeal of section
199, the deduction for domestic production activities income.
Section 199 promotes jobs, it promotes job creation and
domestic production of goods. Section 199 benefits our returned
to the economy through new job creation, as well as increased
spending on agricultural production and in rural communities.
We urge you to maintain this incentive for domestic production.
An immediate threat to many of our farmers is the lack of
available labor. As part of the agricultural workforce
coalition, NCFC is seeking a legislative solution to address
this threat. We must ensure our farmers have access to the
labor they need to harvest crops and care for livestock.
Unfortunately, instability in the ag labor workforce has
reached critical levels today. Farmers face a shortage of
legally authorized and experienced workers each year and the
cumbersome H-2A visa program isn't serving as a safety net to
meet the workforce demands today.
We can and we must do better for our farmers by modernizing
our immigration system. This includes work eligibility for our
existing workforce and a farmer friendly program to provide for
future guest workers for all of agriculture.
Our farmers also depend heavily on foreign markets and
trade is vital to the prosperity of our farming sector. While
small farmers may not have access to international markets
directly, the prices they receive for their commodities are
clearly dependent on experts. Additionally, farmer owned co-ops
offer farmers access to the global marketplace by providing
services that would be more difficult, if not impossible to
accomplish individually.
The co-ops increased earnings due to foreign sales flow
back to the farmer owners through increased patronage
dividends, boosting farmers income well beyond the farm gate.
With over 95 percent of the world's population living outside
the United States, expanding access to foreign markets is
essential to our future success, this includes maintaining and
increasing access markets through existing and future trade
agreements and leveraging export programs that serve as a
catalyst for increased market access.
In my written testimony I have highlighted a few more
issues of importance to NCFC. We must reduce agriculture's
regulatory burden, as well as make improvements to our Nation's
transportation infrastructure, especially in rural America.
This should be a high priority. I have also included
information on a new sustainability initiative NCFC has
launched.
In conclusion, I realize this testimony covers a lot of
ground, some of which may be outside the jurisdiction of this
Subcommittee, but these issues are certainly no less impactful
to the future of America's family farms.
Thank you, Mr. Chairman, for the opportunity to testify
today.
Chairman BLUM. Thank you for your insights, Mr. Conner.
I would now like to recognize myself for 5 minutes. And
this is a question for the entire panel, in the last 4 years
that I have been in politics I have met a lot of farmers in
eastern Iowa, and I have yet to meet one farmer who started
their family farm, starting out in farming that wasn't involved
in a family farm, that didn't inherit the land and the farm
from their parents or didn't purchase it at a severely reduced
price, a less than marketplace price.
I am concerned about the shrinking number of farmers. I
don't want five mega corporations to control our food supply in
this country. And where I am heading here is I would like to
have everyone's insights on financing to start farms. Is there
credit there? Is it reasonably priced? Can a young person start
out without having parents in the business and make it in a
family farm today?
I am a small business person. I started out in software and
made it. In almost every other industry you can start out in
your basement or your garage and make it, potentially. But the
family farm, I am very concerned about the dwindling numbers.
So I would love to hear your insights on can a person, not
inheriting the land or inheriting the farm, make it today?
Maybe we will start with Dr. Lawrence.
Mr. LAWRENCE. That is a difficult challenge. And it is not
a new one. We have often said you either had to be born into
it, marry into it and some have higher costs than others. So we
do see in fact our beginning farmer center does work with
nonrelated parties to maintain a family farm. It moves from one
family to another, they just don't happen to be related to each
other.
We have a database that has over 700 young people that want
to get into a farming operation, and about 35 existing farmers
that want to find a young family to take over. So there is a
bigger demand than there is a supply.
The challenge is how do we encourage more of the existing
generation to move their assets into the next generation
intact? It is easy to have a farm machinery auction and rent
the farm to the highest bidder down the road, but then you lose
a family out of the community.
There is a bit of a balancing act. If we are going to grow
our businesses, oftentimes we have to acquire other assets. So
where do they come from unless we can do value added or grow
within our operations.
Chairman BLUM. Mr. White?
Mr. WHITE. You know, I think in our part of the world there
is young guys that are struggling, because they are trying to
get into the agriculture business and in our country cattle
business. And several of them got in and it is high market, and
now this market has gone the other way and it has really killed
their equity and capital position if they had any to start
with. So when we look at it, to get into this business one, it
has to be a desire and a life's goal because this is not an
industry that is easy, it is an industry you have to have
discipline in, and you have to do things and the way we do it.
In my operation is we have to think out of the box and try to
do it in ways that other people aren't, kind of like a niche
market. And to start on your own, it is tough. It is hard for
these young people to come out. And there are regulations that
are in place that are really--that do hinder.
And as Dr. Lawrence was just saying we are talking about if
there is any passing down, the estate taxes and stuff, our
business like you said is capital rich, cash poor. And so it is
really hard. I think young producers have to start out maybe
working with others that are already in the business and work
through that way.
Chairman BLUM. Ms. Rickelman?
Ms. RICKELMAN. I am going to go off what Mr. White said. My
family did not farm. We had an acreage, but I had a passion and
desire to be in the farming industry. I wanted to be a part of
it somehow. I didn't have the capital. But I went to Iowa State
and had the desire and the passion for it. And I started
working in the barns, just doing little tasks. And I worked my
way up to herdsman and managing positions and where I am part
of teaching other employees.
So I don't have any money invested in the farm, but I make
the operation work. And this is how I think young people need
to get into farming, not get so tied up with I need to raise
corn, soybeans and I need to have a big green tractor. Maybe
work on niche markets and partnering with others who already
farming like I have done and work your way up and eventually
take over or expand in different operations in the farm.
Chairman BLUM. Thank you.
Mr. Conner briefly.
Mr. CONNER. I think there are opportunities for those who
may not have been a farming operation to get in farming today,
but the key point that has been made is you are not going to
get into that farming operation because of great financial
returns, there has to be a passion associated with the land,
with food production in order to drive you with this.
Because if you look historically the return on capital in
agriculture just is never going to match other sectors, it just
is not. We have highs and lows but it is never long term going
to match it so there has to be something else driving you. And
when you have that passion, I believe there are many, many
opportunities to get involved in agriculture.
Chairman BLUM. That is good to hear.
My time has expired, I now yield to the ranking member, Mr.
Schneider for 5 minutes.
Mr. SCHNEIDER. Thank you, Mr. Chairman.
And again, thank you to the witnesses for your very
insightful testimony.
Mr. Connor, in many industries I think they talk about
psychic income and I think that is what you are touching on is
that passion.
Mr. CONNER. Yes.
Mr. SCHNEIDER. I wish I had an hour to discuss some of the
issues. We have covered so much from technology, to trade to
immigration, some of the things that jump out at me is the
importance of access to knowledge. When you talked about the
know how of how to work a farm, that comes with a passion, the
access to capital, the access to markets.
But as this is titled the future of farming, America's
future in farming, Dr. Lawrence, you said something in your
remarks that struck me. I spent my career as a consultant to
small business, family business, dealing with succession and it
is hard and people don't talk about it. And if there is a way
that perhaps working in public, private partnership we on this
Committee might be able to help foster the opportunities for
those discussions, the tools necessary to begin the
conversation on succession, what might we do?
Mr. LAWRENCE. Well, I can give you one example and this is
a USDA beginning farmer and rancher development grant that Iowa
State University received. One aspect is to train facilitators
in both the public and private sector on how to start and carry
out farm succession discussions with farmers. And so we certify
these people. Some are extension professionals, others are
attorneys, some are financial managers that are looking for
business and see this as an opportunity to have an outside
third party professional sit down with both generations and
really help facilitate those discussions.
It is not about choosing the right legal structure, it is
not necessarily about what the numbers crank out. It is ok they
have a common vision and can had they communicate on things.
Mr. SCHNEIDER. Are there obstacles besides having the
conversation to passing the farm on? What are some of those
obstacles?
Mr. LAWRENCE. Well you have heard some of those here today
about tax issues and some of those types of things. The stepped
up basis is really important, one that I believe should be
maintained. As far as other obstacles, sometimes there isn't
enough growth or opportunity in the business to support two
families. And oftentimes that involves somebody working off the
farm, maybe multiple somebodies to work into it as Ms.
Rickelman has spoken about.
Mr. SCHNEIDER. I will open it up to the rest of the panel.
As you see the need for succession, Mr. White, is your farm a
first generation, second generation, your cattle operation?
Mr. WHITE. My cattle operation is a first generation. And
at this point my kids--my son plans to come back, he is in
college and he is planning to come back to the operation. And I
am getting to the age that I am having to start to think about
what I am going to do and how I am going to transition my
operation in the future.
We just went through this in my family about 15 years ago.
And with my family, my father was sick and we went through some
estate work. And that is why it is important to NCBA, and for
me personally, and that is why I am here today. I have a bull
sale Saturday morning which is a major portion of my income,
but this is important to me. This will be the future of my
operation and that is why I am here today.
The estate tax is huge for us. We have to be able to pass
this along because if we have to worry--if I have to worry the
next 20 years about saving money to pay my liabilities for the
estate taxes that takes away from my operation to build it
where I can make room for my son to come in to my operation to
sustain both families.
Mr. SCHNEIDER. Thank you. Before we go further, Ms.
Rickelman, congratulations to you and your husband. The next
generation of farmers is important.
The last thing I want to touch on in my 1 minute, we talked
a little bit about immigration, Mr. Conner, you talked about
the need for immigration. And I asked this question yesterday,
at another hearing in this room, assuming we could come
together across the aisle and find a solution that addresses
border security, comprehensive immigration reform. The CBO
estimates that would add $2 trillion to our economy. The
stability, how positive of an impact would that have on each of
your operations if we could get there?
Mr. CONNER. Well, it is a great question and I would just
say it would have a tremendous positive impact. And it would
create jobs and economic growth in this country, because we
currently cannot get the labor force that we need to do what we
do for America today which is feed and clothe them every single
day. It is getting to a dire circumstance.
Just, very, very briefly we have what is estimated to be up
to 70 percent of our hired labor force on our farms and ranches
today are those who may not be here with legal documentation,
up to 70 percent. That is an incredible number. We can't do
what we do if we lose that labor force, it is just pure and
simple.
And the unfortunate part of that is, if we lose that labor
force, consumers aren't going to feel it in grocery stores or
at least not very much, because we are just simply just going
to import that product. And that is a horrible, horrible
thought to think that we are driving production overseas for
products that we can very, very competitively produce here in
the United States.
Mr. SCHNEIDER. I thank you. With that, I am out of time, I
yield back.
Chairman BLUM. Thank you. The gentleman yields back. The
gentleman from Iowa, Mr. King, is recognized for 5 minutes.
Mr. KING. Thank you, Mr. Chairman. I appreciate you holding
this here today. I would start out with this as sometimes Mr.
Schneider needles me, but I wanted to just ask you, Ms.
Rickelman, are you as happy about Purdue being in the Sweet 16
as he is?
Ms. RICKELMAN. I would have to say no.
Mr. KING. And Dr. Lawrence has already expressed his unity
with you. And so for those who are not watching, that it was at
the expense of Iowa State. Perdue was in the Sweet 16.
Mr. SCHNEIDER. With that Midwestern has taken their time
and made it to their first ever.
Mr. KING. Well, reclaiming my time. Hopefully that does set
a good tone here in this Committee, but when I listen to your
testimony, Ms. Rickelman, I am sitting here and I am smiling
for a whole series of reasons, because you do embody much that
we want to see come into agriculture and with an expanding
family on top of it.
I have long said if you want to do something great for our
country have a lot of babies and raise them right. And the best
place to do so is on a family farm. And so I am happy to hear
your testimony.
I had a question 1,700 head, how many sows is that? That is
farrow to finish, right?
Ms. RICKELMAN. Seventeen hundred sows, we finish 40,000 a
year.
Mr. KING. Okay. That resets my perspective on your
operation and how busy you really are. So I hope you get a lot
of cheap labor coming up in your family. And it reminds me when
you talk about niche marketing also. And it would be about 15
years ago I remember a discussion that I had in northwest Iowa
with a family on the street of one of those communities I won't
name here in the hearing. And at that time if you were going to
lay out the gross receipt cash flow for corn it would be about
$300 an acre gross receipts, roughly.
And so they had 1,100--no excuse me, 1,099 acres of corn.
One acre of what I would call a glorified garden, and out of
that single acre that family took $28,000 worth of crop off of
that single acre in probably the 2001 crop is what it was. And
I remember framing that in my mind. And I gave a speech to Iowa
State and said that out loud, a couple of kids in crowd that
didn't know that. And they let me know there was probably
$50,000 worth of cheap labor, child labor is how they described
it. That was their joke and not an estimate.
But someplace between $28,000 an acre for a labor intensive
well managed, well marketed, irrigated crop rotational piece of
ground at $28,000 an acre, and that $300 an acre is probably
more like $700 an acre now. There are a lot of solutions for
entrepreneurs that want to get into the business. And you had
your eye on it and you found that niche to do that.
So I am encouraged by that by your testimony on it and I--
the list of components here seems pretty universal and the
death tax, it is a direct tax on the American Dream itself.
When you think the people that came over to this country to
plant their stake out on the prairie it was about leaving a
farm or two or three for their--however many children that they
had, and when it interrupts that. And also I didn't hear
anybody say this, but I want to add, that it takes sometimes
generations to put together a unit. And that unit might be row
crop, and pasture, and hay ground, and drain leg and harvest
stores and feed lots.
All the balance of that package is artfully put together
over one or two or three generations blown up by the death tax.
And so that one really resonates with me. I think it hurts the
family farm more than anything else. I hear the discussion on
trade and I think that universal also, that we have a surplus
and we need to promote the trade.
So I think that I would--I want to point also out that we
are taking a good look at the vaccine bank and that is an
important piece. Maybe I will turn it back to you Ms. Rickelman
and ask you was there anything your hogs, Mr. White's cattle,
is there anything you heard that doesn't much up with what you
think between of two of you? I will turn back to Mr. White if
he has anything either.
Ms. RICKELMAN. No, there is nothing I heard. I am in
agreement.
Mr. WHITE. I agree.
Mr. KING. Okay. I will ask one then, Mr. White, could we
open up trade with China if we did identification and
traceability on our cattle, do you think that we would open up
the beef trade in China if we did that?
Mr. WHITE. I wouldn't say that that would be the
backbreaking issue. I don't think it would hurt things. I don't
think it wold hurt things at all, but I don't think it would be
a big deal breaker. They are interested in knowing about where
their product comes from, but they do know that the United
States has the safest meat inspection and pricing. And we have
the best commodities and they do know that.
Mr. KING. Thank you.
Mr. Chairman, indulge me for just a quick moment here in
this hearing I would like to turn to Mr. Conner and make this
point that there are 103 million Americans of working age who
are not in the workforce. Roughly 82 million of them would be
available if we mobilized it to World War II level.
We have got over 70 different means tested welfare programs
that is paying people not to work. And I think at the center of
that out of 103 million we ought to be able to find some people
to go to the farm and do some work. If you care to respond, I
will give you an opportunity to do that.
Mr. CONNER. I will respond, Mr. King. And you and I have
had this conversation in hearings in the past as well. I will
just say our evidence, time and time again and would be happy
to provide some of that documentation evidence to the
Committee, shows that these are jobs that Americans simply will
not do. And I don't think it is fair to place it on the back of
the farmer to sort of go out there and try and solicit jobs
among people that again these are jobs that have been proven
time and time again. It has been tried, it has been tested in a
number of States and it just simply never works.
Mr. KING. I promised you the last word.
I yield back, Mr. Chairman.
Chairman BLUM. Thank you. The gentleman yields.
And now I recognize the gentleman from Florida, Mr. Lawson,
for 5 minutes.
Mr. LAWSON. Okay. Thank you very much. I think one thing
too like I heard my colleagues say there the government is
paying people not to work. And that is really not true if you
have the opportunity to really look at the people who are
disabled have all kinds of situations in their families. And so
the government is not paying them, this is to sustain their
livelihood.
Now, I have some questions about immigration and I heard
what you stated earlier about you couldn't actually get to
market, you know, if you didn't have this, during the course of
the campaign there was considerable amount of discussion about
illegal immigrants how do you go about vetting them that work
on your farm? Have you had any kind of problem because that is
always where the biggest issue is.
I would like have Mr. Conner to elaborate on it and maybe
some of you all can.
Mr. CONNER. Well, Congressman, let me just say that this is
a sizable chunk of labor on our farms and ranches as I have
noted estimates as high as 70 percent of our hired labor force.
These are not people who come and go as a general rule. In many
cases these are workers that have been on these farms for 10,
15, perhaps even 20 years. They are skilled laborers, they are
skilled workers. And that is on the economic side.
On the human side in some cases they are part of the
families of these family farming operations, been there a very,
very long time, integrated into the community. And again, the
key point here is if those people were not there, we would not
do what we do for the American people in terms of food
production and we would ship and it is already happening. I can
cite numerous examples where we are importing a product from
somewhere else that we used to grow and produce here
domestically simply because we can not get the labor to do it.
And I think that is awful. We ought to be growing and
producing as much as we possibly can here in the United States,
use that labor. We have a saying within our organization, your
fruit and vegetables will be handled by foreign workers, the
only question is, is that handling going to occur in the United
States or in another country? We want it to be here in the
United States.
Mr. LAWSON. All right. I am trying--incidentally, Iowa
State and I know the University of Iowa is a little bit
different there. I had the opportunity to go to the University
of Iowa to take a job, but I ended up going to Florida State
and coaching. And in 1972 we played UCLA March Madness is all
over me at this particular point, you know.
But I will say one thing when you talked about the small
farm, is my father and my grandfather, you know, pretty much
farmed on weekends and worked into the city, you know, during
the week in order to really make--I didn't really define it as
being a small farm but I guess it was really a small farm.
The problem that occurred is that if they had not been
working in the city by the time guys like me grew up who wanted
to play basketball and didn't want to go back and do it, the
work, they probably wouldn't have had any kind of retirement
benefits.
And so my question was and I take Ms. Rickelman is that
having to do other jobs, to bring in revenue, how does that
affect your family in terms of when they reach age 65 or most
farmers don't even care about that until they can't go any
more, for retirement purposes because they will have to depend
on Social Security and other means if they are not able to save
any money. With you being much younger, how do you handle that
in working in a family farm?
Ms. RICKELMAN. Thank you. My situation is--might be a
little unique in perspective. My parents did not farm. My
father grew up in the city of Ceder Falls and he works for the
University of Northern Iowa as a landscape groundskeeper. My
mon was a stay-at-home mom.
For me personally right now we have profit sharing at the
work and we have a 401(k) program at our operation. As far as
retirement, and I guess I honestly haven't thought about it
yet, but our--the operation that we worked for that my husband
and I both work for has an excellent profit sharing program and
401(k) benefits. And that is where we are putting our money
right now so other than that I can't speak on other operations.
Mr. LAWSON. I know my time has expired, but I have always
been concerned about farmers, especially cattle farmers how if
you get a chance to, Mr. Chairman, how do you go about
preparing for the future?
Mr. WHITE. Well, to be honest, the way we look--my wife and
I look at it, our retirement is what we are able to accumulate
over the hopefully 50, 60 years that we farm. And we always
tease, it is kind of a joke at my house, my retirement is the
four legs of cows and equipment that I have running around.
That is my retirement.
And so there again is my concern. If my son wants to come
back to the farm and he comes back and comes into the
operation, when I get in my later years, we should be in a
comfortable position that he can come into our farm, get into
the operation and we be successful.
But at the end when it comes--if I have to continue to
worry about inheritance tax and estate planning, that makes it
harder on my wife and I to be comfortable to have enough money
that I can provide for my wife if something was to happen for
me. So that is what is important to us on the estate tax. It
let's us continue to do our business today the way it needs to
be done and not manipulate the way we have to do business.
Chairman BLUM. Thank you, the gentleman's time has expired.
The gentleman from Missouri, Mr. Luetkemeyer, is now
recognized for 5 minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman. As somebody who
raised hogs and cattle for about 20 years growing up I thank
all of you for your testimony today. It brings back a lot of
memories. I still have a farm, but don't do too much with it
because I spend too much time here in D.C.
Mr. Lawrence, you have in your testimony ongoing challenges
list, and two of them is technology and information. And part
of it is open access tools and broadband. This is a real
concern. You know, these folks next to you here I am sure their
businesses are such that they look at the commodities market
every day and probably need to have access to that. And without
broadband, it is very difficult to manage their operations in a
way that is in their best interest.
And so can you elaborate on that a little bit because I
know this is a concern I have, I represent a very rural
district as well?
Mr. LAWRENCE. On a couple of notes. The one you just
mentioned, access to information in a timely manner, the other
is relates to small businesses and small entrepreneurs in these
rural areas that may be the farmers themselves or hiring
farmers.
The other one about the technology really gets to data
portability. We have machines collecting information now on
acres and on animals. But who owns that data? If it is in a
green machine and I want to put it in a red machine, do they
talk to one another, do I have access to it.
Those are some policy issues as well as some that the
marketplace still trying to figure out. But as information is
powerful and has value farmers being able to control that to
their own best interest is absolutely essential.
Mr. LUETKEMEYER. Mr. White and Ms. Rickelman, would you
like to comment on that?
Mr. WHITE. And technology, yes, I follow the market every
day. We do also graze some yearling cattle. I follow the market
because I try to contract and we have to do a lot of hedging.
In this day in time if we are going to stay in time, the
hedging is of utmost importance.
Mr. LUETKEMEYER. Stockbroker is one of your most important
people at this point, a commodities broker.
Mr. WHITE. Yes.
Mr. LUETKEMEYER. Like an accountant or a doctor or a
veterinarian, that is part of your portfolio of folks who help
you manage your business.
Mr. WHITE. Yes, yes. And so if I could go back, we have to
follow this every day. You watch the market, you have got to no
this market moves so fast now that we--I mean it is almost like
you have to sit and watch your phone or it can move $4 or $5 in
seconds. It used to be $3 in a day and you had to quit.
So things have changed in our lives. So it is not like--we
can't go sit on a tractor anymore and just drive and enjoy the
sunshine, you have to be doing this, looking at your phone, you
know. You have to have the technology with you. What will we do
without our phones?
But it comes back. The one thing that does concern me with
what you are asking, it comes back to the GIPSA rule. Because
if competitive marketing goes away, I don't--I will no longer
need that. I don't need my phone for marketing, because I am
going to get one price for my product, like everybody else
across the board.
But that is the way I make my living, sitting and watching
that market and hitting it at the right time.
Mr. LUETKEMEYER. So access to broadband is very, very
important----
Mr. WHITE. Oh, yes, yes.
Mr. LUETKEMEYER. Ms. Rickelman, would you like to comment?
Ms. RICKELMAN. I would have to agree is what Dr. Lawrence
and Mr. White said. The availability of knowledge and resources
to make good marketing decisions is something that we need on a
farm. And like Mr. White said, it is not something that you can
decide what you are going to do in the morning and then look at
it the next morning. It is something you have to be looking at
and thinking about every day, every morning. So yes, I would
just concur with what they have said.
Mr. LUETKEMEYER. Thank you.
Mr. Conner, you brought up and discussed, made several
comments with regards to the border tax that is in the proposed
plan at this point which is not necessarily much more than just
a blueprint. It is pretty sketchy, rough structure. There is
not a lot set in stone. But I was kind of curious, I mean can
argue it either way. I don't really have any strong feelings
either way on it, so don't take my remarks one way or the other
here because I am still trying to gather information on this to
ensure we do this right.
But my understanding is that not only if you sell product
you don't get charged tax on that either. Is that correct? And
whenever you import, there's taxes charged on that. Is that
correct.
Mr. CONNER. That is my understanding, Congressman.
Mr. LUETKEMEYER. So if you import other food products that
compete with what farmers are producing here, that would have
at this point I think a 20 percent tax on that product. That
would help make our products more competitive. Is that not
correct?
Mr. CONNER. Well, I think our fear on the 20 percent tax--
and again we are in much the same--we are more than even you in
the same position than obviously the details are sketchy. But I
used for example the fertilizer that is essential on our farms
and ranches. We import--I am going to use the figure roughly 90
percent of our potash that is an essential fertilizer for
agricultural production in this country.
You throw a 20 percent tax on that, what is going to
happen? The farmer is going it pay more, period. And his
ability--you know there is an argument that they may get it
back in terms of not taxing other things, but remember again
the farmer is a price taker in that circumstance. And when you
are raising his cost of production as a price taker, you are
pretty much taking that out of his bottom line. And so there
needs to be a lot of caution.
And I say that as an organization that is a very strong
proponent of tax reform in general. And we would like to figure
out a way to make all these revenue numbers work, but that is
one that could be a big problem.
Mr. LUETKEMEYER. I appreciate your perspective.
Thank you, Mr. Chairman. I yield back.
Chairman BLUM. Thank you, the gentleman yield back. The
gentlelady from American Samoa, Ms. Radewagen is now recognized
for 5 minutes.
Mrs. RADEWAGEN. Thank you, Mr. Chairman. I want to welcome
and thank the panel for coming here today to testify before the
subcommittee about the state of America's small family farms. I
am proud to have been added to this subcommittee this Congress,
because the majority of small businesses in my home district of
American Samoa are small family farms.
These farms are the soul of the local community, each run
by a family who sell their produce at the market in the center
of Pago Pago. Our farmers markets provide many of our families
their only source of income. However, the only market these
farmers have is the local market, which means that our farmers'
income relies solely on the health of the American Samoan
economy at large.
What would you recommended for farmers like those in the
territories whose incomes are more prone to shocks?
Mr. LAWRENCE. I have to admit, I do not know much about
your situation, but, it would clearly depend on the ability of
your consumers to pay. So a healthy economy for your local
consumers who are buying is a key part of it. And then the
ability to export even if it is to other States as well as
other countries. That likely gets at not only regulations but
finding those markets, and what their quality demands, and
types of specifications that they are asking for.
Mrs. RADEWAGEN. Thank you. And if you have any
recommendations, how we can promote the produce of really small
farms to more than just their local areas?
Mr. LAWRENCE. I would be happy to visit with you more about
this later, because it would require more detail. But
obviously, transportation, and perishability, works against
you. So how do you preserve that in a way that can be shipped
to other locations would be one of the first obstacles.
Mrs. RADEWAGEN. Thank you.
Mr. White? And you are very correct about the handheld
devices in the middle--even out in those remote islands that I
call my home district, our farmers are out there farming
coconuts an tarrow on the mountainside, and they have got these
handheld devices while they are planting the tarrow and
everything. So do you have any perspective on these two
questions I just asked?
Mr. WHITE. Well, I mean, you know you are at a disadvantage
because like you said, transportation is huge. But the other
thing, something--adding a niche marketing and value marketing
basis in your products would be something that I guess I would
recommend. And this wouldn't be exactly the same, but in
Kentucky we have what you call Kentucky Proud, and it is a
marketing base, Statewide marketing base that is a value added
program that they use to market across the country.
And it goes--honestly, when consumers see that in today's
time consumers like to know where their products are coming
from. And so from that standpoint, I think that would help you
from that standpoint.
Mrs. RADEWAGEN. Thank. Ms. Rickelman?
Ms. RICKELMAN. I would say, kind of going off of what Mr.
White said, I had this written down, niche markets, and maybe a
different crop or selling it to consumers in a different way. I
know for us on our farm we try to be very transparent as
showing consumers what we do, having tours of our farm and
having them go through the barn before we put the pigs in the
barn. Something like that could help consumers buy more, be
more interested in what you have to offer at the market.
Mrs. RADEWAGEN. Mr. Conner?
Mr. CONNER. Congresswoman, I am going to be pretty self
serving here and suggest to you that I don't think your
circumstance, is probably too much different than our producers
here on the mainland in terms of being able to find new markets
and export those products.
A lot of that happens here on the mainland through farmer-
owned cooperatives, doing as a group what each individual
probably can't do themselves. And even among the largest
farmers here, their ability to go and contract for example with
the Chinese or the Mexicans, even the very largest can't do
that. It is outside of their ability to sort of cobble all that
together.
But through a cooperative, through, joining together with
our other producers they are able to do those kinds of things.
And I think that kind of sector is right for farmer-owned co-
ops that control their own destiny, their own business and they
are able collectively to do those kinds of things and find the
markets outside of their own little community.
Ms. RADEWAGEN. Very helpful.
Thank you, Mr. Chairman. I yield back.
Chairman BLUM. Thank you. The gentlelady yields back.
The gentleman from Nebraska. Mr. Bacon is recognized for 5
minutes.
Mr. BACON. As you can you imagine with the name Bacon I
have been taking this in real well.
But thank you, Mr. Chairman, for the time. I thank each of
you for being here.
I was raised on a family farm, still extended family, corn,
soybeans, we had about 50 head of cattle. And it was a good
childhood for learning work ethic and prepared me well for 30
years in the Air Force to follow.
So, I wanted to talk a little bit about bilateral trade and
also health care. I will start off with health care because I
don't think we have talked much about it today. In Nebraska we
had 51 percent increase in premiums this past year. It falls
most heavily on self employed, small business and of course we
are talking about the family farmer who is having to pay for
their own premiums. And we have had a 45 percent 50 percent
drop in prices, land values going down. Throw in a 51 percent
cost in premiums.
Could you talk about how ACA has impacted you in your
income and expenses? And do you have any feedback on the bill
we are getting ready to vote on today? We will start with Dr.
Lawrence. We will go down the line.
Thank you.
Mr. LAWRENCE. I don't--I'm not in that situation. I have a
benefit package through the university so I don't think it is
fair for me to comment.
Mr. BACON. Okay. Thank you, sir.
Mr. White.
Mr. WHITE. My health insurance for my family this year went
up over 100 percent.
Mr. BACON. One hundred percent?
Mr. WHITE. One hundred percent.
Mr. BACON. You are probably asking for relief, aren't you?
Mr. WHITE. Well, it would be nice, because it does--you
know, we talk about people not having insurance and that is--
you are not supposed to do that. You are supposed to have
insurance.
But it does come to a time that the economics of things
make you do things that maybe you can't do. And we have to have
health coverage. I mean I understand that, that is vital.
Especially in farming, I have been injured. I know what it
means to be--I know what a big hospital bill is.
So it is an issue that we have to take care of on today's
vote. I really couldn't give you an opinion one way or the
other, other than in our State, giving our State an opportunity
to have some competitive bidding on it.
Mr. BACON. Right. And we voted on that yesterday out of the
House. Will tax credits help you when you buy your insurance?
Mr. WHITE. Sure, it would.
Mr. BACON. It is in this bill. How about expanded has,
where you get tax deductions. Would that help you?
Mr. WHITE. I currently use.
Mr. BACON. Thanks for answering the question that way.
Ms. Rickelman?
Ms. RICKELMAN. I don't think I have ever thought about
insurance until was pregnant. I am 20 weeks pregnant. But yes,
I buy my own insurance through Farm Bureau so does my husband.
And the vote would be very, very helpful. We have a health
savings account, but as this--the delivery comes, there is
bills and things that we need to pay for.
Mr. BACON. Right.
Ms. RICKELMAN. And it definitely weighs heavy on our minds.
Mr. BACON. If you don't mind me asking, if you feel
comfortable, what is your deductible? Because I find people
with their deductible so high they pay every cent to deliver
their child. Are you in that boat?
Ms. RICKELMAN. Yes.
Mr. BACON. See, that is not right.
Mr. Conner.
Mr. CONNER. Congressman, the healthcare challenges for
rural America are, everything that all of our urban
counterparts face and then some. And I can't advise you on
today's vote. I will tell you that farmer-owned co-ops do
believe that one of the things that hinders co-ops from getting
into this space of providing health care for their members is
the fact that there are the state line limitations.
Mr. BACON. Right.
Mr. CONNER. I know that is something that has been part of
that debate. But let me just say as well, a big issue for rural
health care equally as much is just access to the doctors
themselves, programs like the--I am outside of my expertise
space here a little bit, but I know programs like the J-1
program for bringing doctors to the rural areas, because in
some cases at any cost there simply aren't doctors available.
And that is as fundamental as the whole----
Mr. BACON. We've been hearing the same thing in rural
Nebraska as well. I think the current ACA bill has probably
hurt the family farmer as much as anybody. And I think we have
to work hard to get relief now. And HSAs and the tax credits
for buying your own insurance will have a huge impact.
I don't have a whole lot of time left, but on bilateral
trade, Nebraska is a huge export State. Is there any advice if
you guys got more insight versus another one. Are there
particular countries we should be looking at more? How would
you advise the administration to prioritize on bilateral trade,
work that we need to be doing?
Mr. LAWRENCE. Obviously don't screw up what you have,
right? Go where the money is and the markets are. China
continues to be a growing market so how do we continue to tap
into that one while maintaining our other markets. Canada and
Mexico, are two large trading partners and Japan and then open
up more countries.
Mr. BACON. Thank you.
Mr. WHITE. And to add to that, from the aspect from the
cattle industry, you know, 96 percent of the population is
outside our borders. And a majority--you know, we see a premium
of about $300 per fed steer to the cuts that are less desirable
in the United States that other countries think are premium
cuts. And so anything we can do to level the playing field
where we can get our product out of this country and help us
move product would be a benefit for us.
Mr. CONNER. I would just say, Congressman, Japan. Japan
would be a huge one. If we are indeed in an era of bilateral
trade agreements versus multilateral, my advice to them is get
to it.
Mr. BACON. As I yield back, I will just say Japan has I
think a 40 percent tariff on cattle so we have got to work on
than.
Thank you, chairman. I yield back.
Chairman BLUM. Thank you. The gentleman yields back. The
gentleman from the great State of Kentucky is recognized Mr.
Comer for 5 minutes.
Mr. COMER. Thank you, Mr. Chairman.
And let me begin by thanking all the panel for testifying
today.
I want to single out Ms. Rickelman first. Thank you for
your story, it is very inspiring. I grew up showing cattle at
4-H and FFA events all over Kentucky and everywhere else, and
went to Western Kentucky University, got a degree in
agriculture and then started my farm and operation pretty much
from scratch. And that is what I do, I am a full-time farmer.
So I always love seeing people--the next generation of
farmers decide to stay on the farm and hopefully pass it on to
the next generation. So good luck, congratulations. And good
look luck in your career.
I want to welcome Mr. White, my fellow Kentucky cattleman,
fellow Kentucky Cattlemen's Association member. I appreciate
you being here. I have a few questions for you.
Describe your experience with the estate tax. What are your
thoughts on the need to permanently repeal the tax or whatever?
Mr. WHITE. Well in my experience, like I alluded to, my
father was sick 15 years ago. And as we started going through
it, my father was in construction, and his CPA told him, said
you need to start doing something because of what inheritance
tax will do to the liability. And the farm that originally that
I am farming now, my father did buy. And my wife and I ended up
buying that back from him. And so the struggle that we had of
one, paying an outside entity to put together a program for my
family to pass this forward, it took--us several years and it
worked out financially because we were far enough ahead of it
and the industry stayed good, cash flow was good and everything
worked.
But when you look at the estate tax today how that would be
detrimental to what we would have to do is just unbelievable.
And so, you know, it is the only way--removing this tax is
really the only way that we can continue as a small family farm
to operate because our margins are so close. They are just
pennies now. And so we just have to do everything, health care,
have to do everything, but this is huge for us that we have to
look at in the future.
Mr. COMER. You mentioned country of origin labeling. Is
there a legitimate push to reinstate that program? And if so by
who? And why would they think it might work this time around?
Mr. WHITE. No. There is not a push, not from us from
producer's side, there is no push. Because we went through 6-1/
2 years of implementation of this program. And it showed us no
benefit at all financially for the producer or, you know, for
the consumers to do this.
So we have been through the courts. We found out that we
were not in compliance with the national law. And so this just
needs to go on by. We don't need this to come back.
Mr. COMER. Okay. You mentioned the foot and mouth disease
vaccine bank. Can you talk about the need for a more adequate
bank? And what would the economic impact be to the beef
industry and many small family farming operations such as yours
if there were an outbreak?
Mr. WHITE. Well, you know, if foot and mouth disease comes
to the United States with the way social media is today, it
would be an instant crash of every market, not just the cattle
market, not corn, not pigs, every market. What, that would turn
around economically. So that trickles down to me and I can't
sell my product. Then I can't turn out and pay my supplier who
I bought supplies from, equipment from. It goes all the way
back and it will go to the consumer. Eventually, this thing
will tackle our whole Nation, because the food supply is
something we have to have to be sustainable.
Mr. COMER. When I was commissioner of agriculture in
Kentucky, we were over the large animal veterinarians. The
number one priority in our division of the Office of State
veterinarians was to prevent livestock disease outbreak. So I
appreciate your mention of this vaccine bank. And I appreciate
your testimony.
Thank you, Mr. Chairman.
Chairman BLUM. Thank you, the gentleman yields back. The
gentleman from Ohio. Chairman Chabot is recognized for 5
minutes.
Mr. CHABOT. Thank you very much. We pronounce it Chabot,
but that is okay. I know, Mr. Chairman, I said don't screw it
up. I am just kidding.
But in any event, I thought that I would mention just a
couple of things first.
First of all the Sweet 16 came up so I have some bragging
rights here too. Xavier University is in my district and they
beat Maryland on the first round. And my apologies, Mr. Lawson,
but they beat Florida State in the second round. And they are
playing Arizona I understand this evening. I sent my wife the--
because they had all the Members in a writeup. It was Politico,
or the Hill, or one of the local rags up here in Washington. So
I sent it back to her to show her that I had both Xavier and
Cincinnati. And she told me that I am the only Member that had
two teams in March Madness so I thought that was kind of cool.
But there is one left and it is Xavier.
In any event, what I wanted to ask you, Mr. White, for some
of the city folks I thought it was kind of interesting when you
said you had a bull sale this Saturday, and that sounds like
something that is much more interesting than what I will
probably be doing this Saturday.
So for us city folks, could you tell us what that entails,
how much of your time and advertising, and just how you get the
word out there and just all that kind of stuff?
Mr. WHITE. Well, this is our third annual purebred Angus
bull and female sale. This sale will bring in about 40 percent
of my yearly income. It is a major part of our life. It is one
section--we are a very diversified operation, but this is one
major portion of it.
What is entailed in it, we are selling service age breeding
stock. The auction will be held at our farm, at our facility
there in Lexington. We will have probably 200 producers from
Kentucky. I do have several Ohio producers that come and
purchase from us. They come down. And there is a lot of work to
this, a lot of advertising, social media advertising, newspaper
print advertising.
And so the biggest thing--my biggest advertisement in my
operation is my wife and I's determination that we are always
honest, straightforward and we back up the product that we
produce. And we are that way in everything that we produce. If
it is grain or cattle or fed cattle or whatever it is, you
know, it is something that is near and dear to us. This is a
business. We love the cattle business. If we didn't, we
probably wouldn't be in it to be honest. But we love what we
do. And we are very passionate about what we do.
Mr. CHABOT. Thank you very much.
Ms. Rickelman, I think it was you that mentioned how much
regulations can hinder success in your industry. Could you give
us some examples of the kind of regulations that are either
burdensome or, you know, don't make sense.
President Trump for example recently talked about getting
rid of two regulations for every new one that comes out, which
I think seemed a like a pretty good idea. So in your industry
are there some that you think are particularly egregious or
that we ought to look at?
Ms. RICKELMAN. Thank you for the question. The Waters of
the U.S. regulation really threatened every farm in the country
and every landowner as well. I am glad that the EPA will be
writing this rule, but it is things like that that are enacted
here in D.C. or thought about here in D.C. that they might not
really know what is going on on the real farms in Iowa. These
are the things that I worry about, EPA rules in general. Things
like that are concerning to me and this is why I am here today
to share my story of what really goes on in Iowa farms.
Mr. CHABOT. Thank you. And in the time that I have left
here, which isn't a whole lot, in the area of TPP and trade, I
tend to be more of a free trader myself. And so I have been a
bit disappointed in kind of the direction we have seen. The
President talked about bilateral deals rather than regional,
multi country deals. I hope he is right and I am wrong, and it
will work.
I know you all have already touched on this, but does one
of you want to again touch on the importance of trade,
especially with the agriculture industry and what it means?
Mr. CONNER. Well Congressman, I will take a quick shot at
that. It is fundamental to our livelihood in American
agriculture. We already export a substantial percentage of our
product, nearly half of our soybeans, approaching 60 percent, a
large percentage of our pork production. Just you name the
commodity, it is very, very export dependent. And as all have
testified, most of the consumers of the world are living
outside the United States.
The upside demand potential for additional food consumption
here in the United States is really pretty limited, but our
productivity scale in American agriculture is on a very steep
incline. And if we don't find new markets, there is absolutely
no hope for the family farm, for the small family farm in
particular because they just simply will not be needed, because
we have limited ourselves it a relatively flat, domestic market
only, and already a very small percent of the world's mouths to
be fed. We can't do that.
We have to export. And these trade deals, whether
multilateral or bilateral again. We preferred the multilateral,
but if it is bilateral now get to it and get the markets open
so we can get prices back to profitable levels.
Mr. CHABOT. Thank you very much. My time has expired.
Chairman BLUM. Thank you, Chairman Chabot. Sheep and
rabbit, correct?
Mr. CHABOT. And I learned that it is Blum and not Bloom.
Right? So there we go.
Chairman BLUM. With the indulgence of the ranking member I
would like to ask one more question.
Mr. SCHNEIDER. Absolutely.
Chairman BLUM. One last question for the panel and I am
going to write your answers down and you can see this as a
lighting round, if you will.
We have trouble focusing in Washington I think, there is a
lot of issues. I would just like to know, you give me the last
word, what are the top two or three issues that the Federal
Government can help the small family farmer? Top two or three
issues and let's go right down the line and I am writing down
what you say.
Mr. LAWRENCE. I think access to the capital, technology and
markets is key. Also I think it should support a strong rural
economy. It may be broader than just commodity and conservation
issues, but there is a strong synergy between small farms and
small communities.
Chairman BLUM. Mr. White?
Mr. WHITE. Stop overregulation and the estate tax.
Chairman BLUM. Thank you. Ms. Rickelman.
Ms. RICKELMAN. Overregulation and strong and adequately
funded farm bill.
Chairman BLUM. Thank you. Mr. Conner?
Mr. CONNER. Certainly regulatory reform would be at the top
of our agenda. I would add as well, Congressman, that we expect
a large infrastructure bill. Rural America should get its fair
share of that infrastructure bill which would include things
like broadband, the discussion we had earlier in the hearing.
That would be very, very important and then finally tax reform.
Chairman BLUM. Thank you very much.
I would like to thank our witnesses today for your
testimony. You all were excellent and congratulations once
again, Ms. Rickelman, upcoming addition to your family. We
appreciate it very much.
I ask unanimous consent that members have 5 legislative
days to submit statements and supporting materials for the
record.
Without objection so ordered. This hearing is now
adjourned.
[Whereupon, at 11:27 a.m., the subcommittee was adjourned.]
A P P E N D I X
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Thank you Chairman Blum and Ranking Member Schneider for
allowing me to testify today on the future of America's small
family farms.
My name is Tim White. My wife, Amy, and I operate a small
family farm - the T A White Farm LLC - a beef cattle farm in
Jessamine and Fayette County, Kentucky. We have a purebred
Angus heard along with a commercial cow/calf herd. We also run
stockers on an annual basis and host an annual Angus bull sale,
along with raising corn. I recently served as Regional Vice
President for the National Cattlemen's Beef Association, I am
currently Vice President of the Kentucky Cattlemen's
Association, and I am a member of the Fayette County Ag
Development Board.
Cattle producers in this country are small business owners,
by and large, with the country's average cattle herd size at 40
head. The state of the farm economy is weakened. The cattle
business is currently in a market slump that has many producers
struggling. According to the USDA's Economic Research Service,
this year marks the fourth consecutive year of farm income
dropping significantly on a national scale, estimated to
decrease by 10.5 percent this year alone.
Congress plays an important role in several areas that
impact cattle producers. Those areas include regulations, tax,
trade, and the Farm Bill. While these issues alone can be
managed by a cattle producers, when combined with other threats
to our industry, like loss of natural resources, urban
encroachment, and natural disaster, we have a real hurdle that
producers must overcome in order to be successful. And that
hurdle is especially large for new producers who are trying to
get into the cattle business.
Our biggest concern is over-regulation. The EPA's WOTUS
Rule is one such example. WOTUS has been a big concern to
producers. The overreach is that regulation would require many
beef producers to get permits, and comply with those permits,
which would be a huge burden. Not to mention it would open us
up to citizen lawsuits from litigious activist groups.
Producers pride themselves on being good stewards of our
country's natural resources. At the White Farm, we employ a
number of conservation practices, including rotational grazing,
no-till practices, and a slicing technique for planting which
is much less disruptive to the land. We maintain open spaces,
healthy rangelands, provide wildlife habitat, and feed the
world. But to provide all these important functions, we must be
able to operate without excessive federal burdens, like the
WOTUS Rule.
As a small business owner, I am particularly concerned with
the lack of outreach to the small business community by federal
agencies such as EPA. As a family-owned business, and knowing
the detrimental impact this regulation could have on my
operation, it is appalling the agencies could assert that it
would not have a significant economic impact on small
businesses. It is clear to me that the rule's primary impact
would do just that. There was not outreach to us in the
agriculture community before the rule was proposed. There
wasn't a meaningful dialogue with the small business community
as a whole. And because of that, what we got was a WOTUS Rule
that doesn't work for small businesses and doesn't work for
animal agriculture.
The positive news is that President Trump signed an
Executive Order requiring the EPA to go back and revise the
WOTUS Rule so it doesn't regulate every drop of water in this
country. We want to work together with the EPA so we can get
the clarity we need in a WOTUS replacement that works for
cattle producers, protects water quality, and follows the rule
of law.
The positive news is that President Trump signed an
Executive Order requiring the EPA to go back and revise the
WOTUS Rule so it doesn't regulate every drop of water in this
country. We want to work together with the EPA so we can get
the clarity we need in a WOTUS replacement that works for
cattle producers, protects water quality, and follows the rule
of law.
U.S. livestock producers understand and appreciate the role
that taxes play in maintaining and improving our nation in many
ways, however, they also believe that the most effective tax
code is a fair one. For this reason, a full, immediate repeal
of the estate tax must be a top priority as Congress considers
comprehensive tax reform legislation. The federal estate tax is
in direct conflict with the desire to preserve and protect our
nation's family-owned farms and ranches. As a land-based,
capital-intensive industry, many agricultural producers are
asset-rich and cash-poor, with few options to pay off tax
liabilities. Unfortunately, all too often at the time of death,
farming and ranching families are forced to sell off land, farm
equipment, parts of the operation or the entire ranch to pay
the estate tax.
As you may know, the American Taxpayer Relief Act of 2012
(ATRA) permanently extended the estate tax exemption level to
$5 million per person/$10 million per couple indexed for
inflation, and maintained stepped up basis. While we are
grateful for the relief provided by the ATRA, the current state
of our economy, combined with the uncertain nature of our
business, has left many agricultural producers guessing about
their ability to plan for estate tax liabilities and unable to
make prudent business decisions. Until the estate tax is fully
repealed it will continue to threaten the economic viability of
family farms and ranches, as well as the rural communities and
businesses that agriculture supports.
When it comes to trade, cattlemen have always been strong
believers in international trade. We support aggressive
negotiating positions to open markets and to remove spurious
``health'' regulations and other trade barriers intended to
keep our products out of foreign markets. As you are aware, we
continue to fight to recover the market share we once had in
many countries, including China and Japan. We need continual
engagement from Congress to end pseudo-scientific trade
barriers designed to exclude us from foreign markets.
Most of the high-quality U.S. beef we produce is consumed
domestically by American consumers. At the same time, Americans
do not find all cuts of the beef carcass desirable--cuts like
beef tongues, livers, and skirts--and that makes up the 10-15
percent of our annual U.S. beef production that is exported.
Last year we exported $6.3 million of U.S. beef across the
globe, with three of our top five markets located in Asia.
Exports alone accounted for roughly $300 per head of fed cattle
last year. In a time of volatile cattle prices, we need secure
and dependable access to foreign consumers who purchase our
beef at a premium price which helps offset the swing in cattle
prices. The most dependable way to secure access to foreign
consumers is through free trade agreements because they remove
tariff and non-tariff barriers that prevent us from meeting
overseas demand for our product. We must continue to look at
the 96 percent of the world population outside our borders as
markets for our products. I ask this committee to continue to
support the oversight and enforcement of our current trade
agreements, and to push for further opportunities for the beef
industry within the realm of international trade.
Another major item of the agenda for small family farms is
the creation of the 2018 Farm Bill and how that could
positively or negatively affect many small family farms and
ranches. Development of this next farm bill is an important
process for small business owners like myself. Whether directly
or indirectly, the programs that are included in this Farm Bill
have lasting effects, and sometimes a dramatic impact on
producers. NCBA will oppose agriculture policies that pit one
industry group against another, distort market signals, and
inadvertently cause economic harm to the livestock sector.
The vast majority of my fellow livestock producers believe
the livestock industry is best served by the process of free
enterprise and free trade. Market freedom works better in our
industry than government-regulated markets which deter
innovation and distort production and market signals. We
continue to oppose attempts to narrow the business options or
limit the individual freedom of livestock producers to innovate
in the marketing of their product.
Cattle producers oppose the involvement of the federal
government in determining how their cattle are marketed. The
beef industry continues to transition toward more value-based
marketing methods. These systems allow cattle producers to
capture more of the value of their cattle, while also allowing
producers to better market to the specific needs and requests
for our consumers. We believe these market signals have helped
drive a significant improvement in Quality Grade, a predictor
of a satisfactory eating experience. It is vitally important
that we continue to protect each individual producer's ability
to market their cattle in the way that best benefits their
business.
With that being said, NCBA must reiterate our opposition to
the Grain Inspection, Packers and Stockyards Administration
(GIPSA) interim final rule on competitive injury. The rule has
been opposed by the vast majority of cattle producers since it
was first introduced in 2010. In issuing the interim final
rule, GIPSA ignored the comments submitted by thousands of
cattle producers in opposition to the rule, the decisions of
eight separate federal appellate courts, and the intent of
language included by Congress in the 2008 Farm Bill.
Our analysis of the interim final rule leads us to believe
that if this rule is implemented, the packers will offer one
price for all cattle, regardless of quality. Packers have
indicated that they are not willing to open themselves up to
frivolous lawsuits and the legal risks this change in the
competitive injury standard would create. GIPSA claims the rule
is needed to protect producers. However, we believe, since it
would eliminate value-based marketing programs, it would in
fact negatively impact producers and make it more difficult to
provide the types of beef products that consumers are clamoring
for. We do not want to see any attempt to bring this, or a
similar discussion, forward in a new Farm Bill.
NCBA would also like to reiterate its opposition to
mandatory, government-run country-of-origin labeling (COOL) and
any mandatory COOL programs. Repeal of the previous mandatory
program was necessary since, after six and a half years of
implementation, it provided no market benefit to beef producers
or consumers. On top of that, it also violated trade agreements
with two of our largest and vital trading partners. I ask the
committee to resist any attempt to reinstate this failed
program within this Farm Bill or any other congressional
vehicle.
Overall, we believe that the Farm Bill is no place for
activities which restrict our market freedoms and deter the
growth of small businesses. Our priority for the 2018 Farm Bill
is to finally have one that does not include provisions like
the ones above, or any others similar to it.
Another 2018 Farm Bill priority for NCBA is the protection
of conservation programs. Several of these programs authorized
in previous farm bills have played an important role in
assisting farmers and ranchers in the enhancement of our
nation's natural resources for food production, wildlife
habitat, and water quality. In a number of states, the
Environmental Quality Incentive Program (EQIP) is improving
habitat for grassland-nesting birds under consideration for
listing as threatened or endangered species, enhancing the
health of grazing lands, improving water quality, improving
soil quality, and reducing soil erosion., One important feature
of EQIP has been its focus on livestock operations, and we
would like to see continued funding to preserve this program.
Federal funds spent on conservation are a good investment in
our country's natural resources and the sustainability of
agriculture and wildlife.
I would like to mention today something that my fellow
producer David Clawson discussed during a recent Senate
Agriculture Committee Field Hearing in Manhattan, KS. He
discussed the need for a stronger and more sufficient foot-and-
mouth disease (FMD) vaccine bank.
Please let me be very clear, an FMD outbreak is of great
concern to the beef industry. FMD is highly contagious and has
the potential to spread widely and rapidly, debilitating
cloven-hoofed animals, such as cattle, swine, and sheep. The
rapid spread of FMD can cause severe meat production losses;
therefore, a widespread outbreak of the disease would have
disastrous economic consequences. Analysts estimate that an FMD
outbreak in the United States could potentially cost our
nation's livestock producers billions of dollars in the first
12 months alone.
An FMD outbreak has the potential to cause enormous
economic losses to not only livestock producers, but also to
auction markets, slaughterhouses, food processors and related
industries, as well as consumers.
NCBA will be requesting support for the creation of a
larger and more adequate FMD vaccine bank within the 2018 Farm
Bill. We feel that this vaccine bank is vitally important to
the beef industry as FMD is still a threat as countries around
the globe continue to grapple with this disease. APHIS has
publicly stated that our current FMD vaccine supply is
insufficient to deal with a large scale outbreak in the U.S.
and that a larger vaccine bank is needed. APHIS has also noted
that expanding the current FMD vaccine supply is not an
inexpensive investment, however having sufficient quantities of
vaccine readily available and deployable to control an FMD
outbreak would appear to be a critical part of the USDA APHIS
mission. Rapid control of FMD protects the security of the U.S.
food supply, limiting the economic damage from livestock losses
due to the disease, and also shortens disruptions to trade and
commerce that would occur as long as FMD goes uncontrolled due
to a lack of vaccine.
For all of these reasons, we support additional funds
dedicated to the development of a more adequate FMD vaccine
bank. In addition, we support more work around Foreign Animals
Disease preparedness that will continue to shed light on our
response plans that recognize the limitations of current
vaccination capabilities in an FMD outbreak.
The cattlemen and women of this country look forward to
working with the Small Business Committee to ensure that we
have the ability to do what we do best - produce the world's
safest, most nutritious, abundant and affordable protein, while
giving consumers the choices they seek. Together we can sustain
our country's excellence and prosperity, ensuring the viability
of our way of life for future generations. I appreciate the
opportunity to visit with you today. Thank you for your time
and I look forward to answering any questions you may have.
Biography
Tim and his wife Amy own the T A White Farm LLC, a 2,000-
acre cow/calf and backgrounding operation. They raise 400 cow/
calf pairs and background 1,000 stockers. Tim and Amy White are
members of the Fayette and Kentucky Cattlemen's Associations as
well as Kentucky Farm Bureau, the Kentucky and American Angus
Associations, and the Lexington First Assembly Church. Beef
farmers are active in local and state beef associations and
some have served on the boards of national organizations such
as the Beef Promotion and Operating Committee, which
prioritizes and funds national and international market
development programs for beef.
The Whites have two children. Rod is 21 and he attends
school at Eastern Kentucky University and plans to return to
the farm after graduation. Addie is 16 and she is a sophomore
at West Jessamine High School. The White family is involved in
showing cattle, sports, and many church activities.
Testimony of
Sarah Rickelman, Manager
Degener-Juhl Farms
Hudson, Iowa
``The Future of America's Small Family Farms.''
United States House of Representatives
Committee on Small Business, Subcommittee on Agriculture,
Energy, and Trade
March 23, 2017
Washington, DC
Good morning. I'm Sarah Rickelman, manager at Deneger-Juhl
Farms in Hudson, Iowa. Let me begin by thanking Chairman Blum,
Ranking Member Schneider, and Members of the Committee for
allowing me the opportunity to share my story with you today. I
especially want to thank my House member Representative Blum
for inviting me to testify - thank you for the warm
introduction and this opportunity to talk about small family
farms in Iowa.
I am a Farm Bureau member from Black Hawk County in rural
Iowa where I, along with my husband, help manage a 1,700
farrow-finish pig farm. My husband and I are two of several
producers who provide the hands-on daily work to generate a
safe, nutritious, and affordable product that is consumed by
families across the United States and around the world.
My passion for agriculture started as a young girl growing
up on a small acreage and being heavily involved in the local
4-H club - learning about agriculture, caring for my animals,
and preparing them for the county fair year after year. This
was the beginning of my love story with agriculture.
Wanting to continue my education in agriculture I attended
Iowa State University taking classes in agricultural studies
with an emphasis in swine production. ISU empowered me to learn
the skills and obtain the knowledge that I use on the farm
every single day. Some of my daily duties include; animal
observations, record keeping, training employees, and public
relations work. I love being inside the barn every day, working
closely with the animals and ensuring they are given the best
possible care. From early mornings to late nights, work on the
farm is never done, and I wouldn't want it any other way.
My goal in college was to find a career that would balance
farm work with local, state and national agriculture advocacy.
I got involved with Farm Bureau three years ago, and have
really enjoyed the opportunity to share my story of how I got
started in farming and how important agriculture is to my
family and rural Iowa. I truly believe that being on the family
farm is the best career choice I could ever make.
While I couldn't be happier with my decision to farm with
my family, we face significant challenges and threats to our
livelihood. Being a young farmer, I'm concerned about my
ability to continue this profession and one day pass it along
to my children. With commodity prices depressed over the past
several years, net farm incomes have decreased by 46% over the
past three years--with another 8% decrease predicted for 2017.
While grain and livestock prices have a major effect on our
operations, the laws and policies that are enacted in D.C. also
have a significant impact on the success of small family farms.
In these challenging economic times, it is more important
than ever that we have a strong and adequately funded Farm
Bill. The Farm Bill provides a basic level of risk protection
in bad economic times and in years with poor weather. Federal
crop insurance in the Farm Bill has been successfully providing
an essential safety net for family farms across the country. I
hope that Congress will continue to appreciate the importance
of the Farm Bill and pass it before the current Farm Bill
expires.
Another way that D.C. is effecting the family farm is
through current tax policy. As Congress looks to reform our
nation's tax policy I hope that lawmakers will consider the
impact any change will have on the thousands of family farms
across the country. While lowering individual tax rates is a
positive reform, family farmers will ultimately pay more taxes
if essential tax policies for small businesses are eliminated.
Agriculture is a capital-intensive business and being able to
deduct business expenses is a critical tool - this should
include the ability of the next generation to purchase their
first piece4 of ground or expand their operation if they can't
deduct interest expense. A tax reform package that doesn't
include these provisions will ultimately increase taxes on
family farms. On that same note, I hope Congress will finally
and permanently eliminate the death tax while maintaining
stepped-up basis. These tax provisions are essential to the
survival of the family farm.
As I mentioned before, the pork we raise on the farm not
only feeds families in Iowa but also feeds people across the
world. I'm blessed to farm in an area of the world that is
immensely fertile and productive. Our country grows far more
food than we could ever consumer with 98% of the world
consumers living outside of our borders. Agriculture is a
growth industry and expanding export opportunities is vitally
important to the success and future of the family farm. I hope
that Congress and this administration will push for expanded
trade opportunities and work with other countries to negotiate
trade deals that lower tariffs so we can sell more of our
products to those markets.
We face many challenges as farmers grow fewer and the
divide between the general population and agriculture grows
wider. But I am optimistic that if we continue to share our
story we can shine a light on the work we do to grow safe,
affordable, and sustainable food for the world. Being a family
farmer isn't just a career, it is a lifestyle of which I am
extremely proud. Now pregnant with my first child, I look
forward to the day when our little one can come out to the barn
to see the baby pigs with me and my husband - to enjoy
agriculture as much as we do. With a strong safety net, pro-
growth tax policies, and increased trade opportunities I know
American's small family farms have a bright future.
Thank you.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Blum, Ranking Member Schneider, and members of the
Subcommittee, thank you for holding today's hearing on the
future of America's family farms.
I am Chuck Conner, president and chief executive officer of
the National Council of Farmer Cooperatives (NCFC). NCFC
represents the interests of America's farmer-owned
cooperatives. With nearly 3,000 farmer cooperatives across the
United States, the majority of our nation's more than 2 million
farmers and ranchers belong to one or more farmer co-ops. NCFC
members also include 21 state and regional councils of
cooperatives.
Farmer-owned cooperatives are central to America's
abundant, safe, and affordable food, feed, fiber, and fuel
supply. Cooperatives are owned by the farmers who have been
producing food and responsibly caring for their land and
animals for generations. Through cooperatives, farmers
marketplace, allowing individual producers to compete globally
in a way that would be impossible to replicate as individual
producers. In short, cooperatives share the financial value
they create with their farmer-owners.
By pooling the buying power of hundreds or thousands of
individual producers, farmer cooperatives are able to supply
their members--at a competitive price--with nearly every input
necessary to run a successful farming operation, including
access to a dependable source of credit. Furthermore, farmer
cooperative members can capitalize on new marketplace
opportunities, including value-added processing to meet
changing consumer demand. Cooperatives also create and sustain
quality jobs, businesses, and consumer spending in their local
communities.
On behalf of my members, I thank this Subcommittee for
supporting public policy that continues to protect and
strengthen the ability of farmers and ranchers to join together
in cooperative efforts in order to maintain and promote the
economic well-being of farmers, ensure access to competitive
markets, and help capitalize on market opportunities.
I also applaud this Subcommittee for taking a deeper dive
into the factors influencing the current and future farm
economy. It is imperative that federal policies promote an
economically healthy and competitive U.S. agriculture sector.
In examining the dynamics of the farm economy and future
needs of family farmers across the country. I remind you that
numerous influences--some of which are out of our control--come
into play. Extremely volatile weather and global markets result
in equally volatile farm gate prices, yields, and production
costs. Agricultural commodities currently face tight margins,
and farm income has retreated significantly from the highs it
reached just a few years ago.
Our common, ultimate goal is to preserve the productive
capacity of our farms. In today's testimony, I wish to
highlight legislative and regulatory efforts that will have a
direct impact on our members and their farmer-owners as well as
initiatives by our members to ensure the future of American
agriculture remains strong.
Tax Reform
NCFC supports pro-growth tax reform and wants to work with
Congress to achieve this result. However, certain aspects of
tax reform must be coordinated with the special circumstances
of agriculture in general and cooperatives in particular.
Farmer cooperatives calculate their taxable income under
Subchapter T of the Internal Revenue Code. Under Subchapter T,
earnings from business conducted with or for a cooperative's
members are subject to single tax treatment as income of farmer
members, provided the cooperative pays or allocates the
earnings to its members. If the earnings are used to support
the cooperative's capital funding or other needs, the earnings
are taxed at regular corporate rates when retained and taxed a
second time when distributed to the farmer members.
Additionally, earnings from sources other than business with or
for the cooperative's members are taxed at corporate rates.
This method of taxation has been in use for nearly a century
and was codified more than 50 years ago. NCFC supports the
continuation of Subchapter T and related regulations.
The House GOP Blueprint would reduce the top individual
marginal rate from 39.6 percent to 33 percent, and it would
reduce the top pass-through rate to 25 percent on non-wage
income. For cooperatives to thrive, the Blueprint should
provide that patronage distributions from cooperatives are
subject to the 25 percent maximum pass-through rate. Currently,
patronage distributions are subject to individual tax rates,
which max out at 39.6 percent. This is the same rate that
currently applies to pass-through income from partnerships,
limited liability companies, and S corporations. If the 25
percent rate is applied to income from these entities but not
cooperatives, the maximum tax rate on patronage distributions
will be 33 percent, placing cooperatives and their members at a
disadvantaged. It is essential that the rate on pass-through
income apply to patronage distributions from cooperatives.
NCFC members also feel concern about the Border
Adjustability Tax (BAT). The provision would make exports tax-
free, a benefit to exporters. However, farmer cooperatives
would need a way to pass that benefit through to their farmer
members who produce the exported goods. The BAT also would
disallow the business expense deduction for imported goods,
resulting in essentially a 20 percent tax on imported goods
(assuming a 20 percent corporate tax rate). For agriculture, a
tax on imported fertilizer, fuel, farm machinery components,
and retail goods would be extremely detrimental.
Tax experts say the BAT should cause a rise in the dollar's
value, which would offset the loss of the deduction for imports
by making imported goods cheaper. However, there is no
guarantee on the timing or extent of the rise in value of the
dollar. Also, consideration should be given to the effects of
the strengthening of the dollar, which would increase costs for
U.S. trading partners and likely result in retaliatory tariffs
on farm exports.
The Blueprint also would eliminate the deduction for net
interest expense and would allow for immediate expensing of
capital investments, other than land. In many cases, farmers do
not have the resources to satisfy all of their cooperatives'
capital needs. As a result, cooperatives often rely on debt to
finance growth. The repeal of the deduction for interest on
debt would cause harm to farmer cooperatives and their farmer
members by impeding business expansion, new hiring, and product
development.
Immediate expensing of capital investments is also a
challenge for farmer cooperatives. By not spreading the cost of
an investment over the life of the asset, the provision will
cause net operating losses that cannot be equitably shared
among current and future members. Additionally, the Blueprint
would repeal Section 199, the Deduction for Domestic Production
Activities Income. The Section 199 deduction was enacted as a
jobs creation measure in The American Jobs Creation Act of
2004. The deduction applies to proceeds from agriculture or
horticultural products that are manufactured, produced, grown,
or extracted by cooperatives, or that are marketed through
cooperatives, including dairy, grains, fruits, nuts, soybeans,
sugar beets, oil and gas refinding, and livestock.
Cooperatives may choose to pass the Section 199 deduction
through to their members or to keep it at the cooperative
level, making it extremely beneficial to both. Section 199
benefits return to the economy through job creation as well as
increased spending on agricultural production and in rural
communities. Some have suggested lowering corporate rates to
offset the impact losing of the deduction. However, because
farmer cooperatives' income is passed through to farmer
members, a corporate rate reduction would not benefit
cooperatives and their farmers. NCFC opposes the repeal of this
incentive for domestic production.
If tax reform retains the requirement to maintain inventory
records for tax purposes, NCFC supports the continued viability
of the last-in, first-out (LIFO) accounting method. The LIFO
method is a widely accepted accounting method and is used by
some farmer cooperatives. Taxpayers using LIFO assume for
accounting purposes that inventory most recently acquired is
sold first. If LIFO is repealed and replaced with the first-in,
first-out (FIFO) method, farmer cooperatives and other
businesses would be taxed as though they had sold all of their
inventory assets, even though they would have received no cash.
Obtaining the funds necessary to pay the tax on this deemed
sale would cause severe strain on cooperatives' capital
budgets. Taxation of LIFO reserves would be the equivalent of a
retroactive tax on the savings of a cooperative.
NCFC also supports reinstating the alternative fuel mixture
credit, which expired on December 31, 2016. The credit
incentivizes use of propane, a clean-burning, low-carbon,
domestic, and economical alternative to gasoline and diesel.
Immigration Reform
As part of the Agriculture Workforce Coalition (AWC)
Steering Committee, NCFC has long advocated for immigration
reform that meets both the short- and long-term workforce
requirements of all of agriculture. Our primary objective
remains legislation that fully addresses agriculture's
workforce crisis.
The economic health of farmers, and the rural communities
in which they live, is currently being threatened by the lack
of a reliable, stable, and legal workforce. Our farmers face
growing shortages of legally authorized and experienced workers
each year, which in turn results in millions of dollars in
economic loss. A 2012 survey found that 71 percent of tree
fruit growers, and nearly 80 percent of raisin and berry
growers, were unable to find an adequate number of employees to
prune trees or vines or pick the crop.
The current uncertainty and unpredictability is causing
many American farmers to shift production away from labor
intensive crops, which include many fruits and vegetables. In
fact, Texas A&M reported that 77 percent of vegetable farmers
reported scaling back operations and more than 80,000 acres of
fresh produce that used to be grown in California have moved to
other countries. These production shifts make America
increasingly dependent on imported food which threatens both
food safety and our national security.
Jobs in agriculture are not easy; they are physically
demanding, conducted in all seasons, and are often transitory.
Most U.S. residents seeking employment do not find these
conditions attractive. In response to a lack of a domestic
farmworkers labor force, farmers have relied on workers
admitted under a government sponsored temporary worker program
known as H-2A and on workers who appear to have legal status to
work in the United States.
The H-2A program contains significant and growing
challenges. Capacity and infrastructure issues at the
Departments of State (DOS), Homeland Security (DHS), and Labor
(DOL) has led to greater processing delays than ever before.
This means bureaucratic red tape and interruptions in the
program seriously impact the viability and profitability of
farmers and ranchers as workers show up to the farm well after
the date they were needed, resulting with millions of dollars
in agricultural production lost in the interim.
H-2A is the sole legal visa program available to production
agriculture; however, it is limited to labor of a ``temporary
or seasonal nature.'' Thus, leaving industries such as dairy
and livestock left without any legal channel to find workers.
Employment of H-2A workers has nearly tripled in the past five
years; yet, it still only accounts for less than 10 percent of
all seasonal farmworkers. This growth has occurred despite the
program's extreme regulatory hurdles, government
inefficiencies, and high costs. In fact, an entire industry
exists solely for helping farmers navigate the H-2A process.
For many small farmers, accessing these services are
financially out of reach, leaving them with limited options for
hiring workers.
Despite farmers' best efforts, many if not most, of the
agricultural workforce is in the U.S. without proper work
authority. There is no other industry with greater workforce
demographic challenges and foreign labor reliance than
agriculture.
While many foreign-born workers hold farmworker jobs, each
farmworker creates many American held jobs. In fact, every
farmworker engaged in high-value, labor-intensive crop and
livestock production sustains two to three off-farm, but farm
dependent jobs. The activities that occur on domestic farms
support not only farmworkers, but also an entire supply chain
of transportation providers, input suppliers, processors, and
consumer retail functions.
It is important for the subcommittee to know that many of
those American jobs will be lost if access to agriculture's
current workforce is jeopardized. Based on a farm labor study
conducted by the American Farm Bureau Federation in 2014, the
impact of an enforcement-only approach to immigration that
causes agriculture to lose access to its workforce would result
in agricultural output falling by $30 to $60 billion.
Therefore, we must work together to ensure our agricultural
economy stays strong by ensuring immigration legislation
provides farmers and ranchers, across all of agriculture,
access to a legal and stable workforce.
In summary, instability in the agriculture labor force has
reached critical levels. Farmers face a shortage of legally
authorized and experienced workers each year, and the
cumbersome H-2A visa program cannot serve as a safety net to
meet the workforce demands. We can and must do better for our
farmers, our economy and country by modernizing our immigration
system to include work eligibility for our current existing
workforce and farmer-friendly programs to provide future guest
workers for all of agriculture. If not, the future of America's
family farms is in jeopardy.
International Markets
The U.S. food and agriculture sector is heavily dependent
on international markets, and trade is vital to the continued
prosperity of cooperatives and their farmer and rancher
members. While small farmers may not have access the
international market directly, the prices they receive for
their commodities are dependent on exports. For example,
approximately half of the U.S. wheat, soybean, and rice crop is
exported. The percentage is even higher for crops such as
cotton and tree nuts. Over the past few years, foreign markets
have also become increasingly important to supporting the dairy
industry, with exports now accounting for one out of every
seven days of U.S. milk production. Clearly, without those
markets, commodity prices received by producers would suffer.
By their nature, cooperatives bring together groups of
farmers and ranchers, many are operators of small and medium-
sized operations structured as family farms. By banding
together, members of cooperatives can accomplish what would be
more difficult, if not impossible, to do individually. In this
case, cooperatives offer farmers opportunities to market their
products internationally, by providing services such as
consolidating, branding, marketing, processing, and
transportation. This allows farmers access to the global
marketplace. The increased earnings of the cooperative due to
international sales flow back to the farmer-owners in increased
patronage dividends, boosting farmers' income from beyond the
farm gate.
With over 95 percent of the world's population living
outside of the United States, expanding access to international
markets is essential for our future success. This includes
maintaining and increasing access to markets through existing
and future trade agreements, and leveraging export programs
that serve as catalysts to increased market access.
Market Access Program
The Market Access Program (MAP) is of particular
importance, both because it is a vital tool used by producers
and their cooperatives to market products overseas, and because
it represents such a good investment of taxpayer dollars with a
24 to 1 return on every dollar spent under the program.
Many specialty crop producers view MAP, above all other
programs, as their ``farm safety net'' program. The ability of
cooperatives to use MAP helps give individual farmers the
opportunity to market their products overseas, which they
otherwise would not be able to do on their own.
U.S. Department of Agriculture (USDA) Value Added Producer
Grants (VAPG) and Cooperatives
As mentioned earlier, cooperatives by their nature bring
many producers together who individually do not have the size,
expertise, and resources to take advantage of the value chain
beyond the farm gate and gives them the opportunity to profit
from those down-stream activities. Value-Added Producer Grant
(VAPG) funds empowers cooperatives to capitalize on new value-
added business opportunities that would otherwise go
unexplored. VAPG helps cooperatives differentiate and expand
production, in turn helping them improve the value of their
products through processing and marketing. Their successful,
self-sustaining products have translated into greater and more
stable income for producers from the marketplace. This also has
served to promote economic development and create jobs.
The VAPG also assists independent producers at the farm
level, many small and medium-sized, to market new and
innovative products on a smaller scale. Of the 326 grants
awarded in 2016, 287 were to independent producers (86
classified as small or medium-sized, 55 to beginning farmers,
and 68 to socially disadvantaged farmers), and 21 to
cooperatives. Based on information gleaned from cooperatives'
applications, 5,890 farmer-members of cooperatives, many being
small and medium-sized farmers, benefited from the 21 grants to
cooperatives in 2016.
The program is administered on a matching-fund basis,
thereby doubling the impact of such grants and helping
encourage investment in ventures that ultimately benefit rural
America. As a cost-share program, it is as an excellent example
of an effective public-private partnership bringing a number of
self-sustaining products to market.
Other USDA Programs Assisting Small Farms
Funds provided by Rural Cooperative Development Grant
(RCDG) program, helps fund non-profit groups, such as rural
cooperative development centers to develop and expand
cooperatives. These grants help provide the training and
technical assistance rural cooperatives need to be sustainable.
This helps strengthen the rural economy by creating jobs and
building assets that create infrastructure, especially in low
income rural communities.
The Outreach and Assistance for Socially Disadvantaged
Farmers and Ranchers Program (2501 Program). The 2501 Program
assists socially disadvantaged and veteran farmers and ranchers
in owning and operating farms and ranches while increasing
their participation in agricultural programs and services
provided by USDA. The program assists community-based and non-
profit organizations, higher education institutions, and tribal
entities in providing outreach and technical assistance to
socially disadvantaged and veteran farmers and ranchers.
Infrastructure
Improving our nation's transportation infrastructure must
be a national priority that deserves urgent attention. Capacity
constraints, structurally deficient bridges, deteriorating
roads, and locks and dams long past their expected useful life
require the necessary investment to efficiently move the
country's freight now and into the future. As Congress prepares
infrastructure investment legislation, we implore you to
address the infrastructure needs in rural America.
Rural communities have seen their infrastructure
deteriorate, jeopardizing jobs, our agricultural
competitiveness, and the health of rural families. Past
infrastructure initiatives often focused on urban and suburban
infrastructure while not adequately addressing the unique needs
of rural communities. We ask that you address this as part of
any comprehensive infrastructure renewal efforts.
Our nation's ability to produce food and fiber and
transport it efficiently across the globe is a critical factor
in U.S. competitiveness internationally. Infrastructure that
supports rural communities and links them to global markets has
helped make the U.S. the unquestioned leader in agricultural
production. Our deteriorating infrastructure threatens that
leadership position.
Transportation infrastructure improvement is the most
obvious need in rural communities, but not the only one.
Highways, bridges, railways, locks and dams, harbors, and port
facilities all need major investment to continue efficiently
getting our agricultural products to market. For example, one-
quarter of our road system's bridges require significant
repair, or cannot efficiently handle today's traffic and many
of the 240 locks and dams along the inland waterways need
modernization. In addition, critical needs exist in providing
clean water for rural families, expanding broadband to connect
rural communities to the outside world, and enhancing the
ability to supply affordable, reliable, and secure power for
the rural economy.
The scope of the investment needed is staggering. Clearly
the federal government must continue to play an important role
in providing funding and those federal investments should
increase. However, federal resources, likely cannot fill the
need entirely. Creative solutions that pair federal investment
with state/local government investment and private sources of
capital hold promise for raising a portion of the funds
necessary to do the job.
Regulatory Impacts on Cost of Production
We must also ensure that our public policy does not hurt
the economic viability of farm and ranch families across the
country. Often outside traditional farm policy, these issues
come from corners of the federal government that may not
understand production agriculture. Yet a broad range of
regulatory actions--those pending at federal agencies or in the
pipeline and coming soon to a farm near you--have the potential
to increase the costs and reduce the margins of cooperatives
and their farmer and rancher member-owners. Whether the
regulations deal with the environment, immigration and labor,
food safety, or financial reform, they can create an
uncertainty that threatens to hold back investment and growth
across the agricultural sector.
Over 20 million jobs across the country are directly or
indirectly dependent on agriculture, and account for nearly $1
trillion or 13 percent of Gross National Product. If our
agricultural sector can preserve its competitiveness in the
global marketplace, we can grow this number and be a strong
contributor to a growing economy.
Congress and the administration must ensure that the
marketplace, not the federal government, determines the cost of
production for America's farmers, ranchers, and the
cooperatives that they own. If our farms, ranches, and
cooperatives are weighed down with costs imposed by either
regulatory actions or delays in the regulatory process, farm
income will decrease and market share will be lost to our
competitors.
Sustainability
I also want to highlight NCFC's effort to ensure farmer
cooperatives are a part of the sustainability conversation
happening in today's marketplace. Organizations ranging from
Wal-Mart and Whole Foods to NASCAR and the United Nations have
embraced sustainability over the past decade. In turn, the
concepts, definitions, and terminology have also evolved and
standard-setting programs have proliferated. In many cases,
these efforts vary considerably in their approaches to
sustainability. Individual companies face substantial
challenges in this environment, and ultimately, the farmers and
ranchers do as well.
Our membership consists of more than 60 farmer co-ops, and
that results in just as many different definitions of
sustainable agriculture. The truth is, sustainability means
different things to different people. It may not even matter if
everyone agrees on a single definition, but one thing we can
all agree on, as owner-members and managers of the nation's
cooperative system, is that sustainability is an important
concept to a growing number of our customers, both at home and
abroad.
Sustainability is a topic that has gained momentum among
the many companies who buy our agricultural products and who
are ultimately being pushed toward sustainable sourcing by
their own customers.
When many of our farmer-members hear the word
``sustainability,'' the conversation often turns to
environmental issues and additional government regulation. As a
cooperative organization, it's important to understand that
protecting our natural resources is only one part of
sustainable agriculture. As Merriam Webster reminds us, the
word ``sustainable'' can and should apply to our financial,
human, and community resources as well.
Farmers and ranchers have been working over generations to
ensure their own family businesses are sustainable. Likewise,
cooperatives have been part of the rural landscape for
generations and provide a historical perspective on the
farmer's legacy of stewardship of the land and involvement in
the community.
Cooperatives have an intrinsic orientation toward
engagement, shared economic participation, and community that
provides a particularly strong foundation for conducting
effective sustainability programs. In fact, our business model
of farmer-ownership is inherently sustainable?
The governance and ownership structure of
cooperatives creates a strong foundation of stakeholder
involvement among co-op members.
Member participation fosters a shared
economic interest in the cooperative's performance,
through patronage and dividend distribution, that is
further reflected in the shared stake that co-ops have
in the sustainability of their local communities.
Cooperative precepts also include a strong
commitment to education and training for cooperative
members and for sharing knowledge among cooperatives.
Taken together, cooperatives have an intrinsic orientation
toward engagement, shared economic participation, and community
that provides a particularly strong foundation for conducting
effective sustainability programs.
Sustainability also is in the soul of every good farmer and
at the heart of co-op success, and it always will be.
Cooperatives represent a connection to farmers that consumers
value, and the close relationships with farmers help connect
consumers to the farms that produce their food. In fact,
because of their position in the food supply chain,
cooperatives can help farmers and consumers better understand
each other.
Our members believe that fostering collaboration among
cooperatives and all segments of the supply chain is
fundamental to furthering sustainability and continuous
improvement in handling, processing, and marketing food, fiber,
and fuel.
Cooperatives also offer a unique view of accountability,
traceability, and transparency from farm to plate:
Accountability - Cooperatives hold their
members to high standards and can provide education and
information on approved farming and animal care
practices.
Local Sourcing - Cooperatives serve as a
conduit between the farm and the consumer and can offer
transparency regarding food production by explaining
sustainability practices their members use on their
farms.
In order to be more productive, efficient and profitable,
farmer cooperatives and their member-owners are continuously
improving the ways they run their businesses. Cooperatives
provide farmers and ranchers with the education, technology,
innovative products, and services needed to help them
continually improve the quality of the land they farm and the
crops, produce, meat, milk, and eggs they produce. This
continual progress is the driving component of sustainable
agriculture.
NCFC's sustainability initiative is guided by principles
fundamental to farmer-ownership that are integral to
sustainably producing food, fiber, and fuel for America and the
world. Our work is grounded in the core values on which farmer
cooperatives were founded--shared economic participation,
democratic member control, cooperation, and a lasting
commitment to community. From those values, the work of NCFC
and its member cooperatives, through their own individual
commitments to sustanability, is based on the following
principles:
Economic viability - Providing safe and
affordable food, goods, and services for our customers
while supporting the long-term vitality of our members'
family farms.
Environmental stewardship - Managing our
natural resources carefully and efficiently to help
ensure the quality and integrity of the environment
today and for future generations.
Community well-being - Conducting our
businesses responsibly, maintaining a safe, healthy,
and respectful workplace for our employees, and
fostering vibrant rural communities.
In conclusion, I realize this testimony covers a lot of
ground, some of which may be outside the jurisdiction of the
Subcommittee, but these issues are no less important and
impactful to the future of America's family farms and are
worthy of your attention. Especially at a time when farmers
across the country face a touch economy and tight margins, we
must identify ways for our agriculture sector to prosper.
Thank you again for the opportunity to testify today, and I
look forward to your questions.
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